ROK Building Limited v Celtic Composting Systems [2010] EWHC 66 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

summary

In this case the Court held that trying to argue that an adjudicator had failed to apply the rules of natural justice on the basis that the weight of evidence was such that no reasonable adjudicator could have come to the decision he reached was “an almost pointless exercise” (given the wide jurisdiction given to the adjudicator to make a decision which is wrong in fact and/or law).  The Court also held that the slip rule in the CIC Model Adjudication Procedure did not give the adjudicator the power to correct his decision so as to wholly reconsider and re-draft substantive parts of it and effectively change his mind on material points of principle.  

Technology and Construction Court, Mr Justice Akenhead

Background

This was another application to enforce an adjudicator’s decision, involving the same parties on the same contract as addressed in Rok Building Ltd v Celtic Composting Systems Ltd [2009] EWHC 2664 (TCC).  Celtic had employed Rok to provide a composting facility pursuant to a sub-contract incorporating the NEC3 form of engineering and construction contract Option B June 2005 with amendments June 2006, as amended by the parties.   On this occasion, the dispute between the parties related to whether or not Rok had completed its subcontract works by a certain date.  Celtic argued that completion had not been achieved at all.  If Rok was right, then Celtic was required to release half of the retention money and it would also impact on Celtic’s entitlement to liquidated damages for delay.  The adjudicator was working to the CIC Model Adjudication Procedure 4th edition, which provided at clause 28 that he had power to correct his decision within 5 days of delivery of the decision to the parties “so as to remove any error arising from an accidental error or omission or to clarify or remove any ambiguity”. 


The adjudicator issued his decision on 1 December 2009, awarding Rok c.£67.5k plus interest and ordering Celtic to pay his fees in the sum of c.£11k.  Celtic e-mailed the adjudicator on the same day to ask him to correct various alleged errors.  Some of these alleged errors were of a clerical nature which were relatively straightforward to correct, but the correction of some other errors would have required the adjudicator to revise payment certificates.  The adjudicator acknowledged that he was entitled under clause 28 of the procedure to correct the clerical errors, and operated the “slip rule” to make good these mistakes.  However, he refused to revise the certificates, arguing that to do so would go to the heart of his decision and would therefore be unjustified.  Celtic subsequently refused to honour the adjudicator’s decision, and accordingly Rok issued proceedings to enforce it by way of summary judgment.    

Issues

The Court addressed the following issues:

  • Whether the adjudicator had failed to apply the rules of natural justice, on that the basis that the weight of evidence was such that no adjudicator acting fairly could have reached the decision which he reached.    
  • Whether the adjudicator had failed to operate the agreed slip rule properly or fairly.

Decision

The Court held:

  • Provided that the adjudicator acts within his jurisdiction, the fact that he has answered the relevant question incorrectly is irrelevant.  The decision is still enforceable.
  • The fact that clause 28 deals with corrections by the adjudicator means that no “slip rule” would be implied, as there can be no implication if there is an express term to similar effect.  In addressing the adjudicator’s power to correct mistakes, there was therefore no need to look beyond clause 28.
  • The adjudicator had not acted contrary to the rules of natural justice.  In coming to this conclusion the Court gave the following reasons:
  • The adjudicator had obviously reviewed the evidence with real care and attention.
  • Trying to argue that the weight of evidence was such that no reasonable adjudicator could come to the decision was “an almost pointless exercise” (given the wide jurisdiction given to the adjudicator to make a decision which is wrong in fact and/or law).
  • The fact that no meeting was held during the adjudication to “test the evidence” was not obvious evidence that the adjudicator failed to comply with the rules of natural justice.
  • Permitting Rok to serve a Scott Schedule with its Reply was not unfair.
  • There was no material misrepresentation by Rok to the adjudicator.  
  • The adjudicator had not acted unfairly or in breach of the rules of natural justice in relation to clause 28, for the following reasons:
  • The adjudicator had a limited discretion under clause 28 to correct his decision.  He had no right to correct so as to wholly reconsider and re-draft substantive parts of the decision and to effectively change his mind on material points of principle.
  • The adjudicator will generally be the person best placed to determine whether there really is an “accidental” omission.
  • There was nothing obviously “accidental” in what the adjudicator had decided.
  • Instead of pointing out in simple terms that the adjudicator may have got the results of his decision wrong, Celtic had instead submitted a complex calculation to this effect, and it was not surprising that even an experienced adjudicator had found it incomprehensible. 
  • Accordingly, the decision would be enforced and Celtic would be required to pay its costs.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

 

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