In Corebuild Limited v Mr Tom Cleaver and Another [2019] EWHC 2170 (TCC), the court found that an adjudicator’s decision was unenforceable by reason of a material breach of the rules of natural justice.

Background

This case concerned an application to enforce an adjudicator’s decision in which the defendants were ordered to pay sums on the basis that they had wrongly terminated the contract and were in repudiatory breach. The contract between the claimant and defendants was a JCT Intermediate Form with Contractor’s Design 2016 for the design and construction of an extension to a residential property in London.

The defendants sought to resist the claimant’s enforcement application on the following four grounds:

Ground 1: The adjudicator answered the wrong question in relation to contractual termination, with the result that he failed to address the defendants’ actual case;

Ground 2: The adjudicator had no regard at all to any of the evidence going to the progress of the works;

Ground 3: The adjudicator rejected the defendants’ submission as to whether wrongful termination was repudiatory on the basis of a point which was unargued and which the defendants had no opportunity to address; and

Ground 4: The adjudicator proceeded to determine an extremely complicated quantum case notwithstanding the huge amount of new material required to be dealt with, so that the adjudicator was considering a dispute which had not crystallised and/or one which the defendants did not have a fair opportunity to deal with.

The defendants also contended, in the alternative, that due to the claimant’s financial position, summary judgment should not be given or a stay of execution should be ordered.

Decision

Although the court rejected grounds 1, 2 and 4, it found that, under ground 3, the adjudicator’s decision was unenforceable by reason of a material breach of the rules of natural justice. Given this finding, it was not necessary for the court to consider whether the judgment should be stayed, but it nevertheless stated that it would have stayed the judgment in light of the financial position of the claimant (whose insolvency was also undisputed).

Key takeaways

Whilst the outcome of this case is perhaps uncommon, it is not entirely surprising given the facts of the case. Notably, the adjudicator clearly failed to assess a decisive issue (i.e. the question of repudiation) on the basis argued by the claimant. Instead, he decided the issue based on assumed facts, which neither party had argued, were unsupported by evidence or submission, and the defendants had had no opportunity to address.

Nevertheless, it remains the case that, in most instances, it will be difficult to defend successfully an application to enforce an adjudicator’s decision based on a purported breach of natural justice, particularly if the arguments relied on concern errors in the adjudicator’s decision or disregarded parts of evidence. As was reiterated in this judgment, if an adjudicator generally endeavours to address the right sub-issues in order to answer the correct overriding question, it is unlikely that enforcement will be successfully resisted.

James Doe
James Doe
Partner and UK Head of Construction & Infrastructure Disputes, London
+44 20 7466 2583
Noe Minamikata
Noe Minamikata
Professional Support Lawyer, London
+44 20 7466 2838