HT-2025-LDS-000006 - [2025] EWHC 2173 (TCC)

Date

Document / Event

15/10/2024

Notice of adjudication.

17/10/2024

The Claimant applied to the Royal Institute of Chartered Surveyors (“RICS”) for the nomination of an adjudicator.

18/10/2024

RICS nominated Mr Michael Shilcock as the adjudicator.

19/10/2024

Mr Shilcock accepted nomination setting out a provisional 28 day timetable. The adjudication decision was given 87 days from referral.

22/10/2024

Referral

The referral included a request for a number of declarations, including that the gross valuation of the Application 37 was £23,502,636.65 plus VAT or “such other sum as the adjudicator may decide”. The referral included submissions about retention from the gross valuation and sums which should be deducted from it including an assessment of EOTs and LADs.

The referral included a table summarising the eight items where, in respect of eight Employers Agent Instructions (“EAIs”), the principle of the change was agreed but the quantum of the each change was in dispute (“the Relevant Changes”) as follows:

05/11/2024

Response

The response of the Defendant included the figure it asserted should be the gross valuation sum “or such other sum as the adjudicator may decide”. The Defendant also responded concerning the retention rate and other possible deductions.

26/11/2024

Reply.

06/12/2024

Rejoinder.

12/12/2024

Surrejoinder.

09/01/2025

The adjudicator invited for further submissions in respect of item 4 EAI 27.

14/01/2025

The Claimant provided further submissions on EAI 27.

14/01/2025

The Defendant provided further submissions on EAI 27.

17/01/2025

Decision

The adjudicator gave his decision (running to 88 pages) on 17 January 2025. He decided:

(a) the Defendant’s payment notice had undervalued the amount due to the Claimant in respect of the eight Relevant Changes,

(b) the Claimant was entitled to EOTs,

(c) as a result of the entitlement to the EOTs, the Defendant’s entitlement to LADs was reduced, and

(d) the Claimant was entitled to suspension costs and to thickening costs.

After deduction of the LADs, the Defendant was ordered to pay the Claimant £541,880.12 plus VAT in respect of Application 37, interest at the contractual rate of 10% from the final date of payment and his adjudicator’s fees, if they had been paid by the Claimant.

It is not necessary for the purposes of this judgment to set out any of the individual figures adjudicated. However, it is necessary to set out certain matters considered by the adjudicator. His decision ran to 88 pages.

He set out clearly the dispute which had been referred to him in respect of Application 37. He also set out:

(1) details of the determinations sought by both parties in respect of the gross valuation of application 37;

(2) details of the submissions in relation to what should be retained and the sums and period sought in respect of LADs and EOTs, knowing that he had to provide reasons;

(3) the timetable of the adjudication; and

(4) the details of the submission and correspondence from both parties.

In his decision, the adjudicator gave reasons for his decision in respect of the EOTs and the LADs for the works contained within the dispute referred. Those reasons set out broadly the submissions made by both parties before coming to his decision.

The adjudicator then went on to consider the value of the Relevant Changes, again setting out the submissions of the parties in respect of each Relevant Change before giving his reasons for the amount he decided were due.

Where the adjudicator decided to use his own “fair and reasonable” rate, after setting out the positions of each party, he explained that he had considered the work involved in respect of each of these disputed values, using his own “first principles view” of the work involved. Then he considered the valuation rules in clause 5 of the Contract and set out the rate. In relation to the single remeasurement, he explained his reasons for the remeasurement and why he thought that the calculation of Mr Webb was wrong.

20/01/2025

The Defendant emailed the adjudicator seeking clarification of the decision. In respect of five of the Relevant Changes, (EAI numbers 7, 22, 27, 29A and 68B), the Defendant identified the rates which the adjudicator had decided were “fair and reasonable” to value those Relevant Changes. The adjudicator was asked to explain “the basis for” the using those rates. There was also a request for the adjudicator to provide his workings.

20/01/2025

The adjudicator responded by email to the parties and provided his workings. He also responded to the specific questions asked, acknowledging that he had decided some new rates, determining them as a “fair valuation” pursuant to clause 5.4.2 of the contract.

He stated that the parties had invited him to use his discretion to determine the value of various items. They provided him with the contract so that he knew the valuation rules to apply. In addition, they provided details of their measurements and drawings to enable the adjudicator to understand how the structure was affected. Having been provided with that information, he did not believe that reference back to the parties for their observations in respect of new rates was required.

20/01/2025

The Defendant sent a further email which asserted that the adjudicator was in breach of natural justice and the decision should not be enforced because he had used new rates and also appeared to have used different measurements in order to reach his valuations for some of the Relevant Changes.

21/01.2025

The adjudicator responded by email, disputing that he had in some way breached the principles of natural justice, noting that he was asked to provide a gross valuation on the value of Application 37 by both parties at the figure they contended for, or “such other sum as the adjudicator may decide”.

The adjudicator stated:

“During the course of the Adjudication, the Parties made their submissions on measure and value and provided me with a copy of the Contract enabling me to see the valuation rules to apply, the CSA to allow me to determine analogous rates, and also the ability to make a ‘fair valuation’ where the rates did not apply. The latter is a wide discretion normally afforded to the Employer's Agent but substituted in an Adjudication to the Adjudicator. The Parties also provided me with details of their measurements, as well as drawings referring me to the changes to the structure to inform me of how they were affected and invited me to use those details in my determination.”

“The Parties invited me to use my discretion to determine the values of the various items. The Act provides that I may take the initiative in ascertaining the facts and the law; where necessary I would refer back to the Parties if I considered that a new piece of evidence or a different aspect of the law required their submissions, however the

basic execution of the task given to me, to determine the values of various elements of Interim Payment No 37, and being provided with the necessary information to do so, does not in my opinion require the reference back to the Parties for their observations. The Parties have asked me to use the information provided by them and my own

experience, to determine the values of the items in dispute, which process may include accepting one or other of the Parties’ valuations or forming one of my own.”

“I would respectfully suggest that my actions are not a breach of natural justice, but merely the fulfilment of the task set by the Parties to evaluate the disputed Changes.”

22/01/2025

The Defendant replied to the adjudicator’s email of 21 January 2025. The Defendant asserted that the workings provided on 21 January 2025 should have been provided within the decision. In addition, the decision did not allow the Defendant to understand the basis upon which the adjudicator used those new rates nor what their “technical and evidential” basis was. Further, the adjudicator had used new rates, methodologies and the different measurement to come to his decision on those Relevant Charges without informing the parties of the method he proposed to use and without giving the parties the opportunity to make submissions on the new method. As a result, the Defendant asserted that the adjudicator’s decision was not enforceable.

22/01/2025

The Claimant’s solicitors emailed the adjudicator to inform him that the Claimant had paid his fees. They also stated that if, as had happened on previous occasions, the Defendant failed to pay the sums adjudicated, enforcement proceedings would be issued.

27/01/2025

The Defendant sent a follow-up email to the adjudicator, and to the Claimant, stating again that it considered the adjudicator was in breach of natural justice or jurisdiction and the decision was unenforceable.