I appreciate that not everyone will agree but, as well as striving to get to the right answer, correctly applying the law, and so on, most adjudicators also want to provide the parties with a decision that is ultimately enforceable by the TCC. I think I also speak for most adjudicators when I say that it comes as somewhat of a relief when we read a judgment on BAILII or the like and we’ve been enforced.
But what about cases where only part of the decision is enforced, and the other part is severed? It is arguable that for the adjudicator it is, to use the language of the Black Knight in Monty Python and the Holy Grail, “just a flesh wound”. However, I can attest to the fact that it is frustrating, having been one of the first adjudicators to be severed back in 2012 in Beck Interiors v UK Flooring Contractors. I was thoroughly annoyed with myself for getting it wrong and only part of my decision was enforced (but I was assured by my peers that “tis but a scratch”).
The above background is a (very) roundabout way of introducing the topic of today’s post – severance – and, in particular, the severance in CC Construction Ltd v Mincione. I blogged about this case in October 2021, and wrote about some of the interesting aspects of the judgment that are relevant to final statement disputes under JCT D&B contracts. At the time, the judge (HHJ Eyre QC) found that the adjudicator had breached the rules of natural justice by failing to consider the set-off defence. He invited further submissions from the parties on whether he could sever the decision so that the remaining element of the sum due could be awarded. The judgment in round two was handed-down on 9 November 2021 by the same judge (who had become Mr Justice Eyre by then, and to whom I offer my hearty congratulations on his elevation).
CC Construction Ltd v Mincione – Round 2
The facts of the dispute are set out in my previous post, so I’ll concentrate here on what Eyre J decided about severance.
He was invited by the defendant to distinguish between single core and multiple core disputes in adjudication, and to adopt the view that in a single core dispute there is no scope for severance. The defendant argued this was a single core dispute. However, the judge rejected this distinction as a matter of law (although he acknowledged that “there may well be cases where the intertwining of issues makes severance inapplicable”).
Instead, he referred back to his decision in Downs Road Development LLP v Laxmanbhai Construction (UK) Ltd, particularly where he applied Pepperall J’s approach in Willow Corp Sarl v MTD Contractors Ltd and the Court of Session’s approach in Dickie & Moore v McLeish. He said he remained of the view that this was the approach to take. Consequently, there was no need repeat that analysis.
He was satisfied that in the case before him:
“… there was a failure to address a liquidated damages defence. That was a breach of natural justice in the sense that it involved a failure to consider a defence which should have been considered. That was a failure by the adjudicator to exercise the totality of his jurisdiction. However, that is very different from a breach of natural justice taking the form of bias on the part of an adjudicator or a failure to hear one side or the like.”
Did the adjudicator’s failure to address the LDs defence taint other parts of the decision?
I think that the interesting part of the judgment is the court’s consideration as to whether the remainder of the adjudicator’s decision would have been any different had the adjudicator taken account of the liquidated damages claim.
The employer relied on Quartzelec v Honeywell, and argued that:
“… the court should not speculate as to what might have been and the court cannot know what the position would have been if the adjudicator, as he should have done, had considered the liquidated damages defence. In particular consideration of that defence might have affected the conclusions the adjudicator came to on the other matters in dispute.”
In Quartzelec, the adjudicator had failed to consider a defence, but HHJ Stephen Davies declined to sever the decision. Part of his reasoning was that it was not possible to determine whether, if the adjudicator had considered the defence, other parts of his decision might have been decided differently. In particular, he stated that:
“… in many cases it is very difficult if not impossible for the court to be completely confident that the adjudicator’s decision on the other issues which at first blush appear to be discrete might not have been affected had he properly dealt with the offending issue. I can see that in this case it may be said that it is extremely unlikely that the adjudicator’s decision on the other issues would have been affected by whatever decision he might have made on the omissions defence, had he dealt with it. However, that does not invalidate the general principle. Indeed, even in this case it is possible to conceive that evidence adduced in relation to that issue might affect the decision on the other issues, especially if it went to the adjudicator’s overall assessment of the credibility of the evidence put forward by one or both of the parties.”
Returning to the present case, I thought that Eyre J’s comments on the interconnection between the different parts of an adjudicator’s decision were equally as insightful:
“There is, indeed, force in Mr Shirazi’s point that the process of decision-making is inherently interconnected even when broken down in a step by step process. It is right that there is a theoretical possibility that an adverse finding against a party on one point will influence an adjudicator, or indeed any decision-maker, to make an adverse finding against the same party on a different point.”
Speaking personally, I don’t think that an adverse finding against a party on one point has ever influenced me to make an adverse finding against the same party on another point, as I consciously strive to consider each issue on its own merits. However, I acknowledge that the subconscious also plays a part in the psychology of decision making and so, perhaps, I have been subliminally influenced?
Ultimately, Eyre J was satisfied that the adjudicator’s failure to take account of the liquidated damages argument did not taint the adjudicator’s reasoning in other parts of the decision, and he therefore severed the decision and awarded the contractor the remainder of the sum due. However, parties considering an attempt to sever a decision should nevertheless take heed of the judge’s comments as to whether other elements of a decision are likely to have been different if the relevant adjudicator had not erred.