In John Sisk & Son Ltd v Duro Felguera UK Ltd [2016] EWHC 81 (TCC) (25 January 2016) the Claimant (“Sisk”) successfully applied to enforce an Adjudicator’s decision made on 9 October 2015 by which he awarded Sisk a sum in excess of £10 million.Given such eye-watering sum it was perhaps not surprising that the Defendant (“Duro”) valiantly sought to resist the application. The basis upon which Duro sought to resist was three-fold:
- There was a real danger that the Adjudicator approached certain issues with a closed mind (the “pre-determination” point).
- The Adjudicator delegated, or at least he appears to have delegated, certain parts of his decision-making role to a third party (“Mr H” who attended experts’ meetings and produced spreadsheets to the Adjudicator’s request [49]) without notifying the parties of this or seeking their consent to that course (the “delegation” point).
- The Adjudicator purported to rectify or to amend the contract in circumstances where neither party had submitted that it should be rectified and without giving the parties any notice of his intention to take that approach (the “rectification” point).
With regard to the pre-determination point:
“In a letter dated 11 August 2015, the Adjudicator summarised the five grounds of “”challenge”” to his jurisdiction and… dealt with them under the headings of “”Threshold jurisdiction”” and “”Internal Jurisdiction””.” [7] “The Adjudicator concluded that the threshold challenge was not made out and he then considered the four challenges to his “”Internal Jurisdiction””. He went through these, one by one, and in each case concluded that the point was not a good one.” [8]
The letter had been sent by the Adjudicator by e-mail timed 1130hrs.
Pre-determination issue
Edwards-Stuart J recorded:
“…the question for the court is whether the fair-minded and informed observer, having considered all the facts, would conclude that there was a real possibility of predetermination. What is meant by predetermination was explained by Beatson J in Persimmon Homes Ltd & Anor, R (on the application of) v Vale of Glamorgan Council [2010] EWHC 535 (Admin) (15 March 2010) as follows:
“”Predetermination is the surrender by a decision-maker of its judgment by having a closed mind and failing to apply it to the task. In a case of apparent bias, the decision-maker may have in fact applied its mind quite properly to the matter but a reasonable observer would consider that there was a real danger of bias on its part. Bias is concerned with appearances whereas predetermination is concerned with what has in fact happened.””” [26]
“In re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700 [(Director General Of Fair Trading v Proprietary Association Of Great Britain & Ors [2000] EWCA Civ 350 (21 December 2000))], a decision of the Court of Appeal, it was held that the expressions “”a real possibility”” and “”a real danger”” meant the same. In delivering the judgment of the court Lord Phillips MR (as he then was) cited the following passage from the judgment of Simon Brown LJ in R v Inner West London Coroner, Ex p Dallaglio [1994] 4 All ER 139, at pages 151-152:
“”From R v Gough I derive the following propositions: (1) Any court seised of a challenge on the ground of apparent bias must ascertain the relevant circumstances and consider all the evidence for itself so as to reach its own conclusions on the facts. (2) It necessarily follows that the factual position may appear quite differently as between the time when the challenge is launched and the time when it comes to be decided by the court. What may appear at the leave stage to be a strong case of “”justice [not] manifestly and undoubtedly be[ing] seen to be done””, may, following the court’’s investigation, nevertheless fail. Or, of course, although perhaps less probably, the case may have become stronger. (4) The question upon which the court must reach its own factual conclusion is this: is there a real danger of injustice having occurred as a result of bias? By “”real”” is meant not without substance. A real danger clearly involves more than a minimal risk, less than a probability. One could, I think, as well speak of a real risk or a real possibility.””” [27]
“In that case the court considered material that was not known to the appellants when they made their initial challenge of bias. It is clear, therefore, that the court considered all the relevant circumstances that would have been known to the fair-minded observer at the time when it had to decide the issue.” [28]
“In Amec Capital Projects Ltd v Whitefriars City Estates Ltd [2004] EWCA Civ 1418 (28 October 2004), in which Dyson LJ gave the only judgment, he said this, at… [paragraphs 20 to 22]:
“”In my judgment, the mere fact that the tribunal has previously decided the issue is not of itself sufficient to justify a conclusion of apparent bias. Something more is required. Judges are assumed to be trustworthy and to understand that they should approach every case with an open mind. The same applies to adjudicators, who are almost always professional persons. That is not to say that, if it is asked to redetermine an issue and the evidence and arguments are merely a repeat of what went before, the tribunal will not be likely to reach the same conclusion as before. It would be unrealistic, indeed absurd, to expect the tribunal in such circumstances to ignore its earlier decision and not to be inclined to come to the same conclusion as before, particularly if the previous decision was carefully reasoned. The vice which the law must guard against is that the tribunal may approach the rehearing with a closed mind. If a judge has considered an issue carefully before reaching a decision on the first occasion, it cannot sensibly be said that he has a closed mind if, the evidence and arguments being the same as before, he does not give as careful a consideration on the second occasion as on the first. He will, however, be expected to give such reconsideration of the matter as is reasonably necessary for him to be satisfied that his first decision was correct. As I have said, it will be a most unusual case where the second hearing is for practical purposes an exact rerun of the first…
The mere fact that the tribunal has decided the issue before is therefore not enough for apparent bias. There needs to be something of substance to lead the fair-minded and informed observer to conclude that there is a real possibility that the tribunal will not bring an open mind and objective judgment to bear…
It is easy enough to make challenges of breach of natural justice against an adjudicator. The purpose of the scheme of the 1996 Act is now well known. It is to provide a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requiring the decisions of adjudicators to be enforced pending final determination of disputes by arbitration, litigation or agreement. The intention of Parliament to achieve this purpose will be undermined if allegations of breach of natural justice are not examined critically when they are raised by parties who are seeking to avoid complying with adjudicators’’ decisions. It is only where the defendant has advanced a properly arguable objection based on apparent bias that he should be permitted to resist summary enforcement of the adjudicator’s award on that ground.””” [29 – 31]
Duro relied upon Lanes Group Plc v Galliford Try Infrastructure Ltd (t/a Galliford Try Rail) [2011] EWCA Civ 1617 (21 December 2011), but Mr Justice Edwards-Stuart explained:
“…the point… at the heart of this part of the case is the question of the stage at which the issue of bias or predetermination has to be addressed. There was no discussion about that in Lanes v Galliford Try… In my judgment, that decision provides very limited assistance on the question of the stage at which the question of bias or predetermination has to be decided…” [34]
Finding that the pre-determination challenge failed, it was held that the position was not to be judged at the time of receipt of the 11 August 2015 letter but instead at the time when the matter fell to be considered by the court, the judge continued:
“…so that all the circumstances which by then would be known to a properly informed and fair-minded observer fall to be taken into account. …it would… be… artificial not to consider the manner in which the Adjudicator went about reaching his Decision when deciding whether or not there was a real danger that he had approached the issues with a closed mind.” [37]
Mr Justice Edwards-Stuart explained:
“The adjudicator described the conclusions that he reached in his letter of 11 August 2015 as being a “non-binding opinion”. The purpose of reaching those conclusions was for him to determine whether… he had jurisdiction… he… [indicated]… he would… entertain further submissions on the same points. Indeed, it seems that he did so…” [35]
“[Despite reaching] …the same conclusion on each ground as in his letter of 11 August 2015… the way in which he [did]… shows… he was not only willing to, but did in fact, consider the matter afresh.” [36]
Delegation issue
Mr Justice Edwards-Stuart said in rejecting the second challenge:
“Duro has come nowhere near persuading me that any relevant part of the decision-making process was delegated to Mr Hutchinson. Regrettably, it appears that Duro is effectively challenging the honesty of the Adjudicator’s responses to the questions put to him without having any reasonable justification for doing so. I see no reason why the Adjudicator should disclose the number of hours worked by Mr Hutchinson or the rate he has charged the Adjudicator for carrying out that work: neither piece of information would assist one to form a view as to whether or not Mr Hutchinson played any part in making the relevant decisions.” [62]
Rectification issue
In rejecting the third challenge, Mr Justice Edwards-Stuart said that in his:
“…judgment, the Adjudicator did no more than accept the case advanced by Sisk, which had been addressed by Duro in its submissions: this was something that he was entitled to do in the light of the way in which the arguments had been presented to him. Duro had every opportunity to meet the case being advanced by Sisk which it understood perfectly well. There was no breach of natural justice.” [74]
Duro’s challenge to the Adjudicator’s Decision failed on every ground. Accordingly, Sisk was entitled to summary judgment as claimed.
Nigel Davies
26 January 2016
The information & opinions expressed in this article and associated video are not necessarily comprehensive, nor do they represent the trenchant view of the author; in any event this article does not purport to offer professional advice. This article has been prepared as a summary and is intended for general guidance only. In the case of a specific problem, it is recommended that professional advice be sought.
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