Adjudication – Has there been a breach of rules of natural justice?

11 April, 2017
by: Cripps Pemberton Greenish

It is a feature of adjudications that the limitations on the time available for the adjudicator to make a decision can mean that parties are often left with very short periods of time to respond to requests for information from the adjudicator or to review and respond to documents or submissions made by the other side.

In a recent Scottish case1 such a situation arose.  As is often the case a considerable volume of material was submitted to the adjudicator.  The referring party, a contractor who claimed that its contract with the employer (who was the responding party) was wrongfully terminated, claimed damages from the employer including staff costs for delays caused by the employer during construction.  The responding party counter-claimed for the cost of works to complete the building in order to rectify defective work by the contractor.

With less than one week to go before the adjudicator’s decision was due he was still trying to obtain further information from the parties to assess their claims.  He offered a meeting to discuss the rectification works issue and said he would visit the contractor’s office to assess its ledger on staff costs, subject to the employer agreeing and being present at that visit.  The employer resisted and cited concerns about the rules on natural justice.  The contractor was forced to produce four lever arch files of documents that arrived with the adjudicator three days before his decision was due.  Again, the employer complained of a breach of the rules of natural justice. The employer provided some limited further information on the queries the adjudicator had raised on its counter-claim but with 24 hours to go there remained outstanding issues that the employer did not respond to.  Instead it said any decision would not be fair due to a breach of the rules of natural justice.

The adjudicator decided that the employer had wrongfully terminated the building contract and awarded the contractor some of its staff costs.  The adjudicator rejected the employer’s counter-claim.  The employer refused to pay and defended the contractor’s court claim to enforce the adjudicator’s decision by claiming that the adjudicator had breached the rules of natural justice.

The Court rejected the employer’s claim of a breach of the rules of natural justice.  Part of the reasoning was that some matters will inevitably have to be left to be dealt with close to the deadline for the decision.  An accompanied visit to the contractor’s office was not of itself unfair or a demonstration of bias.  The employer was found to instead have been the unreasonable party in refusing a visit.  In relation to the queries on the counter-claim the Court’s view was that it would not have been a breach of natural justice for the adjudicator to refuse to allow the counter-claim on the ground that it was inadequately pleaded without affording an opportunity to provide further proof.  In short, the employer was lucky to have even been asked to provide further information.

The outcome shows how difficult it is to make out a claim of a breach of the rules of natural justice.  In any event anyone who claims a breach of the rules of natural justice should try to make sure they act reasonably themselves. 

1Bell Building Projects Ltd v Arnold Clark Automobiles Ltd [2017] CSOH 55