107772.001 SH Construction Case Booklet

1. Introduction The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Part 1 of 2019. Kenneth T. Salmon, Consultant Solicitor and Katy Ormston, Trainee Solicitor at Slater Heelis LLP. The law is stated at 31 January 2019 and covers abuse of process, the meaning of dispute, enforcement in case of fraud, reservation in case of jurisdictional challenges, and waiver, natural justice and a Court of Appeal decision dealing with the effect of the insolvency of a party on the right to adjudicate and the enforceability of any decision. 2. Abuse of Process Amey LG Ltd v Amey Birmingham Highways Ltd 6 This was an application by the defendant to strike out the claimant’s Part 8 application to enforce several adjudicator’s decisions, as an abuse of process. The defendant (“AB”) had been retained by Birmingham City Council (“BCC”) under a PFI contract to maintain the Birmingham road network for a 25-year period. AB sub- contracted the work to the claimant (“ALG”). BCC claimed it had been overcharged by AB and obtained an adjudicator’s decision setting aside various payment certificates. BCC’s interpretation of the contract was upheld by the Court of Appeal, and they then obtained an adjudicator’s decision against AB entitling them to repayment of substantial sums and judgment enforcing the decision. AB sought to pass on its liability to ALG and issued Part 20 proceedings against them and argued that the sub-contract required ALG to adjudicate before it could litigate. AB wished to have the Part 20 proceedings heard at the same time as BCC’s proceedings against it but the Court ruled that they should be case managed separately since the sub-contract was not precisely back-to-back with the PFI contract. ALG now commenced two adjudications against AB pursuant to the sub-contract seeking payment. The adjudicator decided that ALG was not entitled to any payment whereupon ALG commenced Part 8 proceedings seeking declarations that the adjudicator had correctly decided an issue of interpretation of the sub-contract relating to the service of notices by email. In the meantime the parties agreed a stay of the Part 20 proceedings. ALG did not serve the Part 8 proceedings but instead applied without notice for directions on the basis that the proceedings were adjudication enforcement. The issue that arose was whether the Part 8 proceedings constituted adjudication enforcement subject to the consensual approach explained in the case Hutton 7 or whether they were an abuse of process since the Part 20 proceedings were already on foot.

The Court held that, where it applied, the guidance in Hutton required a consensual approach to adjudication enforcement and Part 8 proceedings that was mandatory and not optional. It would be contrary to that guidance to commence Part 8 proceedings without notice and to seek to abridge time. Although ALG’s Part 8 claim concerned adjudication, it was not within the adjudication enforcement regime requiring abridged directions. ALG’s claim could be struck out under CPR r.3.4(2) (b) as an abuse of the Court’s process or one likely to obstruct the just disposal of the proceedings, albeit the striking out of a valid claim would be the last option. Thus if the abuse could be addressed in a less draconian way, that was the correct course. The Senior Courts Act 1981 s.49(2) required the multiplicity of proceedings to be avoided. In the case of a long-term project (such as this one), more than one set of proceedings was to be expected, but the parties were not free to ignore s.49(2) and to embark on overlapping proceedings to suit their own advantage. As the Part 20 claim appeared to have become redundant, the right course was to stay those proceedings pending further order. It would be disproportionate to strike out the part 8 claim when ALG had filed evidence explaining why it had taken the course which it had. Therefore the Court would give directions for the case management of the Part 8 claim. 7 3. Dispute – Whether Crystallised Barry M Cosmetics Ltd v Merit Holdings Ltd 8 The claimant sought enforcement of an adjudicator’s award in respect of claims for variations, extensions of time and loss and expense carried out for the claimant by the defendant builder. The defendant raised two challenges. First, it claimed that there was no dispute, as the entitlement to payment had not arisen before the claimant gave its notice of intention to adjudicate. The Court rejected the argument. There was nothing in the Scheme to suggest that a dispute could only be referred after the right to payment had arisen. There was clear dispute as to the correct value of the defendant’s final account. Second the defendant said there had been a breach of the rules of natural justice in its having been prevented from fully responding to the claimant’s last submission. The adjudicator had given the defendant permission to serve a rejoinder limited in length and scope to a particular issue, though, in fact, the defendant did not so limit its rejoinder. The Court held that there was no right to respond to the very lengthy submission made by the other party, and that it was perfectly proper to impose the limitations. In deciding there had been no unfairness, the Court commented that what is “fair” is not fixed and is to be judged in the context of the particular adjudication, whilst also noting that any breach must have a significant effect on the outcome.


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