Case No. HT-08-331

Europe v. Automajor [2002] BLR 113 at paragraph 29, ROK can no longer seek to contend that the decision is not binding. 19.Mr Jonathan Lee, who appears on behalf of ROK, submits that ROK has made no election which would preclude it from being able to challenge the decision. He relies on the reservation of rights in the letter sent to Mr Brooker on 22 October 2008, as well as the general reservation made in paragraph 1.2 of the Response. He also submits that the payment of the Adjudicator's fees was made by mistake and that payment of those fees cannot be said to be taking a benefit from the decision. 20.I now consider those submissions. The law on election which, Mr Stansfield submits, prevents a party from “approbating and reprobating” or relying on and challenging the decision of an adjudicator is of some antiquity. In Codrington v. Codrington [1875] LR 7 HL 854 at 866, Lord Chelmsford expressed the doctrine in these terms:“He who accepts a benefit under an instrument must adopt the whole of it, conforming to all its provisions and renouncing every right inconsistent with it.”21.In Banque des Marchands v. Kindersley [1951] 1 Ch 112, a party sought to strike out an action on the basis that a bank was nonexistent and yet at the same time it was seeking to prove in the liquidation of the bank. The Court of Appeal, in finding that there had been no election, referred to the phrase “approbating and reprobating” in Scottish law, or the English phrase, “Blowing hot and cold" and said this at 119 per Lord Evershed MR :“From the authorities cited to us, it seems to me to be clear that these phrases must be taken to express, first, that the party in question is to be treated as having made an election from which he cannot resile and, secondly, that he will not be regarded, at least in a case such as the present, as having so elected unless he has taken a benefit under or arising out of the course of conduct which he has first pursued and with which his present action is inconsistent. These requirements appear to me to be inherent. For example, in Smith v. Baker LR 8 CP 350 and Ex parte Roberston LR 20 Eq 733. See also the speech of Lord Atkin in Evans v. Bartlam [1937] AC 473 at 479: “I find nothing in the facts analogous to cases where a party, having obtained and enjoyed material benefit from a judgment, has been held precluded from attacking it while he is still in enjoyment of the benefit. I cannot bring myself to think that a judgment debtor who asks for and receives a stay of execution approbates the judgment so as to preclude him thereafter from seeking to set it aside, whether by appeal or otherwise. Nor do I find it possible to apply the doctrine of election.” and the speech of Lord Russell of Kilowen at 483: “The doctrine of approbation and reprobation requires for its foundation inconsistency of conduct as, where a man having accepted a benefit given him by a judgment, cannot allege the invalidity of the judgment which conferred the benefit.”’”22.In Lissenden v. CAV Bosch Limited [1940] AC 412 the House of Lords held that the doctrine did not prevent a party from receiving benefits under an award and seeking to appeal the award to obtain greater benefits. Lord Atkin said at 429:“In this country, I do not think it expresses any formal legal concept. I regard it as a descriptive phrase equivalent to, 'Blowing hot and cold'. I find great difficulty in placing such phrases in any legal category, though they may be applied correctly in defining what is meant by election, whether at common law or in equity. In cases where the doctrine does apply, the person concerned has the choice of two rights, either of which he is at liberty to adopt but not both. Where the doctrine does apply, if the person to whom the choice belongs irrecoverably and with knowledge adopts the one, he cannot afterwards assert the other. Election between the liability of principal and agent is perhaps the most usual instance in common law.”23.In the context of adjudication claims, the principle has, in particular, been relied on in two decisions. In Macob v. Morrison [1999] BLR 93 Dyson J, as he then was, had to consider, in the first case of enforcement of an adjudicator's decision, whether a party could both assert that the adjudicator's decision was invalid and also seek to assert that proceedings in relation to the decision should be stayed to arbitration under clause 27 of the contract. Dyson J said this at 99:“In my view, if a defendant wished to challenge the validity of the decision, it had an election. One course open to it was, as it did, to treat it as a decision within the meaning of clause 27 and refer the dispute to arbitration. The other was to contend that it was not a decision at all within the meaning of clause 27 and to seek to defend the enforcement proceedings on the basis that the purported decision was not binding or enforceable because it was a nullity. For the reasons stated earlier in this judgment, this second course would have availed the defendant, but what the defendant could not do was to assert that the decision was a decision for the purposes of being the subject of a reference to arbitration but was not a decision for the purposes of being binding and enforceable pending any revision by the arbitrator. In so holding, I am doing no more than applying the doctrine of approbation and reprobation or election. A person cannot blow hot and cold - see Lissenden v. CAV Bosch Limited [1940] AC 412, and Halsbury's Laws, Fourth Edition, Volume 16, paragraphs 957 and 958. Once the defendant elected to treat the decision as one capable of being referred to arbitration, he was bound also to treat it as a decision which was binding and enforceable unless revised by the arbitrator.”24.In Shimizu Europe v. Automajor His Honour Judge Seymour Q.C. dealt with a case in which a party sought to challenge the jurisdiction of an adjudicator but had also sought to correct the decision under the implied slip rule. Judge Seymour said this, obiter, at paragraphs 29 to 30:“In my judgment, by inviting Mr Haller to correct the award under the slip rule, Berwins, on behalf of Automajor, accepted that the award was valid. It is true that, in its letter to Mr Haller dated the 6th of November 2001, Berwins asserted that the award contained an error which went to Mr Haller's jurisdiction, but, if that were right, it would follow that the award, or the relevant part of it, was a nullity. There would be nothing to correct. I accept the submission of Mr Constable that the invitation to Mr Haller to correct the award under the slip rule is only consistent with recognising it as valid. I also accept the submission of Mr Constable that, by paying part of the sum the subject of the award, Automajor elected to treat the award as valid.”25.He also said at paragraph 29:“In my judgment, it cannot be right that it is open to a party to an adjudication simultaneously to approbate and reprobate a decision of the adjudicator. Assuming that good grounds exist on which a decision may be subject to objection, either the whole of the relevant decision must be accepted or the whole of it must be contested.”26.In my judgment the underlying decisions on election or approbation and reprobation, as applied in the context of adjudication, show that a party cannot both assert that an adjudicator's decision is valid and at the same time seek to challenge the validity of the decision. The party must elect to take one course or the other. By taking a benefit under an adjudicator's decision, the party will generally be taken to have elected a particular course and will be precluded from challenging the adjudicator's decision. In Macob the benefit was the claim to have the proceedings stayed to arbitration in relation to the decision. In Shimizu the benefit was the right to have the decision corrected under the slip rule. 27.In the present case, it is to be noted that, somewhat unusually, PTB had obtained the adjudication decision from the Adjudicator but then because of concerns had decided to seek a further decision from Mr Brooker. Mr Lee says that this itself was inconsistent with seeking enforcement of the decision made by Mr Barnes. That, it seems to me, is self-evidently correct. However, I do not consider that it gives rise to an election which can effect enforceability of the current decision, particularly on the facts of this case. Questions of enforceability might have arisen if the second adjudication had proceeded further, especially if there had been a second decision. 28.In this case, I consider that the commencement of the second adjudication caused a difficulty for ROK in relation to any challenges that it wished to make to the enforceability of the first decision made by the Adjudicator. In my judgment, ROK had to elect whether to contend that the first decision was unenforceable so that it would not preclude PTB from commencing that second adjudication, or whether to contend that it was enforceable so that it would preclude a second adjudication. If it chose the first alternative, then it could repeat certain challenges to the jurisdiction of the adjudicator in the second adjudication, but it could not assert that the first adjudication decision prevented the adjudicator from continuing with the second adjudication. ROK could only do so if it were to assert that the first adjudication decision was a valid decision. ROK chose the second alternative, it chose to assert that there was a valid adjudication decision arising from the first adjudication which precluded the second adjudicator from proceeding. By doing so, I consider that it elected to treat the first decision as a valid decision. In the letters of 22 and 23 October 2008, which I have cited above, ROK informed the second adjudicator that they had raised jurisdictional challenges in respect of the first decision and had not paid PTB. However, in making the challenge to the second decision, I consider that they elected to rely on the benefit of that first decision and in doing so elected not to challenge that decision. The statement in their letter did not and, in my view, could not affect that election. The second adjudicator decided not to proceed with the second adjudication and resigned. That was a clear benefit which ROK obtained by relying on the first decision. In those circumstances, I do not consider that ROK can now seek to challenge the validity of the Adjudicator's decision in these enforcement proceedings. 29.PTB also relied on the fact that ROK had paid the Adjudicator's fees and had thereby elected to treat the Adjudicator's decision as valid. I do not consider that, in the absence of evidence to show that the payment was a mistake, the court can come to that conclusion as a matter of inference or otherwise, as Mr Lee sought to submit. Rather, the natural inference from the payment of the adjudicator's fees is that ROK intended to make payment in respect of a valid decision requiring such payment. Did that payment amount to an election? Mr Lee submits that it is difficult to characterise ROK's payment as amounting to ROK taking a benefit. There is strength in that point but, in my judgment, the taking of a benefit, whilst sufficient for there to be an election, is not necessary. What has to be determined is whether there has been an election. Objectively, a party who decides to pay a sum awarded against it in an adjudicator's decision does so in reliance on that decision being valid. I consider that, in the absence of any circumstances indicating to the contrary, by making that payment ROK elected to treat the adjudicator's decision on fees and expenses as being a valid decision, at least to that extent. 30.In my judgment, the election made by ROK by its reliance on the first decision means that ROK cannot now challenge that decision. However, having heard argument, I now turn to consider the merits of the underlying challenges.