The limits of natural justice

A recent case in the TCC serves as another statement that it will rarely entertain breach of natural justice arguments to resist the enforcement of an adjudicator’s decision. Although a losing party in an adjudication may consider itself to have legitimate cause for complaint as to how an adjudicator has reached and, more to the point, expressed their decision, it will only be in the most exceptional circumstances that the TCC will intervene.

Facts

The case was Clegg Food Projects Limited v. Prestige Car Direct Properties Limited [2025].

Prestige employed Clegg under an amended JCT D&B contract for the construction of a leisure and retail centre in Bishop Auckland. A dispute arose concerning Clegg’s application for payment and so Clegg commenced a true value adjudication. The dispute included the quantum of eight variations (liability was not in dispute) and Clegg’s entitlement to extensions of time and prolongation costs.

Somewhat unusually, the adjudication spanned three months from October 2024 to January 2025 with six rounds of submissions. Both parties submitted that the Adjudicator should decide the gross valuation of the application using their respective figure or “such other sum as the Adjudicator may decide”.

In an 88-page Decision, the Adjudicator awarded Clegg a principal sum of £541,880.12 plus VAT together with interest. For five of the eight variations, the Adjudicator opted to use his own fair and reasonable rate as determined by his own “first principles view” of the work involved. He also introduced a single new measurement in his valuation of the account. The Adjudicator did so without informing the parties beforehand of his proposed valuation methodology.

Prestige refused to pay what was awarded and Clegg applied to the TCC to enforce the Decision.

The Enforcement Proceedings

The TCC was tasked with addressing two main issues:

1. Whether the Adjudicator’s failure to give the parties an opportunity to comment on his proposed valuation methodology constituted a breach of natural justice; and
2. Whether the Adjudicator failed to provide sufficient reasons in his Decision to explain his valuation methodology.

Issue 1 – Failure to give opportunity to comment

Prestige argued that the Adjudicator overstepped in deciding new rates and a new measurement without the parties being consulted. It contended that this was not just a case of the Adjudicator crudely spitting the difference between the parties, but rather an entirely novel analysis not submitted by either party.

On the other hand, Clegg argued that the Adjudicator was entitled to use his own knowledge and experience to determine the gross valuation of the application and that the Adjudicator’s assessment of each overall variation was within the range established by the parties’ respective submissions. Further, Clegg pointed out that, in all but two cases, the new rates adopted by the Adjudicator in the sub-items that made up each of the variations were more advantageous to Prestige than if the Adjudicator had simply accepted Clegg’s rate and, in some cases, if Prestige’s own rate had been adopted. Even then, those two exceptions had a minimal impact on the total amount awarded to Clegg – just £2,600, or 0.2%, of the Adjudicator’s total valuation.

Finding in favour of Clegg on this issue, the TCC emphasised that both parties invited the Adjudicator to award the amount each of them submitted ‘or such other sum as the Adjudicator determined’. It was therefore within the Adjudicator’s remit to arrive at a different valuation for a particular item in the account. He was not obliged to consult the parties on every element of his thinking or to seek further submissions as to his proposed valuation methodology because the parties had already provided him with the information he needed to reach his Decision. While the TCC accepted the Adjudicator could not have gone on a frolic on his own, that would only have been the case if the Adjudicator decided the rates without any consideration of the parties’ submissions.

In any event, even if there was a breach of natural justice, the TCC agreed with Clegg that it would not have been material. This is because Prestige accepted the Adjudicator could have just adopted Clegg’s higher rates and, in the limited examples where the Adjudicator applied an even higher rate, the effect this had on the total valuation was minimal. Prestige’s approach of nitpicking the Adjudicator’s rates in certain sub-items of the variations was therefore deemed “excessively granular”.

Issue 2 – Failure to provide sufficient reasons

Prestige also argued that, because the Adjudicator provided additional workings post-Decision, this suggested that further explanation was needed for the parties to understand his valuation methodology. It said that absent a full understanding of how the Decision was reached, it was impossible to know what defences it might have raised.

Clegg contended that the overall determinations for each of the variations were between the parties’ overall respective positions. It said the Adjudicator was not bound to accept the entirety of either party’s case. Rather, his task was to value each variation pursuant to the terms of the underlying contract, which is precisely what the Adjudicator said he did. Clegg also highlighted it was unrealistic to insist on a detailed description of how a rate was determined for every sub-item that made up each variation.

Again finding in favour of Clegg, the TCC accepted the reasons given by the Adjudicator were “broad brush”, but said they were sufficient. Part of the difficulty for Prestige was that it asked the Adjudicator to provide the additional workings. It did not automatically follow from this request that the Adjudicator failed to provide adequate reasons in his initial Decision. Detailed workings on each sub-item of a variation were not required and there was sufficient detail in the Decision to enable the parties to understand how he reached it “in the round”.

Take-Aways

The TCC enforced the Decision in full. This case therefore reinforces the TCC’s pro-enforcement stance and underlines that breach of natural justice arguments are rarely successful in resisting enforcement.

Where a defendant’s complaint effectively boils down to it not having an opportunity to comment on every sub-issue forming part of a dispute and the Adjudicator has been afforded a wide jurisdiction to determine that dispute, the defendant is very unlikely to be successful. This is particularly the case in a true value adjudication where the adjudicator is to determine the gross valuation of an application and the adjudicator’s decision results in a finding that sits between the two parties’ overall positions.

Additionally, it can almost always be argued that an adjudicator could have given more detailed reasons, but that alone will not be enough to resist enforcement