ISG Retail Ltd v FK Construction Ltd

An adjudicator’s decision is ordinarily enforced despite an error. However, the court may correct an incontrovertible error on a summary enforcement application where the issue is short and self-contained, requires no oral evidence or further elaboration, and it would be unconscionable to ignore it. An issue of law is not automatically excluded from this limited exception. Where the error permits a clear adjustment based on figures already found by the adjudicator, the court may enforce the decision in the corrected amount and sever the erroneous element.

ISG Retail Ltd sought summary judgment enforcing an adjudicator’s decision arising from subcontract works carried out by FK Construction Ltd. The decision awarded sums for pallet store defects and rooflight works. FK accepted the pallet store award but resisted enforcement of the rooflight award, alleging natural justice breaches and an erroneous approach to quantifying damages. FK also pursued a Part 8 claim concerning the adjudicator’s approach and sought joinder or consolidation.

The central issues were whether the adjudicator had failed to consider FK’s set-off case, whether his damages calculation contained an error capable of being raised as a partial defence to enforcement, and whether any error made the rooflight decision wholly unenforceable.

1. Natural justice. The adjudicator had considered FK’s set-off submissions and rejected them. Disagreement with the way an adjudicator addresses a submission does not establish a failure of natural justice.
2. Correction on enforcement. Applying the limited exception identified in Hutton Construction Ltd v Wilson Properties (London) Ltd [2017] EWHC 517 (TCC), an enforcement court may address an incontrovertible error where:
   • the issue is short and self-contained and arose in the adjudication;
   • it requires no oral evidence or elaboration beyond the enforcement hearing; and
   • it would be unconscionable for the court to ignore it.
3. The fact that the issue is one of law does not prevent it being raised. An error in the construction of a contract clause may fall within the exception where the construction is beyond rational justification.
4. The adjudicator had correctly identified the damages methodology but had used the value of work performed by FK rather than the amount actually paid for that work. This caused double-counting because part of the unpaid value was already included in the total contract price. The correct award for the rooflight works was therefore £120,713.06, not £370,180.
5. The error was readily severable and capable of correction from the adjudicator’s own figures. Summary judgment was granted for the corrected rooflight sum, the undisputed pallet store sum, and the adjudicator’s fees, together with interest. FK was ordered to pay ISG’s costs. No order was made on the consolidation application.