I’m sure most adjudicator’s would agree that reasons are part and parcel of their decisions. We may not be required to provide reasons, unless requested to do so (for example, see paragraph 22, Scheme for Construction Contracts 1998) but, in practice, when we are making findings on issues of law or fact, it is unusual for adjudicators not to set out the reasoning behind those findings. It ensures your thinking is clear and logical, and providing reasons also assists the parties in understanding why you have reached the conclusions that you have in your decision.
Judgment in WH Malcolm
In a recent Scottish case, the court considered whether the reasoning of the first adjudicator bound the second adjudicator. There was no dispute that the first adjudicator’s decision was binding on the second adjudicator. It came down to the question of what, in terms of the dispute, had been referred to the two adjudicators.
The responding party argued that the issue “What was the appropriate method of measurement under the sub-contract?” was not part of the first dispute referred and did not feature in the first adjudicator’s decision. It was simply set out in her reasons, nothing more. Therefore, the second adjudicator could consider that issue, if he felt it was necessary to do so.
The referring party disagreed. It said that after the issue had been included as part of the responding party’s defence in the response, the parties had “joined issue on the matter” and it had been decided by the first adjudicator.
Judgment of Lady Smith
The court agreed with the responding party. The first adjudicator had found that:
“SMM7 does not apply to the parties’ contract and is not applicable as the method of measurement when valuing the parties’ contract.”
The court said this view was part of her reasoning in reaching a decision on the sum due to the referring party, but that it didn’t make it part of her decision as well. It was irrelevant that the parties had debated the issue before her; that didn’t make the issue part of the dispute referred.
What does this judgment mean for adjudicators’ reasons?
I think this is an interesting judgment and may make a few adjudicators think twice about how they write their decisions. However, I’m not sure we need to be too concerned.
I only make a finding on a point if it is in issue and it is relevant to the matter I’m deciding. Otherwise there is no need. For example, if, as a necessary step in deciding the dispute, I need to interpret the contract because it is in issue, then I expect my decision and findings on that to form part of my decision. In contrast, if I include findings that do not need to be there, I fully expect that they will not form part of my decision and will not be binding on the parties. As Jackson J said in Carillion v Devonport:
“… a brief statement of those reasons will suffice. The reasons should be sufficient to show that the adjudicator has dealt with the issues remitted to him and what his conclusions are on those issues.”
The difficulty is distinguishing between those aspects of the reasoning that are relevant to the dispute, and those aspects which are irrelevant. Instinctively, I would have thought that the finding made by the first adjudicator regarding SMM7 would be relevant to the question of valuation and/or the question of whether a sum was due. Lady Smith evidently found otherwise.