Synergy Gas Services Ltd v Northern Gas Heating Ltd

Case reference: 
[2018] EWHC 3060 (TCC)
Thursday, November 15, 2018

Key terms: 
Adjudication – Natural justice – Construction contracts – Summary judgments

By way of a background, Synergy Gas Services Ltd (“Synergy”) entered into a sub-contract with Northern Gas Heating Ltd (“Northern”). Clause 14.4 of the sub-contract stated that when Northern determined that the works performed by Synergy were defective, it had a duty to notify Synergy of these defects giving Synergy an opportunity to rectify their works. A dispute arose over non-payments of invoices by Northern and Synergy referred this matter to adjudication.

The Adjudicator decided in favour of Synergy. He based his decision on clause 14.4 and considered that the opportunity to rectify defective works was a condition precedent to the claim. The Adjudicator analysed the contents of clause 14.4 despite the fact that neither party had raised the aforementioned issues in their submissions. 

Following the decision in adjudication, Northern applied for a summary judgment against Synergy, arguing that the Adjudicator breached the principles of natural justice by denying Northern the opportunity to address the fundamental reasoning used by the Adjudicator to reach his decision.

Jonathan Acton Davis QC, sitting as a Deputy Judge of the High Court, held that the Adjudicator did not breach the principles of natural justice because the application of clause 14.4 was relevant in the context of this case. The Deputy Judge’s decision was supported by the fact that the Scott schedule attached to Synergy’s response was filled with evidence demonstrating that Northern failed to notify Synergy of alleged defects to give Synergy an opportunity to rectify them.  Therefore, not without basis, that the Adjudicator made his decision.

He considered case law to support his argument, such as Beumer Group v Vinci Construction [2016] EWHC 2283 in which the court held that a breach of natural justice can be only established in ‘the plainest of cases’ and that ‘the adjudication proceedings must have been obviously unfair’. Likewise in Carillion Construction Ltd v Devonport Royal Dockyard [2005] EWCA Civ Lord Justice Chadwick had observed that challenging the Adjudicator’s decision on the ground that he has breached natural justice ‘is likely to lead to a substantial waste of time and expense’.

Synergy Gas Services Ltd v Northern Gas Heating Ltd demonstrates that it is well-established that where breach of natural justice is argued, the courts tend to interfere when the facts of law are clear and when Adjudicator’s decision is clearly unfair. It demonstrates that there is a high bar for parties to achieve.

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