An error of law by a construction adjudicator did not prevent the good part of his decision being enforceable, the Technology and Construction Court (TCC) has decided. The case followed a dispute about the completion of a new hotel development in London.
Willow had employed MTD Contractors to build a hotel in Shoreditch. The project was delayed, and the parties reached an agreement (‘the Agreement’) about a new completion date. When the work was not finished in time there was a disagreement about whether ‘practical completion’ had been achieved.
The dispute went to adjudication where it was decided that the Agreement meant that practical completion had occurred if an agreed list of outstanding works was provided – even if the work had not been done.
As MTD had provided the list of works, the adjudicator made an adjudication award of nearly £1.2m to the contractor. He rejected Willow’s claim for liquidated damages for MTD’s failure to complete the project on time.
Willow did not pay and took the case to court, claiming that the adjudication was wrong and unenforceable. It argued that the adjudicator’s interpretation of practical completion was wrong. It also said that the decision was in breach of natural justice because the adjudicator had had insufficient time to consider his decision.
MTD rejected Willow’s claims and applied for summary judgement and payment of the adjudication award.
The judge agreed with Willow that the adjudicator had erred in law over his interpretation of practical completion. He decided that as the list of works had not been completed then practical completion had not been achieved. As a result, Willow was entitled to liquidated damages. However, he rejected Willow’s natural justice claim, ruling that the adjudicator had had enough time to consider his decision.
The judge went on to decide that the adjudicator’s error in interpreting practical completion did not affect the rest of his decision. He ruled that the dismissal of Willow’s claim for liquidated damages could be ‘severed’ from the adjudication and that the rest of the decision was enforceable.
“This case shows that it is legally permissible for the bad part of an adjudicator’s decision to be separated from the good, and if this is possible, it does not invalidate the whole,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “In this case it meant that MTD was entitled to its adjudication award – but that Willow was also entitled to liquidated damages. It will be interesting to see if this leads to more adjudicators’ decisions being challenged and whether the courts will follow this ruling.”
Brunel provides a wide range of PII broking services to construction professionals. Click here to find out more or call Jonathan Filer on +44 (0)117 325 0752.