Going the distance: Relevant information

It was not quite the “countercheck quarrelsome” or the “reproof valiant” it was more the “retort courteous” by the adjudicator. He had been asked to “take no cognisance” of the previous adjudicator’s decision. Quite right, he said, I will ignore it. Quite wrong, said the respondent solicitor: “Your decision to ‘not even read the earlier adjudicator’s decision’ seems to breach the principles of natural justice. We reserve our client’s right to challenge your decision in the High Court!” The adjudicator was unfazed. He pressed on, paying no attention to the earlier adjudicator, and made his award.

The question is, what counts as firm ground when an adjudicator decides certain materials are inadmissible? Was this adjudicator on that firm ground?

Sisters Cynthia and Elise Jacques decided to buy a Victorian house in Sefton Park, Liverpool, and turn it into flats. The contract with builder Ensign Contractors was worth £340k. By the fourth adjudication (with the same adjudicator) the final account came in at £298k, meaning an overpayment of £29k had been made. The contractor didn’t comply. Both parties agreed this fourth adjudication was “null and void”, and further agreed to bring a revised final account to a fifth adjudication.

Curiously, in the fifth effort a different adjudicator took the reins. The sisters complained that the final account was only £138k, and said they wanted £187k back.

You’re doomed to failure, said the contractor, but in any event, this adjudicator should certainly look at the opinions of the previous one. He thought the final account was £298k. Don’t look at it, said the sisters. You must, came the reply. The contractor even quoted the Merchant of Venice: “Lies cannot be hid long, but at length the truth will out.”

The adjudicator declared the fourth adjudication inadmissible and ordered the contractor to pay back £97k. The contractor refused and so the case went to the High Court. The judge there agreed that adjudicator Paul Jensen had behaved impeccably and ordered enforcement.

The rule is the adjudicator must consider any relevant information submitted, and if they decide it’s irrelevant, that’s a binding decision.

Credit: Simone Lia

Now then, if it is basic law that the adjudicator shall consider all relevant information, what about all the materials put to them during an adjudication? The court says: “Whatever dispute is referred to the adjudicator, it allows for any ground open to the responding party that would amount in law to a defence of the claim.” So, as long as the defence is all about the dispute indicated in the notice of adjudication, it is relevant ”regardless of whether or not it was raised in the run-up to the adjudication”. The court added: “Subject to natural justice, the adjudicator has jurisdiction to and should consider such defences.”

Ah, there is a stumble here. Sometimes the materials “not raised in the run-up to the adjudication” are a complete surprise to the other party. Have you heard of the phrase “Put your trust in God, but keep your powder dry”? Some folk have a habit of saving arguments until they are needed. So, the issue becomes a matter of fairness in being able to take into account the new material. Does the rule about relevant materials meet the rule of fairness? If the brand new stuff can’t be properly dealt with by the opponent, is it so unfair as to bump it off the pitch?

One judge said: “A ground for rejecting a defence not previously raised is that the failure to raise it at an earlier stage is fatal to the adjudicator’s assessment of its genuineness.” That’s not a decision about jurisdiction; it is a decision about the merits of the defence. So Jacques vs Ensign tells us that (1) the adjudicator must consider defences properly put forward; (2) it is within the adjudicator’s powers to decide what evidence is admissible and helpful; (3) if a decision to disregard evidence is wrong in fact or law, that will not impugn the decision; (4) rejecting a defence has to be distinguished from an omission to consider all evidence about that defence. It is not practicable in the short timescale to consider all aspects, so the adjudicator is not acting unfairly if they don’t address each and every item.