Manor Asset Ltd v Demolition Services Ltd

[2016] EWHC 222 (TCC)

In this adjudication enforcement case, Manor Asset asserted that the adjudicator’s decision was “flawed and invalid” because the adjudicator did not take its evidence into account. That was a breach of natural justice. One of the issues in the adjudication was whether or not Demolition had achieved the first milestone on 23 October 2015. Manor Asset asserted that the adjudicator had failed to take into account, properly or at all, the evidence  on this issue presented by them. This evidence, as set out in a witness statement, was that during a site visit on 27 October 2015 photographs of the work had been taken and that, although during the site visit Manor Asset had concluded that the first milestone had been achieved, subsequent analysis of the photographs taken during the site visit showed that the milestone had not in fact been achieved. The material before the adjudicator on this issue comprised three elements. First, Demolition’s assertion that the milestone had been achieved (for example by submission of the invoice on 23 October 2015). Second, the statement in Manor Asset’s payless notice that the demolition was 60% complete. This evidence suggested that the milestone had been achieved. Third was the witness evidence stating that Manor Asset’s subsequent examination of the photographs showed that the first milestone had not been achieved. The adjudicator said this in his Decision:

“I am satisfied on the balance of probabilities that at 23 October 2015 Demolition Services had passed below the line shown on the photograph incorporated in the Parties’ Contract and therefore the milestone had been achieved. Demolition Services was therefore entitled to raise its invoice.”

The adjudicator then gave his reason for reaching this conclusion, namely that there was no suggestion in the payless notice that the milestone had not been achieved. What the adjudicator did not  do was mention the evidence about the photographs. Mr Justice Edwards-Stuart said that “for the sake of clarity” the adjudicator should have done so.

However, the Judge considered that as there was no other evidence in support of the submission that the first milestone had not been achieved, the adjudicator must have taken it into account because if he had simply overlooked that evidence he would not have thought that there was anything to decide. You do not decide a point and then give a reason for that decision unless there is a point at issue that needs to be decided.

The Judge felt that he should mention the fact that the adjudicator listed all the written submissions that had been made to him which, he said, he had considered fully when making his decision. Whilst he could see that “to some extent” this statement was formulaic, he did not consider that it was appropriate simply to dismiss it outright. Given that the evidence of  fact before the adjudicator was largely confined to the issue about the achievement of the milestone, the Judge thought that it was hard to see how the adjudicator could have overlooked that evidence when considering the question of about the state of the work. Accordingly, the natural justice challenge was dismissed.