Two recent TCC decisions suggest that it will be difficult to establish that "ambush adjudication" is procedurally unsound on the grounds of breach of the rules of natural justice.

First Case

The Dorchester Hotel employed Vivid to carry out the refurbishment of its hotel. A dispute between the parties concerning the final account was referred to adjudication by Vivid on 19 December 2008. The Referral Notice was 92 pages long and incorporated 37 lever arch files. Amongst the 37 files there was material that was entirely new and many of the figures in the final account had been changed from previous submissions.

Vivid had allowed only modest extensions to the adjudication timetable.

A few days into the adjudication, the Dorchester applied to the court for declarations to the effect that unless a more realistic timetable was agreed, there was a "very real risk" of a breach of natural justice because the Dorchester would not have a reasonable and fair opportunity to review the referral and formulate its response and consequently the adjudicator would be unable to carry out "his duty of deciding the case impartially and fairly".

In considering the issues Coulson J confirmed that the court does have the power to intervene in an adjudication, albeit that power will be exercised sparingly. He criticised the timing and the manner in which Vivid had brought the adjudication, which he regarded as an exploitation of the adjudication process. Nevertheless, he refused to grant declarations in this case and in doing so he made the following points:

  • The rules of natural justice do apply to adjudication, but in a limited way. Adjudication is an inherently rough and ready process. The courts will therefore treat with scepticism arguments based on supposed breach of natural justice. This is especially true in circumstances where the supposed breach of natural justice has not yet occurred and may never happen
  • Generally speaking, it will be for an adjudicator to decide whether or not he has enough time to conduct an adjudication fairly. The Judge was much influenced in this case by the fact that the adjudicator had said clearly that he could fairly determine the adjudication in the timetable allowed
  • It could not be said at such an early stage that the short timetable was incapable of giving rise to a fair result. Furthermore, arguments based on breach of the rules of natural justice could be raised and dealt with at the enforcement stage

Second Case

Akenhead J took a similarly robust approach to arguments alleging breach of the rules of natural justice in the recent Bovis Lend Lease case.

There, the defendant employer sought to resist summary judgment of an adjudicator's decision, in part on the basis that there was too much material to be properly considered by the defendant in the time available.

In rejecting this argument Akenhead J put particular emphasis on the failure of the employer to raise the point at any time during the adjudication. The lesson learned from this is that if one intends to resist enforcement on the grounds of breach of the rules of natural justice, one should at least raise the issue during the adjudication.

Implications

The upshot of these two cases is that (generally speaking) arguments based on natural justice are unlikely to fare well in cases where a respondent claims to have been "ambushed" or swamped with material. In both cases the court reasserted that although there had been adjudication "by ambush" this did not necessarily result in a breach of natural justice. The HGCR Act 1996 provides for adjudication "at any time" and sets out a timetable that in complex cases will almost inevitably lead to a "rough and ready" decision by the adjudicator.

Nonetheless, it was also implicit in the court's reasoning that there may be circumstances where the sheer volume of material adduced in support of a Referral Notice is such that a decision cannot be reached fairly and effectively in the adjudication timetable. Exactly how much is "too much" is not discussed by the court, yet it is clear that in considering whether there had been "too much" material, judges will be particularly influenced by two things:

  • Firstly, did the adjudicator believe that there was "too much" material and
  • Secondly, was breach of natural justice an issue raised by the respondent during the adjudication

Perversely, the court's findings may lead to the spectacle of adjudicators playing down the time pressures which they are under (for fear that their protestations will be used as a defence to the enforcement of their decisions) whilst at the same time respondents will be shouting ever more loudly during adjudications that they need more time. Pending further clarification of this issue it may be that the merest whisper by an adjudicator that he has had sufficient time will drown out the anguished cries of respondents that there is "too much" to consider.

References:The Dorchester Hotel Ltd v Vivid Interiors Ltd and Bovis Lend Lease Ltd v The Trustees of the London Clinic.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 11/02/2009.