PML sought summary enforcement of an adjudicator’s decision in the sum of £1.6 million. The Trust said that the central findings in that decision were reached in breach of natural justice. In particular, the Trust said that the adjudicator’s finding that there had been a Compensation Event was made on a contractual basis that had not been raised by the parties and on which neither party had made submissions. Further, the adjudicator made a finding that the Accepted Programme had been updated, but this was not part of the adjudication and was contrary to the position of both parties.
In other words, the adjudicator had decided the dispute on a basis with which the responding party (i.e. the Trust) did not have an adequate opportunity to deal with. Deputy Judge Wiliamson KC referred to the case of Roe Brickwork Ltd v Wates Construction Ltd (see Dispatch 163), where Edwards-Stuart J had said:
“If an adjudicator has it in mind to determine a point wholly or partly on the basis of material that has not been put before him by the parties, he must give them an opportunity to make submissions on it.”
The contract here was for the design and construction of a new barn theatre based on the NEC4 Option A (Priced Contract with Activity Schedule). The central issue was that PML said that it needed a permanent mains water supply to be made available no later than 30 October 2023 for testing and commissioning, but the Trust did not make it available until 20 February 2024, which caused delay. The Trust accepted that it was responsible for the mains water supply, but said there was no requirement for it to be made available by any particular date.
It was common ground before the judge that the Accepted Programme was never updated, in the sense that the Project Manager never accepted a later programme, and that the Accepted Programme did not contain an obligation on the Trust to make permanent water available by a particular date, albeit that subsequent programmes put forward by PML did contain such an obligation.
In the adjudication, PML claimed a 14-week extension of time. The Trust said that PML had to show that there was a Compensation Event (within the list at clause 60.1 of the contract) and that it had been properly notified. That had not happened here.
In response to a question from the adjudicator as to whether Contract Programme Rev2 was an accepted programme, PML said that the only Accepted Programme was the one in the Contract, although PML had submitted later programmes to the Project Manager. The Trust confirmed that Rev2 was not an Accepted Programme in accordance with clause 31.
In the decision, the adjudicator noted that there was an original Accepted Programme but that, in addition, there were a number of later programmes issued by PML, including Contract Programme Rev3 (not Rev2), which PML said set the date by which the water supply was required on site. The adjudicator held that Rev3 had become an Accepted Programme, saying that the default position, where the Project Manager has not taken steps to reject or amend the presented programme must be that the programme becomes the Accepted Programme. As a result, the adjudicator decided that a Compensation Event had arisen under clause 60.1(3) because the Trust had not provided the water main by the date shown in Contract Programme Rev3. This had become an Accepted Programme, even though it had not been accepted in accordance with the procedures set out in clause 31.
The deputy judge found that, in adopting this approach, the adjudicator had decided the central issue – whether the water main was supplied on time, giving rise to a Compensation Event – on a basis that was not argued by either party, was directly contrary to the common position that the only Accepted Programme was that at Appendix 3 to the contract, and had not been put by the adjudicator to the parties.
PML said that the dispute put to the adjudicator was framed in very wide terms, namely whether a Compensation Event arose due to the late provision of the permanent water supply and was not tied to any particular Compensation Event under clause 60.1 of the contract. The deputy judge said that, whilst this might be an answer to a jurisdictional challenge, it was not an answer to a natural justice complaint.
PML said that the adjudicator’s attention was drawn to the full list of Compensation Events under clause 60.1. Further, the adjudicator was entitled to consider, rely on and interpret all the provisions of the contract which were put before him, including clause 60.1(3). As the adjudicator had invited the parties to clarify whether Rev 2 was an Accepted Programme for the purposes of clause 60.1(3), that meant that both parties had a reasonable opportunity to consider and address the relevance of clause 60.1(3).
Again, the deputy judge disagreed. The request for clarification did not ask the parties to consider clause 60.1(3). It asked for assistance on the status of Rev 2, which both parties agreed was not an Accepted Programme. The deputy judge accepted that an adjudicator is not obliged to decide a case only by accepting the submissions of one party or the other:
“But if he is to depart from the submissions of both parties, he must ensure that the issues have been fairly canvassed. This did not happen here. The first that the Trust knew of the clause 60.1(3) case, based on the proposition that it had not provided the water main by the date shown in Contract Programme Rev 3 30.10.23, was when they received the decision.”
The adjudicator determined that there was a Compensation Event within the meaning of clause 60.1(3) because the Trust had not provided the water main by the dates set out in a revised programme which neither party said was an Accepted Programme. By contrast, the Accepted Programme contained no such dates. This conclusion was clearly material to the decision, and it should have been put to the parties for comment. It was a breach of the rules of natural justice not to do so.