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Fraud can land the perpetrator in the Old Bailey, and in the nick. The victim can then applaud, clap, cheer 鈥� but how do they get their money back? Ah, well, that鈥檚 a civil claim; the state prosecutes the criminal fraud, but the victim sues on the civil fraud.

Can the victim use Construction Act adjudication to do this? Yes, if the events arise out of a construction contract. So a QS adjudicator appointed by the RICS can decide fraud. And the decision of a QS adjudicator in a fraud case will subsequently be enforced by the High Court. There is a chance, though, that the High Court will refuse to enforce an adjudicator鈥檚 award in a non-fraud case if the adjudicator was deceived by fraud.

Civil fraud is a false representation, such as inducing a party to enter into a contract, or deceiving them by an inflated invoice or application for payment, through a written or oral statement that the maker knows to be untrue or does not believe to be true 鈥� or even is reckless or careless as to whether it is true or not 鈥� and on which the victim then acted and suffered loss. But an honest belief in false representation is not fraud.

The discovery of fraud that does not impact on the adjudication cannot be deployed to prevent enforcement

I will tell you about a recent adjudication called Grandlane Developments Ltd vs Skymist Holdings Ltd, which subsequently ended up in the High Court. Allegations of fraud are at the heart of the matter. First, though, let鈥檚 look at the main principles that relate to claims in fraud when it comes to adjudication:

• Fraud or deceit can be raised as a defence in adjudications, provided that it is a real defence to whatever the claims are; obviously it is open to parties in adjudication to argue that the other party鈥檚 witnesses are not credible by reason of fraudulent or dishonest behaviour. 
• If an allegation of fraud is to be raised in an effort to avoid enforcement of an adjudicator鈥檚 decisions or to support an application to stay execution of the enforcement judgment, it must be supported by clear and unambiguous evidence and argument.
• A defence in the adjudication of fraud, which is decided upon by the adjudicator, is enforceable.
• A defence of fraud that was available but was not raised at the time of the adjudication, or that was not available because it only emerged after the adjudication, can be raised in an attempt to avoid enforcement, but only if it directly impacts on the decision of the adjudicator. The discovery of fraud that does not impact on the adjudication cannot be deployed to prevent enforcement. That principle holds good the intention of parliament through the Construction Act that adjudicators鈥� decisions are binding. Not even the well-known phrase 鈥渇raud unravels everything鈥� defeats the adjudicator鈥檚 decisions.

In Grandlane vs Skymist the longstanding relationship of trust and confidence between the two key people in the case sadly fell apart. Skymist鈥檚 owner, Elina Baturina, had purchased through her company Beaurepaire Park, an extensive country property in Hampshire, to become her new family home. It required 拢12.5m worth of work, and the job of her 鈥渢rusted agent鈥� Mr Olgert Deinis of Grandlane was to engage the engineers, designers, architects and so on. Even the best of friends fall out; and these two did. In October 2017, the client dismissed her friend. But by then Grandlane had placed contracts for services of all sorts on the job. One such was with architect PTP. Grandlane now asked Skymist for the sums due through Grandlane to the folks providing all these services, and for its own fees. This came to over 拢2m. The RICS appointed the adjudicator, Mr John Riches. 

I like the later remark by Mrs Justice Jefford in the High Court: 鈥淢r Riches observed in the course of his decision that the parties had been relentless in ensuring that they both had every opportunity to say everything they wished to say. Mr Riches is a highly experienced adjudicator and well placed to make such an observation and it gives a flavour of a hard-fought adjudication.鈥� That was not merely a pleasantry recited by the judge. It was important, because nothing was alleged in the adjudication itself about any fraud. It was only when Mr Riches鈥� decision came to be enforced by Grandlane to obtain the money that Skymist raised its suspicions that Grandlane and PTP had colluded to inflate PTP鈥檚 fees. 

The judge heard senior barristers鈥� argument about the unfolding events in which Grandlane carried out its services and engaged the architect, and she saw the fee note claims from the architect. She was looking for evidence of fraud: clear, unambiguous evidence. At the same time the judge was considering whether the matters now put to her could have been raised in the adjudication. She decided that there was not sufficient evidence of fraud, but that even if there had been such evidence, these were all matters that could have been raised in the adjudication. And, given the remark by Mr Riches that the parties 鈥渉ad been relentless in ensuring they both had every opportunity to say everything they wished to say鈥� the decision of Mr Riches was to be enforced; no stone had been left unturned. 

Tony Bingham is a barrister and arbitrator at 3 Paper 好色先生TVs, Temple