South West Contractors Ltd v Birakos Enterprises Ltd [2006] EWHC 2794 (TCC)

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The absence of an express reference to mitigation in adjudicator’s decision does not mean that the adjudicator has failed to consider it and, in any event, it is not the role of the court to examine minutely the reasons for a decision to see whether an adjudicator may have made a mistake.

His Honour Judge Wilcox – Queen’s Bench Division, Technology and Construction Court


South West were engaged as project managers on a project to carry out conversion works to office premises pursuant to a fee agreement and a separate management agreement.  The fee agreement related to the profit element of South West’s earnings, whereas the management agreement related to South West’s costs. 

Birakos terminated South West’s retainer.  South West claimed that this constituted a repudiatory breach of contract and sought damages to put itself in the position it would have been in if it had not been for the breach of contract.

Although Birakos paid some sums towards the management contract costs outstanding, disputes remained both as to the amount of management contract costs and what profits, if any, South West was entitled to under the fee agreement.  South West referred both disputes to adjudication, the management contract being dealt with in Adjudication No.1 and the fee agreement in Adjudication No.2.  The two adjudications were considered together and determined by the same adjudicator, but separate decisions were given, in each case fully reasoned.

Birakos resisted the decision reached by the adjudicator in respect of Adjudication No.2 and therefore South West sought an application for summary judgment of this order.

Present Proceedings

Birakos contended that the adjudicator’s decision in respect of the profit claim was fatally flawed because there was a breach of the rules of natural justice in that the adjudicator had failed to deal with the amount by which South West’s loss should be reduced or mitigated by the fees that South West would have been able to earn in the period between termination of the contract and practical completion of the project.  Mitigation of damage had been expressly considered in Adjudication No.1, but not in Adjudication No.2.  It was argued that this omission demonstrated that the adjudicator had failed to consider the issue of mitigation in respect of the profit claim.

Judge Wilcox rejected this argument: as the adjudicator had considered the adjudications at the same time, it was unlikely that he had not considered mitigation in respect of both claims as he had been asked to, particularly as he had been conscientious and careful in the way he had dealt with the claims as a whole.  Further, it was not permissible to ask the court to minutely examine the reasons for an award to see whether the adjudicator might have made a mistake.

South West was entitled to summary judgment in respect of Adjudication No.2.

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