Volker Stevin Ltd v Holystone Contracts Ltd

Adjudicators’ decisions should be enforced unless it is plain that the adjudicator decided a question outside the reference or acted in an obviously unfair manner. A party cannot resist enforcement by rearguing the merits, pleading financial difficulty, or relying on an amended claim where it had notice and an opportunity to respond. An adjudicator may seek further information and take the initiative in ascertaining the facts, provided the process remains fair. Knowledge that a without-prejudice offer was made does not establish apparent bias where the adjudicator treats that fact as irrelevant and decides the substantive issues independently.

Volker engaged Holystone under an NEC3 subcontract for drainage works. Volker terminated the subcontract, and a first adjudicator decided that the termination was valid. A second adjudicator awarded Volker £561,993.48 plus interest for the financial consequences of termination. Holystone resisted enforcement and sought an adjournment, alleging procedural unfairness, an impermissible change to the monetary claim, apparent bias arising from knowledge of a without-prejudice offer, and the risk of insolvency. Volker applied for summary judgment under CPR Part 24.

1. Enforcement principles. The court followed the approach summarised by Chadwick LJ in Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358. An adjudicator’s decision must be enforced unless the question decided was plainly outside the reference or the procedure was obviously unfair. The unsuccessful party must pay first and pursue any final arbitration or court proceedings afterwards. The merits of the adjudicator’s decision were therefore irrelevant to enforcement.
2. Adjournment and further material. Holystone had no entitlement to a two-day hearing to reargue the adjudication. The adjudicator was entitled, and where necessary obliged, to request information needed to decide the referred dispute. The NEC procedure permitted him to consider further information and take the initiative in ascertaining the facts. Holystone received the material and had opportunities to comment. There was no excess of jurisdiction or breach of natural justice. The court applied the fairness principle illustrated by Multiplex Constructions (UK) Limited v West India Quay Development Company (Eastern) Limited [2006] EWHC 1569 TCC.
3. Amended claim. The revised spreadsheet reduced the claim and corrected matters raised in Holystone’s response. The notice had not confined the referral to a fixed sum, and Holystone had been able to address the revised figures. The adjudicator therefore had jurisdiction to determine the amended amount.
4. Without-prejudice offer. Applying the fair-minded and informed observer test in In Re Medicaments and Related Classes of Goods (No. 2) [2001] 1 WLR 700, knowledge that an offer had been made did not create a real possibility of bias. The adjudicator treated the offer as irrelevant and gave a detailed, independent decision. The court was reinforced in that conclusion by Specialist Ceiling Services Northern Limited v ZVI Construction (UK) Limited [2004] BLR 403.
5. Insolvency. Holystone produced no evidence that enforcement would cause liquidation. In any event, financial difficulty could not justify withholding enforcement, and no stay application had been made.
6. The claim for summary judgment was allowed in the sum of £563,441.66 inclusive of interest, payable within seven days.