After hundreds of hours and thousands of pounds have been spent on adjudication proceedings, the winning party wants to be paid, and quickly. But as Mark James from Coffin Mew explains, the losing party may have other ideas.
A successful party can enforce their award through the courts. Usually this entails issuing a claim while at the same time making an application for summary judgment (applying for an early decision).
Applications are made to the Technology and Construction Court (TCC). However, county courts will also hear enforcement cases if it is sensible for them to do so, depending on the amount in question. The TCC tries to list enforcement proceedings within 28 days. However, unsuccessful parties will sometimes attempt to challenge the enforcement of the award, or make an application themselves for a Stay of Execution.
So, what arguments are raised to challenge enforcement?
Usually, you will already have reserved the right to challenge the jurisdiction of the adjudicator through correspondence. The courts need to be satisfied that you have reserved your position in this respect. If the unsuccessful party cannot show that they made any reservation of the right to challenge the adjudicator’s jurisdiction, then the courts are very unlikely to entertain such an argument at a later date.
Providing that the unsuccessful party reserved their position regarding jurisdiction, the courts will then consider the grounds used to challenge enforcement. The typical arguments used to contend that the adjudicator lacked jurisdiction include arguments such as:
- no dispute had crystallised;
- the adjudicator did not determine the dispute referred to them;
- the adjudicator failed to make a decision within the required time;
- procedural error;
- there has been a breach of the rules of natural justice.
One should start from the premise that the courts will enforce an adjudication award unless there is very good reason not to – even if the adjudicator has made a mistake.
In Macob Civil Engineering v Morrison Construction Ltd [1999] EWHC Technology 254, when Macob came to enforce its award, Morrison argued that the adjudicator’s decision should not be enforced as there was an error in conducting the adjudication, in breach of the rules of natural justice.
However, Frances J held that the Housing Grants, Construction & Regeneration Act 1996 allowed for “rough and ready justice”.
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This principle was similarly adopted in Carillion Construction Ltd v Davenport Dockyard [2005] EWCA Civ. 1358. In this case the adjudicator had disregarded evidence and made errors in calculations, but the court still found that the adjudicator’s decision was to be upheld and that courts were to respect the decision of the adjudicator.
It was only to be in extreme circumstances that the courts should interfere with the adjudicator’s decision.
It is not uncommon for the courts to hear arguments that the adjudicator in some way breached the “rules of natural justice”. The principle of natural justice has two constituents: the rule against bias; and the right to a fair hearing.
Parties commonly argue that that they had not been given a sufficient amount of time to respond or submit evidence in the adjudication. You also see arguments that the case was too complex for the adjudicator to decide or that by not providing the parties with the reasons for the decision that they reached – whether this was requested or not – is a breach of natural justice.
However, as seen in Macob, the courts’ approach is usually one of “rough justice” and it is very difficult to persuade them otherwise.
There have also been cases where it is alleged there was apparent bias by the adjudicator, and therefore the award should not be enforced – but, again, the courts have been reluctant to find bias. In Rydon Maintenance Ltd v Affinity Sutton Housing Ltd [2015] EWHC 1306 (TCC), Rydon won the adjudication and sought enforcement.
However, Affinity argued, among other grounds, bias on the basis of the adjudicator holding a private meeting with the expert and not requiring questions to be answered by Rydon’s expert before the hearing.
The court held that this was not bias and the adjudicator had not acted adversely as long as the procedure was “rapid, inexpensive but also, of course, fair”.
Most of the cases in this area of practice are fact specific and care should be taken before raising arguments in defence to an enforcement application because the costs of bringing such proceedings can be substantial (often tens of thousands of pounds).
The losing party will also normally be ordered to contribute to the costs of the successful party. You could very easily find yourself the victim of “rough and ready justice”.
Mark James is a partner and construction lawyer at Coffin Mew
Main image: David Franklin/Dreamstime
