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Authored by: Justin Yuen
In Home Group Ltd v MPS Housing Ltd  EWHC 1946 (TCC), England’s Technology and Construction Court granted Home Group’s application for summary enforcement of an adjudication decision (Decision), whereby MPS was ordered to pay it approximately £6.5 million. The court rejected MPS’s argument that there had been a breach of natural justice in the adjudication in that the Referral to adjudication included a large volume of quantum expert reports and witness statements, which it had inadequate time to digest and respond to. It said that both complexity and constraints of time to respond are inherent in the process of adjudication, and are no bar in themselves to adjudication enforcement. Whilst 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.
Home Group claimed termination losses said to have been caused by MPS’s repudiatory breach of a JCT Measured Term Contract, under which MPS had been carrying out maintenance and repair works to Home Group’s properties, comprising of a high volume of individual work items, each of which had a relatively low value. MPS purported to terminate the Contract. Home Group did not accept that MPS was entitled to terminate the Contract and asserted that MPS’s purported termination was a repudiation of the Contract, which Home Group accepted. The validity of the termination was referred to the first adjudication, in which the adjudicator determined that MPS’s purported termination was invalid, and that MPS had repudiated the Contract. The second adjudication was commenced in order to recover Home Group’s losses. That second Referral to adjudication included a large volume of quantum expert reports and witness statements with hundreds of exhibits. MPS had 19 days (13 working days) to produce a response to the Referral, which MPS claimed was an inadequate amount of time. MPS contended that it was unable to properly digest and respond to the material served with the Referral and that this was a breach of natural justice which had led to a material difference in the outcome, and that as such, the Decision was unenforceable. MPS did not contend that the dispute was incapable of adjudication per se. Rather, it contended that Home Group should simply have provided MPS with a greater opportunity to understand the claim, whether in advance of the Notice of Adjudication or by agreeing to an extended timetable in the adjudication.
The court referred to the relevant law as derived from the case authorities as follows:
The court rejected MPS submission that, whether by reason of the volume of material, constraints of time, and access to material, and whether taken separately or in aggregate, there had been any, or any material, breach of natural justice
The court said that notwithstanding the significant number of low value items requiring determination, it was in reality a vanilla final account, which was only different from most in that the claim was brought by the employer against the contractor, following the latter’s repudiatory breach, rather than the other way around and was, in many ways, significantly more straightforward than many “kitchen sink” final account adjudications involving not just a money claim, but complex disputes relating to extensions of time and requiring chronological investigation of the lifespan of a construction project and critical path analysis.
The court pointed out that there had been no delay on Home Group’s part in bringing the claim. The Notice of Adjudication followed the service of the Contractor’s Final Account which recorded the significant sums considered to be owed to Home Group, and was brought promptly after the first adjudication on the question of termination as a matter of principle. On the assumption that the Decision was broadly correct, Home Group had incurred considerable sums and was, until payment, considerably out of pocket.
The court concluded that the Adjudicator in this case had correctly kept under review the question of his ability to do broad justice between the parties, notwithstanding the substantial quantity of material he had been presented with. Having determined that he could, the court would be extremely slow to interfere with that conclusion.
It is understood that in the forthcoming Security of Payment Legislation (SOPL) in Hong Kong, the respondent will only have 20 working days for responding to the claimant’s submission and the adjudicator will only have 55 working days to deliver his/her decision, unless it is extended by agreement of the parties. To maximize its chance of success in the adjudication, an unscrupulous claimant may spend a long time to prepare its claim in great detail before commencing the adjudication. In such case, the respondent will be disadvantaged, given that it is difficult to challenge an unfavourable decision, as explained in the above judgment of the Court in England. The respondent may only hope that the adjudicator will decline to make any decision due to the complexity of the case. How often the adjudicator will be willing to do that in practice, will have to be seen after the SOPL is implemented.
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