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Rowan Turrall
Rowan Turrall,
SENIOR ASSOCIATE - SOLICITOR
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Misrepresentation in adjudication nomination process
20 February 2015

There are frequently cases in the Technology and Construction Court in which parties seek to avoid enforcement of adjudicator’s decisions by way of summary judgment. The recent case of Eurocom Ltd v Siemens plc [2014] was one such case. Allegations are often made in such proceedings that the adjudicator has breached the rules of natural justice or decided the same or substantially the same issue as had been decided in a previous adjudication and that was the case here. However there was an additional more interesting allegation that the appointment of the adjudicator was invalid because the referring party had misrepresented to the RICS that a number of adjudicators would have a conflict of interest.

The facts

Siemens engaged Eurocom to install communications systems at Charing Cross and Embankment underground stations. Disputes arose regarding delay to the commencement of the work, variations, prolongation, delay and disruption. Siemens sought to terminate Eurocom’s employment and it subsequently referred the matter to adjudication. The first adjudicator, Mr Matthew Molloy, determined that there was a net payment due from Eurocom to Siemens but that this led to no payment at that stage.

Over a year later, Eurocom’s representative, Knowles Limited, served a notice of adjudication on Siemens. At the same time Knowles applied to the RICS for the nomination of an adjudicator. The nomination form included a question which stated:

Are there any adjudicators who would have a conflict of interest in this case?”

Unbeknown to Siemens at the time, Mr Giles of Knowles completed the box as follows:

We would advise that the following should not be appointed:

Mr Leslie Dight and Mr Nigel Dight of Dight and partners; Mr Slamak Soudagar of Soudagar associates; Rob Tate regarding his fees – giving rise to apparent bias; Peter Barns for dispute of a minimum fees charge and apparent bias; Additionally Keith Rawson, Mark Pontin, JR Smalley, Jamie Williams, Colin Little, Christopher Ennis and Richard Silver, Matthew Molloy who has acted previously or anyone connected with Fenwick Elliott solicitors who have advised the Referring Party.”

Tony Bingham was nominated as the adjudicator by the RICS for the second adjudication and he eventually gave his decision deciding that Eurocom was entitled to just over £1.6million including interest.

Prior to the decision being given Siemens had written to the RICS asking for a copy of all communications from and on behalf of Eurocom including the written request and any completed application form. Although the RICS initially refused to provide a copy of the application form it eventually did do so. Following the decision Siemens wrote to Knowles asking them to explain, among other things, why it was they had alleged the various individuals named had conflicts of interest. Knowles failed to respond. Siemens therefore wrote again, this time attaching a table setting out responses from the individuals identified stating whether or not they had a conflict of interest. Knowles again failed to respond.

Some months later, solicitors instructed on behalf of Eurocom wrote to Siemens seeking payment of the sums awarded by the adjudicator. Siemens indicated that it would resist enforcement proceedings and one of the grounds for doing so would be the nomination process. They provided the solicitors with copies of the unanswered letters to Knowles. Eurocom nonetheless commenced proceeedings and sought summary judgment.

The judge initially gave a direction that Eurocom provide various information about what conflict of interest each potential adjudicator was supposed to have. A number of witness statements were served by the parties following that direction.

In one of the witness statements, Mr Giles of Knowles said the following in relation to the question which had been answered by him in the nomination form:

I largely use this box as a means of stating to which adjudicators, based on past experience, I would not send a referral document: in effect a pre-emptive rejection list. This saves time and money that would otherwise be expended in allowing for notices of adjudication to lapse and reapplying for alternative adjudicators. In the instances where there is a conflict I obviously say why.”

In relation to the individuals named, the witness evidence stated that Mr Molloy (the previous adjudicator) had been named because Mr Giles “considered he had been inundated with jurisdictional challenges during that adjudication and I thought a fresh mind was appropriate”. In relation to the other individuals he stated that there was an incorrect reference to Fenwick Elliot solicitors and in respect of all of the other individuals “these do not have a conflict as such. They are, as I described earlier in this statement.” [i.e. as above]

Siemens argued that there had been a false statement which had been made deliberately and/or recklessly by Mr Giles of Knowles and that the nomination by the RICS based upon that misrepresentation was invalid and a nullity.

The decision

The summary judgment application came before Mr Justice Ramsey. He decided that on the basis of the evidence in the answer to the question “are there any adjudicators who would have a conflict of interest in this case?” Mr Giles had answered the question falsely.  The judge did not have to come to a concluded view for the purposes of the summary judgment application as to whether the statement was made fraudulently. However, he decided that the evidence gave rise to a very strong prima facie case that Mr Giles deliberately or recklessly answered the question so as to exclude adjudicators who he did not want to be appointed and that he made a fraudulent representation to the RICS.

Mr Justice Ramsey decided that where there has been a material fraudulent misrepresentation in the process of applying to the adjudication nominating body, the application for a nomination of an adjudicator is invalid and it is as if no application has been made. He therefore concluded that in this case the appointment of Mr Bingham was a nullity and he did not have jurisdiction.

As an alternative he concluded that if a party, in breach of contract, fails to follow the correct adjudication process in a way which goes to the heart of the appointment, then the adjudicator does not have jurisdiction.

For these reasons, and others set out in the judgment, Eurocom’s application for summary judgment was unsuccessful. As a further sting in the tail the court decided at a subsequent hearing that there had been unreasonable conduct to a high degree, in addition to a very strong case of fraud which took the case outside of the norm. It therefore ordered that Eurocom pay Siemens costs on an indemnity basis.

Conclusion

The case highlights the importance of parties completing forms accurately when seeking the nomination of an adjudicator. Trying to rule out adjudicators parties might not want to use by answering questions inaccurately is now almost certainly going to result in an adjudicator’s appointment being invalid. When the costs of the adjudication and subsequent summary judgment process are taken into account, this will have been a very costly lesson for Eurocom to learn.  

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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