This was an application by the Claimant ("Platform") to enforce an adjudicator’s decision against the Defendant ("ISG") for payment in the amount of £417,541.33 plus VAT.

ISG had engaged Platform to carry out works forming part of its redevelopment of a property in Edinburgh. As a result of alleged repudiation of the Sub-Contract by ISG, Platform purported to rescind the Sub-Contract. ISG contended that Platform's purported rescission was unlawful and that the Sub-Contract had instead been validly terminated by ISG. The adjudicator agreed, deciding that ISG had validly terminated the Sub-Contract. However, the adjudicator determined that ISG had made a significant saving as a result of the termination and awarded that saving to Platform. ISG did not pay Platform, but paid the adjudicator’s invoice whilst reserving its rights to challenge the validity and enforceability of the decision. Platform then issued proceedings to enforce the adjudicator's decision.

Platform argued that payment by ISG of the adjudicator's fees amounted to a waiver of any objection to the validity of the adjudicator's decision, and that their general reservation of rights to challenge the decision was ineffective. They relied on the principles set out in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2019] EWCA Civ 27 arguing that a general jurisdictional reservation will be ineffective if at the time it was provided, the objector knew or should have known of specific grounds for a jurisdictional objection but failed to articulate them. Such reservations are often made simply to try and ensure that all options (including ones not yet thought of) are kept open. 

ISG argued that the adjudicator’s approach did not reflect the terms of the Sub-Contract or the submissions of either party – the Sub-Contract did not provide for Platform to become entitled to any saving that ISG achieved by the termination and neither party in the adjudication contended that that approach could be adopted. Accordingly, ISG had three grounds of challenge: (1) that the adjudicator had failed to exhaust their jurisdiction in respect of the dispute; (2) that the adjudicator had breached natural justice in reaching their award on a method of valuation advanced by neither party; and (3) that the adjudicator failed to give adequate and cogent reasons for their decision on valuation. 

Waiver

The judge proceeded on the basis that payment of an adjudicator's fees may amount to an election to treat their decision as valid, but it is important to keep in mind (as explained in PT Building Services Ltd v ROK Build Ltd [2008] EWHC 3434 (TCC)) whether such act shows that a party is to be taken to have elected to treat the decision as valid. The question is what is to be inferred from the payment. In this case, ISG had made it clear that they regarded the decision as invalid and unenforceable. There was nothing in the payment from which the inference could be drawn that they intended to treat the decision as valid. The judge held that ISG had not waived its rights to challenge the decision. 

Breach of natural justice 

The judge rejected the principal ground of ISG’s challenge, concluding with reference to the principles in AECOM Design Build Ltd v Staptina Engineering Services Ltd [2017] EWHC 723 (TCC); [2017] BLR 329 that the adjudicator was entitled to decide a point of importance on the basis of the material before them, and on a basis for which neither party had contended. In this case, the parties were agreed on the way in which the adjudicator should approach valuation. The problem was that the result of that approach produced a result which neither party had expected. As stated by the judge: “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.”

Failure to give reasons 

The judge also rejected the challenge that the adjudicator had failed to give adequate and cogent reasons for their decision on valuation. The adjudicator had made clear in their decision how they had arrived at their conclusion – whether they were right or not as a matter of law was not the question.

This case emphasises that, although payment of an adjudicator’s fees can amount to a waiver of the right to challenge the validity of the adjudicator’s decision, the key question is whether an inference can be drawn that the payer intended to treat the decision as valid. This case suggests that the court is unlikely to draw such an inference where payment is made under a reservation of rights.