Victory House General Partner Ltd v RGB P&C Ltd

Part 8 is appropriate only where the issue is unlikely to involve a substantial dispute of fact. A party cannot reserve disputed factual issues for later proceedings after obtaining a decision on assumed facts. On enforcement of an adjudicator’s decision, the court should not determine alleged errors of law in the adjudicator’s construction unless that issue is properly before it. Natural justice requires an adjudicator to give the parties a fair opportunity to address a point that is decisive or of considerable potential importance. It does not require the adjudicator to choose between the parties’ submissions where the relevant issue and material have been fairly canvassed. Contractual interpretation may yield an answer not expressly advanced by either party.

Victory House General Partner Limited, the employer, engaged RGB P&C Limited to design and construct a hotel. Following a dispute about interim payment application 30, an adjudicator ordered payment to RGB. Victory House commenced Part 8 proceedings challenging the decision, including on the ground that the adjudicator had breached natural justice by adopting a construction of a memorandum of understanding which neither party had advanced.

The court held that the substantive declarations were unsuitable for Part 8 because they involved disputed facts and directed that they proceed under Part 7. The remaining issue was whether the adjudicator’s approach justified refusing enforcement.

1. The court declined to determine the substantive contractual issues under Part 8. The claim raised disputed questions of fact, and it was unsatisfactory to decide them on assumed facts while leaving the parties to challenge those findings later. That approach risked prejudice and was inconsistent with the Overriding Objective. The substantive declarations were therefore to proceed under Part 7.

2. On the enforcement application, the court held that it was not appropriate to decide whether the adjudicator had erred in law in construing the memorandum of understanding. The issue was confined to alleged breach of natural justice, applying the approach in Carillion v Devonport Royal Dockyard [2005] EWCA Civ 1358.

3. A material breach of natural justice may arise where an adjudicator decides a decisive or potentially important point which is not peripheral and on which the parties have not had a fair opportunity to comment. However, an adjudicator is not confined to accepting one party’s formulation. As explained in AECOM Design Build Limited v Staptina Engineering Services Ltd [2017] EWHC 723 (TCC), contractual interpretation may produce more than two possible answers. The adjudicator may adopt an answer not expressly advanced where the relevant material and issue have been fairly canvassed.

4. The parties knew that the proper construction of the memorandum was central to the adjudication. The adjudicator’s questions expressly invited submissions on the purpose, scope and effect of recital D. RGB addressed the possibility that the recital had operative effect, while Victory House chose to restate the factual background and did not seek permission to respond to RGB’s answer. The adjudicator therefore had not gone off on a frolic of his own. The guidance in Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC) was satisfied.

5. RGB was entitled to summary judgment enforcing the adjudicator’s decision for £682,802.88 plus VAT and interest. Costs and consequential directions were reserved for formal handing down if not agreed.

This was a first-instance enforcement decision. The court had earlier directed that the substantive declarations proceed under Part 7, while determining the natural justice issue on RGB’s application for summary judgment.