Roe Brickwork Ltd v Wates Construction Ltd

Factual and Procedural Background

The Claimant, a subcontractor specialising in brickwork, was engaged on the construction of three blocks of flats on an estate in East London. The Defendant was the main contractor. The Claimant's adjudication claim arose from alleged delays of approximately six months, resulting in significant loss and expense. The claim included additional preliminaries and loss of overhead and profit ("OHP"), loss of productivity from various causes, and additional supervision and management costs.

The adjudicator assessed the claims at a value of £381,459.75 plus interest but did not specify the net sum due after accounting for payments already made under each head. The Defendant opposed enforcement on grounds that the adjudicator lacked jurisdiction to assess OHP in the manner he did and that the decision lacked certainty due to the absence of agreed sums paid on account.

The Claimant applied for summary judgment to enforce the adjudicator’s decision. Directions were given for an expedited hearing which took place approximately one month after the Claim Form was issued. The parties were represented by counsel instructed by solicitors.

Legal Issues Presented

1. Whether the adjudicator had jurisdiction to assess the Claimant’s claim for overhead and profit by applying a 13% uplift to the losses rather than using the Hudson formula as claimed.
2. Whether the adjudicator’s failure to allow the parties an opportunity to make submissions on his approach constituted a breach of natural justice.
3. Whether the adjudicator’s decision was sufficiently certain and enforceable given the absence of findings on sums already paid by the Defendant under each head of claim.

Arguments of the Parties

Defendant's Arguments

• The adjudicator lacked jurisdiction to increase the amounts awarded for other heads of loss by 13% to calculate OHP, as this approach was not referred to or agreed upon.
• The adjudicator’s method constituted a breach of natural justice by deciding a point on a basis not argued or submitted by the parties without giving them an opportunity to respond.
• The decision was uncertain and unenforceable because it did not specify the sums already paid under each head, leaving the net amount due unclear.
• The contracted Daywork Rates were "all-inclusive," incorporating overhead and profit, so a separate claim for OHP was not permissible.
• The preconditions for applying the Hudson formula or the alternative Emden formula had not been met.

Claimant's Arguments

• The adjudicator was entitled to assess OHP by applying a 13% uplift to the losses, which was within his jurisdiction and based on material put forward by the Claimant.
• The adjudicator’s approach resulted in a lower OHP figure than the Claimant’s original calculation using the Hudson formula, so even if consultation was required, the outcome would not have been less favourable to the Defendant.
• The Defendant had admitted paying £97,992.23 on account, making the balance due £283,467.52 plus interest, thus removing any uncertainty about the enforceable sum.
• The Claimant’s claim for OHP in addition to loss of productivity based on Daywork Rates was properly in issue before the adjudicator.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Balfour Beatty Construction v London Borough of Lambeth [2002] BLR 288	An adjudicator must observe natural justice by not deciding points on a basis not argued or put forward by the parties without giving them opportunity to comment.	The court applied this principle to assess whether the adjudicator breached natural justice by adopting an unargued approach without consulting the parties; it found no material breach.
Cantillon Ltd v Urvasco Ltd [2008] BLR 250	An adjudicator breaches natural justice only if he decides on a factual or legal basis not argued by the parties without allowing them to comment or provide evidence.	The court cited this to reinforce that the adjudicator’s approach was within jurisdiction since the relevant points were argued and no party was denied opportunity to respond.

Court's Reasoning and Analysis

The court began by acknowledging the established principle that courts will not interfere with an adjudicator’s decision if it answers the question referred, even if the decision contains errors, except in exceptional circumstances. It recognized the requirement that adjudicators must observe natural justice, particularly by not deciding points on unargued bases without giving parties an opportunity to respond.

In this case, the issue was whether the adjudicator exceeded jurisdiction by applying a 13% uplift to the loss of productivity figure to calculate OHP, rather than applying the Hudson formula as originally submitted. The court found that the 13% figure was derived from material put forward by the Claimant and that the adjudicator’s methodology was a minor variation rather than a new approach outside the scope of the referral.

The court noted that the adjudicator’s approach produced a lower OHP figure than the Claimant’s original calculation, thus any breach of natural justice was not material or prejudicial to the Defendant. The Defendant’s real complaint was that the adjudicator treated Daywork Rates as costs, but this was a matter fully ventilated during the referral.

Regarding the alleged uncertainty of the decision, the court observed that the Defendant had accepted the amount paid on account, leaving no dispute over the balance due. Therefore, the decision was sufficiently certain and enforceable.

The court concluded that the adjudicator neither exceeded jurisdiction nor breached natural justice in any material way. It further held that even if there had been a breach, it did not adversely affect the Defendant’s position.

Holding and Implications

The court GRANTED summary judgment in favour of the Claimant for the balance of £283,467.52 plus interest at 3.5% from 31 January 2013, as determined by the adjudicator. The Claimant was also entitled to recover 50% of the adjudicator’s fees in accordance with the decision.

A dispute remained regarding approximately £50,000 relating to sums paid on account, which was not before the adjudicator. The court ordered a stay of proceedings to allow the parties to refer this dispute to adjudication if the Claimant chose to do so, with permission for either party to lift the stay on two weeks’ notice.

No new legal precedent was established; the decision reaffirmed existing principles regarding adjudicator jurisdiction, natural justice, and enforcement of adjudicator decisions in construction disputes.