Adjudication – Enforcement – Stay of execution – Claimant applying for summary judgment to enforce adjudicator’s award – Whether adjudicator having jurisdiction – Whether adjudication being in breach of natural justice – Whether defendant entitled to stay of execution – Application granted
The defendant engaged the claimant to carry out electrical works at the west stand and in the executive boxes at Twickenham Stadium, London. Disputes arose between the parties in relation to those contracts which were referred to adjudication. The claimant subsequently applied for summary judgment to enforce two adjudicator’s decisions arising out of those contracts in the sums of £60,161.40 and £272,078.03 respectively. The defendant was also ordered to pay interest.
The Technology and Construction Court would normally enforce the decision of an adjudicator except where a properly arguable case could be made out that there had been a breach of natural justice or that the adjudicator lacked the necessary jurisdiction to reach the decision: see Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358; [2005] PLSCS 207.
In the present case the defendant contended that: (i) no dispute had crystallised before the reference to adjudication; (ii) the adjudicator’s appointment was invalid; and (iii) the timetable in the adjudication was too onerous and unfair. If none of those points were accepted by the court, the defendant contended that there should be a stay of execution in any event.
Held: The application was granted.
(1) The service of a claim by the claiming party and subsequent inactivity for a further short period by the responding party might be enough for crystallisation to occur. The court was in no doubt that, in the present case, the dispute between the parties had crystallised before the reference to adjudication. The defendant had failed to pay the invoices in accordance with the contract, had failed to serve a valid payless notice within proper time and had expressly stated that the claims were disputed and would be defended: AMEC Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC), Ringway Infrastructure Services Ltd v Vauxhall Motors [2007] EWHC 2421 (TCC), Enterprise Managed Services Ltd v Tony McFadden Utilities Ltd [2009] EWHC 322 (TCC), Beck Interiors Ltd UK Flooring Contractors [2012] EWHC 1808 (TCC) and St Austell Printing Co Ltd v Dawnus Construction Holding Ltd [2015] EWHC 96 (TCC); [2015] PLSCS 26 considered.
(2) The adjudicator had been appointed by CEDR, the well-known conflict management and resolution consultancy. The application to CEDR for the appointment, made by the claimant’s representatives, included the words “It is preferred that any of the adjudicators in the attached list are not appointed”. The evidence was that those words were included in error and there had been no attached list. There was no false statement because there was no list so that there could be no question of fraud or recklessness. Moreover, since there was no statement, it could not have had any effect: Eurocom Ltd v Siemens PLC [2014] EWHC 3710 (TCC) distinguished.
(3) Adjudication was a rough and ready process because it had to be carried out within a very strict timetable. There was often particular pressure on the responding party but that was a fact of adjudication life and was inherent in the whole process. In the present case, the adjudicator accepted that claimant’s evidence that it had proper cashflow reasons for pursuing the claim when it did. The importance of cashflow was the principle that lay behind the adjudication process. Moreover, the timetable set down by the adjudicator had made best use of the 28 days that was available. The disputes between the parties had not been of any great complexity, the only real point of substance being the absence of a valid payless notice. That was a relatively straightforward matter which was easily capable of determination within 28 days: Bovis Lend Lease Ltd v Trustees of the London Clinic Ltd [2009] EWHC 64 (TCC) and Dorchester Hotel Ltd v Vivid Interiors Ltd [2009] EWHC 70 (TCC) referred to.
(4) In any event, the challenges made by the defendant, whether by way of jurisdiction or breach of natural justice, had been waived by the defendant. If a party wished to raise a jurisdictional objection, it had to do so at the outset of the adjudication. Further, the defendant had known the relevant facts giving rise to the alleged breach of natural justice, namely the onerous timetable, but had not raised that complaint during the adjudication. Thereafter, there were clear and equivocal acts to show that the alleged breach had been waived, namely the payment of the fees and the corrections that were sought to be made to the decisions themselves: Shimizu Europe Ltd v Automajor Ltd [2002] BLR 113, Allied P&L Ltd v Paradigm Housing Group Ltd [2009] EWHC 2890 (TCC), Farrelly (M&E) Building Services Ltd v Byrne Brothers (Formwork) Ltd [2013] EWHC 1186 (TCC), Brims Construction Ltd v A2M Development Ltd [2013] EWHC 3262 (TCC); [2013] PLSCS 263, Laker Vent Engineering Ltd v Jacobs E&C Ltd [2014] EWHC 1058 (TCC) and AT Stannard Ltd v Tobutt [2014] EWHC 3491 (TCC) considered.
(5) Adjudication was designed to be a quick and inexpensive method of arriving at a temporary result in a construction dispute. Consequently, adjudicators’ decisions were intended to be enforced summarily and the claimant, as the successful party in the adjudication, should not generally be kept out of its money. In the present case, the defendant had sought a stay of execution relying on the alleged unhealthy financial position of the claimant rendering it unable to pay back the judgment sum if it was eventually concluded that the claimant was not entitled to the monies awarded by the adjudicator. However, since the claimant’s financial position had been improving over the months, their position was at least as good, if not better than, the position when the contracts were entered into. Accordingly, a stay of execution was refused: Wimbledon Construction Co 2000 Ltd v Vago [2005] EWHC 1086 (TCC) applied.
Edmund Neuberger (instructed by Buckles Solicitors LLP, of Peterborough) appeared for the claimant; the defendant did not appear and was not represented.
Eileen O’Grady, barrister
Click here to read transcript: CSK Electrical Contractors Ltd v Kingwood Electrical Services Ltd
