It is well established that in order for an adjudicator’s decision not to be enforced, a party must generally successfully argue one of two principal grounds: (i) there has been a breach of the rules of natural justice; or (ii) the adjudicator exceeded his jurisdiction. Recently the case of Roe Brickwork Ltd v Wates Construction Ltd caused some ripples, as an adjudicator’s decision was challenged by the defender on two grounds, firstly, for breaching the rules of natural justice, and secondly, a claim that the decision lacked certainty.
The facts of the case are: Wates Construction Ltd (contractor) (“Wates”) appointed Roe Brickwork Ltd (sub-contractor) (“Roe”) to carry out brickwork for flats on an estate in Tower Hamlets, London. A dispute arose as Roe claimed they had been delayed for a period of time and incurred costs as a result. Roe referred the dispute to adjudication on three main heads of claim:
- Additional preliminaries and loss of overheads and profit of approximately £52,000 and £121,000 respectively.
- Loss of productivity, broken down by various causes, totalling approximately £465,000.
- Additional supervision and management of approximately £122,000.
In his decision the adjudicator did not decide that particular sums were due to Roe. Instead, he decided that the total value of Roe’ claim was £381,459, plus interest. He made no reference in his decision to the sums that had already been paid by Wates to Roe in respect of the individual heads of claim, and stated:
"The actual net due shall reflect the amounts already paid under each head of award above. It is payable within 10-days of today. The parties will know what is already paid under each head."
Following the decision Wates did not pay these sums. Roe therefore raised enforcement proceedings. During the enforcement proceedings Wates argued that the adjudicator’s decision should not be enforced for 2 reasons:
- The adjudicator had committed a material breach of the rules of natural justice as the parties were not given an opportunity to make submissions on the adjudicator's approach to calculating Roe’s claim.
- In any event the adjudicator’s decision lacked certainty, as the parties were not agreed on what had been paid under each head of claim.
Edward-Stuart J's decision in the TCC deals with the first argument above by considering what constitutes a material breach of the rules of natural justice. He considered the principle set out in Balfour Beatty Construction Ltd v London Borough of Lambeth, that an adjudicator should not decide a point on a factual or legal basis that has not been argued before him, unless he gives the parties an opportunity to make submissions on it. However, in contrast to this, he noted that there is no rule that limits an adjudicator to deciding a case only by accepting the submissions of one party or the other. He clarified this further by explaining that an adjudicator can reach a decision on a point of importance on the material before him on a basis for which neither party has contended, provided that the “parties were aware of the relevant material and that the issues to which it gave rise had been fairly canvassed before the adjudicator.”
The second argument made by Wates was more unusual. Unfortunately, the court did not address this point in its decision as Wates no longer pursued it. However, the point is akin to the inadequacy of reasons challenge to enforcement, which is not often taken up, but which the courts have previously accepted as a possible ground for refusing enforcement where the deficiencies complained of render the decision or reasoning unintelligible.
At paragraph 28 of the judgement Edward-Stuart J states: “It is, I think, fairly obvious that a conclusion as to whether or not there has been a breach of natural justice is one that in the great majority of cases will be very fact specific.” This demonstrates why there is ambiguity in deciding whether or not adjudicator’s decisions should be enforced, and why it is perhaps difficult to extract a strict set of rules as to how an adjudicator ought to arrive at his decision.
Although in this case the adjudicator’s decision was ultimately enforced perhaps a lesson that adjudicators can take from this case, is that they should take care and ensure they clearly address the dispute that is being referred to them, and reflect this in their decision. This is especially important in the present economic climate, where unsuccessful parties are looking for opportunities to challenge an adjudicator's decision. In order to maintain the credibility of the adjudication process, adjudicators should strive to ensure that their decisions leave no room for a potential dispute about enforcement.