When can an adjudication decision be severed?

5 minute read
17 December 2021

Author(s):

We recently reported on the September 2021 decision of the Technology and Construction Court (TCC) in CC Construction Ltd v Mincione [2021]. Various issues were raised before the TCC including the deadline for challenging the final statement under the Joint Contracts Tribunal (JCT) contracts and the enforceability (or not) of an adjudication decision of March 2021 in CC Construction's favour (the Decision).

One of the TCC's findings in September was that "the adjudicator had committed a breach of natural justice in the sense of a failure fully to exercise his jurisdiction by reason of his decision not to consider the liquidated damages set-off of Mr Mincione". On the severability or otherwise of the Decision, His Honour Judge Eyre QC's provisional view was that the Decision was only enforceable to the extent of the balance of the award over and above the amount of the liquidated damages (LDs) – this provisional finding was subject to further submissions by the parties.

The parties made those submissions and in this article, we review the substantive element of the November 2021 TCC decision in CC Construction Limited v Raffaele Mincione [2021] dealing with the severability (or not) of the adjudicator's decision, further to the finding that there had been a breach of natural justice by the adjudicator, as set out above.



TCC decision

The argument on behalf of Mr Mincione was understandably that the Decision is not severable and therefore not enforceable. Conversely, CC Construction's position was that the Decision was severable which would mean that, after deduction of the amount of the LDs, the balance of the amount awarded to CC Construction in the Decision should be paid by Mr Mincione.

There were two parts to the consideration by the TCC.

Was the Decision severable in principle?

It was argued on behalf of Mr Mincione that there are single core and multi core disputes in adjudication. In a single core dispute such as this, there was no scope for severance. The Judge did not accept that as a matter of law, there was a distinction between single core and multi core disputes.

Having reviewed relevant case law, the key point in the Judge's view was that this was a failure by the adjudicator to exercise the totality of his jurisdiction which was "very different from a breach of natural justice taking the form of bias on the part of an adjudicator or a failure to hear one side or the like". In the Judge's view, the error here by the adjudicator did not constitute a breach that cast "an element of doubt over the whole of the adjudicator's reasoning", as referenced in other case law.

His Honour Judge Eyre QC concluded that the Decision was "eminently severable".

Should the TCC sever the decision?

The TCC agreed that just because an adjudication decision is severable as a matter of law, it did not necessarily mean that it should be severed by the court.

The test includes consideration of whether there is a "safe nucleus" in the adjudication decision or whether the invalid element of the decision taints the reasoning in the balance of the decision. His Honour Judge Eyre QC reflected that if there is a safe nucleus and no such tainting, "then the scope for discretion is quite limited in the sense that it is hard to see a proper basis for declining to sever in such circumstances". (The converse is also correct in that if the whole decision is tainted, there is little scope for discretion to sever.)

This approach reflects the Judge's own decision in Downs Road Development LLP v Laxmanbhai Construction (UK) Ltd [2021] in which he had emphasised the importance of whether the part in question can "safely" be enforced separately from the decision as a whole, and the need to "guard against creating an artificial outcome which could not have been the result of a proper decision by the adjudicator".

Having considered the reality of this case, the Judge was satisfied that the adjudicator's failure to take account of the LDs argument did not taint the reasoning in the other parts of the Decision.

The Decision was severed and the TCC enforced the balance of the Decision.

Commentary

This decision on severability is in line with recent case law and aligns with the courts' stated intention of enforcing adjudication decisions wherever possible. The judgment is a reminder to think carefully about potentially wasted costs and delay before challenging an adjudicator's decision.

If you have any queries on this or any construction related issue, contact Ashley Pigott.


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