Ellis Building Contractors Ltd v Goldstein

An adjudicator must comply with natural justice, but a breach arises only where an undisclosed issue is material and decisive, or of considerable potential importance, and the parties were denied a fair opportunity to address it. A party cannot complain that an issue was not considered if the issue was raised and the party chose not to respond. The improper submission of without-prejudice material is strongly discouraged and may affect enforcement where the adjudicator’s decision was primarily based upon it. Apparent bias is assessed objectively by asking whether the material facts give rise to a legitimate fear that the adjudicator might not have been impartial.

Ellis Building Contractors Ltd applied for summary judgment to enforce an adjudicator’s decision requiring Vincent Goldstein to pay £121,566.86 plus VAT, interest and the adjudicator’s fee. The dispute concerned whether the parties’ contract was governed by signed contract documents prepared by the employer’s architect, or remained subject to a financial cap in a second letter of intent.

Goldstein alleged that the adjudicator decided the dispute on an unargued contractual basis and that the adjudicator was apparently biased after Ellis submitted a without-prejudice letter. The central issues were whether the adjudicator had denied natural justice and whether the decision should be refused enforcement.

1. Natural justice. The adjudicator had jurisdiction to decide the contractual dispute. Ellis’s Notice of Adjudication and Referral expressly relied on the Intermediate Building Contract prepared by the architect and signed by Ellis. The absence of any reference in those documents to the second letter of intent or its cap was addressed in Ellis’s Reply. Goldstein had the opportunity to respond but chose not to do so. The adjudicator therefore did not decide the case on an issue wholly outside the adjudication.
2. The question whether the adjudicator was right in fact or law was distinct from enforceability. A party that elects not to address a point raised in the adjudication cannot later complain that the adjudicator considered it.
3. Without-prejudice material and apparent bias. The letter was improperly submitted and was legally inadmissible. Parties should not deploy without-prejudice communications in adjudication. Nevertheless, the objective test was whether the material facts gave rise to a legitimate fear that the adjudicator might not have been impartial. The court considered the absence of any prompt objection, the adjudicator’s failure expressly to rely on the letter, and the fact that the relevant defence was supported by open evidence.
4. The adjudicator’s decision showed that he determined the dispute by considering the successive letters of intent and the contract documents, not by relying on the without-prejudice communication. Its submission therefore did not establish apparent bias or invalidate the decision.
5. Ellis was entitled to summary judgment for the adjudicated sums. The counterclaim concerning the contractual force of the second letter of intent was directed to trial. Costs were awarded to Ellis on the standard basis, summarily assessed at £10,000. Payment of the judgment sum was not deferred.

Not an appeal. The judgment concerned enforcement of an adjudicator’s decision and directions for trial of Goldstein’s counterclaim.