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When to challenge enforcement of an adjudicator’s decision?

Actavo UK Limited v Doosan Babcock Limited [2017] EHWC 2849 (TCC)

The Claimant sub-contractor had agreed to carry out pipe and steel work, painting and the provision of scaffolding to the Defendant contractor. A dispute arose following an application for payment by the Claimant. The Defendant failed to make payment or issue a valid pay less notice. The Claimant issued a notice of adjudication, and the adjudicator issued and award in the Claimant’s favour.

The Defendant failed to pay. The Claimant sought to enforce the award by way of summary judgment. The Defendant defended the enforcement proceedings in part by challenging the Claimant’s entitlement to Late Payment of Commercial Debts (Interest) Act 1998 (“Act”) interest in the award. 

In determining the enforcement proceedings, Jefford J in the TCC rightly deferred to the guidelines issued by Coulson J in Hutton Construction Ltd v Wilson Properties Limited [2017] EWHC 517 on when it was appropriate for losing parties to come to adjudication enforcement proceedings and ask the court to relook at issues that were before the adjudicator.

In short, Coulson J prescribed:

  1. If the decision was one within the adjudicator’s jurisdiction, and the adjudicator had broadly acted in accordance with the rules of natural justice, defendants must pay now and argue later;
  2. Where there was a dispute as to the defendant’s entitlement to resist enforcement proceedings, the defendant must demonstrate:
    1. There was a short and self-contained issue which arose in the adjudication and which the defendant continued to contest;
    2. The issue required no oral evidence or other elaboration beyond that which was capable of being provided during the interlocutory enforcement hearing;
    3. The issue was one which, on a summary judgment application, it would be unconscionable for the court to ignore.
  3. An unsuccessful challenge by a defendant in enforcement proceedings would almost certainly result in an order to pay the claimant’s costs on an indemnity basis as such challenges attempting to re-run adjudication arguments were an abuse of the court’s process and an improper drain on the court’s resources.

In allowing enforcement in full, Jefford J in the TCC found that even if the adjudicator had erred in applying the Act to an interim payment rather than the contractual rate of 1% above base, it was a matter of fact and/or law which the adjudicator had jurisdiction to decide. It went to the proper construction of the contractual provision and the application of the Act. Applying the Hutton guidelines, Jefford J declined to resolve that argument during the enforcement proceedings; the Defendant was thus required to pay the award now and argue later.

Hannah Laithwaite / 14th Dec 2017


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