Thermal Energy Construction Ltd V AE & E Lentjes Uk Ltd

The adjudicator's decision in the sub-contractor's favour should not be enforced on the ground that the adjudicator failed to consider the contractor's defence of set off and counterclaim
 
THERMAL ENERGY CONSTRUCTION LTD V AE & E LENTJES UK LTD
 
Technology and Construction Court
His Honour Judge Stephen Davies
30 January 2009
 
The sub-contract incorporated the TeCSA Adjudication Rules 2002 (version 2.0 Procedural Rules for Adjudication) which required the adjudicator to give reasons for his decision. A dispute was referred to adjudication by the sub-contractor. The contractor in its response to contended that it had a defence by way of counterclaim operating as a set off. It submitted that it was entitled to have its defence considered by the adjudicator as one of the matters raised by it in its response to the referral. The adjudicator's failure to consider that defence was evidenced by an absence of any reasons given by him in relation to that defence. The adjudicator therefore failed to comply with his obligations under the TeCSA Adjudication Rules. The sub-contractor submitted that the adjudicator should be regarded as having dealt with the contractor's defence in the reasons he gave for his decision. Even if the contractor's submissions were correct, the adjudicator's decision should nevertheless be enforced by reason of the contractor's failure to follow the procedure envisaged by rules 32 and 33 of the TeCSA Rules, which permitted the parties to ask the adjudicator to correct errors in his decision.
 
Judge Davies held that the adjudicator's decision in the sub-contractor's favour should not be enforced on the ground that the adjudicator failed to consider the contractor's defence of set off and counterclaim. Where an adjudicator was obliged to give reasons, those reasons should make it clear that he had decided all of the essential issues he had to decide as being issues properly put before him by the parties and enable the parties to understand in the context of the adjudication procedure what the adjudicator decided and why. The adjudicator failed to give any reasons indicating that he had dealt with the contractor's defence. The contractor suffered substantial prejudice by losing the opportunity of having the adjudicator deal with that defence and deciding that point in its favour. Also if the contractor were to seek to recover the losses claimed in its counterclaim in a further adjudication it would have to comply with the (original) decision and pay up in the meantime if the decision were to be enforced. Also there would be a risk of the second adjudicator declining jurisdiction on the basis that the point had already been determined in the first adjudication.
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