Dorchester Hotel v Vivid Interiors: Court Intervention

January 2009

The Dorchester Hotel had engaged Vivid Interiors, under a JCT standard form contract to carry out the refurbishment of its hotel. Vivid completed the works in September 2007 and submitted a draft final account around the end of March 2008. On 19 December 2008, just before the Christmas holiday, Vivid Interiors referred its final account to adjudication.  The Referral, which was some 92 pages, was accompanied by 37 lever arch files, including new files containing six detailed witness statements and two experts' reports. Many of the figures had been modified, albeit by a small amount, from the March submission.

An adjudicator was appointed but he advised that a condition of his appointment was that the Christmas holiday period would not be included in the 28-day adjudication period.  Vivid agreed to this so that the date for the adjudicator’s decision became 28 January 2009.  Although the adjudicator believed this to be sufficient, Vivid agreed to extend the period for the Dorchester’s response so that it had until 28 January 2009 and the adjudicator was to reach his decision by 28 February 2009.

The Dorchester maintained throughout that the timetable was extremely tight and it was very likely that there could be a breach of natural justice if it was forced to respond in the time available.  The Dorchester therefore commenced Part 8 proceedings to seek declaratory relief to the effect that “there is a serious risk of a breach of natural justice in the conduct of the adjudication … and, unless the parties agree a realistic timetable …, any decision issued by the adjudicator against the existing timetable … would be unenforceable by reason of breach of natural justice”.

The matter was brought before Mr Justice Coulson who decided that he did have jurisdiction to consider applications for declaratory relief in such circumstances.  However, on the facts of this case he declined to give the relief sought on 4 separate grounds:

• The adjudicator had made it clear that he could determine the adjudication by 28 January 2009 or indeed the extended date.  In line with CIB vs Birse [2005], it was up to the adjudicator to decide whether he was able to reach a fair timetable in the time available.
• He did not believe that the timetable in this case was incapable of giving rise to a fair result.
• Mr Justice Coulson did not consider that he was not in a position to be able to say whether or not the new material would lead to a breach of natural justice.
• Even if the declarations were refused, the Dorchester would not be left without a remedy.   It would still be open to them to resist enforcement proceedings at a later stage.

This case underlines the position that only in the rarest of cases will the courts intervene in an ongoing adjudication.  It is interesting to note that Mr Justice Coulson thought that the situation in CJP Builders Ltd vs William Verry Ltd [2008] would have warranted such an intervention.

The full judgement can be downloaded here.

Dorchester Hotel Ltd v Vivid Interiors Ltd [2009] EWHC 70 (TCC)

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