Court confirms very limited grounds upon which adjudicator decisions will not be enforced  

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Authored by: KK Cheung

In J&B Hopkins Ltd v A&V Building Solution Ltd [2023] EWHC 301 (TCC), England’s Technology and Construction Court granted J&BH’s claim to enforce an adjudication decision by way of summary judgment. The judgment usefully sets out the legal principles applicable to an application to enforce an adjudicator’s decision and makes it clear that there are only very limited grounds upon which such decisions will not be enforced by the court. 

Background

The adjudication arose out of a Sub-Contract under which A&V, as Subcontractor, undertook to carry out plumbing installation works at a university campus.  A&V alleged that J&BH had breached the Sub-Contract in a number of respects and claimed sums totalling £455,526.53 plus VAT.  The adjudicator held that A&V had failed to prove any entitlement to the sum claimed and that the true value of the Sub-Contract works was £289,182.31, and taking into account previous payments and retention of 2.5%, a balance of £82,956.88 was to be paid by A&V to J&BH (less any release of retention as appropriate), by a specified date plus the adjudicator’s fee of £13,962.00.  

Application for enforcement of adjudication decision

J&BH sought to enforce the adjudicator’s decision.  A&V resisted enforcement on the basis that after the time for completion of the Sub-Contract had expired, instead of J&BH giving A&V necessary instructions and access to an important management system (the IAuditor system), A&V were left without instructions and instead, J&BH brought in other labour to complete the Sub-Contract.

Principles in deciding an adjudication enforcement application

The judgment usefully sets out the legal principles applicable to an application to enforce an adjudication decision as follows:

• There are only very limited grounds upon which an adjudicator’s decision will not be enforced by means of summary judgment. An adjudicator’s decision will be enforced by summary judgment, regardless of errors of law or errors of fact contained within it, or the merits of the underlying dispute resolved by the adjudicator.

• The starting point is that if the adjudicator has decided the issues referred to him or her, whether he or she is right or wrong in fact or in law, as long as they have acted broadly in accordance with the rules of natural justice, that decision will be enforced by summary judgment.  Defendants must pay now and argue later.

• There are, on contested enforcement applications therefore, only two bases upon which a decision will not lead to summary judgment, namely if the decision  (i) was one made without jurisdiction; and (ii) was made in the presence of material breaches of natural justice. Neither of these features were contended for in the present case.

• The principles of enforcement are subject to two narrow exceptions: (i) an admitted error; (ii) a self-contained legal point concerning timing, categorisation or description of payment notices or payless notices, in respect of which the potential paying party has issued Part 8 proceedings seeking a final determination of that or those substantive points. Part 8 proceedings in the UK are typically used for simpler claims which involve minimal disputes and no overly complex facts. Neither of the two exceptions applied in the present case.

• Adjudication is all about interim cash flow and it is routine to enforce decisions that require substantial allocations of cash to one party or another in the knowledge that it may prove to be merely an interim measure.  The fact that the basis of an adjudicator’s decision is to be challenged in other proceedings is of itself seldom, if ever, a ground for non-enforcement.

• An adjudicator does not need to provide an answer to each and every issue which may be raised in the parties’ submissions.

• An inadvertent failure to consider an issue within a dispute will not ordinarily render a decision unenforceable.

• Inadvertent failure by an adjudicator to consider a particular document has been held, at its highest, to be a procedural error, not amounting to a breach of natural justice.

Court’s decision

The court acknowledged that the adjudicator’s decision must have come as a considerable shock to A&V, in that it was the party seeking payment, but ended up with a decision that it was liable to J&BH and which would be financially ruinous for it.  Although the court pointed to a number of ways in which the adjudicator’s decision could have been improved upon, for example, by raising certain points with the parties, the court rejected A&V’s assertions that the decision was so riddled with errors to show that the adjudicator did not do his duty and that there had been bias and a breach of natural justice.  Insofar as the result of the adjudicator’s conclusions was to show that a sum was due or would become due to J&BH, that seemed to the court to be a legitimate conclusion.  Accordingly, the court granted summary judgment in J&BH’s favour.

Comments

Although enforcement of an adjudicator’s decision in court is still not heard of in Hong Kong, it is likely that the Hong Kong Court will follow the approach as explained in this UK case. Errors of law or fact of the adjudicator are not good grounds for resisting enforcement of his/her decision.

Key Contacts

Kwok Kit (KK) Cheung

Partner | Litigation and Dispute Resolution

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