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Alleged breaches of the rules of natural justice

I seem to have written quite a few posts about cases where the adjudicator was alleged to have breached the rules of natural justice in this column over the last two years or so. That trend does not seem to be abating, as this post demonstrates, following the judgment in Paton and another, Re Judicial Review.

Given that fact, it doesn’t surprise me that in his “Author’s note for the second edition“, Sir Peter Coulson also reflects on the fact that challenges to adjudicators’ decisions on the grounds of breaches of natural justice have “increased significantly” since the first edition of his book was published in 2007. As a consequence, he has expanded the section on natural justice from one to three chapters, dealing with general principles, bias and the right to a fair hearing.

Right to a fair hearing before the court

In Paton, yet again, the court (this time Lord Bannatyne in the Outer House of the Scottish Court of Session) was asked to look at the adjudicator’s actions in reaching his decision.

As ever, the homeowners were dissatisfied with the outcome of the adjudication (the adjudicator granted the contractor an extension of time) and cried foul play on the part of the adjudicator. They argued that, in effect, they didn’t get a fair hearing because (among other things) the adjudicator had applied his own experience and knowledge to the issues before him and hadn’t come back to the parties to seek their submissions on his approach and interim conclusions.

The contractor disagreed and argued that the adjudicator’s reasons for his conclusions were sufficient.

Lord Bannatyne’s judgment

The court held that the adjudicator was not in breach of the rules of natural justice. In reaching his conclusions on the delaying events, he looked at the documents before him, including the construction programme, the meeting minutes and photographs, as well as the parties’ submissions. He accepted the contractor’s approach to delay.

The court was able to distinguish between this adjudicator’s behaviour and that referred to in Balfour Beatty v London Borough of Lambeth (where the adjudicator came up with his own critical path delay analysis). Here the adjudicator did not go off on a “frolic of his own”.

“Between a rock and a hard place”

When acting as the adjudicator, it sometimes feels like you are between a rock and hard place. You are often appointed precisely because of your own experience and knowledge and what you can bring to bear on the issues in dispute. To then be criticised for using that experience and knowledge is exasperating, to say the least.

Equally, as adjudicators, we need to ensure that we don’t stray from the materials and issues before us, that we don’t embark on a frolic of our own without at least advising the parties and giving them an opportunity to comment, if that is what we plan to do. To do otherwise is wasteful of the parties’ time and, ultimately, costs as, most likely, we will end up with an unenforceable decision.

Using your own experience and knowledge

Lord Bannatyne set out seven principles in his judgment, derived mainly from English case law, and which act as an aide memoire to adjudicators of best practice when deciding a dispute. I’d recommend everyone takes a look and that they pay particular attention to items four to seven. These are not dissimilar to some of the issues before Akenhead J in Cantillon Ltd v Urvasco Ltd. Those who act as party representatives in adjudication (and yes, I do mean solicitors as well as others) should also read and take note and, I’d suggest, should think twice before taking certain points.

Finally, I noted one interesting point, made at the hearing by the contractor’s counsel:

“[The Patons] were seeking to challenge the type of decision which adjudicators make routinely… if [adjudicators’ decisions] were to be reviewed successfully on the grounds advanced [in this case] then adjudications would simply ground to a halt and would no longer be used. Adjudications would become so lengthy as to render them unworkable.” (Paragraph 50.)

That would be in no-one’s interest. I doubt anyone would want to see a situation like that (although I know many who already think adjudication is too time consuming and expensive).

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