Anyone reading our blogs will be aware that it is rare for a party to resist enforcement of an adjudicator’s decision.
In a recent case in the Technology and Construction Court (“TCC”) the losing party was not arguing about jurisdiction or natural justice but instead based its case on the fact that the interim payment application, which was the subject of the adjudication had been superseded by subsequent payment applications. This was again given fairly short shrift by the court who enforced the decision, rejecting the assertion that to do so would be manifestly unjust.
Background
Trant Engineering Ltd (“Trant”) had instructed J&B Hopkins Ltd (“Hopkins”) to carry out various works at a recycling plant for circa £1.7m. In July 2019, Hopkins issued an interim application for payment as part of payment cycle 26 (the “Application”). When Trant failed to pay the amount due under the Application, Hopkins commenced 'smash and grab' adjudication proceedings for the payment.
The adjudicator found in favour of Hopkins as Trant had failed to serve valid payment or pay less notices. In light of Trant’s continued refusal to pay, Hopkins brought enforcement proceedings of the adjudicator’s decision.
Trant sought to resist paying the amount of the adjudicator’s award. However, instead of making a jurisdictional challenge or alleging a breach of the rules of natural justice, Trant submitted that:
- The adjudication decision was not enforceable as the Application had been superseded by subsequent interim applications/payments by Trant which Hopkins had 'gone along with', and so enforcing the adjudicator’s decision would undermine the 'correction principle' whereby interim payments can be corrected in the next payment cycle and
- If the decision was enforced, there should be a stay of its execution on the basis that enforcement would result in 'manifest injustice' on the facts.
Judgment
In relation to the first point, described even by Trant’s own counsel as 'novel', Fraser J held that Hopkins had not waived its ability to adjudicate over the Application just because it had 'gone along with' subsequent payment cycles. This does not undermine the 'correction principle', as confirmed in S&T (UK) Ltd v Grove.[1]
The Court also rejected Trant’s application for a stay of execution on the grounds of manifest injustice. It was held that Parliament’s intention with regards to the payment regime and notice requirement would be frustrated if parties could argue manifest injustice to look at the merits of the underlying dispute and achieve a stay. This is entirely consistent with the general approach taken by the TCC, and Trant’s request for a stay can perhaps be seen as a last-ditch approach to be taken if the challenge to enforcement failed.
Comment
Although the decision, in this case, was perhaps unsurprising, it clarifies that where a dispute has arisen in relation to a particular interim payment application, such disputes do not cease to exist because a subsequent application has been made.
The case also serves as a reminder to businesses on the importance of serving payment or pay less notices correctly and complying with contractual notice procedures. As Fraser J stated, this is not a 'Herculean task', and if an adjudication decision has been issued with jurisdiction and without material breaches of natural justice, it will be enforced.