Hutton Construction Ltd v Wilson Properties (London) Ltd

Case reference: 
[2017] EWHC 517
Thursday, 16 March 2017

Key terms: 
Adjudication – Enforcement – Jurisdiction – Natural justice – Payment and pay less notices

The defendant employer Wilson Properties (London) Ltd engaged the claimant contractor Hutton Construction Ltd to carry out the block of flats conversion. The contract incorporated the JCT Standard Building Contract, Without Quantities, 2011 Edition (SBC/XQ 2011), including payment provisions described by the court as “prolix, convoluted and desperately difficult to operate in practice”.

The claimant issued application for payment 24 and the defendant issued a pay less notice, which it also argued was a valid interim certificate. The contractor disputed the validity of the pay less notice and referred the dispute to adjudication. The adjudicator decided that the claimant was entitled to the payment.

The claimant brought proceedings in the TCC by way of a summary judgment application to enforce the adjudicator’s decision. The defendant resisted the enforcement and issued a claim under Part 8 of the Civil Procedure Rules. Interestingly, the defendant neither challenged the adjudicator’s jurisdiction nor alleged any breach of the rules of natural justice but argued that the adjudicator’s decision was incorrect. Moreover, no specific declarations were sought in the Part 8 claim where the defendant asked the court to find that it had issued a valid interim certificate and pay less notice.

Coulson J summarised the general principles to be applied when dealing with enforcement in future derived from Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93, Bouygues UK Ltd v Dahl-Jensen UK Ltd [2001] BLR 522 and Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358. The general principles require that if an adjudicator has decided the issue referred to him and had acted broadly in accordance with the rules of natural justice, his decision would be enforced even if he had made an error for the principal reason that the need to have the right answer has been subordinated to the need to have answer quickly.

Coulson J then considered whether the defendant’s application fell within those limited exceptions and concluded they did not and held that the adjudicator’s decision should be enforced and granted summary judgment.

The court explained that in order to resist enforcement as part of Part 8 claim, a defendant must demonstrate that there was a short, self-contained issue which had arisen in the adjudication and which it continued to contest; that there was no need for oral evidence or any other elaboration beyond that which was capable of being provided during the enforcement hearing; and the issue was one which it would be unconscionable for the court to ignore on a summary judgment application. In practice this was an assertion that the adjudicator’s interpretation of a contract clause was beyond rational justification, or that his calculation of the relevant time periods or his categorisation of documents was obviously wrong.

This case provides good guidance on the use of the Part 8 procedure where a party argues that the adjudicator had simply got the decision wrong. It also illustrates the importance of servicing of payment and pay less notices on time.

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