This article summarises Lapp Industries Ltd v 1st Formations Limited [2025] EWHC 943 (TCC), a case concerning the enforcement of an adjudicator’s decision. LAPP sought summary judgment to enforce an adjudicator’s award of £120,000 plus interest and Formations resisted enforcement on two well-trodden grounds: lack of jurisdiction and breach of natural justice.

Background to Dispute

In 2022, LAPP was contracted by Formations to carry out refurbishment works at 71-75 Shelton Street, London. On 14 April 2023, LAPP submitted an application for payment of £120,000. Formations did not issue a valid payment notice or payless notice, leading LAPP to assert that the application became the ‘default’ payment notice.

On 22 November 2024, LAPP commenced an adjudication. Formations challenged the adjudicator’s jurisdiction, arguing that there were “numerous contracts” meaning the adjudicator lacked jurisdiction to hear a dispute purportedly combining claims under multiple agreements and on 12 December 2024, the adjudicator ruled that the parties “had entered into a construction contract and that there was only one contract”. On 24 December 2024, the adjudicator found that the application was valid and that Formation were to pay the sum claimed.

Jurisdiction Argument

Formations contended there were numerous contracts and thus the adjudicator lacked jurisdiction to determine a dispute spanning multiple agreements. The court accepted LAPP’s assertion that there was a “single, overarching construction contract” that was expanded on an “ad hoc basis” through a series of accepted quotations.

The court said it was contrived and unrealistic for business people to consider an artificial carving up of what was a single project. This was supported by the facts including that: (i) all work was performed at a single site; (ii) advance payments and invoice payments did not correspond to individual quotations but covered work across different periods, supporting a single contract; (iii) the existence of fourteen quotations for a single site would make it surprising if there were fourteen separate contracts; and (iv) it is not unfamiliar in the construction industry to have one contract expanded by ad hoc agreements.

Citing Viridis UK Limited v Mulalley & Company Limited [2014] EWHC 268 (TCC), the court held that the adjudicator had jurisdiction to determine whether there was one or multiple contracts. This was necessarily involved in her substantive decision-making, and her conclusion on this point, even if arguably wrong in fact or law, did not divest her of jurisdiction. The court affirmed that “substance and jurisdiction overlap” in such cases.

Frolic of Her Own

The Court’s finding on this issue was insightful. First, it recited the approach laid down in Roe Brickwork Ltd v Wates Construction Ltd [2013] EWHC 3417 (TCC): “[An adjudicator] should not decide a point on a factual or legal basis that has not been argued or put forward in the submissions made to him [but can reach a decision] on a basis for which neither party has contended, provided that the parties were aware of the relevant material and that the issues to which it related were canvassed in the submissions.”

Formations argued that the adjudicator decided the application’s validity on reasons not raised or argued by the parties. The court rejected this. It said the adjudicator was tasked with determining the validity of the application and her observation about previous requests for advance payments flowed from the material which Formations had put before her as an exhibit to the response. The court found that this was not central to her reasoning and even if it was, the material had been put before her by Formations, who cannot now complain of the same.

Defences Allegedly Not Dealt With

The court considered the authorities, including that an adjudicator must “attempt to answer the question referred to him” and failure to consider a defence must be “deliberate” and “material” to render a decision unenforceable.

Formations claimed that the adjudicator failed to deal with two central defences: (i) the application did not comply with the Scheme requirements; and (ii) the application was withdrawn by a subsequent invoice. The court disagreed finding that: (i) the adjudicator carefully noted the points made and her overall conclusion on validity explicitly stated she took “a commonsense, practical view of the contents” and found the application to be a valid notice; and (ii) the adjudicator again carefully noted the points made and regarded it as an issue of implied withdrawal/estoppel/waiver arising out of the further invoice. The court said this was a “classic case of a losing party to comb through the adjudicator’s reasons and identify points upon which to present a challenge.”

Finally, the court briefly addressed Formations’ CPR Part 8 proceedings seeking a declaration on the validity of the application. The judge had previously ruled this was “not an appropriate use of Part 8” and invited Formations to consider pursuing it under Part 7.

Discussion

In terms of a frolic and a breach of the rules of natural justice, when exactly should an adjudicator canvass the parties? The court stating that the exhibit was put before the adjudicator by the responding party follows the approach in Roe Brickwork in that an adjudicator can reach a decision “on a basis for which neither party has contended, provided that the parties were aware of the relevant material and that the issues to which it related were canvassed in the submissions.”

So, it might be said that the adjudicator has a relatively loose reign. However, it is opined that taking this approach is fact dependent and were the adjudicator to find such material central and decisive, it might be prudent to consider canvassing the parties and avoiding the possibility of a frolic – or furthermore, the appearance of bias.