Platform Interior Solutions Ltd v ISG Construction Ltd

Payment of an adjudicator’s fees does not, without more, establish an election to accept the decision as valid. The court must assess the objective inference from the payment, including any contemporaneous reservation and the nature of the challenge. A material breach of natural justice requires the adjudicator to decide a decisive or potentially important point without giving the parties a fair opportunity to address it. An adjudicator may reach a contractual interpretation not advanced by either party where the relevant material and issues have been fairly canvassed. A decision is sufficiently reasoned if it enables an objective reader to understand what was decided and why; an error of fact or law is not, by itself, a basis to resist enforcement.

Platform sought to enforce an adjudicator’s decision requiring ISG to pay £417,541.33 plus VAT under a construction sub-contract. The adjudicator had found that Platform had unlawfully rescinded the sub-contract and that ISG was entitled to terminate it. She then calculated the termination valuation by comparing the value of the works had Platform completed them with ISG’s actual costs to complete.

ISG resisted enforcement and issued related Part 8 proceedings. It alleged waiver, failure to exhaust jurisdiction, breach of natural justice because the valuation method had not been advanced by either party, and inadequate reasons. The central questions were whether payment of the adjudicator’s fees preserved ISG’s objections and whether the decision was invalid or unenforceable.

1. Waiver. ISG had not waived its rights. Payment of an adjudicator’s fees may, in an appropriate case, evidence an election to treat the decision as valid, but the question is the objective inference to be drawn from the payment. Here ISG had promptly stated that the decision was invalid and unenforceable and expressly reserved its rights before paying. The court also emphasised the policy of avoiding any discouragement of payment for an adjudicator’s work.
2. Natural justice and jurisdiction. The alleged failure to exhaust jurisdiction substantially overlapped with the natural justice complaint. A material breach requires the adjudicator to decide a decisive or potentially important point which the parties had not been given a fair opportunity to address. An adjudicator is not confined to accepting one party’s formulation. The adjudicator may decide an important contractual issue on the material before her and on a basis advanced by neither party, provided the relevant material and issues have been fairly canvassed. Both parties had addressed the valuation approach, and the unexpected result did not create a breach of natural justice.
3. Reasons. The adjudicator’s decision was intelligible. She explained the valuation method and identified the figures producing the award. The fact that her reasoning might be legally wrong was irrelevant to this enforcement challenge. A decision need not address every argument, but must disclose the route by which the conclusion was reached. Reasons may be simple and adjudicators are not judged by the strict standards applicable to judges or arbitrators.
4. The challenge to validity and enforceability was rejected. The court invited submissions on the appropriate order in light of the imminent Part 8 proceedings.

First-instance enforcement proceedings. No appellate history was stated in the judgment.