UK: Natural Justice And Awareness Of Adjudication Proceedings

Last Updated: 7 February 2018
Article by Stuart Thwaites

It is now well recognised that in the absence of material breaches of natural justice and/or lack of jurisdiction, the Courts will enforce an Adjudicator's decision whether it is right or wrong.

A relatively novel angle on the breach of natural justice argument arose in the case of Lobo -v- Corich & Anor [2017] EWHC 1438 (TCC). The case concerned an Adjudication commenced against the Defendant builder Mr Corich. The Claimant, Mr Lobo, had terminated the Defendant's employment due to breach of contract and claimed monies from him for the cost of completion/rectification. The contract was a JCT Intermediate Building Contract Revision 2 2009, signed by the parties. Mr Corich did not pay. So Mr Lobo referred the dispute to Adjudication.

Adjudication proceedings

Mr Corich took no part in the adjudication. Perhaps not surprisingly the Adjudicator found in Mr Lobo's favour. Again the Defendant did not pay. So the Claimant issued Court proceedings to enforce the Adjudicator's decision in the usual way.

The court enforced the decision in February 2017, which was for circa £630,000, together with indemnity costs of circa £30,000. Again Mr Corich played no role in those proceedings, and did not pay. So due to non-payment Mr Lobo obtained an interim charging Order over a London property owned by the Defendant.

Defendant issues court proceedings to set aside the court decision

Up to this point the Defendant, Mr Corich, had taken no part in either the Adjudication or the subsequent court proceedings. Indeed he did not come on the scene until March 2017 when he instructed solicitors. They issued court proceedings seeking to set aside the Adjudicator's decision, and the orders made against him, on the basis that the Adjudicator's decision had been reached in breach of the principles of natural justice and was also procedurally unfound and unfair, in that the adjudication proceeded in his absence and without him ever having been made aware of any aspect of it. As a result he had not been able to put in a defence.

Use of multiple addresses by the defendant

The court therefore had to determine whether Mr Corich was aware of the Adjudication proceedings and/or the subsequent enforcement/charging order proceedings. He was described as living a relatively peripatetic lifestyle, and gave evidence to the court about where he lived from time to time, but this was far from clear, and was evasive as to exactly where he was living between 2014 and 2017. His oral evidence in cross examination was also far from clear as to where exactly he was living in that period.

Mr Corich stated that he did not look at the Contract terms when he received the Claimant's termination notice letter. However he did reply to that letter, by e-mail, disputing the allegations made. In that e-mail he stated with regard to the letter he had received "With this letter...and all future correspondence can you please also send an e-mail copy so we can respond promptly?"

Mr Corich subsequently sent another e-mail, which appeared to refer to previous correspondence, and proposed a without prejudice meeting. It was sent from the e-mail account previously referred to by the Defendant, and made reference to another e-mail account which was used by him.

The notice of adjudication and referral had been served by process servers at three addresses known to be used by Mr Corich, and also sent by email to him at his four known email addresses. The adjudicator's decision was also posted and emailed to him. The court proceedings were served by process servers by hand and by email.

Proper notice of adjudication and court proceedings had been received.

Nevertheless Mr Corich contended that he was not aware of the adjudication proceedings or the subsequent Court action until 1 March 2017. He had not received the hard copy documents. As to the e-mails he had received, his response was that he had only replied to those incoming e-mails to which he "needed" to reply, so had not seen Mr Lobo's emails on the proceedings/adjudication. But as the judge rightly noted, it "...begs the obvious question: how could he decide what to reply to without paying some attention to the incoming e-mail?"

The judge found that he had received proper notice of the adjudication and court proceedings, noting, perhaps tellingly, "...I stop just short of being satisfied to the requisite standard that the Defendant is lying." Mr Corich's applications therefore failed.

Clearly in this case there were some unusual facts in terms of receipt of notices and service of proceedings. But it highlights the need for proper and effective service of adjudication notices as well as court proceedings. In this case it seems Mr Lobo took pains to effect service at multiple addresses as well as by email, and this paid off when it came to defending the Defendant's applications to set aside the adjudicator's award and the subsequent court orders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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