As those involved in adjudication will be aware, the grounds for challenging an Adjudicator’s Decision are limited. The two narrow challenges are: (i) jurisdictional matters, or (ii) breaches of the rules of natural justice.
The recent case of J J Rhatigan & Co (UK) Ltd (JJR) v Rosemary Lodge Developments Ltd (RDL) in England considers whether the adjudicator’s alleged failure to consider “material” evidence was enough to render the Decision unenforceable. The challenge was framed as a breach of natural justice, with the allegation being that the Adjudicator "failed to deal with a potentially determinative matter".
Dispute
The dispute referred to adjudication related to whether or not there was a binding oral agreement on the value of the final account, encompassing all claims and counterclaims. RDL provided witness statements, with both the Reply and the Surrejoinder (the second and third rounds of submissions for the Responding Party in adjudication) supporting its position that there had not been a binding oral agreement. The “potentially determinative matter” that RDL claimed the Adjudicator had failed to consider was a witness statement provided with the Surrejoinder.
Court’s Decision
The court rejected the challenge and granted summary judgement. In determining the issue, the Technology and Construction Court (TCC) considered the test set out in the longstanding case of Cantillon Ltd v Urvasco Ltd [2008], to decide if the breach was more than “peripheral”, and decided in this case that the second witness statement may have been overlooked, but this was not sufficient to be a material breach of natural justice.
The court also rejected RDL’s submission that a fairly standard paragraph in the adjudicator’s decision in relation to considering all the evidence was incorrect. The court referred back to an earlier case of Balfour Beatty Construction Northern Ltd v Modus Corovest (Blackpool) Ltd [2008] to comment that just because a paragraph is a "standard paragraph" does not mean it is untrue or inaccurate.
Natural Justice or Jurisdiction?
The defendant in this case framed its defence around an alleged breach of natural justice. In support of this position, it referred to the Scottish case of Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers Ltd [2013], where the adjudicator had made an inadvertent error, which was so severe that it amounted to a breach of natural justice. Interestingly, the court commented that such an error was more likely to be an issue with jurisdiction, as opposed to natural justice. This is consistent with the approach taken in recent Scottish cases, where an argument that the Adjudicator had failed to exhaust his jurisdiction by considering one of the Respondent’s key defences has had success (e.g. NKT v SP Power Systems Limited, [2018]). It is possible, although perhaps unlikely, that the court may have approached the matter differently, if RDL had framed its challenge as one of jurisdiction instead of natural justice.
Lessons learned
The lessons learned from this case is that the courts remain supportive of adjudication and adjudicator’s decisions as a whole, and the bar to challenge such a decision is high.
For adjudicators, the case is also a reminder to ensure that you do consider all arguments and evidence provided as part of the adjudication process. A brief paragraph in your Decision stating that this has been done, will go some way to save your Decision if an unhappy party decides to challenge it later. However, that will not always be enough.
For the parties to adjudication, the case is a reminder to consider how to assist the adjudicator in presenting arguments and evidence to reduce the possibility of those being overlooked.