Background

An adjudication decision was made in favour of Synergy Gas Services against Northern Gas Heating on 8 August 2018. The present case concerns an application by Synergy Gas Services for enforcement of the adjudication award.

The key issue was whether the adjudicator had breached natural justice. The defendant’s contention was that the adjudicator decided the dispute on matters that had not been raised by either party, and that it did not take account of the matters raised by it.

This allegation stemmed from the adjudicator’s construction of Clause 14.4 of the sub-contract. Clause 14.4 required that Northern Gas notify Synergy Gas of any defects and required Synergy Gas to make good of those defects after notification. If the defects were not repaired, then Northern Gas was entitled to employ a replacement and recover costs incurred from Synergy Gas.

However, the adjudicator construed Clause 14.4 as a condition precedent to the set-off of any sum for remedial works during the defects liability period. The problem was that there was no reference to Clause 14.4 as a pre-condition in the clause itself and neither parties had advanced such a construction in their submissions during the adjudication. Nor did the adjudicator raise the point with the parties so as to give Northern an opportunity to address the point.

Decision

Jonathan Acton Davis QC, sitting as Deputy Judge, held that there had been no breach of natural justice. Summary judgment was granted and the adjudication award was enforced.

His main reason for coming to that decision was that Synergy Gas had, in its response to Northern Gas’s skeleton argument, contained in a Scott Schedule, denied that Northern Gas was entitled to “deduct or set-off any sum,” as “Synergy was not provided with the opportunity to inspect/remedy contrary to clause… 14.4 of the sub-contract.” This along with other references in the Schedule showed that the issue was implicit in the adjudication and that Northern had an opportunity to address the point. It was not without basis that the adjudicator had concluded that Clause 14.4 was a condition precedent.

Further, the Deputy Judge went on to review the case law, citing a number of cases where the Court has stated that it would generally enforce the adjudicator’s decision unless it was obviously unfair.

For instance, Fraser J at para [16] of Beumer Group v Vinci Construction [2016] EWHC 2283:

…for breaches of natural justice to be sufficient to justify the Court declining to order Summary Judgment and enforcing an Adjudicator’s Decision, they must be the plainest of cases; the adjudication proceedings must have been obviously unfair. Combing through what has occurred, or concentrating on the fine detail of the material before the Adjudicator, to allege a breach of natural justice, will neither be encouraged nor permitted by the Court.”

Comment

Synergy Gas is yet another example of the high bar required to establish a breach of natural justice to invalidate an adjudicator’s decision. This particularly appears to be the case where the breach is said to result from an adjudicator deciding the dispute based on matters not raised by the parties. For instance, in Victory House General Partner [2018] EWHC 102 (TCC) the Court similarly held that the adjudicator was entitled to a contractual interpretation that did not necessarily reflect the submissions of the parties.

The general rule then is that courts will be reluctant to interfere with an adjudicator’s decision for breach of natural justice unless the proceedings are obviously bias or unfair.