Adjudication Case Law Update 2024: Part 2

In the second edition of our 2024 Court Decision Summaries, Kenneth Salmon MCIArb, consultant solicitor at Slater Heelis LLP, summarises recent court decisions concerning the enforcement of adjudicators' Awards under the Housing Grants, Construction and Regeneration Act 1996. 

In Part 2 

Jurisdiction – Whether alternative claims were separate disputes 

Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 10 (TCC) DJ Baldwin judgment 27 November 2023 

Jurisdiction – Validity of appointment of adjudicator from employer’s panel – power to award repayment after earlier negative valuation 

Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 269 (TCC) HHJ Stephen Davies judgment 12 February 2024 

Strike out stay refused despite jurisdiction mandatory adjudication clause 

Lancashire Schools SPC Phase 2 Limited v Lendlease Constructions (Europe) Ltd [2024] EWHC 37 (TCC) 

Natural justice - Had the adjudicator failed to address material lines of defence? 

UK Grid Solutions Ltd and Amey Power Services Ltd v Scottish Hydro Electric Transmission Ltd [2024] CSOH 5 Legislation 


The “Act” means the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 Pt 8. The ‘new’ provisions apply to contracts entered into on or after 1 October 2011. The Act applies to England and Wales, Scotland and Northern Ireland. 

The main regulations are contained in the Scheme for Construction Contracts (England & Wales) Regulations 1998 (the ‘Principal Regulations’). [1] They have been amended by the Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 [2] (the ‘new Regulations’). The new Regulations apply only to contracts for construction operations in England entered into on or after 1 October 2011. For earlier contracts, the Principal Regulations apply. Northern Ireland has its own scheme: the Scheme for Construction Contracts in Northern Ireland 1999 as amended by the Scheme for Construction Contracts in Northern Ireland (Amendment) Regulations (Northern Ireland) 2012. The Northern Ireland Scheme is broadly similar to that in force in England and Wales. There are separate regulations for contracts for work in Scotland applicable to contracts made on or after 1 November 2011. [3] 

The new Regulations apply only to contracts for work in Scotland entered into on or after this date. For earlier contracts the Scheme for Construction Contracts (Scotland) Regulations 1998 [4] applies. There are new separate regulations for Wales, applicable to contracts for construction operations in Wales entered into on or after 1 October 2011. [5] A reference to “the Scheme” is to the Principal Regulations for England and Wales, or the Scheme for Scotland, Wales, or Northern Ireland, as the context requires. 


Jurisdiction – Whether alternative claims were separate disputes 

Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 10 (TCC) DJ Baldwin judgment 27 November 2023  

A claim for payment of a sum in a payment application as a notified sum under the Act (a “smash and grab”) or, in the alternative for a “true valuation” on a substantive basis produced by the contract, was a single dispute. The adjudicator had not exceeded his jurisdiction in going on to decide the true value of the amount after dismissing the smash and grab because the payment application was invalid. 

Jurisdiction – Validity of appointment of adjudicator from employer’s panel – power to award repayment after earlier negative valuation 

 Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 269 (TCC) HHJ Stephen Davies judgment 12 February 2024 

The adjudicator had been validly appointed from the employer’s panel of three even though the appointment was partly pursuant to the provisions of the amended contract and partly pursuant to the Scheme. The contract provisions were compliant with the Act and there was no implied bias. The amended contractual payment provisions did not prevent the employer from recovering an overpayment on an earlier negative interim certificate; the adjudicator had the same power as the court to order repayment on a ‘dispositive’ basis. 

Strike out stay refused despite jurisdiction mandatory adjudication clause 

 Lancashire Schools SPC Phase 2 Limited v Lendlease Constructions (Europe) Ltd [2024] EWHC 37 (TCC) 

The court refused either to strike out the claim or stay the court proceedings against the fourth defendant (Lancashire County Council) despite the presence in the contract of a mandatory provision that any dispute first be referred to adjudication. Even though the contract was one containing a statutory right of adjudication, it would be disproportionate to strike out the claim. Further a stay would not resolve all the issues due to the multi-party nature of the dispute and could lead to procedural complications where claims against other defendant could proceed in the absence of the fourth defendant. 

 Natural justice - Had the adjudicator failed to address material lines of defence?   

 UK Grid Solutions Ltd and Amey Power Services Ltd v Scottish Hydro Electric Transmission Ltd [2024] CSOH 5 

The court rejected arguments that the adjudicator had failed to consider material defences raised by the responding party, or that errors in his order for payment rendered the decision unenforceable. 

 Court decision summaries in full 

Click on the options below to read a full summary and analysis.

Jurisdiction – Whether alternative claims were separate disputes

Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 10 (TCC) DJ Baldwin judgment 27 November 2023


The claimant (Bellway) as assignee of R applied to enforce the decision of Mr Timothy G Bunker awarding them £148,431 in a ‘true value’ adjudication (TVA). The defendant (Surgo) opposed the application on the grounds that there was more than one dispute, arguing that the adjudicator lacked jurisdiction or he had exceeded his jurisdiction in making a true value award having already decided that the payment application (PA) was invalid in the context of the "smash & grab" aspect of the adjudication.


R had referred a dispute over payment of its PA to adjudication. In both its notice and referral R claimed the sum of £152,225 on the basis that Surgo had failed to issue a payment notice or timeous pay less notice, meaning the amount of the PA was the sum due. In the alternative, if the adjudicator found they were not entitled to payment of the notified sum in PA, they asked the adjudicator to determine the true value due to them in respect of the PA. R put is entitlement in these terms:


  1. The Referring Party submitted its Application for Payment for December 2022 on 22 December 2022 at 16:59 ("the Application"), which specified the sum due at the payment due date and the basis on which that sum was calculated, in the amount of £152,225.23.
  2. The Responding Party failed to issue either a payment notice or a pay less notice and the Referring Party's primary position is that the Application became the notified sum which the Responding Party failed to pay on or before the final date for payment.
  3. Further or in the alternative, the Referring Party is entitled to an amount due up to end December 2022, calculated on a substantive basis, in such sum as the Adjudicator shall decide.

In terms of the relief sought, they asked for:


(1) a decision that, in respect of the Application, £152,225.23 is the sum due to the Referring Party on the Due Date or, alternatively, such sum as the Adjudicator shall decide;…"


Having dismissed a jurisdictional challenge by Surgo, the adjudicator went on to find that the PA was not a payment notice such as to give rise to a notified sum to found a “smash and grab” outcome. It so decided because the PA lacked any detail, being no more than a statement of dates and amounts of various invoices which in turn claimed payment for additional works. He therefore turned to consider what he found to be the alternative claim for a true valuation of the payment due at the date of the PA. He arrived at a “true value” and made his award in those terms.


One dispute or more than one?


The court was referred to and considered a number of cases. Both parties relied on Witney v Beam Constructio [6] and, in particular, Akenhead J's consideration of HHJ Thornton KC's judgment in Fastrack v Morrison Construction [7] as well as extracts from Coulson on Construction Adjudication at 7.100 – 7.101. Surgo also relied on Grove Developments v S&T (UK) Ltd [8] noting what Sir Rupert Jackson said at para. 95 namely that "payment bargains" and "valuation bargains" are separate and distinct, arising from the statutory regime and the true valuation approach respectively and arguing that the distinction applied to the difference between the production of a notified sum under the Act in a “smash and grab” and a “true valuation” produced by the contract. They argued that the two claims were independent of one another. For Bellway it was said that the two disputes were raised in separate adjudication notices and nothing in Grove could be said to prohibit the bringing of such bargains together as alternative routes to establishing a claim for the same (or "a") remedy for the same payment cycle.


The court decided this was a case of a single disputed claim for a sum due for the following reasons:

  • The wording of the notice of adjudication clearly characterised the dispute as a failure to pay any sum due to the claimant by the final date for payment, whether by means of a notified sum or by way of a substantive amount due up to the end of December 2022;
  • Characterising the issues as separate disputes would be to adopt too legalistic an approach to the exclusion of a task readily performed by the adjudicator on the facts presented and within the timescale afforded by the Scheme.
  • There was no real reliance by the defendant upon a factual matrix which would allow a clear conclusion of true independence in fact. On the contrary, the distinction sought to be drawn was a legalistic one;
  • The underlying facts, insofar as they assist, only amount to an alleged failure on the part of the Surgo to pay R any sum due by December 2022 for 14 more kitchens than originally contracted for [81-2]. Factually, the character of this matter was that there are two routes advanced to the same goal of determining a sum owed;
  • Whilst the smash & grab claim can clearly be decided without deciding the true value claim, that did not persuade the court these were to be envisaged as separate claims as perceived by Akenhead J at para. 38(vii) of Witney. Indeed, the "complete subservience" issue raised by Surgo tended to support a view that the true value issue could not be decided, sensibly, without deciding the notified sum issue, which could be characterised as establishing a clear link between the two;
  • In the court's experience it was not unique for such issues to be combined within one adjudication referral, as alternative outcomes;
  • Overall, the dispute could fairly and straightforwardly be described as a single, disputed claim for a sum due.


Excess of jurisdiction?


This question called for decision, in light of the finding that the adjudicator had jurisdiction. 


Surgo’s case was that in deciding the true value after dismissing the PA as invalid, the adjudicator exceeded his jurisdiction.


The court found the adjudicator had done precisely what he was asked to do. In finding that the PA did not amount to a payment notice he had not found it was invalid for all purposes. It still amounted to a claim for payment that provided a substantive basis for a trued value assessment. The court pointed out that this was not a simple claim for “such other sums as the adjudicator thinks fit”. It was a claim for an alternative assessment on a “substantive basis”.


Summary judgment granted.


Jurisdiction – Validity of appointment of adjudicator from employer’s panel – power to award repayment after earlier negative valuation

Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 269 (TCC) HHJ Stephen Davies judgment 12 February 2024


Following the judgment of DJ Baldwin, Bellway sought to enforce the decision of the adjudicator, Mr Cope, in the fourth adjudication. Here, he had made a true value award which resulted in Bellway having overpaid Surgo by a sum in excess of £1m. Surgo opposed the application on the basis that for one or both of two reasons Mr Cope had not been properly appointed and his decision was therefore invalid.


Firstly, by its Part 8 claim Surgo sought declarations to the effect that there was no proper legal basis for Mr Cope to decide a true value adjudication in respect of the current interim payment cycle and, secondly, that Surgo had been overpaid on a previous interim payment cycle and should repay Bellway the amount of the overpayment. This raised questions as to the true meaning of the amended contractual payment provisions, and whether they prevented Bellway from recovering any overpayment arising from an interim certificate, other than from the final certificate.


The contract was a JCT Intermediate Form with a schedule of bespoke employer amendments. The relevant amendments were:


  • To the conditions and particulars relating to adjudication: an application to appoint an adjudicator was first to be made by request to each in turn of 3 named adjudicators on Bellway’s Panel; if all 3 were unavailable within 2 days of request, then application could then be made to the adjudicator nominating body (RICS) with a view to referring the matter to the adjudicator “as soon as reasonably possible after” (rather than within 7 days of the request as required by the Scheme).
  • A new payment clause 4.9A was added, providing that: "For the avoidance of doubt, the Employer shall be entitled to recover from the Contractor any overpayments made at any time. All interim payments made to the Contractor are payments on account only of sums due under the Contract." Its effects were disputed.


Was Mr Cope properly appointed?


S.108(2)(b) of the Act required the timetable to have the object of securing appointment and referral within 7 days of the notice of adjudication.  That did not preclude the possibility that, so long as the contract secured that objective, it was not fatal that it might not prohibit a period in excess of 7 days.  Paragraph 7 of the Scheme required the dispute to be referred not later than 7 days from the notice of adjudication, but that did not mean that a provision which did not have the same mandatory effect automatically contravened s.108(2)(b). 


Read at the time of contracting, including knowledge of the adjudication panel list current at that time, the contract did provide such a timetable.  Surgo would have, or could easily ask for, and would be entitled to the relevant panel list.  The court was satisfied there was an implied duty of co-operation upon which a contractor in Surgo's position could rely, either to enforce compliance or, if breached, to be free to ask RICS to nominate instead.  It was inherently unlikely that all 3 named adjudicators would each refuse and would also each take the full 2 days to communicate that decision.  (The position would be very different if, for example, the list comprised 10 adjudicators, and if each was allowed up to 5 days to respond.)


There was no reason why the amendment to paragraph 7 of the Scheme should be considered objectionable.  The parties would still be subject to the obligation to refer the dispute as soon as reasonably possible and, anyway, it would be in the referring party's interests to do so.




The submission of a perception of bias faced the difficulty that the parties were free to agree in their contract that one or more identified persons should act as adjudicator and to include provision for a specified nominating body in default.  In this case, the panel adjudicators were identified at the point of contracting and were all well-respected and independent adjudicators, with no links either to Bellway specifically or to employer or property developer organisations more generally, and no other characteristic which might dissuade a contractor such as Surgo from appointing them.  There is no basis for any suggestion that any informed person would have considered that any of them would be inclined to depart from their well-known duty of impartiality when acting as adjudicator. 


It followed in the court’s judgment that the bespoke contract terms were not contrary to the requirements of the Act or to its underlying policy, so that they applied in full. It followed that the challenge to the appointment of Mr Cope failed. On a subsidiary issue, in case the above conclusions were wrong, the court held that paragraph 9.2.1 of the Contract Particulars did not survive independently of clause 9.1.1 of the contract, if that was indeed objectionable.  On an objective reading they had no independent effect and could not survive the removal of clause 9.1.1 if that was held to offend against the Act. Second, even if that was also wrong, the court was satisfied that the clear and consistent line of authority, summarised by Sir Peter Coulson in Coulson on Construction Adjudication 4th edition at paragraph 4.12, was that the Scheme provisions are brought in "lock, stock and barrel" so that all of the existing contractual provisions relating to adjudication fell away.


Did Mr Cope have jurisdiction to determine the dispute?


Notwithstanding the above findings, Mr Cope had, as a matter of fact, been appointed on the basis of the Scheme not the contract, so the court had to deal with a further issue. This arose because there had been two abortive attempts to appoint him and, in the second, he decided in the face of objection from Surgo that the amendments to the adjudication provisions of the Contract did not comply with the Act. This led to Bellway seeking his appointment through RICS pursuant to the alternative provisions and the Scheme. Though the court disagreed with Mr Cope’s view (see above), it was necessary to engage with the issue.  The court concluded that the appointment was valid and Mr Cope had jurisdiction to determine the dispute (as to true value) for the following reasons.


Surgo relied on the “overarching principle” identified in Coulson on Construction Adjudication 4th edition at paragraph 7.57: "….. that a notice of adjudication, with a purported nomination made under a contractual provision or legislative power which, on a correct analysis does not apply, is invalid.”


The court described this as “a vexed topic”. It was necessary to identify the correct contractual provisions and to see whether they made a substantial difference as regards the proper contractual basis of jurisdiction, of appointment and the proper procedure for the conduct of the adjudication. If not, they would not amount to a defence. Applying these principles here the court concluded that there was never any dispute between these parties as to the applicable contract.  The only possibilities were that the applicable adjudication provisions were either of the following three options:


(a) the contractual adjudication provisions, namely the Scheme as amended by clause 9.2 and the contract particulars (as Bellway had initially contended);

(b) the Scheme as amended only by the contract particulars (as Mr Cope had concluded in the second adjudication and as Bellway had contended in the adjudication); or

(c) the Scheme as unamended (as Surgo had always contended).  


The only material difference between the options in the context of this dispute was whether or not the adjudicator was to be selected via the contractual provisions, whether under clause 9.2 and under the contract particulars, or under the contract particulars alone, or via any nominating body under the Scheme.  Whether Bellway's initial view was right (as the court held) or Mr Cope's view (as adopted by Bellway) was right made no material difference to that outcome. Mr Cope would have been appointed under the contractual provisions in any event.  It would only be if Surgo was right that there would be a material difference, because that would prevent an adjudicator being appointed from the Bellway panel.  


In summary, what the court founds was that Bellway was correct from the outset: it was entitled to refer the dispute under the contractual provisions.  It made no material difference in this case whether the referral was under the contractual provisions, as it should have been, or under the Scheme and the contract particulars, as it was made. There was no defence to enforcement.


The Part 8 claim by Surgo


 Surgo did not dispute Mr Cope’s jurisdiction to decide the true value. Instead, the court had to decide the substantive question as to whether or not Mr Cope was entitled to order Surgo to pay such sum,   based on his assessment of the difference between the true valuation of the works as at 30 January 2023 under interim payment cycle 36 and the amount which Bellway had been compelled to pay under adjudication 1 in respect of Surgo's notified sum entitlement under interim payment cycle 29.  


Upon analysis of the authorities and textbooks (Keating, Hudson and Emden) it was clear to the court that unless there was something in the terms of the contract or some particular feature of the case militating against it, the general principle was that there was a right to repayment, whether that repayment was by way of express or implied term or restitution, and whether there had already been a notified sum and/or a true value adjudication or not, and whether the issue arose within the same interim payment cycle or a later interim payment cycle.   


This was consistent with the general principle, implicit in the typical building contract (even if not express), that interim payments are only payments on account and any overvaluation can and should be corrected and any overpayment reclaimed, either in subsequent interim payment cycles or at final account stage including, if necessary, by a true value determination by any tribunal with jurisdiction to do so, which includes a validly appointed adjudicator and a court.


At paragraph 111 of the judgment, the court added this:


“The general proposition, which I accept, is that both an adjudicator and the court has, in all such cases, jurisdiction to determine the question as to what, on the merits, is the true entitlement of a party under an interim certificate and to order payment or repayment as the case may be if that is different from the amount stated in any interim payment and required to be paid under the terms of the contract and, if such be the case, under the decision of an adjudicator.”



Strike out stay refused despite jurisdiction mandatory adjudication clause

Lancashire Schools SPC Phase 2 Limited v Lendlease Constructions (Europe) Ltd [2024] EWHC 37 (TCC)


The fourth defendant, Lancashire County Council (the Authority), applied to strike out the claims made against it by the claimant, Project Co, or to stay the proceedings which the Authority contended had been brought in breach of a contractual ADR requirement that all disputes must first be determined by adjudication.


The Authority was a children's services authority with duties and powers to provide primary and secondary education under the Education Acts. As part of its programme, the Authority engaged Project Co to deliver the Project, namely serviced accommodation at a School (Sir John Thursby & Ridgewood) including the carrying out of Works and the provision of Services thereto, under a conventional Private Finance Initiative Project Agreement. Several Project agreements were also entered into and these proceedings concerned and arose out of the Phase 2 Project Agreement. The substantive proceedings were for various declarations and ultimately concerned liability of various parties, including the building contractors and facilities management contractors, for any defects which may be found to exist in the school. In summary, the claim against the Authority was an attempt by Project Co to position itself so that no ultimate liability sits with it. The contractor (Lendlease) was joined as first defendant, its parent was second defendant and the facilities management (FM) contractor, the third defendant, none of whom took part in the application.


Clause 68 of the Project Agreement contained the dispute resolution provisions.


The basis for the application for both strike out or stay was that the provisions of clause 68 of the Project Agreement contain a mandatory requirement for adjudication as a precursor to litigation which had not taken place. The Authority sought an order that the court should decline to exercise any jurisdiction over the claim or strike out the statement of case until there was compliance with the dispute resolution provisions.


It was common ground that the court was not bound to give effect to a mandatory ADR provision by ousting, or refusing to exercise, its jurisdiction even if that is the intended contractual effect of the provision. Rather, non-compliance gave rise to a discretion to order a stay of proceedings (or other relief) having regard to, amongst other things, the overriding objective.


After considering the provisions the court was satisfied that adjudication was a condition precedent to the commencement of litigation in respect of any dispute arising in relation to any aspect of the Project Agreement. And, if wrong about that, was also satisfied that the requirement to adjudicate first was mandatory.


The Authority contended:


  • First, the subject matter of the proceedings concerned many and varied defects and the issues between Project Co and Lendlease and between Project Co and the FM Contractor (Equans) would be expensive, lengthy and complex to resolve. The Authority had no desire to be dragged into that battle which did not concern it. It was only concerned with the contractual question of whether its obligations were 'back to back' with those arising under the Building Contract and the FM Agreement. It had bargained for a 2-party 28-day adjudication, with litigation only as a last resort.
  • Second, the Authority was a public body providing educational facilities with constrained financial resources.
  • Next, the Authority's position that adjudication was appropriate prior to legal proceedings was supported by sub-clauses 68.16 and 68.17 which allowed both Lendlease and Equans to make their submissions within the adjudication to which the Authority was a party. The point was made that all four parties (the Authority, Project Co, Lendlease and Equans) had bargained up and down the line to be bound by an adjudication decision reached between Project Co and the Authority.
  • Finally, the Authority also made the point that the court should support the adjudication process and have regard to the fact that, in most cases, parties take the medicine administered by the adjudicator, rather than engage in subsequent litigation.


In the exercise of its discretion the court refused to make an order staying or striking out the proceedings having regard to the following matters.


The case against the Authority was not confined to a short point of contractual interpretation but extended to the merits of the claims. If, contrary to that understanding, it was the sole or a key issue between the parties, the Authority could in due course apply to the court for the determination of a preliminary issue if appropriate.


Whilst in principle, the Authority's points about clauses 68.16 and 68.17 (the right of others to take part in the adjudication) were powerful ones, they gave rise to difficulties of application. This was not a simple case where there were common issues between all parties to which the contractual provisions would be directly applicable to any adjudication taking place at Project Agreement level. This case was more complicated because it involved two supply chain parties, each of whom was likely to be saying the other was responsible. It was difficult to see how a bipartite adjudication could resolve all the issues which might arise under the various supply chain agreements. There would be difficulties as to what relief could be claimed or given. At the least, there would be difficulties trying to operate a four-way dispute under different contracts and issues over the effect of various clauses, all of which might spawn satellite adjudications. Further the contractual timescales would inevitably be exceeded, making it more time consuming and expensive; and more likely still one or more parties would be dissatisfied with the result and give notice to litigate the issue. Then there was the impact that a stay in respect of the Phase 2 litigation against the Authority would have on the conduct of those proceedings for other parties and the case management difficulties that would arise. It would also inevitably delay the hearing of the action.


In summary

  • In respect of Phase 2 alone, this was essentially a multi-party dispute. It was very doubtful that a bilateral adjudication of the contingent dispute between Project Co and the Authority would satisfactorily resolve matters, even taking into account the ability of others to intervene in the adjudication. In the present case, the ‘joinder’ provisions might be particularly difficult to apply and could well lead to procedural complications. Overall, it seemed doubtful there was much utility in requiring an adjudication to be conducted. If the court was to insist upon it, there was a real risk that the adjudication would achieve little. The less satisfactory the adjudication, the more likely any decision in respect of it would be challenged.


  • A stay for adjudication would probably interfere with the orderly progress of the Phase 2 litigation and, potentially, the Phase 1 litigation if that was to be consolidated with it. The Phase 2 litigation was already underway against the other defendants. None of the other three parties, including Project Co, was interested in adjudicating the Phase 2 issues first, yet they would each be impacted by such a stay. Overall, the ultimate disposal of those proceedings would probably be delayed. This would be contrary to the overriding objective.


  • Project Co had submitted that, if the present application was dismissed, the Authority was free to begin its own adjudication, either now or in the future, if it wished to. If that was right, the significance of the court refusing a stay now was less significant than may first appear.


  • Multi-party mediation might be impacted by sending the dispute between Project Co and the Authority down a different track.


As to strike out, such an order would be disproportionate. This was not a case where there was no cause of action. And it would not make sense to stay to adjudication in the circumstances outlined above.


Natural justice - Had the adjudicator failed to address material lines of defence?

UK Grid Solutions Ltd and Amey Power Services Ltd v Scottish Hydro Electric Transmission Ltd [2024] CSOH 5


The Pursuers formed a joint venture for works to an existing sub-station. They engaged the Defenders under an NEC3 contract to construct the sub-station building and carry out installation and commissioning. Responsibility for delivery and installation of two transformers (SGT5 and SGT6) remained with the Pursuers. 


Delays occurred in relation to the delivery and installation of the two transformers. The Project Manager (PM) under the Contract made an assessment that (this) Compensation Event under the Contract did not result in any increase to the Defined Cost, nor affect Completion nor the meeting of Key Dates (all as defined in NEC3). The Pursuers rejected the PM’s assessment and submitted their own assessment and claim for extension of time (EOT) for the impact of the delays. This was in turn rejected by the Defenders who issued a nil payment notice. This gave rise to the adjudication and these proceedings.


The Pursuers claimed EOT and payment was based on what the PM should have awarded at the time of the compensation event on what is called the “prospective approach”, which the Pursuers said was what NEC3 required. This meant that as the Completion Date had not been reached, there was no question of any liability for liquidated damages at that time and they were entitled to payment consistent with the objective of cashflow. The Defenders argued that it was the “retrospective approach” (looking back at what had actually happened) which the PM and therefore the adjudicator should adopt. This issue arose in the Reply and Rejoinder, where, for the first time, the Defenders claimed that even on the basis that the Pursuers were entitled to the EOT claimed, they were late achieving Completion and raised a set off for liquidated damages which exceeded the payment claimed by the Pursuers, so that nothing was due to the Pursuers but some £1.5m was due to the Defenders.


The adjudicator found for the Pursuers and awarded an EOT and a payment of £1.85m. In doing so it was contended by the Pursuers that he must have followed their “prospective” approach and rejected the Defenders’ “retrospective” approach, though he did not expressly say so, nor deal with the set off, nor give reasons for rejecting it.


The Defenders opposed the application to enforce the adjudicator’s decision on three grounds:


(1) that the adjudicator had failed to deal with the set off, which it was conceded was a material defence which the Defenders were entitled to raise and which the adjudicator was obliged to address.

(2) that the adjudicator had failed to give any discernible reasons for rejecting the set off defence.

(3) his award in terms of remedy was meaningless as a result of the way the redress was expressed [9] and a clerical error in the figures and the fact that no time period for payment was included.   


In a very careful judgment, after referring to case law, relevant extracts from referral and subsequent submissions in the adjudication, the adjudicator’s findings and the respective senior counsels’ submissions to the court, Lord Richardson delivered his conclusions.


Awards were to be enforced unless the adjudicator was not validly appointed, acted outside his jurisdiction, did not comply with the rules of natural justice, or provided inadequate reasoning. The adjudicator was obliged in fairness to consider and determine any material line of defence. It was not necessary to deal with every point made but the reasons for the decision must be coherent.


In this case grounds 1 and 2 amounted to the same complaint – that the adjudicator had failed to consider the defence of set off. His Lordship rejected that complaint. It was clear that the question of whether the assessment should be made on a “prospective” or “retrospective” basis was an issue in the response, reply and rejoinder. In accepting the Pursuers’ case on the assessment, as could be seen or deduced from section 10 of his decision, leading to an award of what should have been assessed by the PM at the time, and paid in full by the Defenders, the adjudicator had accepted the “prospective” approach. Thus he must have rejected any right of set off for liquidated damages since this was not a claim which had by then arisen.


In addition at section 10 of his Decision he had said:


“Adjudication is a process to facilitate cash flow. Therefore, had the Project Manager certified the payments in accordance with my assessments in a prospective nature, the Employer would be in no worse financial status."


His Lordship put it this way:


“The reason that the defender would be in no worse financial position had the Project Manager certified the payments in accordance with the adjudicator's approach is precisely because, on the adjudicator's logic, at the time certification ought to have occurred, the defender had no entitlement to liquidated damages. The adjudicator then goes on to conclude, in paragraph 10.5, that he will make a declaration and order payment.”


As to reasons, it was not necessary that the adjudicator deal expressly with every allegation. It was discernible from the Decision both what he decided and the reasons for that Decision. The court rejected the second argument.  


It was acknowledged that there were errors in the final part of the Decision that could have been, but remained, uncorrected. The court found that it would have been clear to the “reasonable reader” from the earlier findings, what sum the adjudicator intended to award and that payment was to be made within 7 days. The court repelled the Defenders’ pleas in law and granted decree to the Pursuers. 


[1] Scheme for Construction Contracts (England & Wales) Regulations 1998 (SI 1998/649).

[2] Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 (SI 2011/2333).

[3] Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SI 2011/371).

[4] Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687) (S.34).

[5] Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (Wales) Regulations 2011 (SI 2011/1715) (W.194).

[6] [2011] EWHC 2332

[7] [2000] BLR 168

[8] [2018] EWCA Civ 2448.

[9] It seemed to have been ‘cut and pasted’ from the Referral without the necessary editing to make it an award, directing payment to be made and a time for payment. The amount also duplicated some figures.

Read: Adjudication Case Law Update Part 3 2024

Read: Adjudication Case Law Update Part 1: 2024

About the author: Kenneth Salmon MCIArb is a qualified solicitor in England, Wales and Eire. He is a Ciarb qualified and CMC accredited Mediator and Chair of Education at Ciarb North West Branch. Kenneth is a construction specialist currently working as a consultant to Slater Heelis Limited. He has extensive experience of all forms of dispute resolution including arbitration, adjudication, expert determination and mediation. He is the author of Cases on the Enforcement of Construction Adjudication Awards (2012) and the series Cases (on adjudication enforcement) published in Ciarb’s journal Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 1999-2017.


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