The adjudicator under a construction contract has strong protection from liability for anything he does in discharge of his duty, or so the Housing Grants, Construction and Regeneration Act 1996 seems to say.
Many seem to assume that the words that confer that protection, in section 108 (4) of the Act, confer a statutory immunity that allows any adjudicator, on whatever kind of construction project, to sleep soundly knowing that provided he keeps good faith, he cannot be sued.
Like all assumptions where construction disputes are concerned, this is a dangerous one to make. Statutory immunity from suit has to be conferred in express terms, and a close examination of section 108(4) reveals no such terms. What it actually stipulates is that "the contract shall provide that" the adjudicator shall not be liable for anything done or not done by him other than in bad faith. The Act therefore imposes nothing on anyone not party to the contract under which the adjudicator is appointed (as distinct from to the contract for adjudication services between the adjudicator and the parties to the dispute).
What this means is that the adjudicator's immunity is only as regards actions brought by the parties to that contract. What it implies is that anyone else involved in the same project under different contracts can freely take action against an adjudicator whose decision they are affected by.
For example: a disgruntled sub-contractor, fixed with disruption and delay because of an adjudicator's having been heavy-handed as between the main contractor and the employer, might join the adjudicator in an action to recover additional costs. A developer, suffering losses because the adjudicator has sanctioned delays to sub-contract work, might do the same. An occupier, left with an unsafe building because an adjudicator was negligent in deciding a dispute over, say, piling design, would as a matter of course sue the adjudicator to ensure that the main defendants could not escape liability by blaming him.
The legal basis for such actions is clear. The tort of negligence, following Hedley Byrne v. Heller and Partners and Caparo Industries v Dickman, allows a plaintiff to recover economic losses suffered as a result of negligent misstatement made by someone who owes that plaintiff a duty of care. It is trite law that such a duty is owed to anyone who might foreseeably be harmed by one's actions; it is similarly trite law that the complex interplay of contractual and commercial relationships on any construction project allow actions to have far-reaching results.
The adjudicator must find a way to protect himself. There is nothing in the Act to help him; there is no express provision that the parties to the contract are required to indemnify him against actions brought by third parties (which would achieve almost the same thing as statutory immunity).
The adjudicator could, of course, seek such an indemnity directly from the parties, but unless it became a universal requirement of appointment, it would simply mean that the parties went elsewhere for their adjudication service. Adjudicators nominated on standard terms by adjudicator nominating bodies have, of course, an advantage here as the parties are less in control of the process of appointment.
Finally, there is the possibility of insurance. Many adjudicators will carry ordinary professional indemnity cover as a matter of course. As there are not yet any full-time adjudicators and most are drawn from the professional end of the construction industry, it remains to be seen whether those professional indemnities cover work as an adjudicator - it would be surprising if they did not - but it would be an unwise adjudicator who did not check.
For further information please contact Andrew Dennis, e-mail: Click Contact Link , Trinity Court, 16 John Dalton Street, Manchester M60 8HS, UK, Tel: +44 161 830 5000
This article was first published in the November 1998 Hammond Suddards Construction and Engineering Newsletter
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.
Many seem to assume that the words that confer that protection, in section 108 (4) of the Act, confer a statutory immunity that allows any adjudicator, on whatever kind of construction project, to sleep soundly knowing that provided he keeps good faith, he cannot be sued.
Like all assumptions where construction disputes are concerned, this is a dangerous one to make. Statutory immunity from suit has to be conferred in express terms, and a close examination of section 108(4) reveals no such terms. What it actually stipulates is that "the contract shall provide that" the adjudicator shall not be liable for anything done or not done by him other than in bad faith. The Act therefore imposes nothing on anyone not party to the contract under which the adjudicator is appointed (as distinct from to the contract for adjudication services between the adjudicator and the parties to the dispute).
What this means is that the adjudicator's immunity is only as regards actions brought by the parties to that contract. What it implies is that anyone else involved in the same project under different contracts can freely take action against an adjudicator whose decision they are affected by.
For example: a disgruntled sub-contractor, fixed with disruption and delay because of an adjudicator's having been heavy-handed as between the main contractor and the employer, might join the adjudicator in an action to recover additional costs. A developer, suffering losses because the adjudicator has sanctioned delays to sub-contract work, might do the same. An occupier, left with an unsafe building because an adjudicator was negligent in deciding a dispute over, say, piling design, would as a matter of course sue the adjudicator to ensure that the main defendants could not escape liability by blaming him.
The legal basis for such actions is clear. The tort of negligence, following Hedley Byrne v. Heller and Partners and Caparo Industries v Dickman, allows a plaintiff to recover economic losses suffered as a result of negligent misstatement made by someone who owes that plaintiff a duty of care. It is trite law that such a duty is owed to anyone who might foreseeably be harmed by one's actions; it is similarly trite law that the complex interplay of contractual and commercial relationships on any construction project allow actions to have far-reaching results.
The adjudicator must find a way to protect himself. There is nothing in the Act to help him; there is no express provision that the parties to the contract are required to indemnify him against actions brought by third parties (which would achieve almost the same thing as statutory immunity).
The adjudicator could, of course, seek such an indemnity directly from the parties, but unless it became a universal requirement of appointment, it would simply mean that the parties went elsewhere for their adjudication service. Adjudicators nominated on standard terms by adjudicator nominating bodies have, of course, an advantage here as the parties are less in control of the process of appointment.
Finally, there is the possibility of insurance. Many adjudicators will carry ordinary professional indemnity cover as a matter of course. As there are not yet any full-time adjudicators and most are drawn from the professional end of the construction industry, it remains to be seen whether those professional indemnities cover work as an adjudicator - it would be surprising if they did not - but it would be an unwise adjudicator who did not check.
For further information please contact Andrew Dennis, e-mail: Click Contact Link , Trinity Court, 16 John Dalton Street, Manchester M60 8HS, UK, Tel: +44 161 830 5000
This article was first published in the November 1998 Hammond Suddards Construction and Engineering Newsletter
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.
