Barry M Cosmetics Ltd v Merit Holdings Ltd

In construction adjudication, a dispute about the valuation of a final account may be referred before any entitlement to payment has arisen. A fair hearing is assessed in the context of adjudication’s strict timetable and requirement for a speedy decision. Natural justice requires each party to have the arguments necessary to meet the opposing case, but it does not confer a right to respond to every submission or to conduct unlimited rounds of pleadings. Enforcement will be refused only where a breach of fairness has had a significant effect on the adjudication’s outcome.

The claimant sought summary judgment to enforce an adjudicator’s decision concerning the value of the defendant contractor’s final account. The defendant argued that no dispute existed because no entitlement to payment had arisen. It also alleged a breach of natural justice because the adjudicator limited its rejoinder to the claimant’s delay analysis and other submissions.

The adjudicator considered the parties’ delay reports and issued his decision within the agreed timetable. The issues were whether there was a referable dispute, whether the adjudication had been conducted fairly, and whether enforcement was suitable for summary determination.

1. Dispute. The court followed Working Environments Ltd v Greencoat Construction Ltd [2012] EWHC 1039 (TCC). The language of paragraph 1 of the Scheme for Construction Contracts Regulations 1998 did not require an entitlement to payment to have arisen before a dispute about valuation could be referred. There was a clear dispute about the correct value of the final account.
2. Fair hearing. Parties to adjudication are entitled to a fair hearing, but fairness must be assessed against the process’s strict and limited timetable. A party resisting enforcement must show more than a technical breach; the alleged breach must have had a significant effect on the outcome. The court adopted the contextual approach described in Macob Civil Engineering v Morrison Construction [1999] BLR 93 and Cantillon v Urvasco [2008] BLR 250.
3. An important element of natural justice is the opportunity to comment on material which the adjudicator is to consider but which has not been generated by either party. That principle, discussed in RSL v Stansell [2003] EWHC 1390 (TCC), did not require an unlimited response in this case. The adjudicator had both sides of the argument and did not need further submissions by way of refinement. The approach was consistent with Amec v Thames Water [2010] EWHC 419 (TCC).
4. The adjudicator’s limitation of the rejoinder was fair and proper. In any event, the defendant ignored the limitation, advanced submissions on the claimant’s delay report, and those submissions were considered in the final decision. No material breach of natural justice was established.
5. The application was governed by CPR 24. There was no issue of fact requiring a trial, and enforcement was suitable for summary judgment. Summary judgment was granted to the claimant.