“The distinction between an adjudicator addressing a defence and concluding that it fails and an adjudicator deliberately declining to address a defence can be a narrow one but it is a real one. I am satisfied that by deliberately deciding not to address this defence the adjudicator was declining to address a defence which the Employer was entitled to advance and entitled to have considered by the adjudicator.” In light of that conclusion it was unnecessary for the court to consider an alternative argument that the adjudicator had been given “ad hoc” jurisdiction by reason of the parties having addressed the issue of the capping beam in the adjudication. Had it been necessary to do so the court would have held that it did not give the adjudicator jurisdiction. The capping beam claim was not part of the initial referral. It was put forward by way of a defence on the Employer's part and which the Contractor then addressed. It could not be said that it was matter which the parties had agreed the adjudicator should decide[11]. The adjudicator having failed to address a matter which was put before him, it was necessary to decide whether that failure was “material” breach of the rules of natural justice within the principles set out by Coulson J in Pilon[12]. The court had no difficulty in concluding that it was material. Apart from anything else it was worth more in claimed value that the amount actually awarded.
Failure to address the defence/cross claim of the defective capping beam related
The adjudicator took the narrow view that he could only look at the value of the Payment Application itself, at that point in time and that as the matter of the capping beam had not then been raised, he could not take it into account. In adopting that approach the adjudicator had taken an unduly narrow view of the dispute. The adjudicator was engaged in deciding the sum due in a particular payment cycle and on that he reached a conclusion as to the correct figure plus interest on the balance. The capping beam claim was put forward in reduction of the amount due in that cycle. It was, accordingly, raised as a defence in respect of the matter in issue in the adjudication and in respect of which the Adjudicator had jurisdiction. The Contractor’s arguments as to the effect of the provisions of the Contract relied on as meaning that the capping beam claim was not to be taken into account in calculating what was due, were, on proper analysis, not arguments as to jurisdiction. They were arguments as to why no deduction should be made – that the capping beam claim was not within the scope of the deductions from the gross valuation provided for in the contractual terms governing the calculation of an interim payment. That argument could have been advanced in the adjudication and “put on that footing they might have [had] considerable force.” But they did not mean the Employer's capping beam defence was not a matter to be addressed in the adjudication. Had the adjudicator considered the capping beam claim and concluded that the defence did not operate to reduce the amount due, his decision would have been unimpeachable (whether founded on either the interpretation of the Contract or on arguments as to the merits or quantum of the capping beam claim).
[11] Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358, distinguished [12] Pilon Ltd v Breyer Group Plc [2010] EWHC 837 (TCC).
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