Case Law Article Analyzing Jurisdiction and Natural Justice in Adjudication Enforcement: Van Elle Limited v Keynvor Morlift Limited

Introduction

In the recent judgment of Van Elle Limited v Keynvor Morlift Limited ([2023] EWHC 3137 (TCC)), the Technology and Construction Court (TCC) of the High Court of Justice faced complex questions concerning jurisdiction under Part 2 of the Housing Grants, Construction and Regeneration Act 1996, as well as the applicable principles of natural justice within adjudication enforcement. This article analyzes the legal concepts and principles that were pivotal to the resolution of the case.

Key Facts

Van Elle Limited (VEL) sought to enforce an adjudicator’s decision, which deemed Keynvor Morlift Limited (KML) liable to pay £335,142.33 for services carried out under their contract. KML contested the enforcement on grounds of (a) jurisdiction — specifically, the territorial extent of the right to adjudicate disputes, and (b) alleged breaches of natural justice regarding the adjudicator’s decision-making process.

The key points of factual dispute centred on the location of a pontoon in Fowey Harbour, Cornwall, its status as construction operations ‘in England’, and whether the adjudicator had indeed failed to consider substantive defenses raised by KML during the adjudication.

Legal Principals

Jurisdiction and Territorial Extent

The court scrutinized s.104(6)(b) of the Construction Act, which constrains the Act’s application to contracts relating to construction operations in England, Wales, or Scotland. The debate revolved around whether the pontoon construction operations conducted by VEL were deemed to occur ‘in England’.

The Judge referred to the Interpretation Act 1978 definition, which delineates ‘England’ as consisting of counties per the Local Government Act 1972, leading to reference to the Ordnance Survey maps. The question was then whether construction operations beyond the low-water mark are within ‘England’. The Judge found that the intention of Parliament, reflecting the scope of statutes like the Territorial Sea Act 1987 and relevant international conventions (UNCLOS), meant that Part 2 of the Act applies up to the baseline at the mouth of the river where it meets the sea, and that inland waters fall within the ambit of ‘land’ in s.105(1).

Breach of Natural Justice

The principles of natural justice dictate that an adjudicator must attempt to answer the question referred to them, as established in Carillion v Devonport and subsequent cases. An inadvertent failure to address an issue wouldn’t ordinarily render a decision unenforceable, provided it didn’t signify an overall failure to resolve the dispute referred to them or signify unfairness in the adjudication.

KML’s allegations of breaches of natural justice—such as the adjudicator’s disposition to weather downtime, rates, ground conditions, and equipment valuation—were examined against these principles. The court found that none of KML’s allegations amounted to a breach of natural justice that was material and significant enough to invalidate the adjudicator’s decision.

Outcomes

Judge Stephen Davies concluded that KML had no realistic prospect of successfully defending against the enforcement of the adjudicator’s decision. He held that the Construction Act was appropriately applied to construction operations conducted on the pontoon within the river Fowey well within the territorial boundary of ‘England’. In addition, findings of inadvertent failure to address issues were ruled as non-material and thus not constituting a breach of natural justice sufficient to impede enforcement.

Conclusion

This judgment underscores the court’s inclination to uphold adjudication decisions, barring substantial procedural or jurisdictional flaws. It illustrates a high threshold for challenges based on jurisdictional arguments related to territorial waters and a stringent approach towards allegations of breaches of natural justice within adjudication. Practitioners must be mindful of the broad territorial scope of the Construction Act as clarified in this case, and the robust enforcement policy which rejects speculative and non-material challenges to adjudicators’ decisions.