Executive Summary

The TCC has given useful guidance clarifying the circumstances in which a Part 8 Claim will be considered by the Court on the enforcement of an adjudicator's decision:

  • the issue must be short and self-contained and have arisen in the adjudication;

  • the issue must require no oral evidence or any other elaboration beyond what is capable of being provided during the enforcement hearing; and

  • the issue must be one which it would unconscionable for the Court to ignore.

The Background

In general the TCC takes the approach that if an adjudicator has decided the issue that was referred to him, acting in accordance with the rules of natural justice, then his decision will be enforced. That is the case even in circumstances where the adjudicator can be shown to have made the wrong decision. There are however, two narrow exceptions to the rule.

The first involves a situation where there is an error which is admitted and accepted by all parties including the adjudicator. If the Court has the jurisdiction to make a final decision on the point (where there is no arbitration clause) then it can correct the error (see Geoffrey Osborne v Atkins Rail Limited [2010] BLR363).

The second exception concerns the discreet issue of the timing, categorisation and description of the relevant application for payment, payment notice or pay less notice (see Caledonian Modular Limited v Mar City Developments Limited [2015] EWHC1855 TCC). These types of cases arise out of the strict payment procedure regime required by the Housing Grants (Construction and Regeneration) Act 1996 as a result of which a party may be liable to make a payment on the basis that he failed to serve, at the appropriate time, the required notice.

In most such cases considered by the TCC there has been a degree of consent between the parties that the substantive issue should be considered. The TCC Guide paragraph 9.4.3 envisages allowing the consideration of Part 8 proceedings challenging the adjudicator's award at enforcement in appropriate circumstances. In Hutton v Wilson the Court has provided guidance as to its approach where the necessary element of consent is absent and on the circumstances in which a party may succeed in its challenge by Part 8 proceedings.

The Facts

The dispute between the parties arose out of the conversion of a property into a number of apartments. The contract for the works was in the form of the JCT Standard Building Contract without Quantities 2011 under which Hutton contracted to carry out the works. The dispute before the Court concerned an adjudication on an application for payment. The adjudication considered whether there was a valid interim certificate or pay less notice in response. The adjudicator made an award in favour of Hutton, which Wilson did not comply with.

Hutton commenced enforcement proceedings which Wilson indicated it intended to resist. When it eventually provided its evidence in response Wilson raised issues in relation to previous applications which had not been the subject of the adjudication, arguments which had not been raised in the adjudication, failed to properly identify how it was argued the adjudicator's decision was wrong, and failed to identify the declarations it sought. Subsequently Wilson issued a Part 8 claim which sought to argue that a document issued entitled pay less notice was in fact an interim certificate or alternatively that the notice was a pay less notice notwithstanding that no interim payment notice had been given.

The Court concluded that the challenge to the adjudicator's decision raised in the Part 8 proceedings should not and could not be considered by the Court at the adjudication enforcement hearing. The Court stressed that a challenge by Part 8 proceedings must be issued at the outset of the enforcement.

Having regard to the considerations set out in the executive summary above, the Court gave examples of circumstances in which in practice a Defendant may be entitled to resist summary judgment on the basis of a Part 8 claim including:

"that the adjudicator's construction of a contract clause is beyond any rational justification, or that the adjudicator's calculation of the relevant time periods is obviously wrong, or that the adjudicator's categorisation of a document as, say, a payment notice, when, on any view, it was not capable of being described as such document. In a disputed case anything less would be contrary to the principles in Macob, Bouygues and Carillion."

Commentary

This case is an important restatement of the principles of adjudication enforcement, and a helpful clarification of the limited circumstances in which those principles may be departed from. The issues to be considered on a Part 8 application must be short, self-contained, require no oral evidence and be capable of being heard at the enforcement hearing, and it must be unconscionable for the Court to ignore the issue. As the TCC restated in this case, the fact that many defendants consider that the adjudicator has reached the wrong decision will in 99 cases out of 100 be irrelevant to any enforcement application.