Can you avoid enforcement of an adjudicator’s decision? Recent decision reaffirms TCC stance

A recent decision by the TCC reinforced the importance of accurate payment certification and reaffirmed the court’s robust approach to enforcing adjudicators’ decisions. The case also contends with professional negligence and the duty for construction professionals to exercise reasonable skill and care when assessing payments.

The background

The dispute concerned a major development project at Gateway South in Coventry: a 215-acre former sewage treatment site that required significant remedial works.

The project was led by Coventry & Warwickshire Development Partnership LLP (CWDP). It appointed Avison Young (AY) as Project Manager and Supervisor under an NEC3 contract. As part of this, AY was responsible for assessing the progress of the contract and certifying the sums payable in monthly applications for interim payments based on the Price for Work Done to Date (PWDD). Difficulty arose in establishing how much of the earth-related work was complete. The records included data showing the volume of material excavated but did not demonstrate how much material had been treated and placed in its final position. The accuracy of the payment assessments depended on the evaluation of the available records and progress achieved on site.

The dispute

CWDP alleged that AY failed to exercise the proper skill and care required when assessing the contractor’s progress and when certifying payments. CWDP contended that AY had accepted insufficient evidence of completed works, relied on excavation figures which did not account for the final position of the materials, and had failed to detect defects in the works. The contractor, Buckingham Group Ltd, became insolvent and CWDP were unable to recover the alleged overpayment. CWDP therefore pursued AY for damages, claiming that their negligent payment assessments had caused financial loss.

CWDP referred the dispute to adjudication. The adjudicator considered whether AY as Project Manager had performed its duties, including the PWDD assessment and detection of defects, with the required degree of skill and care.

The adjudicator found that AY had failed to meet these standards, and in doing so had significantly over-certified the sums due to Buckingham Group Ltd. The adjudicator awarded damages of £8,729,179.33 plus interest to CWDP. AY notified that it refused to pay the sum awarded and so CWDP raised enforcement proceedings in the TCC.

The TCC case

AY contended that the adjudicator had:

Acted outwith his jurisdiction. He had approached the matter as a valuation argument rather than a professional negligence and loss claim. And he had undertaken his own valuation of the sums which should have been certified, when he should have limited his determination to whether AY had been negligent and the loss arising from that
Failed to give adequate reasons for his decision
Breached the principles of natural justice by taking account of a report prepared by Gardiner & Theobald (G&T) in March 2024, which was included in the claim papers, without giving parties a proper opportunity to comment. This report was significant because it assessed values between those of the parties experts whose values differed widely
Treated retention in the wrong way, so this should be severed from the decision

The court found in favour of CWDP.

It held that the adjudicator did not act outwith his jurisdiction. The calculations he used to value the works formed part of the necessary determination of financial loss arising from the negligence that he had found to be present, and therefore he had answered the dispute which was put to him.

The court found that the adjudicator’s reasons were adequate and noted that passages of a decision that may on their own seem “bare” had to be judged against preceding passages and the decision as a whole. The content, analysis and structure one might expect of a court decision is not required.

The TCC also said that the adjudicator did not breach the principles of natural justice by relying on the G&T values. He had raised the G&T report as relevant with the parties and invited them to make submissions. While the parties did not consider the G&T report to be relevant, the adjudicator was not bound by this. By forewarning the parties of his inclination to rely on the G&T report and by inviting comment, the adjudicator had given AY a fair opportunity to challenge and comment on that approach. Therefore, while the adjudicator decided the claim on a basis which neither party put forward and indeed which both rejected, the forewarning and opportunity to comment that were provided meant this was not a breach of natural justice.

Finally, it held that severance of the adjudicator’s findings on retention would be inappropriate. The approach to retention was not a clear error, and it was not in any event a self-contained issue suitable for severance but part of the adjudicator’s chain of reasoning.

Conclusion

This decision reinforces the court’s continued stance on the enforcement of adjudicators’ decisions. An adjudicator is not prevented from relying on evidence simply because a party objects to it, if that party is given a fair opportunity to challenge and comment on it. It also confirmed that, when assessing the adequacy of an adjudicator’s reasons for a decision, it will consider the decision as a whole – not individual sections in isolation.

The decision also serves as a stark reminder to construction project managers of the importance of diligence, inspection and interrogation when assessing work and certifying payments. Significant financial consequences can arise from inaccurate valuations.

This article was co-authored by Trainee Cristina Antonacci.

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