Fileturn Ltd v Royal Garden Hotel Ltd

On an application to enforce an adjudicator’s award, the court must assess whether the resisting party has a real prospect of establishing apparent bias at trial. It must not conduct a trial or mini-trial. The applicable test is whether a fair-minded and informed observer, having considered all relevant circumstances, would conclude that there was a real possibility of bias. Challenges to adjudicators’ decisions on natural justice grounds must be examined critically because adjudication is intended to provide speedy, interim resolution. A former professional association, without continuing financial interest, knowledge of the appointment request or other significant connection, may be insufficient to establish apparent bias. Non-disclosure does not create an alternative or weaker test for apparent bias.

Fileturn applied under CPR Part 24 to enforce an adjudicator’s award of £219,635.14 plus VAT and interest. The adjudicator had previously been a director of Alway Associates, whose representative had acted for Fileturn and had requested his appointment in the adjudication. The defendant, Royal Garden Hotel Ltd, alleged apparent bias based on that former association, the representative’s repeated requests for his appointment, alleged inaccuracies in disclosure, and the adjudicator’s statement that he was a practising barrister.

The central issues were whether the defendant had a real prospect of proving apparent bias at trial and whether non-disclosure gave rise to a separate, weaker test under the principles discussed in Smith v Kvaerner [2006] EWCA Civ 242.

1. Summary judgment test. The court assessed whether Royal Garden Hotel had a real prospect of successfully defending enforcement at trial. It was required to assess the likely outcome, not conduct a trial or mini-trial: Three Rivers DC v Bank of England [2003] AC 1. Challenges to adjudicators’ awards based on natural justice should be examined critically, and summary enforcement should be resisted on apparent-bias grounds only where the objection is properly arguable and the case is plain.
2. Apparent bias. The governing test was whether the informed and fair-minded observer, having considered all relevant circumstances, would conclude that there was a real possibility of bias: Porter v Magill [2002] 2 AC 357, approving Re Medicaments [2001] 1 WLR 700. The court must consider the adjudicator’s explanation as one of the circumstances, viewed from the observer’s perspective.
3. Application. The adjudicator’s former co-directorship with the representative had ended six years earlier. There was no continuing financial interest, significant subsequent contact, evidence that the adjudicator knew of the repeated appointment requests, or special connection with either party. The fair-minded and informed observer would regard the allegation as fanciful speculation. The alleged errors in the RICS questionnaire and description of the adjudicator’s professional status did not bear materially on apparent bias.
4. Professional relationships between adjudicators, judges and practitioners do not ordinarily establish bias. Adjudicators are professional persons expected to act with an open mind: Amec Capital Projects Ltd v Whitefriars City Estates [2004] EWCA Civ 1418; Taylor v Lawrence [2002] EWCA Civ 90.
5. The suggested separate, weaker test based on non-disclosure was rejected. Smith v Kvaerner [2006] EWCA Civ 242 did not establish that non-disclosure automatically rendered a decision unenforceable. The ordinary apparent-bias test remained applicable.
6. Royal Garden Hotel had no real prospect of successfully defending the enforcement claim. Judgment was entered for Fileturn for £219,635.14 plus VAT and interest. Costs were left for further submissions.

Not stated in the judgment. This was a first-instance application for summary judgment under CPR Part 24.