J & B HOPKINS LIMITED v A&V BUILDING SOLUTION LIMITED
The Adjudication Society's 2022 report on construction adjudication noted that, since 1 October 2011, the TCC has only declined summary enforcement of an adjudication decision in 21% of cases brought (and in a quarter of those enforcement was only refused in part).
The outcome of this case did not buck the trend; but it is interesting from a practical perspective in two ways:
Natural justice challenges – a strategy
In addition to running a last minute and ill-fated summary judgment argument that the Referring Party had not complied with the TCC Pre-Action Protocol for construction and engineering disputes (which was of course dismissed on the basis that it does not apply to adjudication), the Responding Party sought to resist enforcement on the basis of 7 separate alleged breaches of natural justice by the adjudicator.
None of them were accepted. Some of them had next to no chance of succeeding; for instance, those that related to the adjudicator's finding of fact and/or law. The court did have more sympathy with delay arguments that had not been expressly addressed by the adjudicator, describing that as "undoubtedly unfortunate" and with the potential at court or arbitration for "a different result [to] prevail". However, there was no basis on which to hold that there had been a breach of natural justice.
In an area such as this, when the party seeking to resist enforcement is very much the "underdog", the best strategy is usually to assess any potential challenges vigorously, identify any which have a genuinely strong prospect of success, and only pursue those ones at court. To do otherwise risks polluting any good points and giving the court the distinct impression that this may be a rather desperate "kitchen sink" attempt at refusing to comply with the decision. It is generally far preferable to be selective and measured; in terms of both the prospects of success and also of course cost consequences.
Indeed, the court was faced with two much broader arguments here: (1) that the decision was "so riddled with error as to show that the adjudicator did not do his duty" and (2) that the adjudicator did not spend enough time on the dispute, compared with a previous adjudicator on a related dispute. The court was robust in rejecting these more general grounds, noting that to do otherwise could have "very wide implications". The court decided that there was nothing before it to suggest bias or breach of natural justice. In particular, the court noted that "If there are, as I have suggested, some areas where, with the benefit of hindsight things might have been done differently [by the adjudicator], there is nothing…which crosses the threshold so as to establish a breach of natural justice".
Consequences of adjudication decision – take them seriously!
We know that adjudication is a bit of a lottery. The court here acknowledged that the decision must have come as a "considerable shock" to the Referring Party, who had (1) sought payment in the adjudication but ended up being liable to pay monies back, (2) been on the receiving end of a favourable adjudication decision, and (3) had not had the opportunity to express a view on one of the contract clauses relied on by the adjudicator. The court understood that the decision was "financially ruinous" for the losing party.
All of that should be taken as a reminder that the consequences of an adjudication can be unexpected and serious for any business. The importance of taking legal advice, for pursuing as well as defending claims at adjudication, cannot be understated.
Legal Director, Construction & Engineering