Corebuild Ltd v Cleaver & Anor

In adjudication enforcement proceedings, an adjudicator’s error in addressing evidence or a sub-issue will ordinarily not make the decision unenforceable if the adjudicator generally attempted to answer the dispute referred. A failure to consider part of the case must result from an erroneously restrictive view of jurisdiction, and must be deliberate and material.

A breach of natural justice occurs where an adjudicator decides a determinative issue on a factual or legal basis not advanced by either party, without giving the affected party an opportunity to respond. On a summary judgment application, it is generally sufficient to show that the undisclosed point was properly arguable; the court should not determine its merits.

Corebuild Limited applied for summary judgment to enforce an adjudication award requiring Mr Tom Cleaver and Ms Hanna Osmolska to pay approximately £80,000. The adjudicator had found that the defendants’ termination of a construction contract was wrongful and repudiatory.

The defendants alleged that the adjudicator had misunderstood the contractual termination issue, failed to consider relevant evidence, determined repudiation on an unargued factual basis, and dealt unfairly with a substantial quantum case. They also argued that Corebuild’s financial position justified refusing summary judgment or granting a stay of execution.

The central issues were whether the adjudicator’s approach amounted to a material breach of natural justice and, alternatively, whether Corebuild’s insolvency justified a stay.

1. Grounds 1 and 2. The adjudicator had attempted to answer the correct overriding questions, namely whether the defendants had terminated lawfully and, if not, whether the termination was repudiatory. Any failure to engage fully with evidence concerning the progress of the works was, at most, an inadvertent error while addressing the relevant sub-issues. It did not demonstrate an erroneously restrictive view of jurisdiction and did not render the decision unenforceable.
2. Ground 3. The parties agreed that the defendants had acted in good-faith reliance on the contract administrator’s position. The adjudicator nevertheless found that there had been no actual reliance, based on an inference that the defendants had suggested or approved the termination. That factual basis had not been advanced, supported by evidence or addressed in submissions. Since it determined the repudiation issue, the defendants had been denied a fair opportunity to respond. This was a clear and material breach of natural justice.
3. Following ABB Ltd v BAM Nuttall Ltd [2013] EWHC 1983 (TCC), the court should be slow to speculate about what the adjudicator would have decided after hearing argument on the undisclosed point. Ordinarily, showing that the point was properly arguable was sufficient. The decision was therefore unenforceable.
4. Ground 4 was rejected. The defendants had not shown that the dispute had failed to crystallise or that the quantity of material itself constituted a breach of natural justice.
5. Although unnecessary to the result, a stay would in any event have been granted under Wimbledon Construction Company 2000 Ltd v Derek Vago [2005] EWHC 1086. Corebuild’s insolvency was undisputed, and no special circumstances justified departing from the usual approach. The application was dismissed.

First-instance decision. No prior appellate decision is stated in the judgment.