This article was first published on Practical Law's Construction Blog.
As we are all in the process of opening our annual referral notice Christmas presents, I thought you might welcome a brief distraction by considering whether anyone will be able to enforce the pending decision in the New Year. Perhaps surprisingly, 2016 has seen some developments on this front that practitioners need to bear in mind.
The court’s general approach to adjudication enforcement is well understood. As Chadwick LJ put it in Carillion Construction v Devenport:
“… in the overwhelming majority of cases, the proper course for the party who is unsuccessful… must be to pay the amount that he has been ordered to pay by the adjudicator.”
Any attempt to resist enforcement on the basis of jurisdiction or natural justice is likely to be a waste of time and money “save in the plainest cases”.
Similarly, the procedure for seeking enforcement through the TCC is clear and well established. You apply to enforce by way of summary judgment and the test for that means that you need to show there are no real prospects of the defence succeeding. The Court of Appeal in Pegram Shopfitters Ltd v Tally Weijl (UK) Ltd declined to enforce an adjudicator’s decision by way of summary judgment where it was “at least arguable” that the contract was not on the terms referred or there was no contract at all.
So, should the court be enforcing all but the “plainest cases” or should it be requiring the claimant to meet the high standard of summary judgment, and is there a difference in practice?
The interaction between these two principles has, at times, been less well recognised and less consistently applied. This has been amply demonstrated by the different approaches and conclusions reached by the TCC in three cases this year, the most recent just a couple of weeks ago. There is not the space here to set out the detail of these cases, but a brief snippet from each gives a flavour of what I have in mind.
Ground Development Ltd v FCC Construction SA and others
In Ground Development Ltd v FCC Construction SA and others, Fraser J was considering the enforcement of just under £200,000. Among other matters, the defendant was arguing that there was a lack of jurisdiction, a breach of natural justice and that there was no binding contract at all (or that the terms of the contract were not those the adjudicator adopted). In ordering enforcement, the judge emphasised Chadwick LJ’s comments from Devenport.
For our purposes though, the interesting part was where the judge responded to the contention that the uncertainty relating to the existence of terms of the contract was such that the claimant could not meet the test for summary judgment.
The defendant relied on the standard summary judgment test and asserted that the claimant could not show that the defendant’s contentions on the contract had no real prospects of success. Fraser J was referred to the usual practice of enforcing adjudicators’ decisions, and he concluded that:
“It is not necessary, and in my view would be contrary to that approach, to have to conclude on the material currently before this court that each, all, or any of the arguments that the Joint Venture has marshalled to resist this summary judgment application had no real prospect of success in order to give summary judgment to GDL on this Decision. The approach of the court should be the conventional one on an enforcement, namely was the adjudicator validly appointed, did he act within his jurisdiction and in accordance with the rules of natural justice?”
Did that mean, as it appeared to say, that in order to get summary judgment, the claimant did not in fact need to meet the test for summary judgment?
Fraser J prudently covered his bases by also concluding that this test was indeed met by the claimant on the facts and so the point was left with slightly less bite than might have been the case. However, it is clear that this was an obiter conclusion and that his primary finding was one of principle.
Goldsworthy and others (t/a Goldsworthy Builders) v Harrison and another
By ready contrast, a decision reached by Mr Andrew Bartlett QC in the TCC a matter of days prior to Ground Developments adopted a more conventional approach to summary judgment. In Goldsworthy and others (t/a Goldsworthy Builders) v Harrison and another, the judge pointed out, simply, that:
“Since this is a summary judgment application, I can only decide the application in the claimants’ favour if I conclude that the defendants have no real prospect of successfully defending the enforcement claim and that there is no other compelling reason for a trial (CPR 24.2).”
The enforcement hearing again turned on the terms of the contract. The judge looked at the competing evidence presented and concluded that:
“… without fuller evidence… I find it impossible for me to say that there is not a triable issue on the question whether the parties did or did not reach a stage where they agreed with contractual effect to the application of the Minor Works terms.”
He considered the position to be “borderline” and therefore refused enforcement by way of summary judgment.
It was therefore with some interest that we awaited subsequent TCC decisions to see how they would approach this issue. We didn’t have to wait long.
Dacy Building Services Ltd v IDM Properties LLP
A few weeks ago, Jefford J faced a similar problem in Dacy Building Services Ltd v IDM Properties LLP. The defendant resisted enforcement on the basis that there was no contract at all (because the contract was with a different party). Having looked at the evidence in some detail, the judge concluded that there were realistic prospects of the defence succeeding and accordingly she would not enforce the adjudicator’s decision by way of summary judgment.
Where does this leave us?
Interestingly, neither Jefford J nor Andrew Bartlett felt the need to refer to the Devenport line of authority in reaching their decisions, although it is inconceivable that they were unaware of such trite law.
It remains to be seen whether Fraser J’s approach in Ground Developments will gain traction despite being overlooked thus far. With respect, I think that Fraser J was wise to provide an alternative fact-based explanation of the decision. In my view, his comments would be best read as a reminder that the courts are predisposed to enforcing adjudicators’ decisions so as to meet the intention of the Construction Act 1996, rather than being taken too literally so as to suggest that one no longer needs to meet the test for summary judgment in order to get summary judgment. If the courts or Parliament intended there to be a separate bespoke process for adjudication enforcement to which different rules should apply, they would need to have created one.
In the circumstances, it remains in principle sufficient for parties to avoid enforcement by showing that their jurisdictional or natural justice challenges have no more than a real prospect of success. However, it is fair to presume that the courts will continue to be robust in applying that test. To that effect, I am reminded of the way the courts approach the requirement to prove fraud: you still only need to prove it on the balance of probabilities, but you are likely to require more cogent evidence to reach that standard than would otherwise be the case. Similarly, the test here remains that for all summary judgment applications (that is, there is a need to show the defence has a real prospect of succeeding) but, in reality, the court will require something pretty persuasive to reach that conclusion.