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Council wins £2.2m adjudication claim against leisure centre developer

A construction firm cannot rely on ‘Micawberism’ to challenge an adjudication award against it in favour of Sefton Metropolitan Borough Council, HHJ Hodge has ruled in the Technology & Construction Court.

The case concerned Allenbuild, which in September 2005 contracted with Sefton to build and maintain a leisure centre and water-based theme park, now known as Dunes Splash World.

Practical completion was certified on in June 2007, but after a series of standstill agreements Sefton in November 2021 served a notice of adjudication relating to defects.

This was a referred to adjudicator Christopher Ennis, who issued his reasoned decision in January 2022.

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HHJ Hodge was asked to rule on two actions. Sefton sought summary judgment to enforce an adjudication award made by Mr Ennis against Allenbuild, which in turn sought a stay pursuant to s9 of the Arbitration Act 1996 .

He said: “The applications raise the question whether a paying party which seeks to avoid the summary enforcement of an unfavourable adjudicator's award is entitled to the stay of any action to enforce that decision for arbitration on the basis that there is a 'dispute' as to whether the sum claimed is due.

"The resolution of that question involves the consideration of two competing public interests: the 'pay now, argue later' policy which underlies the scheme for the speedy resolution of construction disputes by adjudication, and the respect to be accorded to the contractual autonomy of parties who have agreed that any dispute that may arise between them is to be referred to arbitration. In my judgment, the resolution of this potential tension lies in identifying the true scope of any reference to arbitration.”

Sefton argued that Mr Ennis’s decision meant Allenbuild should pay it £2,204,217.13 as the adjudicator had noted “there have been no challenges to my jurisdiction”.

HHJ Hodge ruled: “I am satisfied that [Allenbuild] has no real prospect of successfully defending this adjudication enforcement claim, and that there is no other reason (still less any compelling reason) why this case should be disposed of at a trial.

“The defendant does not seek to challenge the adjudicator's decision on the grounds of breach of natural justice. That effectively limits any challenge to a want of jurisdiction on the part of the adjudicator.”

He said matters raised in a response by Allenbuild to the summary judgment application were “manifestly irrelevant and misconceived”.

The judge explained: “The fact that the tribunal might ultimately reach a different final decision from the adjudicator does not affect the provisional binding character of his decision in the meantime, or its amenability to summary enforcement.”

He added: “The fallacy underlying [Allenbuild’s] position is the misconception that ‘… the parties had agreed upon arbitration as a means of settling a dispute, in the event either party was dissatisfied with the adjudicator's decision’. In my judgment, they have not done so.”

HHJ Hodge said the court must take into account not only the evidence actually placed before it on such applications, but also the evidence that can reasonably be expected to be available at trial.

But any defendant must “lay a sufficient evidential foundation” for any submission that more evidence can reasonably be expected at a trial and explain why it was not yet available.

“It is just not good enough for a defendant to express the unparticularised hope (like Mr Micawber in David Copperfield) that something may ‘turn up,.” the judge said.

He said one authority cited - Lewison J in Easyair - “should not be seen as an endorsement of such Micawberism” and that Allenbuild had not persuaded him that there was any proper need to adjourn the summary judgment application.

HHJ Hodge made an order for Allenbuild to pay Sefton £2,204,217.13, plus interest at £51.92 per day from 24 January 2022 to the date of payment.

He said Allenbuild should pay Sefton’s costs for both applications and the claim as a whole.

Mark Smulian

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