“(a) The decision of the adjudicator is wrong and beyond rational justification in that the adjudicator’s assessment of sums due to Platform was inconsistent with the terms of the Sub-Contract; “(b) Platform is not entitled to the sums awarded by the adjudicator; and/or “(c) Insofar as this claim is determined prior to or at the same time as Platform’s application for summary judgement to enforce the Decision in claim HT-2020-000038, that Platform is not entitled to judgment enforcing the Decision.”
“There is insufficient time to timetable this Part 8 Claim for hearing with the Part 7 enforcement hearing, which raises different issues for determination. Please could you obtain a time estimate from both parties for the Part 8 hearing so that a date can be fixed.”
“(1) ISG may without prejudice to any other of its rights or remedies immediately terminate the Sub-Contactor’s employment under this Sub-Contract in respect of the whole or any part of the Works if the Sub-Contractor: “…. “(h) is in material or persistent breach of this Sub-Contract. “…. “(4) The Sub-Contractor shall within 14 days of being so notified, submit an application for payment for works executed by him up to the date of termination. Such application shall be treated in all respects as if it was a final account submitted by the Sub-Contractor pursuant to clause 2(12) and the procedures set out in clause 2 shall apply in respect of such an application. “(5) ISG shall be entitled to recover from the Sub-Contractor all losses, expenses, costs and damages suffered or which may be suffered by ISG by reason of such termination.”
“20. As set out above, on the termination of the Contract under Clause 27(1) of the Sub-Contract Conditions, Clauses 27(4) and 27(5) govern the parties’ entitlements to payment. However, Clauses 27(4) and 27(5) were not applied by the adjudicator. “21. ISG’s position in the adjudication was that Clauses 27(4) and 27(5) govern payment following termination as set out in paragraphs 11.1 and 11.2 of the Adjudicator’s decision. Further ISG’s losses under Clause 27(5) could be calculated by taking the difference between what ISG would have had to have paid Platform to complete the works but for the termination and the actual cost of completion. “22. As to the approach to the valuation of sums due, at paragraph 11.28 of the Decision the Adjudicator decided that: “I concur with [ISG] that the termination valuation should be based upon the value of the works it would have paid to [Platform] less the costs it has actually incurred in completing the works within the Scope of the Referring Party’s Sub-Contract.” “23. Contrary to that determination ISG had not submitted that the ‘termination valuation’ of any sum due to Platform should be calculated on that basis. ISG had maintained that ISG’s losses, and any sum due to ISG in respect of those losses, could be calculated by taking the total cost of completing the works and deducting the value of the works that ISG would have paid to Platform. “24. The Adjudicator went on to determine that: “a. If the works had been completed by Platform, the value of the works carried out by Platform would have been£2,506,096.38 (paragraph 11.30 of the Decision). “b. The actual cost to ISG of completing the works, including sums paid to Platform was£2,088,555.05 (paragraph 11.31 of the Decision). “c. ISG was therefore liable to make payment to Platform in the sum of£417,541.33 , being the amount of the saving that ISG had made as a result of the termination, being the difference between the actual cost of completion of the works and the sums that would have been payable to Platform but for the lawful termination of the Sub-Contract. (paragraph 13.1 of the Decision) “25. The Adjudicator’s calculation of the sum due to Platform was not in accordance with the parties entitlements pursuant to Clauses 27(4) and 27(5) of the Sub-Contract Conditions or any clauses of the Sub-Contract or any claim before the Adjudicator. “26. The Adjudicator did not value the works carried out by Platform in accordance with Clause 27(4) of the Sub-Contract Conditions or at all. “27. In the premises the Adjudicator’s decision that ISG was liable to pay any sum to Platform and/or that ISG was liable to pay the sum of£417,541.33 was incorrect and made in error. “28. The Adjudicator’s error is fundamental to the decision and Platform is not entitled to the sums that it has been determined ISG should pay.” “I concur with [ISG] that the termination valuation should be based upon the value of the works it would have paid to [Platform] less the costs it has actually incurred in completing the works within the Scope of the Referring Party’s Sub-Contract.”
“3. The starting point, of course, is that, if the adjudicator has decided the issue that was referred to him, and he has broadly acted in accordance with the rules of natural justice, his decision will be enforced: see Macob Civil Engineering Limited vMorrison Construction Limited[1999] BLR 93 . Adjudication decisions have been upheld on that basis, even where the adjudicator has been shown to have made an error: see Bouygues(UK) Limited v Dahl-Jensen (UK) Limited[2000] BLR 522 . Chadwick LJ summarised the principal reason for this in Carillion Construction Limited v Devonport Royal DockyardLimited[2006] BLR 15 : "the need to have the 'right' answer has been subordinated to the need to have an answer quickly." “4. There are two narrow exceptions to this rule. The first, exemplified by Geoffrey Osborne v Atkins Rail Limited[2010] BLR 363 , involves an admitted error. In that case the calculation error was raised by the defendant in a separate Part 8 claim. Because the error was admitted by everyone, including the adjudicator, and because there was no arbitration clause, which meant that the court had the jurisdiction to make a final decision on the point, there were no reasons why, in that case, the error could not be corrected. If there had been an arbitration clause, the court would not have had the power to determine the issue and the decision would have been enforced: see Pilon Limited vBeyer Group PLC[2010] BLR 452 . “5. The second exception concerns the proper timing, categorisation or description of the relevant application for payment, payment notice or payless notice, and could be said to date from Caledonian Modular Limited v Mar CityDevelopments Limited[2015] EWHC 1855 (TCC) ;[2015] BLR 694 ; 160 Con LR 42. In that case, the defendant had raised one simple issue, in a detailed defence and counterclaim served at the outset, to the effect that a small group of documents could not have constituted a claim for or notice of a sum due for payment. If that argument was right, it was agreed that the claimant was not entitled to summary judgment. At paragraph 11 of my judgment in that case, I reiterated the general principle that it was not open to a defendant to seek to avoid payment of a sum found due by an adjudicator by raising the very issue on which the adjudicator ruled against the defendant in the adjudication. I went on: “12. That is, of course, the general rule and it will apply in 99 cases out of 100. But there is an exception. If the issue is a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing, then the defendant may be entitled to have the point decided by way of a claim for a declaration. That is what happened, for example, in Geoffrey Osborne Ltd v AtkinsRail Ltd[2010] BLR 363 . It is envisaged at paragraph 9.4.3 of the TCC Guide that separate Part 8 proceedings will not always be required in order for such an issue to be decided at the enforcement hearing. “13. It needs to be emphasized that this procedure will rarely be used …..” “12. That is, of course, the general rule and it will apply in 99 cases out of 100. But there is an exception. If the issue is a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing, then the defendant may be entitled to have the point decided by way of a claim for a declaration. That is what happened, for example, in Geoffrey Osborne Ltd v AtkinsRail Ltd[2010] BLR 363 . It is envisaged at paragraph 9.4.3 of the TCC Guide that separate Part 8 proceedings will not always be required in order for such an issue to be decided at the enforcement hearing. “13. It needs to be emphasized that this procedure will rarely be used …..”
“8. The authorities since Caledonian Modular demonstrate that, very often, the point taken by the defendant is a straightforward argument to the effect that the adjudicator was wrong and that, either with regard to its timing, or its content, the relevant payment notice was invalid and/or that the payless notice was valid and prevented payment. In those circumstances, the defendant has issued Part 8 proceedings seeking a declaration to that effect. The claimant may issue its own enforcement claim or, as the cases show, the parties may agree that, if the defendant loses its Part 8 claim, it will pay the sums awarded by the adjudicator in any event. “9. This broadly consensual approach can be seen in a number of the cases, including: …”
“10. These cases all involved a significant degree of agreement between the parties. In particular, they all involvedCPR Part 8 claims issued by the defendant challenging the decision of the adjudicator, and seeking a final determination by way of court declarations. They all involved a tacit understanding that the parties' rights and liabilities turned on the decision as to whether or not the particular notice had been served in time and/or was a valid application for payment or payment/pay less notice. “11. Furthermore, the issue of a separate Part 8 claim in those circumstances was not simply a matter of form. It was important in two respects. First, it provided a vehicle whereby the defendant could set out in detail its challenge to the adjudicator's decision. This meant that the claimant could see and understand the precise basis of the challenge and the consequential declarations sought. “12. Secondly, the existence of a separate Part 8 claim meant that the TCC knew from the outset what was going to be involved at any subsequent hearing… “13. In my view, the practice which has grown up around challenges of this sort has worked relatively well, but only where there has been a large measure of consent between the parties from the outset. The problems in the present case, and in many other recent cases, have arisen because there has been no such consent. “14. Many defendants consider that the adjudicator got it wrong. As I said in Caledonian Modular, in 99 cases out of 100, that will be irrelevant to any enforcement application. If the decision was within the adjudicator's jurisdiction, and the adjudicator broadly acted in accordance with the rules of natural justice, such defendants must pay now and argue later. If the degree of consent noted in the authorities set out in Section 3 above is not forthcoming, then the following approach must be adopted.”
“It does not simply follow from the fact that the adjudicator’s decision is wrong that it will not be enforced, save in the sort of particular or exceptional circumstances identified by Coulson J. in Hutton for the very reason that normally the fact that the adjudicator may be wrong does not render his decision unenforceable.”
“61 In this case the parties were agreed on the way in which the Adjudicator should approach valuation in the event that she determined that it was ISG, not Platform, that validly terminated the sub-contract. The problem appears to me to be that the result of that approach produced a result which I suspect neither party had expected and which gives rise to the legal issues raised in the Part 8 proceedings as to the proper approach on her conclusions as to valuation. “62 That problem, if, after the parties have made their submissions in the Part 8 proceedings, it continues to be perceived as a problem, arises out of the Adjudicator applying the approach which both parties had suggested should be applied. It may well be that ISG now wishes that it had caveated that approach as to what should happen if it resulted in a flow of money from ISG to Platform, but that is not a ground for holding that there was a breach of natural justice.”
“The decision of an adjudicator appointed under this Sub-Contract shall be binding until the dispute or difference is finally determined by legal proceedings in the English Courts”
“I am in no doubt that an adjudicator’s decision is binding on the parties and, save in exceptional circumstances, it must be complied with, no matter how quick or slow the Pt 8 procedure to challenge that decision. A losing party who makes a challenge to the decision by using the CPR Pt 8 procedure can do so, but in the ordinary case he must, in the meantime, pay the sum found to be due.”