Michael John Construction Ltd v Golledge & Ors

In adjudication enforcement proceedings, the court should enforce an adjudicator’s decision unless the adjudicator decided a matter outside the referral or otherwise lacked jurisdiction. Errors of law within the referred dispute do not ordinarily prevent enforcement.

A dispute may contain several issues without becoming several disputes. The identity and liability of individuals acting for an unincorporated association may form part of a dispute under the construction contract. Where an agent contracts personally or on behalf of identified principals, the other contracting party may elect whom to pursue, subject to avoiding double recovery.

A prior decision by the same adjudicator does not itself establish apparent bias or prevent a later adjudication where the parties or issue differ. A stay based on the claimant’s finances was refused because the claimant’s position was not materially worse than at contracting and was substantially affected by non-payment.

The claimant contractor obtained two adjudication decisions concerning sums due under a construction contract for works at a rugby football club. The employer was identified as an unincorporated association, and the contract had been signed by the fourth defendant. The first adjudication proceeded against the fourth defendant and another trustee. After discovering who the trustees were when the contract was made, the claimant commenced a second adjudication against the first to fourth defendants.

The defendants challenged enforcement on jurisdictional grounds. They argued that the second adjudication involved more than one dispute, that the issue was not a dispute under the contract, and that the adjudicator could not reconsider matters dealt with previously. They also alleged bias and sought a stay of execution based on the claimant’s financial position.

1. Enforcement principles. The court applied the robust approach to adjudication enforcement. An adjudicator’s error of law does not deprive the decision of enforceability where the adjudicator answered the question referred. Enforcement may be refused where the adjudicator decided a dispute or issue outside the referral.
2. Liability of the defendants. The club’s constitution regulated the internal relationship between members and trustees. It did not govern the club’s legal relationship with the claimant, which had not been shown the constitution before contracting. A trustee contracting personally is prima facie personally liable. Where the fourth defendant acted as agent for the first, second and third defendants, those defendants were liable as principals, while the fourth defendant remained a person whom the claimant could elect to pursue. The claimant could elect to proceed against the first, second and third defendants or the fourth defendant, but not obtain double recovery.
3. Jurisdiction of the second adjudication. The reference concerned one dispute: how much, if anything, the employer owed the claimant. The identity and capacity of the liable individuals were constituent issues within that dispute. The issue was also a dispute under the contract because it concerned the employer’s obligation to pay under the contract. The second adjudication raised a new issue as against the first to third defendants, who had not been parties to the first adjudication. The fourth defendant’s liability was considered on a more precise basis and was not the same issue previously decided.
4. Bias and fairness. Applying the fair-minded and informed observer test, there was no real possibility of bias. The adjudicator had invited submissions on valuation, but the defendants concentrated on jurisdiction and bias and supplied no material capable of producing a different valuation conclusion. A previous decision by the adjudicator did not establish a closed mind.
5. Orders. Judgment was entered against the first, second and third defendants for £134,343.84 plus interest, pursuant to the claimant’s election. The first adjudication decision was not enforced, although the adjudicator had jurisdiction to make it. A stay of execution was refused.

Not stated in the judgment.