Farrelly (M & E) Building Services LTD v Byrne Brothers (Formwork) Ltd
Technology and Construction Court
9th May 2013
The sub-contractor contended that the contractor waived any natural justice challenge because it failed to raise that challenge when the adjudicator sent his draft decision to the parties.
Ramsey J rejected that challenge in principle and on the facts. In principle for there to be a waiver of the right to bring a natural justice challenge, the challenger must know or be taken to know that the ground for bringing the challenge has arisen and act clearly and unequivocally to show that it does not intend to rely on that challenge. On the facts there was no waiver by the contractor in continuing with the proceedings without bringing a challenge even if it believed that there had been a procedural irregularity.
In elaboration of his reasons for rejecting the contention in principle Ramsey J stated that whist a party may waive a failure by an adjudicator to comply with the rules of natural justice, the nature of a natural justice challenge differs in important respects from a challenge to the jurisdiction of an adjudicator. For there to be a waiver (i) A party must be aware of or be taken to be aware of the right of challenge to the adjudicator's decision and (ii) There must be a clear and unequivocal act which amounts to a waiver of the right. For there to be a waiver of the right to bring a jurisdictional challenge, the challenger knows or can be taken to know that the ground for challenging the jurisdiction has arisen but continues with the adjudication process without raising the challenge. For there to be a waiver of the right to bring a natural justice challenge, the challenger must know or be taken to know that the ground for bringing the challenge has arisen and act clearly and unequivocally to show that it does not intend to rely on that challenge. If procedural unfairness becomes apparent during the proceedings and if the party asserting a breach of the rules does nothing and continues with the adjudication (i) It is difficult to see that that would be a clear and unequivocal act preventing that party from relying on the breach if it has a sufficiently significant effect on the outcome once the decision is produced but (ii) The fact that a party continues with the adjudication knowing of the breach may have other consequences.