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

The Claimant seeks summary judgment and denies that there has been any breach of natural justice, much less a serious breach. The Claimant argues that the adjudicator was absolutely entitled to use his own knowledge and experience in order to come to a gross valuation of Application 37. In any event, when the facts are analysed properly, the Claimant argues that the Defendant has no prospect of establishing that there is any injustice, let alone anything which could be described as substantial injustice.

The Claimant submits that complaints about the new rates are “excessively granular” and are, in effect, a smokescreen to attempt to distract from the key facts. The adjudicator was asked to provide a gross valuation of Application 37, which application included the eight Relevant Changes. Each Relevant Change had multiple items and sub items. The adjudicator’s valuation of every disputed sub item was within the range established by the parties’ rival valuations in their submissions.

The Claimant notes that the adjudicator was not tasked with making declarations as to the rates to use for valuing each of the various items and sub items. His task was a much broader one, namely that of valuing the entirety of Application 37, included in which gross valuation would of course be the Relevant Changes and their sub items.

Moreover, the Claimant submits that the Defendant faces a more fundamental difficulty. In order to vitiate a decision, any breach of natural justice must be serious or of considerable potential importance to the outcome. The Claimant asserts that is not the position here. In the witness statement of Mr Barge, the Defendant asserts an impact in respect of natural justice on both parties. The Claimant emphasises that it does not object to the methodology used by, nor the outcome of, the decision of the adjudicator. In that situation, even if there was any breach, the Defendant cannot rely on any unfairness alleged to affect the Claimant as a reason to refuse summary judgment. In reality therefore, as the argument advanced by the Defendant is breach of the rules of procedural fairness, the Defendant must establish that such procedural unfairness causes substantial injustice to the Defendant.

The Claimant argues that the Defendant engages in a nitpicking exercise about the use of new rates without consultation. The difficulty with that approach is that, without exception, the rates which the adjudicator used to arrive at overall valuations in respect of the Relevant Changes were within the range established by the parties’ contentions. Further, “even at this excessive level of granularity” and treating the single re-measurement as a new rate, in all but two cases the use of the new rates was more advantageous to the Defendant than at least one of the unobjectionable rates which could have been chosen by the adjudicator, without needing to consult. Those unobjectionable rates are the Claimant’s rate, the Defendant’s rate or a crude “split the difference” rate.

The two exceptions (the use of the adjudicator’s own measurement in EAI 22 and the use of a different rate when valuing EAI 29A) meant an increase in the valuation against the Defendant of less than £2,600. That increased figure equates to less than 0.2% of the Relevant Changes. Moreover, those increases are vastly outweighed by more than £202,000 resulting from the adjudicator’s use of the new rates which were more favourable to the Defendant than the rates which the adjudicator could unarguably have used without further consultation.

In his evidence, Mr Cook set out a table of hypothetical scenarios to demonstrate the outcome of various rates which the Claimant submits could have been chosen by the adjudicator without any justifiable objection by the Defendant because the rate used by the adjudicator was the rate proposed by either the Claimant or the Defendant, a crude “split the difference” or a rate more favourable to the Defendant than those proposed by the parties. In all those circumstances, the rates adopted are more favourable to the Defendant. Thus there cannot be a serious breach of natural justice affecting an issue of considerable potential importance to the outcome for the Defendant – the Defendant is better off.

The only scenario in which the Defendant may have a justifiable complaint against the use of a new rate, depending on the facts, would be if the adjudicator generated a wholly uncanvassed case, rather than assessing the case from the materials provided to him by the parties, and the use of any new rate was material to the outcome and materially prejudiced the Defendant. Here, the plain effect of the two new rates which went against the Defendant were obviously de minimis (less than 0.2% of the adjudicator’s valuation of the Relevant Changes alone) when one considers the value being assessed overall by the adjudicator both of the Relevant Changes and of the gross valuation of Application 37. In short, submits the Claimant, it is a nonsense for the Defendant to suggest that it is entitled to complain about the use of new rates and a single remeasurement which have the overall effect of very substantially reducing the amounts payable to the Claimant. That is particularly the case when the figures are compared with the position which would obtain if the adjudicator had accepted the Claimant’s rates (the use of which rates would be plainly unobjectionable) which he could have used without any consultation.

The Claimant submits that there is also no merit in the Defendant’s submission that the reasons set out in the decision were inadequate to understand what conclusion the adjudicator had reached on the principal controversial issues. Decisions on values reached by the adjudicator were in between the parties’ rival positions on valuation. This is not an exceptional case of the kind envisaged by the Court of Appeal where an adjudicator’s failure to put his provisional conclusions to the party will constitute such a serious breach of the rules of natural justice that the court would decline to enforce the decision. These decisions are an intermediate position for which neither party was contending in respect of value. The position is analogous to the Arcadis case. The fact that the adjudicator may have got it wrong is entirely irrelevant.

The adjudicator here was not bound to accept the entirety of either party’s case on valuation on any of the Relevant Changes. If he did not accept the parties’ submissions, his task was to value each Relevant Change in accordance with clause 5 of the contract, evaluating and comparing that change with work items for which there was a contract sum analysis (“CSA”) rate. That is precisely what the adjudicator asserts he did in his replies to the emails sent by the Defendant after the decision was given and, unobjectionably, he reached an intermediate position for which neither party was contending. It is wholly unrealistic in the context of interim applications for payment which need adjudicating to insist that there is detailed description of how a particular rate was reached in respect of every minor change in the various sub items set out in the Relevant Changes.

Even in respect of the aspects of the adjudicator’s decision which went against the Defendant’s submissions, those aspects are further complicated because the parties and the adjudicator adopted different approaches to grouping items under some of the sub items in different numbered EAIs. Some adjustment would therefore be needed to compare like with like. The very fact that this would need to be done shows how wholly unrealistic the Defendant’s criticisms are, given the task allocated to the adjudicator of providing the overall gross valuation of Application 37.

The practical context is important and the Claimant argues that the practical context has been ignored by the Defendant in its nitpicking approach. Arguing against the new rates is unjustified when a higher rate could have been imposed by the adjudicator and there could have been no argument. The reliance on Balfour Beatty v Lambeth LBC is misplaced. In that case, the adjudicator did one party’s work for it, creating a critical path in respect of EOTs without any analysis as to critical and non-critical events in circumstances where, without the creation of that critical path, no or no material EOT could have been granted on the basis presented by the other party. It was against that background that the adjudicator was required to have raised those issues with the parties in advance of finalising his decision.

The reality is that the 1996 Act and Scheme can only be made to work in practice if some breaches of the rules of natural justice which have no demonstrable consequence are disregarded. The provisional nature of these decisions justifies ignoring non-material breaches. The adjudication process is inevitably a rough and ready process and that is why errors of fact and law by adjudicators are disregarded for the purposes of enforcement action. The Defendant’s approach is therefore obviously too granular. If there was any technical breach, it would not in any event be material looking at the facts. In short, the Defendant “is simply scrabbling about for reasons to avoid payment”.