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Breach of natural justice defence to enforcement

11 Dec 23 Home Group Ltd v MPS Housing reminds us that resisting enforcement is a fool’s errand, says lawyer Tim Seal.

The Technology & Construction Court
The Technology & Construction Court

In Home Group Ltd v MPS Housing Ltd [2023] EWHC 1946 (HGL),the Technology & Construction Court (TCC) recently provided a reminder of the difficulties faced by an unsuccessful responding party in adjudication, if it tries to resist the enforcement of the adjudicator’s decision. The case was based on an argument of material breach of natural justice, arising because MPS said it had too little time to put its case in the adjudication, as a result of having been served with a very large volume of expert evidence (forming the final account) with the referral, and then not being allowed enough time to deal with it in the response.

The fact that the responding party’s argument found no favour with the TCC is symptomatic of the simple reality that it is almost impossible nowadays to resist enforcement, however extreme or irregular the adjudicator’s decision is and/or the procedure that preceded it. Adjudicators’ decisions today seem to enjoy the same good fortune as the suspect did in Blackadder’s Massingbird anecdote:

“I remember Massingbird's most famous case: the Case of the Bloody Knife. A man was found next to a murdered body. He had the knife in his hand. 13 witnesses had seen him stab the victim and when the police arrived, he said "I'm glad I killed the bastard." Massingbird not only got him off, he got him knighted in the New Year's Honours List and the relatives of the victim had to pay to wash the blood out of his jacket!”

In HGL, the referral included a quantum expert report of 155 pages, with 76 appendices, which comprised 202 files in 11 sub-folders, amounting to 338 megabytes of data and a further 2,325 files in 327 sub-folders and five factual witness statements (which amounted to 88 pages, with hundreds of exhibited pages sitting behind). The responding party was given 19 days (13 working days) for its response. It argued that it had been given insufficient time, that it was a breach of natural justice which led to a material difference in the outcome, and hence the decision was unenforceable. The court was having none of it though.

Having reviewed the authorities, the court said this in paragraph 50 of the judgment: the relevant legal position can be distilled as follows:…..

(2) An adjudication decision will not be enforced if it is reached in breach of natural justice and the breach is material, in that it has led to a material difference in the outcome. However, the court should examine such defences with a degree of scepticism;

(3) Both complexity and constraint of time to respond are inherent in the process of adjudication, and are no bar in themselves to adjudication enforcement. Whilst it is conceivable that a combination of the two might give rise to a valid challenge, in circumstances where the adjudicator has given proper consideration at each stage to these issues and concluded that he or she can render a decision which delivers broad justice between the parties, the court will be extremely reticent to conclude otherwise;

(4) In cases involving significant amounts of data, an adjudicator is entitled to proceed by way of spot checks and/or sampling. The assessment of how this should be carried out is a matter of substantive determination by the adjudicator and an argument that the adjudicator has erred in his or her approach, absent some particular and material related transgression of natural justice, will not give rise to a valid basis to challenge enforcement. It would, even if correct, merely be an error like any other error which will not ordinarily affect enforcement.    

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In other words, arguments based upon lack of time impacting on ability to respond, have enjoyed little success in the courts.

The TCC said that the final account in this case was in reality just a vanilla final account….significantly more straightforward than many 'kitchen sink' final account adjudications. Moreover the sampling approach proposed by the referring party in advance of the adjudication, to access by the responding party to the considerable underlying documents to the final account, was reasonable and should have been taken up by the referring party, but was not and hence it lost time available to it to interrogate the account.

Instead it had insisted on having detailed information on each and every line item in the account, which was not agreed to.

The court added that by the time of the referral, five weeks had already passed since the provision of the draft expert report and three weeks had elapsed since the revised appendices had been provided.

The amount of time available to it had been understated by the responding party and the complexity of the material it had had to consider had been overstated. Its insistence on analysing the account only via the provision of detailed information for every line item, had been inappropriate and had added to its task. Taken with the fact that all arguments seeking to undermine enforcement of adjudicators’ decisions always start with the handicap that there are previously few of them available and that they are all to be treated by the court with scepticism, unsurprisingly saw the responding party fail to defend the summary judgement application.

So what can be learnt from this case? I think that (if you didn’t already know it) it is simply that resisting enforcement is extremely hard to pull off, however egregious the decision seems to the losing party and therefore likely to be something of a fool’s errand.

About the author: Tim Seal is head of construction at Ridgemont, a boutique law firm specialising in construction and real estate

*Captain Edmund Blackadder’s description of Bob Massingbird can be seen on YouTube, here!

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