Willow Corp S.À.R.L. v MTD Contractors Limited

In adjudication enforcement proceedings, the court will ordinarily enforce an adjudicator’s decision under the statutory construction adjudication scheme. A challenge based on natural justice succeeds only in the plainest cases, where the adjudication was obviously unfair. A short, self-contained construction issue may nevertheless be determined in Part 8 proceedings.

On contractual construction, practical completion is not achieved merely because the parties agree a list of outstanding works. The contractor must achieve practical completion by the contractual date, subject only to works expressly permitted to remain outstanding. Where an adjudicator makes an error confined to one separable part of the decision, the court may enforce the clearly identifiable balance.

Willow engaged MTD to design and build a hotel under a JCT Design and Build contract. Following delay and disputes concerning extensions of time, loss and expense, and completion, the parties entered into a supplementary agreement in June 2017.

An adjudicator construed that agreement as requiring certification of practical completion on 28 July 2017 provided that an agreed list of outstanding works existed. He rejected Willow’s claim for liquidated damages and ordered payment to MTD. Willow commenced Part 8 proceedings seeking declarations concerning construction and enforceability. MTD commenced Part 7 proceedings to enforce the adjudication.

The issues were whether the supplementary agreement had the adjudicator’s meaning, whether natural justice had been breached, and whether any unenforceable part of the adjudication could be severed.

1. Late evidence. MTD’s late evidence in both the Part 8 proceedings and the summary judgment application was excluded. The applications were unsupported by the required application notice or evidence, and admitting the material would have disrupted the agreed order of evidence and risked adjournment. Applying the principles in Denton v TH White Ltd [2014] EWCA Civ 906, the default was serious, insufficiently explained, and contrary to the interests of justice.
2. Part 8 construction issue. The contractual construction issue was short, self-contained, and suitable for final determination in Part 8 proceedings. The remaining declarations concerning factual completion, enforceability, and natural justice were matters for the Part 7 enforcement proceedings.
3. Construction. The June agreement extended the date for achieving practical completion to 28 July 2017. It did not deem practical completion to occur on that date. The agreement distinguished between works required to be completed by 28 July and works expressly permitted to continue afterwards, including the gym, spa, testing, and commissioning. Agreement of a list of outstanding works was not a wholesale exclusion from the obligation to achieve practical completion. The construction advanced by the adjudicator undermined the agreement’s purposes of extending the completion date, agreeing a timetable for outstanding works, and settling financial liabilities.
4. The court applied the contractual interpretation principles restated in Arnold v Britton [2015] UKSC 36. Natural and ordinary meaning, the other contractual provisions, the agreement’s purpose, the factual matrix, and commercial common sense all supported the court’s construction.
5. Natural justice and enforcement. The compressed timetable, admission of evidence at reply stage, and permission for a surrejoinder did not make the adjudication obviously unfair. Willow had a reasonable opportunity to answer the case and, in relation to the disputed surrejoinder issues, already had the benefit of addressing the relevant matters. Errors in assessing loss or failure to deal expressly with every point were not sufficient grounds to refuse enforcement.
6. Severance. Although the adjudicator erred on contractual construction, the error affected only the dismissal of the liquidated damages claim. The balance of the decision was a clearly identifiable core that was not infected by the error. The court therefore severed the defective part and enforced the balance of the adjudication decision.