J J Rhatigan & Co (UK) Ltd v Rosemary Lodge Developments Ltd

[2019] EWHC 1152 (TCC)

RLD sought to resist enforcement of an adjudicator’s decision in the sum of £1.7 million on the basis that the decision had been reached in breach of natural justice. Mrs Justice Jefford reminded the parties that when alleging that a breach of natural justice has occurred, it is necessary to establish that the breach is more than peripheral: it must be material. To resist enforcement, RLD had to establish:

(i) that there was some plain breach of the rules of natural justice; 

(ii) that that breach was material to the outcome of the adjudication; and 

(iii) that that material breach was such that it would be unfair to enforce the decision. 

The decision included the comment that the adjudicator had “carefully considered all the evidence and submissions although not specifically referred to in this Decision”. There was no dispute that this appeared to be a “pro forma” paragraph in the adjudicator’s decision. However, the Judge noted that the fact that a paragraph is a standard paragraph does not mean that it is not true and accurate.

In making a decision about whether or not an agreement had been reached, the adjudicator referred to statements from four people who had attended a key meeting but made no reference to another statement on the same issue. As a result of overlooking that statement, it was said that the adjudicator had failed to deal in its entirety with a key defence, namely that there was no intention to create legal relations at the meeting in question.

The Judge said that she was prepared to accept that RLD would have a real prospect of success on the argument that the adjudicator overlooked the statement on this issue. However, that was not the relevant issue. Rather, the question was whether there was a real prospect of defending the claim to enforce the adjudicator’s decision and that turned on whether the adjudicator had failed, inadvertently in this case, to address a key defence to the extent that that amounts to a breach of natural justice. The apparent omission of any consideration of the statement was only relevant in so far as it went to whether there was a real prospect of success on the argument that the adjudicator had failed to address a key defence. 

The Judge did not consider that this was the case here. For example, the evidence in question added nothing to other evidence which was referred to. The “overlooked” evidence was “not in any sense crucial”. 

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