07 Feb 2024
Following the landmark decision in Churchill, Marcus Cato FCIArb and Ken Salmon MCIArb delve into what could come next for adjudication. Could ‘Court-annexed Adjudication’ be a way forward?
The dispute landscape has changed dramatically with the Court of Appeal decision in James Churchill v Merthyr Tydfil County Borough Council  EWCA Civ 1416 (Churchill) which has opened the gates for a more integrated approach to alternative dispute resolution (ADR). It was decided in the Churchill judgment that courts have the power to order parties to engage in ADR, provided the power is exercised in a way that does not impair “the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost” .
It’s clear that when domestic disputes (between homeowner and builder or architect) in construction occur, they can be extremely painful and damaging. For many domestic clients, building works will represent the single biggest investment they will make beyond the purchase of a property. Many domestic projects may be more suited to adjudication because of their technical content, recurring themes and value. All parties tend to suffer greatly from a construction-based dispute whether it be the lack of amenity from unfinished or defective works, or the impact on cashflow or reputation.
Churchill – More than mediation
The invitation to embrace ADR into the UK judicial process is clear. Plus, the benefits of utilising adjudication, arbitration and expert witnesses for construction-based disputes has provenance, with their potential to offer speed, cost-effectiveness and better, more appropriate technical evaluation.
It no longer seems radical that the courts should consider releasing low or lower value construction disputes (involving consumers as well as businesses) to a non-statutory form of interim binding or final and binding adjudication.
Before the Churchill judgment, the judgment of His Honour Judge Stephen Davies in The Sky’s the Limit Transformations Limited v Dr Mirza  EWHC 29 (TCC) is well worth considering. It raised the topical subjects of mediation, joint expert witnesses, compulsory ADR, and cost and time of the dispute being completely disproportionate to the value of the disputed sums. Succinctly put, His Honour Judge Davies stated “In my view concrete steps to address the challenge of finding a time and cost effective means of fairly resolving domestic property renovation building contract disputes are required.” He then suggested the following expedient actions could be undertaken, which we paraphrase here:-
Interestingly, whilst mediation was mentioned as a probable route to resolution, no mention was made of the potential benefits of adjudication.
In the Churchill judgment, no firm criteria is set down to decide what form of ADR might be ordered. In fact, what was said was, “judges are well qualified to decide whether a particular process is or is not likely or appropriate for the purpose of achieving the important objective of bringing about a fair, speedy and cost-effective solution to the dispute and the proceedings, in accordance with the overriding objective.”
In principle, it appears that both cases fully support the power of a court to direct what we will term “Court-annexed Adjudication” (CaA) where directions might be made with the following points in mind:
Let us assume that the court already has (and if not, is given) the power in its discretion to direct the parties to another process. We suggest that notwithstanding the preference made in the judgment in Churchill for ENE, the court is entitled to direct the manner in which the dispute or an issue should be resolved under the direction and supervision of the court. We see no reason why that manner should not include an expedited process called ‘Court-annexed Adjudication’ (CaA).
The court already has extensive case management powers set out in Part 3 of the Civil Procedure Rules 1996 (CPR). We suggest the scope of the Part is wide enough to allow the court to direct that an issue be referred to adjudication with an adjudicator selected by agreement. If there is no agreement, an adjudicator could be appointed by the court or by an appropriate Adjudication Nominating Body (such as Ciarb, RICS, RIBA or TeCSA) in the same way that the court can refer the case (or an issue) to another judge for ENE.
Unlike a stay to mediation, this power could be exercised without the consent of the parties. If there is any doubt, then the rules committee could be asked to consider an amendment to the court’s CPR case management powers.
Given the existence of the power, then subject to hearing the parties, and usually following the service of a defence and or counterclaim, the court would be entitled to direct the manner in which the dispute (or issue) was to be resolved and if appropriate to refer the dispute or the issue to CaA where either the parties agreed, or the following criteria were met:
How would it work?
Consideration should be given as to whether in order to protect the parties’ interests, but not to remove choice, that CaA would have to be specifically opted out of. Arguably, in respect of verbal or simple contracts the rigour of professional and technical intervention in the dispute would be welcomed. In respect of written contracts there would be no barrier and it would not be capable of being contracted out of (consumer rights excepted and preserved).
Upon referral by agreement or order, the court would direct:
Conduct of the CaA
The adjudication would operate in the same way as statutory adjudication. The statement of case would stand as the Claimant’s Referral to be supplemented within such time as the court or adjudicator directed by any evidence or documents relied on and not already served. The Defendant’s Defence and any Counterclaim would serve as the Response with the defendant being directed to file and serve any evidence and documents relied on not already served, and an entitlement to serve a Reply and Defence to Counterclaim but remaining subject to review and amendment of pleadings with the benefit of any joint expert witnesses’ report.
The adjudicator would give such further directions as may be required for the conduct of the adjudication (but with liberty to apply to the court in case of doubt or difficulty) and set the (remainder of) timetable. The decision would be given to the parties and lodged in court.
The adjudicator fees and expenses
The adjudicator would have the right to apply on notice to the court for enforcement of the obligation of one or both parties to pay their fees and expenses, removing the need of separate proceedings.
Parties to a construction dispute, who want final determination by an expert in both the process and the field, in accordance with a tried and tested process, would no longer be limited to a choice between litigation and arbitration (or expert determination). Nor would they have invest time and effort in obtaining a temporarily binding adjudication decision followed by the possibility of separate proceedings to enforce an award in court. CaA offers a streamlined process with all the advantages of adjudication and court support, without the drawbacks of temporary effect and the need for separate enforcement proceedings.
Importantly, it also removes certain jurisdictional dangers associated with statutory adjudication, such as referral of the wrong dispute, failure to properly frame the dispute, premature referral before a dispute has crystallised, referral to the wrong adjudicator or procedural mishap in the referral process as these matters will be controlled by the court. Once referred by the court, the dispute is fully identified, and jurisdiction conferred on the adjudicator.
It is anticipated some formal amendments to the CPR may be required to allow and support the processes described but there would be no need of any other statutory intervention nor amendment to the Construction Act. Statutory construction adjudication would be unaffected.
In this article, we have proposed a potential way forward in the form of CaAs. However, the implications of Churchill are yet to be seen. What can be said for certain is that the judgment is a positive step forward for the integration of dispute resolution to the civil justice system.
The authors wish to acknowledge and thank practicing adjudicator, arbitrator, expert determiner and mediator Peter Vinden BSc (Hons) DipICArb FRICS FCIArb FCIOB FInstCES who was kind enough to comment and make suggestions on the procedural aspects of CaA and to encourage the development of the article. The authors are keen to point out that the opinions expressed are purely their own.
About the authors:
Kenneth T. Salmon MCIArb is a qualified solicitor in England, Wales and Eire. He is a Ciarb qualified and CMC accredited Mediator and Chair of Education at Ciarb North West Branch. Kenneth is a construction specialist currently working as a consultant to Slater Heelis Limited. He has extensive experience of all forms of dispute resolution including arbitration, adjudication, expert determination and mediation.
Marcus Cato FCIArb, MICE, CEng is MD of McComb Partnership Ltd in UK and Rwanda and founding Committee Member of the newly formed Ciarb Rwanda Branch. He has over 25 years’ experience in international construction and engineering disputes resolution as a certified commercial mediator and qualified arbitrator. Marcus has over 20 years’ experience in working as a party representative and in managing adjudication disputes for large and small clients in all aspects of construction and process engineering.
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