Practical Law

The phrase “I’ll phone-a-friend” may have started off as a lifeline in the television quiz show, Who wants to be a millionaire?, when people couldn’t answer a question, or were unsure as to the correct answer, but it has recently taken on a whole new meaning in the world of adjudication.

If you are not sure what I am talking about, I recommend you take a look at Lord Menzies’ judgment in Highlands and Islands Authority Ltd v Shetland Islands Council.

Highlands and Islands v Shetland

In Highlands and Islands v Shetland, a dispute arose over liability for defects in a runway extension on Shetland. An adjudication was started and an adjudicator, Mr Ross, was appointed.

Part way through the adjudication, Mr Ross decided he needed confirmation as to the meaning of a particular contract clause. He decided to “phone a friend”, or at least a contact in his mobile phone address book. His first port of call, Mr Howie QC was conflicted out, so Mr Ross turned to Mr Currie QC. He asked Mr Currie a quick question, as a freebie. Aside from the usual pleasantries during a conversation with someone you know, I’m sure the conversation went something along the lines of:

• Mr Ross: “What is your understanding of clause X in contract Y?” [reads out the relevant clause].
• Mr Currie: “The words ‘say what they say’.” (In other words, “assess the costs” means “assess the costs”, not actual costs.)
• Mr Ross: “That’s what I thought they meant.”

As Mr Ross got the confirmation he sought, he got on with the adjudication and didn’t mention this to the parties. It was only after his decision was delivered that one of the parties discovered what had happened and put it to him. Mr Ross denied he had sought and received legal advice, whether in writing or otherwise.

When the matter came before Lord Menzies, he decided that Mr Ross had sought and received legal advice. It did not matter that it was given quickly, informally and for free. Lord Menzies accepted that Mr Ross had formed a view as to the clause’s meaning, but noted that he was sufficiently concerned to seek confirmation of that view. Lord Menzies said:

“It was legal advice which was sufficiently important to Mr Ross that when Mr Howie declined to speak to him because of a conflict of interest, Mr Ross went on to telephone another senior counsel [Mr Currie] to obtain advice on the point.”

There but for the grace of God go I

Having read the judgment, some may think Lord Menzies’ decision on natural justice is a harsh one, but I wonder just how many adjudication practitioners are sitting at their desks now thinking that it could be them, instead of Mr Ross?

I’m not suggesting for one minute that adjudicators regularly ring around barristers’ chambers to get a bit of free advice on an issue, but I wonder how often similar conversations take place within the confines of their offices. Issues often arise that get discussed with colleagues, informally over a coffee (or other beverage).

How different might the outcome have been if Mr Ross had simply spoken to a colleague? For one thing, no-one may ever have known, but even leaving that issue aside, would a discussion with a colleague be viewed differently to a discussion with counsel? Should it? And would it make a difference if that colleague was a senior colleague with many years experience of construction disputes?

Doing things differently

The obvious answer, to avoid a situation like this happening, is for an adjudicator to tell the parties what he is thinking, even if he doesn’t think it is an issue. Both parties in Highlands and Islands accepted that Mr Ross’ understanding of the clause was correct, and it was an uncontroversial one. As one said, telling them and giving them an opportunity to make submissions “would have cured the problem”.

Will the English courts follow this judgment?

I don’t know the answer to this, but it seems that Lord Menzies has opened a can of worms.

While the courts do not generally favour allegations that an adjudicator breached the rules of natural justice, it is clear that in cases where the adjudicator has received advice from a third party, that advice should be made known to the parties to give them an opportunity to comment on it. The same rule applies if the adjudicator uses his own knowledge and experience and doesn’t share that with the parties until his decision. If a case similar to Highlands and Islands came before the TCC, I would be very surprised if it didn’t decide the advice was legal advice and followed Lord Menzies.

Oh, and there goes my phone now…