The presumption of regularity

The adjudication was all about a claim for £272k worth of delay and disruption. The adjudicator cut it down and awarded £73k. So be it. Scottish main contractor Morris & Spottiswood baulked at paying their subcontractor any money. So the subcontractor, SW Global Resourcing, came to court, award in hand. The main contractor’s shopping basket of challenges has some neat points. None worked but we can learn a thing or two.

First, the adjudicator was accused of bias. It was said he was determined to find in the subcontractor’s favour. Lawyers looking at what he said might be forgiven for thinking he was leaning against the main contractor. He was convinced that the work had been disrupted but it looks to be that not enough evidence of the money loss was put up to him. The lawyer’s approach - some say the proper approach - is to therefore award no money at all. But this is adjudication. It’s different. It’s a rough approach to who can have the cash pro-tem. There is no trial, no testing of evidence, no in-depth inquiry - wham-bam-kerplonk.

So when this adjudicator said in his award “irrespective of the extent (or otherwise) of the records provided … I must use my own knowledge and experience as a quantity surveyor (41-years) to evaluate the loss and expense …” the lawyers cringed. That’s because they have been weaned on evidence, on proof. The QS adjudicator was using his nose, his QS gut feel. And the senior Scottish judge was content that in adjudication he can do that. There is a “presumption of regularity or of propriety which an adjudicator enjoys”. That phrase means “it is presumed that he has looked at the relevant documents and given them appropriate consideration within the tight time constraints under which he works”.

Shall you and I call it “a jolly good QS sniff”? Nothing wrong here said the judge. No bias, no leaning; just doing what a QS does all the time and doing it as the adjudicator. Comfortable?

The next challenge also came into conflict with lawyer thinking. The main contractor argued that his main contract was stepped-down into the subcontract. No it isn’t, said the subcontractor. The adjudicator said some bits were and some were not, but no one argued for partial incorporation. The court said there were hints of an argument about partial incorporation, so no harm was done by the adjudicator. Comfortable?

Then it was argued that the adjudicator had failed to consider the main contractor’s argument that the subcontractor was significantly responsible for his own delays. In other words that he had simply missed the main contractors arguments. No, said the judge; the presumption of regularity applies.

Counsel in this Scottish case now challenged this “presumption of regularity”. It is, he said, trumped by “demonstrable irrationality”. He meant that when there are, as here, obvious errors of law and fact, and logical inconsistencies in an adjudicator’s decision, it is all so unreasonable that none of it can stand. Nothing, he said, supported extending time to an 80-week contract period, or the notion that certain clauses had not been incorporated in the contract, and nothing reasonably supported the adjudicator’s treatment of the claim for head-office overheads.

But the judge would not accept this. He said: “Where the adjudicator is asked to make interim decisions under tight time constraints, the exceptional ground for review will be applied, if at all, only where a mistake (the decision) is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it”. The adjudicator’s decision came nowhere near this standard.

The final challenge was that the adjudicator’s decision failed to give any or adequate reasons for the extension of time issue. The judge rejected that too. The parties had presented the adjudicator with materials to make a determination and he rejected the main contractors argument by saying the claims were insubstantial.

The Scottish judge ended by saying: “An adjudicator’s decision is only an interim decision. The court is not concerned whether he has made errors of fact or law but only with the question whether he has acted unfairly or acted ultra vires. It is hostile to technical arguments to postpone the enforcement of his decision.” Quite.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple