JA Ball Limited (in administration) v St Philips Homes (Courthaulds) Ltd

An adjudication award will ordinarily be enforced summarily, but enforcement must yield where the adjudicator decides the dispute on a novel, determinative basis which the parties had no fair opportunity to address. A point is not fairly canvassed merely because the underlying contract or documents were available.

A breach of natural justice is material where the unanswered point has a reasonable prospect of success, unless it is so obviously unarguable that it could not have affected the result. Insolvency may also justify refusing or staying enforcement where it deprives the respondent of security for a cross-claim.

The claimant, a building contractor in administration, sought summary judgment to enforce an adjudication award requiring the defendant employer to pay approximately £102,829 plus interest, VAT and fees. The underlying contract concerned the conversion of commercial premises into apartments.

The adjudicator rejected the parties’ competing contractual routes to payment but awarded a balance under a different analysis, treating the contractual payment machinery as having fallen away. The defendant argued that this basis had not been advanced or fairly canvassed, and relied additionally on the claimant’s insolvency, loss of security for its cross-claim and alleged champerty in the funding arrangements.

1. Natural justice. The court applied the robust approach to adjudication enforcement, subject to jurisdictional error and material breach of natural justice. The parties’ cases concerned common-law damages or payment under clauses 8.7.4 and 8.7.5. The adjudicator instead held that clause 8 had fallen away and awarded payment on a residual contractual basis.
2. The parties’ possession of the contract and their responses to a general question about clause 8.3.1 did not give notice of that approach. It was a novel and determinative basis, not an intermediate position between the cases advanced. The failure to invite submissions was therefore a breach of natural justice.
3. Following Corebuild and ABB, the breach was material because the unanswered point had a reasonable prospect of success. The court did not decide the point itself. The defendant also had a realistically arguable case that, for an insolvent contractor, clauses 8.7.3 to 8.7.5 applied under clause 8.5.3 whether or not a termination notice had been served.
4. The award was unenforceable and the application for summary judgment was dismissed.
5. Had the natural-justice challenge failed, the court would have given judgment but stayed enforcement. Insolvency may displace the pay-now-argue-later approach where enforcement deprives the respondent of security for a cross-claim. The proposed ring-fencing and guarantees were inadequate. The damages-based agreement was non-compliant with the Damages-Based Agreements Regulations 2013, but the funding arrangement was not realistically arguable as an abuse of process.