Kitt & Anor v The Laundry Building Ltd & Anor

An adjudicator must consider substantive defences properly raised by a responding party, including defences not advanced before the adjudication. The adjudicator retains jurisdiction to decide the admissibility, relevance and weight of the evidence. An erroneous decision about evidence will not ordinarily amount to a breach of natural justice.

A notice of adjudication cannot artificially limit the responding party’s right to defend a payment claim by excluding disputed items or set-offs. The notice must be read in its factual and commercial context. A party satisfies natural justice by giving the opposing party a fair opportunity to present its case; the opposing party may choose whether to use that opportunity.

Gary Kitt and EC Harris LLP claimed adjudicator’s fees from The Laundry Building Ltd, with Etcetera Construction Services Ltd joined as a Part 20 defendant. The adjudicator had valued a construction final account, considered disputed account items and set-offs, and ordered Etcetera primarily to pay his fees.

Etcetera contended that the adjudicator had exceeded his jurisdiction and breached natural justice by considering items which its notice said were not to be opened up. The central issues were whether the notice or the parties’ communications excluded those matters, whether the adjudicator had failed to consider the proper scope of the dispute, and whether his fees were recoverable.

1. Jurisdiction and defences. The notice of adjudication generally identifies the dispute, but it must be read in context. A disputed payment claim necessarily permits the responding party to raise any factual or legal defence to that claim. A referring party cannot prevent that by describing disputed parts of the account as outside the adjudicator’s jurisdiction.
2. Natural justice. The adjudicator must consider substantive defences properly put forward. However, deciding that evidence is inadmissible, unhelpful or of little weight is ordinarily a decision within jurisdiction. The court must distinguish failure to address a substantive defence from failure to mention every aspect of the evidence supporting it. Adjudication is conducted under tight time constraints and does not require meticulous treatment of every evidential point.
3. The notice was ambivalent and did not exclude disputed final-account items or set-offs. The adjudicator had notified the parties that he would consider all such matters and gave Etcetera a proper opportunity to respond. Etcetera chose not to provide full evidence on many items. There was therefore no breach of natural justice or excess of jurisdiction.
4. The parties’ agreement with the adjudicator was tripartite. Although the parties were jointly and severally liable for his fees, the party required by the decision to pay them was primarily liable. A party paying the adjudicator in the other party’s place could recover the payment contractually, by restitution or unjust enrichment, or under the Civil Liability (Contribution) Act 1978.
5. The claim was upheld. Judgment was entered for Mr Kitt and EC Harris against TLB, and for TLB against Etcetera. TLB was ordered to pay the claimants £9,000 in costs, and Etcetera was ordered to reimburse TLB that sum and pay £5,400 towards TLB’s costs.