Project One London Limited v VMA Services Limited

An adjudication award will ordinarily be enforced unless the adjudicator decided a question not referred or acted in an obviously unfair manner. An adjudicator may reach a conclusion on a basis not advanced by either party where the relevant material was before the adjudicator and the resulting issues were fairly canvassed. A misunderstanding or inadvertent failure to consider evidence is generally an error of fact or law, not a breach of natural justice.

Any breach must be material and go to the heart of the dispute. In assessing interim valuations, an adjudicator may make a rough and ready approximate assessment from inadequate evidence. The award remains binding until the dispute is finally resolved.

Project One London Limited sought enforcement of an adjudicator’s award concerning the true value of VMA Services Limited’s interim payment application under a mechanical works subcontract. The adjudicator directed VMA to repay £102,656.67.

VMA alleged breaches of natural justice, asserting that the adjudicator introduced an unargued air-conditioning pipework issue, ignored evidence concerning the value of a water tank and testing, and applied arbitrary percentage reductions. The central issues were whether the adjudicator had acted unfairly and, if so, whether any failing was sufficiently material to justify refusing enforcement.

1. Enforcement principles. An adjudication decision will not usually be enforced where the adjudicator decides the case on a factual or legal basis not advanced by either party without giving an opportunity to comment. However, the adjudicator may decide an issue on a different basis where the relevant material was before the adjudicator and the issues arising from it were fairly canvassed. The court must respect the rough and ready nature of adjudication and interfere only in plain or exceptional cases.
2. Air-conditioning valuation. The pipework issue had been extensively ventilated in relation to the water services. The adjudicator was entitled to conclude that those findings could affect the air-conditioning valuation. The parties had a sufficient opportunity to address the relevant material. The adjudicator was also entitled to make an approximate assessment between nil and the full amount claimed, using experience and the evidence as a whole.
3. Evidence and alleged guesswork. A possible misunderstanding or failure to consider evidence concerning the water tank did not establish natural injustice. A failure to consider evidence must ordinarily be deliberate, and an inadvertent failure will only exceptionally justify non-enforcement. The adjudicator was entitled to value the testing item at nil on the evidence and submissions before him.
4. Percentage reductions and materiality. The reductions described as arbitrary represented approximate valuation assessments made under time pressure. They did not involve the arbitrary exercise of state power and were not, without more, breaches of natural justice. In any event, none of the alleged failings went to the heart of the dispute. The interim valuation involved thirteen items and a range of possible figures consistent with natural justice.
5. Disposition. VMA had no real prospect of establishing a natural justice breach, and any alleged breach would in any event have been immaterial. Project One London Limited was entitled to enforcement of the award. Consequential matters were to be agreed, failing which they would be determined at a short remote hearing.