Practical Law

It was Alice Cooper that sang:

“‘Cause you are damned if you do
Damned if you don’t
Damned if you will
Damned if you won’t”

If you are wondering what an earth I’m talking about, take a look at Ramsey J’s judgment in Farrelly v Byrne Brothers.

Farrelly v Byrne Brothers

Here the adjudicator, Mr Rowlinson, was appointed to determine a dispute arising under an NEC3 sub-contract. Part of the dispute concerned the interpretation of compensation events under clause 63.1 and whether the assessment should be made prospectively, as the sub-contractor (Farrelly) argued, or retrospectively, as the contractor (Byrne Brothers) argued.

To avoid taking a “flight of fancy”, the adjudicator requested submissions from the parties on the point. He then made his decision based on those submissions and using his own knowledge and experience.

That all seems sound and sensible to me. However, when the adjudicator’s decision went against it (the adjudicator had preferred the prospective approach), the contractor argued there had been a breach of the rules of natural justice because the adjudicator had taken “a crucial point against [it] that neither party had advanced”. It resisted enforcement on this basis.

No breach of rules of natural justice

Ramsey J looked at the judgments in Cantillon v Urvasco and Carillion v Devonport on breaches of the rules of natural justice, and Balfour Beatty v Lambeth in terms of an adjudicator going off on a frolic of his own. He said that this case came no where near the “exception type of case” like Balfour Beatty. Here there was no frolic. Rather, in coming to his decision, the adjudicator was not:

“…under an obligation to go back to the parties another time to seek their further submissions on clauses 62.3 and 64.1… As observed by Jackson J in Carillion at first instance, it is not practicable for the Adjudicator to go back to the parties with each of his provisional conclusions which represented some intermediate position for which neither party was contending.”

Ramsey J held that the adjudicator had not breached the rules of natural justice. He also went on to note that the adjudicator is the author of a textbook on the NEC3 conditions of contract and was chosen by the parties because of this expertise.

I know that adjudicators do, occasionally, go off-piste when it comes to using their experience and own knowledge. For a clear example of this, see Lord Glennie’s judgment in SGL Carbon Fibres Ltd v RBG Ltd. Therefore, it was good to see a common sense approach from the adjudicator, with further submissions sought from the parties.

I have always argued that one of the advantages of adjudication is that you can select someone with the appropriate expertise for the dispute. Perhaps we can add another requirement to that; it is also important for parties to appoint someone who also knows when to ask them questions too.

Sending out a draft decision and costs liability

Two other elements of this judgment also interest me:

• Service of a draft decision to allow the parties to make submissions on liability for costs.
• Right for the adjudicator to order who pays the costs of the adjudication.

I think these are points for another day but I’d be interested to know what others think of them.