Lawrence Pearce is a partner at law firm Holmes & Hills
Adjudication has long been the construction industry’s financial safety net. It is quick, relatively cheap and, most of the time, reliably enforceable. But a recent Technology and Construction Court ruling shows how easily that safety net can be ripped away, not by bad arguments, but by a badly handled nomination form.
“It is tempting… to dress up dissatisfaction with an adjudicator as a ‘conflict’… But this case shows how dangerous that approach is”
In RNJM Ltd v Purpose Social Homes Ltd, a contractor was awarded just over £132,000 in adjudication. Yet when it tried to turn that decision into cash through enforcement proceedings, the court refused. The reason was not anything the adjudicator did wrong, but how RNJM had gone about securing that adjudicator in the first place.
The dispute had a long backstory. The parties had already been through four adjudications. Two of them ended with RNJM being ordered to pay the adjudicator’s fees but not doing so. The adjudicator eventually threatened recovery action, prompting Purpose Social Homes to pay the fees itself so the matter could be put to bed.
When RNJM launched a fifth adjudication, it asked the Royal Institution of Chartered Surveyors (RICS) to appoint a different adjudicator. On its nomination form, RNJM stated that the previous adjudicator had a “conflict of interest” because there was “a dispute over payment with the referring party”. That short sentence proved fatal.
Purpose repeatedly asked RNJM to explain what this supposed conflict was. Those requests were ignored. Only later did RNJM suggest that the unpaid fees might give rise to apparent bias.
The court was far from sympathetic. It found there had never been any genuine conflict between RNJM and the adjudicator at all, just an unpaid invoice, which Purpose had already settled. There was no conflict, no reasonable perception of bias and no basis for excluding the adjudicator from further appointments.
Worse still, the judge concluded that RNJM’s statement to RICS had been misleading. And that triggered a well-established but often forgotten rule from Eurocom v Siemens: if false or misleading information is given to a nominating body, the adjudicator’s appointment can be invalid, even if the adjudicator then conducts the case impeccably.
Unenforceable
That is exactly what happened here. Because RNJM’s description of a “conflict of interest” was wrong, the RICS appointment process was compromised. The adjudicator was never properly appointed. And without a valid appointment, there was no enforceable decision, no matter how strong RNJM’s underlying claim may have been.
For the industry, this is not just a legal technicality. It goes to the heart of how adjudication is supposed to work. Nominating bodies rely almost entirely on what the parties tell them. That makes the nomination stage far more important than many in the industry realise. It is tempting, particularly after a bruising adjudication, to dress up dissatisfaction with an adjudicator as a “conflict” in order to get someone new next time. But this case shows how dangerous that approach is.
A real conflict of interest requires something concrete – a financial stake, a prior relationship, or direct involvement in the same dispute. Being annoyed about a previous decision, or having been ordered to pay fees, does not come close.
The court was also unimpressed by RNJM’s refusal to explain itself when challenged. If there is a genuine conflict, it should be easy to articulate. Silence, as the judge noted, is often “telling”.
The practical lesson for contractors, employers and their advisers is straightforward. Treat adjudicator nomination forms with the same care as you would a witness statement. Be accurate. Be transparent. And resist the temptation to use loaded language to try to influence the appointment process.
Because as RNJM discovered, it only takes one careless form to turn a six-figure adjudication win into a complete loss.
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