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

I start first with the Defendant submissions because unless the Defendant can establish one of the few defences to enforcement of an adjudicator’s decision, the Claimant will be entitled to summary judgment. The Defendant asserts that there was a breach of natural justice because the adjudicator used his own rates when assessing the value in five of the eight Relevant Changes and he remeasured work done (using the documentation provided in respect of one of the Relevant Changes) without informing the parties that he intended to do this and without giving them the opportunity to comment on the suitability of doing that.

The Defendant relies upon three cases in particular:Primus Build Limited v Pompey Centre Limited; Roe Brickwork Ltd v Wates Construction Ltd and the Scottish case of Van Oord UK Ltd v Dragados UK to assert the breach of natural justice. Relying on those cases, the Defendant asserts that by deciding new rates and a new measurement without consultation, the adjudicator plainly went too far in deciding an alternative way, not advanced by the parties, to value aspects of Application 37. That being so, the Defendant asserts that the rates and measurement were not fairly canvassed and the adjudicator had not simply adopted an intermediate value within the range contended for by the parties.

The Defendant asserts that this breach was material because it was founded on a novel analysis of the materials. As such, if consulted, the Defendant may have had a reasonable prospect of successfully objecting to the basis chosen by the adjudicator. The Defendant asserted that adjudicator’s decision was not so obviously correct that the Defendant had no realistic prospect of success. By choosing new rates, the adjudicator “made good” the Claimant’s case, as was the position in Balfour Beatty Construction Ltd v Lambeth LBC. In that case, the adjudicator had not informed the parties of the methodology which he proposed to adopt nor did he invite submissions as to whether that proposed methodology was reasonably and properly used in the particular circumstances.

The Defendant recognised that there were other cases such as Roe Brickwork v Wates where the adjudicator had heard submissions on whether to apply a day works rate or a costs plus profit means of calculating loss. The adjudicator there decided to come to a valuation using a combined day works and profit rate. This was considered not to be a breach of natural justice. The Defendant submitted that decision was justified because the appeal judges could work through the adjudicator’s calculations to understand precisely what had been done. The Appeal Court found that the decision of the adjudicator was immaterial in respect of the alleged breach in any event because, had he consulted the parties, the result “would probably have been the award of a greater amount…”.

The Defendant submitted that there was ample opportunity for the adjudicator in this case to state his intentions or directly seek submissions concerning the new rates and measurement. The fact that additional workings were provided by the adjudicator after the decision underlines the fact that further explanation was required to enable the parties to start to understand his decision. However, in any event, the list of numbers with the simple explanation that the adjudicator had decided upon a “new rate” was not sufficient to enable the parties to understand how the adjudicator had arrived at the new rates.

This was a material breach because the new rates affected a substantial proportion of the total sums in dispute. The Defendant notes that the difference between the parties’ gross valuations in respect of all items contained within the eight Relevant Changes totalled £738,469.58, which is approximately 71% of the difference between the parties’ gross valuations of Application 37. The difference in the gross valuation between the parties in respect of the five Relevant Changes affected by the new rates and measurement was £407,246.86, or approximately 55% of the value of the eight Relevant Changes.

Further, as the Defendant could not understand how the adjudicator decided upon his new rates, it was impossible to say what defences might have been raised to his methodology or figures by either party. On that basis, it is reasonably arguable that the Defendant may have been able to challenge the new rates and the measurement so as to substantially reduce its liability under the decision.