Byrne Brothers (Formwork) Ltd (“Byrne”) engaged Farrelly (M&E) Building Services Ltd (“FBS”) under a subcontract for mechanical and electrical work and services. Disputes arose in relation to an interim payment and FBS referred the matter to adjudication. The adjudicator issued a draft decision (as had been agreed by the parties) and following a small adjustment under the slip rule, issued his decision which awarded sums in favour of FBS. Bryne failed to make payment and so FBS commenced enforcement proceedings for £500,000 plus interest.

Byrne resisted enforcement on the grounds that (i) the adjudicator’s finding that FBS’s entitlement to direct costs be assessed on a prospective basis and his rejection of Byrne’s case on concurrent delay constituted a breach of the rules of natural justice and (ii) any judgment in favour of FBS should be stayed given FBS’s financial position. The first ground was the subject of a preliminary issue as FBS maintained that Byrne had waived its natural justice challenge as it was not made until after the adjudicator issued his draft decision.

The Court enforced the decision, deciding on the preliminary issue that Byrne had not waived its right to rely on a breach of the rules of natural justice on the facts of the case.

As for the substantive points, the Court decided there had been no breach of the rules of natural justice. Firstly, the adjudicator had not gone off on a frolic of his own and determined the matter on a factual or legal basis which had not been argued by either party. Instead, he decided there should be a prospective rather than retrospective analysis and this was a point on which he had sought further submissions from the parties.

Secondly, Byrne’s concurrent delay argument was linked to the retrospective/prospective analysis and so the issue had been sufficiently aired in the context of the adjudication and the adjudicator was entitled to reach the conclusions he did. Thirdly, in relation to the natural justice arguments, the Court noted that Byrne did not raise allegations of serious breach when the adjudicator issued his draft decision. Finally, Byrne had failed to show that FBS was insolvent or that its financial position was different to the time at which it entered into the contract. Accordingly, the Court declined to exercise its discretion and stay enforcement.