The Technology & Construction Court decision in聽 Lobo v Corich & Anor聽 [2017] EWHC 1438 shows that a party cannot simply turn a blind eye to adjudication and other proceedings, thinking that the rules of natural justice and procedural fairness will save it.聽
Here a Contractor failed to engage in adjudication and subsequent proceedings against it. It then sought to set aside the adjudication decision and orders. Was it able to do so? The court scrutinised both the contractual service provisions and the Contractor鈥檚 conduct.
The facts
On 19 May 2010 Mr Emile Lobo and Dr C.E Lobo (鈥楨mployer鈥�) entered into a JCT Intermediate Building Contract, Revision 2 2009 with Mr Corich (鈥楥ontractor鈥�), a music publisher and property developer. The Contract related to the carrying out of works for a Contract Sum of 拢683,000. The date for completion was 鈥�60 weeks鈥�. The Contractor travelled a lot and was associated with a number of properties both in the UK and elsewhere.
Under the Contract, notices or communications had to be in writing. These, together with any documents, could be transmitted electronically or otherwise. Where delivered by hand or sent by post, they had to be sent to the recipient鈥檚 address in the Contract Particulars (for the Contractor, 7 Gunter Grove London) or any other notified address; alternatively, to the recipient鈥檚 last known principal business address or registered/ principal office.
In spring 2014 the Employer exercised its contractual rights to terminate the Contractor鈥檚 employment. Termination notices were served by special delivery to 7 Gunter Grove. Because the Employer was concerned to ensure service was effective, notices were also served at other addresses and emailed to a number of the Contractor鈥檚 email accounts.
In May 2014 the Contractor emailed from one account to reject the reasons for termination.
In February 2016 the Employer issued a certificate for sums due. In the absence of payment it referred the dispute to adjudication in September 2016. The adjudication notice was served by hand to 3 addresses (including 7 and 25 Gunter Grove) as well emailed to 4 accounts. In October the Contractor was served with the adjudication decision against it 鈥� by post to 7 Gunter Grove and by email to four email accounts. Each email had subject lines such as 鈥楢djudication: Lobo v Corich鈥� or 鈥楢djudication: Lobo-c-Corich鈥�.
When the Contractor failed to pay, the Employer issued proceedings. Notices were served in January 2017 by hand to 7 and 25 Gunter Grove and also by email. The Court鈥檚 subsequent order granting summary judgment (for 拢630,022.66 plus indemnity costs) and an interim charging order over 25 Gunter Grove were also sent by post to 25 Gunter Grove and by email to the 4 email accounts.
Only in March 2017 did the Contractor engage. He instructed solicitors to:
- 聽聽聽聽聽 聽issue Part 8 proceedings seeking to set aside the adjudicator鈥檚 decision; and
- 聽聽聽聽聽聽聽set aside the Court鈥檚 summary judgment and interim charging order, alternatively to stay聽 聽execution pending the outcome of his applications.
Why? Because he claimed he had been unaware of matters until early March. He claimed the adjudication decision was reached in breach of natural justice principles and it was procedurally unsound and unfair. It had proceeded in his absence and 鈥渨ithout [his] ever having been made aware of any aspect of the Adjudication such that he played no part in it and could not put forward his case on the merits. 鈥�"
Questions for the Court
The Court had to decide:
- 聽Was the Defendant aware of the adjudication proceedings or the Claimant's court proceedings?
- 聽Were the adjudication proceedings properly constituted with due notice being given to the Defendant?
- 聽Were the Claimant's proceedings duly served on the Defendant?
- 聽Should the adjudication decision and/or summary judgment and/or charging order be set aside?
The Judgment
- Yes: In relation to emails, the Contractor had used all 4 email accounts in and from September 2016.
鈥淎s an educated and intelligent businessman, the [Contractor] should have been fully aware of the need to identify potential disputes and litigation when checking his emails.鈥�
If he wasn鈥檛 aware of the existence of emails that could only have arisen as a result of 鈥渁n extraordinarily casual laxness in failing to look even at the subject lines of emails with sufficient care to see what they were about, compounded by a complete lack of curiosity about the identity of the senders of emails.鈥�
The Contractor鈥檚 lack of knowledge resulted from a conscious decision- not to open emails and not to look at physical documents. The Court also rejected his suggestion that he neither saw nor picked up the documents at 25 Gunter Grove. 鈥淗e may not have picked them up, but they were there to be seen and, if he did not do so, it was as a result of a conscious sifting process.鈥�
- Yes: The Court held the Adjudication Notice and Referral Notice were effectively served and the adjudication was properly constituted with due notice being given to the Defendant.
- Yes: The Employer was correct to serve proceedings on the Contractor at 25 Gunter Grove. This was his 鈥渓ast known place of residence鈥� and also the address where the Contractor had the closest residential connection even though he was staying at a partner鈥檚 elsewhere. The proceedings were duly served.
- No to all parts: There was no breach of natural justice or procedural unfairness towards the Contractor.
Even if the Contractor had unconsciously failed to pick up the relevant emails or documents (which it hadn鈥檛) this still would not have justified setting everything aside. The Contractor 鈥渨ould have only himself to blame for such a protracted, pervasive, serious and inexplicable failure to behave with the prudence of a normally intelligent and educated businessman.鈥�
Conclusion
An unsurprising result with two lessons.
First, Employers and Contractors should ensure they scrutinise all emails, correspondence and documents received.聽
Second, if as a Claimant you are faced with no engagement by the other side, do not assume that you are free to proceed without the need to question this. Although there is no duty to ensure they are aware of proceedings, a failure to ensure they know what is going on may still risk an application to thwart your progress.
About the author: Sarah Evans is a senior associate in the construction department of law firm Irwin Mitchell.
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