Mr Bumble had a point when he said the ‘law is a ass’ – as was borne out recently by a High Court battle that could have been settled with a phone call
Do you remember Mr Bumble, the Beadle in Oliver Twist? I thought of him when reading the story in the adjudication case of Geris vs CNIM. Two top-class barristers and two top-class firms of solicitors appeared before one top-class construction industry High Court judge to find out what an adjudicator intended should happen.
Why think of Mr Bumble? Well, daft as it sounds, I couldn’t help musing on the idea of someone picking up the phone and simply asking the adjudicator what he meant. Heavens, the judge could have popped around the corner to see him, robes, wig and all. He might even have stood him lunch. But: “If the law supposes you can do that,” Bumble states, in what has become one of the most quoted lines in Dickens, “the law is a ass – a idiot.”
To interpret, fathom, figure out the true intention of the adjudicator when dishing up his decision you don’t go and ask him – you would be “a idiot”. Instead you go to court.
CNIM was building a waste incineration plant at Marchwood in Hampshire. Geris subcontracted for the geodesic dome to cover the plant. The work didn’t proceed as originally intended. There were delays, for which builder and client were both in part responsible. So, with about 25% still to complete, CNIM terminated the subcontract on the grounds that Geris was not proceeding reasonably and diligently under the IChemE Model Form, aka the Brown Book.
Geris said the termination was wrongful. It started an adjudication. It claimed for all the work done up to wrongful termination, then for all the consequences of the wrongful termination. CNIM contra-claimed, saying this was its bill for correctly terminating and engaging others to complete. It was big money.
The adjudicator was David Simper. He is an experienced adjudicator. Well respected, too. He accepted that CNIM had correctly terminated the contract. He also accepted what the value of works done up to termination was and stated the balance otherwise due up to that threshold date of leaving site. That’s not the same as saying “pay up”. Then he dismissed the money claim by Geris for the wrongful termination because it was not wrongful. So the potential amount due from CNIM to Geris up to leaving site was a lump of money.
To interpret the true intentions of an adjudicator when dishing up a decision you don’t go and ask him – instead you go to court
Now comes the CNIM counterclaim such as liquidated damages for delay and the back charges for completion. He declined to consider the £2m-plus alleged costs of completion and lost productivity and several more heads of claim of another £1m since they were outside what the process authorised him to decide. This sounds fair enough, if they had not previously been canvassed between the parties. Meanwhile, ought the adjudicator have ordered CNIM to pay Geris the sum payable before termination? The ordinary position is that if a payer has a list of contra-accounts he must serve in good time the famous “notice to withhold”. Missing the boat with that notice means the payer must pay up and fight the battle later. That’s invariably what an adjudicator will order. And the court will throw out an application that the payer can set off or postpone paying up after an adjudicator’s decision since that would be entirely counter to the policy behind the Construction Act.
The big difference here is in what the adjudicator seems to have said in his decision. He accepted an argument presented in the adjudication and said: “I find that CNIM is entitled to exercise its rights of set-off”.
The reason was a clause in the contract that said: “The contractor shall be entitled to deduct from any payments due or becoming due to the subcontractor under the subcontract any sums which are due from the subcontractor to the contractor.”
It is not easy to see how that clause fits in with the absent withholding notice but that’s not the point. The point here is that the adjudicator did not order any money to be paid over. He decided only what was due. Decided, too, that set-off rules applied. So, no order to pay means no order to pay. Mind you, if that is what he meant, if that is what all the court hearing was about, don’t spend all that money finding out – just take the adjudicator out to lunch and ask.
Tony Bingham is a barrister and arbitrator
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