Back in July, I wrote about ABB Ltd v BAM Nuttall Ltd in which Akenhead J found that the adjudicator had committed a serious breach of the rules of natural justice by deciding a case on the basis of a clause that neither party had mentioned or even argued. At the time, I stressed that such cases are relatively rare, and that commentators, parties, and so on, should not get carried away on a wave of hysteria. The defendant in CG Group Ltd v Breyer Group Plc raised similar arguments, but this time Akenhead J found that the adjudicator had not breached the rules of natural justice.
GC Group Ltd v Breyer Group Plc
CG was Breyer’s sub-contractor but, for various reasons, left site before its works had been completed. The dispute referred to adjudication concerned the final payment due to CG, with CG arguing that because the interim payment terms in clause 8 of the sub-contract did not comply with the Construction Act 1996, the payment provisions in the Scheme for Construction Contracts 1998 applied.
Breyer denied that there were any problems with the clause 8 payment terms. However, it said that, in any event, CG’s entitlement to payment (or not, as Breyer unsurprisingly argued) arose under the termination provisions of clause 16. The adjudicator decided that the payment terms were a combination of those in the Scheme and clause 8, and ordered Breyer to pay the sum claimed.
Breyer cried “foul” and refused to pay, arguing in the enforcement proceedings that the adjudicator decided the case on a basis that had not been argued. Breyer said that the adjudicator had no jurisdiction to decide the case as he did and, even if he did have jurisdiction, the adjudicator committed a material breach of the rules of natural justice because he should have given Breyer the opportunity to address the point.
Akenhead J gave the jurisdiction point short shrift. He went on to consider the natural justice point in some detail, and found that the adjudicator decided the dispute on the basis of the submissions that the parties had put before him. In particular, he relied on the fact that Breyer had said in the response that there were no inconsistencies or discrepancies with the clause 8 interim payment provisions, but even if there were:
“…the payment terms of the Sub-Contract Conditions would prevail…”
Akenhead J said that the combination of the Scheme and clause 8 payment provisions was, in effect, one of a variety of permutations of payment terms open to the adjudicator to accept, and therefore there was no serious breach of the rules of natural justice. Decision enforced!
What can we learn from the case?
For me, the key paragraph of the judgment is 31(e) in which Akenhead J stated:
“It behoves courts who are considering challenges on the grounds of breach of the rules of natural justice to have regard to the constraints under which adjudicators operate when faced with what are often complex legal arguments. It should not be the case that the Court should have to carry out a relatively minute examination of all the arguments and contentions put forward by the parties in the adjudication to seek to determine whether the final permutation in the exact form as found to apply by the adjudicator (being one of many open to him or her to find) was or was not specifically highlighted by a party. If the permutation as found is covered by the presented arguments, it should be a rare case for a natural justice breach to be found.”
So, what Akenhead J is saying is, provided an adjudicator’s decision is based on a permutation that can be found in a combination of the parties’ submissions, it doesn’t matter that the exact form was not highlighted by a party. This can be distinguished from the type of situation found in ABB Ltd v BAM Nuttall Ltd where the adjudicator decided the case on the basis of a clause that neither party had mentioned or even argued.
Personally, I think this judgment showcases the pragmatic approach of the TCC and the judiciary’s support for adjudication. I appreciate that some will argue that it creates uncertainty, but I’m not so sure; while adjudicators should think twice before digressing from parties’ stated cases and, if in doubt, should give parties the opportunity to comment, it must be remembered that Akenhead J isn’t saying that adjudicators can go off on a frolic and decide disputes on a different basis to that argued.
So Akenhead J has proved my point that any hysteria over ABB Ltd v BAM Nuttall Ltd was unwarranted, and can safely be left for the Rolling Stones or, for those of who grew up a little later, Wham and George Michael. Indeed any suggestion that ABB Ltd v BAM Nuttall Ltd altered the law concerning natural justice would clearly be a Careless Whisper…