Andrew Wallace Ltd V Noon

ANDREW WALLACE LTD V NOON Technology and Construction Court His Honour Judge David Grant 19 November 2008

THE FULL TEXT OF THE JUDGMENT OF JUDGE GRANT

1. Because of the summary nature of these proceedings, and the underlying context of an application to enforce an adjudicator's decision, I am delivering this as an ex tempore judgment.

2. This is an application to enforce an adjudicator's decision and it is resisted essentially on the ground of apparent bias on the part of the adjudicator. The essential history of the adjudication is set out in the witness statement of Kathleen Wilson of the claimant's solicitors and it is as follows. On 23 May 2008, the claimant gave notice of adjudication. On 29 May the RIBA appointed Mr John Price as adjudicator. On 30 May the claimant served a referral notice. On 9 June the defendants served a response. On 16 June the claimant served a reply. On 20 June the defendants served a rejoinder and then on 23 June the claimant served a reply to that rejoinder. Also on 23 June there was a meeting held by the adjudicator with both parties' quantity surveyors in attendance. On 24 June the adjudicator visited the site. By agreement on 26 August the adjudicator gave his decision.

3. The essential complaints of the defendant were summarised by Mr Grantham, who appears on behalf of the defendant, towards the very end of his submissions in court today and they are fourfold. First, it is the fact of the dispute resolution relationship as between Mr Price and the claimant, Andrew Wallace Ltd. Secondly, as regards the mediation to which I shall refer in a moment, it is the proximity of time of the mediation hearing conducted by Mr Price and his subsequent acceptance of appointment as adjudicator. Thirdly, complaint is made that there was no initial disclosure of his having acted as a dispute resolver to either the RIBA or the parties, especially the defendant, thus depriving the defendant of an opportunity to make representations. Fourthly, there is a complaint that such disclosure as was in fact provided was somewhat piecemeal in nature and had to be ascertained by means of particular questions, particularly having regard to the fact that Mr Wallace had acted as the representative for Andrew Wallace Ltd in the mediation.

4. The essential facts to which it is appropriate to have regard are as follows. First, in October 2005, Mr Price had acted as adjudicator in a dispute involving Andrew Wallace Ltd. That is gleaned from correspondence which has been exhibited to the witness statement of Mr Jeff Noon, the defendant, and in particular the letter of 3 July at page 25 where, in the third paragraph of that letter, there is a reference to there having been a previous adjudication. That was in the context of a complaint about an email being sent to one of the parties but not the other. I will come back to that letter in a moment.

5. In a subsequent letter of 7 July at page 29 of that exhibit, Mr Price wrote as follows:

“As far as I can recall I had no direct communication with Mr Wallace during the October 2005 adjudication.”

6. Save for the fact that there was an adjudication in October 2005, there is no evidence before the court about the subject matter of that adjudication and in the course of his submissions Mr Grantham agreed that there was no evidence before the court about the subject matter of that adjudication.

7. Secondly, on 27 May 2008, Mr Price conducted a mediation in a dispute in which Andrew Wallace Ltd was a party and reference to that is made in the letter of 7 July 2008 (page 30 of exhibit JN/1), where Mr Price writes, "I conducted the mediation on 27 May 2008". It is apparent from the form of application for appointment of a person to act as mediator (page 1 of exhibit AW1 to the witness statement of Mr Wallace) that the parties to that mediation, one of whom being Andrew Wallace Ltd, made application to the RIBA for the appointment of a person to act as a mediator. Mr Wallace signed that application form, as it appears from the photocopy (which is not entirely clear) on 7 March 2008 and the other party signed it on 18 March 2008. As regards the subject matter of that mediation, that is dealt with by Mr Wallace in his witness statement, paragraph 10 of which provides as follows: “Earlier this year I had a dispute with a domestic client over a relatively small sum. We both agreed to resolve the dispute by way of mediation. We both completed the RIBA application form requesting RIBA to nominate a Mediator, and Mr Price was appointed by the RIBA. A copy can be found at page 1 of the bundle.”

Then at paragraph 11:

“The form was sent to the RIBA and a week or so later Mr Price was nominated by RIBA. Neither I nor the other party objected to his appointment. The mediation was eventually arranged for May 2008 taking into account availability due to holidays etc. There were various emails between the parties whilst we arranged the date - hence Mr Price had my contact details.”

He then goes on to add:

“The fact he had my email address appears to be what started the Defendant's argument about bias.”

8. Thirdly, there is correspondence which is particularly germane to this application, and that correspondence is helpfully set out in the exhibit to Mr Noon's witness statement. First, on 1 July 2008 (see page JN1/23) those who were representing Mr Noon in the adjudication, Pye Associates, wrote to Mr Price as follows:

“In our letter to you dated 27 June 2008, we reported not only that the meeting of the quantity surveyors had been unsuccessful but that the Referring Party intends to respond to the joint report by issuing comments. Although we made strong a objection to this in the letter, the Referring Party's quantity surveyor has since made those submissions.

Later in the evening of 27 June the Responding Party received an email from Cobbetts attaching a copy of an email which you had sent to Kath Wilson of Cobbetts and Andrew Wallace himself. The email however was not addressed to Pye Associates. What is more of a concern to us is why it is that, in any event, you have Andrew Wallace's email address in your computer address book.

We also refer to a conversation which took place at the site meeting on 24 June 2008 when you disclosed to Jeff Noon that you already knew Andrew Wallace from a previous adjudication.

In view of the above our client would like you to fully disclose all your previous involvement with Andrew Wallace and/or Andrew Wallace Limited or any other company he may be associated with.”

9. Mr Price replied by letter dated 3 July (page 25 of the exhibit), this apparently being a letter written while Mr Price was in fact overseas:

“Dear Sirs

I acknowledge receipt of Pye Associates' letter of 1 July 2008. As the parties have been informed I am overseas until 6 July but I shall respond to the last three paragraphs of that letter. Other matters will have to await my return and the timetable of the adjudication has been agreed so as to cater for that.

My email of 27 June 2008 should have been sent to Cobbetts and Pye and not to Mr Wallace. This was an administrative error by my secretary for which I apologise. Mr Wallace's email address is to be found within the documents in this adjudication. We also have it from a previous adjudication - see below.

I acted as adjudicator in October 2005 and as mediator in May 2008 in disputes in which Andrew Wallace Limited was one of the parties. I have had no previous contact with Andrew Wallace or Andrew Wallace Limited or any other company, as far as I am aware, with which Andrew Wallace is or has been associated.”

10. Pye Associates then replied the following day, which was Friday 4 July (page 26):

“Thank you for your letter dated 3 July.

We note the point you have made in your reply regarding the email address of Andrew Wallace being on the documents of this adjudication. We are still however at a loss to understand why it is on your computer address book since if Mr Wallace was represented in both the previous adjudications and the more recent mediation then you would not have communicated with him directly.

Please therefore advise us firstly, as to whether Mr Wallace has ever communicated with you or you with him directly and secondly, whether the subject matter of the mediation was similar to the subject matter of this present adjudication.”

11. As I say, that letter appears to have been written on the Friday. The following Monday, 7 July, Pye Associates wrote again (pages 27 and 28 of the exhibit):

“We write further to our letter dated 4 July to which we have not had a reply.”

Mr Grantham in the course of his submissions made it abundantly clear that it was not in any way part of the defendant's case today that there could be any reasonable or sensible complaint made by the defendants that the adjudicator had not replied to the letter, which it appears had been written only the previous Friday, Pye Associates writing again the very following Monday. To continue with the letter:

“We contend that the request for information in the letter was reasonable following disclosure of your involvement with the Referring Party in a mediation in May 2008. For the following reasons therefore we suspect the possibility of bias or partiality in your acting as adjudicator in this dispute the appointment of which we note was taken up on 29 May 2008, the same month as the mediation.

1. Non-disclosure until now of your involvement with the mediation.

2. The disclosure eventually made on 24 June 2008 at the site inspection was not made to both parties simultaneously and even then was only made verbally to our client, Jeff Noon.

3. When you informed the Responding Party of your involvement in the adjudication of 2005 in which Andrew Wallace was one of the parties you chose, consciously, not to mention the mediation although such involvement would have been uppermost in your mind since you had only just completed the mediation probably only a matter of days before accepting the appointment of adjudicator in this dispute.

4. Since bias may arise either from a relationship between the adjudicator and one of the parties, or from a relationship between the adjudicator and the subject matter of the dispute and since we have not had a reply to our questions relating to the latter then we must assume that the subject-matter of the mediation was similar. We therefore believe that in this adjudication you are not now in a position to approach with an open mind the submissions made by the parties and, particularly, by the Responding Party.

As a result of this, we contend that a right-minded person with full knowledge of the facts in these circumstances would be led to conclude that there is a real likelihood of bias and accordingly, invite you to resign as adjudicator in this dispute.”

12. Mr Price then replied on that same Monday, 7 July. His letter is at pages 29 and 30:

“Dear Sirs I refer to Pye Associates' letter of 7 July received by fax this afternoon at which time I was in the process of drafting a reply to Pye's letter of 4 July 2008, one working day after it was sent.

My secretary tells me that our computer sometimes automatically puts email addresses in our address book when emails are received. We have, as previously explained, received an email from Andrew Wallace during the course of this adjudication.

As also already explained my email of 27 June 2008 was sent to A Wallace Limited by my secretary by mistake. I have had no other direct contact with Andrew Wallace Limited during this adjudication.

As far as I can recall I had no direct communication with Mr Wallace during the October 2005 adjudication.

The mediation was on a different contract with a different client of A Wallace Ltd.

I did, of course, communicate directly with Mr Wallace during that mediation but as the subject was a completely different contract I did not consider when I accepted the RIBA nomination in this adjudication that any conflict arose.

Turning to Pye's letter of 7 July 2008 I do not believe there is any question of any bias or partiality in this adjudication.

When the RIBA asked me if I was willing to act I said yes because my only prior involvement with Andrew Wallace Ltd or Mr Wallace was as a dispute resolver on completely unconnected contracts. I have never acted for or against Andrew Wallace Limited and have never had any contact with that company or Mr Wallace other than in the role of Adjudicator and Mediator on two previous completely separate disputes.

Taking the numbered points in Pye's letter of 7 July 2008:

1) I saw no possibility of any bias or conflict when asked by the RIBA if I would act.

The RIBA asked whether the adjudicator is prepared to act "on the understanding you have no current relationship towards either party nor any connection with the subject matter of the dispute". The answer was "no" in both cases. My previous role as adjudicator and mediator gave rise to no conflicts of interest.

2) At the site meeting of 24 June 2008 I explained to Mr Noon that I had met Mr Wallace before. This was not a formal "disclosure". I do not understand the point about "simultaneously". Mr Wallace was aware that we had already met, and when I spoke to Mr Noon Mr Wallace was present.

3) I conducted the mediation on 27 May and accepted the RIBA nomination on 29 May because my involvement in the mediated dispute was completely finished.

If I mentioned adjudication but not the mediation when I met Mr Noon a month later that was not intentional. Indeed I think I may have referred to the mediation. However, the point I was making to Mr Noon was that I had only ever met Mr Wallace in my capacity as a dispute resolver (eg, adjudicator or mediator) and had no other involvement with Mr Wallace.

4) It is premature to complain at 14.55 on a Monday of not having received a reply to a fax sent at 14.35 on a Friday. As the parties had been advised, I was overseas until yesterday.

Pye's assumption that the "subject matter of the mediation was similar" is incorrect. It was on a completely different contract with a different client of Wallace. It did involve payment of fees. It should also be appreciated that in a mediation the mediator makes no decisions.

I maintain that I am in a position to conduct this adjudication with "an open mind". I do not consider it appropriate to resign. I am, however, prepared to suspend the adjudication, with the consent of both parties, if Mr Noon wishes to obtain a court ruling as to whether I should continue. It is, of course, in both parties' interest that any challenge to my jurisdiction is dealt with before any costs are further incurred.

Alternatively, given the above explanation and my assurance that I shall conduct this adjudication with an open mind and even-mindedly, Mr Noon may wish to consider his position and decide not to challenge my jurisdiction.

I await to hear from both parties as a matter of urgency.”

The last paragraph is not relevant to the current proceedings. I should add for completion that, pursuant to Mr Price's proposal that he would be prepared to suspend the adjudication with the consent of both parties, what happened was that while the defendant's representatives were of that mind, the claimant's solicitors disagreed and requested that the adjudicator not resign but continue to his decision, which is what in the event happened. That letter of 7 July of course sets out the adjudicator's explanation in the sense explained by Lord Phillips.

13. I turn now to consider the law. I have been referred by both counsel to a number of cases which set out the essential history of this jurisprudence. I shall refer to them sequentially. First, the case of Locabail UK Limited v Bayfield Properties [2000] QB 451, as cited by Dyson LJ in the case Amec Capital Projects v Whitefriars City Estates [2005] BLR 1 in paragraph 18 of his judgment. There, citing paragraph 25 of the Court of Appeal's judgment in Locabail, is set out the following passage:

“It would be dangerous and futile to attempt to define or list the factors which may or may not give rise to a real danger of bias. Everything will depend on the facts, which may include the nature of the issue to be decided. We cannot, however, conceive of circumstances in which an objection could be soundly based on the religion, ethnic or national origin, gender, age class, means or sexual orientation of the judge. Nor, at any rate, ordinarily could an objection be soundly based on …”

Then a number of matters are there set out:

“… or previous receipt of instructions to act for or against any party, solicitor or advocate engaged in a case before him By contrast, a real danger of bias might well be thought to arise if …”

Then there are a number of matters there set out:

“… for any other reason, there were real ground for doubting the ability of the judge to ignore extraneous considerations, prejudices and predilections and bring an objective judgment to bear on the issues before him In most cases, we think, the answer, one way or the other, will be obvious. But if in any case there is real ground for doubt, that doubt should be resolved in favour of recusal.”

14. From that passage of the Court of Appeal's judgment in Locabail, Mr Fraser, who appears for the claimant, makes two submissions. First, that if acting for a party is not ordinarily a matter that would provide a sound basis for objection, then acting as a dispute resolver would be even the less so. Secondly, that the answer, one way or another, should be obvious and that point is essentially the same point that was made by Chadwick LJ in the subsequent case of Carillion, where he refers to "the plainest of cases".

15. Secondly, I was referred in passing to the case of Porter v Magill [2002] 2 AC 357 in the sense that it was that case whereby the House of Lords approved the decision in Locabail: see paragraph 18 of Dyson LJ's judgment in Amec.

16. Thirdly, the case of In re Medicaments [2001] 1 WLR 701. Paragraph 37 of the judgment of the Court of Appeal in In re Medicaments was cited by Dyson LJ at paragraph 17 of his judgment in Amec. That paragraph bears repetition: “Bias is an attitude of mind which prevents the judge from making an objective determination of the issues that he has to resolve. A judge may be biased because he has reason to prefer one outcome of the case to another. He may be biased because he has reason to favour one party rather than another. He may be biased not in favour of one outcome of the dispute but because of a prejudice in favour of or against a particular witness which prevents an impartial assessment of the evidence of that witness. Bias can come in many forms. It may consist of an irrational prejudice or may arise from particular circumstances which, for logical reasons, predispose a judge towards a particular view of the evidence or issues before him.”

Also to be noted are paragraphs 83 to 85 of that judgment. In paragraph 83, Lord Phillips MR, giving the judgment of the court held as follows:

“We would summarise the principles to be derived from this line of cases as follows. (1) If a judge is shown to have been influenced by actual bias, his decision must be set aside. (2) Where actual bias has not been established the personal impartiality of the judge is to be presumed …”

I pause to interject that actual bias was not pursued by Mr Grantham in the course of his submissions. This is thus a case where the principal allegation is that of apparent bias. To continue:

“(3) The court then has to decide whether, on an objective appraisal, the material facts give rise to a legitimate fear that the judge might not have been impartial. If they do the decision of the judge must be set aside. (4) The material facts are not limited to those which were apparent to the applicant. They are those which are ascertained upon investigation by the court. (5) An important consideration in making an objective appraisal of the facts is the desirability that the public should remain confident in the administration of justice.”

Then at paragraph 84 Lord Phillips MR continued:

“This approach comes close to that in R v Gough. The difference is that, when the Strasbourg court considers whether the material circumstances give rise to a reasonable apprehension of bias, it makes it plain that it is applying an objective test to the circumstances, not passing judgment on the likelihood that the particular tribunal under review was in fact biased.”

And at paragraph 85:

“ When the Strasbourg jurisprudence is taken into account, we believe that a modest adjustment of the test in R v Gough is called for, which makes it plain that it is, in effect, no different from the test applied in most of the Commonwealth and in Scotland. The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the tribunal was biased.”

17. Fourthly, I was taken to Amec, to which I have already referred, and in particular to paragraphs 14 to 18 of that judgment. In particular, at paragraph 16 Dyson LJ sets out the test as follows:

“The test for apparent bias is not in doubt. It is whether a fair-minded and informed observer, having considered all the circumstances which have a bearing on the suggestion that the decision-maker was biased, would conclude that there was a real possibility that he was biased …”

Of course, those words resonate with the words of Lord Phillips MR that I have just recited.

18. Again at paragraph 22 of Dyson LJ's judgment is the following passage:

“It is easy enough to make challenges of breach of natural justice against an adjudicator. The purpose of the scheme of the 1996 Act is now well known. It is to provide a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requiring the decisions of adjudicators to be enforced pending final determination of disputes by arbitration, litigation or agreement. The intention of Parliament to achieve this purpose will be undermined if allegations of breach of natural justice are not examined critically when they are raised by parties who are seeking to avoid complying with adjudicators' decisions. It is only where the defendant has advanced a properly arguable objection based on apparent bias that he should be permitted to resist summary enforcement of the adjudicator's award on that ground.”

19. Fifthly, I have been referred in passing to the case of Carillion Construction Limited v Devonport Dockyard Limited [2005] EWCA Civ 1358, and to paragraph 85 of that judgment, that being a judgment cited by Akenhead J in the more recent case of Makers, to which I shall refer in a moment. In that judgment, Chadwick LJ held at paragraph 85:

“The objective which underlies the 1996 Act and the statutory scheme requires the courts to respect and enforce an adjudicator's decision unless it is plain that the question which he has decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair. It should be only in rare circumstances that the courts will interfere with the decision of an adjudicator. The courts should give no encouragement to the approach adopted in the present case; which may, indeed, be aptly described as "simply scrabbling around to find some argument, however tenuous, to resist payment".

87. In the overwhelming majority of cases, the proper course for the party who is unsuccessful in an adjudication under the scheme must be to pay the amount that he has been ordered to pay by the adjudicator. If he does not accept the adjudicator's decision as correct (whether on the facts or the law) he can take legal or arbitration proceedings in order to establish the true position. To seek to challenge the adjudicator's decision on the ground that he has exceeded his jurisdiction or breached the rules of natural justice (save in the plainest cases) is likely to lead to a substantial waste of time and expense …”

20. Sixthly, the case of Makers v London Borough of Camden [2008] BLR 470, in particular paragraphs 34 and 36. At paragraph 34 Akenhead J held as follows:

“One must judge apparent bias objectively, by the standards of the "fair-minded and informed observer" referred to in Porter v Magill. The fact that individuals within Camden are subjectively concerned or distressed by what has happened is not in itself material. Parties to adjudications must avoid making mountains out of molehills even where something happens which is outside their immediately experience.

36. The court is urged that, even if it is against Camden on each individual matter raised by it, taken overall, and given the possible importance of the issues raised in the case, summary judgment is inappropriate. I am mindful however of the numerous authorities that point inexorably to the prompt enforcement of valid adjudicators' decisions.”

Then Akenhead J went on to cite those passages of Chadwick LJ's judgment in Carillion to which I have already made reference.

21. I have also been referred to decisions in the case of Glencot and both the Discain cases. As regards Glencot, it is important to note that that case is singularly distinct from the facts of the present case, for the specific reason that in Glencot the very same person acted as mediator in the course of an adjudication in which he had already been appointed adjudicator. Thus the facts of Glencot are peculiar to that case, and are significantly different from those in the present case.

22. From all of those authorities, Mr Fraser makes two submissions of general nature as regards applications of this type. First, that the court should examine critically the allegations of breach of natural justice, here an allegation of apparent bias: see Dyson LJ at paragraph 22 of his judgment in Amec. Secondly, that the answer should be "obvious", to use the terminology of the judgment of the Court of Appeal in paragraph 25 of its judgment in Locabail, which was cited by Dyson LJ in paragraph 18 of his judgment in Amec, or something that arises only "in the plainest of cases" to adopt the language of Chadwick LJ in Carillion. 23. In my judgment, both those submissions are well founded and I accept them and will apply them in my determination of this application.

24. To my mind, the essential question that calls for decision in this case is as follows: does the fact that Mr Price had acted as mediator in an entirely separate dispute involving one of the parties to this adjudication, but otherwise entirely unconnected with the subject matter of this adjudication, albeit conducted only two days before he was appointed adjudicator in this adjudication, mean that the "fair- minded and impartial observer, having considered all the circumstances which have a bearing on the suggestion that the decision maker was biased, would conclude that there was a real possibility that he was biased"?

25. In my judgment, the answer to that question is no. The reasons on the evidence for that conclusion are as follows. First, this adjudicator had no personal knowledge of either of the parties. Secondly, the fact of his professional qualifications is a material or relevant factor, those being that he was FRICS and FCIArb and also-in passing-the fact that he was a chartered arbitrator, which puts him among the relatively small number of such arbitrators. Thirdly, the fact that he was appointed and not selected by the parties, that being a different situation from that which may have formed part of the background to the case of Makers. Fourthly, the criteria used by the RIBA in their questions addressed to a person intended to be appointed as arbitrator. Here one goes back to the letter of 7 July (pages 29 and 30 of exhibit JN1). Although the letter from the RIBA to Mr Price is not in evidence before the court today, it has been sensibly accepted by both parties that such a letter was indeed written by the RIBA to Mr Price in such terms.

26. What follows from that is that Mr Price's position was that he had no current relationship towards either of the parties to this adjudication, nor did he have any connection with the subject matter of the dispute. It follows that the defendant's submission that summary judgment should not be permitted because of apparent bias on the part of the adjudicator fails.

27. Mr Grantham made a supplemental submission that, if he was not successful on the first main limb of his argument, then as a fall-back position, the defendant contended that there was some other good reason for a trial, namely that the issue of apparent bias would still have to be investigated and that could only be progressed through the process of disclosure. But, as Mr Grantham rightly appreciated in the course of his oral submissions, that submission itself runs into the problem of precisely what would be the ambit of disclosure, when such disclosure would be directed towards documents connected with or relating to a mediation, which process is, of course, confidential to the parties to that mediation. There is then the further complication that here the dispute resolution process between these parties is that of arbitration, as acknowledged by Mr Jeff Noon in paragraph 30 of his witness statement.

28. Mr Fraser meets those points by drawing attention to the function and purpose of adjudication. It is to provide an interim yet binding remedy. If a party is dissatisfied with the outcome of the adjudication, then his remedy is to get on with the substantive process of dispute resolution which remains available to him, whether that be litigation or, as apparently here, arbitration. I concluded that the points relied upon by Mr Grantham in this context are not of sufficient weight to amount to or qualify as some other good reason for a trial. Accordingly, the claimant's application for summary judgment will succeed.