Manor Co-Living Limited v RY Construction Limited

A responding party to an adjudication may raise any properly arguable defence to the referred claim. That does not widen the dispute. An adjudicator must consider a material and fundamental element of such a defence, but need not decide an issue rendered unnecessary by an earlier finding. Common-law termination for repudiatory breach requires both repudiatory conduct and a communicated acceptance. Where the alleged acceptance is rejected, the adjudicator need not determine whether repudiatory conduct occurred. A court assessing natural justice must examine the substance of the decision and the case actually advanced, rather than minor sub-issues or an unadvanced alternative case.

Manor Co-Living Limited brought a Part 8 claim challenging an adjudicator’s decision concerning the purported termination of a construction contract. The adjudicator found that the contractual termination was premature and ineffective, and that Manor had breached the contract by preventing RY Construction Limited from accessing the site.

Manor argued that the adjudicator had failed to consider its defence that RY Construction was in repudiatory breach, and that Manor’s conduct amounted to acceptance of that repudiation. The central issue was whether the adjudicator had failed to consider a material defence, thereby breaching natural justice.

1. The Part 8 claim failed. There was no breach of natural justice.
2. A responding party may raise any properly arguable defence to the claim referred to adjudication. It is not entitled to widen the adjudication by introducing a separate dispute, but it may rely on all available defences. A referring party cannot determine unilaterally which elements of a defence fall within the adjudicator’s jurisdiction. The court adopted the principles identified in Global Switch Estates Ltd v Sudlows Ltd [2021] BLR 111 (TCC).
3. Common-law termination required Manor to establish both that RY Construction was in repudiatory breach and that Manor had communicated its decision to accept that repudiation. The adjudicator was entitled to consider the acceptance issue first. Having rejected the case that the termination notice communicated acceptance, he correctly treated the question of repudiatory conduct as unnecessary.
4. The case actually advanced in the adjudication was that the termination notice itself constituted acceptance. Manor did not advance the distinct case that barring access to the site constituted acceptance. It could not complain of a failure to determine a case that had not been put.
5. The adjudicator’s discussion of conduct capable of amounting to acceptance was conditional. He rejected Manor’s renunciation case on its merits and made no finding that Manor’s conduct in fact accepted RY Construction’s repudiatory breach. Paragraph 95 of the decision concerned Manor’s alleged repudiatory breach and did not alter that conclusion.

The adjudicator had considered the substance of the alternative common-law termination case, rejected it on the basis that there had been no valid acceptance, and was not required to determine the underlying repudiatory conduct.