Broughton Brickwork v F Parkinson Ltd [2014] EWHC 4525 (TCC)

The TCC enforced an adjudicator’s decision that a Pay Less Notice had not been validly served, despite the adjudicator failing to take a key document into account.

When challenged, the adjudicator acknowledged that had he seen the document at the time, he would have found that there had in fact been valid service of the Pay Less Notice. However, the court refused to reverse the adjudicator’s decision because the losing party had failed to point the relevant document out to the adjudicator during the adjudication itself.

This decision is a reminder of the need to present your case clearly to the adjudicator and to direct the adjudicator specifically and accurately to all key documents. Read on for more detail.

The Facts

F Parkinson Limited (Parkinson), the contractor, engaged Broughton Brickwork Limited (Broughton), as subcontractor to carry out certain works at sites in Warrington. A dispute arose between the parties over Broughton’s interim application 12 (IA12) and Broughton referred the dispute to adjudication.

In their response, Parkinson claimed that two later interim applications (IA13 and IA14) superseded IA12 and that they had served valid Pay Less Notices against the later applications. These Pay Less Notices were included in the bundle of documents that accompanied their Response.

However, while Parkinson’s Response directed the adjudicator to the Pay Less Notices in the bundle of documents, there was a page numbering error and the Response therefore failed to point out a covering letter also included within the bundle, which showed that the Pay Less Notice for IA14 had been sent to Broughton by email as well as in the post.

In the absence of this covering letter, it appeared that the Pay Less Notice had been served by post and was therefore late. The adjudicator concluded that the Pay Less Notice had not been validly served and ordered that Parkinson pay Broughton approximately £96,000 plus interest. Parkinson did not pay and Broughton commenced enforcement proceedings in the TCC.

A breach of Natural Justice?

The court will not enforce an adjudicator’s decision reached in serious and material breach of natural justice. Parkinson argued that the adjudicator’s failure to consider the covering letter was a breach of natural justice.

Broughton argued that the adjudicator was entitled to reach the decision he did and he did not have to revert to the parties to seek clarification of their submissions before doing so. Broughton also argued that the adjudicator’s failure to consider the document was largely due to Parkinson’s own conduct in not flagging up the document.

The court confirmed the established rule that an adjudicator can make mistakes of fact or law, even ones which are obvious and fundamental, without this rendering his decision unenforceable, so long as he acted within his jurisdiction.

The court took the view that the adjudicator’s conduct here would only amount to a breach of natural justice if he had deliberately ignored the covering letter. On the facts, the adjudicator’s conduct had not been deliberate. He had made an inadvertent procedural error. The court also commented that the error was substantially Parkinson’s own fault as it had not drawn the existence or the importance of the document to the adjudicator’s attention. The adjudicator could not be criticised for failing to trawl through the totality of the documents before him.

The court therefore ordered Parkinson to pay the sum stated in the adjudicator’s decision.

Comment

Typically a responding party to adjudication will have 7 days from the date of the Adjudication Referral in which to put together its Response. The process usually involves late nights, weekend working and a lot of caffeine. In light of this, Parkinson’s reference to an incorrect page number in the bundle of supporting documents does attract a certain amount of sympathy. It is not difficult to imagine that similar errors have been made in other adjudications, albeit without the far reaching consequences suffered by Parkinson here.

The court acknowledged that Parkinson might be left with a sense of injustice at its decision. However, adjudication is an interim remedy that can be put right in later legal proceedings. This option was open to Parkinson and as a safeguard would potentially prevent any permanent injustice.

This decision is a further reminder that the courts are reluctant to overturn adjudicators’ decisions even where they have been reached in error. Generally, the courts prefer to maintain the strength and efficiency of adjudication as a rough and ready, ‘pay now – argue later’ interim remedy.

This article was published by Walker Morris on 01/05/15.

 

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