Theresa Mohammed, senior associate in the contentious construction team at law firm Trowers & Hamlins on their recent enforcement case win in the Technology and Construction Court.
The approach the Technology and Construction Court has taken towards technical arguments was reinforced last week when it threw out a defence challenging an adjudicator’s decision brought under the argument that it breached the rules of natural justice.
CG Group Limited won the enforcement decision defeating a challenge by Breyer after an adjudication decision had gone against it. The outcome has serious implications for construction in that attempts to resist enforcement continue to be denied by the Court. It sends a strong legal signal that if the parties’ submissions are directing the adjudicator towards what transpires to be an unwelcome decision there will be no scope to deny jurisdiction.
The history of the case is that CG was engaged by Breyer to undertake interior refurbishment works to a number of apartments in an east London development. A dispute arose over the non-payment of the final account, and CG started adjudication proceedings. In July 2013 the adjudicator found that Breyer did not issue a Pay Less Notice and was therefore obliged to pay the notified sum being as per CG’s draft final account application.
Following the adjudicator’s decision, Breyer did not pay the awarded amount, and CG pursued enforcement proceedings in the Technology & Construction Court. In its defence, Breyer argued that the adjudicator had decided the case on a point that had not been argued by the parties and therefore had no jurisdiction to decide the case as he did.
Furthermore, even if he did, he was materially in breach of the rules of natural justice as Breyer should have been given the opportunity to address the point. This kind of defence follows a line of authorities concerning the actions of adjudicators when it is said they go off on frolics of their own which, if found to be material, can render a decision a nullity.
Here, Breyer’s main concern was whether the provisions of the subcontract applied to circumstances where CG had said the provisions of the scheme provided the relevant payment regime. In response, CG said that there could not be any jurisdictional challenge, as the overall dispute was broadly defined as whether Breyer had failed to pay what was being claimed in the draft account.
The judge said that it was clear that the decision of an adjudicator who substantially decides a dispute on the basis of a legal point that has not been either raised or addressed by either party will not be enforced. If allegations like this are made, a detailed analysis of what happened during the course of the dispute and in the adjudication proceedings may be required.
In this adjudication, the parties had debated whether the scheme provisions could be applied and whether Breyer had issued the appropriate notices in time. The adjudicator had reviewed the parties’ submissions and decided that a combination of the sub-contract conditions and the scheme applied. This was not unfair, as the parties had put forward a variety of arguments, and Breyer itself directed him to one of the alternatives, which he found persuasive.
In this case, the court found that it was difficult to see how any challenge on the basis of jurisdiction or breach of natural justice could be maintained. This meant that the decision was enforced and judgment was entered for CG in the amounts claimed.
One of the themes from this case is that where parties are trying to reconcile new law and contracts with outdated payment terms, it is extremely important to be clear as to what you are asking for and how the arguments are developing, given the severe time constraints of adjudication. It is also important to remember that the adjudicator is not required to slavishly follow the demands of the parties and it is open for him or her to take an intermediate position.
During the course of rushed drafting, parties may become confused or find the issues raised difficult to navigate. However, it must be accepted law that if one of the arguments or permutations of an argument is adopted by the adjudicator, it cannot be a breach of natural justice.
