Technology And Construction Court Overturns Adjudicator's Decision On Grounds Of A Breach Of Natural Justice

Publication Date28 Apr 2021
SubjectLitigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Construction & Planning
Law FirmShepherd and Wedderburn LLP
AuthorMr Iain Drummond

The recent case of Global Switch Estates 1 Limited (GSEL) v Sudlows Limited (Sudlows) highlights an exception to the courts' normal practice of enforcing adjudication decisions, based on a breach of natural justice.

Background

Sudlows was engaged in 2017 by GSEL in a project to fit out and upgrade GSEL's specialist data centre located at East India Dock House in London.

Four adjudications arose following disputes between the parties. These concerned whether particular payment notices were issued on time, applications for extensions of time, whether a further payment notice was valid, and a determination of the true value of parts of certain interim applications.

The decision in the fourth adjudication concerning the true value of parts of certain interim applications was issued on 17 July 2020 (and was later corrected on 21 July 2020). GSEL persuaded the adjudicator that the scope of his jurisdiction was limited to the parts of Sudlows' interim applications referred to adjudication by GSEL and to the equivalent parts of the payment notices issued by GSEL in response. The adjudicator held that this prevented him from considering, among other things, whether Sudlows was entitled to a further extension of time and related loss and expense as these matters were not included in GSEL's referral, though they formed part of the relevant applications.

GSEL was ultimately successful in the adjudication, and sought to enforce a multi-million pound award made against Sudlows.

Sudlows resisted enforcement on the ground that the adjudicator had breached natural justice by failing to consider Sudlow's claims for extension of time, loss and expense and other items included in the interim applications that were the subject of the adjudication.

The case was brought to the Technology and Construction Court, before Mrs Justice O'Farrell.

Decision

Mrs Justice O'Farrell held that the decision of the adjudicator was unenforceable. Sudlows' claims for loss and expense were clearly relevant and raised a potential defence to GSEL's claim for payment, but the adjudicator had wrongly assumed he did not have jurisdiction to consider them.

GSEL had sought to artificially limit the scope of the adjudication to prevent Sudlows having the opportunity to properly defend itself, and as a result, a breach of natural justice was plain and obvious on the face of the adjudicator's decision.

GSEL's claims for declaratory relief did restrict the adjudicator's jurisdiction to the parts of the...

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