Following on from our latest Adjudication Case Update on the case of J & B Hopkins Limited v A&V Building Solution Limited, a recent Technology and Construction Court (TCC) judgment serves as an important reminder that parties attempting to resist enforcement of adjudicator's decisions citing breaches of natural justice will need a particularly strong case to succeed. Here we summarise the practical takeaways from the case of Home Group Limited v MPS Housing Limited  EWHC 1946.
Complexity and time constraints in adjudications – not a bar to enforcement!
MPS was engaged under a JCT Measured Term Contract by Home Group, a social housing provider, to carry out low value, high volume maintenance and repair work to Home Group's properties.
There was a purported termination by MPS and an adjudicator was asked to determine the validity of the termination. The adjudicator decided that MPS had not validly terminated and, instead, had repudiated the contract.
Home Group then commenced a second adjudication seeking the losses it claimed to have suffered as a result of the termination. Home Group's Referral included a substantial quantum expert report, five factual witness statements and a very large quantity of documents and data relating to the works orders under the contract. The adjudication timetable provided MPS with 19 days (or 13 working days) to serve its Response. MPS provided its Response whilst at the same time maintaining certain jurisdictional challenges including that the case was too complex to be resolved in adjudication.
The adjudicator ultimately decided that Home Group was entitled to recover substantial sums from MPS and when MPS did not pay the amount awarded, Home Group commenced court proceedings to enforce the adjudicator's decision. The proceedings were defended by MPS on the basis that it had not been able to properly consider the complex and voluminous material served alongside the Referral in the period of time available and that was a breach of natural justice.
The judge was not persuaded by MPS's submissions that "whether by reason of the volume of material, constraints of time, and access to material, and whether taken separately or in aggregate, there has been any, or any material, breach of natural justice". Accordingly, the adjudicator's decision was enforced.
Helpfully, the judge summarised the relevant authorities on complexity and time-pressure as part of his judgment:
- Adjudication decisions must be enforced even if they contain errors of procedure, fact or law
- Adjudication decisions will not be enforced if they are reached where a material breach of natural justice has occurred and this led to a material difference in the outcome. The Courts are directed to review such defences with a degree of scepticism.
- The Court will be reluctant to not enforce a decision where the resisting party claims that complexity and time constraints give rise to a breach of natural justice but the Adjudicator has concluded it can render a decision delivering "broad justice between the parties".
- An Adjudicator may undertake spot checks and/or sampling in cases involving significant amounts of data and this of itself will not give rise to a valid basis to resist enforcement.
Here, the judge concluded that MPS had in fact had sufficient time to review and respond to the material which comprised Home Group's Referral and he referred to the fact that, prior to the adjudication, Home Group had provided MPS with a draft of the expert report and had also offered MPS the opportunity to inspect the underlying electronic data. The judge commented that the complexity of the dispute should not be overstated, noting that "the dispute revolved around a relatively small number of categories (21) of factual or expert dispute. This was, in many ways, significantly more straightforward than many 'kitchen sink' final account adjudications…".
A party seeking to resist enforcement will face great difficulty persuading the TCC not to enforce if relying on complexity, volume of material and/or time constraints as its reasons for resisting, especially when the Adjudicator has concluded that he or she can consider the significant and voluminous evidence available within the time period and reach a fair result (including by the use of sampling and spot-checking methods if necessary).
Parties should be particularly cautious in seeking to rely on procedural challenges based on complexity, volume of material and/or time constraints in circumstances where the opposing party provides draft expert reports, electronic data and/or other documents pertinent to the claim prior to the service of a referral.
As a final note, where a resisting party maintains that there is a breach of natural justice, it must evidence that such breach of justice has led to a materially different outcome.
This is yet another example of the court's robust attitude to the enforcement of adjudicator's decisions and shows the high bar which must be met if a natural justice challenge is going to succeed.
Partner, Construction & Engineering
Our Construction & Engineering team deal with adjudications on a daily basis and would be delighted to discuss any of the issues raised in this article with you.
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