Reference: [2020] EWHC 3314 (TCC)
Date: 3 December 2020
Judge: Mrs Justice O’Farrell DBE Link: Global Switch Estates 1 Ltd v
Sudlow’s Ltd [2020] EWHC 3314 (TCC)
(03 December 2020) (bailii.org)
Keywords: Adjudicators’ decisions; Enforcement; Interim payments; Jurisdiction; Natural justice; Referral notices
Case Note
This was an application by Global Switch Estates 1 Limited (“GSEL”) for summary judgment to enforce an adjudication decision dated 17 July 2020. The decision directed Sudlows Limited (“Sudlows”) to pay GSEL £5,019,120.86 plus the adjudicator’s costs in the sum of
£81,588.00.
The dispute related to a project to fit out and upgrade GSEL’s specialist data centre in London. Sudlow’s resisted enforcement on the grounds that:
- The adjudicator failed to consider and deal with matters relied on by Sudlows as defences to GSEL’s claim, thereby acting in breach of the rules of natural justice;
- The adjudicator failed to consider and deal with an allegedly fraudulent call on a bank guarantee, a further breach of the rules of natural justice; and
- The adjudicator wrongly came to decisions contrary to a previous adjudicator’s decision, thereby acting in excess of jurisdiction.
On 31 March 2020, Sudlows submitted Interim Applications 27 (“IA27”). The total interim payment claimed was £8,764,699, based on a gross valuation of the works of £30,391,761. GSEL made no payment in respect of the application. On 15 May 2020, GSEL commenced an adjudication. The notice of adjudication sought a decision as to the true value of parts of IA27 and that Sudlows should pay GSEL the sum of £6,831,163.03 or such other amount as the adjudicator determined.
In its referral, GSEL listed several matters which it said were outside the scope of the adjudication. This included Sudlows entitlement to extensions of time and loss and expense claims. In its response, Sudlows disputed GSEL’s attempt to confine the scope of the adjudication, alleging that, to defend its assessment of IA27, Sudlows was entitled to raise these issues.
The adjudicator considered that GSEL was entitled to limit the scope of his jurisdiction to specified parts of IA27. He did not have jurisdiction to award further extensions of time or decide whether Sudlows was entitled to additional loss and expense regarding any such matters. The adjudicator determined that the true value of IA27 was £16,927,352.15, deciding in favour of GSEL. Sudlow’s failed to pay, and GSEL commenced enforcement proceedings.
The Judge considered that the adjudicator decided incorrectly on the scope of his jurisdiction. The determination of the claim for payment required the adjudicator to consider all of the matters raised by Sudlows in support of its case, including its claims for loss and expense. The Judge held that this failure amounted to a material breach of the rules of natural justice, and the decision was unenforceable as a result.
The Judge rejected Sudlows’ arguments that the adjudicator failed to consider and deal with an allegedly fraudulent call on a bank guarantee. The adjudicator wrongly came to decisions contrary to the decision of a previous adjudicator. However, GSEL’s application for summary judgment was ultimately
dismissed based on the adjudicator’s failure to consider key elements of Sudlows defence in the adjudication.
This case is an important reminder that, although the courts take a robust approach to enforcing adjudicator’s decisions, certain circumstances exist where the decision will not be enforced. For example, as highlighted in this case, a failure by the adjudicator to consider substantial parts of a responding party’s defence can lead to a material breach of natural justice which, as a result, can render the adjudication decision unenforceable.
