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England and Wales High Court (Technology and Construction Court) Decisions
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Cite as:  EWHC 3710 (TCC)
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| Eurocom Limited
- and -
Ms Fionnuala McCredie QC and Mr Paul Bury (instructed by Mr Suber Akther, Siemens PLC Legal Department) for the Defendant
Crown Copyright ©
Mr Justice Ramsey:
"We would advise that the following should not be appointed:
Mr Leslie Dight and Mr. Nigel Dight of Dight and partners; Mr. Siamak Soudagar of Soudagar associates; Rob Tate regarding his fees - giving rise to apparent bias; Peter Barns for dispute of a minimum fees charge and apparent bias; Additionally Keith Rawson, Mark Pontin, J R Smalley, Jamie Williams, Colin Little, Christopher Ennis and Richard Silver, Mathew Molloy who has acted previously or anyone connected with Fenwick Elliott solicitors who have advised the Referring Party."
"If it is known that specific adjudicators would be unable to act because of a conflict of interest, please give details here. Please note: the form will automatically be copied to the responding party. Where time permits, we will allow 24 hours for a response to be made before making a nomination. RICS reserves the right to copy any correspondence to the adjudicator and to the other party."
"I can advise that we are unable to provide copies of any documentation received. I would suggest you contact the referring party directly to obtain copies of the documents you require."
"Within seven days of service of this order the Claimant is to disclose copies of all communications relating to the appointment of the adjudicator and, in relation to any potential adjudicator whom it claimed to have a conflict of interest, within ten days of service of this order it is to state briefly what that conflict of interest was."
The Issues on this Application
(1) Whether the appointment of the adjudicator in the Second Adjudication was invalid because of the information provided by Mr Giles of Knowles to the RICS in making the application for the appointment of an adjudicator and/or by the action of the RICS in failing to raise conflicts of interest with Siemens in accordance with the procedure in their explanatory notes.
(2) Whether the decision in the Second Adjudication sought to adjudicate again on the same or substantially the same matters as had been referred to and/or decided in the First Adjudication.
(3) Whether the adjudicator in the Second Adjudication adopted a procedure which contravened the rules of natural justice.
(4) Whether there should be a stay of enforcement of any sums awarded by way of summary judgment.
Appointment of the Adjudicator
"On the same page of the application form there is a box headed "Are there any adjudicators who would have a conflict of interest in this case?". I largely use this box as a means of stating to which adjudicators, based on past experience, I would not send a referral document: in effect a pre-emptive rejection list. This saves time and money that would otherwise be expended in allowing notices of adjudication to lapse and reapplying for alternative adjudicators. In the instances where there is a conflict I obviously say why."
"With regard to Mr. Matthew Malloy who had adjudicated on a previous dispute between the parties, I considered that he had been inundated with jurisdictional challenges during that adjudication and I thought a fresh mind was appropriate."
"In respect of all other persons listed in the box headed "Are there any adjudicators who would have a conflict of interest in this case?" these do not have a conflict as such. They are, as I described earlier in this statement,"
"(7) It might be possible to imply a term by which the party seeking a nomination should not suborn the system of nomination. Thus, (wholly irrelevant here) bribing the nominator would by one route or another invalidate the nomination or the nomination of someone one knew was actually biased in favour of the requesting party could be undermined. In the latter example, the adjudicator's decision would in any event be unenforceable on non jurisdictional grounds. However, that term is not alleged in this case and the facts do not begin to support a breach of such a term.
I am unconvinced that, even if the Implied Terms applied, a breach of it would, in the absence of impropriety, undermine or invalidate the appointment of the adjudicator. The appointment would still be valid having resulted from an application for nomination and the nominator, acting in good faith, would formally have nominated a person properly. The remedy would be damages for breach of the Implied Term, which could include the wasted costs of the adjudication."
"My Lords, the so-called rules of natural justice are not engraved on tablets of stone. To use the phrase which better expresses the underlying concept, what the requirements of fairness demand when anybody domestic, administrative or judicial has to make a decision which would affect the rights of individuals depends on the character of the decision-making body, the kind of decisions it has to make and the statutory or other framework in which it operates. In particular it is well-established that when a statute has conferred on any body the power to make decisions affecting individuals, the court will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness."
Was there a false statement?
"Whether this is one of a series of adjudications on the same contract. Normal policy is to nominate the same adjudicator because of potential savings in costs and time. Each application is treated on an individual basis and there may be circumstances where it may not be appropriate to nominate the same adjudicator. These could include: the availability of the adjudicator; court action by one of the parties relating to the adjudicator's previous decision; different types of dispute; other reasons which RICS consider makes a nomination inappropriate. RICS retains a discretion which will always be exercised fairly;"
Was the false statement made deliberately or recklessly?
The effect of the false statement
"No court in this land will allow a person to keep an advantage which he obtained by fraud. No judgment of a court, no order of a minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever…."
"The principle is that fraud cancels the advantage which would otherwise have been obtained from the transaction by avoiding the transaction altogether."
"Mr. Pryor, although accepting the principle in the speech of Lord Herschell which I have just cited, submitted that before fraud could be found the court must also hold that the dishonest and false representation was calculated to deceive and did deceive the recipient. That may be necessary in actions in which a party seeks to recover damages based on fraudulent statements, but in a case where the party committing the fraud seeks to rely upon his fraudulent conduct a court will not give effect to that conduct whether or not it deceives the recipient. In practice all fraudulent statements and notices to quit under Schedule 3 are calculated to deceive in that they are assertions that the landlord honestly believes that he has a good ground of complaint, honestly believes the facts stated as reasons for the notice and honestly believes that he has a reasonable case to terminate the tenancy because his interest has been materially prejudiced. But the fact that the tenant is not deceived is irrelevant. The notice if fraudulent is a nullity and the court will refuse to give it effect."
"On this analysis I am unable to see any material distinction between the declaration which was considered in Lazarus Estates Ltd. v. Beasley and a notice to quit which is given under section 26(2) of the Act of 1986. If in such a notice the landlord fraudulently states that the tenant has committed breaches of covenant which he has not committed, the notice is invalid. It is as if it has not been given and there has been nothing which can bring the tenancy to an end. The tenant's state of mind on receiving the notice is irrelevant. It does not matter whether he is deceived by it or not."
"The principle is mainly familiar in the context of contracts and other consensual arrangements, in which the effect of fraud is to vitiate consent so that the transaction becomes voidable ab initio. But it has been applied altogether more generally, in cases which can be rationalised only on grounds of public policy, for example to justify setting aside a public act such as a judgment, which is in no sense consensual, a jurisdiction which has existed since at least 1775: Duchess of Kingston's Case (1776) 2 Smith's LC (13th ed) 644, 646, 651. Or to abrogate a right derived from a legal status, such as marriage: R v Secretary of State for the Home Department, Ex p Puttick  QB 767. Or to disapply a statutory time bar which on the face of the statute applies: Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government  2 AC 304. These decisions (and there are others) illustrate a broader principle governing cases in which the benefit of some apparently absolute legal principle has been obtained by dishonesty."
Breach of an implied term
Breach of natural justice by the RICS
Conclusion on the jurisdiction of the adjudicator
Overlap between first and second adjudication
"Appendix C has a fairly sophisticated and new critical path analysis. It could well be that grounds for extension of time, which were not established individually in the first adjudication, could nevertheless legitimately feature in Appendix C, in conjunction with other grounds not advance in the first adjudication, as being on a critical path affected by those other causes of delay. In principle, such a composite claim might legitimately be seen as outside the dispute which the first adjudicator determined."
Compensation Events/ Variations
"There is a real likelihood that the Decisions in Adjudication No. 1 are about sums due, merely on an interim account basis: an interim account is just that… interim. It does not bind or shut out the Final Respondent Account. It is nevertheless open to the parties to elect to adopt decisions of an adjudicator arising out of an interim account Adjudication as appears to be the case here in the list provided by Eurocom. The adjudicator (here) in Adjudication No.2 does not accept that any other Decisions in Adjudication No.1 are binding."
EC12 Extended Working/NOP
Whether the procedure contravened the rules of natural justice.
Stay of enforcement