The idea behind adjudication is to provide for quick determination of disputes at a sensible cost. By and large, practical experience over the past decade has shown this is what the adjudication process generally achieves. So what of the situation where one party obtains a favourable decision from an adjudicator but their opponent then refuses to pay up? It is open to the successful party to enforce the adjudicator’s decision through the Courts but what happens where the opponent belligerently obstructs the enforcement process?
This situation was recently considered in Harris Calnan Construction Co. v Ridgewood(Kensington) Limited. In this case, Harris had obtained a decision from the adjudicator for payment of nearly £100,000 plus interest. failed to pay and Harris commenced enforcement proceedings. Despite the fact that Ridgewood had no real defence to the proceedings, it tried to raise a number of technical arguments at the eleventh hour before the Court. Judge Peter Coulson QC (who has very recently become a High Court Judge – now Mr Justice Coulson) dismissed each of these points in turn and upheld the adjudicator’s decision.
First, Ridgewood argued there was no contract in writing (an essential ingredient if a dispute arising under a contract is to be referred to adjudication) and alleged the adjudicator had no jurisdiction to decide the matter. Ridgewood had neither taken this point before the adjudicator nor had it reserved its position, in order to enable it to do so at a later stage before the Court. Accordingly, the judge rejected this first argument.
Secondly, Ridgewood argued that as a company it was domiciled outside of the UK (it was based in the Channel Islands) and so the enforcement proceedings were invalid. The judge referred to the contract which gave the English Courts clear jurisdiction to settle any dispute arising between the parties from, or in connection with, the contract. The judge had little hesitation in rejecting this argument as well.
A third argument was then raised concerning an alleged defect in the way the Court paperwork had been served on Ridgewood, but this was also dismissed by the judge who found that the adjudicator’s decision was properly valid and enforceable by Harris, and consequently payable by Ridgewood.
The judge then considered an application from Harris for an order that Ridgewood should pay all of Harris’ legal costs of the enforcement proceedings. Judge Coulson noted that it was regrettably not uncommon for a defendant to fail to pay up on an adjudicator's decision. The judge held that, having considered and dismissed each of the arguments above, there had been no reason for Ridgewood to attempt to challenge the adjudicator’s decision in the first place. The outstanding sum ought to have been paid to Harris at the time the decision was made by the adjudicator – several months earlier. The judge made it clear that the Courts will not tolerate this sort of situation, i.e. where a party has no real defence to enforcement proceedings, but nevertheless then goes on to waste valuable Court time and the resources of the successful party by running arguments that are without merit and which the losing party either knows, or ought to know, will ultimately be futile. Accordingly, the judge awarded Harris all of its legal costs of the enforcement proceedings – despite various late protests that were raised on behalf of Ridgewood.
This case demonstrates the approach of the Courts to enforcing adjudicators’ decisions. It emphasises the usefulness of adjudication as a method of quickly resolving disputes and shows that adjudicator’s decisions are taken seriously by the judges, who are not generally willing to interfere with those decisions. Any party on the wrong end of an adjudicator’s decision and who is without a valid defence to enforcement should be extremely wary of the potential financial risks of trying to resist the decision. Misconceived arguments such as those above will be given short shrift by the Courts.
For more information contact Matthew Phipps.
