Bouygues -v- Dahl-Jensen (CA)
The adjudicator's decision should be enforced despite it being common ground that the adjudicator had made a mistake in arriving at the amount awarded
31 July, 2000
The adjudicator made a decision in the sub-contractor's favour whereby the contractor was ordered to pay a specified sum of money based on the adjudicator's valuation of the sub-contract works. The adjudicator failed to deduct from that valuation the contractual retention monies which were not due to be released to the sub-contractor at the time of the decision. It was common ground that the adjudicator had been wrong to do so. The judge at first instance ordered summary judgment in the sub-contractor's favour to enforce the adjudicator's decision notwithstanding the adjudicator's error. By the time of the appeal the sub-contractor was in liquidation. The Court of Appeal held that the decision should not be overturned on the basis of the contractor's contention that the adjudicator's mistake meant that he had not had the jurisdiction to make the decision. The adjudicator had not in effect answered the wrong question with the result that his decision was a nullity. The adjudicator answered exactly the questions put to him. Although his mistake was an error, it was an error made whilst he was acting within his jurisdiction. It was not the case that to enforce the decision in such circumstances would plainly be unjust, particularly in view of the fact that the sub-contractor was in insolvent liquidation with the result that the final resolution of the account between the parties would be unenforceable by the contractor, should be rejected. This was because the possibility of such an outcome was inherent in the exceptional and summary procedure provided for by the Construction Act. Also unfairness could not be determinative of the true construction or effect of the adjudication scheme in general. However, a stay of execution of the summary judgment awarded in the sub-contractor's favour to enforce the adjudicator's decision should be ordered in circumstances where there were latent claims and cross-claims between the parties and where one of the parties (the sub-contractor) was in insolvent liquidation on the basis that all the claims and cross-claims should be resolved in the liquidation as required by rule 4.90 of the Insolvency Rules 1986 (made under section 411 of the Insolvency Act 1986). Advice Note This important decision of the Court of Appeal definitively establishes that a decision will be enforced by the courts notwithstanding the adjudicator having made an obvious error of fact or law provided that he acted within his jurisdiction in doing so.