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Adjudication:
More on Bryen &
Langley -v- Boston
In the last issue of News and Views, I commented on Bryen & Langley -v- Boston regarding a questionable decision on a letter of intent. The editor, quite rightly, pointed out that the letter of intent in Westminster Building Company -v- Andrew Beckingham was couched in very similar terms but with a different result and therefore I feel that I must give further explanation.
Westminster Building was not referred to in the submissions in B&L on the letter of intent (although it was for other purposes). The letter of intent was found by the judges in both cases to be in the form of 'no contract exists until formal execution'.
However, in Westminster, HHJ Anthony Thornton contrived an entirely separate contract in which the return of the signed contract documents by the Contractor formed the 'offer' which was 'accepted' by performance when the Employer permitted Westminster to continue on site without challenging the document.
With respect I suggest that this is a very dangerous approach, albeit that it arrives at an equitable solution. It raises the question of what contract governed the work carried out prior to the contractor's return of the contract documents. By all measures, there was no contract at that stage, because the contrived contract could not include work executed previously (remember the doctrine of past consideration). In this case the work was minimal (4 days between start on site and the return of documents). However, a significant delay could have serious repercussions - in B&L it was some 2½ months.
It is unfair to say that the decision may have been affected because HHJ Seymour is not greatly in favour of adjudication. In these cases and with the utmost respect, HHJ Thornton may have let his keenness on the process give a false impression of the proper approach. However the adjudicator in B&L (our own Chairman Robin Orme) should take heart that the majority of adjudicators would probably have agreed with him and continued with the adjudication (I certainly would have).
My intent last month was not to analyse the judgments but to draw attention to the need for vigilance in dealing with letters of intent and to show that the proper/fair/equitable result is not always achieved. However, in B&L -v- Boston, several other points are dealt with, which make it one of those cases that form a very useful summary/reference.
Part of the defence was that adjudication fell foul of the Unfair Conditions in Consumer Contracts Regulations. I would first draw attention to the detailed and compelling arguments put forward for the Defence by Michael Bowsher. That the argument failed does not detract from its eloquence. However, HHJ Seymour examined other judgments and it is for this analysis that the case is of interest.
The next matter of note is that of the adjudicator deciding his own jurisdiction. In this case the adjudicator had authority from the parties so that he had power to determine his own jurisdiction. However HHJ Seymour said;
'… the effect of the decision of an adjudicator as to his own jurisdiction, even if made with jurisdiction to make at least that determination, is, in my judgment, very limited. ….(the) decision is only binding, so far as is presently material, "until the dispute is finally determined by legal proceedings". If a decision by an adjudicator that he has jurisdiction over the substantive dispute referred is challenged at the enforcement stage, what the court is then being asked to do is finally to determine whether the adjudicator had jurisdiction or not.'
I note that HHJ Seymour missed the important qualification of the nature of the temporary decision in that it may become 'permanent' by agreement between the parties. This point is well made in Thomas-Fredric's (Construction) Ltd -v- Keith Wilson - one of the few Court of Appeal cases on adjudication. (I don't know why but I could not find this case from my usual sources but it is on www.adjudication.co.uk) It could be that what the adjudicator has to do, to make his ruling on jurisdiction 'permanent', is to obtain from the parties not only the power to determine his own jurisdiction but also their agreement to treat this decision as final.
One further point is one which I have been banging on about for years. The parties'? advisers should ensure that the case is put to the proper tribunal. HHJ Seymour said that
'If proceedings had been commenced in this court to resolve the differences between the parties, such an action could have been tried and finished long ago. It is a matter of regret that, instead of trying to resolve the substance of their differences, the parties have embarked upon a course which at best could only provide an interim solution and at worst was a complete waste of time, money and effort.'
I agree entirely with this sentiment. This is also shown by the statistics in the last edition of News and Views showing that excessive cost was far and away the chief complaint in adjudication. I suggest that those adjudications accumulating extraordinary costs are likely to be in the wrong forum. Adjudication is fine for small and simple disputes but, although it may be used elsewhere, is not a form of cut down arbitration. When so used it loses its advantages of cost and time without gaining the attributes of arbitration or litigation.
While I used to advocate that adjudicators should have the power to award inter-parties costs, I now believe that no such change is necessary - the increase of costs and time will eventually persuade parties that adjudication is not the magic wand it first appeared and that arbitration, with a robust arbitrator, with the powers of the 1996 Act is a viable alternative. Once the parties realise this, consultants may have to put alternative courses to their clients rather than take the easy way out and go for the quick and substantial fees of adjudication.
However, on this occasion, I must disagree with the honourable judge. As far as I can see from the facts in the judgment, the delay was in commencing any action and was not due to the selected tribunal. Even with hindsight, I think that they elected the proper tribunal. The problem lay with a jurisdictional point, which could not reasonably have been identified at an early stage.
Editors note: I would like to thank Peter for another thought provoking article. He and I do not necessarily agree on the "correctness" of the decision on Bryen & Langley (I prefer Judge Thornton's more pragmatic approach) but, hopefully, time, and further cases, will make the position clearer. If this case is followed in the future it means that even if the Parties give the adjudicator the jurisdiction to rule on his own jurisdiction, the courts can, at the enforcement stage, nevertheless overturn that ruling if they consider it to be wrong. This appears curious given that it is established law that the courts will not overturn any other "wrong" part of the adjudicator's decision at that stage as long as it is within his jurisdiction. This may all change if the recommendation in the recent White Paper, giving the Adjudicator the power to make a final and binding decision on his jurisdiction in certain circumstances, is adopted (see Editorial). In the meantime it will be interesting to see what other judges will make of this problem when it comes before them.
Any other views would be most welcome.
Peter Horne