The judgment in BDP Construction Ltd v Cygnet Behavioural Health Ltd [2026] EWHC 1796 (TCC) serves as a critical reinforcement of the ‘pay now, argue later’ philosophy that underpins UK construction adjudication. The court addressed the common tactical attempt by defendants to “ringfence” an adjudicator’s jurisdiction into a ‘binary choice’ where the adjudicator found that neither party had overcome the burden of proof regarding the rate of liquidated damages (‘LADs’). Ultimately, the court was satisfied that the adjudicator had not acted in excess of jurisdiction or breach of natural justice.

Factual Background

The dispute arose from the construction of a hospital in Wolverhampton. After receiving a claim for LADs in 2025, BDP referred a dispute to adjudication in January 2026. As the parties never formally executed the contract, the adjudication was conducted with a fundamental uncertainty regarding the intended version of the JCT Design & Build 2016 contract and, consequently, the applicable rate for LADs: BDP alleging a rate of £14,500 per week and Cygnet alleging £1,000 per day.

The adjudicator found the parties contractual positions to be “totally polarised” and, as criticised by the court, that “there must be clear and unequivocable evidence as to what forms the intended contract agreement.” He concluded: “… neither BDP or CBH has persuaded me that BDP and CBH have agreed to include in the Contract liquidated damages at the rate of £14,500.00 per week (BDP) or £1,000.00 per calender [sic] day (CBH) … I Decide that BDP or CBH have not evidenced the rate for liquidated damages agreed by BDP and CBH or intended to be included in the Contract … I Decide that CBH is not entitled to claim liquidated damages at the rate and amount claimed or any other amount.”

Jurisdictional Boundaries

The Notice of Adjudication is a strategic tool used to ringfence the adjudicator’s jurisdiction and parties frequently argue that the Notice limits the adjudicator to a narrow set of outcomes. Here, the Defendant argued that the adjudicator was presented with a binary choice and exceeded his jurisdiction by opting for a third path: deciding no entitlement to LADs as no rate was proven.

To illustrate the alleged jurisdictional excess, the Defendant’s counsel presented the following analogy: “Two parties might ask an adjudicator to resolve their dispute about the colour of a building. The Notice of Adjudication calls for the adjudicator to decide whether the building is red or yellow… What the adjudicator cannot do… is to give an answer such as: the parties have not persuaded me that the building exists.”

Constable J rejected this characterization and, developing the analogy, he said that the adjudicator did not find that, “the building did not exist; merely that neither side had persuaded him of what the colour of the building was.” Further, the judge found that the adjudicator was not bound to make a binary choice as the redress sought a declaration on the invalidity of the LAD notice.

In respect of the adjudicator’s “infelicitous language” when describing what he needed to be satisfied of in order to establish the existence of an agreement, the judge said that: “assuming that he did impose some higher burden of proof on the parties, that would have been at most an error of law which does not amount to a basis upon which to resist enforcement. It was not an error in relation to jurisdiction; it was an error in answering the question the Adjudicator had jurisdiction to decide.”

Natural Justice

The TCC maintains a robust approach towards enforcement, ensuring that the threshold for a material breach of natural justice remains exceptionally high. The defendant argued that it was incumbent upon the adjudicator to inform the parties in advance that he was going to reject both sides’ case on what the appropriate rate was. Constable J disagreed that the adjudicator was required to invite comment where the adjudicator was merely determining that neither party had come up to proof in respect of its respective contentions: “He was not, as I have already indicated, proposing to identify a different, positive answer to the question…”

The Defendant argued that the adjudicator should have notified them before rejecting both rates, which would have allowed them to argue that JCT Clause 2.29.2 saved their position. This clause allows an Employer to claim a lesser rate than that stated in the Contract Particulars.

Constable J stated: “This argument would not have had a reasonable prospects of success. It is plainly wrong. The Adjudicator had concluded that neither had established what the contractually agreed rate was. In these circumstances, both conceptually and numerically, it is impossible for there to be a ‘lesser’ rate for the purposes of the Clause.  Clause 2.29.2 would not have saved Cygnet, even if they had been given the opportunity to make the submission.”    

Discussion

On its face, the judgment presents a compelling study of what happens when an adjudicator is faced with two highly polarized contractual positions and determines a third path: that neither party has discharged its evidential burden. While a total failure to prove any applicable rate of liquidated damages may seem surprising to practitioners, it is highly consistent with how the adjudicator handled the rest of the reference. Tellingly, the adjudicator rejected the extension of time claim on the exact same evidential basis, signalling a systemic failure by both parties to document their commercial relationship.

While the judge affirmed that there was no need for the adjudicator to invite further submissions and that the JCT Clause 2.29.2 ‘Cap’ was “conceptually and numerically” impossible without an established baseline contract rate, one ponders whether the correct outcome was reached. If Cygnet had founded its argument as say “the £1,000 per day stated in the Notice of LADs could only be either (i) the stipulated contractual rate; or (ii) the lower rate under clause 2.29.2,” a lower rate suddenly feels less “conceptually and numerically” impossible.