This article summarises the judgment in Bell Building Limited v TClarke Contracting Limited [2024] EWHC 1929 (TCC), which concerns adjudication enforcement proceedings where the subcontractor Bell sought to enforce an adjudicator’s decision against the main contractor TCL regarding the notified sum for a data centre project at the Isle of Dogs, London.
The central issue for the court was the adjudicator’s jurisdiction and adherence to natural justice principles owing to the adjudicator awarding Bell a sum higher than claimed. The court found in favour of Bell, granting summary judgment for the enforcement of the adjudicator’s decision. The judge concluded that TCL had no arguable defence to the enforcement based on either lack of jurisdiction or breach of natural justice.
Factual Background
Payment Application No. 18 was issued by Bell on 20th April 2023 for £20,915,777 gross. TCL’s corresponding payless notice was issued on 6 June 2023, notifying a sum due of £710,120 and TCL made payment thereof on 21 June 2023. Bell then referred to adjudication as a ‘notified sum’ dispute, explicitly stating it did not give the adjudicator jurisdiction to decide the ‘true value’ of the payment claim but sought payment of an alleged outstanding sum of £1,443,981 plus VAT. The judgment states the following sequence of events and adjudicator’s reasoning:
“(i) The Adjudicator noted that Application No. 18 was for a payment of £1,058,248.92 and not £1,443,981.51 as claimed. He asked for an explanation of the difference;
(ii) Bell explained that it was because the sum applied for under Application No. 18 reflected the increase in value of the completed work since the last application. It did not take into account the sums previously due as interim payments and/or sums paid by TCL to date;
(iii) In contrast, Bell’s claim in the adjudication was based on its contractual entitlement to the value of the completed work less sums previously due as interim payments, sums paid to date and retention;
(iv) Bell’s figure of £1,443,981.51 plus VAT claimed in the adjudication was therefore the result of deducting the sums paid by TCL at the date of the Referral from Bell’s gross valuation under Application No. 18, less 3% retention;
(v) However, as recorded in the Decision at paragraphs 211 – 216, TCL challenged Bell’s calculation on the basis that it included payments made by TCL under Application No. 18 and Application No. 19. At paragraph 228 of the Decision, the Adjudicator accepted TCL’s submissions and concluded that he had no jurisdiction to consider payments made under Application No. 19;
(vi) He therefore concluded that his assessment of the sum due under Application No. 18 in the absence of a valid Pay Less Notice should exclude the sum of £679.592.78 that Bell claimed it had received under Application No. 19. This increased the sum due under Application No.18 from the sum claimed of £1,443,981.51 to £2,129,672.69 plus VAT.”
Natural Justice & Jurisdiction
TCL argued that by awarding a higher sum without prior suggestion or allowing TCL to comment, the adjudicator failed to act fairly, causing it material prejudice. The judge rejected this and said that the increase in the sum awarded resulted from the adjudicator’s response to TCL’s own submissions, where TCL had challenged Bell’s calculation, asserting it included payments made under both Application No. 18 and Application No. 19 and the adjudicator accepted TCL’s submission that he had no jurisdiction to consider payments made under Application No. 19. In reference to the principles set out in Cantillon Limited v. Urvasco Limited [2008] EWHC 282 (TCC), the judge said: “It simply cannot be said that this Adjudicator went off on a frolic of his own, deciding a case upon a factual or legal basis which had not been argued or put forward by either side … Both parties were aware of the relevant material, the issues were canvassed before the Adjudicator in correspondence.”
Further, TCL argued that the adjudicator took it upon himself to value the work done in Interim Application 18 and to award a sum higher than that sought in the Referral and that was outside his jurisdiction. Again, in reference to Cantillon, the judge stated that the “ambit of the reference to arbitration or adjudication may unavoidably be widened by the nature of the defence or defences put forward by the defending party in adjudication or arbitration.”
While Bell’s referral sought a specific sum and excluded jurisdiction for a ‘true value’ assessment, TCL’s series of defences to the quantum of Bell’s claims expanded the scope. Specifically, TCL’s submission that payments under Application No. 19 should be ignored (which the Adjudicator accepted) directly led to the recalculation and increase of the sum due under Application No. 18.
Conclusion
This judgment underscores the principle that an adjudicator’s decision, even if awarding a sum higher than initially claimed, will be enforced if the increase arises directly from the defending party’s own arguments and/or submissions made during the adjudication, rather than the adjudicator embarking on an uncanvassed frolic of their own. As the judge said in Cantillon, “It offends reason that Urvasco could run that defence and avoid the consequences”. That is to say, the ‘any defence’ rule may result in a party being hoist by its own petard.
Further, in Hopkins Ltd v Trant Engineering Ltd [2020] EWHC 1305 (TCC) the judge said that, “Serving the relevant and required notices is not an impossible or Herculean task. Failure to do so has certain consequences.” An unfortunate consequence of the Act – as was the case here – a party’s entitlement to be paid the notified sum may temporarily result in a double payment.
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