Failure to resist enforcement action on the basis of an alleged breach of natural justice by the Adjudicator

Kingsmead failed to pay the sums awarded to Bexhill and so Bexhill made an application for summary judgment to enforce the adjudicator's decision. 

Resisting enforcement action

Kingsmead resisted the enforcement action and further made an application to stay the enforcement proceedings.  In its Defence of the enforcement proceedings, Kingsmead argued that the adjudicator had breached the rules of natural justice on the basis that Kingsmead had raised arguments during the original adjudication proceedings in relation to the validity of a payment notice it had issued which it stated the adjudicator had not considered in his decision.  Kingsmead claimed that by allegedly failing to consider all defences raised by the Responding Party i.e. Kingsmead, the adjudicator had breached the rules of natural justice.  In addition, in support of its application for a stay of execution, Kingsmead claimed that there was a risk that Bexhill would not be in a position to repay the judgment sum, if required, as a result of probable insolvency.

The Court's findings

An adjudicator can be found to be in material breach of the rules of natural justice if there has been a failure to act impartially, evidence of bias or apparent bias or a procedural irregularity. 

In this case, the Judge in the enforcement proceedings, HHJ Kelly, rejected the arguments put forward by Kingsmead for the following reasons:

• There was no evidence that the adjudicator had deliberately excluded the argument raised by Kingsmead in respect of the validity of the payment notice;
• In his decision, the adjudicator had expressly confirmed that all submissions made by the parties had been considered;
• The adjudicator had provided reasons for his decision despite not being requested to do so by the parties.

The Judge also made the point that if the adjudicator had not provided reasons for his Decision, Kingsmead would not have been in a position to allege that the rules of natural justice had been breached at all.

Kingsmead argued that although the adjudicator had provided reasons for his Decision, he failed to make reference to the argument raised in respect of the payment notice and therefore this evidenced that he had not considered it.  This argument was rejected by the Judge who specifically noted that the adjudicator was not required to provide reasons in his decision for each and every point made, particularly in circumstances where no request was made by the parties for reasons to be given.

As regards Kingsmead's application for a stay of execution, the Judge held that there was insufficient evidence to establish a probable risk of insolvency and so that application also failed.

As such, the adjudicator's decision was successfully enforced and the Judge found that the Court had no grounds to order a stay of execution.

Key takeaway's

The key points to note from the TCC's findings are as follows:

1. The adjudicator is not obliged to set out each and every matter raised by the parties in his/her decision, nor does he have to give detailed reasons for every aspect of his decision, unless it is necessary;

2. An inadvertent failure by an adjudicator to consider a particular issue in an adjudication will not ordinarily render an adjudicator's decision unenforceable. An adjudicator would have to have deliberately decided not to consider a particular point for the decision to be unenforceable;

3. This case highlights the determination of the Court to uphold adjudication decisions, unless there are jurisdictional issues or serious breach of natural justice issues. The Court will only interfere in rare circumstances;

4. The Court will also always try to give primacy to an adjudicator's decision in circumstances where the adjudicator has stated that he/she has taken account of all matters even where some matters are not expressly referenced in the decision;

5. Resisting enforcement action is difficult and a high hurdle to overcome unless it can be shown that the adjudicator has exceeded his/her jurisdiction or is in material breach of the rules of natural justice.