Adjudicator's fairness is put under the spotlight

Adjudicators must insure not only that the adjudication process is fair but also that it is seen to be fair. Knowing how to deal with an attempt to ambush the procedure is essential, writes Daniel Atkinson.

ALTHOUGH some regard adjudication as an interim stage towards litigation, most parties intend the adjudicator's decision to be final.

This can happen only if the adjudicator's decision carries sufficient weight with both parties and that depends on the perceived fairness of the procedure and conduct of the adjudicator.

The importance of the adjudicator's fairness to both parties was demonstrated in a recent case in the Technology and Construction Court. London & Amsterdam Properties v Waterman Partnership showed the high standard of conduct required of adjudicators in a case that hinged on complex questions concerning limitations of time.

Waterman, a firm of structural and civil engineers, was employed by LAP as structural and civil engineer and traffic consultant during the development of Midsummer Place Shopping Centre in Milton Keynes.

When things went awry LAP accused Waterman of professional negligence.

There followed a lot of correspondence between the companies' solicitors until, on February 19,2003, LAP began adjudication.

A timetable was agreed: Waterman was to serve its response on March 7; LAP would reply on April 11; and the adjudicator would give his decision 14 days later.

When LAP served its reply it contained a supplemental statement by a witness, which included considerable evidence that had not been made available to Waterman hitherto, even though it was available at the time of the referral notice.

On April 16 Waterman requested an extension of time to deal with new evidence, and asked that the adjudication decision should be put back to May 23.This would have allowed Waterman to obtain the assistance of its professional advisor.

In adjudications the period for the adjudicator to make his decision cannot be extended without the agreement of the referring party - in this case, LAP. LAP refused an extension.

Waterman objected to the additional evidence on the basis that it had been available to LAP at the time of the referral and LAP had chosen not to use it.

Waterman also pointed out that it had requested the information contained in this new evidence long ago and there was now no adequate time to deal with it by way of expert analysis.

Despite this the adjudicator chose not to deal with Waterman's objections.

The adjudicator gave his decision and ordered Waterman to pay LAP more than £700,000.

However part of the adjudicator's reasoning depended on the material produced in the final stages of the adjudication.

This was the very evidence about which Waterman complained and upon which Waterman had not had a chance to submit expert evidence in reply.

LAP applied for summary judgment to enforce the decision, and so the case ended up before Judge Wilcox in the Technology and Construction Court.

Judge Wilcox observed that the additional evidence was introduced so late in the adjudication process that it could not have been taken into account in Waterman's response. In fact the evidence was not made available until after Waterman's response in which its expert had drawn attention to its absence.

This clearly amounted to an evidential ambush by LAP. The decision to withhold the evidence requested in 2002 was clearly deliberate. The decision to serve the considerable body of detailed evidence at the time of the referral was deliberate. Judge Wilcox generously observed that the omission of the necessary additional evidence may have been merely oversight or neglect.

Nevertheless, the judge held that mere ambush, however unattractive, did not necessarily amount to procedural unfairness. It depended on the case, and how the adjudicator dealt with it would be a test of his conduct in the light of the requirement of impartiality.

In this case the adjudicator did not seem to appreciate that he should consider upon what grounds LAP should be allowed to submit such late evidence. Nowhere in the proceedings did the adjudicator deal with the late evidence, nor did he find that Waterman did not need an extension. He merely pointed out that he did not have power to grant the extension.

Judge Wilcox said that the additional evidence should have been provided earlier in the proceedings and he held that, in accordance with the rules of natural justice, the adjudicator should either have excluded the supplemental witness statement or should have given Waterman a reasonable opportunity of dealing with it.

Under the applicable adjudication rules LAP's denial of an extension prevented the adjudicator from giving Waterman more time. So the evidence should have been excluded.

The adjudicator had avoided a decision as to whether or not the evidence should be admitted and then based his decision on that evidence without giving Waterman an opportunity to deal with it. This, said Judge Wilcox, amounted to a substantial breach of natural justice.

The judge decided that Waterman had demonstrated the adjudicator's failure to act impartially and he refused summary judgment in favour of LAP.

This decision once again emphasises how important it is for adjudicators to manage the adjudication process so as to ensure fairness and impartiality.