Background
This case relates to MPS Housing Ltd's ("MPS") repudiatory breach of a maintenance contract (the "Contract") it had with Home Group Limited ("HGL") for carrying out maintenance and repairs to HGL's property within the South-East of England and the subsequent adjudication relating to HGL's losses.
HGL issued a final account assessment requesting payment of circa £8million from MPS. This was accompanied by a one-page excel spreadsheet.
MPS followed this by requesting that a number of documents be provided in order to assess the account noting that it would need 8 weeks to respond.
HGL rejected this, suggesting a sampling method be used, with which MPS did not agree with. HGL also offered MPS to attend its offices to review such samples. Instead, MPS requested a spreadsheet showing 8 categories of information for each work order.
HGL revised it's claim upwards and provided a further 11 spreadsheets of information to substantiate the claim. MPS's position remained that it had not provided what was necessary to consider the account.
On 10 February 2023, HGL provided MPS with a draft expert report and on 24 February 2023, a appendices to this report, both on a 'without prejudice save as to costs basis'.
MPS noted it would need until 19 May 2023 to provide a formal response to the draft report. On 24 February 2023, HGL refused this timeframe before starting an adjudication. In response, MPS contended that 'it was impossible for us to commence any meaningful review (or ultimately for an adjudicator to properly consider the position) in the absence of a full and detailed description of the work that was undertaken against each and every work order'.
On 28 February 2023, HGL reiterated its offer for MPS to attend to review samples of information, which MPS did not take up.
The Application
The adjudication commenced shortly thereafter and MPS raised three jurisdictional challenges: (1) no dispute had crystallised; (2) the case was too large/complicated for adjudication and (3) two different disputes has been referred.
The adjudicator confirmed that he had jurisdiction.
Following this, MPS invited the adjudicator to resign or give MPS sufficient time (e.g. 14 weeks) to consider the amount of documentation (338 MB of data, a further 2, 325 files and 5 factual witness statements – see paragraph 3 of the judgement for full details of the documents provided).
The adjudicator proposed an extended timetable, , which MPS refused. MPS continued to participate in the adjudication under protest and after two rounds of submissions from each party, the Adjudicator found for HGL ordering the sum of £6,565,831.94 excluding VAT and interest was payable by MPS. MPS refused to pay and HGL sought to enforce the decision. MPS maintained its jurisdictional challenges, and in particular, argued that had it had time to review the information fully there would have been a materially different outcome to the decision.
Decision
MPS's allegation that there had been a breach of the rules of natural justice was rejected by the Court.
The Court confirmed that "It is abundantly clear on the authorities that the Court must look to wider considerations when considering whether, on the facts of any particular case, a breach of natural justice may have occurred by reason of an ability of a party to fairly put its case."
The Court reviewed some previous case-law on the matter with the upshot being that even if there is what might be considered a very large amount of material and depending up on the factual circumstances of each case, an overwhelming amount of evidence is not a reason for beach of natural justice. In fact, the case law referred to enforces the idea that the legislation envisaged that adjudications can deal with complex/high volume cases. It was further noted that sampling/spot checks is "an entirely permissible way for an adjudicator to proceed…".
In addition, it was importantly noted that the adjudicator kept tabs on his ability to "do broad justice between the parties, notwithstanding the substantial quantity of material he had been presented with….".
Very helpfully, Mr Justice Constable succinctly set out the legal position at paragraph 50 which is worth repeating verbatim:
"(1) Adjudication decisions must be enforced even if they contain errors of procedure, fact or law.
(2) An Adjudication decision will not be enforced if it is reached in breach of natural justice and the breach is material, in that it has led to a material difference in the outcome. However, the Court should examine such defences with a degree of scepticism;
(3) Both complexity and constraint of time to respond are inherent in the process of adjudication, and are no bar in themselves to adjudication enforcement. Whilst it is conceivable that a combination of the two might give rise to a valid challenge, in circumstances where the Adjudicator has given proper consideration at each stage to these issues and concluded that he or she can render a decision which delivers broad justice to the parties, the Court will be extremely reticent to conclude otherwise; and
(4) In cases involving significant amounts of data, an adjudicator is entitled to proceed by way of spot checks and/or sampling. The assessment of how this should be carried out is a matter of substantive determination by the adjudicator and an argument that the adjudicator has erred in his or her approach, absent some particular and material related transgression of natural justice, will not give rise to a valid basis to challenge enforcement. It would, even if correct merely be an error like any other error which would not ordinarily affect enforcement."
Implications
Be forewarned – where you receive information in a dispute, do not delay in digesting it . This case confirms that the volume of information received vs the time allowed to review it will rarely give rise to circumstances amounting to a breach of natural justice.
This is another case that emphasises the Court's reluctance to obstruct enforcement of an adjudicator's decision and demonstrates the dangers in placing too much weight on ambitious challenges to jurisdiction.
