Court adds further teeth to adjudication enforcement

The Technology & Construction Court (TCC) has long been a strict enforcer of adjudicator’s decisions since the very first enforcement case of Macob Civil Engineering v Morrison Construction Ltd, which set the tone for the courts attitude to the process.

“…The intention of Parliament in enacting the Act was plain. It was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis…The timetable for adjudication’s is very tight…and are likely to result in injustice. Parliament must be taken to have been aware of this…Crucially, it has made it clear that decisions of adjudicators are binding and are to be complied with until the dispute is finally resolved.”

This was further confirmed in Bouygues (UK) Ltd v Dahl-Jensen UK Ltd insofar as the courts acknowledged that adjudicators will make mistakes in fact and law; but if they have answered the right question wrongly the decision will still be enforced.

AMD Environmental Ltd v Cumberland Construction Company Ltd

In the recent case of AMD Environmental Ltd v Cumberland Construction Company Ltd Mr Justice Coulson has fired more than a warning shot to parties considering resisting enforcement of an adjudicator’s decision.  In finding that Cumberland’s challenges to enforcement were ‘hopeless’, he concluded that:

32 – I add two points to the written transcript of my ex tempore judgment, summarising my views on two consequential matters, namely interest and costs

33 – Mr Thompson argued for interest at 8.5% pursuant to the Late Payment of Commercial Debts (Interest) Act 1998. Mr Davis asked for 2.5%. I noted that typical figures in the Rolls Building are between 4 or 5%. However, I decided that, in this case, the right figure was 6%. That is because this adjudication decision should have been honoured some time ago, and the arguments in support of the defendant’s position were properly categorised as hopeless. The TCC is concerned that too many adjudication decisions are not being complied with, and that there are too many disputed enforcements where the grounds of challenge are without merit. Thus a high interest rate under the Act will be awarded in such cases

34 – For the same reasons, I acceded to Mr Thompson’s submission that AMD were entitled to indemnity costs. There is plenty of authority that indemnity costs are appropriate in a case of this kind, where the challenge to the decision is without merit….(Emphasis added)

The message is clear; refusal to comply with an adjudicator’s decision without valid reason will result in a high interest rate awarded against you.

If we can assist you in any way, or if you simply want to discuss the needs of your construction and engineering project, we would be delighted to meet with you either in our office or at your office to discuss your issues. Please contact us at any time.

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