Barnes & Elliot Ltd v Taylor Woodrow Holdings Ltd [2003] EWHC 3100 TCC

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Where an adjudicator fails to issue his decision within the timescale agreed between the parties this will not itself mean that the decision is not binding upon the parties.  The court will consider the case on its facts and if the decision is only a day or so late decide that this delay is excusable as being within the tolerance and commercial practice that one has to afford to the legislation and to the contract.

Judge Humphrey Lloyd QC, Technology and Construction Court

20 June 2003

The parties entered into a contract involving design, refurbishment and conversion work at a former psychiatric hospital near Epsom. The contract was subject to the conditions of the JCT 98 standard form with Contractor's Design. A dispute arose between the parties and was referred to adjudication. The provisions for adjudication are laid out in clause 39A of the contract which amongst other things states at clause 39A.5.3:

"The adjudicator shall within 28 days of the referral … acting as an Adjudicator for the purposes of the Housing Grants Construction and Regeneration Act 1996 … reach a decision and forthwith send that decision in writing to the parties."

The clause also allows the parties to agree to an extension of the 28 day period for the adjudicator's decision.  This was in fact done, or at least treated by the court to have been done, and the period substituted was to expire on 22 May 2003.  Although the adjudicator sent a draft of his decision to both parties' solicitors by email on 20 May, it was not until 22 May when the final decision was signed and dispatched using the Document Exchange (DX). The decision (in the claimant's favour) therefore arrived with the parties one day late on 23 May.

The claimants applied to the High Court to enforce the award. The defendants resisted enforcement on the basis that the award fell outside the authority conferred on the adjudicator under the contract due to the fact that it was delivered one day later than agreed. 

The judge considered the interpretation of clause 39A.5.3. He acknowledged that the case was on a "technical" point and accepted the defendants' submission that the effect of the agreement reached between the parties was that both the two stages, i.e. to "reach a decision" and to "send that decision", had to be met within the 28 day timeframe or, as in this case, such further period as the parties may have agreed. The judge commented that there was no reason why the adjudicator could not have sent the final decision by email (as he had done previously with the draft) or fax and therefore have ensured that the decision was not only made, but "reached" as in the meaning given by section 108 of the Housing Grants, Construction and Regeneration Act 1996, namely communicated to the parties within the 28 day period, i.e. before the end of 22 May 2003. However, the key question was whether the adjudicator's error in delivering his award a day late rendered the award unenforceable. 

In making his decision as to whether the adjudicator's award was enforceable, the judge considered the decision of Lord Wheatley in St. Andrews Bay Development v. HBG Management Ltd and Mrs Janey Milligan [2003] ScotCS 103. In this case, Lord Wheatley commented:

"While the failure of an adjudicator to proceed with a decision within the time limits is undoubtedly a serious matter, I cannot think that it is of sufficient significance to render the decision a nullity. The production of a decision two days outwith the time limit provided is not such a fundamental error or impropriety that it should vitiate the entire decision" and a degree of tolerance and commercial practice needed to be afforded to the legislation and the relevant contract. Here the fact that the decision was delivered a day late did not render it unenforceable.

Whilst recognising that timing was integral to the objective of the legislation, the judge stated that "compliance with a time limit is not the dominant and be all factor. That is the production of the decision". It is this decision that the parties have to accept. As the judge commented "notification [of the decision] should follow as night follows day, but the first and primary objective is that the decision should be there within the time limit". 

The judge said that it would not result in a satisfactory interpretation of section 108 to say that the decision was unenforceable solely on the basis that the adjudicator had made a mistake concerning the delivery of the final decision. The underlying purpose of the legislation as the judge put it was to "establish a mechanism for the resolution of disputes, ostensibly arising during the course of the execution of the works (rather than after completion)".

Although, on the facts of this case, the judge held that adjudicator's decision was enforceable, it is worthy of note that the judge took the opportunity to emphasise that time remained very important and that his tolerance would not extent to a period greater than a delay of a day or possibly two in the delivery of a decision. The judge said that he hoped in future cases, whether or not the adjudicator is as close to the time limit as in this case, an adjudicator's decision would not be "simply put in the DX".

This summary was provided by CMS Cameron McKenna LLP.

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