Dawnus Construction Holdings Ltd v Marsh Life Ltd

A party to an adjudication cannot ordinarily approbate and reprobate the adjudicator’s decision. Where, without an express reservation of rights, it invites correction under the slip rule, it elects to treat the decision as valid and may be precluded from later challenging enforcement, including for alleged breaches of natural justice. Enforcement will generally follow where the adjudicator decided the referred issue and broadly complied with natural justice. A challenge requires a breach that is material and causative of prejudice. An inaccurate description of a party’s argument will not necessarily invalidate the decision if the adjudicator substantively decided the contractual issue referred.

Dawnus Construction Holdings Ltd applied for summary judgment to enforce an adjudication decision requiring Marsh Life Ltd to pay more than £1 million, together with the adjudicator’s fees and expenses. Marsh Life resisted enforcement, alleging that the adjudicator had failed to consider its defences to loss and expense claims arising from an electricity-cable delay and consequential winter working.

Before the enforcement hearing, Marsh Life had invited the adjudicator to revise the decision under the slip rule, without expressly reserving its right to challenge enforcement. The central issues were whether that conduct amounted to an election to accept the decision as valid and, alternatively, whether the alleged failures to address Marsh Life’s defences amounted to material breaches of natural justice.

1. Summary judgment granted. Dawnus was entitled to enforce the adjudicator’s revised decision.
2. Marsh Life’s distinction between jurisdictional objections and natural-justice objections was conceptually unsound. Both challenges alleged that the decision was a nullity. By inviting correction under the slip rule without an express reservation, Marsh Life had elected to treat the decision as valid and waived or abandoned its right to challenge enforcement. A party cannot simultaneously approbate and reprobate the relevant adjudication decision. In the absence of an express reservation, it must accept or contest the whole relevant decision.
3. Alternatively, the alleged natural-justice failures did not bar enforcement. The applicable standard requires a breach that is more than peripheral and is material, significant or causative of prejudice. Enforcement remains appropriate where the adjudicator decided the issue referred and broadly acted in accordance with natural justice.
4. Although the adjudicator inaccurately described Marsh Life’s argument concerning the SSE cable, he had in substance decided the issue of entitlement to loss and expense. His conclusion was that the delay was a Relevant Matter under clauses 4.21.1 and/or 4.21.4 of the contract. Marsh Life was bound by that conclusion.
5. The winter-working claim was consequential on the SSE cable delay. Having decided that loss and expense was recoverable for the SSE delay, the adjudicator had rejected the substantive defence to the winter-working claim, notwithstanding the inaccurate description of Marsh Life’s position.
6. The parties were invited to agree an order reflecting the judgment, including costs, with short skeleton arguments to be filed if outstanding issues remained.