Costain v Strathclyde Builders

The adjudicator's failure to disclose the matter in respect of which he obtained advice from his legal adviser or to invite comments or submissions thereon was a breach of the principles of natural justice
 
COSTAIN LTD v STRATHCLYDE BUILDERS LTD

Scotland, Outer House, Court of Session
Lord Drummond Young
17 December 2003
 
The adjudicator discussed a particular matter with his appointed legal adviser. The adjudicator did not make known to the parties the nature of the matter he wished to discuss with his legal adviser or the results of those discussions. Neither party made any request to be told of the terms of the discussions or to see their result. The adjudicator did not invite the parties to comment or to make submissions on the advice tendered by his legal adviser and neither party requested any opportunity to do so. The contractor brought court proceedings to enforce the adjudicator's decision in its favour and applied for a summary decree (judgment).
 
Lord Drummond Young held that the adjudicator's failure to disclose the matter in respect of which he obtained advice from his legal adviser or to invite comments or submissions thereon was a breach of the principles of natural justice notwithstanding that neither party made any request to be told of the terms of the discussions or to see their result on the basis that the (mere) possibility of unfairness inherent in that failure was sufficient to justify a challenge to the decision.
 
Whilst it was possible that no new matters were covered in either the request for advice or the advice itself with the result that there was no actual prejudice to either party, that was immaterial since the mere possibility of prejudice was sufficient for there to have been a breach of the principles of natural justice. If no actual prejudice was caused to the parties, the adjudicator could easily put matters right by disclosing the matter on which he sought his legal adviser's advice and the terms of that advice but until those matters were disclosed, the employer had set out a relevant case that would, if proved, justify the reduction of the adjudicator's decision. The fact that the employer did not point to any part of the decision or reasons that was formulated by the adjudicator himself and was not founded on the parties' submissions and did not allege that any part of the adjudicator's reasoning had not been argued by the parties was irrelevant. Advice Note If an adjudicator appoints a legal adviser, he must disclose the advice given or he will be in breach of the rules of natural justice.
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