A defendant’s scraping around does not impress the TCC, or the Court of Appeal
Donald Insall Associates Ltd v Kew Holdings Ltd [06.02.19]
Kennedys’ construction team recently succeeded in the enforcement of an adjudicator’s decision in the Technology and Construction Court (TCC) on behalf of the claimant, Donald Insall Associates (DIA), whereby Mrs Justice O’Farrell granted Summary Judgment in DIA’s favour despite several (unsuccessful) jurisdiction challenges from the defendant.
The adjudicator had decided that the defendant, a Cayman Islands registered company, owed a debt for unpaid invoices in respect of DIA’s architectural services at the King’s Observatory, Kew. Despite this decision, the defendant did not make payment, instead claiming that the adjudicator lacked threshold jurisdiction to make his decision. The defendant claimed that: there was no contract between the parties as the defendant’s director had contracted in his personal capacity with DIA; there was no construction contract sufficient to satisfy Section 107 of the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act); and there was no crystallised dispute.
Following robust submissions on DIA’s behalf and a lengthy Summary Judgment hearing, O’Farrell J dismissed all of these arguments and awarded Summary Judgment in favour of DIA.
She also considered the defendant’s argument, raised late in the adjudication, that an oral variation to the contract meant that the contract was not capable of being adjudicated on because not all of the terms were in writing (the contract being entered into before the Construction Act was amended). This was rejected by O’Farrell J, who found that there was no oral variation to the contract terms.
Further, the defendant raised an argument during the Summary Judgment hearing, that the adjudication should have been conducted under statute and not contract because there was no express right to adjudicate in the contract. In considering this argument, O’Farrell J stated:
Having regard to the guidance given by Coulson LJ in the Bresco case, this is a classic case of a defendant scraping around after the event to find a potential jurisdictional challenge that was not made either in the formal jurisdictional challenge at the beginning of the adjudication, or indeed in the additional exchanges and submissions made during the course of and at the conclusion of the adjudication. It is therefore too late for the defendant to raise this argument.
She went on to state that this argument had no merit in any event, confirming that the defendant had no real prospects of successfully defending DIA’s claim such that summary judgment was awarded in DIA’s favour.
Court of Appeal
Despite a full and robust judgment from the TCC, the defendant applied to the Court of Appeal for permission to appeal O’Farrell J’s Decision.
The former head of the TCC, Lord Justice Coulson, had no hesitation in refusing permission to appeal, stating in his order that 95% of Adjudicators’ Decisions are enforced at hearing. He went on to say that arguments concerning the lack of crystallised dispute are “regularly taken on adjudication enforcement disputes by defendants who do not want to pay. To my knowledge it is yet to be successful” and that the TCC Judge’s rejection of this argument was “plainly correct”.
This case again shows that the Decision of Coulson LJ in Bresco will be applied widely amongst TCC practitioners with it now being the leading authority on adjudication enforcement. The TCC and the Court of Appeal’s message in this case is that the judiciary are unlikely to overturn an adjudicator’s decision, particularly on grounds raised at the eleventh hour.
It also shows the importance of raising jurisdiction challenges in a timely manner (on the basis that any such arguments have merit, unlike those raised in this case).
Solicitors for Donald Insall Associates: Caitlin Gallagher (Associate) and Christopher Butler (Partner) of Kennedys Law LLP
Counsel for Donald Insall Associates: Paul Cowan of 4 New Square