Fileturn Ltd v Royal Garden Hotel Ltd [2010] EWHC 1736 (TCC)

[2010] EWHC 1736 (TCC)Case No 2010-TCC 27826
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13/07/2010
Before
THE HONOURABLE MR JUSTICE EDWARDS-STUART
Between
Fileturn LtdClaimantRoyal Garden Hotel LtdDefendant
Mr Charles Pimlott (instructed by Silver Shemmings LLP) for ClaimantMr James Bowling (instructed by Fenwick Elliott) for DefendantHearing Hearing date: 6th July 2010
Judgment

Introduction

[1]By an application dated 10 June 2010, the Claimant (“Fileturn”) seeks summary judgment against the Defendant (“RGH”) pursuant to Part 24 of the Civil Procedure Rules to enforce an adjudicator’s award in the sum of £219,635.14 plus VAT plus interest. The award was made by Mr R Sliwinski in a decision in dated 24 May 2010.[2]The application is resisted on the ground of apparent bias on the part of Mr Sliwinski. This is said to arise out of a pre-existing relationship between Mr Sliwinski and Mr Richard Silver, of Alway Associates, who represented Fileturn in the adjudication.[3]Alway Associates carry on business as construction claims consultants from various offices in England and Wales. Between March 2001 and February 2004 Mr Sliwinski was a director of Alway Associates. He then left the company to become a partner in a firm of solicitors, Wright Hassell LLP, and then about two years later he left that firm to set up his own practice in dispute resolution. He acts as an adjudicator on a regular basis, and is on the panels of both the Royal Institute of Chartered Surveyors and the Chartered Institute of Arbitrators.[4]During the period whilst Mr Sliwinski was with Alway Associates Mr Silver was based in the company’s Epping office, whereas Mr Sliwinski was based in the company's Banbury office.[5]It seems that Mr Sliwinski is an adjudicator favoured by Mr Silver because he has requested his appointment as an adjudicator in about a dozen disputes over the last few years, although Mr Sliwinski was in fact appointed in only two of those adjudications (one being the adjudication the subject of the present dispute).[6]It is the existence of the previous association of Mr Sliwinski and Mr Silver whilst they were both directors of Alway Associates, together with the fact that Mr Sliwinski has acted as an adjudicator in about 10 adjudications in which Alway Associates has acted for one of the parties, that gives rise to the allegation of apparent bias.

The correct approach on this application

[7]Since this is an application under CPR Part 24 I have to consider whether RGH has no real prospect of successfully defending the claim to enforce Mr Sliwinski's award. In order to do this I must carry out the exercise of assessing RGH's prospects of success if this action were to go to trial, but I emphasise that I am making an assessment and not conducting a trial, or even a mini-trial (see Three Rivers DC v Bank of England [2003] AC 1, at 282, per Lord Hobhouse).[8]There is no dispute between the parties as to the test for apparent bias. It is whether the informed and fair-minded observer, having considered the relevant facts, would conclude that there was a real possibility that Mr Sliwinski was biased: see Porter v Magill [2002] 2 AC 357.[9]However, in the context of an application to enforce the award of an adjudicator, I have been reminded by Mr Charles Pimlott, who appears for Fileturn, of the observations made by Dyson LJ (as he then was) in Amec Capital Projects Ltd v Whitefriars City Estates [2004] EWCA Civ 1418, at paragraph 22:
“It is easy enough to make challenges of breach of natural justice against an adjudicator. The purpose of the scheme of the 1996 Act is now well known. It is to provide a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requiring the decisions of adjudicators to be enforced pending final determination of disputes by arbitration, litigation or agreement. The intention of Parliament to achieve this purpose will be undermined if allegations of breach of natural justice are not examined critically when they are raised by parties who are seeking to avoid complying with adjudicators’ decisions. It is only where the defendant has advanced a properly arguable objection based on apparent bias that he should be permitted to resist summary enforcement of the adjudicator’s award on that ground.”
[10]Observations to similar effect were made by Chadwick LJ in Carillion Construction Limited v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358, where he said, at paragraph 87:
“In the overwhelming majority of cases, the proper course for the party who is unsuccessful in an adjudication under the scheme must be to pay the amount that he has been ordered to pay by the adjudicator. If he does not accept the adjudicator’s decision as correct (whether on the facts or the law) he can take legal or arbitration proceedings in order to establish the true position. To seek to challenge the adjudicator’s decision on the ground that he has exceeded his jurisdiction or breached the rules of natural justice (save in the plainest of cases) is likely to lead to a substantial waste of time and expense . . .”
[11]Basing myself on these authorities I must consider the extent to which it is arguable that it may be held at trial that this is a plain case of apparent bias: the matter must be looked at broadly and it is only if I consider that RGH has no real prospect of making good its case at trial that I should give summary judgment.[12]It is established by the authorities that the task of the court at trial will be to ascertain all the circumstances which have a bearing on the suggestion that the adjudicator was biased, and it must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the adjudicator was biased (see Porter v Magill [2002] AC 357, approving the judgment of Lord Phillips MR in Re Medicaments [2001] 1 WLR 700, at paragraph 85).[13]In Re Medicaments Lord Phillips MR said also, at paragraph 86, that the material circumstances to be considered by the court will include any explanation given by the adjudicator under review as to his knowledge or appreciation of those circumstances. He said that where that explanation is accepted by the applicant for review it can be treated as accurate but, where it is not accepted, it becomes one further matter to be considered from the viewpoint of the fair-minded observer. He went on to say: “The court does not have to rule whether the explanation should be accepted or rejected: rather it has to decide whether or not the fair-minded observer would consider that there was a real danger of bias notwithstanding the explanation advanced".

The material facts disclosed by the evidence on this application

[14]The material facts as disclosed by the evidence in support of the application and in the form of replies to requests for further information can be summarised as follows:(1) For the first 10 years of his career Mr Sliwinski was employed as a Quantity Surveyor in professional practice.(2) From 1990 to 2000 Mr Sliwinski practised as a barrister, dealing mainly with construction disputes. During this period he began to act as an adjudicator and as an arbitrator, being appointed to the RICS Adjudication Panel and the CIArb Construction Adjudication Panel.(3) In March 2001 Mr Sliwinski became a director of Alway Associates based in the Banbury office. During this period Mr Silver was a director based at the Epping office, and it appears that Alway Associates had 4 “full” directors and 4 associate directors. Mr Sliwinski and Mr Silver, who were both full directors, had their own separate caseloads although they did work together on one or two occasions during 2002/2003. They met socially only at Alway Associates’ annual summer function. Mr Sliwinski left the company in February 2004.(4) In March 2004 Mr Sliwinski became a partner in Wright Hassell LLP. He left Wright Hassell in March 2006 to set up his own practice, SWL Dispute Resolution.(5) During the past 10 years Mr Sliwinski has conducted about 250 adjudications.(6) In those adjudications Alway Associates have acted for one of the parties on about 10 occasions, in two of which Mr Silver has been the advocate. On one of those two occasions Mr Sliwinski had been asked for by name by Mr Silver.(7) Mr Silver has made applications for the appointment of an adjudicator on more than 150 occasions. On about 12 occasions he has requested Mr Sliwinski. On only one occasion – the present case - has Mr Sliwinski been appointed after Mr Silver had specifically requested him by name.(8) No-one in Alway Associates, apart from Mr Silver, has ever requested Mr Sliwinski to act as an adjudicator.(9) Mr Sliwinski has also been appointed as adjudicator where either Wright Hassell LLP or Knowles, for whom he had also worked in the past, acted for one of the parties.(10) There is no information about the outcome of any of the previous adjudications in which a representative of Always Associates has represented a party before Mr Sliwinski.[15]There is one further potentially relevant matter that is not agreed. By a letter dated 30 June 2010 Fenwick Elliott, who act for RGH, asked how often Alway Associates had asked for Mr Sliwinski to be nominated as an adjudicator. The answer was that Mr Silver had asked for Mr Sliwinski on 12 occasions but that no one else in Alway Associates had asked for him. Fenwick Elliott also asked how often Mr Sliwinski had been appointed as an adjudicator in disputes in which Alway Associates had represented one of the parties. Mr Sliwinski's answer was that there had been 10 occasions, and that in two of them the representative had been Mr Silver himself.[16]The following day, 1 July 2010, Fenwick Elliott asked in a further letter how often Mr Silver or anyone else in Alway Associates had requested the appointment of Mr Sliwinski "as an arbitrator, mediator or has carried out an early neutral evaluation [sic], or has been appointed in any other judicial, arbitral, or quasi-judicial or quasi-arbitral role". In addition, Fenwick Elliott asked how often Mr Sliwinski had actually been appointed in any of these capacities. Mr Silver's response was that he had never requested the appointment of Mr Sliwinski in any of these capacities and that, to the best of his knowledge, no one else in Alway Associates had done so either and that Mr Sliwinski had not acted in any of these capacities (but that in relation to the latter two questions he was making enquiries).[17]The same questions were put to Mr Sliwinski. To the first two questions Mr Sliwinski responded, unsurprisingly, that he did not know how often Mr Silver or anyone else at Alway Associates had requested his appointment in any of those capacities. However, in relation to the third question his response was as follows: "I have only been appointed as an adjudicator where Alway Associates have been a party representative. I believe that I have only been appointed on about 10 occasions by Alway Associates as an arbitrator, mediator, an early neutral evaluator, or in any other judicial, arbitral, or quasi-judicial role.” Mr Bowling submitted that by this answer Mr Sliwinski was saying that, in addition to the 10 occasions on which he had acted as an adjudicator in cases where Alway Associates represented one of the parties, he had also acted as an "arbitrator, mediator, an early neutral evaluator, or in any other judicial, arbitral, or quasi-judicial role" on a further 10 occasions. Mr Pimlott submitted that what Mr Sliwinski must have meant by this was that he had only acted as an adjudicator in disputes where Alway Associates was representing one of the parties and had not acted in any of the other capacities listed.[18]Mr Sliwinski's response is certainly not a model of clarity, but I am inclined to conclude that Mr Pimlott is correct. With respect to Fenwick Elliott, the questions could have been better drafted in order to make it quite clear that the questions were directed at appointments other than that as adjudicator. The difficulty is that the words "any other judicial, arbitral, or quasi-judicial or quasi-arbitral role" could be understood to include acting as an adjudicator. I think that the first sentence of Mr Sliwinski's response was intended to mean that the only types of case in which he had come across Alway Associates as a party representative was when he was acting as adjudicator. If this is not the case, then it would be a curious coincidence that Mr Sliwinski has acted as an adjudicator on 10 occasions when Alway Associates have represented a party and also on 10 occasions in all the other capacities when Alway Associates have represented a party: of course, this is not impossible but such a coincidence seems unlikely.[19]However, I must again make it clear that I am not involved in a fact finding exercise at this stage, rather I am making an assessment of the likely outcome of the case if it proceeded to trial. Whichever view of Mr Sliwinski's answer is correct, I doubt whether it will make much difference to the final outcome. I have to bear in mind that the facts summarised above may not be the same as those which may become apparent after the detailed inquiry that will take place at a trial. My view at this stage is that the facts, which are for the most part based on a statements made by Mr Sliwinski and Mr Silver, are unlikely to change to any material extent after detailed investigation. I accept, of course, that the figures may be refined and that, when considered in the correct context, they may show a slightly different picture. But, for reasons which I give below, I very much doubt whether this will make any difference to the outcome of the question concerning apparent bias.

The conclusions that would be drawn by a fair-minded and informed observer

[20]On the basis of the facts summarised above, I consider that a reasonably fair-minded and informed observer would probably draw the following conclusions:(1) Although Mr Silver requested the appointment of Mr Sliwinski as an adjudicator on about 12 occasions (of which only one resulted in an appointment), there is no evidence that shows that Mr Sliwinski was aware of this.(2) Accordingly, the fact that Mr Silver requested the appointment of Mr Sliwinski as adjudicator on 12 occasions cannot have had any effect on the mind of Mr Sliwinski.(3) Mr Sliwinski conducts about 25 adjudications per annum, of which on average Alway Associates has represented one of the parties on one or two occasions. Put another way, in only 5-10% of adjudications conducted by Mr Sliwinski has Alway Associates acted as a representative of one of the parties.(4) There has been no significant contact between Mr Sliwinski and Mr Silver since Mr Sliwinski left Alway Associates in March 2004 and the adjudication that is the subject of the present proceedings apart from the fact that Mr Silver has represented a party in one previous adjudication before Mr Sliwinski.(5) Mr Sliwinski and Mr Silver must have had a reasonably close professional association whilst they were co-directors of Alway Associates between March 2001 and February 2004. However, there is no evidence that during this period (or since) they had any association outside their professional activities.(6) Mr Sliwinski has had no continuing financial or other interest in Alway Associates’ business since February 2004.(7) The fact that 90-95% of adjudications conducted by Mr Sliwinski have not involved Alway Associates suggests that Mr Sliwinski is not dependent on Alway Associates for his practice as an adjudicator to any extent that is material.(8) There is no suggestion that Mr Sliwinski had any special knowledge of or connection with either Fileturn Limited or RGH at the time of the adjudication in 2010.[21]Mr James Bowling, who appeared for RGH, commented, with some justification, that the statistics put forward by both Mr Sliwinski and by Mr Silver needed to be treated with some caution because it could not be assumed that Mr Sliwinski was necessarily eligible to be nominated as an adjudicator in every adjudication that he carried out. This is a fair point, but it is in my view irrelevant because Mr Bowling's underlying submission - based on the number of times that Mr Silver has requested Mr Sliwinski's appointment as an adjudicator - completely misses the target.[22]It is reasonably clear from the evidence that, where an adjudicator is nominated by a professional body, the adjudicator whom the body is proposing to nominate receives a copy of the referring party's request for the appointment of an adjudicator. It follows that where the nominating body decides to appoint an adjudicator who is not a person requested by the referring party, the adjudicator who had been requested unsuccessfully would not see a copy of the referring party's request for an adjudicator and, unless specifically told, would therefore not know that his name had been put forward by the referring party.[23]Since there is no evidence that Mr Silver ever told Mr Sliwinski that he had requested his appointment on many occasions, the reasonable conclusion is that Mr Sliwinski would have been wholly unaware of this. This is why the fact that Mr Silver may have requested Mr Sliwinski’s appointment as adjudicator on many occasions cannot have had any impact on the mind of Mr Sliwinski.[24]Mr Bowling also placed considerable reliance on what he submitted were inaccuracies by Mr Sliwinski when responding to the questionnaire issued by the RICS. This asked Mr Sliwinski to “disclose any involvement, however remote, but in particular an involvement you or your firm has (or has had in the last five years) with either party in this dispute”[emphasis supplied by Mr Bowling]. He was then asked to confirm, amongst other things, that "having made enquiries within your organisation no involvement exists (or has done so in the last 5 years) in particular with any party to this dispute". It is clear to me that the reference to "involvement" in this question must relate back to the "involvement, however remote" in the passage that I have already quoted. Accordingly, it seems to me that what the RICS was expecting any potential adjudicator to disclose was(a) any subsisting involvement, however remote, with any party to the dispute and(b) any such involvement that he had had within the last 5 years.[25]I reject Mr Bowling's submission that the presence of the words "however remote" effectively meant that the prospective adjudicator was being asked to disclose any relevant involvement however long ago it existed. In my view, the questionnaire was clearly limiting the involvement that had to be disclosed to any involvement that had existed during the last 5 years. However, I do not mean to suggest that there could never be circumstances in which a duty to disclose some involvement more than 5 years ago could arise. For example, suppose that the referring party was represented by a former partner of the proposed adjudicator and that they had parted company 10 years ago because one of them was alleging fraud by the other. In those circumstances I would expect the proposed adjudicator to decline the appointment; at the very least, I would expect him to disclose those facts. However, there is no suggestion of anything of that sort in this case.[26]Mr Bowling also criticised Mr Sliwinski's letter to the RICS dated 13 April 2010 in which he confirmed his willingness to accept the nomination. In that letter he confirmed that "I comply with the special requirements of being a barrister". This was a reference to section (B) of the application for nomination form which was entitled "Qualifications of the adjudicator". The former asked the applicant if there were any specific qualities or expertise that in his opinion would be required of the person to be nominated. In response to this Mr Silver made the following entry:
"Practising barrister and if available Mr Sliwinski or"
It was common ground that the "or" at the end was simply a typing error. But it was also accepted by Mr Bowling that, in order to give it sense, the entry should be taken to read:
"Practising barrister or if available Mr Sliwinski"
[27]Mr Sliwinski was not a practising barrister at the time when he was nominated. It seems that he probably gave up practice in around 2000, but the precise date does not matter. He was a barrister, but not a practising one. I doubt very much whether the fair-minded informed observer would set any store by this error. It seems to me unlikely in the extreme that it would have made any difference at all if Mr Sliwinski had instead written that he was a barrister, but that he was no longer in practice at that time. Even if Mr Sliwinski is to be criticised for this error, I cannot see how it can bear on the question of apparent bias.[28]The point was also made by Mr Bowling that this must be an obvious case of apparent bias because a reputable commercial organisation, with the support of its legal advisers, was prepared to make that assertion. I do not place much weight on this: in Makers UK Ltd v London Borough of Camden [2008] EWHC 1836 (TCC) a complaint of apparent bias was made on the basis that the referring party's solicitor spoke to the potential adjudicator apparently to discuss the latter's availability to act in the forthcoming adjudication before putting his name forward as a nominee and that this fact was never disclosed to the opposite party. The complaint was also based in part on the fact that the telephone call took some 12 minutes, which it was submitted was much longer than was necessary to make a simple enquiry about availability. It was robustly rejected by Akenhead J, although he took the opportunity to give some helpful guidance to those involved in the appointing procedure in the adjudication process. For my part, I consider that the allegation of apparent bias made in that case was very thin: nevertheless it was made on behalf of one of the larger London Boroughs represented by leading counsel.[29]The regrettable fact is that bad points are not infrequently taken in litigation, even by the most reputable parties and experienced legal advisers. To say that "we are a reputable party with experienced legal advisers so because we are making the allegation, it must be a good one" is just a circular (or bootstraps) argument.[30]It has been said time and again that in this jurisdiction there is no inherent objection to the fact that the legal representatives of one or more of the parties are well known to the judge. In specialist courts, such as the TCC, it happens frequently. Indeed, in Taylor v Lawrence [2002] EWCA Civ 90, Lord Woolf CJ, giving the judgment of the court said this, at paragraph 62:"61. The fact that the observer has to be "fair-minded and informed" is important. The informed observer can be expected to be aware of the legal traditions and culture of this jurisdiction ... Our experience over centuries is that this integrity is enhanced, not damaged, by the close relations that exist between the judiciary and the legal profession. Unlike some jurisdictions the judiciary here does not isolate itself from contact with the profession. Many examples of the traditionally close relationship can be given: the practice of judges and advocates lunching and dining together at the Inns of Court; the Master of the Roll’s involvement in the activities of the Law Society; the fact that it is commonplace, particularly in specialist areas of litigation and on the circuit, for the practitioners to practice together in a small number of Chambers and in a small number of firms of solicitors, and for members of the judiciary to be recruited from those chambers and firms.62. It is also accepted that barristers from the same chambers may appear before judges who were former members of their chambers or on opposite sides in the same case. This close relationship has not prejudiced but enhanced the administration of justice ...63. The informed observer will therefore be aware that in the ordinary way contacts between the judiciary and the profession should not be regarded as giving rise to a possibility of bias. On the contrary, they promote an atmosphere which is totally inimical to the existence of bias. What is true of social relationships is equally true of normal professional relationships between a judge and the lawyers he may instruct in a private capacity.”[31]It was suggested by Mr Bowling, although perhaps somewhat faintly, that adjudicators were not in the same position as judges. At paragraph 11 of his skeleton argument he submitted that an adjudicator "also differs from a judge in another material respect. He does not have to take an oath of office ... The fact of proceedings being conducted in a courtroom (or arbitral hearing rooms) may serve to concentrate the mind of the need for things to be seen to be done fairly.". Whilst it is of course correct that an adjudicator is not the same as a judge, adjudicators are, nevertheless, professional men with their own codes of conduct. As Dyson LJ (as he then was) said in Amec Capital Projects Ltd v Whitefriars City Estates, at paragraph 20:
“Judges are assumed to be trustworthy and to understand that they should approach every case with an open mind. The same applies to adjudicators, who are almost always professional persons.”
[32]In the light of the probable facts (as summarised above) and the further considerations that I have discussed in the preceding paragraphs, it seems to me inherently unlikely that the fair-minded and informed observer would conclude that Mr Sliwinski’s involvement with Alway Associates between March 2001 and February 2004 might give rise to a continuing bias 6 years later in favour of a party represented by Alway Associates. I consider that such an observer would regard this suggestion has no more than fanciful speculation.[33]For these reasons I consider that RGH has no real prospect of succeeding at trial on its argument based on apparent bias. However, Mr Bowling had a further argument, the waiver argument, to which I now turn.

The waiver argument

[34]Mr Bowling submits that the right to have a tribunal free from apparent bias, and the right to waive any objection about apparent bias that might subsequently be made, are two conceptually different things. The test for whether a party should have been afforded the right to waive any objection based on apparent bias is different (and weaker) than the test for establishing apparent bias itself. All that is required is a “borderline” case, and that there is a real (as opposed to fanciful) prospect of an objection being taken that the circumstances give rise to a risk of apparent bias on the part of the adjudicator.[35]Thus, submits Mr Bowling, if an adjudicator should have concluded that there was a real (as opposed to fanciful) prospect of an objection to his appointment, but did not disclose the relevant material and so did not give the parties an opportunity to object to his continuing the referral, the decision is unenforceable. For this proposition, he relies on Smithv Kvaerner [2006] EWCA Civ 242.[36]I reject this submission. In my judgment it is wholly misconceived. The facts of Smithv Kvaerner are straightforward. Mr Smith was injured in a road accident in Thailand when being driven in a car owned by Kvaerner (KCF). Unfortunately, the driver of the car was killed and the sole issue at the trial was whether the car was being driven with or without the consent of KCF’s manager in Thailand. The case came on before a recorder who, as he disclosed very shortly before the hearing, had in the past acted for companies in the KCF group. In addition, he was head of the chambers of which both counsel were members. Mr Smith was advised by his counsel that, whilst each of these matters was a ground for objecting to the recorder trying the case, he could expect a fair trial from the recorder and that there was no question of the recorder being biased.[37]The recorder continued with the trial and eventually found against Mr Smith. Mr Smith was concerned at what had happened and subsequently sought permission to appeal. For reasons which are not relevant to the present question, the Court of Appeal held that Mr Smith had not given his free and fully informed consent when he agreed not to object to the recorder trying the case. The court accordingly quashed the recorder's decision and ordered a retrial.[38]There is nothing in the judgment in this case that suggests that if the recorder had not disclosed the fact that he had acted for companies in the KCF group, being a matter that he ought to have disclosed, the judgment would automatically have been quashed. On the contrary, in that situation the question before the court would in my opinion then become whether or not the judge was tainted with apparent bias. To that question the usual test would have been applied.[39]If Mr Bowling's submission was correct, it would mean that in every case of non-disclosure by a judge or other tribunal of a material fact relevant to the question of whether or not he or she should hear the case the question of apparent bias would not have to be considered if the judge or tribunal was aware of the facts not disclosed. The conventional test for apparent bias would be confined to cases where the judge or tribunal was unaware of, or had forgotten, the matters that were material to be disclosed. But that is not the law.

Conclusion

[40]For the reasons that I have given I consider that RGH has no real prospect of successfully defending this action by succeeding in its allegation of apparent bias.[41]Accordingly, there must be judgment for Fileturn in the sum of £219,635.14 plus VAT, together with interest. I will hear counsel on any questions relating to costs.