Adjudication offers speed – and not at any cost

The Scottish Judge in the recent case of ATG Services (Scotland) Ltd vs Ogilvie Construction Ltd [2024] CSOH 94 laid it on the line. He said: “The defence to this action is entirely without merit.” It was an adjudicator’s decision that awarded over £1m to ATG. But Ogilvie did not pay. So the groundworks subcontractor came to court to get the award enforced.

There was, said the judge, “a squall got up by the defender” Ogilvie, but none of it impressed the judge. Very experienced counsel for Ogilvie argued this way and that, and cleverly advanced all sorts of reasons to give the elbow to the adjudication award, but none of it, not even a teeny-weeny bit, got home. He enforced the award then required Ogilvie to pay the legal costs at the highest scale, saying it “fell comfortably within unreasonable behaviour”.

Let me tell you what’s up here. High-speed dispute resolution has trumped litigation. A device in the ADR stable such as adjudication has become embedded in our commercial world. It is flawed, yes. But not nearly as flawed as long drawn-out, immensely expensive litigation. Only those with deep pockets could afford to go to court. Adjudication, on the other hand, is a pocket battleship. It dashes in, dashes out and then – wallop – announces the result. It’s commercial.

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Ogilvie was the main contractor for a housing and care facility in Dalkeith. It appointed ATG for the groundworks package. The works progressed and interim accounts were paid. Then an interim account for £1,081,254.83 (excluding VAT) was not paid. ATG called on the Scottish Building Federation to appoint an adjudicator. Beginning on 21 May 2024, the usual rounds and submissions, were made; and on 26 June the award ordered sums to be paid forthwith. So, that is five weeks from start to finish. It only took another six weeks, from start to finish in court, to enforce. There is no chance that litigation can come within a sniff of that timescale. Nor within a mile as to legal costs. True, true, high-speed ADR has a real risk that the timescale means shortcuts that will result in errors in the decision. Choose your poison.

Ogilvie attempted to argue that its opponent had failed to follow the adjudication procedure in the contract when it identified an email address, but ATG did not serve there. “Invalid,” said Ogilvie. No, it isn’t, said the court. Seemingly, no one quarrelled with the error at the time of the adjudication. Argued as well was that the adjudicator came up with his own arguments, without telling the parties. That argument failed. Then it was argued that the published reasons in the award were not good enough. That failed too.

Only those with deep pockets could afford to go to court. Adjudication, on the other hand, is a pocket battleship. It dashes in, dashes out and then – wallop – announces the result. It’s commercial

Look, the high-speed process of ADR is intended to decide, on balance, which party shall have the money. That’s pro-tem binding. Pay up, say the courts. You are up against it if you try to beat down the adjudicator’s high-speed, possibly wrong decisions. Pay now; argue later. The court doors are still open if the losing party is minded to start all over again. Meanwhile this high-speed, shortcut system gives a binding result. Construction adjudication has shown the courts the way out of its awful, awful failure.

Now then, if you want or need a bang up-to-date guide on doing adjudication, there’s a new book out. It’s called Adjudicating Construction & Engineering Disputes and is by Matthew Malloy and Jonathan Cope (published by LPP, and £40.69 on Amazon). You might be relieved to know “it is emphatically not a legal textbook” – so says Sir Peter (Lord Justice) Coulson in the foreword, and he added “it might be said to be much too useful to be that”. That’s a very big compliment. The book’s purpose is to provide a practical and practitioner’s guide from the perspective of the adjudicator. And if, instead of being the hapless piggy-in-the-middle deciding the quarrels, you are one of the parties, it is ever so useful to gain an insight into the adjudicator’s job – more particularly, to know what the adjudicator wants from you.

Malloy and Cope have been appointed many times to adjudicate construction disputes over the years. I nearly called them “old-timers”. Better to explain they are man and boy industry experts – brought up as quantity surveyors, then coaxed to learn the law, became barristers – and that’s what it takes. They tell you their book is intended as a “walk through from the beginning to the end of an adjudicator’s involvement with a dispute under or in connection with a construction contract” –  in other words, a cradle-to-grave guide.

In short, the book is a chronological journey in being the adjudicator and managing the procedure as well as managing the sometimes-difficult mardy parties. Bear in mind this is the authors’ own view on the process – a cautious view. In parts, the authors accept that other adjudicators do it (and are entitled to do it) differently. The reality is that we constructors invented and have moulded adjudication. And we are not finished yet!

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