Adjudication decision unenforceable for apparent bias
Carlo Taczalski has represented the successful Part 8 Claimant / Part 7 Defendant in AZ v BY [2023 EWHC 2388 (TCC), in what is thought to be the first case in England and Wales in which an adjudicator’s decision has been declared unenforceable for apparent bias, after one party placed without prejudice material before the adjudicator.
The Judgment can be found here. It has been published in redacted and anonymised form in order to protect the without prejudice material, pending resolution of the underlying dispute between the parties, which is ongoing.
The decision (of Constable J) is significant because it considers each of the previous authorities addressing the deployment of without prejudice material within adjudications, and confirms that the test to be applied is that which was set out in Re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700. This is the test that was in fact being applied by Akenhead J in Ellis Building Contractors Limited v Vincent Goldstein [2011] EWHC 269 (TCC); AZ had sought to argue that paragraph 29(b) of the judgment in Ellis gave rise to a threshold which required the resisting party to establish that the decision was ”primarily” based upon the without prejudice material. This submission was decisively rejected. The important question was whether the deployment of the without prejudice material gave rise to a question mark over the decision, in the sense of an objective legitimate fear of partiality.
The decision is also significant because Constable J considered the recent Scottish authority of Transform Schools (North Lanarkshire) Ltd v Balfour Beatty Construction Ltd [2020] CSOH 19. That case had been interpreted by a number of commentators as reducing the opportunity of challenge to an adjudicator’s decision where the adjudicator had considered without prejudice material and wrongly decided it to be admissible. The Part 8 Claim brought by Carlo’s client meant that the Court could consider the question of admissibility afresh in this case in any event, and so the difficulty potentially caused by the Transform Schools decision was circumvented. However, Constable J went on to explain that at least in England and Wales, an error of law as to the admissibility of evidence which was properly without prejudice, would be treated as akin to an error of law going to jurisdiction:
“an error as to the admissibility of without prejudice material is an error of law that could potentially impact the fairness of the decision-making process in accordance with the rules of natural justice. It is similar, in this sense, to an error of law by an adjudicator in assessing the extent of their own jurisdiction. It is an error which can affect the enforceability of the decision. If, therefore, a court concludes (contrary to the determination of the adjudicator) that material was in fact without prejudice and that the test of apparent bias is made out, the decision should not be enforced. Not only is this the correct result analysing the position from first principles, it seems to me it also accords with the important public policy behind without prejudice communications, and, in the words of Akenhead J, is consistent with the Court’s strong discouragement to parties from deploying “without prejudice” communications in adjudication.
This was a very welcome clarification, as it should allow future parties to avoid the difficulties of trying to have a parallel Part 8 claim heard alongside the enforcement action, as was fortunately possible in this case (despite AZ’s protestations).
