Paice & Anor v MJ Harding (t/a Mj Harding Contractors) [2015] EWHC 661 (TCC)

Case No HT-2015-000045[2015] EWHC 661 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 10 March 2015
Before
THE HONOURABLE MR. JUSTICE COULSON
Between
(1) Gary PaiceClaimants(2) Kim SpringallClaimantMJ HardingDefendant
Mr Charles Pimlott (instructed by Silver Shemmings LLP) for ClaimantsMr Piers Stansfield QC (instructed by Davies and Davies Associates Ltd) for DefendantHearing Hearing date: 9 March 2015
JudgmentThe Hon. Mr Justice Coulson:
[1]INTRODUCTION This is an adjudication enforcement application involving the fourth adjudication decision arising out of the contract between the parties. This decision was in the claimant’s favour in the sum of £325,484, together with £15,487.50 for the adjudicator’s fees. If the procedural history of this matter is regrettable (four adjudications, one enforcement hearing, one injunction hearing and one ongoing appeal to the Court of Appeal), the current disputes are nothing short of extraordinary, involving as they do allegations of apparent bias and defamation; two lengthy statements from the adjudicator expressed in trenchant terms; two statements from the adjudicator’s practice manager and wife; and allegations of telephone records fraudulently obtained. On that basis, this case might be thought to be many miles away from the “clear system of dispute resolution” promoted by supporters of adjudication during the debates in the House of Lords about the Housing Grants (Construction and Regeneration) Act 1996.[2]There are two grounds of challenge to the summary enforcement of the decision in the fourth adjudication: apparent bias on the part of the adjudicator, and a lack of jurisdiction, because it is said that he purported to decide something which had already been decided (in completely contrary terms) in the third adjudication. Accordingly I propose to set out a brief history of this matter and then deal with each ground in turn. I am very grateful to both counsel for their measured submissions, particularly in view of the colourful allegations and cross-allegations advocated in the witness statements on both sides. BRIEF HISTORY[3]By a contract dated 25 March 2013 incorporating the JCT Intermediate Form 2011 edition, the claimants engaged the defendant to construct and fit out two residential houses in Purley in Surrey. The work commenced in April 2013 but did not go well. By the end of September 2013 the works had come to a halt and there were arguments about which party had validly terminated the contract.[4]The first adjudication was in respect of the defendant’s interim application 7. In a decision dated 4 November 2013, Mr Sliwinski, the adjudicator, ordered the claimants to pay the defendant £8,252.72 in respect of that application.[5]The second adjudication was in respect of the defendant’s interim application 8. In a decision dated 28 November 2013, Mr Sliwinski ordered the claimants to pay the defendant £249,769.59 plus VAT and interest. Neither of the sums in adjudication 1 and 2 was paid in accordance with those decisions and enforcement proceedings were required. Ramsey J gave judgment for the defendant in these proceedings in respect of the sums ordered to be paid to him by Mr Sliwinski.[6]On 8 August 2014, the defendant sent his final account to the claimants accompanied by three lever arch files of supporting material. It was in the sum of £397,912.48. The following week, on 12 and 13 August 2014, there were a number of conversations between the claimants and someone at Mr Sliwinski’s office. The first of those conversations on 12 August 2014 lasted for over an hour. The second led to the claimants appointment of a particular claims consultant, Peter English, to act on their behalf. It was Mr English who rejected to the defendant’s final account claim “in its entirety” on 18 August 2014. The fact of the conversations only emerged in January of this year and I deal with the evidence concerning those conversations in greater detail below.[7]Following the rejection of his final account claim, the defendant started adjudication 3. Notice of that adjudication was dated 1 September 2014. The sum claimed was £397,912.48 in accordance with the claim that had been made on 8 August 2014. Mr Linnett was appointed as the adjudicator in adjudication 3.[8]On 6 October 2014, Mr Linnett decided that, under clause 8.12 of the contract, which dealt with the parties’ rights to payment following termination, the employer (the claimants) was required to serve a valid payless notice in accordance with the notification regime in the Scheme for Construction Contracts. Although the claimants had issued a payless notice on 2 September 2014, the adjudicator found that this was too late and that, in order to be valid, the payless notice should have been served no later than 30 August 2014. Accordingly, Mr Linnett concluded:
“184. Therefore in the absence of a valid payless notice Harding was entitled to receive payment of £397,912.48 on 6 September 2014. 185. For the avoidance of doubt I stress I have not decided on the merits of Harding’s valuation and have not decided that £397,912.48 represents a correct valuation of the works, the parties made submissions in this adjudication about the proper valuation but these did not fall to be considered by me because of the rule relating to the notified sum becoming automatically due in the absence of a valid payless notice.”
[9]On 14 October 2014, the claimant’s served a notice of adjudication (adjudication 4), seeking a decision as to the true value of the contract works and seeking a repayment from the defendant. Although the referral notice said that “the dispute now sought to be referred is as to the terms of Harding’s valuation”, it also sought the sum of £110,787.42 said to be due by way of repayment from the defendant. The referral did not explain the contractual mechanism by which this sum was said to be due and payable by the defendant. By this time the claimant’s current solicitors were acting in place of Peter English.[10]On 20 October 2014, Mr Sliwinski was appointed by the RICS as the adjudicator in adjudication 4. His first communication with the parties was dated the same day. He made no mention of the conversations of 12 and 13 August 2014. On 23 October 2014, Nigel Davies, the consultant acting for the defendant in all of these adjudications, as well as these proceedings, sent Mr Sliwinski an email in the following terms:
“In the context of the question of your jurisdiction please can you confirm what contact, if any, (whether oral or in writing) you have had with Mr Paice and or Ms Springall (or anyone on their behalf) during the period between 29 November 2013 and 16 October 2014? If you orally communicated with Mr Paice or Ms Springall (or anyone on their behalf) during that period: (1) When was that please? (2) If so when and on each occasion, for how long please? (3) If so, on each occasion, what was it about please? (4) If so when did you disclose the existence of such to the RISC?”
[11]Mr Sliwinski replied on the same day, 23 October 2014, in these terms:
“I can confirm that I have had no contact with Mr Paice or Ms Springall at all, save in relation to the previous adjudications when I had contact with their representative for the purposes of those adjudications.”
Mr Sliwinski again made no mention, either then or subsequently, of the telephone conversations on 12 and 13 August 2014.[12]Later the same day, Mr Davies sought from the claimants their landline telephone records for the five days from 8 August 2014. This request was copied to Mr Sliwinski, as was a later email the same day, which said that “the voluntary provision of the landline records is anticipated to resolve the enquiry”. The following day, 24 October 2014, Mr Davies wrote to the claimant’s solicitors, asking them for the same information as to oral communications that he had already sought from Mr Sliwinski. None of these various requests were answered and no telephone records were provided by the claimants.[13]The defendant sought an injunction to restrain adjudication 4 on the grounds that the sums found due by Mr Linnett in adjudication 3 had not been paid by the claimants, and that the dispute referred to Mr Sliwinski in adjudication 4, was the same or substantially the same as that which had already been decided by Mr Linnett. The claimants subsequently agreed to pay the sum due in adjudication 3, so that ground for the injunction fell away. The second ground, however, was maintained.[14]In a judgment dated 21 November 2014, Matthew Harding (t/a M J Harding Contractors) v Gary George Leslie Paice and Kim Springall [2014] EWHC 3824 (TCC), Edwards-Stuart J declined to grant an injunction to prevent adjudication 4 from going ahead. The core of his reasoning can be found in the following paragraphs:
“30. In my judgment the adjudicator decided that: i) if the employer wished to pay less than the sum stated in the contractor's account, it had to issue in time a compliant Pay Less notice; and ii) the employer did not issue such a notice; and, therefore iii) the employer had to pay the amount stated in the contractor's account. 31. In these circumstances Mr. Scott Holland submitted that the adjudicator had determined “… the amount properly due in respect of the account” so that the employer cannot re-open this issue in separate adjudication proceedings. 32. In fact, Mr. Scott Holland's submission logically goes further. If it is correct that if the employer wishes to pay less than the sum stated in the contractor's clause 8.12 account, it must issue a Pay Less notice (a proposition about which I express no opinion), it follows that the employer can only set aside the adjudicator's decision in subsequent litigation by showing that its Pay Less notice was validly served. If it fails to do that, submits Mr. Scott Holland, then its challenge to the adjudicator's decision must fail. 33. If Mr. Scott Holland is right, this has far reaching consequences. A failure to serve a valid Pay Less notice in time would deprive the employer forever of the right to challenge the contractor's account. So if the contractor had seriously overvalued his account, but the employer or his advisers failed to serve a valid Pay Less notice in time, the contractor would obtain a windfall that the employer could never recover. 34. This, if correct, is a more draconian regime than that which applies to the Final Certificate. In the case of the latter, if the employer commences adjudication or litigation within 28 days of the issue of the Final Certificate, it ceases to be conclusive in respect of the matters raised in the litigation or adjudication (see clause 1.9). 35. I consider that Mr. Scott Holland's argument, elegantly though it was put, cannot be right. What is due under clause 8.12.5 is the “… amount properly due in respect of the account”
. The adjudicator has not determined what is “properly due”. He has determined that, in the absence of a valid Pay Less notice, the employer must pay the amount stated in the contractor's account within 28 days. The effect of this, according to the submissions of Mr. Scott Holland, is that the absence of a compliant Pay Less notice converts a sum that may not be properly due into one that is properly due, and does so for all time. 36. I do not accept this argument. In the circumstances, therefore, it seems to me that it is open to the employer to have determined, either by adjudication or litigation, the question of what sum is properly due in respect of the contractor's account. However, that right does not detract from its obligation to comply with the adjudicator's decision in the meantime by paying the sum ordered. 37. I should add that I have some reservations about the application of the provisions of the Scheme for Construction Contracts (as amended) to clause 8.12.5 and, in that context, the meaning of expressions such as “due date for payment” and “notified sum”, but since I heard no argument on this point I do not propose to say any more about it.” Subsequently on 22 December 2014, Jackson LJ granted the defendant permission to appeal against that decision, expressly recording that the grounds of appeal were “properly arguable”. The appeal will not be heard until later this year.[15]Following Edwards-Stuart J’s refusal of the injunction, adjudication 4 proceeded in front of Mr Sliwinski. On 15 December 2014, Mr Sliwinski issued a decision in which he concluded that the defendant was liable to pay the claimants £325,484 pursuant to clause 8.12, together with his fees of £15,487.50. In addressing the issue as to whether this decision was contrary to that of Mr Linnett, the adjudicator said:
“14. Taking the above two judgments into account I have concluded that the use of the notification regime as provided within the contract for interim and final payments, does not apply to the termination provisions for payment as set out in clause 18.12. It is also in my view the case that the scheme is not required to insert additional payment provisions into clause 8.12 thus the notification procedure including the need for a payless notice is not a requirement of the contract in relation to the payment under clause 8.12…Where does this leave us? 15. Although somewhat of a grey area, I have concluded that any payment that is due to either party, after I have decided what is ‘the amount properly due’, will be within my jurisdiction to decide. I do accept that clause 8.12 allows for a single payment after the assessment of what is properly due has been made. This does not of itself prevent the sum being corrected or the payment of a sum being corrected when the disputed account has been decided. I also take note that the sum stated as being the clause 8.12 account, can be disputed within 28 days. Whilst the effect of the 28 day period has not been put before me, I do see that this allows the account to be assessed in a proper forum and the eventual sum to be found properly due would then be the subject of a balancing payment. If I am wrong in this respect then it will be open to the parties to ask the court for a judgment as to what jurisdiction I actually had, and whether I was empowered to decide whether a payment should be made. I am deliberately keeping the decision to payment separate from that of valuing the sum properly due, so that if necessary the court can remove the offending, if it so finds, part of this decision.”
[16]I note that the sum that the adjudicator awarded to the claimants was far higher than the sum which had been sought in the referral notice. This may be explained by the claimants’ subsequent payment of the sum found due in adjunction 3. But this only serves to highlight the uncertain nature of precisely what it was that the claimants were seeking in adjudication 4. It also highlights one of the dangers of serial adjudication.[3]APPARENT BIAS 3.1. The Law[17]The test for apparent bias was set out by Lord Phillips at paragraph 85 of his judgment in In re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700:
“…The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the tribunal was biased.”
He went on to say that “the material circumstances will include any explanation given by the judge under review as to his knowledge or appreciation of those circumstances. Where that explanation is accepted by the applicant for review it can be treated as accurate. Where it is not accepted, it becomes one further matter to be considered from the viewpoint of the fair-minded observer. 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.” This approach was subsequently approved by the House of Lords in Porter v McGill [2002] AC 357 save that Lord Hope deleted the words “or a real danger” and focused simply on whether or not there was a real possibility that the tribunal was bias.[18]In Lanes Group PLC v Galliford Try Infrastructure Ltd [2011] EWCA Civ 1617; [2012] B.L.R 141, Jackson LJ noted that the fair-minded observer must be assumed to know all relevant publicly-available facts; must be assumed to be neither complacent nor unduly sensitive or suspicious; must be assumed to be perspicacious and must be able to distinguish between what is relevant and what is not relevant. Moreover, he must be able to decide what weight should be given to the facts that are relevant. Jackson LJ noted that there were conceptual difficulties in creating a fictional character, investing that character with this ever-growing list of qualities and then speculating about how such a person would answer the questions before the court. He said the obvious danger was that the judge would simply project onto that fictional character his or her personal opinion. However, he accepted that the approach involving the fair-minded observer was established by high authority and was therefore the exercise that had to be undertaken in cases where apparent bias was alleged.[19]There are a number of cases in which unilateral communications between the adjudicator and one of the parties have given rise to sustained allegations of apparent bias. Thus in Glencot Developments & Design Co Ltd v Ben Barrett and Son (Contractors) Ltd [2011] B.L.R 207, the adjudicator had spoken to the parties individually in an attempt to mediate the dispute. When that failed he returned to acting as an adjudicator, but not before he had asked the parties whether either of them considered that his capacity to act as an impartial decision-maker had been compromised by his individual discussions with the parties. One party did object on this ground, but the adjudicator continued anyway. His Honour Judge Humphrey Lloyd QC refused to enforce the decision on grounds of apparent bias. He said:
“24. In this case Mr Kennedy submitted that there was no evidence that anything emerged in the discussions that might have affected Mr Talbot's decision or approach. That very submission effectively makes the defendant's case. Whilst in an adjudication it is permissible to make inquiries and receive evidence and submissions from one party alone there is a clear obligation on the adjudicator to give any absent party a complete and accurate account of what has taken place. Mr Talbot went to and fro between the parties. We do not know what he heard or learned. He was under no obligation to report it, nor given that the content was “without prejudice” and confidential ought there to be any inquiry as to what happened. Those private discussions could have conveyed material or impressions which subsequently influenced his decision. On the evidence he was or may have been instrumental in resolving the issue about the 3% discount which was one of the matters that he later had to decide (in the event against the defendant). Of much more consequence in my view is the fact that the discussions on 29 September were heated so that it would have been only understandable if some view had been formed about some people or a party. In the adjudication Mr Talbot was asked to decide certain points about which there was no documentary evidence, in other words to form a view about the credibility of the applicant's case. These are areas where unconscious or insidious bias may well be present. Mr Talbot's action is writing the letter of 2 October tellingly suggests that he was concerned about an outsider might reasonably think about what had taken place. 25. Accordingly and taking account of Mr Talbot's commendable openness and explanations which I shall accept as accurate I have nevertheless reached the conclusion any fair-minded and informed observer would conclude that Mr Talbot's participation in the lengthy discussions on 29 September that there was a real possibility of him being biased. In my judgment Mr Talbot was absolutely right to have written as he did in paragraph 7 of his letter of 2 October. Had he not done so and had the decision stood alone it would not in my judgment have been an enforceable decision, or at least an immediately enforceable decision. It would have been a decision affected by apparent bias and not the decision of an impartial adjudicator. It would not therefore have been a decision authorised by the terms of the contract and therefore as unforceable as any other decision made without jurisdiction.”
[20]A similar conclusion was reached by His Honour Judge Thornton QC in Woods Hardwick Ltd v Chiltern Air Conditioning Ltd [2001] B.L.R 23. In that case the adjudicator, on his own initiative, consulted representatives of Woods Hardwick and Chiltern’s sub-contractors, without informing Chiltern either that he had obtained information from those sources, or indeed telling them what that information was. Judge Thornton considered that the failure to make available to both parties the information that the adjudicator had obtained meant that he had not acted impartially and he declined to enforce the decision. In addition, Judge Thornton was concerned about the apparent bias resulting from the fact that the adjudicator had provided a witness statement which was positively in favour of the enforcement of the claimant’s claim.[21]The perceived mischief in both Glencot and Woods Hardwick was the fact that the adjudicator had communicated with one side only, and that the other side did not know what had transpired. That is to be contrasted on the facts with the position in AMEC v Whitefriars [2004] EWCA Civ. 1418, where Dyson LJ (as he then was) found that the conversation that had taken place related solely to the adjudicator’s availability, and therefore did not support the allegation of apparent bias. He did however warn that “conversations between one party and the tribunal in the absence of the other party should be avoided.” And in Makers UK Ltd v London Borough of Camden [2008] EWHC 1836 (TCC), Akenhead J said at paragraph 37: “This case has thrown up a number of points upon which it may be helpful if some guidance is given which might be of practical help to people and parties involved in the adjudication process under the HGCRA : ”(1) It is better for all concerned if parties limit their unilateral contacts with adjudicators both before, during and after an adjudication; the same goes for adjudicators having unilateral contact with individual parties. It can be misconstrued by the losing party, even if entirely innocent.(2) If any such contact, it is felt, has to be made, it is better if done in writing so that there is a full record of the communication.(3) Nominating institutions might sensibly consider their rules as to nominations and as to whether they do or do not welcome or accept suggestions from one or more parties as to the attributes or even identities of the person to be nominated by the institutions. If it is to be permitted in any given circumstances, the institutions might wish to consider whether notice of the suggestions must be given to the other party.” 3.2. The RICS Guidance[22]In addition to the authorities, it is also necessary to refer to the RICS guidance, since Mr Sliwinski was appointed to act as the adjudicator in adjudication 4 by the RICS. They have published guidance which deals, amongst other things, with unilateral contact between the parties and the adjudicator. The following matters are identified: “2.1.4 Adjudicators considered suitable for nomination are approached and asked to confirm…• That no significant involvement exists or has existed in the last five years either personally or within the organisation with either party to the dispute… In deciding whether to agree to be nominated it is recommended that respective nominees take into consideration and disclose all matters that might give rise to the possibility or appearance of bias. They are required by RICS to disclose every matter which could reasonably be considered to create a conflict of interest. However even matters over five years old may constitute a potential conflict of interest if there is any doubt as to whether a connection with a property, a party or a representative of a party might give rise to a conflict of interest RICS expects it to be disclosed. The test as to what constitutes a conflict of interest is an objective one. It is not restricted to specific conflicts that surveyors themselves may have. It extends to the partners and others in their firm or organisation. 3.1.5 Communication with the adjudicator … It is not recommended that adjudicators speak to or meet with a party alone concerning substantive matters and any conversation should be limited to procedural matters only. In circumstances where adjudicators do meet or talk to a party without the other being privy to the conversation their actions must be seen as being fair. It is therefore essential in such circumstances to ensure that they personally make the other party aware as soon as practicable what went on in sufficient detail together with the impressions and or views that they have formed as a result to enable the other party to address them.” 3.3. The Evidence[23]The defendant has provided a statement which said that, on 6 January 2015, he received an anonymous letter enclosing two pages of what appeared to be the claimants’ phone bill which revealed the existence of the two telephone conversations to which I have referred at paragraph 6 above. It appears that similar copies of the same bill were sent to three representatives of the claimant’s solicitors. It is the claimant’s case that a fraudster contacted British Telecom claiming to be Mr Paice, in order to gain access to the claimant’s account. The claimants say, or certainly infer, that the fraudster was either the defendant, or someone in his employment. There is however no evidence, let alone evidence to the criminal standard, in support of that suggestion, and is simply not a finding that I can make on an application for summary judgment.[24]The revelation of the phone calls gave rise to a good deal of evidence in these enforcement proceedings. However, little of that evidence comes from the claimants, even though they instigated the conversations and, according to one version of what was said, did most of the talking. The only evidence from Mr Paice about the conversation can be found at paragraph 31 of his statement in these terms:
“These records highlight two telephone numbers. I can confirm that I and Ms Springall did call these numbers. I can confirm that they were to Mr Sliwinski’s office. However at no time did either I or Ms Springall ever speak to Mr Sliwinski. We only spoke by speaker phone to Mr Sliwinski’s office manager. We were at that time very upset over the whole dispute with Mr Harding and the service that we had received from those we relied upon to help us. I’ve seen copies of the statements made by Mr Sliwinski and Ms Reynolds and I can confirm that I can agree with the comments made in respect of the section relating to the calls made by myself and Ms Springall.”
[25]Accordingly, the principal evidence about these conversations came from Ms Jacqueline Reynolds, Mr Sliwinski’s office manager and also his wife. Her evidence is set out at paragraphs 8, 9 and 10 of her original statement in these terms:
“8. I remember being put on speaker phone with both Mr Paice and Ms Springall but Mr Paice appeared to be particularly upset and at the start of the call almost unable to speak. They spent much of the time saying how disappointed they were with the service that they had received from the advisors they had instructed previously and how they felt let down by them. They also commented on the actions of both Mr Harding and his representatives in the conduct of the two adjudications between them. They then mentioned further documents they had received from Mr Harding and that they were considering trying to start an adjudication without the help of their previous representatives. They then asked some questions concerning the adjudication process and how it worked. I remember providing a brief outline of the process in general, the sorts of information that they would need etc and directing them to the RICS website for further information. As the call progressed it became apparent to me that they would need the assistance of another professional in order to manage any future adjudication. Whilst I explained that Robert would not be in a position to provide this assistance I did say that I would ask him for some suggestions as to who they might contact in this regard. As the call had gone on for a considerable time, I gave them my direct number and suggested they call me if they decided they would like some suggestions of other professional who may be in a position to help. They said they would get back to me on this. 9. At no point in the conversation did they ask me about the specifics of either of Robert’s earlier decisions. 10. Upon Robert’s return that afternoon I informed him that Mr Paice and Ms Springall had called to try and speak to him and briefly outlined their problems. I also asked if he could give me the names of a number of other professionals that may be able to assist them should they phone back to ask for this.”
[26]In her original statement, Ms Reynolds went on to say that the claimants called back the following day, asking for the list and names of people who could assist them in respect of the final account. She said that Mr Sliwinski gave her a list of eight firms in the Midlands (five solicitors and three claims consultants), and that she passed these names onto the claimants, although she did not say in her statement how she did that. In her second statement, she disclosed a further document, being Mr Sliwinski’s email to her of 13 August 2014, listing the eight firms. But she still did not say how the list was communicated to the claimants. Mr Pimlott told me that his instructions were that she passed on the names by speaking to the claimants on the telephone at some time during 13 August 2014, which would therefore be a third unilateral telephone communication between the adjudicator’s office and the claimants.[27]Although not a party to the telephone calls, Mr Sliwinski gave evidence about them in both of his statements. It is notable that in so doing, he gave a different account to that of Ms Reynolds and sought to minimise anything other than the allegedly procedural content of those discussions. Thus, at paragraph 26 of his first statement, he said:
“The content of the telephone conversation on 12 August 2014 between Mr Paice and Ms Springall and Jacqui was in connection with the process of adjudication and not in connection with any of the issues between Mr Paice and Mr Harding.”
There are similar references in the rest of Mr Sliwinski’s first statement which runs to 59 paragraphs, and his supplemental statement which runs to a further 19 paragraphs.[28]The defendant does not accept the evidence from Ms Reynolds and complains that her evidence was only provided at all as a result of the revelation of the telephone records in January 2015. In addition Mr Stansfield QC points out that, although Mr Sliwinski was given the opportunity to deal with the conversations in the request made by email on 20 October 2014, he had instead given what Mr Stansfield QC described as a ‘wholly misleading answer’ to that question. 3.4. My Findings of Fact[29]On the basis of the evidence currently before the court, I make the following findings of fact in connection with the calls on 12 and 13 August 2014.(a) The telephone calls were between the claimants and Ms Reynolds, not Mr Sliwinski. There is no evidence to the contrary.(b) The long call on 12 August 2014 should not have been permitted to take place at all, particularly given that Mr Sliwinski had already acted as adjudicator in two separate disputes involving the claimants and the defendant. Ms Reynolds should have curtailed that conversation at the outset.(c) Once the conversation was permitted to proceed, a detailed file note should have been made at the conclusion of the call. The absence of such a file note makes it impossible for anyone now to remember precisely what was said. The accounts in the evidence as I have recorded them are at best sketchy. They do not amount to a “complete and accurate” statement of what happened, as per Glencot.(d) Whilst I accept that at some point there was some discussion about the procedural elements of adjudication, I reject the suggestion by Mr Sliwinski that that formed the totality, or even the bulk, of what was discussed. That is not what Mr Paice says, and it is not what Ms Reynolds says either. Moreover, the claimants already knew at least something of what was involved in the adjudication process, given that there had already been two adjudications between the parties before that conversation.(e) It is clear from Ms Reynolds’ original statement that the first part of the conversation centred on the defendant’s earlier claims, which had been the subject matter of adjudications 1 and 2. According to Ms Reynolds, the claimants were saying how dissatisfied they were with the service that they had received from their previous advisors. That poor service could only have related to adjudications 1 or 2, and if the claimants were dissatisfied with that service, that could only have been because they had lost those adjudications and been ordered to pay (in adjudication 2 at least) a significant sum to the defendant. They must therefore have felt that they should not have been ordered to pay anything at all, or certainly not £250,000.(f) That adjudications 1 and 2 were the focus of the first part of the conversation is confirmed by Ms Reynolds’ evidence that the claimants also commented on the actions of the defendant and his representatives “in the conduct of the two adjudications between them”. This demonstrates that the claimants were continuing to make clear how unhappy they were with what had happened in those adjudications. I accept what Ms Reynolds says, that there was no discussion about the decisions in adjudications 1 and 2, but there was clearly discussion about how dissatisfied the claimants were both with the outcome and the defendant’s conduct.(g) The conversation then moved on to the defendant’s final account claim which had been sent to the claimants on 8 April 2104. Those were obviously the “further documents” which Ms Reynolds says the claimants mentioned that they had recently received, and which they were so concerned about that they wanted to start their own adjudication. That final account claim discussed by the claimants and Ms Reynolds was the very claim which Mr Sliwinski was subsequently to adjudicate upon, in detail, in adjudication 4.(h) These two matters, that is to say the perceived problems as a result of adjudications 1 and 2, and the final account claim, were then “briefly outlined” by Ms Reynolds to Mr Sliwinski on his return to the office. The extent and content of that important conversation was not the subject of any further evidence from either Ms Reynolds or Mr Sliwinski. That is regrettable.(i) There was some discussion about the procedural aspects of the adjudication and the following day the names of eight firms were listed by Mr Sliwinski and sent to the claimants by Ms Reynolds, from which they then chose one representative (Peter English) to act for them. It was Peter English who rejected the defendant’s final account claim on their behalf of the claimant’s on 18 August 2014. 3.5. Disclosure of the Conversations[30]The first issue is whether, at the time of his appointment as adjudicator for adjudication 4, a fair-minded observer would conclude that Mr Sliwinski should have disclosed the existence of the telephone conversations, and that his failure to do so was indicative of apparent bias. I make plain that the issue is disclosure: although Mr Stansfield QC suggested that Mr Sliwinski should have declined the appointment at the outset, I am bound to say that I think that takes matters too far. The question is whether, like the adjudicator in Glencot, he should have written to the parties, disclosing the conversations, and asking if either of them had any objections to his continuing to act as adjudicator.[31]Mr Pimlott’s principal argument was that the conversations did not need to be disclosed because nothing was said in them that was material; that they were conversations about the procedural aspects of adjudication only. Although, as I have indicated, there is support for that proposition in Mr Sliwinski’s evidence, I have noted that he was not a party to the relevant conversations, and that paragraph 8 of Ms Reynolds is in different terms, and makes clear that the conversation involved far more than matters that were purely procedural.[32]Given my findings of fact, which I have set out in detail at paragraph 29 above, it seems to me self-evident that those conversations should have been disclosed. The long conversation on 12 August 2014 dealt with adjudications 1 and 2, and the claimants’ concern that, because the service they had received from their previous advisors was poor, the result of those adjudications was unsatisfactory for them. The conversation also dealt with the new final account claim, which was of such concern to the claimants, and which was to be the subject of adjudication 4. Those were material conversations with one party. It seems to me that, on the face of it, fairness required that the existence of those conversations should have been disclosed by Mr Sliwinski once he was notified by the RICS of his appointment.[33]Furthermore, it cannot be said on the evidence that Mr Sliwinski did not know about the conversations or their material aspects. Ms Reynolds says at paragraph 10, that she “briefly outlined [the claimants’] problems” to Mr Sliwinski. Accordingly he was aware of the nature of the claimants’ complaints and concerns, both past and future. He does not suggest otherwise in his evidence, and he does not contradict paragraph 10 of Ms Reynolds’ original statement.[34]That of course is one answer to the next point raised by Mr Pimlott, to the effect that the conversations did not need to be disclosed because they were with Mr Sliwinski’s practice manager/wife, and not him personally. Accepting for present purposes that that is true, it seems to me it makes no difference, because the content of the call, including the nature of the perceived problems, was outlined to Mr Sliwinski on his return to the office. He therefore had actual knowledge of the content of the conversations, even if he had not been a party to them.[35]But there is a wider answer to Mr Pimlott’s point. It seems to me that a fair-minded observer would conclude that it was inappropriate for a decision-maker who knows about, and fails to disclose, a material but unilateral conversation, subsequently to say that it was not disclosable because it had taken place with his practice manager/wife, not him personally. That might be regarded as the sort of artificial distinction beloved of lawyers, but not a proper approach to the business of decision-making. The RICS guidance, which I have set out, makes it clear that such an approach is unjustified because of its repeated references to the adjudicator and others associated with the adjudicator, including colleagues in his/her office.[36]In addition, Mr Pimlott argued that the conversation was not disclosable because it took place two months before the adjudication. That argument, too, is unsustainable. What matters is not what the timing was, but what the conversation was about. I have found that the conversation was, amongst other things, about the very same claim, that is to say the final account claim, which Mr Sliwinski was just about to adjudicate upon. The fact that there was a two month gap between the conversations and the adjudication was immaterial.[37]I consider that this approach is fully in accordance with the adjudication authorities noted at paragraphs 19 to 21 above. The message from them is clear: an adjudicator should not engage in unilateral conversation with the parties because of the obvious risks involved. This was manifestly not a conversation about availability as in AMEC v Whitefriars. Whilst, as Mr Pimlott noted, both Glencot and Woods Hardwick were concerned with such conversations during an adjudication, Akenhead J made clear in Makers that the same rules apply whether before, during or after the adjudication. It seems to me, with respect, that that must be right. No sensible distinction can be made in cases where the mischief is the fact of the conversation itself, not when it happened.[38]Finally, a fair-minded observer would note that this was not a case of inadvertence. This was not a situation where Mr Sliwinski was saying that he had forgotten about his conversation with Ms Reynolds, and that if he had remembered it, he would have disclosed the conversations with the claimants to the parties on his appointment. His evidence was that he considered that the conversations were simply not disclosable, so he had taken a deliberate decision not to disclose them. For the reasons I have given, I consider that the fair-minded observer would conclude that the deliberate decision not to disclose those unilateral conversations did give rise to the real possibility that the adjudicator was biased. 3.6. Answer to the Email[39]Now assume that I am wrong, and that a fair-minded observer would not necessarily have thought that the failure to disclose the conversations on their own was enough to give rise to a real possibility of bias. Would Mr Sliwinski’s answer to the email (paragraphs 10 and 11 above) alter that view?[40]In my view it would have done. The email was a clear request to identify any unilateral contact that had taken place. I should say that I agree with Mr Pimlott, that it seems strangely coincidental that the defendant’s request was so specific as to when the communication might have taken place, almost as if the questioner knew or strongly suspected that such contact had indeed occurred. But be that as it may, the email gave Mr Sliwinski the perfect opportunity to reconsider his decision not to disclose the conversations of 12 and 13 August 2014, and the outline that he had been given of those conversations by Ms Reynolds.[41]He did not take that opportunity. Instead, I consider that his answer was misleading. He made no mention of the conversations with his practice manager/wife, or that these conversations had then been outlined to him, albeit briefly. He made no mention of the list of eight firms. Instead he simply asserted that there had been “no contact…at all”.[42]The only answer to the criticism of that reply was Mr Pimlott’s suggestion that Mr Sliwinski had construed the request as relating to him personally, and that therefore his answer was truthful. On analysis, there are a number of difficulties with that submission.[43]First, Mr Sliwinski gives no evidence at all about how he construed the question in the email. Both his long statements are silent on that point. Indeed they suggest that the idea that the question related to him personally and no one else has been alighted upon subsequently.[44]Secondly, for the reasons I have already given, a fair-minded observer would not regard it as appropriate for a decision-maker to hide behind the syntax of a letter, written by a layman, and say that, since the question only referred to ‘you’, he did not need to refer to the conversations with his practice manager/wife, even though their content was subsequently outlined to him. A fair-minded observer might think that such sophistry was worthy of a politician, and would not mean that as a compliment.[45]Thus I consider that a fair-minded observer would consider that the unequivocal denial, in the face of a specific request, in a situation which, at the very least, the adjudicator knew to be more nuanced than he was representing, was a further factor to be taken into account, and a further factor that would support in the mind of the fair-minded observer, the real possibility of bias. 3.7. The Adjudicator’s Explanations[46]As Lord Phillips made plain in In re Medicaments, the decision-maker’s explanations are also a relevant matter which the fair-minded observer would need to consider when reaching a view as to apparent bias. In my view, rather like the position in Woods Hardwick, the adjudicator’s explanations in this case make the possibility of apparent bias more, rather than less, likely. There are a number of reasons for that.[47]First, I agree with Mr Stansfield QC that Mr Sliwinski’s witness statements are aggressive and unapologetic. Their tone is unfortunate, given what I have found to be Mr Sliwinski’s errors of judgment. The terms in which he expresses himself would, I think, give a fair-minded observer the impression that he had concluded that something had gone wrong, and that accordingly attack was the best form of defence.[48]I note in particular his use of the words “misconceived” (paragraph 24 of his first statement); “false” (paragraph 38 of his first statement); and “totally unsupported allegation” (paragraph 37 of his first statement), to describe the defendant’s assumption that the conversation on 12 August 2014 had been with Mr Sliwinski himself. Such descriptions are unwarranted: after all, until Ms Reynolds provided her original statement, that was an entirely fair assumption to make. Parties do not usually talk for over an hour to a practice manager about their legal problems. To call the defendant’s assumption that the adjudicator was a party to the conversation a “defamatory accusation”, as Mr Sliwinski does at paragraph 39 of his first statement, is, I regret to say, a gross exaggeration. Again this line of attack hangs on the narrow point that, although he knew about the content of the calls, they had not actually been with him.[49]Other criticisms made by Mr Sliwinski of the defendant’s case, such as “rubbish” (at paragraph 48 of his first statement); “without foundation” (at paragraph 59 of his first statement); and “absurd” (at paragraph 9 of his second statement) are also ill-judged, as is the suggestion that Mr Sliwinski, an adjudicator whose role was at an end by the time he made his witness statements, was being “intimidated” by the defendant.[50]What is also very troubling is that Mr Sliwinski made his first statement expressly in support of the claimant’s application for summary judgment (paragraph 3 says that in terms), and he concluded that statement at paragraph 59 by saying:
“I ask this honourable court to uphold the claimant’s action to enforce my decision and to declare that there has been no contact between Mr Paice and Ms Springall and me and further the allegations made against me are defamatory and without foundation.”
[51]Mr Pimlott tried to suggest that paragraph 3 was just a formal statement and did not really mean what it said. I do not accept that. It is clear that at paragraph 3 Mr Sliwinski was saying, in terms, that the claimant’s application for summary judgment should be allowed. In any event, paragraph 59 is clear and case-specific. Thus, like Judge Thornton QC in Woods Hardwick, I consider that a fair-minded observer would think that an adjudicator who was so concerned to see one side win that he supported their application for summary judgment, and in these trenchant terms, was at risk of having lost all objectivity, and again demonstrated a real possibility of bias. 3.8. Summary[52]For the reasons I have set out, and in particular the failure to disclose the conversations (Section 3.5 above); the misleading answer to the email (Section 3.6 above); and the tone and content of his explanations and witness statements (Section 3.7 above); I conclude that a fair-minded observer would consider that there was a real possibility that Mr Sliwinski was biased. Accordingly, subject to the new argument about waiver, the claimants’ claim for summary judgment must fail on that ground alone.[4]ALLEGED WAIVER OF GROUND 1[53]In his skeleton argument, Mr Pimlott argued, for the first time, that the evidence in relation to the telephone records, and the earlier specific requests about contact between the adjudicator and the claimants, presented an overwhelming case that the defendant knew about the telephone conversations on 12 and 13 August 2014 at the time of the commencement of adjudication 4, and had allowed that adjudication to proceed in any event. Accordingly, he argued that the defendant had waived his right to rely on ground 1.[54]The evidence does not permit me to say whether or not the defendant knew of the calls at the start of adjudication 4. But it does not seem to me to matter. Let us assume, against the defendant, that he did know about the calls. It is clear beyond doubt that he did not know about their content. Indeed as we have seen, he did not even know who they were between. Mr Pimlott repeatedly stressed that, in respect of apparent bias, what mattered was the content of the calls. Since it cannot realistically be argued that the defendant knew about the content of the calls until the witness statements in these enforcement proceedings, the defendant cannot have waived his right to allege apparent bias. In order to do that he would have to have known what was said i.e. the references to the poor service in adjudications 1 and 2, and the discussion about the final account, and he did not.[55]Waiver in adjudication proceedings was dealt with by Ramsey J in Farrelly (M&E) Building Services Ltd v Byrne Brothers (Formwork) Ltd [2013] EWHC 1186 (TCC). He outlined the principles as follows:
“27. In principle a party may waive a failure by an Adjudicator to comply with the rules of natural justice, although 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 it is evident that a party must be aware of or be taken to be aware of the right of challenge to the adjudicator's decision. The second step requires a clear and unequivocal act which, with the required knowledge, amounts to waiver of the right. 28. In the case of jurisdiction a party must know or be taken to know that the ground for challenging the jurisdiction has arisen. If, with that knowledge a party then continues with the adjudication process without raising the challenge then it may waive its rights to challenge jurisdiction at a later date. In the case of jurisdictional challenges it is therefore by continuing with the adjudication in the knowledge that there are grounds for jurisdictional challenge that gives rise to a waiver. 29. In the case of a natural justice challenge the party has to know or be taken to know that the grounds for a natural justice challenge have arisen. However there has then to be some clear and unequivocal act by that party to show that it does not intend to rely on that natural justice challenge before there can be waiver.”
[56]Applying those principles to the present case, I find that the defendant did not know, and cannot be taken to have known, about the content of the conversations, so he did not know that the grounds for a natural justice challenge had arisen. In addition, there was no clear and unequivocal act on the part of the defendant which could amount in fact, or in law, to waiver.[57]For those reasons the waiver argument in this case must fail and my finding in respect of apparent bias must, therefore, defeat the summary judgment application. Notwithstanding that, I go on to consider the question of jurisdiction, since that was also argued before me.[5]GROUND 2: JURISDICTION 5.1. The Law[58]The law as to when the second adjudicator is constrained from trespassing on the same, or substantially the same, dispute as determined by the first adjudicator is complex. The leading cases are Quietfield Ltd v Vascroft Construction Ltd [2007] B.L.R 67 (CoA) and HG Construction Ltd v Ashwell Homes (East Anglia) Ltd [2007] EWHC 144 (TCC). The principles were subsequently summarised in Benfield Construction Ltd v Trudson (Hatton) Ltd [2008] EWHC 2333 (TCC) as follows: “34 In my view the relevant principles that apply in cases of this sort are those set out in paragraph 38 of the judgment of Ramsey J [in HG] where he expressly considered the effect of clause 39A.7.1. I summarize those principles as follows:(a) The parties are bound by the decision of an adjudicator on a dispute or difference until it is finally determined by court or arbitration proceedings or by an agreement made subsequently by the parties.(b) The parties cannot seek a further decision by an adjudicator on a dispute or difference if that dispute or difference has already been the subject of a decision by an adjudicator.(c) The extent to which a decision or a dispute is binding will depend on an analysis of the terms, scope and extent of the dispute or difference referred to adjudication and the terms, scope and extent of the decision made by the adjudicator. In order to do this the approach has to be to ask whether the dispute or difference is the same or substantially the same as the relevant dispute or difference and whether the adjudicator has decided a dispute or difference which is the same or fundamentally the same as the relevant dispute or difference. (e) The approach must involve not only the same but also substantially the same dispute or difference. This is because disputes or differences encompass a wide range of factual and legal issues. If there had to be complete identity of factual and legal issues then the ability to re-adjudicate what was in substance the same dispute or difference would deprive clause 39A.7.1 of its intended purpose. (f) Whether one dispute is substantially the same as another dispute is a question of fact and degree.” 5.2. The Relevant Facts[59]In adjudication 3, Mr Linnett decided that the defendant was entitled to be paid the entirety of his final account claim under clause 8.12 because of the absence of a valid payless notice.[60]In the injunction hearing, Edwards-Stuart J decided that it was open to the claimants to have determined the question of what sum was properly due in respect of the defendant’s final account, and that the absence of a payless notice was not, as it were, a defence for all time. He therefore declined to order an injunction restraining adjudication 4.[61]In adjudication 4 Mr Sliwinski said that, contrary to Mr Linnett’s view, he thought that the payless notice regime was irrelevant to clause 8.12 and that the claimants were entitled to be repaid almost all of what they had paid to the defendant under adjudication 3. The Court of Appeal has now said that the defendant’s appeal against the decision refusing the injunction has a reasonable prospect of success and granted permission to appeal. 5.3. Is There A Reasonable Prospect That The Defendant Can Show A Substantial Overlap Between Adjudications 3 and 4 Such That Mr Sliwinski Did Not Have Jurisdiction?[62]In my view, on the basis of the facts that I have set out, I am obliged to conclude that the defendant does have a reasonable prospect of successfully arguing that there was a sufficiently substantial overlap between adjudications 3 and 4, and that accordingly Mr Sliwinski had no jurisdiction to decide as he did. The steps giving rise to that conclusion are these:(a) If Edwards-Stuart J had concluded that the absence of a payless notice was fatal to adjudication 4, he would have granted the injunction because he would have held that that issue had already been decided in adjudication 3. He refused the injunction because he considered that, regardless of the absence of a payless notice, the claimants were entitled to a full valuation of the sum due to the defendant, if any, under clause 8.12.(b) The Court of Appeal has granted permission to appeal against the decision of Edwards-Stuart J, meaning that they consider that there is a reasonable prospect of successfully showing that the judge was wrong not to accept the defendant’s argument and therefore wrong not to rule that the relevant issue in adjudication 4 had already been decided in adjudication 3.(c) Accordingly, the Court of Appeal have said that there is a reasonable prospect that the defendant can show that adjudication 4 addressed the same, or substantially the same, subject matter as adjudication 3 and that therefore Mr Sliwinski had no jurisdiction to trespass onto something that had already been decided.(d) In those circumstances, I am bound by, or at least would not wish to depart from, that decision of the Court of Appeal.[63]In such circumstances the question of jurisdiction, namely whether there is a reasonable prospect of the defendant showing that the issue in adjudication 4 was the same, or substantially the same, as the issue in adjudication 3, can only be answered in the affirmative.[64]For completeness I should add that the terms of Mr Sliwinski’s decision (paragraph 15 above) also suggest that he was aware of this potential problem. First there is his stated view that the payless regime does not apply, which he acknowledges to be contrary to Mr Linnett’s (temporarily binding) decision to the opposite effect. Moreover, he goes on to admit that his decision as to payment in the light of that was, as he put it, “something of a grey area”. There is also his attempted distinction between valuation and payment. I consider that all of this is a reflection of Mr Sliwinski’s awareness of the difficulties of one adjudicator coming to a very different view to that of a previous adjudicator on the same, or substantially the same, point. 5.4. Who Holds The Money?[65]Mr Pimlott argued that the claimants were entitled to the fruits of the decision in adjudication 4, at least until the Court of Appeal hearing later this year. He relied on the well known decision of Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358; [2006] B.L.R. 15; 104 Con. L.R. 1; (2005) 102(47) L.S.G. 26, and all the other myriad decisions by TCC judges which are generally in favour of the enforcement of adjudicator’s decisions. However, even leaving aside the fact that my finding of apparent bias means that the summary judgment application must fail in any event, I do not accept that submission.[66]First, if it is reasonably arguable that Mr Sliwinski did not have the necessary jurisdiction, then there can be no entitlement to the money until that point has been finally determined. That is axiomatic in any enforcement claim. Secondly, by way of the wider merits, the jurisdiction point was taken upfront by the defendant at the start of adjudication 4, but the claimants still sought to proceed by way of adjudication 4. They were therefore always aware of the risk that the decision in adjudication 4 would not be summarily enforced. Indeed in the passages from Mr Sliwinski’s decision, which I have set out above, he too was aware that the payment part of his decision, which is after all what the claimants are interested in, could be the subject of a ruling from the court that it was not enforceable. 5.5. Summary[67]For the reasons noted above, I conclude that the jurisdiction challenge succeeds for the purposes of preventing summary judgment. The defendant has a reasonable prospect of successfully challenging the adjudicator’s decision in adjudication 4 on jurisdiction grounds, because he purported to decide the same or substantially the same dispute as adjudication 3.[6]CONCLUSIONS[68]For the reasons that I have given, I uphold both challenges and I decline to enforce Mr Sliwinski’s decision in adjudication 4. The application for summary judgment is therefore refused.[69]I should add this. Although I accept that it is cold comfort as far as the claimants are concerned, I have considerable sympathy for their position. They have not been well served by the adjudication process. Serial adjudications often bring with them significant jurisdictional risks. In my view, the claimants have been unnecessarily exposed to those risks in this case. Their difficulties have been compounded by what I have referred to as a series of misjudgements by Mr Sliwinski, the adjudicator.[70]Despite all of that, and coming back to what this case is all about, namely the true value of the defendant’s final account, the chances must be high that at present, the claimants have overpaid the defendant. After all, he was paid the entirety of his final account claim because of the absence of a valid payless notice. Everyone in the construction industry knows that contractor’s claims are usually overstated. Accordingly, it is likely that the defendant has been overpaid. It seems to me that a mediation would resolve these relatively straightforward quantity-surveying disputes between the parties. They are much better off going down that route than waiting for an appeal hearing in the Court of Appeal, which will not be finally determinative of the disputes between them, and will instead relate to whether or not an adjudication should have been injuncted something like a year after that adjudication actually took place. That again only confirms the view that I expressed at the outset of this Judgment, that this case is a long way away from the sort of dispute for which adjudication was intended.

Cited in 6 later judgments