Adjudication Update

The new (Third Edition) adjudication procedure of the CIC is due to come out in March. This will be particularly significant if your contract requires that the CIC procedure is used since Rule 6 states that the relevant procedure will be that in existence at the date of the Adjudication Notice.

In George Parke v Fenton Gretton Partnership, HHJ Boggis QC in Chancery Division had to consider whether to set aside a Statutory Demand served by the Defendant seeking payment under an adjudication decision. Mr Parke argued that he had a valid cross claim which exceeded the amount of the decision. He also commenced proceedings for recovery of an alleged overpayment in the TCC.

The Judge considered that an adjudicator's decision did create a debt which could form the basis of a Statutory Demand. Further the Court could not go behind the debt. However, the Judge held that the existence of a cross claim was a matter to be considered under rule 6.5 (4) of the 1986 Insolvency Rules even if it would not have amounted to an acceptable defence against an application for Summary Judgment. Here, he held there was a valid cross claim and therefore it would be wrong not to set aside the Statutory Demand. It was not right that an employer can be made bankrupt where it is known there are proceedings on foot, which might result in a payment to him. This Judgment obviously demonstrates the need for caution if you chose to seek the enforcement of an adjudicator's decision through the insolvency procedures.

Human Rights/Natural Justice/Bias

During a boundary dispute, Taylor & Anr v Lawrence & Anr, the Judge disclosed that the claimants' solicitors had drawn up and were holding his Will. No objection was raised. However, on the day of the closing submissions, the Judge went to those solicitors to sign a codicil to his Will. One of the witnesses was a secretary in the litigation team. The defendant appealed saying that there was an appearance of bias.

The CA said that the test for the appearance of bias was whether a fair minded and informed observer would conclude that there was a possibility of the Judge having been influenced. It was necessary to look at all the circumstances of the case and in the light of any explanations advanced. Here, anyone would recognise that on occasion in private life, a Judge would need to use service providers such as solicitors. There is no reason to suggest in these circumstances that a Judge would favour solicitors or their client. Judges were often acquainted with advocates or solicitors. The fair-minded observer would conclude that a Judge would not discuss the litigation at issue. In any event, the Judge had volunteered information that the solicitors had acted for him and obtained express confirmation that there was no objection. The obtaining of the codicil was part of this.

Health & Safety

The Health and Safety Commission has issued a draft code on health and safety responsibilities for Company Directors and board members of public sector organizations. The draft code sets out the HSC's view of the roles and responsibilities of the Board in respect of health and safety risks.

The draft code sets up a series of action points including the need for boards to accept joint responsibility and leadership for health and safety performance. The code recommends appointing one board member to champion health and safety issues. All board decisions must reflect health and safety intentions.

Copies of the code can be found on the HSE website www.hse.gov.uk.

The HSC is also seeking comments on its draft strategic plan for 2001-2004. The plan targets three specific industries, agriculture, the health service and construction. In particular, the HSC has identified priorities including falls from height, musculoskeletal disorders and occupational stress.

News From the TCC

Statistics from the TCC show that the number of claims issued has continued to decline albeit that it is possible that levels have now settled at about one third of the pre-1997 numbers:

1996 - 1090
1997 - 480
1998 - 410
1999 - 336
2000 - 325

These figure do not include cases referred to the TCC, which account for around 29% of TCC business.

Arbitration

In Prafilati Italian SRL v Painewebber Butchers Inc, Moore-Bick J had to consider whether or not to set aside an arbitration award in accordance with Section 68 of the 1996 Arbitration Act on the grounds that there was a serious irregularity, namely the procurement of the award by fraud.

The Respondent had failed to disclose two material documents, which would have supported the Applicant's case. It was argued that this meant that the Respondent misled the Tribunal. Here, there was no suggestion that the failure to disclose was carried out by fraud or conduct of a similar nature. Therefore the application failed. Under the 1996 Act a Court cannot remit an award simply on the grounds that new evidence had come to light. No substantial injustice had been suffered.

Other Cases of Interest

In David Wilson Homes Ltd v Surrey Services Ltd & Anr, the CA considered whether or not a clause in an insurance policy, which provided that any dispute or difference arising under the policy be referred to a QC, was an Arbitration Agreement within the 1996 Arbitration Act. If the clause was, then any action brought under the insurance policy could be stayed to arbitration. Despite there being no reference to either an arbitrator or arbitration, the fact that there was an agreement to refer disputes to a person other than the court who was to resolve the dispute in a manner binding on the parties made the agreement, in the opinion of the CA, an arbitration agreement within section 6.

In J Jarvis & Sons Ltd v Castle Wharf Developments Ltd & Others, the CA considered the question of whether or not the professional agent of an employer under a building contract could become liable to a contractor for negligent statements made by that agent to the contractor to induce him to tender. The CA found that in principal, there was absolutely no reason why not. However, it would be necessary to show that the Contractor had relied upon those mis-statements. Thus, whether a duty of care in fact arises would depend on all the circumstances of a particular case.

Here, Jarvis commenced works on the strength of representations that the designs and modifications would be acceptable to the planning authority. The planning authority issued an enforcement notice and Jarvis sought payment on a quantum meruit basis for the works it had carried out. In particular, the court held that here was a very experienced contractor with particular expertise as a design and build contractor. It had known the details of the planning permission and the planning authority had not indicated that it could proceed with its design. Thus Jarvis well knew that starting the building works without the planner's approval for its scheme was at its own risk.

Expert Evidence

In Mutch v Allen, the CA considered Rule 35.6 of the CPR which enables a party to submit written questions to the other side's expert. At a case management conference, a District Judge had allowed the Defendant to put written questions to the Claimant's medical expert. This order was reversed on the basis that the replies did more than merely clarify the report.

The CA disagreed. The DJ had given permission for the questions to be put. The Claimant had not objected. Had the expert been called to give oral evidence, the Defendant would have asked the same questions in cross-examination.

One of the essential reforms behind CPR 35 was to ensure that an expert witness no longer served exclusively the interests of the party by whom he had been instructed and to ensure that his expertise was available to all so that the Court was provided with all relevant material in the most cost effective way. By way of example, CPR 35.11 provides that one party can use the other party's expert report even if that party chose not to rely upon it.

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