1. Introduction The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Part 4 of 2018. Kenneth T. Salmon Consultant Solicitor and Katy Ormston Trainee Solicitor at Slater Heelis LLP. The law is stated at 31 July 2018 and covers four cases giving rise to jurisdictional challenges. These cases also concern the ability of the adjudicator to order repayment of an overpayment; the inability of an adjudicator to decide claims requiring the taking of an account following mutual dealings under the Insolvency Rules; a failure to exhaust jurisdiction and a rather uncommon case of waiver. Further, and as we have come to expect, there are cases on payment, set off and natural justice. 2. Enforcement—set-off against adjudicator’s decision See MI Electrical Solutions Ltd v Elements (Europe) Ltd (below) 3. Jurisdiction—excess—power to order refund of overpayment Breyer Group PLC v Adam Michael Scaffolding Services Ltd 6 The Claimant contractor (“Breyer”) employed the Defendant subcontractor (“Adam”) to provide scaffolding services. The subcontract period became extended and the subcontract sum of £685,000 increased. In fact Breyer paid Adam just over £4.5 million. Adam said it was entitled to more and claimed a final account gross sum of some £5.6 million, which, after giving credit for the sum paid, left a balance due to them of approximately £1 million. Breyer on the other hand, contended that the true value of the final account was much lower and it had therefore overpaid Adam. The dispute was referred to adjudication in which it was decided the value of the final account works was £2.5 million. It followed there had been an overpayment of £2.013 million which the adjudicator ordered Adam to repay to Breyer. Adam failed to make any payments to Breyer. Breyer sought enforcement of the adjudicator’s decision. Adam opposed and contended that: 1. The adjudication notice was not wide enough to confer jurisdiction on the adjudicator to make an award in favour of Breyer nor to order any payment from Adam to Breyer; 2. That the decision was one that no adjudicator could reasonably have made; Adam criticised the evidence and the way it was dealt with by the adjudicator; 3. Breyer had been paid for the works by its employer; 4. Enforcement would render Adam insolvent.
In granting the application the Court held: 1. The notice of adjudication was wide enough to allow the adjudicator to determine the value of the final account and to order the refund of any overpayment 7 . 2. The reasonableness or otherwise of the decision was irrelevant upon enforcement unless, perhaps, it could be said to be ‘outrageously irrational’ and that was not the case here 8 . The criticisms of the evidence were no defence to enforcement. 3. There was no evidence before the adjudicator as to the payment position under the main contract. Even if there had been and he had failed to take it into account, such an error would not have been a defence. 4. The evidence before the Court did not demonstrate that Adam was insolvent. There were no special circumstances to justify a stay and nothing to prevent Adam from bringing proceedings to correct the alleged errors. 4. Jurisdiction—failure to exhaust DSVG Façade Ltd v Conneely Facades Ltd 9 The Claimant subcontractor (“DSVG”) supplied labour to carry out cladding works for the Defendant contractor (“Conneely”). DSVG presented an invoice for £21,747 part of which Conneely paid some months later. DSVG referred the dispute over the unpaid part of the invoice to adjudication claiming payment on the basis that there was no valid payer’s notice or pay less notice but in the alternative on the merits that DSVG’s payment application had been rejected because of Conneely’s wrongful assessment and valuation of the works. The adjudicator found for DSVG on the basis that there was no valid payer’s notice or pay less notice and declined to deal with the alternative case regarding the merits of the valuation of the works. When DSVG sought enforcement of the decision, Conneely argued that the adjudicator’s refusal to deal with the issue of valuation meant that, in breach of the rules of natural justice, the adjudicator had failed to deal with the entire dispute referred to him and had thus failed to exhaust his jurisdiction. The Court found that on a proper construction of the referral documents there was no agreement to refer two disputes to the adjudicator. He could only decide one dispute, namely as to DSVG’s entitlement to the notified sum in the absence of a payer’s notice or pay less notice 10 . The adjudicator had decided that dispute, and having done so, there was no residual jurisdiction to consider and decide a separate dispute about the true valuation of the works. It followed the adjudicator could not be in breach of the rules of natural justice for having decided not to consider the valuation of the works. Conneely was not entitled to raise the valuation issue as a defence to enforcement. It was a different dispute to be dealt with in separate proceedings 11 .
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