In this case the court considered when Part 8 proceedings can be validly brought in enforcement of adjudications.
Background
The dispute itself centred around the adjudicator’s findings that Red Key Concepts Ltd, the contractor, were liable to pay Breakshore Ltd, the employer, liquidated damages following delays to the works. The delays had occurred because Red Key had suspended the work mid-way through the contract and did not remobilise, despite instructions to do so. Red Key submitted that they were not responsible for the delays as they were entitled to suspend works
One of Red Key’s key submissions was that Breakshore had not obtained appropriate planning permission after changes were made to the development. They stated that this uncertainty caused their suspension of the work. The adjudicator found that this change did not mean that work should have been stopped without approval or instructions to do, especially as planning permission conversations were ongoing.
The judgment
As many will be aware, it is well established that the enforcement of an adjudicator’s decision is a robust process. Adjudicator’s decisions will only be overturned if there is a serious breach of natural justice or a lack of jurisdiction, and neither of these points were raised here. Instead, Red Key asserted that the adjudicator’s decision was obviously wrong and thus that they wished to have the dispute determined by Part 8 proceedings.
As there was no consent to the Part 8 claim, the principles established in Hutton Construction Ltd V Wilson Properties (London) Ltd[1] were considered by the court. Hutton established that there were certain conditions that must be satisfied by a defendant who wish to resist enforcement proceedings via a Part 8 application. The conditions are as follows:
- There must be a short and self-contained issue which arose in the adjudication that the defendant wishes to contest;
- The issue must require no oral evidence or any other elaboration beyond that which is capable of being heard in around 2-3 hours; and
- The issue must be one which on a summary judgement application, it would be unconscionable for the court to ignore.
Hutton creates a high threshold for when a Part 8 claim will have successful grounds to be heard, it is in effect limited to circumstances where ‘a calculation of relevant time periods is obviously wrong’ or ‘an adjudicator’s construction of a contract clause is beyond any rational justification’.
This threshold was not met. It was held that the issues of whether it was reasonable for the contractor to suspend its work was a question of fact which was not suitable for Part 8 proceedings. There were no clear-cut issues where the adjudicator was so obviously wrong, and the issues that had been raised would require ‘careful examination’ that is ill-suited to a Part 8 application.
The court enforced the adjudicator’s decision and also awarded costs on an indemnity basis. The court felt the Part 8 proceedings had been attempted in order to gain an unwarranted ‘tactical advantage’.
This case is a reminder that adjudication enforcement continues to be robust. Part 8 should not be seen as a means around that. Such proceedings can be used only in rare and narrow circumstances and parties should be hesitant to rely on them, particularly if they want to avoid adverse costs.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email enquiries@sharpepritchard.co.uk.
[1] [2017] EWHC 517 (TCC)
