A fact of adjudication life?

This article looks at the case of CSK Electrical v Kingswood Electrical [2015] EWHC 667 (TCC) and jurisdictional challenges and alleged breaches of natural justice which can be raised in adjudication proceedings.

4th June 2015

CSK Electrical (“CSK”) was engaged by Kingswood (“K”) to undertake electrical work to the executive boxes at Twickenham rugby ground. K did not issue the requisite pay less notices by the deadline and therefore CSK started two adjudications for payment of the sums claimed. CSK was successful in both adjudications. However, as K did not want to pay up it raised several jurisdictional and natural justice challenges at the enforcement proceedings. From a review of the judgment it seems the strategy was to raise every type of challenge possible in the hope that at least one of them was accepted. The four challenges were:

Challenge 1: No dispute crystallised

K claimed that no dispute had crystallised in relation to this matter. However, there was a failure to submit a pay less notice by the deadline, a letter from CSK and a response from K saying they would defend any claims. Coulson J noted: “the crystallisation argument is almost never successful”, and here it was clear that a dispute had indeed crystallised. Unsurprisingly, this first challenge failed.

Challenge 2: Invalid appointment

After Eurocom v Siemens, more parties may now try and claim that the adjudicator was not validly appointed for reasons of fraudulent misrepresentation on its application form to an ANB. In this case, K claimed there was fraudulent misrepresentation as when making its application to CEDR CSK’s representative had stated: “It is preferred that any of the adjudicators in the attached list are not appointed.” However, although this statement was made in the application, no list was actually attached. The court therefore held there had been no fraudulent misrepresentation and dismissed this challenge. If such a list had been present, it would have been interesting to see if the court would have determined if this was indeed fraudulent misrepresentation, or rather only suggestions to the ANB. After the case of Eurocom v Siemens it would be expected that parties will err on the side of caution and take the prudent approach of not submitting any such list.

Challenge 3: Timetable

K’s next challenge related to the adjudication timetable. K claimed there had been a breach of the rules of natural justice because the adjudicator’s timetable was too quick and put too great a strain on its resources. This will come as a surprise to those involved in adjudication, as tight timescales and difficult deadlines are normal. The court stated that such a challenge had never succeeded previously and they saw no reason to depart from that approach here. The court acknowledged that the adjudication timetable was indeed strict, but noted that to be “a fact of adjudication life”. Further, the court noted that despite raising this challenge now, K had not complained about the adjudication timetable during the adjudication itself. He therefore also dismissed this natural justice challenge. Again, this challenge may have had some more weight if K had complained consistently throughout the adjudication; however, this would likely still be insufficient to prove there had been a breach of natural justice.

Challenge 4: Stay of execution

K’s last chance at a challenge was to request a stay of execution due to CSK’s poor financial position. The court held that they were satisfied that there was no evidence that CSK would be unable to repay the sums ordered by the adjudicator in later proceedings, therefore refused to grant the stay. Again, there appeared to be little basis supporting K’s claim that CSK were in a poor financial position. Had there been some actual evidence of poor financial performance then the court may have considered whether enforcing the decision would have been fair (as the court considered in detail in the case of Galliford Try Building Ltd v Estura Ltd [2015] EWHC 412 (TCC)) and perhaps arrived at a different decision.

Lessons learned

Whilst jurisdictional and natural justice challenges are common in adjudication, such challenges will not be upheld by the court unless there are strong arguments to support them. As reiterated in previous articles, the courts continue to be robust in upholding adjudicator’s decisions – therefore, unless there are good strategic reasons for simply delaying matters, it is better not to waste money on dubious challenges.