18/03/2015
So far on "ADJUDICATION".....
In this part of our adjudication series we cover the elements of adjudication that all participants are particularly interested in; the decision and how costs are apportioned.
Time Limits for Challenging an Adjudication Decision
The main advantages of adjudication are speed and certainty. In order for these key objectives to be met, an adjudicator is required to reach a decision within 28 days of the referral unless there are exceptional circumstances. An extension of 14 days may be granted if the referring party agrees, and after 42 days the consent of both parties will be required in order for an extension to be granted. If the adjudicator considers the matter too complex to be able to make a decision within 28 days, and he or she cannot gain consent from both parties to extend the time limit, then he or she should decline to adjudicate on the matter.
The 28 day time limit is strictly enforced by the courts. In the case of Mott MacDonald v London Regional Properties 113 ConLR 33 (2007) the court held that an adjudicator’s decision must be delivered by the quickest means available (for example by fax or email) or else it will be deemed a nullity.
The courts have consistently ruled that decisions which fail to be made within the 28 day time frame are a nullity and any interim or partial decision made on the matter will also become a null and void.
Reasons for the Adjudicator’s Decision
Under The Scheme for Construction Contracts (England and Wales) Regulations 1998, an adjudicator must give reasons for his or her decision if asked to do so by the parties; however, there is no general duty to do so if reasons are not requested.
In the case of Carillion Construction v Royal Devonport Dockyard [2005] EWCA Civ 1358, it was held that a brief statement of the reasons for the decision will suffice and only in extreme circumstances would erroneous reasons be considered grounds for the court to nullify an award.
The Impact of the Adjudicators Decision
Unless the adjudicator’s decision is nullified through further litigation, arbitration or an agreement between the parties it is binding. The decision is also binding on any agents of the parties.
Adjudication Costs
Costs in Relation to Construction Contracts Entered into Prior to 1st October 2011
In the case of contracts entered into before the 1st October 2011 costs and fees will be allocated:
Costs in Relation to Construction Contracts Entered into After the 1st October 2011
Costs relating to adjudication proceedings for construction contracts entered into after 1st October 2001 are governed by the now amended section 108A of the Housing Grants Construction and Regeneration Act (HGCRA) 1996. This section prohibits any agreement between the parties concerning adjudication costs except under very exceptional circumstances. The amendments were enacted to end the application of ‘Tolent’ clauses (whereby a clause in the construction contract states that all costs, irrespective of the outcome of the adjudication, are to be borne by the referring party.
In the 2013 case National Museums and Galleries on Merseyside (Trustees of) –v- AEW Architects and Designers Ltd, the Technology and Construction Court (TCC) ordered the Respondent to pay not only a proportion of the claimant’s legal fees but also fees and expenses acquired from the adjudication hearing which occurred prior to the court case. Akenhead J came to his decision after considering the laws relating to foreseeability and causation. Subsequently, in future, if a party to litigation subsequent to adjudication can prove a causal link between the other parties conduct and the need for adjudication proceedings to be brought, and or defended, they may be able to recover the adjudication costs.
The Slip Rule in Adjudication
If an Adjudicator makes a mistake in his or her ruling he or she is entitled to correct it providing it is done so within a reasonable time (usually within a few days of the original decision as illustrated below in the YCMS case). This is known as the ‘slip rule’.
In order for the slip rule to apply the adjudicator must acknowledge that he or she has made a mistake which needs to be corrected.
The slip rule in relation to adjudication was thoroughly reviewed by the TCC in the case of YCMS Limited (trading as Young Construction Management Services) v (1) Stephen Grabiner (2) Mariam Grabiner [2009] EWHC 127 (TCC). In this case Akenhead J concluded the following in relation to the slip rule, after considering earlier cases including Bloor Construction (UK) Ltd -v- Bowmer and Kirkland (London) Ltd (2000) BLR 764.
(a) "An adjudicator can only revise a decision if it is an implied term of the contract by which adjudication is permitted to take place that permits it. It does not follow that, if it is purely a statutory arbitration under the HGCRA (if there is no contractual adjudication clause), such implication can be said to arise statutorily.
(b) If there is such an implied term, it can and will only relate to "patent errors". A patent error can certainly include the wrong transposition of names or the failing to give credit for sums found to have been paid or simple arithmetical errors.
(c) The slip rule cannot be used to enable an adjudicator who has had second thoughts and intentions to correct an award. Thus for example if an adjudicator decides that the law is that there is no equitable right of set off but then changes his mind having read some cases feeling that he has got that wrong, such a change would not be permitted because that would be having second thoughts.
(d) The time for revising a decision by way of the slip rule will be what is reasonable in all the circumstances. In the Bloor case, the Adjudicator revised his decision within several hours and before the time for issuing a decision had been given. It will be an exceptional and rare case in which the revision can be made more than a few days after the decision. The reason for this is that, unlike a court judgment or an arbitration award, a principle purpose of the 1996 Act is to facilitate cash flow. If an adjudicator was able to revise his decision, say, 21 or 28 days later that would necessarily slow down and interfere with the speedy enforcement of adjudicators' decisions. That would in broad terms be contrary to the policy of the Act."
Construction contracts entered into after the 1st October 2011 must include a slip rule provision ( section 108(3A) of the HGCRA 1996).
This post concludes the main part of this series on ‘Adjudication - The Essentials. ’. Next we will publish our top tips relating to adjudication proceedings.
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