黑洞社区

The case of Lapp Industries Ltd (Lapp) vs 1st Formations Ltd (Formations) has a shopping trolley of examples not to be attempted if you want to upset an adjudicator鈥檚 binding decision. LAPP was awarded its 拢120,000 claim in November by the adjudicator. Formations refused to pay up. By April, they were ushered into the High Court. Here comes the spoiler: Formations lost again. Pay up, said the judge.

Formations ran arguments; I will tell you about them in a moment. First, though, the big overarching hurdle is a feature well rehearsed in adjudication law: 鈥淭he objective which underlies the act (adjudication) requires the courts to respect and enforce the adjudicator鈥檚 decision鈥�, except in very limited examples. Formations was searching for them.

First, it said that many disputes under numerous contracts between the two companies had been run in the same adjudication. That is not allowed under the rules of the Scheme (aka the Construction Scheme). Snag is, the behaviour was typical building industry stuff.

Formations had requested LAPP to carry out a minor item of demolition at an office block in Shelton Street, London. Then it added a bit more, then more and more, and so on, ad infinitum. Ah, said Formations, that鈥檚 a lot of separate contracts, so you have to adjudicate one at a time. The adjudicator saw through that, and so did the judge. I suspect you do too.

Formations had asked LAPP to carry out a minor item of demolition at an office block. Then it added a bit more, then more and more, and so on, ad infinitum

As so often happens in our building world, the work begins then moves on and on, expanding the original deal. It grew arms, and legs. Same site, same works, same companies, just bigger and bigger. In any case, said the judge, the original deal is a construction contract and the adjudicator is then entitled to make a binding decision as to what it contains. The decision was enforceable on that point.

So Formations tried another angle. It argued that these 鈥渟everal contracts鈥� contained differing terms from each other. That鈥檚 true, said the judge, they do differ in minor respects, but the overall picture is not undermined. The works scope had evolved in a 鈥渟omewhat untidy fashion鈥� and 鈥済rew far beyond the original scope but that is quite consistent with a single contract gradually being expanded, as required鈥�, he said. The judge suggested that LAPP had embarked upon 鈥渟urmise and Micawberism鈥� (unjustified optimism) in the attempts to point away from his conclusion.

>>Also read: The Procurement Act is here 鈥� what does it mean for the construction industry?

>>Also read: Get your clause into it 鈥� contractual responsibility for specific risks

Formations might be on better ground to resist enforcement under the heading of 鈥渂reach of natural justice鈥� 鈥� in other words, by alleging unfairness by the adjudicator. The shopping trolley argued that the adjudicator failed to consider a number of issues, which would amount to being unfair. It also argued that the adjudicator went on a 鈥渇rolic of her own鈥� in that she decided the case on reasons or arguments not raised or argued by the parties. In other words, Formations was deprived of the opportunity to comment. Finally, Formations argued that the applications for payment by LAPP were not valid as interim payment notices.

The judgment reminds the reader of the context of construction adjudication: 鈥淎djudicators have a difficult task. They have to resolve often complex disputes at breakneck speed. They are deluged with submissions from all concerned, which are, equally, prepared in great haste. It has to be borne in mind, also, that adjudicators are required only to provide a temporary binding solution to a dispute. Their decisions are not to be compared with those of the Supreme Court or Commercial Court, drafted and redrafted over a long period, following extensive submissions from the finest advocates available.鈥� I suspect you can guess what鈥檚 coming about Formations鈥� optimistic arguments.

Ah, said Formations, that鈥檚 a lot of separate contracts, so you have to adjudicate one at a time. The adjudicator saw through that

As to the adjudicator deciding the case, but not mentioning arguments put by the parties, the judge looked at previous cases. The principles to be adopted ask the reader to recognise that almost every question formally put for an answer to the adjudicator will have, or consist of, a number of sub-issues. The adjudicator need only, generally, address all those. Moreover, even if a key question is not addressed by the adjudicator the outcome is still sound and enforceable, if the omission was inadvertent, not deliberate; nothing like that arose here.

As to a frolic of the adjudicator鈥檚 own, such as bringing in argument or observations not put by the parties, the judge reminds the reader: 鈥淭he touchstone is that the court, making every allowance for the inherently rough-and-ready and speedy nature of adjudication, will nevertheless intervene where unfairness has occurred.鈥� But it was not the case here. There was nothing in the adjudicator鈥檚 approach that went to the heart of the dispute.

I have an observation of my own. Some, if not all, adjudications are indeed highly complex. Some, but not all, adjudicators have the qualifications, experience and know-how to cope. Some!

Tony Bingham is a barrister and arbitrator at 3 Paper 黑洞社区s, Temple