Practical Law

I’m not telling you anything new when I say that it’s a funny thing, adjudication. We have a statutory process for resolving disputes in the construction industry set out in section 108 of the Construction Act and Part 1 of the Scheme for Construction Contracts 1998. Both the Act and the Scheme provide for when the referring party will put in its evidence (within seven days of the notice of adjudication, which the Scheme calls a “referral notice“, the Act doesn’t even go that far) but neither contain an express provision for the responding party to do the same.

Without looking back to the Parliamentary discussions on the Act and the Scheme, I’m not sure exactly why we ended up with this state of affairs, or whether it has really ever prevented the process from operating properly. It only really came to mind the other day, when I was looking at Akenhead J’s judgment in A T Stannard v J and T Tobutt.

A T Stannard v J and T Tobutt

This was a dispute about retention monies, which the contractor (A T Stannard) claimed from the Tobutts.

After the dispute was referred to adjudication and an adjudicator  was appointed, the referral notice was served and (I presume) the adjudicator issued a timetable giving the Tobutts time to respond. The initial timetable was extended (from 23 to 30 June) but, according to the judgment, the Tobutts “did not actually ever submit a Response”. Rather, the Tobutts’ representative wrote two letters to the adjudicator:

• On 25 June, to advise that his clients would be participating in the adjudication.
• On 3 July, to set out his clients’ “initial response”.

The representative subsequently indicated to the adjudicator that a response would be forthcoming, but none was served on the adjudicator before he reached his decision on 14 July.

I pause there. The judgment says the Tobutts “did not actually ever submit a Response”, and yet then states that their representative served an “initial response”.

What is a response?

While it may be more usual for a response to take the form of a submission or pleading, it is not unheard of for an adjudicator to receive letters or emails setting out a responding party’s position. I know that both Jon and I have had situations where, although a party says it will not take part, its “defence” (such as the reasons why it has not paid the referring party) have been articulated sufficiently within correspondence to enable us, as the adjudicator, to consider it when deciding the matter referred.

That sounds like what happened here. We know from the judgment that the letter of 3 July alleges that:

• The parties had entered into a letter of agreement containing some form of pay when paid provisions whereby the retention would only be passed on to the contractor when it was received by the Tobutts from Clancy Docwra.
• By 13 June, no retention had been released by Clancy Docwra.
• The Tobutts had a counterclaim for defective works, as £75,000 has been withheld by Clancy Docwra.

We also know that the adjudicator took the letter of 3 July into account because he expressly addressed the issue of whether the contractor was entitled to the retention, which he decided it was, together with interest.

When I have been faced with this type of situation, I have defined the submission/letter/email as a “response” in my decision, when recording the submissions that I’ve received.

The judgment doesn’t say whether this adjudication proceeded under the Scheme but, assuming it did, it is also worth noting that paragraph 17 of the Scheme requires an adjudicator to take into account “any relevant information submitted to him by any of the parties”. If the Scheme applies, this obligation is mandatory and therefore the adjudicator would be accused of breaching the rules of natural justice if he didn’t (and we all know how “well” that often ends!).