A & S Enterprises Ltd v Kema Holdings Ltd

An adjudicator’s decision may be enforced only where the adjudication process complies with natural justice and the adjudicator acts impartially. The court does not ordinarily reconsider the adjudicator’s factual findings or conclusions of law. However, there is a real possibility of bias where the adjudicator’s language indicates that a party’s submissions will be viewed adversely because a witness did not participate in an oral meeting. Where an adjudicator later considers oral evidence from a witness important, fairness requires the parties to be told and given a proper opportunity to make that witness available for questioning. Failure to do so may vitiate the decision.

A & S Enterprises Ltd sought summary judgment to enforce an adjudicator’s decision requiring Kema Holdings Ltd to pay £89,475.86 under a building contract. The adjudicator had convened a meeting at which evidence was given by the architect, while Kema’s principal participant did not take part in the telephone conference. The adjudicator stated that the witness’s failure to participate was unhelpful and that he viewed Kema’s submissions and arguments in that light. Kema resisted enforcement on grounds of apparent bias, breach of natural justice and failure to consider its submissions. The central issues were whether the adjudicator’s conduct gave rise to a real possibility of bias and whether Kema had been afforded a fair opportunity to present its case.

1. The application for summary judgment was dismissed and the action to enforce the adjudicator’s decision was dismissed.

2. The court’s function was supervisory. It was not appropriate to reconsider whether the adjudicator’s factual findings or legal conclusions were correct. The adjudicator had clearly found that a valid application for payment, supported by documentation, had been delivered to Kema and that the supporting material justified the amount claimed.

3. The applicable test for bias was whether the circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility of bias. The relevant passage in the adjudicator’s decision had to be assessed as a whole and in its factual context, rather than sentence by sentence.

4. The adjudicator’s description of the witness as having chosen not to participate, his statement that no proper explanation had been offered, and his conclusion that he would view Kema’s submissions and arguments in that light indicated that he intended to take a dim view of those submissions because of the witness’s non-attendance. The reference to submissions and arguments naturally included legal submissions, not merely factual matters.

5. The adjudicator’s earlier communications had indicated that the meeting was principally intended to hear from the architect. They had not indicated that the other witness’s oral participation was crucial. If, after the meeting, the adjudicator considered it important to hear from that witness, he should have said so and given Kema an opportunity to make the witness available for oral questioning. His failure to do so breached natural justice.

6. Those defects vitiated the adjudicator’s decision. The enforcement action therefore could not succeed.