The case: CJP Builders Limited -v- William Verry Limited [2008] EWHC 2025, 15 August 2008.
The issue: Discretion of adjudicator to extend time for submissions.
The implication: The adjudicator does have discretion to extend time for service of the response beyond the seven days provided by the adjudication rules within DOM/2 and generally has the discretion to determine his own procedure provided that he does so in a manner that enables the timetable for reaching the decision to be complied with. The adjudicator was wrong to exclude the response issued out of time.
The caseAdjudicators inevitably have to deal with requests from parties for more time in which to prepare submissions and they often have to decide what is to be done about submissions that are made later than the timescale required by the contract or as otherwise agreed or directed by the adjudicator.
Adjudication rules, including the Scheme, require the adjudicator to determine the procedure for the adjudication. The Scheme leaves it to the adjudicator to determine the entire procedure, whereas some rules provide a time period of seven or 14 days from the date of the referral within which the responding party is expected to serve its response.
One of the overriding principles of adjudication is that the procedure must comply with the rules of natural justice, namely that each party has a fair opportunity to make its case and to respond to that of the other. Further, in reaching his decision, the adjudicator is required to take account of the submissions of the parties. In addition, the adjudicator has to balance the requirement to follow a fair procedure with his duty to reach his decision on time.
The recent case of CJP Builders Ltd -v- William Verry Limited principally concerned the enforcement of an adjudicator's decision about the value of an interim application for payment.
Initially, the adjudication had proceeded on the basis that the applicable adjudication rules were those set out at clause 38A of the DOM/2 Conditions, which at clause 5.1.2 provides that the responding party may provide a response within seven days of the referral.
The referral was served on 2 May 2008. The adjudicator invited a response within seven days in accordance with clause 38A. Verry requested until 19 May 2008 to respond. CJP objected and the adjudicator confirmed his view that the contractual timescale of seven days had to be complied with and, significantly, that he did not consider that he had the power to go behind the contractual adjudication rule in clause 38. After further exchanges, CJP agreed to extend the time for the response three times, finally until 12 noon on 14 May 2008. The response was then issued by email five and a half hours late at 17.26 on 14 May 2008.
Agreed extensionCJP's solicitors then took the point that since CJP had not been prepared to agree to an extension beyond noon on 14 May and the adjudicator had no power to give relief, the response had been served out of time and consequently the response should therefore be entirely disregarded.
The adjudicator agreed, stating that he had no discretionary power to defeat the extended deadline allowed by CJP.
Verry then tried to argue by virtue of an ambiguity between different parts of the subcontract order that the TeCSA rules applied, which provided an unfettered right on the part of the adjudicator to decide the procedure.
In his decision, the adjudicator decided that the DOM/2 adjudication rules applied and he maintained that he was bound by the time provision in DOM2 as extended by CJP and he had no discretion to allow a later time for service. He confirmed that he would have allowed further time if he considered that he was not so bound. He found that the response was served out of time and then proceeded to reach his decision as to the value of the interim payment in favour of CJP, ignoring entirely the response from Verry.
Verry, of course, refused to pay the sum decided by the adjudicator, contending that there had been a breach of the rules of natural justice.
The judge decided that the adjudicator was wrong to have considered himself fettered by the timescale for the response within DOM/2. In summary, his reasons were that he found nothing in clause 38A that prevented the adjudicator from extending time clause 38A.2.5.5 requires the adjudicator to set his own procedure and it gives him the absolute discretion to ascertain the facts and the law, which the judge observed must include the right to extend time clause 5.1.2 states that the responding party "may" issue a response within seven days, which does not mean that it must, and there is nothing to say it cannot be issued later if the adjudicator agrees and very clear wording would be required to oust the general rule of natural justice that a party has a right to be heard and to have its submissions considered by the adjudicator.
The court therefore concluded that the adjudicator was wrong to exclude the response from his decision and to have done so was a material breach of the rules of natural justice, resulting in a decision that was not enforceable.
