Adjudication Update

In the case of Woods Hardwick Ltd v Chiltern Air Conditioning Ltd, HHJ Thornton QC refused to enforce an adjudicator's decision where the adjudicator had acted in a way which appeared to the court not to be impartial whatever the attitudes of the parties to the adjudication proceedings. In this case, the adjudicator's actions during the adjudication and when the decision required enforcement raised questions as to whether the adjudicator had remained neutral.

In particular, the adjudicator breached the provisions of the Scheme in three respects. First he failed to make available to one of the parties, information he had obtained from both the other party and third parties. Second he obtained legal advice without notifying the parties of his intention to take that advice. Finally, he submitted a witness statement to the enforcement proceedings, a highly unusual move in itself, which left the impression that he was not impartial.

If you want to consider the full transcript of this case log in to www.adjudication.co.uk.

Expert Evidence

In Cosgrove & Anr v Pattison & Anr, Neuberger J considered the CA case of Daniels v Walker when allowing an appeal by the Defendants that they be permitted to instruct an expert of their own since they were unhappy with the report prepared by the single joint expert. Amongst the relevant factors were the fact that thousands of pounds were at stake and the fact that because the hearing was some way off, the instruction of another expert would have little effect on the hearing date and would give the Claimants the opportunity to instruct their own expert.

In Brown & Another v Bennett, Neuberger J confirmed that when a litigant had agreed to pay an expert witness, he should not be able to get away without paying that fee by issuing a Witness Summons.

In Mann v Chetty & Patel, the CA considered the principles to be applied when giving leave to amend a claim to adduce expert evidence. These include (i) how cogent the proposed expert evidence would be; (ii) how helpful the proposed expert evidence would be to resolving the issues in the case; and (iii) how much it would cost in relation to the sums at stake.

Health & Safety

Lafarge Redland Aggregates Ltd were fined £75,000 plus costs of £55,000 for breaching Section 3(1) of the Health & Safety At Work Act 1974 which requires that people not in the employment of a company should not be exposed to risks to their own safety. Here, during road surfacing, a pedestrian was run over by a reversing lorry and had suffered multiple injuries.

Interest

Do not forget that the latest provisions of the Late Payment of Commercial Debts (Interest) Act 1998 came into force on 1 November this year.

Now every contract between small businesses (and not just those between a small and large business) for the supply of goods and services will be subject to an implied term, that any outstanding debt will be subject to statutory interest. Statutory interest runs at 8% above the Official Dealing Rate per annum. This can be found daily in the Financial Times under the "London Money Section" and is headed the "UK clearing bank base lending rate".

A small business is one with less than 50 employees. The interest will run from the day after the agreed date for payment or if no date is specified the date will be defined by section 4 of the Act.

Fenwick Elliott News

We are pleased to announce that Karen Gidwani joined us, as an assistant solicitor from Decherts on 20 November 2000. Karen, who was previously at Sharpe Pritchard, has specialised in construction since qualification.

Other Cases From the TCC

In Carillion Construction Limited v Felix UK Limited, Dyson J set aside an agreement between the parties in relation to the final account on the grounds of economic duress.

Felix contracted for the design, manufacture and supply of cladding. However, Felix then told Carillion that without agreement to the draft final account, the completion date for their works could not be guaranteed. Felix knew that until it delivered the cladding, construction would have to be halted. Carillion would be liable to the employer for liquidated and ascertained damages to the tune of 75k.

On the facts, Dyson J found that Carillion had made out the four limbs necessary to prove duress. There was a threat from Felix (to withhold delivery), which was illegitimate (the threat was one to commit a clear breach of contract).

The practical effect of the threat was that Carillion had no choice but to enter into the contract. Carillion approached other contractors but the items at issue were not standard units. In the circumstances Carillion could not be certain that an injunction would be granted, whilst adjudication could take 4-6 weeks.

Finally, it was clear that Felix's actions were the significant cause, which induced Carillion to enter into the agreement. And there was no question that it could be argued that Carillion had affirmed that agreement since it stopped performing the settlement agreement as soon as it was no longer subject to the threat, in other words, as soon as Felix had made their final delivery.

In the case of Miller Construction Ltd v James Moore Earthmoving, HHJ Seymour QC considered an application to remove an arbitrator for misconduct.

The judge commented that the proper conduct of the arbitral process depended on each party being given the opportunity to be heard in relation to any matter upon which the arbitrator was called upon to decide. Adopting this objective test, the judge found that a reasonable person would think that there was a real likelihood that the arbitrator here would not come to a fair and balanced conclusion in respect of any of the remaining issues. Thus the arbitrator was removed.

The twist here was that the party who made the application to remove the arbitrator had actually been the one who had benefited from the preliminary findings, which were the subject of the application. The arbitration was continuing. Both parties were thus exposed to the risk of misconduct in the future.

In American Design Associates v David Insall Associates, HHJ Bowsher QC had to decide whether the parties had agreed to incorporate a UK arbitration clause. Both ADA, and the project itself, were based in Hong Kong. However whilst ADA's standard terms provided for China as the arbitration venue, no contract was signed. Disputes arose and DIA referred the matter to arbitration in England.

However on the facts, HHJ Bowsher QC found that the arbitrator did not have jurisdiction. An arbitration clause is, in effect, a self contained contract. In order for the clause to have been incorporated there must have been a clear intention that the parties intended it to apply. Nothing had been agreed. Further given the foreign connections, without any clear agreement it could not be said that the reasonable expectations of the parties, as sensible businessmen, were that any dispute resolution should take place in England.

Other Cases of Interest

In UYB Limited v British Railways Board, the CA upheld the decision of the trial Judge to withhold interest for the period between the service of the Writ, 15 December 1995, and the service of an Expert's report some 3 years later. The original claim was for approximately £64,500 in respect of loss of profits. This increased to over £12million on the service of the expert report. The trial Judge "formed a very poor view of the way in which UYB had come to make a vastly inflated claim at a very late stageÖ he was Ö entitled to exercise his discretion in the way that he did".

Human Rights

In Stevens Associates v The Aviary Estate, Pumphrey J refused to allow a Claimant whose claim for fees had previously been struck out for delay to issue fresh proceedings until it had paid the costs of the earlier proceedings. This was not a breach of Article 6 of the Convention since the entitlement to a fair and public hearing could not be viewed as a licence to litigate for a second time before the earlier costs were paid.