Clegg Food Projects Ltd v Prestige Car Direct Properties Ltd

[2025] EWHC 2173 (TCC)

Following practical completion, a dispute arose regarding the valuation of Clegg’s application for payment 37. The disputed issues included the valuation of eight variations and Clegg’s entitlement to extensions of time and prolongation costs. Following an adjudication, the two key issues before HHJ Kelly were:

1. Was the adjudicator in breach of natural justice by failing to go back to the parties and ask for further submissions when they decided to use a new “fair and reasonable” rate and a single new measurement in respect of the valuation of certain individual items when asked to provide a gross valuation of Application 37?
2. Did the adjudicator fail to provide adequate reasons for their decision including to explain the decision made on “fair and reasonable” rates?

By way of a reminder, the judge confirmed that not only must there have been a breach of the principles of natural justice, but any breach must also be material. HHJ Kelly also confirmed that:

“If issues have been fairly canvassed before an adjudicator, or if the adjudicator has simply adopted an intermediate position, fairness does not require the parties to be given an opportunity to make further submissions. An adjudicator is obliged to make a decision and come to conclusions based on the evidence of each party, his analysis of it and of the submissions put to him. He is not under an obligation to invite comments on his conclusions reached after that process.”

Prestige said that there was a breach of natural justice because the adjudicator used their own rates and remeasured the work (using the documentation provided in respect of one of the variations) without informing the parties that they intended to do so and without giving them the opportunity to comment on the suitability of that approach. This breach was material because it was founded on a novel analysis of the materials. As such, if consulted, Prestige may have had a reasonable prospect of successfully objecting to the new approach.  By choosing new rates, the adjudicator “made good” Clegg’s case.

The adjudicator had ample opportunity seek submissions on the new rates and measurement. The fact that additional workings were provided by the adjudicator after the decision underlined that further explanation was required to enable the parties to understand the decision. Simply providing a list of numbers with an the explanation that the adjudicator had decided upon a “new rate” was not sufficient to enable the parties to understand how those rates had been arrived at.

Clegg argued that the adjudicator was absolutely entitled to rely on their own knowledge and experience. The complaints about the new rates were “excessively granular” and were, in effect, a smokescreen intended to distract from the key facts. The adjudicator had been asked to provide a gross valuation of Application 37, which included the eight variations, each containing multiple items and sub-items.

One difficulty with Prestige’s approach was that, without exception, the rates the adjudicator used to arrive at overall valuations for the variations were within the range established by the parties’ contentions. Furthermore, in all but two cases, the use of the new rates was more advantageous to Prestige than at least one of the rates the adjudicator could have adopted without consultation – namely being Clegg’s rate, Prestige’s rate, or a crude “split the difference” rate.

The two exceptions resulted in an increase in the valuation of less than £2,600 or under 0.2% of the Relevant Changes. Those increases were vastly outweighed by more than £202,000 resulting from the adjudicator’s use of the rates which were more favourable to Prestige than the rates the adjudicator could have adopted without further consultation. The use of new rates therefore had the overall effect of substantially reducing the amounts payable to Clegg. 

The judge did not accept that there had been a breach of natural justice. Both parties had specifically invited the adjudicator to award either the amount each of them submitted for the gross valuation or “such other sums as the adjudicator shall see fit”. The adjudicator was not tasked with making declarations on the individual rates to be used when valuing any sub-items. The decision they were asked to make was broader: the overall valuation of Application 37.

The adjudicator was not filling a gap in the evidence. Both parties had made submissions on rates, and the adjudicator did not rely on material that the parties instructed them not to consider. In addition, it was significant that each “fair and reasonable” value adopted by the adjudicator was either an intermediate position between those contended for by the parties or was more favourable to Prestige. Prestige had accepted that if the adjudicator had simply adopted either party’s position on value or applied a crude “split the difference” rate, it could have no legitimate complaint.

The parties chose to instruct a Chartered Quantity Surveyor to assess their submissions. They provided the adjudicator with the materials needed to reach a valuation and the adjudicator provided a valuation within the range contended for by the parties, or which was more favourable to Prestige. It was not necessary for the adjudicator to set out the details of the methodology used to come to a decision.

Further, Prestige had not established that any breach, if proved, was material. Prestige accepted that the adjudicator could simply have adopted the rate proposed by them. Whilst, in respect of some sub-issues, the adjudicator’s decision meant that the “fair and reasonable” rate was more favourable to Clegg than Prestige, that was not always the position. As Counsel for Clegg observed, Prestige could not: “properly complain that it lost an opportunity to persuade the adjudicator to order it to pay more than it was in fact ordered to pay”.

Following a request by Prestige, the adjudicator provided additional workings. The judge commented that the fact the adjudicator later provided workings and answered questions about their reasoning, when asked directly, did not mean that the initial decision amounted to a failure to provide adequate reasons.

Further, there was sufficient detail in the 88-page decision to enable the parties to understand how the decision had been reached. The judge accepted that the reasons provided were broadbrush, with references to submissions and documents in footnotes. Fuller reasons could have been given, but that did not mean the reasons given were inadequate: “Detailed reasons, workings and explanations do not have to be given in respect of each individual sub item when the dispute put to the adjudicator is one concerning a global valuation”.

Back to the previous page

Click to download PDF