Jurisdiction of adjudicators

In March 2002, in the case of RJT Consulting Engineers -v- DM Engineering, the Court of Appeal dealt with the important point of whether oral contracts would be subject to the provisions of the Construction Act. The Court held that all the terms, and not just the existence of a construction contract, had to be evidenced in writing if the contract was to be capable of being referred to adjudication under the act.
In a dissenting judgement, Lord Justice Auld noted that, in his opinion, what was important was that the terms of the agreement material to the issues giving rise to the adjudication should be clearly recorded in writing. In his view, it was not necessary that every term, however trivial or unrelated to those issues, should be expressly recorded or incorporated by reference.
Such issues concerning the jurisdiction of adjudicators remain commonplace. It is often the case that challenges will be made to the adjudicator at the beginning of the adjudication and the adjudicator will have to decide, on the basis of those challenges, whether or not to proceed with the adjudication.
It will be important for the parties to be clear that the deliberations of the adjudicator at this point are merely preliminary in nature. He simply decides whether it is appropriate to continue with the adjudication and the matter of his jurisdiction, if that continues to be challenged, will be decided by the court at a later stage.
It is, however, possible for the parties to agree to confer upon the adjudicator the necessary jurisdiction to deal with such a question. Judge Dyson considered this matter in 1999 in the case of The Project Consultancy -v- The Trustees of the Gray Trust. He said: "If two people agree to submit a dispute to a third person, then the parties agree to accept the award of that person, or putting it another way, they confer jurisdiction on that person to determine the dispute".
These matters have been reconsidered by the Court of Appeal in the recent case of Thomas-Fredric's (Construction) -v- Keith Wilson. Wilson was the principal shareholder of a company called Gowersand, a company formed for the development of two dwellings on land at the rear of Wilson's home near Sheffield.
In March 2001, Thomas-Fredric's undertook to carry out the construction works. Following disputes, however, that agreement was determined and a second agreement was made whereby, provided the works were completed by a particular date, the further sum of £35,000,would be paid. The agreement was evidenced by a letter that Wilson had signed "on behalf of Gowersand".
Disputes continued and these led to Thomas-Fredric's commencing adjudication. It named Wilson as the responding party. At the outset, Wilson made representations to the adjudicator that he was not the developer in the contract and that the correct party should be Gowersand. He contended there could be no referral to adjudication as the wrong party had been named in the notice of adjudication.
The adjudicator called for submissions from both parties and concluded that, in his opinion the contracting parties had been correctly named in the notice of adjudication.
That being the case, he proceeded with the adjudication. In due course he issued his decision directing Wilson to pay Thomas-Fredric's various sums totalling about £12,000.
Wilson refused to pay, and the matter came before the court in May of this year. Thomas-Fredric's successfully obtained summary judgement on its claim. The judge had rejected Wilson's argument that he was not the party to the contract and held that the adjudicator had been correct in assuming jurisdiction to continue with the adjudication.
The judge explained his decision on two footings. First, he held that where the adjudicator had made his decision in respect of the jurisdictional challenge, the court should follow it.
Second, even if he was wrong on that first point, he concluded that the evidence all pointed one way, to the effect that the party to the contract was indeed Wilson.
The matter then passed to the Court of Appeal. Lord Justice Simon Brown stated he had the greatest difficulty with the conclusion of the trial judge.
He noted that an adjudicator's jurisdiction under the 1996 Act only arises under a construction contract in writing. Here, the only agreement relied upon was that evidenced by the second agreement letter. That letter had been expressly signed by Wilson on behalf of Gowersand. Lord Justice Brown concluded that he could not find within that letter any evidence, let alone clear evidence, to the effect that Wilson, rather than Gowersand, was the contracting party.
However, if Wilson had submitted to the adjudicator's jurisdiction, in the full sense of having agreed not only that the adjudicator should rule on the issue of jurisdiction, but also that he would then be bound by that ruling, then the decision would be liable to enforcement even if the adjudicator was plainly wrong on this issue.
On the facts of the case, Lord Justice Brown concluded that in simply making representations concerning jurisdiction, Wilson had not submitted to the jurisdiction of the adjudicator in that full sense.
In consequence the appeal was allowed. The earlier summ-
ary judgment in favour of Thomas-Fredric's was set aside.