J J Rhatigan & Co (UK) Ltd v Rosemary Lodge Developments Ltd

An adjudicator’s decision will ordinarily be enforced by summary judgment. The court does not reconsider its merits. Resistance is confined to exceptional cases, including jurisdictional error and a material breach of natural justice. The breach must be plain, material to the outcome, and sufficiently serious to make enforcement unfair. An inadvertent failure to mention or weigh an aspect of evidence will generally be an error within the adjudicator’s jurisdiction, rather than a breach of natural justice. A failure to address a truly decisive defence may present a different question, but the defence must genuinely be central to the dispute. The adjudicator’s decision was enforced because the material defence had been considered and the allegedly overlooked evidence added nothing material.

Rosemary Lodge Developments Ltd resisted summary judgment enforcing an adjudicator’s decision requiring it to pay J J Rhatigan & Co (UK) Ltd £1,693,659.69 plus VAT. The adjudicator had concluded that the parties reached a binding agreement for a final account of £8.6 million, subject to retention and previous payments, in full and final settlement of their claims and counterclaims.

Rosemary Lodge alleged breaches of natural justice. It argued that the adjudicator had made an unfair comment about witness collaboration and had failed to address a defence that no binding agreement could arise before execution of a deed of variation and approval by funders. The central issue was whether any omission or failure to address the evidence amounted to a material breach making enforcement unfair.

1. Enforcement principle. The court entered summary judgment for J J Rhatigan. Under the approach in Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358, an adjudicator’s decision should be respected and enforced unless it is plain that the wrong question was decided or the adjudicator’s process was obviously unfair. The court does not determine whether the adjudicator reached the correct result on the facts or law.
2. Natural justice threshold. Applying Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC), Rosemary Lodge had to establish a breach of natural justice, a material breach, and unfairness in enforcing the decision. A material issue is one which is decisive or of considerable potential importance, rather than peripheral.
3. Witness comment. The adjudicator’s observation that two witnesses may have collaborated did not amount to a finding of dishonesty or fabrication. It merely explained why the evidence might receive less weight. In any event, the adjudicator expressly treated the relevant evidence as irrelevant, so any procedural complaint could not be material.
4. Failure to address evidence. The adjudicator had considered the defence that no binding agreement existed until a deed of variation was executed. His references to the complete email, the relevant witnesses, and a binding oral agreement showed that he had addressed and rejected that case. The further evidence about funder approval was, at most, an evidential explanation and did not constitute a separate crucial defence.
5. The court considered the reasoning in Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWHC 778 (TCC) and Balfour Beatty Construction Northern Ltd v Modus Corovest (Blackpool) Ltd [2008] EWHC 3029 (TCC). An adjudicator’s failure to refer expressly to every piece of evidence, including where an aspect is overlooked inadvertently, will ordinarily be an error within jurisdiction. It is not a ground for refusing enforcement. The same approach was reflected in Jacques v Ensign Contractors Ltd [2009] EWHC 3383 (TCC).
6. The court left open whether the exceptional reasoning in Whyte and Mackay Ltd v Blyth and Blyth Consulting Engineers Ltd [2013] CSOH 54 should be followed. This case did not require that question to be decided. The omission relied upon was neither a failure to address a key defence nor material to the result.