Citation: [2019] EWHC 1591
Willow engaged MTD to design and build a hotel in Shoreditch. As a result of delays, the two parties agreed a revised practical completion date of 28th July. However, the works were not completed by then.
It was determined in the adjudication that Willow was not entitled to claim for liquidated damages. MTD was subsequently awarded £1.17m in the adjudication. Willow did not pay the award, and instead issued a Part 8 claim that the adjudication was unenforceable on the following grounds:
The adjudicator’s rejection of liquidated damages was legally unenforceable because his interpretation of the practical completion clause was flawed.
A breach of natural justice. In particular, there was time pressure that prevented the adjudicator from conducting a fair review of the case.
The Adjudicator’s Decision
Liquidated damages were precluded if practical completion was achieved. Practical completion was deemed even if there remained outstanding items; provided that a list of outstanding works was provided. Since such a list was provided, liquidated damages were precluded.
MTD applied for summary judgment.
HHJ Pepperall granted the declaration that the adjudicator had made an error of law in relation to the construction of the practical completion clause. The dismissal of liquidated damages was incorrect, but the error did not affect the rest of the adjudicator’s decision. Since there was no breach of natural justice, the claim for liquidated damages could be severed from the adjudication and the balance could be enforced.
Practical Completion
The June agreement precluded liquidated damages only if the outstanding works on the list were completed according to schedule. This was consonant with the purpose of the June agreement: to set up a timetable for outstanding items to be completed. It was therefore incorrect for the adjudicator to construe the agreement as allowing MTD to deem practical completion without actually undertaking the further work required.
Natural Justice
Time was very tight in the present circumstances. However, it was in the nature of adjudication for there to be time pressure. The judge was not satisfied that the adjudicator was given insufficient time to review the case. Further, there was no significant breach in the adjudicator’s admission of evidence at the reply stage or in his allowance of the surrejoinder.
Severance
The adjudicator’s error in law in relation to the construction of the practical completion clause did not undermine the rest of the adjudicator’s decision. The error was confined to whether Willow was entitled to liquidated damages. The claim for liquidated damages could therefore be safely severed from the rest of the adjudication decision, which could be enforced.
Abdul Jinadu represented the defendant (instructed by BDB Pitmans LLP)
