When enforcing Adjudicator’s Decisions in Court, there are two alternative approaches, either by issuing proceedings under Civil Procedure Rules (CPR) Part 7 or under CPR Part 8.
CPR Part 7 is the conventional method of starting Court proceedings, and is the usual method of attempting to obtain summary judgment of an Adjudicator’s Decision under a modified and shortened Court procedure.
A claimant may use the CPR Part 8 procedure where it seeks the Court’s decision on a question which is unlikely to involve a substantial dispute of fact.
CPR Part 7 is the conventional method of starting Court proceedings, and is the usual method of attempting to obtain summary judgment of an Adjudicator’s Decision under a modified and shortened Court procedure.
A claimant may use the CPR Part 8 procedure where it seeks the Court’s decision on a question which is unlikely to involve a substantial dispute of fact.
An Adjudicator’s Decision between Platform Interior Solutions Ltd (“Platform”) and ISG Construction Ltd (“ISG”) was enforced in the TCC (Platform Interior Solutions Ltd and ISG Construction Ltd [2020] EWHC 945 (TCC)) (following a CPR Part 7 application), with the judgment being handed down on 21 April 2020.
Prior to the date that the above judgment was handed down, ISG sought declarations under a CPR Part 8 application that the decision of the Adjudicator was: “wrong and beyond rational justification in that the adjudicator’s assessment of sums due to Platform was inconsistent with the terms of the Sub-Contract”. The purpose of the declarations sought by ISG was to prevent enforcement of the Adjudicator’s decision.
By way of background;
Platform started the Part 7 adjudication enforcement case on 31 January 2020; ISG started the Part 8 case on 27 February 2020. On 10 March 2020, the TCC said that there was insufficient time to timetable the Part 8 Claim for hearing together with the enforcement case which raised: “different issues for determination”. Platform’s case was heard on 24 March 2020 and ISG’s case (ISG Construction Ltd v Platform Interior Solutions Ltd [2020] EWHC 1120 (TCC)) was heard on 24 April 2020.
In the latter case, the Judge accepted that the arguments raised by ISG related to serious issues as to whether the approach adopted by the Adjudicator was correct as a matter of construction of the contract between the parties. However he did not hear full argument on the proper approach to the contract and so he did not determine the issue.
The Judge referred to the Hutton Construction Ltd v Wilson Properties Ltd [2017] EWHC 517 (TCC) case which set out the conditions that must be satisfied by a defendant who seeks to resist enforcement proceedings via a CPR Part 8 application. It was found in that case that there must be a short and self-contained issue which arose in the adjudication that the defendant continues to contest; the issue must require no oral evidence or any other elaboration beyond that which is capable of being provided during the time allowed for the enforcement hearing (usually about 2-3 hours); and the issue must be one which on a summary judgment application it would be unconscionable for the court to ignore.
In addition, the Judge added that the onus was on the defendant to promptly issue a Part 8 application that clarifies exactly what relief/declarations it seeks.
The Judge in the ISG Part 8 case noted that these principles were applied in the Seadown Developments Ltd v SMCC Construction Ltd case (unreported, 3 November 2017) where the Judge in that case said;
“It does not simply follow from the fact that the adjudicator’s decision is wrong that it will not be enforced, save in the sort of particular or exceptional circumstances identified by Coulson J. in Hutton for the very reason that normally the fact that the adjudicator may be wrong does not render his decision unenforceable.”
This is a very important point to keep in mind, which has been established for many years, but is worth repeating, that “the fact that the Adjudicator may be wrong does not render his decision unenforceable.”
In the ISG Part 8 case, the Judge considered whether or not the Part 8 proceedings brought by ISG raised a “short and self-contained issue which arose in the adjudication”.
In the earlier Platform Part 7 case, the Judge had noted that the parties were agreed on the way in which the Adjudicator should approach valuation in the event that she determined that it was ISG, not Platform, that validly terminated the sub-contract. The problem was that the result of that approach produced a result which the Judge suspected neither party had expected. It was this which gave rise to the legal issues raised in the Part 8 proceedings as to the proper approach to the Adjudicator’s conclusions about valuation.
Therefore ISG were raising in the Part 8 proceedings a point that had not been raised in the adjudication, and therefore one of the conditions that had been set out in the Hutton case had not been met.
An exception to the above might have been if there was an admitted error. However, there was not an admitted error in this case.
Further, there was another issue against the Part 8 process. ISG argued that the Adjudicator fell into error in that she did not determine the question of what sum was due to Platform by reference to or in accordance with the particular provisions of the contract, and, in particular, did not assess Platform’s entitlement, if any, on the value of the works up to the date of termination. However, to make this argument good, ISG needed detailed valuation evidence, and as such, the issue was no longer a short point of construction (being one of the other criteria for a Part 8 application to be made).
In addition, ISG went as far as contending that the Adjudicator’s construction of the contract was beyond any rational justification. However, in the Judge’s view, it was impossible for ISG to succeed on that case where the Adjudicator had done what she had been asked to do by both ISG and Platform.
Whilst the Judge noted that it might be possible for ISG to seek to apply to amend the Details of Claim in the Claim Form in order to request slightly different declarations to those that it had sought, something that might be opposed, for the present purposes, the Judge simply held that:
“to grant the declarations sought with the purpose and effect of preventing enforcement of the Adjudicator’s Decision would be wrong.”
The interrelationship between adjudication enforcement and consideration of legal issues under CPR Part 8 was explained in Fenice Investments Inc. v Jerram Falkus Construction Ltd [2009] 128 Con LR 124 case where it was said by Coulson J that;
"I am in no doubt that an adjudicator's decision is binding on the parties and, save in exceptional circumstances, it must be complied with, no matter how quick or slow the Pt 8 procedure to challenge that decision. A losing party who makes a challenge to the decision by using the CPR Pt 8 procedure can do so, but in the ordinary case he must, in the meantime, pay the sum found to be due."
Therefore, the important points to note from the above are that in the normal course of events, the fact that an Adjudicator’s Decision may be patently ‘wrong’, this will not (of itself) render his / her Decision as being unenforceable; and that the use of a CPR Part 8 application to Court in an attempt to avoid the enforcement of an Adjudicator’s Decision has very limited application.
Peter Barnes, Director, Blue Sky ADR Ltd
[email protected]
07515 104307
www.blueskyadr.com
Date 11 November 2020
This article is provided for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the writer or by Blue Sky ADR Ltd. If specific advice is required, Blue Sky ADR Ltd should be contacted direct at [email protected]. If you require any further information in relation to this article please contact one of our team.
Prior to the date that the above judgment was handed down, ISG sought declarations under a CPR Part 8 application that the decision of the Adjudicator was: “wrong and beyond rational justification in that the adjudicator’s assessment of sums due to Platform was inconsistent with the terms of the Sub-Contract”. The purpose of the declarations sought by ISG was to prevent enforcement of the Adjudicator’s decision.
By way of background;
Platform started the Part 7 adjudication enforcement case on 31 January 2020; ISG started the Part 8 case on 27 February 2020. On 10 March 2020, the TCC said that there was insufficient time to timetable the Part 8 Claim for hearing together with the enforcement case which raised: “different issues for determination”. Platform’s case was heard on 24 March 2020 and ISG’s case (ISG Construction Ltd v Platform Interior Solutions Ltd [2020] EWHC 1120 (TCC)) was heard on 24 April 2020.
In the latter case, the Judge accepted that the arguments raised by ISG related to serious issues as to whether the approach adopted by the Adjudicator was correct as a matter of construction of the contract between the parties. However he did not hear full argument on the proper approach to the contract and so he did not determine the issue.
The Judge referred to the Hutton Construction Ltd v Wilson Properties Ltd [2017] EWHC 517 (TCC) case which set out the conditions that must be satisfied by a defendant who seeks to resist enforcement proceedings via a CPR Part 8 application. It was found in that case that there must be a short and self-contained issue which arose in the adjudication that the defendant continues to contest; the issue must require no oral evidence or any other elaboration beyond that which is capable of being provided during the time allowed for the enforcement hearing (usually about 2-3 hours); and the issue must be one which on a summary judgment application it would be unconscionable for the court to ignore.
In addition, the Judge added that the onus was on the defendant to promptly issue a Part 8 application that clarifies exactly what relief/declarations it seeks.
The Judge in the ISG Part 8 case noted that these principles were applied in the Seadown Developments Ltd v SMCC Construction Ltd case (unreported, 3 November 2017) where the Judge in that case said;
“It does not simply follow from the fact that the adjudicator’s decision is wrong that it will not be enforced, save in the sort of particular or exceptional circumstances identified by Coulson J. in Hutton for the very reason that normally the fact that the adjudicator may be wrong does not render his decision unenforceable.”
This is a very important point to keep in mind, which has been established for many years, but is worth repeating, that “the fact that the Adjudicator may be wrong does not render his decision unenforceable.”
In the ISG Part 8 case, the Judge considered whether or not the Part 8 proceedings brought by ISG raised a “short and self-contained issue which arose in the adjudication”.
In the earlier Platform Part 7 case, the Judge had noted that the parties were agreed on the way in which the Adjudicator should approach valuation in the event that she determined that it was ISG, not Platform, that validly terminated the sub-contract. The problem was that the result of that approach produced a result which the Judge suspected neither party had expected. It was this which gave rise to the legal issues raised in the Part 8 proceedings as to the proper approach to the Adjudicator’s conclusions about valuation.
Therefore ISG were raising in the Part 8 proceedings a point that had not been raised in the adjudication, and therefore one of the conditions that had been set out in the Hutton case had not been met.
An exception to the above might have been if there was an admitted error. However, there was not an admitted error in this case.
Further, there was another issue against the Part 8 process. ISG argued that the Adjudicator fell into error in that she did not determine the question of what sum was due to Platform by reference to or in accordance with the particular provisions of the contract, and, in particular, did not assess Platform’s entitlement, if any, on the value of the works up to the date of termination. However, to make this argument good, ISG needed detailed valuation evidence, and as such, the issue was no longer a short point of construction (being one of the other criteria for a Part 8 application to be made).
In addition, ISG went as far as contending that the Adjudicator’s construction of the contract was beyond any rational justification. However, in the Judge’s view, it was impossible for ISG to succeed on that case where the Adjudicator had done what she had been asked to do by both ISG and Platform.
Whilst the Judge noted that it might be possible for ISG to seek to apply to amend the Details of Claim in the Claim Form in order to request slightly different declarations to those that it had sought, something that might be opposed, for the present purposes, the Judge simply held that:
“to grant the declarations sought with the purpose and effect of preventing enforcement of the Adjudicator’s Decision would be wrong.”
The interrelationship between adjudication enforcement and consideration of legal issues under CPR Part 8 was explained in Fenice Investments Inc. v Jerram Falkus Construction Ltd [2009] 128 Con LR 124 case where it was said by Coulson J that;
"I am in no doubt that an adjudicator's decision is binding on the parties and, save in exceptional circumstances, it must be complied with, no matter how quick or slow the Pt 8 procedure to challenge that decision. A losing party who makes a challenge to the decision by using the CPR Pt 8 procedure can do so, but in the ordinary case he must, in the meantime, pay the sum found to be due."
Therefore, the important points to note from the above are that in the normal course of events, the fact that an Adjudicator’s Decision may be patently ‘wrong’, this will not (of itself) render his / her Decision as being unenforceable; and that the use of a CPR Part 8 application to Court in an attempt to avoid the enforcement of an Adjudicator’s Decision has very limited application.
Peter Barnes, Director, Blue Sky ADR Ltd
[email protected]
07515 104307
www.blueskyadr.com
Date 11 November 2020
This article is provided for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the writer or by Blue Sky ADR Ltd. If specific advice is required, Blue Sky ADR Ltd should be contacted direct at [email protected]. If you require any further information in relation to this article please contact one of our team.
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