Adjudicator's Decision Unenforceable Based On A Breach Of Natural Justice

Executive Summary

1. In Corebuild Ltd v Cleaver and another [2019] EWHC 2170 (TCC), the Technology and Construction Court refused to enforce an adjudicator's decision by reason of a material breach of the rules of natural justice. In reaching its decision, the Court held that the adjudicator had determined a question of repudiatory breach on the basis of a factual finding that had not been argued in submissions, and which the responding party had not had opportunity to respond to or adduce evidence.

   Facts

2. The Defendants had engaged the Claimant under a JCT Immediate Form with Contractor's Design 2016, for the design and construction of extension works to a residential property in London.

3. Pursuant to the terms of the contract, two notices were required to terminate the contractor's employment. The first to put the contractor on notice that the works were not proceeding regularly and diligently, giving time for that to be corrected. The second notice to terminate the contract.

4. During the course of the works, the Contract Administrator sought to terminate the contract on those terms. The first notice advised that the contract would be terminated in 14 days if the Claimant continued to fail to proceed regularly and diligently with the works. When, in the Contract Administrator's opinion, the default continued, and matters failed to improve, a second notice was served, terminating the contract.

5. The Claimant referred the dispute to adjudication, arguing that the Defendants had invalidly terminated the contract and were in repudiatory breach. The Defendants argued that, even if the termination had been invalid, it was not a repudiatory breach as they had relied on the expertise and judgement of the Contract Administrator when terminating the contract.

6. Importantly, the Claimant did not dispute the fact that the Defendants' had relied on the Contract Administrator; they instead argued that any such reliance was irrelevant and would constitute repudiatory breach in any event.

7. The adjudicator found in the Claimant's favour, finding as a matter of fact that the Defendants had not relied on the Contract Administrator not least as they were both "very much involved" in the administration of the Contract.

8. The Claimant subsequently applied for summary judgement to enforce the adjudicator's decision. The Defendants resisted the enforcement, arguing that the adjudicator:

   8.1 Answered the wrong question in relation to contractual termination...