In Wordsworth Construction Management Ltd v Inivos Ltd T/A Health Spaces [2024] EWHC 617 (TCC) the TCC has given some useful further guidance on how the Court will approach the enforcement of serial, and seemingly incompatible, adjudication decisions.
Wordsworth was the construction manager for Inivos in respect of the construction of a new modular facility at Newham University Hospital, London, until its appointment was terminated in May 2023. Wordsworth referred a dispute regarding the termination and sums due as a result of that termination to adjudication in July 2023. Wordsworth sought £961,245 in its referral. Inivos denied owing any sums due to Wordsworth and sought payment of £798,050.76 in its response.
The adjudicator, Guy Jackson, found that Inivos had wrongfully terminated Wordsworth’s appointment and was therefore in repudiatory breach of contract. Mr Jackson awarded £170,562.69 to Wordsworth – crucially his decision was limited to the consequences of termination.
Inivos considered that in reaching his decision Mr Jackson had failed to:
- consider all points of defence and/ or counterclaim raised by Inivos;
- give sufficient reasons for his decision; and that he had in fact; and
- considered matters not raised by either party in their submissions.
Inivos then referred a further dispute to adjudication after Mr Jackson gave his decision above.
Inivos sought to avoid Mr Jackson’s appointment as adjudicator on the basis that Wordsworth might run a natural justice defence to the enforcement of the previous decision. Whilst there was some dispute as to the propriety of that attempt, the RICS ultimately appointed Dr Milner as adjudicator. Wordsworth challenged Dr Milner’s jurisdiction on basis that:
- Inivos had interfered with the appointment process; and
- Mr Jackson had already decided the dispute referred.
Dr Milner did not agree, and he subsequently decided that Health Spaces was entitled to payment from Inivos in the sum of £192,772 plus interest for breaches of the construction management appointment which Inivos originally raised in the previous adjudication, but which Mr Jackson had not decided as part of his wider decision.
Both parties sought to enforce the adjudications in their favour, and each opposed the enforcement sought by the other – Inivos arguing that the Jackson decision should not be enforced on grounds of natural justice, and Wordworth arguing that:
- Dr Milner’s appointment as adjudicator was invalid; and
- the ‘Milner decision’ concerned matters previously decided by Mr Jackson.
In a judgment handed down in February, Record Singer KC considered the arguments. In determining that both decisions should be enforced, Singer KC gave a careful review of the principles of enforcement of adjudicators’ decisions. He noted that in order:
- to successfully defend enforcement of an adjudicator’s award on the grounds of a breach of natural justice, the breach has to be material and of sufficient seriousness; and
- for an earlier decision to bind a subsequent decision, as a matter of fact and degree, the dispute in the second adjudication must be the same or substantially the same as the dispute that was decided in the first adjudication. In essence, and as per Coulson, LJ in the case of Sudlows Ltd v Global Switch Estates 1 Ltd [2023]referring to HG Construction v. Benfield: “a party [cannot re-adjudicate] a claim or a defence on which they have unequivocally lost”.
The judgment doesn’t deal with the ultimate outcome of the set off, but it is fair to presume that honours were more or less even at the end of the matter. The parties might rightfully consider this was an expensive way to get to the answer that nobody owed much or anything.
It is a useful reminder, though, of the Court’s overwhelming preference for the enforcement of adjudicators’ decisions. Even where there were overlapping facts and submissions, the Court was happy to construe the decision of Mr Jackson sufficiently narrowly so as to render Dr Milner’s decision enforceable.
The Judge did accept that there might be circumstances in which identifying a potential conflict of interest on an application for nomination of an adjudicator, when that conflict does not in fact exist, might invalidate the appointment of an adjudicator. This is something parties should bear in mind when completing the application for appointment.
Finally, it is noteworthy that the Judge quoted Coulson LJ’s leading textbook as follows:
“It is important that in serial adjudications, the policing of this sort of debate is primarily left to the adjudicators themselves. The court should only intervene when something has gone clearly wrong in a later adjudicator’s decision.”
Practitioners and parties should all bear those words in mind when deciding whether to refuse to pay an adjudicator’s decision.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2024.