Paice v Harding (t/a MJ Harding Contractors)

Citation: [2015] EWHC 661 (TCC); BLR 345

Nature of case:
The Defendant Contractors successfully challenged an adjudicator’s decision on the grounds of bias, in circumstances where he had failed to disclose his knowledge of telephone calls made to his office two months prior to the adjudication, in which the Claimant Employers had spoken at length to his office manager about the dispute. Although the adjudicator (Mr Sliwinski) had not been party to the conversations, he had actual knowledge of the content of them, which went beyond merely procedural matters. The court also upheld an alternative challenge to Mr Sliwinski’s jurisdiction, on the grounds that the issue was the same or substantially the same as had already been decided in a previous adjudication.

Adjudications 1 and 2 related to interim payment applications and, in both, awards were made by Mr Sliwinski in favour of the Defendants. Prior to Adjudication 3, there were a number of telephone conversations made by the Claimants to a manager at Mr Sliwinski’s office, in which the Claimants discussed their disappointment with the previous two adjudications, their dissatisfaction with the advisors they had instructed and also their concerns over the final account claim, which was to become the subject of the third and fourth adjudications. These conversations were “briefly outlined” to Mr Sliwinski.

In Adjudication 3, a different adjudicator awarded the Defendants £397,912.48 representing the full value of their final account claim. There was no decision as to the merits of the valuation as the Claimants had not submitted a valid payless notice and, for this reason, the notified sum was determined to have become automatically payable.

Adjudication 4, to which these proceedings related, was commenced by the Claimants who sought a decision as to the true value of the contract works and also a repayment from the Defendants. Mr Sliwinski was appointed as adjudicator.

Prior to Adjudication 4, Mr Sliwinski did not disclose the fact that conversations had taken place between the Claimants and a manager at his office, nor did he volunteer this information: (i) when emailed by the Defendants who questioned him directly about any contact he had had with the Claimants since the second adjudication; (ii) after being notified by the Defendants of their request for copies of the landline records to be voluntarily disclosed; or (iii) thereafter. The adjudication went ahead and an award was made in favour of the Claimants.

The Defendants later claimed to have received an anonymous letter enclosing two pages of the Claimants’ phone bill which revealed the existence of the phone conversations to Mr Sliwinski’s office.

Coulson J, refusing to enforce the adjudicator’s decision, held that a fair-minded observer would conclude there was a real possibility of bias.

Firstly, Mr Sliwinski should have disclosed the existence of the telephone conversations. These dealt with more than purely procedural matters, he had actual knowledge of their content and this was not a case of inadvertence. The message from the authorities was clear: an adjudicator should not engage in unilateral conversations with the parties because of the obvious risks involved. The perceived mischief in both Glencot Developments & Design Co Ltd v Ben Barrett and Son (Contractors) Ltd [2011] BLR 207 and Woods Hardwick Ltd v Chiltern Air Conditioning Ltd [2001] BLR 23 was the fact that the adjudicator had communicated with one side only, and that the other side did not know what has transpired. Although Mr Sliwinski need not have declined the appointment at the outset, he should have written to the parties, disclosing the conversations, and asking if either of them had any objections to his continuing to act.

Further, even if a fair minded observer would not have thought that this, in itself, was enough to give rise to a real possibility of bias, Mr Sliwinski’s response to the Defendants’ email specifically requesting him to identify any unilateral contact that had taken place, would be sufficient to alter that view. His unequivocal denial, simply asserting that there had been “no contact…at all”, was misleading and would support in the mind of the fair-minded observer the real possibility of bias.

A third relevant consideration was the adjudicator’s explanations, which also made the possibility of apparent bias more, rather than less, likely. He was aggressive and unapologetic in his witness statements, giving the impression that he knew something had gone wrong and had concluded that attack was the best form of defence. He had also been “so concerned to see one side win” that he had supported the Claimants’ application for summary judgment, and did so “in trenchant terms”, which would cause a fair minded observer to think he was at risk of having lost all objectivity.

Coulson J went on to find that the Defendants had not waived their right to allege apparent bias by merely proceeding with the adjudication as, at the time, they did not and could not have known about the content of the conversations, so did not know that the grounds for a natural justice challenge had arisen.

In relation to the Defendants’ alternative challenge to the jurisdiction of the adjudicator, Coulson J found there was a reasonable prospect of the Defendant showing that the issue in Adjudication 4 was the same or substantially the same as the issue in Adjudication 3.

Link to Judgment

Counsel: Piers Stansfield QC appeared on behalf of the successful Defendants.

Counsel

Piers Stansfield QC

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