Enforcement proceedings: enough is enough

United Kingdom

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Following the ever increasing trend of losing parties attempting to use enforcement proceedings to try to side-step the decision made by an adjudicator, the Technology and Construction Court (TCC) now appears to have called time on this particular bandwagon.

In Hutton Construction Limited v Wilson Properties (London) Limited, Coulson MJ has put his foot down on parties trying to resist the enforcement of an adjudicator's decision on the basis that the adjudicator simply 'got it wrong'. This, according to his Lordship, is the cost of doing business in the construction industry and restates the principle, first laid down in Bouygues v Dahl-Jenson, that getting a quick answer is more important than getting a right answer.

This, of course, presupposes that the adjudicator had the proper jurisdiction and that he/she complied with the rules of natural justice. Where this is the case, the 'pay now argue later' principle should win out and your recourse following a decision you believe to be wrong is to a final hearing of the issues in court or arbitration. There are, however, very narrow exceptions to this rule and this judgment provides welcome clarity regarding the Court's position as to when these should apply. Exceptions include:

  1. Where there is an admitted error in the decision (such as an incorrect calculation of the proper award) that is recognised by all the parties. In so far as there is no arbitration clause in the underlying contract, the Court has jurisdiction to deal with such errors under a Part 8 claim.
  2. Where there is an issue in the decision which relates to the determination as to the timing, categorisation or description of a contractual document (e.g. interim application, payless notice, contractor's notice in default or another point of discreet contractual interpretation), the Court may address this via a Part 8 claim for a declaration as to the force and status of the disputed document/provision.

The cases where exception 2 will be most helpfully used are where there is a discreet point on which the adjudicator is said to have erred and that point can be dealt with by the Court quickly and cost-efficiently without the need for factual evidence or lengthy legal submissions. In these circumstances, the Court can address the perceived unfairness of a wrong decision (that would otherwise be enforced) and thereby avoid further litigation. On the basis of the particular facts of this case, this was not a decision to which either exception should apply and summary judgment was duly entering in favour of the enforcing party.

In the writer's opinion, this decision is very much to be welcomed. Not only does it clearly set out the principles that have, to date, been administered by the Court on a more ad-hoc basis, but it also gives practical guidance in the form of an update to the TCC guide as to how to approach this type of challenge where there is no agreement between the parties as to how to proceed.

The Court is clearly growing ever more impatient with the rise of 'smash and grab' adjudications, last chance saloon arguments with regards to breaches of natural justice and the general attempts to frustrate the 'pay now argue later' principle. Hopefully, this line drawn in the sand will lead to greater certainty in the application of the Construction Act and encourage the industry to remember the point of adjudication in the first place.