HOYLE v BAK BUILDING (CONTRACTS) LTD
TECHNOLOGY AND CONSTRUCTION COURT
23 AUGUST 2018
The contractor’s contentions that the sub-contractor’s son who represented the sub-contractor in the adjudication had a conflict of interest, was not expressly authorised to represent him and was improperly consulted by the adjudicator should be rejected
The adjudicator, in dealing with the alleged conflict of interest of the sub-contractor being represented in the adjudication by his son, stated that this fact was irrelevant on the basis that there is no requirement for impartiality between a party to adjudication and its representative. Jefford J expressed her agreement with what the adjudicator said.
The contractor in opposing enforcement of the award made by the adjudicator to the sub-contractor of a specified sum stated that (i) It had not dealt with or heard from the sub-contractor at any point throughout any of the proceedings (ii) The person responding in the adjudication was the sub-contractor’s son and (iii) The adjudicator was not directly instructed because it did not see any authority or any indication of an authority from the referring party that authorised his son to deal with this matter. Jefford J in rejecting this contention stated that the contractor’s points were utterly ill-conceived. The sub-contractor made it clear at the outset of the adjudication that he was going to be represented by his son. The letter which enclosed his notice of adjudication said precisely that. Adjudication is not a court process and it is entirely open to somebody involved in the adjudication to be represented by someone whom they wish to represent them. It is not necessary for that person to provide any written form of authority or enter into any other formal arrangement. The fact that the adjudicator may have received submissions from the son had no impact on his jurisdiction whatsoever.
The contractor expressed its belief that the sub-contractor, a surveyor by profession, was consulted and relied upon by the adjudicator. Jefford J in rejecting this contention stated that it was a vague and unsubstantiated allegation. It was supported by no evidence and no evidence could have been adduced to support any allegation that the adjudicator had acted in a way that was biased or otherwise improper so as to vitiate his decision.
THE FULL TEXT OF THE JUDGMENT OF JEFFORD J
1. This is an application by the claimant, Mr Charles David Hoyle, against a construction company B.A.K. Building (Contracts) Ltd (“BAK”) for summary judgment, summary judgment being sought in order to enforce the decision of an adjudicator, Mr Conway, which was given on 22 February 2018. The claimant commenced proceedings and, in the normal way, directions were given by Mr Justice Fraser which abridged time for various activities to be undertaken so that the matter could come before the court for the enforcement of the adjudicator's decision. Those directions included the abridgement of time for acknowledgement of service to four working days; that further evidence should be filed and served by the defendant by 30 July, that any evidence in response by the claimant should be filed by 10 August; that there should be an oral hearing today at 10.30 am and that the claimant should file and serve a paginated bundle comprising all relevant documents, statements, pleadings, etc, by 12.00pm on 20 August 2018.
2. The dispute itself, which was referred to adjudication, arises out of a project at Langdale Gardens and Clifton Court which are in Blackpool. Mr Hoyle undertook carpentry work for BAK, the defendant, pursuant to an oral agreement entered into May 2017. There is no dispute between the parties that there was such an oral agreement. His claim in the adjudication was for a relatively small amount and he was awarded, by the adjudicator's decision, the sum of £3,850.96. The adjudicator also made provision for the payment of interest and the payment of his fees and expenses in the sum of £3,805.50. BAK failed to pay those amounts and, as I have already said, Mr Hoyle, in due course, commenced proceedings to enforce the adjudicator's decision.
3. Before I turn to the substance of the application, I should say that the defendants has sought to have today's hearing adjourned. It appears that on 16 August last Thursday the defendant wrote to the court asking for an adjournment. It is not at all clear to me whether that letter has been received by the court but, in any event, it had not before yesterday come to the attention of any judge. In that letter, the defendant company said that the person who was dealing with this matter had been away when the claim was received. The office had, therefore, filed the acknowledgement of service believing that this would give 28 days for the defence as “The top document was the normal claim form”, The letter contuined:
"Please note that they did not realise that there was a different timetable as they are not legally trained. We were not aware of the hearing date otherwise instructions would have been left as regards the procedure if this was received but as we did not know the hearing was taking place this was unable to be done."
4. The letter continued that the person who had been dealing with this matter had been on annual leave from 26 July until 13 August. It was the receipt of the trial bundle on 16 August stating that there was a hearing on 23 August that had prompted someone to take a closer look at the file. The letter again continued:
"We can confirm that the hearing date in particular is difficult for the firm as both the site manager and the director who would be able to comment more fully and provide statements are on annual leave and do not return to the office until 3rd September 2018."
As I said, the defendant proceeded to ask for extensions for the filing of further evidence and for the re-listing of the hearing on a more convenient date in September.
5. The letter came to my attention because it was responded to by the claimant's solicitors who declined to agree to the adjournment at such short notice and also pointed out that they had written to the defendant on 12 July, enclosing a copy of the order of Mr Justice Fraser directing the defendant to serve evidence in defence by 30 July. For the avoidance of doubt, that order also stated that the hearing would be today at 10.30 am. It follows from that, that before the person who was dealing with this matter went on annual leave, indeed about two weeks before that person went on annual leave, the defendant had been properly notified of this hearing and the directions relating to it.
6. The matter was drawn to my attention after the close of court business yesterday by way of the CE-Filing system. I declined to adjourn the matter on the basis of the documents before me for two reasons. Firstly, it seemed to me that there was no good reason to do so, given that the defendant had had adequate notice of the hearing for the reasons I have given. Secondly, which I will come to when I deal with the substantive matter, that there was no indication of what evidence might be adduced that could have made any difference to the outcome of this application.
7. This morning, Mr Hirst has appeared on behalf of the claimant. Proportionately, he appears without any instructing solicitor. There is no representation whatsoever from the defendant. The defendant is a limited company and it would have to appear either by legal representatives or, with the permission of the court, by an appropriate representative, probably a director of the defendant company. But, in the event, no one has attended. Nevertheless, by some means, a document entitled "Skeleton argument" has been filed. I have considered that document and I will refer to it again when I deal with the substantive application but it seems to me that it is also appropriate to do so in the context of the application to adjourn.
8. The “skeleton argument” is not signed in the sense that it does not identify by whom it has been drafted but it is written in the first person plural and it seems, therefore, to have come directly from the defendant company and not from any legal representatives. The document sets out what it is that the defendant might wish to say in opposition to this application for summary judgment. If there was anything in it that caused me to think that the defendant ought to have an opportunity to make oral submissions to me and that would militate in favour of adjourning this matter, then it would have some impact on my decision but there is nothing in that skeleton argument that causes me to consider that this matter should be adjourned.
9. Therefore, the first matter that I decide is that there should be no adjournment of the application today.
10. I turn next to the substance of the application and it is easiest to do so by reference to the adjudicator's decision. The adjudicator was appointed, on the application of Mr Hoyle, by the Chartered Institute of Arbitrators. The contract between Mr Hoyle and BAK was an oral contract. There were no express terms dealing with either dispute resolution by adjudication or payment provisions. Accordingly, the terms of the Scheme for Construction Contracts applied.
11. On that basis, it was perfectly proper for Mr Hoyle to make an application to a nominating body for the appointment of an adjudicator. It is not the case that in those circumstances the responding company, or responding party, has to agree to the process of adjudication or agree to the appointment of a particular adjudicator. If that were the case, it would drive a coach and horses through the provisions of the Housing Grants, Construction and Regeneration Act 1996 in respect of adjudication.
12. In his notice of adjudication, Mr Hoyle claimed the sum of £3,850.96 for the provision of on-site carpentry works at Langdale Gardens and Clifton Court. The redress sought was the payment of that amount.
13. Mr Conway, who is a quantity surveyor by training, was appointed as the adjudicator. He wrote to the parties on 9 January 2018 advising that he accepted the nomination and setting out his terms and conditions. He perceived that there was some difficulty with apparent the receipt of documents by the responding party, BAK. But on 23 January 2008, as is recited in the adjudicator's decision, he received a letter from BAK which said this:
"We would confirm that we have not agreed to recognise the adjudication and do not agree to be responsible for any fees in this matter. Our reasons for this are as follows: (1) Mr Charles David Hoyle had no written contract with ourselves for the carrying out of works. He was contracted as a sub-contractor and provided a weekly time sheet and was paid for hours worked on site which was not always eight hours per day and, in any event, would have included an unpaid lunch break. (2) The surveyor who was dealing with this matter on behalf of Mr Hoyle we understand is his son and therefore there is a clear conflict of interest and any analysed and valued work assessed by the claimant is not agreed. Mr Hoyle did not, during the whole of the time contracted on the site dispute the time sheets or the payments made until he left the site by mutual agreement. Mr Hoyle was not satisfied at having the money withheld until disputes on the site were resolved and we were not happy with the standard of work which had been good in parts but then some work had been sub standard."
The letter then made further points which all related to the dispute between the parties as to what Mr Hoyle should be paid.
14. The adjudicator, sensibly, approached the letter of 23 January as if, perhaps somewhat generously to the respondent, it raised issues going to his jurisdiction. He responded by a letter of 24 January in which, amongst other things, he said this:
"With regard to BAK's confirmation that it has not agreed to recognise the adjudication, et cetera, of 23 January 2018, I will make the following observations:
(1) Mr Hoyle's entitlement to refer to Adjudication is not dependent upon Mr Hoyle having a written contract with BAK. Such requirements for a written contract do not apply to the Housing Grants Construction and Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2009.
(2) The fact that Mr Charles David Hoyle is represented in these proceedings by his son, Andrew, is irrelevant. I see no 'conflict of interest' as suggested by BAK. I am not aware of any requirement for impartiality between a Party to adjudication and its representative."
Mr Conway was, in my view, entirely right in the views that he expressed in those two paragraphs.
15. No other matter that was raised in the letter of 23 January went to jurisdiction rather than the substance of the dispute between the parties. Mr Conway, therefore, proceeded with the adjudication and, in my judgment, he was entirely right to do so.
16. The skeleton argument that was provided to the court this morning takes the following points which, in fairness to the defendants, I will deal with. The first is that the adjudicator acted “outside the matter being referred”. The skeleton says the defendant believes the adjudicator acted outside his jurisdiction and did not answer the question which was referred to him.
17. Those points are developed in the following way. Firstly, it is said that the adjudicator accepted instructions and dealt directly with Mr Andrew Hoyle who was the son of Mr Charles Hoyle. The skeleton continues, and I quote:
"At no point throughout any of the proceedings have we dealt with or heard from CDH. Even through the arbitration, the person responding was Andrew Hoyle, not CDH. Therefore, as we did not see any authority or any indication of an authority from CDH that authorised his son to deal with this matter, the adjudicator was not directly instructed."
Those points are, in my view, utterly ill-conceived. Mr Hoyle made it clear at the outset of the adjudication that he was going to be represented by his son who was a chartered quantity surveyor. The letter of 5 January to BAK, which enclosed his notice of adjudication, says precisely that. Adjudication is not a court process and it is entirely open to somebody involved in the adjudication to be represented by someone whom they wish to represent them. It is not necessary for them to provide any written form of authority or enter into any other formal arrangement and the fact that the adjudicator may have received submissions from Mr Andrew Hoyle has no impact on his jurisdiction whatsoever.
18. The following points, under the heading, "Adjudicator acted outside the matter being referred" are all matters which go to the terms of the contract between Mr Hoyle and BAK and what, as a consequence, Mr Hoyle was entitled to be paid. They are all, therefore, matters that challenge the substantive decision of the adjudicator. It is well-established that this court, on an application for summary judgment to enforce the decision of an adjudicator, is not concerned with whether his decision was right or wrong but merely with whether it was made within his jurisdiction (which in this case) it clearly was or whether there was, in some other respect, a breach of natural justice in the obtaining of the decision.
19. Apparently, in some respect, aware of that of that position in law, the defendant now takes a second point under the heading, "Adjudicator showed bias". What is said in the skeleton argument under that heading is,
"As can be seen above, the adjudicator failed to take account of evidence sent to him and relied instead on the unevidenced allegations of CDH".
Four examples are given. They are all, once again, issues that go to whether the adjudicator's decision was right or wrong. They do not come close to establishing bias on the part of the adjudicator.
20. I also observe that, during the course of the adjudication, BAK participated in the adjudication without either continuing to reserve their rights in respect of the jurisdictional argument or raising any argument that the adjudicator was acting in breach of natural justice and/or showing bias.
21. The last point which is taken comes back to Mr Andrew Hoyle, the son of Mr Charles Hoyle. It is that BAK believe that Andrew Hoyle, who was a surveyor by profession, was consulted and relied upon by the adjudicator. That is an allegation made in the skeleton argument which is wholly unsubstantiated and appears in the vaguest possible way to allege that the adjudicator, himself a qualified chartered surveyor, has somehow improperly relied on the representative of the referring party in reaching his decision. That is, as I have said, the most vague and unsubstantiated allegation. I can see absolutely nothing in it. It is supported by absolutely no evidence and there is, in my view, nothing to support, and no evidence that could have been adduced had I permitted an adjournment, that will support any allegation that Mr Conway had acted in a way that was biased or otherwise improper so as to vitiate his decision.
22. It is, therefore, my judgment that this application should be allowed. It will be allowed in the sum on which Mr Hirst will address me in a moment. I would record that in light of his extremely clear and thorough skeleton argument and in the absence of the attendance of the defendant, it has not been necessary for me to hear any further oral submissions from him and, as he rightly said, keeping this hearing to a reasonable length in these circumstances was a sensible and proportionate course to adopt.