Breaking the speed limits

Not long ago, I suggested that one of the main reasons why statutory adjudication had not taken off in the construction industry was that there was no track record of its usage (6 November 1998). As long as adjudication remained untested where it really matters – in the courts –parties would be reluctant to invoke it. The recent decision of Mr Justice Dyson, the senior judge in the Technology and Construction Court, in Macob vs Morrison represents clear judicial recognition that parliament intended adjudication to be a speedy, straightforward process for producing an interim decision from which money would flow pending final review in arbitration or whatever.

The decision also largely dispels the doubts that existed about enforcing adjudication decisions made under the Scheme for Construction Contracts and the concern that parties would be able to derail the enforcement process simply by challenging the validity of the adjudicator’s decision. Such challenges, typically based on the scope of the adjudicator's jurisdiction and the legitimacy of the procedure chosen by the adjudicator could, in the judge's words, “drive a coach and horses through the scheme” and indeed through the legislation as a whole.

The Macob decision was therefore a valuable first step in establishing the credentials of statutory adjudication. Although it amounted to a clear statement of judicial intent to uphold the adjudication process, it nevertheless offered little practical guidance to those seeking to enforce adjudication decisions. It left many crucial questions unanswered. And although the judge found in favour of the party seeking to enforce the adjudicator's decision, it should be remembered that that party then had to start fresh court proceedings to do so.

Many of those practical questions have now been answered in the second decision handed down by the Technology and Construction Court on this subject. The background to the court's decision in Outwing Construction Ltd vs H. Randell & Son Ltd was that an adjudicator, acting under the Scheme for Construction Contracts, gave a decision requiring Randell to pay Outwing the sum of some £16 000 within seven days. Randell refused to pay.

Having unsuccessfully attempted to persuade Randell to comply with the decision without litigation, Outwing's lawyers – my own firm – issued a writ and gave notice that it intended to apply for summary judgment of the contested amount. Furthermore, we applied to the court for a shortening of the normal timetable for that procedure from about two to three months to a matter of two to three weeks, from commencement of proceedings through to a court decision.

Although Judge Humphrey Lloyd did not have to make any order abridging the procedural timetable, he made it clear that as a matter of principle the judges in the Technology and Construction Court should look favourably on applications of that sort.

In the judge’s opinion, parliament's intention in passing the Housing Grants, Construction and Regeneration Act 1996, and the Scheme for Construction Contracts that goes with it, was clearly “that adjudication decisions and orders, if not complied with, were to be enforced without delay”, and it was the court's role to follow that intention through.

The Outwing decision therefore provides clear judicial guidance as to how parties and their lawyers should seek speedy enforcement of adjudication decisions through the courts. Furthermore, it is now clear that the court should proceed with enforcement despite the fact that the complying party has referred the adjudicator's decision to arbitration.

This guidance on the procedures for speedy enforcement is much to be welcomed. But the judge also had to resolve a question about legal costs that is likely to recur where a party complies with the decision only after court proceedings have begun.

Having received Outwing's writ, and after a date for Outwing's application to shorten the procedural timetable had been fixed, Randell paid the amount of the claim in full, but refused to pay the additional legal costs incurred by Outwing in preparing the application for abridgement. The judge ordered Randell to pay these costs. All the steps Outwing had taken were, in his opinion, reasonable to force Randell to comply with the adjudicator’s decision, which it had done only under pressure from court proceedings.

It is now clear that if a party only complies with an adjudicator’s decision after court proceedings have been issued, it will face a stiff bill for the legal costs that the other party has had to incur in pursuing litigation.

The decision is just as relevant to other schemes such as the JCT provisions or the TeCSA/ORSA adjudication rules. Hopefully, parties in whose favour an adjudication decision has been made will now feel more confident about taking such decisions to court to secure compliance.