Hughes (JW) Building Contractors v GB Metalwork [2003] EWHC 2421

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Where a party had failed to raise the issue of non-receipt of certain documents in the adjudication, when invited to do so, it could not claim the adjudicator had infringed the rules of natural justice by failing to give that party the opportunity to consider and respond to documents.  It is commonplace that certain documents come to light at a late stage in litigation and other dispute resolution procedures and are dealt with without any delay or adjournment proceedings.   

The Honourable Mr Justice Forbes, Technology and Construction Court

The case arose out of a subcontract for the fabrication and erection of steelwork between the respondents, JW Hughes Building Contractors Ltd ('JWH') and the applicants, GB Metalwork Limited ('GBM'). The matter went to adjudication and GBM were successful. GBM brought proceedings to enforce the adjudicator's decision which JWH was resisting on two grounds:

Firstly, JWH argued that the adjudicator lacked jurisdiction because there was no dispute, the dispute having been compromised prior to the purported referral to adjudication.  However, the Court held that the correspondence between the two parties revealed that JWH was fully aware of outstanding matters relating to GBM's subcontract claims and therefore it was clear that there had been no binding compromise of the final account.  There was therefore a dispute for the purposes of the 1996 Act. Further, the conduct of the parties showed that they had agreed that the adjudicator was free to determine his own jurisdiction. The adjudicator therefore had jurisdiction to reject the argument that there was no dispute and had done so.

JWH's second jurisdictional argument was that there had been an infringement of natural justice during the adjudication because JWH had not been provided with certain critical documentation during the adjudication (namely, the written statement of case and/or the referral to adjudication). Further, having become aware of these facts, the adjudicator had failed to take appropriate steps to allow JWH to properly deal with the documents in presenting its case.

However, the Court held that there was no procedural unfairness on the part of the adjudicator: it was common ground that the GBM had served the documents in question on JWH's former solicitors but that JWH's former solicitors had failed to forward them on to JWH. Once the adjudicator knew that JWH was missing some documents, six days before his meeting with the parties, he invited JWH to raise the matter further. However, JWH failed to do so.   In addition, there was evidence that JWH had not complained of any embarrassment through non-provision of documents at the hearing.

In the circumstances, it could not be said that the adjudicator should have taken the view that JWH would be at a significant and unfair disadvantage at the hearing. The documents in support of the statement of case were familiar to both parties, with one exception (a bar chart) which was not of great significance to the matter. That document could have been dealt with on the day by anybody familiar with the case.  Mr Justice Forbes commented that:

Mr Justice Forbes similarly held that the fact that JWH did not have sight of the written statement of case did not itself give rise to any irremediable or overwhelming disadvantage in dealing with the matter before the adjudicator: a statement of case is not evidence, it is merely the way a party sets out its case in writing.  JWH apparently had no difficulty in putting together a response to what they understood the case to be because they submitted a detailed response to the adjudicator long before the meeting.

Accordingly, the Court held that the adjudicator's decision should be enforced and that GBM was entitled to judgment. 

JWH applied for a stay of execution of the judgment, arguing that there was a high risk that GMB would be unable to repay the money awarded to them on the resolution of the underlying dispute. The Court refused to grant a stay as it was apparent that GBM's financial situation was improving and would continue to do so.  This was therefore not a case where there was a high risk that GBM would not be able to return the money awarded by the adjudicator if ordered in later proceedings.

This summary was provided by CMS Cameron McKenna LLP.

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