Essential Living (Greenwich) Ltd v Conneely Facades Ltd

By a trade contract dated 14 June 2017, Essential Living (Greenwich) Limited (“Essential”) engaged Conneely Facades Limited (“Conneely”) to carry out design, construction, coordination and commissioning of rainscreen cladding, curtain walling, glass doors and glass screen works at a development at Greenwich Creekside.

A dispute arose in relation to a defective Corium brick slip cladding system which was designed and installed by Conneely. The issue was referred to adjudication on 9 February 2024. During the course of the adjudication, Conneely’s solicitors sought disclosure of an earlier adjudicator’s decision of Dr Mastrandrea and associated expert reports (collectively referred to as “the Mastrandrea materials”. The adjudicator rejected the disclosure application.

The adjudicator issued a full and detailed decision on 19 April 2024 and Conneely paid the adjudicator’s fees on 15 May 2024. Essential sought a summary judgment against Conneely in order to enforce the adjudicator’s decision.

Despite paying the fees, Conneely resisted enforcement of the decision on the basis that the adjudicator had breached the rules of natural justice in reaching its ruling to dismiss its application for disclosure. The basis for Conneely’s application for disclosure of the Mastrandrea materials was that they supported its position that the defects complained of within the present adjudication were caused by breaches of contract of other parties and were not due to its own workmanship failures. Conneely argued that the Mastrandrea materials would support its case that Essential were seeking a double recovery of costs.

The adjudicator rejected the disclosure application referring to the suggestion of double recovery as “fanciful”. Conneely took the position that when considering its application for disclosure, the adjudicator made a determination about the strength of Conneely’s case that would lead a fair-minded and informed observer to conclude that the adjudicator had predetermined the case and was therefore biased. There had therefore been a breach of natural justice.

At the start of the judgment, the following points of authority are identified in relation to the issue of breaches of natural justice:

1. Adjudication decisions should be enforced summarily unless there is a serious breach of the rules of natural justice (see Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2006] BLR 15);
2. Such a breach must make “a material difference to the outcome” of the matter (see Constable J in Home Group Ltd v MPS Housing Ltd [2023] BLR 474);
3. The courts should approach complaints of alleged breaches of natural justice with scepticism (see Carillion and Home Group); and
4. The adjudicator has to carry out “onerous duties” because “adjudication is a rough and ready process carried out at great speed” (see Lanes Group Plc v Galliford Try Infrastructure Ltd [2012] BLR 121).

In considering Conneely’s complaint of an alleged breach of natural justice, the decision of the adjudicator was reviewed by the judge, in particular a section where the adjudicator suggested that he was willing to reconsider his comment in relation to Essential’s alleged double recovery if Conneely were to submit evidence of the same. Based on this, it was held that the adjudicator gave Conneely every opportunity to substantiate its case and he was not predetermining any substantive points of the dispute.

Further to this, the judge considered a later document within which Conneely, once given the opportunity to review the Mastrandrea materials, expressly abandoned the argument of double recovery against Essential. The judge held that even if there had been a breach of natural justice, it would not have made any material difference to the outcome of the matter.

Decision

The judge rejected Conneely’s natural justice challenge for the following reasons:

1. The adjudicator’s ruling to dismiss Conneely’s application for disclosure was not a breach of natural justice, let alone a serious breach. The parties were given the opportunity to address the issue of disclosure and the adjudicator was not convinced of the merits of the application;
2. The adjudicator at every stage left the door open for Conneely to evidence that Essential’s claim was for double recovery;
3. If there was a breach of natural justice, it did not make a material difference to the outcome as Essential ultimately abandoned this argument; and
4. There was no predetermination as Conneely had not been able to point to an issue decided against them in the decision upon which the adjudicator had expressed a firm and immovable view on at an earlier stage (see Miller and Another v Health Service Commissioner for England [2018] PTSR 801 and H1 and Another v W and Others [2024] EWHC 382 (Comm)).

The court therefore rejected the arguments made by Conneely and held that Essential was entitled to summary judgment as claimed.

Further to this, the judge considered that the points raised by Conneely were “unmeritorious” and that it had chosen to make an attack on a very experienced adjudicator which was wholly inappropriate. As a result, costs were awarded on an indemnity basis.

This case demonstrates that where there has not been a serious breach of natural justice which would have materially impacted the outcome of the adjudication, it is unlikely to be accepted as grounds to resist enforcement of an adjudication. The judgment serves as a warning of the potential penalties which a party looking to rely on an allegation of breach of natural justice may be subject to where such an argument is unfounded.