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By Ava Solouk, Trainee
This case concerns a claim by Clegg Food Projects Limited (“Clegg”) against Prestige Car Direct Properties Limited (“Prestige”) for the enforcement of an adjudicator’s decision made on 17 January 2025 (the “Decision”) by Mr Kevin Shilcock (the “Adjudicator”). The Adjudicator’s Decision awarded Clegg £541,880.12 plus VAT, interest at the contractual rate of 10% from the final date of payment, and Adjudicator’s fees (if paid by Clegg) in respect of its application for payment made on 27 August 2024 (“Payment Application 37”). The Decision was challenged by Prestige on the grounds of alleged breaches of natural justice and insufficient reasoning by the Adjudicator.
Background
On 10 November 2022, Prestige, as Employer, engaged Clegg, as Contractor, for the construction of a leisure and retail centre in Bishop Auckland, under an amended JCT Design and Build Contract (the “Contract”). Practical completion was achieved, but a dispute arose between the parties in respect of the valuation of Clegg’s Payment Application 37. Three days later, on 30 August 2024, Prestige served a payment notice in respect of the same (the “Payment Notice”).
At that stage, the issues between the parties included the value of eight variations, which were agreed to be changes, but whose valuations in accordance with clause 5 of the Contract were not agreed (the “Relevant Changes”), and Clegg’s entitlement to extensions of time (“EOTs”) and prolongation costs. In addition, Prestige claimed liquidated damages (“LADs”) for delays as a result of the extensions of time, to which Clegg asserted it was entitled.
On 15 October 2024, Clegg initiated an Adjudication for, amongst other things, that the gross valuation of Payment Application 37 was £23,502,636.65. On 17 January 2025, the Adjudicator produced his Decision. He decided that Prestige’s Payment Notice had undervalued the amount due to Clegg in respect of the Relevant Changes; Clegg was entitled to EOTs; as a result of the EOTs, Prestige’s LADs were reduced; and Clegg was entitled to suspension costs and thickening costs. The Adjudicator gave reasons for his Decision and in doing so set out that he used his own “fair and reasonable” rate for calculating five of the eight Relevant Changes and remeasured one of the items.
On 20 January 2025, Prestige asserted that the Adjudicator was in breach of natural justice and the Decision should be unenforceable because the Adjudicator used his own rates and remeasured one of the items without consulting the parties. The Adjudicator disputed this on the grounds that he was asked to provide a gross valuation on the value of Payment Application 37 by both parties at a figure they contended for, or such other sums as the adjudicator may decide.
Issue 1 – Was the Adjudicator in breach of natural justice by failing to give the parties an opportunity to comment on his new rate?
Prestige argued that the Adjudicator should have sought additional submissions in respect of the “fair and reasonable” rate used and the single remeasurement. The Court did not accept Prestige’s arguments as a breach of natural justice.
The Court found that the Adjudicator was invited by both parties to determine the gross valuation of Payment Application 37 using either the amount they submitted or “such other sums as the adjudicator shall see fit”. The Adjudicator’s Decision to use a “fair and reasonable” rate was within the range contended by the parties and did not constitute a breach of natural justice. The Court held that the Adjudicator’s actions were not a breach of natural justice, as the issues had been fairly canvassed during the course of the Adjudication. The Court also found it significant that in respect of each “fair and reasonable” value, and in respect of the single remeasurement, used to calculate the gross value of each Relevant Change by the Adjudicator, that value was an intermediate position between those contended for by the parties, or was more favourable to the Prestige.
Issue 2 – Did the Adjudicator fail to provide sufficient reasons in his Decision of 17 January 2025?
Prestige contended that the Adjudicator failed to provide adequate reasons for his Decision, particularly regarding the use of new rates and remeasurement. The Court rejected this argument finding that the Adjudicator’s Decision, although broad brush, provided sufficient detail to understand the basis of his conclusions. The Court also noted that the Adjudicator’s Decision was not unintelligible and did not cause substantial prejudice to Prestige.
The case emphasises that where parties provide an adjudicator with a wide jurisdiction to determine a dispute, it is within his remit to use a new rate and/or conduct a remeasurement. A party cannot attempt to resist an enforcement on those grounds.