construction and Engineering Law articles by Michael Reynolds

Contents Editorial: To Bring Justice Within the Reach of All Men 2 Civil Justice Forum: Justice Is Blind 4 The Hamlyn Lectures: Civil Justice 8 Adjudication and Inquisition: inquisito cum promovente Revisited 10 Case Update: No Bond On the Dome 11 Gone With the Wind 12 Holding Out 13 Litigant in Person’s Costs 13 Construction Adjudication: Adjudication: Is There a Flaw in the Logic? Simon J A Tolson 14 Jurisdiction and the Adjudicator - and Then There Were Three Simon J A Tolson 15 Book Reviews 18 Editorial Board Honorary Members: President: The Rt Hon Lord Justice Otton Vice President: HH James Fox-Andrews QC General Editor: Michael P Reynolds, LLM, MSc, FCIArb, Solicitor International: Laure Leserviosier (International Commercial Arbitration Group, Clifford Chance, London) Insurance: Alison Green (4, Field Court) Arbitration: Alan Shilston, BSc, CEng, FICE, FCIWEM, FIHT, FCIArb The information provided and the views expressed in this publication are for further consideration and should not be acted upon without independent consideration and professional advice. The views of contributors are not necessarily those of the Publishers or Editor(s). Neither CLT Professional Publishing Ltd, the Editor(s), nor the contributors to this service will accept any responsibility for any loss occasioned to any person acting or refraining from acting as a result of material contained in this publication. Construction & Engineering Law January / February 2000 Contents Members: Roger Bloomfield BSc, FRIBA, (Bickerdike Allen Partners) Suzanne Burn LLB, LLM, M.Phil, Deputy District Judge Ronan Champion BSc, (Northcroft) Chris Ennis MSc, FRICS, FCIArb, (Northcroft) Dr Robert Gaitskell QC, (Keating Chambers) Fiona Hammond, Solicitor, (BAA) Rudi Klein Joe Jacob, (Law Dept., London School of Economics) Vivian Ramsey QC, MA, CEng, MICE, (Keating Chambers) Nick Stuart BSc, MSc, CEng, MIStructE, FCIArb John Riley (Member, Joint Contracts Tribunal) Leslie Rothwell LLM, MSc, FCIArb, MICE, MIStruct, MCIOB Simon Tolson, Partner, (Fenwick Elliot) Professor Ian Duncan Wallace QC, MA (Oxon) John Wasilewski BSc, CEng, MICE, (Harris & Sutherland) .1 Editorial To Bring Justice Within the Reach of All Men 1 quick to recognise the distinction between party autonomy and the freedom of the parties to present the case as they saw fit in England and the practices of the continental civil law system where the courts do not respect the principle of party autonomy. He also placed high value on the orality principle. He saw the English judge as commanding respect because of his passive and strictly neutral position. He respected the lawyer’s role of representing his client and the lawyer’s freedom to present it as he saw fit. It was his experience that litigants preferred their lawyers to deal with the case rather than the judge; people would only litigate as the very last resort. To mark the end of the century it is fitting to pay tribute to those who are regarded as having made an outstanding contribution to Justice in construction and engineering law and to the legal system itself. Possibly, a senior member of the bar might select an eminent member of the House of Lords such as Devlin, Atkin or Denning. Their place in legal history is undoubted. But for the solicitor he may be minded to select someone at first instance. Someone before whom he appeared and someone who made such contribution to procedural law and someone who unselfishly devoted himself to the enhancement of the Official Referee’s Court. Sir Jack Jacob So far as procedural law is concerned that person would have to be Sir Jack Jacob. He was not only an excellent practitioner and procedural judge but also an academic. He wrote numerous papers on the reform of civil procedure and established an excellent course in the subject at University College London. It was fitting that the law school concerned was named after Jeremy Bentham whose influence on society and the law remains. Sir Jack however had a particular advantage over Bentham: he understood human nature and advocated reform derived from practical experience. He understood the evolution of the law, its essential place in society and that Justice should be accessible to any citizen, a right derived from Magna Carta itself. In his Hamlyn lecture on The Fabric of Civil Justice he said: “what is needed above all today is a breath of fresh air to blow through the corridors of civil justice to de-mystify this process ... to bring Justice closer to the common people.” As a student of the civil justice system he was 2. He recognised clear failings in the system which he sought to redress: the inequality in the resources available to the parties; and the mystique that surrounded the system in the mind of the citizen. He considered the attributes of the continental civil law system and its inquisitorial methods but did not think they would be practical in English proceedings. But twelve years before Lord Woolf’s Final Report he advocated an active role for the courts; that the courts would control the procedure; that the courts would define the real issues between the parties. He advocated the exchange of witness statements and experts’ reports, and suggested that the court should act on its own initiative in calling witnesses and experts. He also suggested that the courts should endeavour to promote settlement or compromise of the proceedings. Despite his preference for orality he foresaw fundamental changes: “The whole thrust of advocacy is likely to undergo a fundamental change as written procedures take the place of oral procedures since orality is the lifeblood of advocacy.” He believed there would always be a place for a specialist Bar. He considered as a matter of practicality that integration of the County and High Courts would become necessary. Such an idea was very much in the minds of jurists when in 1872 the Judicature Commissioners in their Second Report suggested that the County and High Courts should be converged into a single Supreme Court of Judicature.2 He favoured a code of civil procedure in order to obtain: “the actual, palpable and widespread improvement of the quality of Justice, bringing Justice within the reach and the understanding of all and providing a simple Construction & Engineering Law January / February 2000 speedy inexpensive accessible and effective system for its dispensation free from formalism and technicalities.” From a practical point of view he suggested many improvements in the courtroom itself. For instance; that the judges should sit at a lower level and Counsel be seated at tables rather than stand in benches. He suggested witnesses should be seated. In a paper which he prepared for the 10th Common Law Conference in 1980 on the Administration of Civil Justice, he advocated the identification and exchange of witness statements so that the gamesmanship and forensic arts could be avoided. It was in 1978 that he wrote “Access to Justice in England” in which he said: “The fundamental principle of equality for the law becomes the equally fundamental principle of equality of access to the law.” And in his paper, “Justice between Man and Man”, a title he derived from the opening statements of Justinian’s Institutes, he contemplated the new civil procedure rules suggesting that there should be a Code of Civil Procedure which should be imaginative, creative, courageous and constructive. John Newey It was a privilege to often appear before Judge Newey in the mid to late 1980s and more so to complete my arbitration training with him by observing the way he dealt with interlocutory applications on Fridays. He was undoubtedly a good judge and an excellent lawyer, above all infinitely patient. He was devoted to his work and his court and beyond that devoted his energies to improving the system and procedure of the court. Today the court is enjoying many of the benefits he fought hard to achieve. In other words, John Newey clearly had, in the opinion of leading practitioners, the particular qualities of a first rate judge. He understood the legal arguments and the technical facts well, and had that essential quality of the best judges; an understanding of human nature. He had perhaps something more that I detected in my many appearances before him, and that was that he never had to assert his authority with lawyers. He could master the proceedings without any robust interventions. In the best English judicial tradition he would simply enquire in order to clarify and often make practical time-saving and cost-saving suggestions. It was clear in some of the exchanges that he was ever searching for better ways to do things. He would probably have welcomed the Woolf reforms because they are based on the concept of case-flow management which his court had been pioneering in its own way for more than a decade before. In my experience he did not discriminate between solicitor or barrister and always treated the advocate with courtesy and patience. He was a father-like figure of the court who always left a good impression. He was very well liked not only in the profession but outside it and was patron of the South East Branch of the Chartered Institute of Arbitrators. As I told that Branch on the occasion of a tribute to him: the name John Newey would long be remembered for his name was already legend. If that legend means anything to this profession today it means that there will be mutual respect between the judges and the practitioners, whether they be barristers or solicitors. Michael P Reynolds References 1. Epitaph of David Dudley Field cited by Sir Jack Jacob in Civil Procedure since 1800. 2. Second Report of the Judicature Commissioners (1872) c.631, pp. 10, 13, 14, and 19. Construction & Engineering Law January / February 2000 Editorial He studied law at Cambridge and graduated First Class. For some years he was a Treasury Junior and took silk in 1970. He was Head of Lamb Chambers for eight years before being appointed an Official Referee. In the tributes that were paid to the judge at the time of his retirement Mr Anthony Butcher QC said that he had been devoted to “the development of the law along liberal lines”. In his tribute to him Mr Richard Fernyhough QC said that Judge Newey showed “a deep instinct for justice and for where the real merits of the case lay”. John Bishop, the leading construction solicitor in England, paid tribute to the way in which Judge Newey had fought for recognition that the court deserved and the innovative procedures that had benefited its users. He had also been impressed by the judge’s kindness and dedication. Mr Norman Royce, a leading construction arbitrator, spoke of “gifts all too rare in the commercial world - a capacity for warmth and understanding; an openness and lack of self-importance”. .3 Civil Justice Forum Justice Is Blind Nemo Index In Re Sua The maxim nemo index in re sua requires that a man may not be a judge in his own cause. This maxim has been at the heart of the administration of justice for centuries to the extent that the rule denies the Head of State the right to sit in her own courts to administer justice.1 The credibility of the judiciary cannot be discussed without reference to it. Various appeals concerning alleged bias were heard in the Court of Appeal on 17 November 1999. The Court consisted of the Lord Chief Justice of England, the Master of the Rolls, and the Vice Chancellor of the Chancery Division. They had five different but consolidated applications for permission to appeal on grounds of bias. The applications were listed together because they raised common questions concerning disqualification of judges on grounds of bias. Such appeals are very rare but are of considerable public concern and interest. Such matters go back to the Magna Carta itself, to the fundamental freedoms and rights of the citizen and fundamental aspects of human rights. It is a matter that has concerned many judges including Lords Denning, Diplock, Cooke CJ, Blackburn and Mansfield, as well as the writings of Hobbes. It is a subject therefore striking at the heart of the law and the constitution. The Lord Chief Justice, Master of the Rolls and Vice Chancellor, have reiterated this fundamental principle not only for Judges of the Civil and Criminal Courts but also for all those who act in a judicial capacity, lay justices and jurors. Any such person who allows any judicial decision to be influenced by partiality or prejudice violates one of the most fundamental principles underlying the administration of justice. Where such prejudice or partiality is shown the litigant will have irresistible grounds for objecting to the trial by that judge (if objection is made before the hearing) or for applying for judgment to be set aside. Proving actual bias is very difficult. On proof of requisite facts, the existence of bias is effectively presumed and gives rise to automatic disqualification, e.g. where a judge is shown to have an interest in the outcome of 4. a case. Their Lordships referred to the leading case where a judge is shown to have an interest in the outcome of the matter which he has to decide or has decided. In Dimes v Grand Junction Canal (1852) 3 HL Cas 759, an action was brought in the Court of Chancery by a public company in a matter affecting the interests of the company. The case was tried by the Vice Chancellor of the Court and on appeal by the Lord Chancellor who affirmed that decision in the company’s favour. Unknown to the defendant the Lord Chancellor owned 90odd shares in the canal company. Dimes issued further proceedings and the House of Lords set aside Lord Cottenham’s Decree on the basis that the Lord Chancellor was disqualified on the grounds of interest and not according to law. Lord Campbell giving judgment said that that would be a lesson for all inferior tribunals to take care not only that in their decrees they are not influenced by personal interest, but to avoid the appearance of labouring under such influence.2 The rule has been expressed differently over the years. In R v Rand (1866) LRI QB 230 Blackburn J said: “There is no doubt that any direct pecuniary interest, however small, is subject to enquiry, and does disqualify a person acting as a judge in the matter.” In R v Camborne Justices ex parte Pearce [1955] 1 QB 41 Slade J said: “It is, of course, clear that any direct pecuniary or proprietary interest in the subject matter of a proceeding, however small, operates as an automatic disqualification.” Their lordships said: “The basic rule is not in doubt. Nor is the rationale of the rule; that if a judge has a personal interest in the outcome of an issue which he is to resolve, he is improperly acting as judge in his own cause; and that such a proceeding would, without more, undermine public confidence in the integrity of the administration of justice. Dimes v Grand Junction Canal (1852) 3 HL Cas 759 at 793 and R v Gough [1993] AC 646 at 661 per Lord Goff of Chieveley. The automatic disqualification factor was expressed by Winneke P in the Victoria Court of Appeal in Clenae Pty Limited and others versus Australia and New Zealand Banking Group Limited [1999] VSCA 35 (Supreme Court of Victoria) where he said that it was not the mere shareholding held by a judicial officer which constituted the disqualifying pecuniary interest, ‘but rather Construction & Engineering Law January / February 2000 regard (or have unfairly regarded) with favour or disfavour, the case of a party to this issue under consideration by him.” it is the potential interest’ created by that shareholding in the subject matter or outcome of the litigation which is the disqualifying factor.” The point of public concern was expressed by Lord Hutton at page 293 who observed that where a Judge had a strong commitment to some cause or belief or association with a body or person involved in the litigation it could shake public confidence in the administration as much as a shareholding (which might be small) in a public company involved in proceedings. The test of bias has previously been expressed in various cases: a reasonable suspicion or apprehension of bias in Law v Chartered Institute of Patent Agents [1919] 2 Ch 276 at p. 290; R v Sussex Justices ex parte McCarthy [1924] 1 KB 256 at 259; real danger or likelihood of bias in R v Gough.3 Lord Goff in his judgment said that justice “must manifestly be seen to be done”. Further in his judgment Lord Goff referred to: “the test in terms of real danger rather than real likelihood to ensure that the Court is thinking in terms of possibility rather than probability bias. Accordingly having ascertained the relevant circumstances there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly The Lords Justices having considered their authorities then went on to say: “Provided the Court personifying the reasonable man takes an approach which is based on broad common sense, without inappropriate reliance on special knowledge, the minutiae of court procedure or other matters outside the ken of the ordinary, the reasonably well informed member of the public, there should be no risk that the courts will not ensure both that justice is done and that it is perceived by the public to be done.” In reviewing judicial conduct, the reviewing court will not have regard to any statement made by the judge concerning the impact of knowledge on his mind or on his decision. The burden is on the court reviewing the judge’s conduct to assess the risk that “some illegitimate extraneous consideration may have influenced his mind”. Solicitors as Judges The solicitor who becomes a judge may have a more difficult time than a barrister, albeit barristers chambers, which are becoming very large, may soon develop partnerships of their own or merge with solicitors as economic factors dictate in future. If the solicitor is a partner or remains a partner after a part-time judicial appointment he is still legally liable for the acts of his partners. The question which concerned the court was whether the partner owed a duty to clients of the firm for whom he or she personally may never have acted and of whose affairs he or she personally may have known nothing. The court was careful to safeguard the integrity of the court but at the same time recognised that the rules were not unfairly applied against solicitors in such a way as “to inhibit the increasingly important contribution which solicitors are making to the discharge of judicial function”. The court had some concern over solicitors as part-time judges in civil rather than criminal cases. However, the concern can be overcome very simply by the solicitor conducting a conflict search in the firm. The same difficulty may face a barrister, but the difficulty for both lies in the existence of remote indirect associations which may not be so readily identifiable by a search or check. In these circumstances the judge concerned would disclose such interest if and when it became known to him. Construction & Engineering Law January / February 2000 Civil Justice Forum Their lordships also considered other recent authority from South Africa and New Zealand that supported a “diminimus” exception where the potential effect on a judge’s decision is so small as to be incapable of affecting his decision one way or the other, but they went on to say: “bearing in mind the rationale of the rule, that any doubt should be resolved in favour of disqualification”. Where the judge’s interest was derived from a family link that link would have to be “so close and direct as to render the interest of that other person, for all practical purposes, indistinguishable common interest of the judge himself”. The automatic disqualification does not end there. In R v Bow Street Metropolitan Magistrates ex parte Pinochet Ugarte (No. 2) [1999] 2 WLR 272 the House of Lords said the disqualification extended to a limited class of non-financial interest. Lord Browne Wilkinson, the most senior judge in England, said that if the interest was concerned with “the promotion of the cause, the rationale disqualifying a judge applies just as much as if the judge’s decision would lead to the promotion of a cause in which the judge is involved together with one of the parties”. .5 Civil Justice Forum What the Judge Should Do Decisions on the Case In automatic disqualification cases the judge should excuse himself as soon as he knows. The judge should do this before objection is raised or where he feels embarrassed for hearing the case for personal reasons. If the judge knows of or becomes aware of any matter which arguably could be said to give rise to a real danger of bias it is generally desirable that disclosure should be made to the parties in advance of the hearing. The judge should not yield to any tenuous or frivolous objection. On the other hand, he should not ignore an objection of substance. Factors Not Giving Rise to Bias The Court of Appeal could not give an exhaustive list of factors that would not give rise to bias, but subject to the particular facts and nature of the issue to be decided it could not conceive of circumstances in which objection could be soundly based on religion, ethnic or national origin, gender, age, class, education or employment, background of the judge, extra curricular utterances (whether in text books, lectures, speeches, articles, interviews, reports or responses to consultation papers); or previous instructions to work for or against any party, solicitor or advocate engaged in a case before him, etc. Factors Giving Rise to Bias However, the court considered that a real danger of bias could exist if there were a personal friendship or animosity between the judge and any member of the public involved in the case, or if the judge had pronounced on the person’s credibility in a previous case, or if the judge expressed extreme views in unbalanced terms as to throw doubt on his ability to try the issue with an objective judicial mind, or there was other reason to judge the objective reason of the judge. Judges’ Duty If before a matter has commenced, the judge is alerted to a matter which might throw doubt on his ability to act, the judge should enquire into the full facts so far as ascertainable in order to make disclosure. If the judge knows something he should disclose it, but he cannot disclose what he does not know. 6. Having considered the general principles applicable, the Court then gave its decisions in several appeals before it: Locabail (UK) Ltd v Bayfield Properties Ltd & Another Locabail (UK) Ltd & Another v Waldorf Investment Corporation & Others In this case Mr Lawrence Collins QC, solicitor and deputy High Court Judge, a senior partner and the former head of Herbert Smith’s litigation and arbitration department, disclosed to counsel before him in this case that his firm at one time had attempted to get a bankruptcy order against one of the parties. Neither counsel took any objection on the point. It was denied there was any conflict of interest between Mr Collins position as a judge and that as a partner in his firm. The Court of Appeal considered the R v Gough test and found that there was no real danger of bias. The deputy judge did not know the facts that would give rise to a conflict of interest. The court did not consider that the discovery of a conflict of interest which under The Law Society rules would disqualify a solicitor from acting for one or other of the parties to a case necessarily bars the solicitor from hearing the case as a deputy judge or requires a hearing already started to be aborted or a judgment given on the case to be set aside. Everything depends entirely on the facts and circumstances of the case. In this case there was no real danger that the judge had been biased. Timmins v Gormley This was an appeal against a Recorder at Liverpool County Court on the grounds of bias or apparent bias. The Recorder concerned is a consultant editor of Kemp and Kemp. He wrote an article for The Lawyer on 21 June 1999 after he had given judgment in favour of a claimant in a road traffic personal injury case. In the article the judge had referred to Access to Justice being likely “to remain a dream”. The article suggested that the adversarial system was inconsistent with the new culture and the article continued to be critical of the “delaying tactics” of insurers. The court referred to another article in which the Recorder considered the decision in Wells v Wells [1999] 1 AC 345 to be a “wonderful victory” for claimants generally. The two articles generally demonstrated the Recorder’s sympathy for personal injury claimants and reservations about the change of culture. Construction & Engineering Law January / February 2000 The Recorder wrote another article in the Personal and Medical Injuries Law Letter which according to him had lessons for plaintiffs’ lawyers concerning the intimidatory tactics of the defendants and suggesting that a properly prepared and researched claim by the plaintiffs ought to succeed. was a former Inland Revenue employee who had not dealt impartially with the applicant’s claim for discrimination against the Board of Inland Revenue. The Court considered that it was fanciful to suggest that the Chairman’s decision was affected in any way by his employment with the Revenue 30 years before. The court had to consider the weight which would attach to such articles to see whether they showed a real danger of bias. R v Bristol Betting & Gaming Licensing Committee ex parte O’Callaghan The Lords Justices said: “Anyone writing in an area in which he sits judicially has to exercise reasonable care not to express himself in terms which indicate that he has preconceived views which are so firmly held that it may not be possible for him to try the case with an open mind ... The specialist judge must therefore be circumspect in the language he uses and the tone in which he expresses himself. It is always inappropriate for a judge to use intemperate language about subjects on which he has adjudicated or will have to adjudicate.” “an ill defined line beyond which the expression by a trial judge of preconceived views about the reliability of particular medical witnesses could threaten the appearance of impartial justice.” The Court of Appeal considering the applicable authorities had difficulty with this case. There was in their opinion a real danger of bias. They took a broad common sense approach, whether a person holding the pronounced pro-claimant anti-insurer views expressed by the recorder in the articles might not unconsciously have leant in favour of the claimant and against the defendant in resolving the factual issues between them. They concluded, not without misgiving, that there was on the facts, a real danger of such result. Williams v Inspector of Taxes In this case the Chairman of an industrial tribunal was challenged on the basis that he Comment In dealing with this particular appeal the Lords Justices gave some very interesting pronouncements concerning the writing of articles in legal journals, books and reports and the giving of opinions and difficulties that may arise. Sometimes publication can be hazardous not only for judges but for experts who may be cross-examined on previous published opinions. But for judges the tradition is as ancient as Bracton and de Glanville’s Treatises and as modern as Goff and Jones, Dicey & Morris and Keating. It is not inconsistent with the holding of judicial office or the discharge of the judicial function. However, authors must be careful to present a view which will not impinge upon the exercise of the judicial function. It is therefore sometimes difficult for judges to write and yet it is only they who can truly give authoritative experienced guidance e.g. Coke, Blackstone, Construction & Engineering Law January / February 2000 Civil Justice Forum The court went on to refer to Vakauta v Kelly [1989] 167 Crim LR 568 in which the High Court of Australia dealt with some intemperate judicial remarks by the trial judge about medical evidence in a personal injury action. The majority of that appellate Federal Court held that intemperate remarks would have given the parties a reasonable apprehension of prejudice. They considered that there was: This case concerned the Judge in Charge of the TCC, Mr Justice Dyson, who had dealt with an application by the appellant for an order extending time in which to challenge a decision of the Bristol Betting and Gaming Licensing Committee by way of judicial review. The application before Mr Justice Dyson was without merit and time was not extended. Subsequently the appellant read an article in the Sunday Times which stated that the judge was a director of a property company, one of whose tenants was the bookmaker whose licence the appellant had wanted to revoke. The company was a family property company formed several years before by the judge’s parents in which he, his mother and brother were directors. The judge took no part in the management of the company. At the time the judge dealt with the case he had not known that his family’s company had let property to the particular tenant. The judge’s interest was indirect and nominal. There could be no danger of bias. No reasonable or fair-minded person sitting in court and knowing the relevant facts would have considered there was a real as opposed to a fanciful danger of a fair trial not being possible. .7 Civil Justice Forum 8. and Wright. It is only, it is suggested, in a tiny minority of cases that conflicts may occur. If it were otherwise then legal literature and the courts themselves would be seriously impeded with a lack of authoritative guidance as would all students of law. The law would never advance. Perhaps if Gaius and Justinian had never bothered to codify the Roman law we would never have had that particular civilisation for so long. One therefore hopes that whatever the outcome of the appeal in Timmins v Gormley such experienced authors will continue to contribute to our understanding of the law without unnecessary bias or prejudice. In those exceptional cases where judges should take a lead, e.g. constitutional matters and access to justice, it is The Hamlyn Lectures: Civil Justice This year Professor Michael Zander QC, Emeritus Professor of Law at the London School of Economics, University of London, gave this series of lectures. This annual series of lectures is shortly to be published. The lectures derive from a scheme approved by the Chancery Division of the High Court in November 1948 by virtue of which a charitable trust was set up to develop the knowledge and understanding of comparative jurisprudence and ethnology of European States. It is fitting that it was Professor Zander QC who gave this series devoted to the important subject of civil justice. He has long been a campaigner for civil justice reforms in England and someone who in his academic career has made an outstanding contribution not only in terms of his writings but also, and especially, in the way in which he has inspired many of his students and members of the profession to seek better standards of justice in practice. These lectures have been delivered by the most eminent in the profession and academia, including Lord Denning, Professor Glanville Williams, Lord Devlin, Professor C H S Fifoot, Sir Robert Megarry, Henry Cecil, Sir Rupert Cross, Sir Otto KahnFreund, Lord Scarman, Sir Desmond Heap, Professor Sir William Wade, Sir Gordon Borrie, Professor P S Atiyah, Sir Jack Jacob, and Lord Woolf. hoped they will continue to do so in line with the noblest traditions of the English judiciary. Michael P Reynolds References 1. Professor Paul Jackson. “Natural Justice.” Modern Legal Studies, Sweet & Maxwell (1979) p. 27. 2. Six years after this case Lord Wensleydale refused to hear an appeal because he had shares in the appellant’s company. London and North Western Railway Company v Lindsay (1858) 3 Macq 59. 3. Op cit. In his second lecture, given at the London School of Economics on 23 November 1999, Professor Zander referred to some of the changes that have taken place recently in the civil justice system. He noted that in the last 100 years there had been 60 reports into civil justice and that Access to Justice, Lord Woolf’s Report, would not be the last. He further noted that in terms of jurisprudence there had been a curious neglect of this subject. A reason for this may be that of all those who have rights to make a claim, empirical evidence suggests only one in seven do so. He referred to Professor Hazel Genn’s recent survey, Paths to Justice (260pp), where there was a sample of 4000 persons and interviews with 1100. Interestingly, 95% of those questioned had tried to do something and deal with the problem. Mostly they tried to take direct action. Sometimes they got results, sometimes they did not. One third of the disputes were resolved by agreement, and 50% of the people in those cases had received advice. Some disputes were resolved by adjudication. But in over half of the cases there was no result. This was curious bearing in mind that one fifth of all respondents were aware of the Citizen’s Advice Bureau and its facilities. Nine out of ten received advice. Professor Genn’s study suggests that most people do something, namely complain, but very few use the resources of the legal system and most give up. Professor Zander questioned whether this was a good or a bad thing. What most people seemed to be concerned about was time, cost and stress. Professor Zander considered that ADR was the flavour of the month. However, it did not appear from Professor Gann’s survey to be Construction & Engineering Law January / February 2000 particularly popular with litigants because only 5% of litigants appeared to be taking to mediation. It is questionable whether ADR can save costs. If the parties agreed to mediate and come to a settlement, that may well save costs; if the parties litigate, then try and mediate, and there is no agreement, costs are increased. Professor Zander referred to the Rand Corporation study in the United States, a study of ten thousand cases which indicated that there been no fundamental shift towards ADR and that the pyramid structure of litigation would remain. This was supported by the recent study carried out by Professor Hugh Collins. It is proposed that the civil justice system in England and Wales be self funding. Indeed it has been suggested by the Lord Chancellor that the further on in the case litigants get, the higher the court fees. This would seem to be contrary to the whole basis of the civil justice system as has existed in this jurisdiction for centuries. Professor Zander considered this to be highly objectionable. Under the new rules the courts may not be consistent as between procedural judges; some judges may take a different approach to others as their particular interpretation of a particular rule. How can allocation of costs be just when the criteria for the award of costs is subjective and wholly imprecise? Do the new rules as to allocation of costs not create further uncertainties and difficulty for lawyers in how they advise their clients as to the likely outcome of costs applications? There may also be difficulty for the judge in getting the allocation of costs right. The key test for the Civil Procedure Rules according to Professor Zander amounts to this: do their strengths outweigh their weaknesses when compared to the Rules of the Supreme Court? Editorial Comment Professor Zander has raised many issues for Professor Gann’s study is interesting because it possibly suggests the limits to which Access to Justice has gone. It means that for a high proportion of the population access to justice is not a reality. People do not want to make the effort or give the time or money to get redress for infringement of their rights in court or by other means. That will remain the case whatever publicity is given to whatever means of dispute resolution. The problem was articulated by Professor A V Dicey KC, Vinerean Professor of Law, University of Oxford, almost a century ago, and remains one of understanding and education. In practice one sometimes finds the small builder who takes issue with a stronger commercial party and who is quite incapable for commercial/ financial reasons of pursuing the case to a satisfactory solution. There are two primary reasons for this: a failure by the State to provide the financial safety net for access to justice and the costs indemnity rules whereby the losing party pays the other sides costs. The costs risk is too great despite the new allocation of costs provisions. The costs risk is double that in the United States where each side pays its own costs. That may not be good for the winner but at least there is more certainty in the system. Secondly the almost total withdrawal of legal aid from the poorer classes of contractor and even from the middle class contractors and employers who would not be able to devote adequate resources to the disputes process. These litigants will have more reason to avoid litigation, arbitration and other means of dispute resolution. In a sense people will only go to litigation if they have to and when all else has failed. But then that is how it should be; the difference here in England is that the State appears to be asking a high price. It is trite law that parties freely entering into a contract are bound by the obligations they give to one another so that if they agree to resolve their disputes in a certain manner the law recognizes their right to do so and will not force them to use courts. These days lawyers advise on a wide range of disputes procedures. Indeed many lawyers promote particular forms of disputes procedures fearing perhaps that the traditional work of lawyers in the courts will be less and that there is more work to be had in ADR. The problem is, as Professor Zander rightly identifies, that this is “the flavour of the month”. Lawyers must be careful in advising Construction & Engineering Law January / February 2000 Civil Justice Forum The new Rules had been in operation for several months and the feeling generally was “so far so good”. However, Professor Zander had concerns about increased costs through observance of pre-action protocols and the unnecessary effect of front-end loading of cases to comply with the protocols. How can this be justified in the sense that cases might otherwise settle without such preliminary work? It maybe that parties will spend more than they did formerly before they are able to settle. debate affecting civil justice as a whole. In so far as his comments may have implications to practitioners in this field it is right that they be carefully considered at a practical and economic level. .9 Civil Justice Forum 10. on alternative means of dispute resolution because of the risk of error; for example failure to learn of the relevant facts; incorrect weighing of facts; lack of expertise; scarcity of time and lack of thoroughness in investigation.1 The penalisation of litigants with higher court fees the further they go in the process would seem to inhibit justice rather than provide access to it. The strict adherence to timetables and robustness of judges may be considered essential in attempting to curb procedural delay and to prevent others in having to wait too long to get a hearing. Nevertheless, the question of fairness and balance must be considered along with practical experience. A procedural judge can be fair as well as being robust and keep to a timetable. As Professor Adjudication and Inquisition: Inquisito Cum Promovente Revisited Zander said, he can do that by regarding Rules as guidelines and not trip-wires. Michael P Reynolds The Editor would like to thank Professor Michael Zander, Professor of Law, London School of Economics, for his kind permission to use the material quoted. The full series of his lectures is expected to be published by Sweet & Maxwell in March. References 1. All these were identified as early as 1979 by Professor Earl Johnson Jr, Professor of Law, University of California, in his contribution to Volume III of Access to Justice: Emerging Issues and Perspectives Typology of Possible Strategies. the witness statements were treated as testimony, the English judge treated such evidence as mere accusation. Having made his enquiries the judge then proceeded to hear the evidence and give judgment. The essential saving feature of English practice was that the judge actually saw and heard the witnesses (jurors) give their evidence and was able to form a view as to the credibility of a witness and evaluate the weight of that evidence. Section 108(2)(f) of the Housing Grants Construction and Regeneration Act 1996 provides that the adjudicator can take the initiative in ascertaining the facts and the law. It appears he can adopt an inquisitorial approach. Inquisitorial procedure is not unknown under English law, but those who framed the legislation were probably unaware of the trials and tribulations of its evolution in England. It should be noted that such an exceptional process was applicable in the criminal and heretical cases where there were different burdens of proof for crime committed by “thought”. Such extremes of torture as were practised in other jurisdictions implementing the inquisition were not known in the practice of English law. On the civil side certain inquisitorial methods were featured in the system but they were balanced so that a defendant had a fair chance to put his case. It is well to remember that inquisition, according to Pollock and Maitland,1 was introduced to English law by Pope Innocent III. The judge proceeded ex officio of his own a motion or at the suggestion of the claimant (inquisito cum promovente). He collected witness statements which were not shown to the defendant and of which the defendant had no notice. The process was secret with appalling consequences for the defendant. The Papal Decree was interpreted more pragmatically in England by the Judges and modified by King Henry II. In practice the English judge was fairer than his continental counterpart because, whereas on the continent The history and practice of the English legal system has been based on the idea of fair trial since Magna Carta and before. English lawyers may therefore have historical reasons to be concerned about the practices of adjudicators who may think they know what ‘inquisitorial’ may mean but are ignorant of the context in which English law has dealt with it. Whilst such practices undoubtedly got a bad name in the excessive practices of the civil law in continental systems, equity seems to have prevailed in England in its subsequent adoption in the Chancery Courts. What adjudicators in this jurisdiction will have to watch is the application of the Human Rights Construction & Engineering Law January / February 2000 Act 1998 which in many ways reflects traditional English principles of fairness. The recent warning given by Judge Anthony Thornton QC2 in his lecture to the Society of Construction Law should be noted by all engaged in adjudication. Under Article 6 of the Act an applicant is entitled to access to a court that is both realistic and effective, to a fair public hearing at a reasonable time, to a fair public hearing that embodies both equality of arms and a reasoned decision. According to Judge Thornton the position may be tricky because the adjudicator may be fulfilling a function of a public nature or may be acting in the nature of an administrative decision-maker. The parties must therefore be provided with convention rights and failure to do so may render the process in breach of the convention. Breaches of the convention might arise in failure to follow the Housing Grants No Bond On the Dome Koch Hightex GMBH v New Millennium Experience Co Ltd Facts The contractor claimants appealed from an order of Mr Justice Lindsay who struck out the claim for monies due under the contract for the construction of the roof of the Millennium Dome. The claimants failed because the defendant was held not to be under any liability because of the claimants’ failure to provide forms of bond and guarantee required under the contract. The contract expressly provided that the provision of the documents was a condition precedent to any liability on the part of the defendant. The claimants admitted that their remedy was not barred by reliance on the facts. They submitted that they In the historical context one can anticipate why an English court would not be too sympathetic to an over-zealous inquisitorialstyle process. Michael P Reynolds References 1. Source: History of English Law, Pollock and Maitland, Vol II, p. 657, Cambridge University Press, 1923. 2. The Human Rights Act and Construction Disputes, HHJ A Thornton QC, Lecture to Society of Construction Law, 5 October 1999. had tendered for work on the dome roof. They had received a Letter of Intent which was to precede the building contract. The contractors started to build the Dome roof. They entered into the contract which contained a provision for the bond and guarantee and purported to make such provision a condition precedent to any liability on the part of the employer. Another condition gave the employer the right to determine without cause upon payment of compensation. Shortly afterwards the employer changed its mind and decided to use another material for the roof. The claimants were in the process of doing the work and preparing the documents. The claimants thereupon claimed compensation in the sum of £2.2 million. The defendant rejected this claim on the basis that the claimants had failed to fulfil the obligation to provide the bond and guarantee. The defendant applied to strike out the claim whilst the claimants cross-appealed for an interim declaration under Rule 25.1(1)(b) of the CPR, as to whether the claim was barred by the condition precedent. Mr Justice Lindsay dismissed the claimants’ application and struck out the claims. The Court of Appeal decided that the defendants case was misconceived. The Court considered the real issue here was not the matter of the clause creating a contingent condition precedent or a promissory condition but the more fundamental question on the Construction & Engineering Law January / February 2000 Case Update In this case the Court of Appeal (Civil Division) held that the failure of a claimant contractor to provide a performance bond and guarantee could not be relied upon where the building contract had been determined for reasons other than failure to provide the bond or guarantee. Construction and Regeneration Act itself, the use or abuse of power under the statutory scheme, and from the way the adjudicator conducts the process itself. .11 Case Update facts of the case as to whether the parties had intended the provision of the documents was so fundamental that the result of failure to provide them would be that the contractor would lose its right to payment under the contract and under the letter of intent. To the Court of Appeal this represented ‘commercial nonsense’ because on a true construction of the contract the parties could not have intended Gone With the Wind Michael P Reynolds The case was appealed because an agent of the MOD gave an instruction within a condition 7(1)(a) GC/Works 1 (Ed 2) as to a variation modification or substitution of work under the contract. D&D also appealed on the grounds that MOD had waived their rights. Remedial Work Scott Wilson Kirkpatrick & Partners v Dean and Dyball Construction Ltd & the Ministry of Defence In Scott Wilson Kirkpatrick & Partners v Dean and Dyball Construction Ltd & the Ministry of Defence, CA, 30 November 1999, the defendants were not liable in respect of the repair for works done to a higher standard than their contractual obligations required. Facts In 1993 the roof of No. 1 slip dockyard in Plymouth was blown off in a wind gust. Both the consulting engineers Scott Wilson Kirkpatrick Partners (SWK) and Dean and Dyball Construction Limited (D&D) were held to be jointly liable for damages for loss by Mr Recorder Bruce Coles QC. D&D appealed on issues of liability, quantum and apportionment of blame. It was required to show the Court that the contractual obligations were varied or that the MOD precluded itself from insisting on these obligations or from alleging breach. The judge held that D&D were in breach of Condition 13 (4) GC/Works 1 requiring D&D to execute the works “in a workmanlike manner” and for breach of an obligation contained in notes to a drawing by way of an instruction to “ensure boarding rafters purlins and other materials” were well fixed as existing. The Court found that the roof came off because of inadequate fixings and that the contractors, who could have used nine-inch cut nails, had used only four-inch long galvanized nails which insecurely fastened the roof so that it became detached under wind pressure. 12. that the contract should have that effect. They also said that in terminating the contract for reasons other than failure to provide documents the defendant had waived the claimants’ failure in that regard and triggered the contractual obligation to make compensation payment. When the roof was rebuilt the purlins were affixed to the main frame rafters using straps, saddles and bolts in addition to nails. The defendants argued that these materials were betterment and added an extra cost of £27,285.28. The judge held that MOD acted reasonably and awarded damages for that sum against D&D. The Court of Appeal considered the judge’s findings and his award of damages. In the court’s opinion the judge in the first instance came to the right decision on condition 7(1) and concluded that the contractors should have executed the works in a workmanlike manner ensuring the boarding, rafters, purlins and other materials were as well fixed as the existing ones. The court did not find there was ever any instruction to vary or modify. So far as the agent was concerned the agent’s words and conduct did not constitute any representation. There was no waiver or estoppel by the MOD. The Court said that conduct confirming or encouraging another party to think that what would otherwise be a breach would not be treated as such, could be expected to have a greater clarity than was present in this case. The Court on this point distinguished Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] 1 QB 84. The Court found difficulty in relying upon the agent’s supervision to inspect and discover defects in the fixing members. The contractors had not demonstrated how any or all written representations by the agent and any reliance thereon by the contractor could make the Construction & Engineering Law January / February 2000 MOD insistence on performance of D&D’s contractual responsibilities inequitable. The estoppel was also rejected. The Court considered that the judge of first instance was in error in considering whether MOD had acted reasonably in undertaking remedial works in 1993. There was no reason for this work to be upgraded at the contractors’ expense. D&D’s cross-appeal on quantum of damages was allowed. Finally the Court upheld the finding of Mr Recorder Coles on the apportionment of 50/50 responsibility for each party. Comment Holding Out work for a development. The partnership comprised of D1 and D2. D1 alleged he was a sole trader and that D2 was his subcontractor. The evidence included a letter heading of the firm’s notepaper showing D1, D2, and H, with whom the claimants had reached a settlement discontinuing proceedings. Wendover submitted that both D1 and D2 had held out D2 as being part of the firm, under s 14 Partnership Act 1890, or at common law. D1 alleged the contract was not made with Wendover but with the second claimants. Upon hearing the evidence on the preliminary issue the Court was satisfied that there was an Appointment dated 9 February 1996 between RFP and Wendover. The evidence of the letter heading left little doubt that RFP were holding out D2 as a partner. Wendover had no knowledge of D1’s sole trader status and thus were entitled to rely upon the holding out. In addition the court considered there was sufficient evidence of equitable estoppel. Wendover Developments Ltd and London and Newcastle (Holdings) PLC v John Asquith Fish and TCM Fidler Judge Anthony Thornton QC gave judgment in this action on 23 November 1999. The case concerned the issues as to when and between whom a contract for structural engineering services had been made and whether the second defendant had been held out as a partner of the first defendant so as to be jointly liable in negligence. Wendover alleged that RFP (Robert Fish & Partners) had been engaged under the terms for an appointment to provide all relevant structural engineering design and supervision Dick Lucien Chitolie v H M C & E Clearly in this case the builder was bound as at the date of the contract by the current code of practice and not by any subsequent codes. Michael Reynolds Michael P Reynolds was entitled to an assessment of his costs based on provable lost earnings, or two-thirds of the fees that a lawyer would have charged, whichever was the lower, and £9.25 per hour for work carried out. The appellant’s costs in this matter were assessed at £160 on 17 hours work at £9.25 per hour. Rule 48.6 and Practice Direction 48 of the CPR were applied (Costs: Special Cases). In Dick Lucien Chitolie v H M C & E the Court of Appeal held that a litigant in person Construction & Engineering Law January / February 2000 Michael P Reynolds Case Update Litigant in Person’s Costs This case raises interesting questions of a technical and legal nature. First, as to the proper method of repair and remedial standards and next as to responsibility to comply with Codes of Practice. .13 Construction Adjudication Adjudication: Is There a Flaw in the Logic? In previous columns in this journal we have looked at the steadily developing law that is being handed down, mainly by the Technology and Construction Court, in the field of adjudication. This applies particularly in relation to the question of enforcement and recent jurisdictional points which have been taken by parties to try and prevent a decision perceived to be bad from seeing the light of day. By and large some pretty major markers have been set down to the effect that the courts will largely uphold the process of adjudication, in the spirit intended by parliament, save where there might be a palpable lack of jurisdiction.1 Until very recently, there was little or no reported authority on the courts’ attitude to adjudicators’ decisions which are flawed not on grounds of jurisdiction but on technical inaccuracy. In other words getting the number work wrong. As many readers will know, unlike arbitration, where there is a slip rule under section 57 of the Arbitration Act 1996 there is nothing comparable in adjudication. At least not unless it is expressly provided for in the contract or rules governing the adjudication regime. Parliament fully anticipated that because of the nature of adjudication, which subject to certain exceptions requires the adjudicator to reach his decision within 28 days, the result of this might lead on occasion to mistakes. That is why by s 108(4) an adjudicator is not liable for making an error including getting his maths wrong unless this is the result of some act of bad faith. This immunity also extends to his employees or agents, usually consultants the adjudicator may have turned to in helping him ascertain the facts and the law. In the case of Bouygues UK Limited v DahlJensen UK Limited, Mr Justice Dyson had to grapple with this very issue. The adjudication was run under the CIC procedure with a solicitors adjudicator appointed. The facts briefly were these. Bouygues were the Main Contractor for a project at Cornwall House, Kings College in London, and Dahl-Jensen were appointed as M & E domestic subcontractors to Bouygues. Whilst the contract was entered into before 1 May 1998 14. condition 22 of the subcontract provided for dispute resolution by adjudication in the form contemplated for by the Housing Grants Construction and Regeneration Act. The work started in April 1998 but on July 8 things had gone so badly that Bouygues purported to determine the employment of Dahl-Jensen who then promptly issued a notice to adjudicate seeking inter alia £5,000,000 for claims arising out of breaches of contract and/or additional works plus a further £225,000 for wrongful determination of the subcontract. As is so often the case in this type of situation, Bouygues then issued its own notice of adjudication seeking repayment of sums allegedly overpaid, together with liquidated damages for delay to completion which it had suffered as a result of the determination. Bouygues’ claim was agreed to be treated as a counterclaim in Dahl-Jensen’s adjudication. Bouygues’ own counterclaim totalled a little more than £5 million. The adjudicator appointed a cost consultant from a leading practice to assist him in matters of quantum. No oral hearing ensued and the decision of the adjudicator was reached on document-only submissions. The adjudicator’s decision was published on 5 October 1999. In his decision he found for Dahl-Jensen. He concluded that the subcontractor was entitled to payment for additional work and for damages for various breaches of contract prior to the determination. However in relation to the validity of the determination, he found that Bouygues were entitled to liquidated damages, and costs relating to remedial works as well as damages in relation to extra costs for completing the subcontract operations. The net result of the adjudicator’s findings was a positive sum to Dahl-Jensen for £207,741.46. There was however a rather major gaffe in the numberwork. This arose from an error which Mr Justice Dyson regarded as explicable. The error arose from lack of consistency in dealing with the netting off of retention monies. Had the computational analysis been carried out properly then instead of Dahl-Jensen being awarded just over £200,000 the effect would have been a net award of £141,254 to Bouygues. In other words the error had effectively worked an injustice to the tune of £350,000. Bouygues was quick to spot the error and through their solicitors, Masons, invited him to correct the “slip”. Predictably, Hammond Suddards, for Dahl-Jensen, contended that the Construction & Engineering Law January / February 2000 adjudicator was not functus officio and had no jurisdiction to revisit his award. The adjudicator responded to these arguments in a letter to the parties in which he pointed out that he had indeed reserved the right to rectify any slip as if it were an award published pursuant to s 57 of the Arbitration Act 1996. In the circumstances quite a clever thing to do, particularly in complex and detailed disputes. Be that as it may, the adjudicator concluded that his decision did not contain a clerical mistake or error arising from an accidental slip or omission. Perhaps most worrying for some was what Mr Justice Dyson made of all this. He concluded that by simply making a mistake in the ascertainment of the sum which was due, the adjudicator had not exceeded his jurisdiction. He came to this conclusion notwithstanding Bouygues’ argument that in these circumstances such a decision might bring adjudication into disrepute. Mr Justice Dyson roundly disagreed. In a judgment in which he referred to a number of earlier decisions2 he noted that the purpose of the statutory scheme3 was to provide an expeditious machinery for the settling of disputes in construction Jurisdiction and the Adjudicator and Then There Were Three This article considers three very recent cases which have emphasised the important constraints that jurisdictional issues impose upon adjudication. With some alacrity he concluded: “It is inherent in the Scheme that injustices will occur because, from time to time, adjudicators will make mistakes.” In other words he came to some sort of greater good argument that whilst there will be occasions, generally rare ones, where adjudicators get it wrong, that does not mean that the courts will necessarily interfere. Purists may be unhappy with this concept but it does represent sound common and commercial sense. Perhaps the most unfortunate practical aspect from this case comes from the fact that Dahl-Jensen then went into liquidation in circumstances where it had a lot of money it should not have been entitled to. It is understood leave is being pursued to appeal. Simon J A Tolson Partner, Fenwick Elliott Solicitors References 1. The Project Consultancy Group v The Trustees of Gray Trust. 2. Macob Civil Engineering Limited v Morrison Construction Limited [1999] BLR 93; The Project Consultancy Group v Trustees of the Gray Trust (unreported); Palmers v ABB Power Construction Limited (unreported). 3. Scheme for Construction Contracts (England and Wales) Regulations 1998. Introduction As most readers will know, Part II of the Housing Grant, Construction & Regeneration Act 1996 (“the Act”) which came into force on 1 May 1998 introduced adjudication and payment provisions. These provisions cannot be contracted out of despite the attempts of a number of contractors to do so, as reported recently by the Constructors’ Liaison Group, and so as a body of legislation and extra statutory provisions, they represent a fundamental development in the rights of the parties unique to the construction industry. Some aspects of adjudication remain uncertain Construction & Engineering Law January / February 2000 Construction Adjudication Dahl-Jensen then applied for summary judgment under the new CPR Part 24 based on the adjudicator’s decision. Bouygues defended those proceedings on the basis that the adjudicator had made a mistake which was so radical as to award the whole of the retention sum to Dahl-Jensen when it was neither due nor claimable. It was on this basis that it contended that the adjudicator has exceeded his jurisdiction and that accordingly the decision should not be enforced. contracts on what he termed a “provisional interim basis”. .15 Construction Adjudication and in this article we concentrate on three decisions concerning jurisdiction. The Jurisdiction Question The Act sets the basic framework for the jurisdiction, powers, and duties of the adjudicator. There is no precise definition in the Act of adjudication or adjudicator. The right given under s 108(i) to refer disputes under the contract to adjudication serves to formalise the jurisdictional parameters but significantly, this only deals with disputes arising under the contract,1 not disputes that do not concern obligations created by or incorporated into the contract, such as tortious claims for example, which fall outside the Act. Only parties to a “construction contract” as defined in ss 104 to 107 (but limited by the Exclusion Order) may refer disputes to adjudication. Contracts may make express provision for adjudication to go beyond the minima in the Act. They will usually do so by the incorporation of specific rules such as those produced by TeCSA.2 The usual legal analysis for determining jurisdiction applies the key test - what does the contract say? If the contractual provisions comply with the eight minimum criteria of the Act the contract will be deemed compliant and the Scheme3 will not apply. If a contract furnishes the adjudicator with powers and duties which go beyond the Act and is otherwise compliant, then the adjudicator will have the benefit of a greater field of operation, ergo his decision will be prima facie enforceable. The wider powers provided by a construction contract cannot be pared back to the statutory minimum without a variation agreement or deed. One of the statutory exclusions to the right to adjudicate arises where the works concern residential occupiers and their dwellinghouses. Certain standard forms get round that situation by incorporating an adjudication clause that binds the employer whatever his status, for example the JCT Agreement for Minor Works 1998 Edition. Note that under s 107, the Act only applies to agreements that are in writing. This definition was lifted from provisions within the Arbitration Act 1996 which were drafted to 16. circumvent frequently litigated arguments4 over whether or not an arbitration clause was effectively incorporated into a contract. Section 107 restricts the instances in which it might be arguable that the contract was not reduced to writing. Against this backdrop there have been three important decisions handed down by the Technology and Construction Court since June 1999. The first case considered is A&D Maintenance and Construction Limited v Pagelhurst Construction Services Limited.5 The case concerned an application for summary judgment under the new Rule 24 to enforce the decision of an adjudicator. The claimant subcontractor had been appointed by the defendant main contractor to install a boiler and flue as part of a school refurbishment. A fire ensued causing serious damage to the school, and the defendant, simultaneously pursuing a substantial claim in separate proceedings against the claimant, contended that the cause of the fire was incomplete and defective work by the claimant. The claimant asserted its work had been properly carried out and that substantial invoices were due and owing. Because of the fire the employer had determined the main contract. On the same day the defendant received notice of determination, he served a similar notice on the claimant and gave notice of intention to withhold further payments. The claimant commenced adjudication in respect of outstanding invoices. The defendant threatened to apply to court to prevent the adjudication from proceeding on the basis that there were complex claims which were the subject of separate proceedings. However the main contractor fully participated in the adjudication. The adjudicator found in the favour of the claimant for just over £100,000 including fees and interest. The claimant then claimed summary judgment, which was opposed by the defendant on the grounds that: “The sub-contract was not a construction contract for the purposes of the Act, the sub-contract had come to an end on 19 November 1998, and therefore it was too late to issue a notice to refer to adjudication; and, the existence of the substantial claims made by the defendant against the claimant in the other proceedings amounted to sufficient grounds under CPR Part 24.2(b) to require that the case be disposed of at a trial.” Judge Wilcox held that the sub-contract was Construction & Engineering Law January / February 2000 the scope and level of the fees remained to be agreed. Following a dispute over fees the claimant served a Notice of Adjudication in early 1999. The defendants alleged that the contract was being made before the implementation of the Act and was not subject to the adjudication provisions. They nevertheless took part in the adjudication but at all times reserved their position on the jurisdiction issue. The adjudicator duly decided that a contract had been made which post dated the implementation of the Act. The defendants refused to pay; alleging that the decision was made without jurisdiction and, as an alternative ground, that they had never entered into a binding contract. The claimant brought proceedings for summary judgment, relying on the decision in Macob Civil Engineering v Morrison Construction Limited (1999) TLR, 11 March 1999, and the later decision in Outwing Construction v H Randell & Son Limited (1999) 64 Con LR 59. Judge Wilcox emphasised that the adjudicator’s powers were very wide and that the matters complained of by the defendant were clearly within his competence. He ruled that the claimant had discharged the burden of showing that the defendant had no real prospect of defending the claim in accordance with the new test under Rule 24 (rather than the old test of whether there was an arguable defence). Giving judgment, Judge Dyson said that in enforcement proceedings the defendants could challenge the decision of the adjudicator on grounds of deficient jurisdiction. He concluded that on the facts, the defendants had never submitted to the jurisdiction of the adjudicator and were not bound to accept his decision. He found that there was no contract, nor clear evidence that one had been concluded. If there was no contract there could be no adjudication and consequently no summary judgement. Judge Wilcox also ruled that had the defendant immediately challenged the adjudication as threatened, or sought an immediate ruling by the adjudicator as to his jurisdiction then the outcome may have been very different. He went on to indicate the circumstances when a court might refuse enforcement of an adjudicator’s decision where there are irregularities in the adjudicator’s appointment. In The Project Consultancy Group v the Trustees of Gray Trust 6 the issue also centred on jurisdiction following an application for summary judgment under Part 24. The claimant was engaged by the defendants to provide consultancy services to planning permission stage for the conversion of a nursing home. After planning permission was granted and the claimant paid, the parties discussed a further contract to provide services during construction, but nothing was specifically agreed. In June 1998 the claimant sent draft fee proposals to the defendants which resulted in a further meeting. In a subsequent letter the defendants in principle agreed the claimant’s proposals but Hence, any jurisdictional challenge ought to be made at the outset and that position reserved during any participation in the adjudication. The third case germane to the issue of jurisdiction is Palmers Limited v ABB Power Construction Limited.7 The claimant was the sub-sub-sub-contractor on a scaffolding contract but contracted directly with the defendant for specific works. The defendant blamed the claimant for delays and served notice under s 111 of the Act of its intention to withhold payment. The claimant contended that it was entitled to suspend operations under s 112 and that the s 111 notices were invalid and commenced adjudication over outstanding interim payments. The defendant alleged that there was neither a “construction operation” nor a construction contract as defined under s 105 of the Act. Thus, there was no right to adjudication and any adjudicator purportedly appointed would have no jurisdiction. In his judgment, Judge Thornton confirmed that it Construction & Engineering Law January / February 2000 Construction Adjudication evidenced in writing by a sub-contract order and written submissions, which had been exchanged in the separate proceedings, and therefore constituted a construction contract within the meaning of s 104 of the Act. As the sub-contract did not provide any express provision for adjudication, the Scheme was held to apply. Thus the reference to adjudication was valid and effective. The fact that the sub-contract was determined did not prevent the dispute being one which arose under the contract and did not affect the right of the claimant to issue notice of adjudication. Judge Wilcox said that had parliament intended to impose a time limit on the exercise of rights to refer to adjudication, it would have to have been clear. A better view seems to be that one can pursue an adjudication at any time subject to any evidential bars that might be contained within a contract. Thus the decision of the adjudicator was valid and effective. .17 Book Reviews was appropriate for the court to declare whether the adjudicator had jurisdiction where the adjudicator had no inherent powers to resolve disputes about his own jurisdiction. In interpreting the Act Judge Thornton followed judicial approval 8 of the admissibility of parliamentary material, holding that the scaffolding operations in question did constitute construction operations. He further stated that it was not appropriate to determine the validity of a s 112 notice to suspend where the serving party also sought adjudication. Finally he held that the s 111 notice was invalid if it did not specify the amount to be withheld. Accordingly the claimant obtained a declaration that its interim payments were due and payable, but in the absence of a monetary claim, no money. Simon J A Tolson Partner, Fenwick Elliott 1. Fillite (Runcorn) Limited v Aqua Lift Limited (1989) 47 BLR 27. 2. Now version 1.3. 3. Scheme for Construction Contracts (England and Wales) Regulations 1998. 4. Aughton Ltd v M F Kent Ltd (1992) 57 BLR et al. See s 5 Arbitration Act l996. In conclusion, whilst earlier decisions such as Macob, Outwing and the Rentokil decision in Scotland have confirmed the courts’ support for adjudication, it now seems that the courts will be prepared to consider the substantive merits of adjudicators’ decisions on jurisdictional grounds and refuse enforcement if appropriate. 5. A decision of His Honour Judge David Wilcox delivered on 23 June 1999. These three cases are likely to encourage further litigation. Adjudicators will also need 8. Pepper (HMIT) v Hart (1992) 3 WLR 1032. Book Reviews made, how rights may be determined and terms interpreted. I particularly liked the way the authors dealt with the parties to a construction contract and their particular status and the various standard forms. Part B of the text illustrates this in dealing with the employer, contractor, sub-contractor, engineer and architect under contract title headings: ICE 6th, JCT 98, CECA Blue Form, DOM/1, and DOM/2. Part C deals with non-performance and breach of obligation by employer, contract administrator, contractor. This part needs to be revised to include more comprehensive coverage of an important area. In particular it fails to deal with the role of the architect and the engineer. No doubt this, as with other parts of the text, will be gradually expanded. Part E contains a general guide to dispute resolution and the new CPR. I was not sure what the authors really intended by the inclusion of such general descriptions of the various alternative procedures now open to disputants. If it is simply to inform the reader of the differences between the various processes then it would be useful if it could contain all the relevant rules of adjudication, arbitration and litigation, Guide to Construction Contracts by Delves, Lewis, Fleet and Tadiello; Butterworth/Tolley, 1999 This loose-leaf guide is broken down into five key sections: Formation and Construction, Parties’ Rights and Obligations, Nonperformance, Planning for Contingencies and Dispute Resolution. The text is readable and easy to follow. There are no disjointed references to numerous authorities that can confuse, but instead reference to the leading case on that particular part of the text with citations in the appendices. The style is modern and clearly-focused on recurring practice problems: what the contract is and how it is 18. to be cautious about jurisdictional issues which go to the root of their appointment and entitlement to payment. 6. The Honourable Mr Justice Dyson handed down on 16 July 1999. 7. His Honour Judge Anthony Thornton QC delivered 6 August 1999. Construction & Engineering Law January / February 2000 including practice directions and pre-action protocols, analysing such differences; advantages and disadvantages. The difficulty for the authors is the same difficulty that has confronted every author of a construction law textbook since the days of Alfred Hudson. Namely, dealing with the rights, obligations and remedies of the parties at Common Law and under Statute. These authors have succeeded in providing a simple logical structure upon which to build their guide. What is lacking on the Construction lawyer’s bookshelf is a more scientific analysis of this complex subject, which deals with each standard form in depth as a guide to both draftsman and advocate. Michael P Reynolds Solicitors Duties and Liabilities by Roger Billins; Sweet & Maxwell, 1999 A good book, practical and worth reading. Michael P Reynolds Construction Law Yearbook 1998-1999 To those unfamiliar with this series the book contains topical articles on construction lawrelated matters, “sanitised” construction arbitration awards which the authors, via contributors, have found interesting to the wider construction law fraternity, previously hard-to-access case reports, and a construction law case index that includes cross-references to standard forms of contract, statutes and court rules and judicially-considered cases. This, the fourth volume of the yearbook, commences with a refreshingly sardonic review of the 1998 construction law year. It dwells particularly on the recent developments in statute-based adjudication and its dependent contractually-based procedures, with other sections commenting on the reversal of Crouch, and the changes to and renaming of the Official Referee’s Court as the Technology and Construction Court. Of particular interest to some will be the section headed “Adjudication in Peril”, which offers the view that application of s 26 of the Scheme for Construction Contracts (via s 114(a) of the Housing Grants, Construction and Regeneration Act 1996) makes adjudicators potentially liable to third parties who suffer loss through their decisions. Whilst construction contracts usually expressly confer immunity on adjudicators, and vis-à-vis the parties s 26 of the Scheme does similarly, there is thus, according to this editorial, a risk to adjudicators that many will be unaware of and which may seem controversial. The conventional view that adjudication is a roughand-ready, interim means of dispute resolution, albeit open to review in due course at arbitration or via the courts, means that there is a possibility that a wrong decision between the parties to an adjudication could prejudice the position of a third party. No example is offered in the Con L Yb, but the present writer might suggest a situation where a bondsman is forced to pay up on insolvency triggered by an adverse, but patently wrong decision against a contractor at adjudication. It is to be Construction & Engineering Law January / February 2000 Book Reviews This is an essential guide for all practising solicitors and complements the Law Society’s Guide to the Professional Conduct of Solicitors (7th Edition). The author has dealt with some very important aspects of practice, in particular the question of retainer by particular persons, e.g. companies, trustees, liquidators, agents and the duration of that retainer. Secondly, he deals with the importance of the solicitor’s authority to act in contentious and non-contentious business. This is worth serious consideration, especially in the context of the urgency with which certain actions must be taken, e.g. as to whether or not authority exists to take urgent action to deal with the unexpected service of an adjudication notice. The text also deals with a solicitor’s fiduciary duty, and conflicts of interest, both of which are well worth reading about in the context of Judge Bowsher’s recent decision Maes Finance Ltd v Sharpe & Partners (see Construction & Engineering Law, Vol 4, Issue 5) and the recent cases reported in this issue from the Court of Appeal. This book is easy to read, logically presented and proportionate to the importance of the subject’s various divisions. In particular I found the references to the Civil Procedure Rules 1998 useful and noted the wise advice that the Rule 15 client care letter should explain to the client in detail what will be required of the client to ensure compliance with the court timetable. After reading this it sparked a few ideas as to how any new Preaction Protocol of the TCC may be linked to the solicitor’s client-care letter. The TCC’s new protocol with respect to pre-action matters might well benefit by some consideration of the client’s duty to help the court to further the overriding objective in accordance with Rule 1.3. .19 Book Reviews conjectured whether all those who hold themselves out as construction adjudicators, or their professional indemnity insurers, have identified this area of potential risk. Of the articles included I found the Anthony Lavers analysis of the Banque Bruxelles and South Australia decisions (“Professionals Beware”) of particular interest. Although it had seemed to me that the dicta of Lord Hoffmann in the latter needed little subsequent judicial assistance in interpretation, Professor Lavers points up the potential for difficulty in analysing the interrelationship of the advice given by the team of advisers appointed by a developer or other client organisation and/or its funder and the scope of the duty owed by each member of that team. The sanitised construction arbitration awards included are by Messrs Pickavance, Tait and Willis, all well-known names in the field. They deal with, respectively, the form of notices in respect of default and termination under the ACA standard form of contract and the place of “business common sense”; jurisdiction in respect of joinder under clause 18(8) of the FCEC sub-contract conditions; and the extent of the arbitrator’s discretion as to costs under s 18(1) of the 1950 Act. These works, so far as they are unlikely to be replicated by judicial pronouncement, are useful additions to the body of reference available to the specialist practitioner and good examples of awardwriting that would also be of interest to wouldbe arbitrators. The two cases included are Cadmus Investment Company v Amec Building Ltd, which followed the third award published in this volume, and the well-known Wells v Army and Navy Co-operative Society first reported in the Casebook to the 4th Edition of Hudson of 1914, long out of print. The greater part of this volume, and its true utility besides the above goodies, is devoted to the listings of cases and statutes relevant to construction law in name order and by subject, with lists of judicially-considered cases, rules and other indices. It may surprise non-lawyers or others unfamiliar with works of this nature to find that decisions are not given, even in gist, but the value of this part of the book is the cross-referencing via topic and judicial consideration to other cases, all with full and alternative citations to law reports and articles in learned journals. Thus the student or practitioner is referred to the source material 20. and commentary elsewhere rather than given a digest capable of misinterpretation or incomplete understanding through missing distinguishing factors discernible from the report itself. It seems obvious that a work like this would benefit from computerisation, and indeed this is part of the package: a CD-ROM containing the Construction Law Case Index database is included with the book. There are 1034 case abstracts, 60 subject headings, 78 statutes or rules, 40 standard forms and 2266 judicially considered cases listed in the database. A complete user manual appears as an appendix to the book. The database is easy to install and versatile in use. It is packaged as an application based on a run-time version of Folio Bound Views for Windows software, which allows text-based searching and hyperlinking. A small criticism may be levelled at the need to double-click on hyperlinks rather than the single click usual in other, more widely-used, software, but this is a quirk that is readily adjusted to for the power of the search tool harnessed. When a search for words is made Boolean logic is automatically supplied for the user, where necessary, making this one of the most user-friendly search engines I have ever used. Upon searching for a particular word the user is informed of the number of items that would be retrieved, allowing addition of other words to limit or increase the number of entries returned. The entries themselves appear with the sought words highlighted to allow immediate contextchecking. The search engine retrieves according to either text included in the abstract or by name (or part of a name – a boon to the nominally aphasic construction law practitioner). When a case abstract is selected it appears with head note and cross-referencing to subject categories, statutes/rules, standard forms and the judicially considered cases. Double-clicking on the hyperlink takes the user to the item shown. Browsing is easy and speedy. This work would be worth buying for the CDROM alone. It could quickly become an essential reference tool for all involved in construction dispute resolution or any research related to it. The book itself is a bonus; the Review and the articles are stimulating, and the arbitration reports are also of interest. Chris Ennis Construction & Engineering Law January / February 2000