The Technology and Construction Court (TCC) has refused to enforce a construction adjudication award which was a “plain and obvious” breach of the rules of natural justice.
It is well recognised that the courts usually enforce adjudication awards, even where the decision includes errors of fact or law – but this case shows that they will still act where the adjudication is obviously unfair.
Infrastructure specialist, Sudlows, was appointed to upgrade a data centre for Global Switch Estates (GSE) in East London in a contract worth £15 million. There were a number of disputes over payment which led to the appointment of an adjudicator.
GSE asked the adjudicator to value certain parts of the project – but explicitly excluded other issues from the adjudication. This move was seen by Sudlows as a bid to prevent it from defending GSE’s claim by making counter claims for loss, expense and extensions of time.
The adjudicator decided that he did not have jurisdiction to deal with the excluded matters and awarded GSE over £5 million. Sudlows refused to pay, so GSE took the claim to the TCC to ask the court to enforce payment.
The judge decided that Sudlows’ loss and expense claims were relevant to the valuation as they offered a defence to GSE’s claims. She ruled that the adjudicator was wrong to assume that he did not have jurisdiction over Sudlows’ claims and this was a ‘plain and obvious’ breach of natural justice. As a result, the judge refused to enforce the award.
“This judgment shows that the Court will intervene where there is manifest injustice in the way in which adjudications are run and that the rules of natural justice still bite,” wrote law firm Clyde & Co in a report into the case. “The judgment is also a warning to adjudication practitioners that trying to be too clever in order to shut off avenues of defence for your opponent might very well backfire,” they added.
James Burgoyne, Director – Claims & Technical, Brunel Professions said: “This case shows that claimants shouldn’t always assume the courts will enforce adjudication awards, and for defendants it is well worth looking at the bigger picture. It is clear that attempts to artificially limit the scope of an adjudication will be seen through by the courts and run the risk of failing.”
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