Dorchester Hotel Ltd v Vivid Interiors Ltd

The TCC has jurisdiction to intervene in an ongoing adjudication by granting declaratory relief concerning jurisdiction or a serious prospective breach of natural justice. That jurisdiction must be exercised very sparingly, and only in a clear-cut case where intervention is necessary to prevent significant prejudice or wasted costs.

Natural justice applies to adjudication, but its requirements must be reconciled with the process’s swift and summary nature. The adjudicator ordinarily decides whether the timetable permits a fair determination, subject to a continuing duty to act fairly. Where the alleged breach has not yet occurred and the timetable is tight but not demonstrably incapable of producing a fair result, the appropriate remedy is ordinarily to challenge enforcement after the decision.

The claimant had engaged the defendant to refurbish its hotel under a contract incorporating the JCT Standard Form of Building Contract (1998 Edition). The defendant referred a substantial final account dispute to adjudication, serving a 92-page Referral Notice with 37 lever arch files, including new material, witness statements and expert reports.

The claimant sought declarations under CPR Part 8 that the timetable created a serious risk of breach of natural justice, that any resulting decision would be unenforceable, and that the adjudicator could resign. The central issues were whether the TCC had jurisdiction to intervene before the adjudication concluded and whether the proposed timetable was so unfair that declaratory relief should be granted.

1. Jurisdiction. The TCC had jurisdiction to entertain a Part 8 application for declaratory relief during an ongoing adjudication. That included a case alleging a prospective breach of natural justice with a significantly prejudicial effect. The jurisdiction was consistent with the TCC Guide and with the need to prevent substantial wasted time and costs: see Vitpol Building Service v Samen [2008] EWHC 2283 (TCC), ABB Zantingh Ltd v Zedal Building Services Ltd [2001] BLR 66 and CJP Builders Ltd v William Verry Ltd [2008] BLR 545.
2. The jurisdiction had to be exercised very sparingly. The adjudication process should ordinarily operate without court intervention. Intervention was reserved for rare, clear-cut cases in which the adjudicator’s conduct or decision was fundamentally wrong in law.
3. Natural justice generally applied to adjudication, but its requirements were limited by the adjudication process’s pressure of time and summary character. Courts should approach allegations of breach with scepticism and give priority to the rough and ready adjudication process where the two were in tension. The court relied on Discain Project Services Ltd v Opec Prime Development Ltd [2001] BLR 287, Glencot Development and Design Company Ltd v Ben Barratt & Sons (Contractors) Ltd [2001] BLR 207, RSL (South West) Ltd v Stansell Ltd [2003] EWHC 1390 (TCC) and Balfour Beatty Construction Ltd v London Borough of Lambeth [2002] EWHC 597 (TCC).
4. The adjudicator’s view that the dispute could be fairly determined was an important factor. His duty to act fairly was continuing, and he might need to extend the timetable. The agreed timetable was tight, but the court could not conclude at that stage that it was incapable of producing a fair result. The approach in CIB Properties Ltd v Birse Construction Ltd [2005] 1 WLR 2252 supported leaving the assessment primarily to the adjudicator.
5. The declarations were refused. The claimant remained entitled, after the adjudication, to resist enforcement on natural justice grounds if it could establish an actual breach causing material prejudice. Costs were reserved.

First-instance decision. No prior appellate decision is stated in the judgment.