Fair enough?: Breaching natural justice

A feature of adjudication now sadly familiar to practitioners is the way in which a respondent’s ability to deal with the claim may be hampered by shortage of time. The adjudication may be launched at a most inconvenient time, accompanied by vast quantities of documents, with a tight timetable – a sort of ambush by steamroller.

In the recent case of the Dorchester Hotel vs Vivid Interiors (19 January 2009), Mr Justice Coulson was faced with an adjudication in which he clearly felt this was going on. Vivid had been engaged to carry out refurbishment in the Dorchester hotel. The final account was in dispute. On 19 December 2008, the Friday before Christmas, Vivid commenced adjudication proceedings. The referral notice, itself 92 pages long, was accompanied by 37 lever-arch files which included six substantial witness statements and two experts’ reports of 30 and 20 pages each. Although it appears that much of this material was not entirely new, at least five files were and many of the individual figures within the final account had been recast or revised.

The adjudicator was only prepared to accept the reference if Vivid agreed to disregard the holiday period from 24 December to 4 January for the purpose of the 28 days within which the adjudication had to be concluded. Vivid agreed and in addition agreed a further extension to 28 February with a timetable that required Dorchester to respond to the claim by 28 January. However beyond that Vivid was not prepared to go.

Dorchester said this timetable was too tight and claimed there was a risk of there being a breach of natural justice. Using Part 8 of the Civil Procedure Rules it sought declarations to that effect. Mr Justice Coulson said this raised the novel question of the extent to which the court should intervene in a continuing adjudication in connection with potential breaches of the rules of natural justice.

The judge clearly sympathised with Dorchester. He said that Vivid had commenced the adjudication in the way it had in order to obtain the greatest possible advantage from the summary adjudication procedure. He added that it was a matter of regret that the adjudication process, which was itself introduced as a method of dispute resolution that would avoid unnecessary legal disputes and procedural shenanigans, was now regularly exploited in this way.

It was perhaps a bit optimistic of Dorchester to ask for a finding of breach of natural justice in advance, so to speak. However the judge did fire some warning shots…

 

He also expressed confidence that the enthusiasts for adjudication in and out of parliament in 1996 had not envisaged that the system would be used for making a claim of this type and in these circumstances. Although he accepted that Vivid was faced with an employer who was stonewalling and that it had sought to ameliorate its conduct to some extent by agreeing a revised timetable, nevertheless his overall view was critical.

Despite this, he did not grant Dorchester the declaration it sought. He rejected Vivid’s argument that he did not have jurisdiction to grant the declarations, but he felt that he should not grant relief at this stage. First, he noted that the adjudicator himself had said that he could determine the dispute fairly within the time agreed to by Vivid. Second, although the timetable was tight, he could not say at this stage that it was incapable of giving rise to a fair result. In addition to this, he was unable to reach a view as to whether there was so much new material that it would result in a breach of natural justice. And finally, if in the event there were a breach of natural justice, then Dorchester could resist the enforcement of an adverse decision by the adjudicator on that ground.

It was perhaps a bit optimistic of Dorchester to ask for a finding of breach of natural justice in advance, so to speak. However the judge did fire some warning shots. He reminded the adjudicator that he had to continue to conduct the adjudication fairly, which might mean extending the timetable further. He also reserved costs which meant that if the decision were successfully challenged on natural justice grounds, Vivid might end up paying them.

So in one sense Dorchester may have achieved its aim.