RSL (Southwest) Ltd v Stansell Ltd
Technology and Construction Court
His Honour Judge Richard Seymour QC
16 June 2003
The adjudicator engaged a programming expert from within his own firm to assist him with the sub-contractor’s extension of time claim. Whilst the adjudicator disclosed the expert’s initial report to the parties for their comments, he did not disclose his final report and made his decision in the sub-contractor’s favour after having considered this final report.
Judge Seymour held that this conduct was in breach of the rules of natural justice. The adjudicator’s obligation under paragraph 12(a) of the Scheme for Construction Contracts to act impartially in carrying out his duties was one in essence to observe the rules of natural justice and was not simply one not to show bias. It was elementary that the rules required that a party should know the case against him and should have an opportunity to meet it. An adjudicator had to give the parties the chance to comment on any material, from whatever source, including the knowledge or experience of the adjudicator himself, to which he was minded to attribute significance in reaching his decision. The mere fact that material before the court indicated that the adjudicator took into account an undisclosed report which might have been of importance in the decision was sufficient to mean that the decision was in breach of the rules.
Judge Seymour also held that the sub-contractor was not entitled to an interim payment in respect of that part of the decision “untainted” by the finding of breach of the rules of natural justice. The dispute referred was how much was due to the sub-contractor in respect of its final account. Whilst it was also conceptually possible for more than one dispute to be referred to the same adjudicator on the same occasion and for the adjudicator to make decisions on the disputes in one document, it was not the case, as the sub-contractor submitted, that any decision was “severable” so as to be able properly to separate out those parts on which the objection bit and those parts which were unaffected.
Adjudicators need to be “transparent” in their dealings with the parties. Any document or report potentially used to reach the decision must be disclosed to both parties to give them the chance to comment on it.