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News » Law » When to challenge adjudication decisions » published 10 Apr 2017

When to challenge adjudication decisions

Dissatisfied with an adjudicator’s decision? It might be best to twice before acting, warns Mike Plews of law firm Irwin Mitchell.

With the growth in the number of construction disputes being referred to adjudication there has been a growth in the number of adjudicator’s decisions that are being challenged. It has become more frequent that the ‘losing’ party, and sometimes the ‘winning’ party, has been unhappy with the outcome and for one reason or another has disputed the validity of the decision. The Technology & Construction Court has seen a corresponding increase in the number of cases where an action has been commenced.

In the recent case between Hutton Construction Limited and Wilson Properties (London) Limited [1] the ‘losing’ party (Wilson) failed to implement the decision of the adjudicator to pay the sum of £491,944.73. So, Hutton went to the Court to have it enforced.

The background to the dispute may sound familiar to those dealing with payments under JCT contracts. Here the JCT Standard Building Contact, Without Quantities, 2011 applied. For those who have had sleepless nights having to deal with the complexities of the payment mechanism, you can rest easier in the knowledge that the judge in the case referred to them as “….convoluted, and desperately difficult to operate. I am unsurprised that they were the source of the disputes between the parties at the adjudication.”

The issues in dispute were whether or not there was a valid interim certificate or pay less notice in response. These required the adjudicator to consider the contract, the factual background to the documents said to constitute the notices and the notices themselves. The defendant tried, unsuccessfully, to argue that its pay less notice was actually an interim certificate or that, if it was a pay less notice, it was given in time and contained the necessary information.

At the enforcement hearing in the Court, the defendant did not raise any issue as to the adjudicator’s jurisdiction to decide the dispute (which is often the first line of defence), nor was it said that there was any breach of natural justice. The natural justice ‘defence’ is often cited as grounds for not complying with the decision of an adjudicator where the ‘losing’ party argues that there was a breach of natural justice in the adjudication procedure that has the effect of making the adjudicator’s decision unenforceable.

Here, the defendant sought to resist summary judgement being given on the grounds that the adjudicator was wrong to reach the conclusions arrived at and that, in consequence, the adjudicator’s decision should not be enforced.

Where many defendants consider the adjudicator got it wrong, in 99 out of 100 cases that will be irrelevant to any enforcement proceedings. If the decision was within the adjudicator’s jurisdiction, and the adjudicator broadly acted in accordance with the rules of natural justice, the approach of the Court has been ‘pay now and argue later’.

Given that approach, the view of the Court, as expressed in this case, is that many of the applications which are currently being made by disgruntled defendants (and which are not approached by the parties in a consensual way when enforcement is being resisted) are an abuse of the court process. They are resisting a defendant’s endeavours to re-run the entirety of the adjudication. Additionally, because of the potential abuse of the court process, a defendant who unsuccessfully raises this sort of challenge on enforcement will almost certainly have to pay the claimant’s costs of the entire action on an indemnity basis.

Having set out the Court’s approach, it was not surprising when, having considered the facts, the judge in this case decided to enforce the adjudicator’s decision.

So, if following adjudication and you are the ‘losing’ party, perhaps you should think twice before resisting if the ‘winning’ party enforces it in court.

 

1.  Hutton Construction Limited v Wilson Properties (London) Limited [2017] EWHC 517 (TCC)

 

 

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This article was published on 10 Apr 2017 (last updated on 10 Apr 2017).

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