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Natural Justice and Awareness of Adjudication Proceedings

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 recent 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. 

The Defendant did not pay. So the Claimant referred the dispute to adjudication. 

The Defendant took no part in the adjudication and the adjudicator found in the Claimant’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 the Defendant played no role in those proceedings, and did not pay; due to non-payment the Claimant obtained an interim charging order over a London property owned by the Defendant. 

Up to this point the Defendant Mr Lobo 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. There were joined proceedings between the parties, hence why the Claimant is referred to here as Mr Lobo. 

The Defendant said 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. 

The Court therefore had to determine whether the Defendant was aware of the adjudication proceedings and/or the subsequent enforcement/charging order proceedings. 

The Defendant was described as living a relatively peripatetic lifestyle, and having properties both in the USA and UK, travelled frequently between those countries. 

The Defendant gave evidence to the court about where he lived from time to time, but this was far from clear, and 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. 

The Defendant 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 email, disputing the allegations made. In that email he stated with regard to the letter he had received “With this letter…and all future correspondence can you please also send an email copy so we can respond promptly?” 

The Defendant subsequently sent another email, which appeared to refer to previous correspondence, and proposed a without prejudice meeting.  It was sent from the email account previously referred to by the Defendant, and made reference to another email 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 the Defendant, 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. 

Nevertheless the Defendant 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 emails he had received, the Defendant’s response was that he had only replied to those incoming emails to which he “needed” to reply, so had not seen the Claimant’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 email?” 

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.” The Defendant’s applications therefore failed. 

Clearly in this case there were some unusual facts in terms of receipt of notices and service of proceedings. It highlights the need for proper and effective service of adjudication notices as well as court proceedings. In this case it seems the Claimant 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.