KNN Coburn LLP v GD City Holdings Ltd

A referral notice under the Scheme starts time running when it identifies and refers the dispute in writing. Failure to provide supporting documents at the same time is ordinarily a procedural defect, unless the omission is so fundamental that the adjudication is invalid.

A party may acquiesce in an adjudicator’s timetable, including an implied extension of time, by participating fully without timely objection while reserving other jurisdictional points. An adjudicator’s inadvertent failure to address a subordinate issue will ordinarily not invalidate the decision unless it materially affects a major issue in the dispute.

KNN sought summary judgment to enforce an adjudicator’s decision awarding it liquidated damages. GD City resisted enforcement on four grounds: the decision was issued one day late; the adjudicator reopened matters decided in an earlier adjudication; and he failed to consider a contractual defence, allegedly causing a breach of natural justice.

The court considered the date on which the referral was made, whether GD City had acquiesced in the adjudicator’s timetable, the scope of the earlier adjudicator’s decision, and the effect of the alleged omission.

1. Timing of the decision. The document sent on 31 January 2013 was a referral notice within paragraph 7(1) of the Scheme. It identified the dispute and referred it in writing. The supporting documents required by paragraph 7(2) were procedurally associated documents. Their absence did not invalidate the referral because the dispute could be understood from the referral itself. The decision was therefore due by reference to 31 January.
2. A party cannot participate fully in an adjudication under a timetable which plainly allows the adjudicator to decide after the ordinary 28-day period, remain silent about the timetable, and then raise lateness after receiving an unfavourable decision. GD City’s participation, including obtaining an extra day to respond, amounted to acquiescence. KNN’s conduct also constituted consent under paragraph 19(2). The decision issued on 1 March was accordingly in time.
3. Earlier adjudication. The previous adjudicator decided only that liquidated damages could not be withheld from the final account without a valid withholding notice. He did not decide KNN’s entitlement to recover liquidated damages under clause 2.29 or the correct amount of those damages. The later adjudicator was therefore entitled to decide those issues.
4. Natural justice. The court adopted the principles in Pilon Ltd v Breyer Group Ltd [2010] EWHC 837. An inadvertent failure to address one issue will ordinarily not make an adjudication unenforceable. The failure must be material and have potentially affected the overall result. The relevant question is whether the omission meant that the adjudicator failed effectively to address a major issue in the dispute. GD City had not shown that the omitted defence met that threshold.
5. Clause 2.17.4 applied only where a consultant or subcontractor had carried out work connected with the employer’s claim. It was generally inapplicable to a liquidated damages claim based on delay, and was inapplicable on the evidence. All grounds of challenge failed. KNN was entitled to enforce the decision.