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The claimant in this claim was LAPP Industries Limited (“LAPP”), while the defendant was 1st Formations Limited (“Formations”). The sum at issue in this claim was a sum of £120,000 plus interest awarded to LAPP as due from Formations in an adjudicator’s decision dated 24 December 2024.
Formations engaged LAPP in 2022 to carry out works relating to the refurbishment of the reception, business centre, and second and third floors at 71 – 75 Shelton Street, London WC2H 9JQ (the “Premises”). On 14 April 2023, LAPP sent what it asserted to be an interim payment application to Formations, to which Formations did not issue any valid Payment Notice or Pay Less Notice. ON LAPP’s case, this application became a Default Payment Notice. On this basis, LAPP commenced an adjudication on 22 November 2024. Formations raised a jurisdictional challenge, arguing that there were in fact multiple contracts between LAPP and Formations and LAPP had referred many disputes under numerous contracts to the adjudicator. The adjudicator rejected this challenge, and on 24 December 2024 issued her decision, awarding LAPP the fill £120,000 claimed and interest within 14 days. Formations did not pay this sum and LAPP brought proceedings to enforce the adjudicator’s decision.
Formations resisted the enforcement on two grounds. Firstly, it repeated the jurisdictional challenge first raised in the adjudication. This challenge is based on the fact that LAPP provided an initial quote for or works to the roof, decking and reception of the Premises and then quoted for and issued invoices for additional works in tranches. Formations argued that the separate quotes represented the subject matter of separate construction contracts.
Formations’ second basis for resisting enforcement was that the adjudicator “went off on a frolic of her own in determining that the interim application was valid for reasons not raised by or argued by the parties and on which they were not given the opportunity to comment”, these reasons including the parties’ course of dealings in respect of previous requests for payment. As part of this argument, Formations also alleged that the adjudicator had not dealt with two of its defences. The first of these was Formations’ allegation that LAPP’s payment notice did not comply with Part II of the Scheme for Construction Contracts. The second was Formations’ argument that the application had been withdrawn because LAPP issued a further invoice on 27 April 2023.
The judge agreed with the adjudicator in respect of Formations’ jurisdictional challenge. In his view, the parties had not agreed to multiple separate contracts, but instead had agreed on an ad hoc basis to expand the initial scope of the construction contract they had formed in June 2022. Accordingly, there was a single contract, and a single dispute. The judge reached this conclusion on the basis of a number of factors, including that the parties had referred to the works as the “project” and that the works were all carried out at a single site.
The judge also dismissed Formations’ argument regarding the adjudicator having gone on a “frolic”. In the view of the judge, the adjudicator had to determine whether LAPP’s payment application was a proper application in accordance with the contract and the Scheme, and that is what she had done on the basis of multiple factors set out in her decision. Furthermore, some of the factors that she had considered were based on matters out before her by Formations in its Response. As concerns the two points that the Adjudicator allegedly failed to consider, the judge considered that it was apparent that the adjudicator had reached an overall view on the validity of the application, taking into account all the contentions urged on each side, and that she had considered, and rejected, Formations’ case on waiver.
The key points to take from this judgment are those that are helpfully drawn out by the judge at the closing of his judgment. The relevant authorities make clear that to overturn an adjudicator’s decision, the failure of the adjudicator to consider a relevant point must be deliberate. If the failure was inadvertent, this would only suffice in an extraordinary case. Further, where an adjudicator clearly sets out in their decision that they have considered all the material submitted by the parties, this should not be taken as a mere boilerplate, but should be understood as the adjudicator confirming that they had considered all of the parties’ evidence and submissions. Further, a party will be well advised to deploy a natural justice challenge on the basis of a “frolic” by the adjudicator, as this will not easily succeed, in particular when it is a transparent case of a losing party seeking to comb through the adjudicator’s reasons and identify points upon which to present a challenge.