Coventry & Warwickshire Development Partnership LLP v Avison Young (UK) Limited

From January 2020 to January 2023 the Defendant was engaged by the Claimant to act as NEC project manager and NEC supervisor in relation to the Claimant’s development works at Gateway South in Coventry. The Claimant contended that the Defendant failed to perform its duties with proper care and skill in relation to the certification of the sums due from the Claimant and that it suffered loss thereby. The Claimant referred the matter to adjudication and by his decision (“the Decision”) of 13^th February 2026 Franco Mastrandrea (“the Adjudicator”) awarded the Claimant £8,729,179.33 plus interest as damages. On 16^th February 2026 the Defendant said that it would not pay the sum awarded and invoked the grounds of defence which I will consider below. The Claimant commenced proceedings for payment of the sum awarded and now seeks summary judgment.

The Defendant resists that application. It says that the Adjudicator failed to address the dispute referred to him but instead addressed a different dispute and that, in doing so, he acted outside his jurisdiction. It says that, instead of assessing whether the Defendant was in breach of its obligations and the loss flowing from any such breach, the Adjudicator engaged in undertaking his own valuation of the sums which should have been certified. In essence it is said that rather than addressing the matter as a claim for loss flowing from professional negligence the Adjudicator approached it on the footing of conducting a valuation exercise to find the true value. Alternatively, the Defendant contends that the Adjudicator failed to give adequate reasons for the Decision. It also says that there were material breaches of natural justice, the principal breach being said to have been that the Adjudicator took account of documents produced by Gardiner and Theobald in March 2024 (“the G&T Assessment”) without giving the parties an opportunity to address them. Finally, the Defendant says that, even if its contention that the Decision is unenforceable in its entirety is not accepted, parts of the Decision should be severed and the severed parts not enforced.

The relevant works concerned the development of an industrial and logistics park on a 215-acre site which had previously been a sewage treatment plant. Substantial reclamation and remediation earthworks were required. The Claimant engaged Buckingham Group Contracting Ltd (“Buckingham”) to undertake works involving the excavation, treatment, and positioning of some 5,000,000 m³ of material to form a bund. Buckingham was to make monthly applications for interim payments. The amount of those was to be determined by reference to the Price for Work Done to Date (“the PWDD”) which was, in turn, to be calculated by determining what proportion of the total works in relation to the relevant activity had been properly completed at the date of the application and applying that proportion to the total lump sum to be paid for that activity. The Defendant’s role included the certification of the sums due on the monthly payment applications.

The Claimant’s case was that the Defendant had significantly over-valued the amounts due to Buckingham. The Defendant had, the Claimant said, accepted without adequate questioning reduced volumes which Buckingham put forward for the total volume of material to be moved. This had the effect that the works performed at any given stage would be a greater proportion of the total than would otherwise have been the case. Further, the Defendant was said to have wrongly accepted Buckingham’s assertion of the extent of the work performed and to have failed to identify defects in the work which had been performed. An element in the Defendant’s failings was said to have been its use of the Permits, Equipment, and Earthworks Data (“the PEE”) which recorded excavation volumes as the primary source of data. Instead, the Claimant said, priority should have been given to the Earthworks Production Data (“the EPD”) which recorded the volume of material placed in its final location. The Claimant said that this had caused loss because it had overpaid Buckingham and the subsequent insolvency of Buckingham had meant that the overpayment could not be recouped from Buckingham.

The Defendant did not accept that the criticism was merited. It said that the certification had been appropriate; that it had performed its task properly; and that in any event the difference between the sums certified and the correct amounts was negligible.

That was the background to the adjudication. It will be necessary to consider in some detail below the cases which were put to the Adjudicator and the terms of the Decision.

The Claimant is seeking summary judgment but is doing so in the context of proceedings to enforce the decision of an adjudicator. The effect is that a robust approach is to be taken. As O’Farrell J explained in Global Switch Estates Ltd v Sudlows Ltd [2020] EWHC 3314 (TCC) at [44] and [45]:

“44.

It is important to emphasise that the courts take a robust approach to adjudication enforcement. The relevant legal principles are well-established and clear, as summarised by Jackson J in Carillion v Devonport Royal Dockyard [2005] EWHC 778 (TCC) at [80]:

‘1. The adjudication procedure does not involve the final determination of anybody’s rights (unless all parties so wish)’;

The Referral was dated 26^th August 2025. In the Executive Summary the Claimant said:

“2.1

The dispute concerns a contract for infrastructure works at SEGRO Park, Coventry and the performance of AY’s role as Project Manager and Supervisor relating to an NEC 3 ECC Option A contract. …

2.2

AY fundamentally failed to perform its duties properly and with the required standard of skill and care. It did not assess the amount due to the contractor, BGCL, with an acceptable degree of accuracy and failed to properly identify Defects in BGCL’s Works in its role of Supervisor.

2.3

As a result, at the point AY’s Appointment was terminated in January 2023, in reliance on AY’s assessments CWDP had over-paid BGCL by a significant amount by reference to the amount of work BGCL had properly carried out and the payment mechanism in the Contract. CWDP has not been able to recover the full extent of that over-payment from BGCL and, as a result, has suffered a loss.

2.4

The details of AY’s negligence can be summarised into some quite simple points.

2.5

The Contract required AY, as PM, to assess the PWDD based on the proportion of work for each activity that had been completed by BGCL as contractor. Therefore if the price for an activity is (say) £100 and the contractor had completed 25% of the work required for that activity, the amount due was £25.

2.6

In order to do this, AY needed to know three things:

2.6.1

The total amount of work required to complete each activity (in this case this would be the volume of material to be excavated, treated and placed);

2.6.2

The proportion of that total work that had been completed;

2.6.3

The extent to which any work done was defective (as this affected whether the work was considered ‘complete’).

2.7

AY failed in relation to all three of these key elements:

2.7.1

AY used and/or accepted significantly reduced baselines for the total work to complete that were included in the contractor’s applications for payment, even though:

2.7.1.1 There was no evidence to support any such reduction (so AY took the contractor’s claims at face value); and

2.7.1.2 The reduced baselines were contrary to other progress information being provided by the contractor at the same time (i.e. AY had conflicting information but did nothing with it);

2.7.2

As a result of this the contractor’s progress would be overstated compared to the actual progress because the payment process was using a smaller amount of total work to be done than was actually the case and which was being reported as progress information.

2.7.3

AY accepted the contractor’s calculations of the proportion of work done using information included in the contractor’s applications for payment that:

2.7.3.1 Failed to take account of all of the work required for the activity (and only took account of a small part of the total work); and

2.7.3.2 Were contrary to other progress information being provided by the contractor at the same time (so AY failed to ‘join the dots’ and consider other information readily available to it);

2.7.4

Again, this had the effect of over-stating the extent of the contractor’s progress: AY was compounding its first error (regarding the baseline of total work) by accepting that a greater proportion of work had been completed.

2.7.5

AY failed to properly identify defects in the contractor’s work even though AY’s appointment was as Project Manager and Supervisor and as Supervisor, AY was responsible for checking and notifying defects in the contractor’s work. As a result, BGCL was paid for work that was defective on the basis that it was ‘complete’, when it was not. Not only did this result in BGCL being paid more than it should have done, because of BGCL’s insolvency CWDP has had to pay a replacement contractor to put right the defective work.

…”

After setting out the background to the project and to the engagement of the Defendant, the Claimant said, at paragraphs 3.15 and 3.16:

“3.15

CWDP considers that AY failed to discharge its duties under the Appointment with the required standard of skill and care.

3.16

AY, negligently and in breach of the duties owed to CWDP, made assessments of the amount due to BGCL on the basis that a significantly greater proportion of the work was complete (and free from defects) than was actually the case and that was or should have been readily apparent from the information available to AY. Consequently, the amount due assessed by AY was grossly overs-stated in comparison to the actual extent of progress and taking account of the defects present that AY ought to have been aware of.”

At paragraph 3.21 and following the Claimant set out the sums it was claiming and described those as “damages representing the loss arising from AY’s breaches of the Appointment”.

Section 6 of the Referral was entitled “Breaches by AY” and at paragraph 6.6 it said:

“AY failed to discharge its duties under the Appointment with the required standard of skill and care with the result that it failed to properly assess the PWDD and the amount due to BGCL in accordance with clause 50.1 of the Contract. The Report explains that the failings by AY were numerous and continued over a lengthy period. The failures by AY that led to the over-assessment of the PWDD and amount due include the following:

6.6.1

AY accepted, without any apparent question, revised (reduced) baseline volumes for the earthworks submitted by BGCL which significantly reduced the overall amount of work to be done, despite no evidence being provided to support such reduced volumes. By reducing the total amount of work to be done, BGCL was able to over-state the proportion of the total work completed and increase the value of the PWDD claimed in its applications for payment;

6.6.2

AY also accepted the extent of progress claimed by BGCL in its applications for payment without any apparent interrogation of the data presented and despite the fact that the progress claimed was materially over-stated compared to the progress reported by BGCL at the same point in time in other reports and other progress information in AY’s possession. Put simply, AY took BGCL’s applications for payment at face value despite AY being in possession of other information (including information from BGCL) that indicated a significantly smaller amount of work completed;

6.6.3

Further, AY failed to properly discharge its duties as NEC Supervisor. As a result, AY failed to identify Defects in the works which, if they had been properly identified, should have led to a reduced assessment of the PWDD. CWDP has incurred additional costs employing other contractors to make good the defects identified by BWB as Supervisor since the termination of AY’s Appointment but which should reasonably have been identified and reported by AY.”

At paragraph 6.7 the Claimant said that it was relying on the reports of Chris Everett to support its case. It then set out what were said to be “some examples of AY’s failings to illustrate the issues with AY’s performance”.

At paragraphs 6.21 and 6.22, under the sub-heading “Failure properly to assess progress”, the Claimant said:

“6.21

As noted above, in order to assess the PWDD, AY had to assess the proportion of the work completed for each activity. Therefore, AY had to properly assess progress against the baseline to work out the proportion of the work that was complete.

6.22

However, AY failed to make its own assessments and seemingly relied on the information provided in or with BGCL’s interim applications for payment, without taking account of additional information provided by BGCL contemporaneously that contradicted BGCL’s application, or making its own independent assessment.”

Under the sub-heading “Defects” the Claimant referred to a number of defects in the works performed by Buckingham. It said that these had not been identified by the Defendant but that they should have been if the Defendant had carried out its duties properly. It said that the Defendant’s failure to identify these defects and/or to notify the Claimant of them was negligent.

Section 7 was entitled “CWDP’s Claim”. For current purposes it is sufficient to note that paragraphs 7.1 and 7.5 said:

“7.1

As a result of the above, AY, negligently and in breach of the duties owed to CWDP, made assessments of the PWDD on the basis that a significantly greater proportion of work was complete (and free from defects) that was actually the case and readily apparent from the information available to AY. Consequently, the PWDD assessed by AY was grossly over-stated in comparison to the actual extent of progress and taking account of the defects present. AY failed to carry out its duties to the required standard of skill and care.

…

7.5

CWDP was entitled to and did rely on AY’s assessments of the PWDD in making payments to BGCL under the Contract. Therefore, in reliance on AY’s incorrect assessments of the PWDD as at January 2023 CWDP paid BGCL £25,374,883.84 more than the proper value of the works completed by BGCL at that point in time. …”

Then, at paragraph 7.18 and following, the Claimant set out the sums which it claimed “as damages as a result of [the Defendant]’s breaches of the Appointment”.

The Defendant’s response was dated 14^th October 2025. The Executive Summary began at paragraph 2.1 by saying:

“CWDP’s claim is one based on breach of AY’s contractual obligations to assess applications made by Buckingham Construction Group Limited (“BGCL”) and certify the sums due to it from CWDP. As such, before considering any of the quantum analysis by the parties’ appointed experts, the Adjudicator must first find that AY did not act reasonably in performance of its contractual duty when assessing the sums due to BGCL.”

At paragraph 2.10 and 2.11 it said:

“2.10

In conjunction with failing to present any positive case on liability, in summary, CWDP:

2.10.1

Ignores contemporaneous evidence (even when relying on the relevant document for other purposes) that provides insight into total actual volumes / contractual documents and instead elects to use volumes set out in tender documents as the basis of its quantum assessment;

2.10.2

Has not properly considered the assessment role structure that was determined by its contract with BGCL (“the Contract”) or its role in what documents were made available for AY to use, which impacted the data points available against which the certification was carried out;

2.10.3

Does not appear to have considered that on a project such as this, there is a reasonable tolerance level for variance between works completed and what is certified on a month to month basis, where there are numerous unknowns about the materials on site, not least the volumes and the topography of the land that sits under the lagoons;

2.10.4

Has made a claim for alleged Defects which either: (i) were not discoverable by AY; (ii) do not fall within the scope of the Adjudication and / or for those that do fall within the scope of the Adjudication (iii) are not properly substantiated;

2.10.5As a result of its incorrect assessment approach, has made a vastly inflated claim for additional finance / interest charges.

2.11

Putting the issue of liability to one side, AY’s position is that on a proper assessment of the position as at August 2023 (it is common ground that this is the relevant point from which to assess CWDP’s alleged losses),2 when BGCL went into administration, there is a negligible differential between the certified amount and the works that had been completed.

At section 4A the Defendant referred to the witness statement of Russ Cairns who explained the involvement and actions of the Defendant and then, at paragraph 4.9, it said:

“Exhibit RC4 of Mr Cairns’ Witness Statement amply demonstrates AY’s challenges to BGCL’s payment applications. It is submitted that this is a clear demonstration that AY was actively assessing and considering the veracity of BGCL’s statements to it within its monthly applications – clearly performing its assessment function with reasonable skill, care and diligence, contrary to the factually inaccurate impression given by CWDP in its Referral.”

At paragraph 5.4 the Defendant explained the stages in which it would address the alleged over-certification saying:

“5.4

We address the alleged over-certification first (leaving Defects and Finance Charges to later in this Response) in the following stages:

5.4.1

Interpretation of the Contract;

5.4.2

The structure of the Activity Schedule;

5.4.3

Addressing what AY did when assessing applications for payment;

5.4.4

Why Mr Everett’s retrospective assessment is, with respect, flawed;

5.4.5

Based on all contemporaneous evidence available, what was the status of the works as against the sums paid to BGCL, as at:

5.4.5.1 January 2023;

5.4.5.2 August 2023.”

At paragraph 5.26 the Defendant set out the processes which it had put in place to meet its contractual obligations to the Claimant.

At section 5D the Defendant set out its critique of the approach taken by Mr Everett for the Claimant. Then, at section 5E, it summarized the approach and conclusions of its expert, David Somerset. At paragraph 5.59 the Defendant said:

“If the Adjudicator considers he must determine the proper retrospective assessment, as opposed to determining that CWDP has not established that AY was in breach of its obligations, we invite the Adjudicator to prefer the evidence of Mr Somerset over Mr Everett…”

At paragraph 5.74 the Defendant said:

“5.74

In summary therefore, on a proper assessment of the contemporaneous evidence:

5.74.1

there is a nominal / very limited variance between the works done and the certified payments as at August 2023;

5.74.2

Any variance falls within reasonable tolerances for assessment and cannot justify a finding of any breach of AY’s assessment obligations; and

5.74.3

CWDP has not suffered any loss.”

Section 5F was entitled “Allegations of Breach, Causation and Loss in relation to alleged Over-certification”. It contained a table setting out allegations by the Claimant and the Defendant’s response thereto followed by further commentary and the contention that the Claimant had failed to establish that any over-certification (which was denied by the Defendant) had caused loss.

The response concluded thus at paragraph 6.1:

“6.1

The Adjudicator is invited to reject the invitation made by CWDP in paragraph 9.4 of the Referral to make the declarations set out therein. The Adjudicator is invited to make the following findings:

6.1.1

AY did not breach its contractual obligation to use reasonable skill, care and diligence in carrying out its assessment role in light of the information/data available to it during the Project;

6.1.2

In any event, the extent of any over-payment as at August 2023 was negligible;

6.1.3

CWDP has not suffered any loss as a result of AY’s assessments of BGCL’s monthly applications;

6.1.4

CWDP is not entitled to any sum for its claim for defects;

6.1.5

CWDP is not entitled to any sum for additional financing its payments to BGCL or in the alternative, the Adjudicator is invited to determine such sums additionally incurred by CWDP if the Adjudicator disagrees with paragraphs 6.1.1 to 6.1.5 of this Response.

6.1.6

That AY is not liable to pay CWDP the sum of £14,957,623.16 plus VAT in respect of damages determined under paragraphs 9.4.3 and 9.4.4 of the Referral (or any sum).”

It follows that the Claimant’s case was being put fairly and squarely as a case of professional negligence on the footing of damages flowing from a breach of the duty to exercise proper care and skill and that the Defendant responded on the same basis.

The material put before the Adjudicator included lay witness statements together with expert evidence on behalf of each party. The Defendant’s lay evidence consisted of statements from Russell Cairns, a director of the Defendant, who had acted as project manager for part of the relevant period.

The Adjudicator set out the dispute he was to address at section 2 of the Decision. At paragraph 2.1 he said:

“The dispute is whether AY failed properly to assess the amount due to BGCL in accordance with clause 50.1 of the Main Contract [Referral/6.6]. CWDP alleges that AY failed to perform the duties that AY owed to CWDP properly and with the required standard of skill and care; more particularly, that it failed properly to:

(a)

assess the amounts due to BGCL (the Price for Work Done to Date (“PWDD”)) with an acceptable degree of accuracy; and/or

(b)

identify Defects in BGCL’s Works in its role of Supervisor.

I am required, if I conclude that AY did so fail, to determine the consequence of that/those failures.”

At paragraph 2.2 the Adjudicator set out his understanding of the Claimant’s case saying that it was a contention the Defendant “had not correctly assessed the PWDD” and that as a result Buckingham had been overpaid. He said that the Claimant alleged that the Defendant’s “failure” included:

“(a)

acceptance, without any apparent reason, revised (reduced) baseline volumes for the earthworks submitted by BGCL which significantly reduced the overall amount of work to be done, despite no evidence being provided to support such reduced volumes. …

(b)

acceptance of the extent of progress claimed by BGCL in its applications for payment without any apparent interrogation of the data presented and despite the fact that the progress claimed was materially over-stated compared to the progress reported by BGCL at the same point in time in other reports and other progress information in AY’s possession. AY took BGCL’s applications for payment at face value despite AY being in possession of other information (including information from BGCL) that indicated a significantly smaller amount of work completed;

(c)

failure properly to discharge its duties as NEC Supervisor. As a result, AY failed to identify Defects in the works which, if they had been properly identified, should have led to a reduced assessment of the PWDD.”

The Defendant’s case was summarized thus at paragraph 2.6:

“AY rejects the CWDP claims. It says that any overpayment in August 2023 was negligible; that CWDP has not suffered any loss as a result of AY’s assessments of BGCL’s monthly applications; that CWDP is not entitled to any sum for its claim for defects; and that CWDP is not entitled to any sum for additional financing.”

The Adjudicator noted in passing that the Defendant “cannot be held liable for the consequences of [Buckingham]’s insolvency”.

At section 3 the Adjudicator addressed a dispute as to his jurisdiction and at section 4 he recited the relevant contractual provisions. Then, in section 5, he set out his analysis.

The Adjudicator began that discussion with a passage entitled "Background and Sums Claimed”. In that passage he noted, at paragraph 5.3, the Claimant’s expert’s criticism that Mr Cairns’s account of the approach which the Defendant had undertaken indicated no account had been taken of the EPD. At paragraph 5.4 he recorded that the Defendant’s expert had said that the Defendant’s approach “appear[ed] to him to have been a reasonable approach”. At paragraphs 5.10 and 5.11 the Adjudicator commented on the steps which the Claimant had taken after the over-payment had come to light and after Buckingham had left the site. He noted that the Claimant’s “mitigation approach” had not been criticised but said that he would comment further on the use of terms drawn from the post-departure arrangements “in the appraisal of any measure of damages or loss against [the Defendant]”.

Next, the Adjudicator addressed how the PWDD was to be calculated. Then, he set out a passage under the heading “Quantities of Work”. This included, at paragraph 5.18:

“I wrote to the Parties again on 16 October 2025, that it seemed to me, given their approach to the matters in issue, that two things might be paramount:

(1)

what final adjusted quantities of work BGCL would have had to carry out had it taken the Works to term. It seemed from the evidence that had been submitted to that date, that CWDP considered the quantities were no less than, indeed more, than the quantities to be derived from the BGCL Bills of Quantities (“the BCGL BoQ”) (leaving to one side the issue whether the BCGL BoQ was contractually relevant/this was a lump sum or remeasurement contract, etc.) and the Hydrock Materials Management Strategy (“MMS”), whilst AY considered that they were considerably less.

(2)

how much of each of those final quantities of work were carried out by BGCL prior to termination, so that the proportion of each against those final adjusted quantities could be determined for the purposes of establishing what should properly have been paid by CWDP to BGCL for work carried out by BGCL before termination.”

The Adjudicator turned to how T (the total amount of work covered by an activity) was to be calculated. This passage began thus, at paragraph 5.22:

“CWDP contends, appropriately in my decision, that if the Project Manager does not know the total amount of work to be completed for any particular Activity i.e. its baseline, or if the baseline total is wrong, then the Project Manager cannot calculate properly the proportion of the (total) work that the contractor had completed at any point.”

At paragraphs 5.36 – 5.38 the Adjudicator summarized three criticisms which the Claimant had made of the approach which the Defendant had taken in performing its role before concluding, at paragraph 5.39, that “these all seem to me valid criticisms”.

The Adjudicator had asked the parties various questions including a question as to the baseline quantities which should have been used. He dealt with this point from paragraph 5.40 to paragraph 5.57. Having summarized the responses the Adjudicator said at paragraphs 5.48 and 5.49:

“5.48

I am bound to conclude, based on this evidence, that it would be unsafe to rely on the quantities contended for by Mr. Everett, of 5,682,708m³, albeit that - as a figure - it is unchallenged by AY.

5.49

Nor, by contrast however, can I accept the baseline quantities relied on by AY, such as 5,030,107m³ based upon what CWDP alleges is incomplete data.”

That section of the Decision concluded thus:

“5.55

Taking stock at this point, I have been pointed to no satisfactory evidence to corroborate the contention that there were substantial changes in workscope beyond the work commissioned from BGCL. In any event, AY as not sought to quantify any such changes.

5.56

It is in just these sorts of circumstances, and particularly the substantial controversy between the Parties on quantities that measures, such as are identified at 5.19(a) and 5.19(d) above would have been appropriate. Unfortunately, neither has been available to me.

5.57

Standing back, therefore, from this largely unsatisfactory material, and turning to the additional factor - namely the submission on 21 January 2026 described by AY as to the “main discovery of the disclosure on (G&T Termination Assessment) Tab 16,” I conclude that I should in my own evaluations apply the proportions (original emphasis) shown in that Tab 16. I do so not only on the basis of the material set out in Tab 16, but also

(a)

given the lack of a quantified measure of quantities (see from 5.16 above),

(b)

having regard to the burden of proof, bearing in mind that CWDP is the Referring Party in this adjudication,

based nevertheless on the presumption, which I consider to be justifiable and one safer than following either one or other Party’s Expert appraisal given my misgivings about each, that even if the quantities shown in Tab 16 may not (and are unlikely to) be finite, and are very likely understated, they are nevertheless likely to have been produced on the basis of equivalence.”

Next, the Adjudicator addressed the approach to calculating how much work had been done by Buckingham. Having summarized the competing evidence he said:

“5.66

It seems to me reasonably clear from this, that AY was prepared to accept largely at face value the progress information placed before it by BGCL, which in turn coincided with the PEE quantities.

5.67

I accept therefore, the CWDP assertion that AY did not much challenge the BGCL applications for payment and relied instead largely on the PEE application quantities which in turn did not well correlate with the EPD quantities.

5.68

As to that, [Everett 3/18] notes that both Experts agree that the EPD is the primary source of data for calculating the volumes of material placed into the environmental bund. He asserts that AY failed to consider that data, which contributed to AY’s over certification.

5.69

In that context, Mr. Everett further notes that Mr. Cairns appears to acknowledge [Cairns 1/17] that the placement activity Prices are absorbed into another activity (as to which see generally 2.5 above), although he links cut and fill together. If this were correct then Mr. Cairns would naturally have used the EPD figures (which include the cut, treatment, and fill volumes), and not the isolated PEE figures (which include only cut volumes). Whilst Mr. Cairns says this made sense to him, in Mr. Everett’s view he has not administered the assessment process with that same sense. [Everett 3/269]”

The Adjudicator had asked the parties how much of the final quantities of work had been carried out by Buckingham before the termination of its engagement. Having summarized the responses he said, at paragraph 5.73, that he had arrived at an evaluation “based upon the proportions shown in Tab 16 of [the G&T Assessment] (again original emphasis)” saying that he was doing so for the reasons he had given at paragraph 5.57.

The Adjudicator turned then to consider how to deal with sums which the Claimant had recovered under a performance bond. He noted that Defendant had contended these should be “considered as part of the final account of loss … before any damages can be claimed”. The Adjudicator rejected this argument for the reasons he gave at paragraph 5.82 including that the bond “was not intended to cover losses attributable to [the Defendant]”. At paragraph 5.83 he added, as an alternative reason, that:

“any benefit received by CWDP under the bond was quite independent of the circumstances giving rise to the loss contended for against AY in this case. It thus appears to have the complexion of an adventitious or collateral benefit.”

There had been a dispute as to the approach to be taken to the retention monies. At paragraphs 5.90 and 5.91 the Adjudicator noted the Defendant’s contentions thus:

“5.90

AY invokes Townsend v. Stone Toms & Partners (No.2) to the effect that retention monies should be taken into account when considering the quantum of any professional negligence dispute. [Rejoinder/7.5] As to that, CWDP says that that authority can be readily distinguished from the facts here on the basis that no recovery has been made from BGCL that could reduce AY’s liability. [Surrejoinder/7.3]

5.91

AY rejoins that from any QS / legal analysis, it cannot be liable for alleged damages when CWDP holds funds that were retained from BGCL that have to be applied to the BGCL account. It would amount to a double recovery if CWDP were entitled to the benefit of the retention as well as to recover damages for the same sums ‘paid’ to BGCL but not actually transferred across. [Rejoinder/7.6]”

The Adjudicator then explained that the retention was to be brought into account albeit in a different amount from that for which the Defendant had contended saying:

“5.92

I conclude that retention should be brought into account. Even (contrary to CWDP’s contention) had AY carried out a proper valuation, an adjustment would have been appropriately made in the certification process by AY for retention. Retention would have been withheld, albeit in a different sum attributable to a proper valuation. Thus, had AY rather than PIDG produced Certificate 42, it would, as PIDG did, have shown as being payable to BGCL only a net sum after retention.

5.93

Having so found, however does not result in a credit of the whole of the retention against the AY failings. What should be brought into the evaluation is the difference between the retention that ought to have been deducted upon a valuation of the works properly carried out at August 2023 and the retention that was in fact deducted against Certificate 42, i.e. the sum of -£241,549.93 (as to which see the quantum summary at 5.161 below) for otherwise the Employer’s legitimate security against BGCL’s defective performance would be lost, and was here lost given the subsequent course of events, as was canvassed in Townsend.”

The Adjudicator addressed the contention that the Defendant had failed to identify defects in the works undertaken by Buckingham. He noted the Defendant’s response that the alleged defects had not been discoverable by the Defendant; fell outside the scope of the adjudication; and had not been substantiated. The Adjudicator analysed the arguments and included in this analysis his assessment that it was not a failure on the part of the Defendant to include in the interim payment valuation “defects which were latent or not readily apparent to a reasonably competent Project Manager” before concluding:

“I conclude, having regard to the foregoing, that CWDP has failed to make out its case on the majority of the claimed defects, whether on the basis that they could or should have been identified and excluded prior to PIDG Certificate No. 42, or because they were latent, or because they are replacement contractor cost-based as opposed to an excluded BGCL value base.”

The Defendant had contended that account should have been taken of the materials left on site on the termination of Buckingham’s engagement. The Adjudicator noted, at paragraphs 5.113 and 5.114, that the point was raised at late stage by the Defendant and appeared to have arisen out of a review of the G&T Assessment. The Adjudicator explained, at paragraph 5.118, that he was taking into account the sum which had been allowed under this head in the G&T Assessment.

At paragraphs 5.119 and 5.120 under the heading “Generally on Valuation and Progress Proportions” the Adjudicator explained that where the parties’ experts were “agreed on valuation” he had used their figures in his evaluation. Where they were not agreed he had taken a figure derived from the G&T Assessment. Having said that, the Adjudicator then, at paragraphs 5.121 – 5.147, set out the sums he was taking into account under various heads before stating, at paragraph 5.148, the total sum he was taking into his evaluation in relation to the sum in respect of remediation and earthworks on part of the land. He then explained the sums he was attributing to three other elements before saying, at paragraph 5.160:

“Having regard to the foregoing, I conclude that AY failed to carry out its duties under the Appointment to the required standard of skill and care, leading to its significant over-certification of the Price for Work Done to Date due to BGCL before Completion.”

That was followed by what the Adjudicator described as “a quantum summary of my Decision”.

The Decision was set out at section 6 and the following are of note for current purposes:

“(a)

in its payment certificate No. 37 issued 3 February 2023, AY over-valued the cumulative Price for Work Done to Date at that time;

(b)

the extent of the over-valuation by AY under paragraph (a) above was no less than £7,694,883.73;

(c)

as a result of AY’s over-valuation, CWDP has suffered a loss of £8,729,179.33, inclusive of interest;

(d)

AY is liable to compensate CWDP by way of damages in respect of that loss”.

A failure by an adjudicator to give adequate reasons for his or her decision can indicate that the adjudicator failed to decide the dispute which had been referred to him or her (and so had made a decision outside the adjudicator’s jurisdiction). It can also be an indication that the adjudicator failed to comply with the rules of natural justice. Moreover, a failure to give adequate reasons can be a separate and freestanding ground of challenge to an adjudicator’s decision.

The point was made by Jackson J, as he then was, in the fifth of the propositions listed at [81] in the first-instance decision in Carillion as was explained by HH Judge Stephen Davies, sitting as a judge of the High Court, in Thermal Energy Construction Ltd v AE & E Lentjes UK Ltd [2009] EWHC 408 (TCC) at [19] and following. Paragraph 22 of the Scheme for Construction Contracts requires an adjudicator to give reasons where a party requests this (as was done here by the Claimant in the referral). It follows that an adjudicator who fails to give reasons is not making a decision which accords with the requirements of the Scheme. As a referral under the Scheme is the source of the adjudicator’s jurisdiction such an adjudicator would be acting outside his or her jurisdiction.

The reasons for an adjudicator’s decision can be expressed briefly. They are to be seen in the context both of the adjudication procedure generally and of the particular adjudication. In the latter regard it is of note that they are addressed to parties who know the issues and whose submissions will have formed the background to the decision. In Thermal Energy Judge Stephen Davies noted, at [21], the fact that an adjudicator will often have to address a “great number of matters within a short time frame” and that an adjudicator’s decision will only have “a temporary finality” but then explained that:

“the fact remains that an Adjudicator is obliged to give reasons so as to make it clear that he has decided all of the essential issues which he must decide as being issues properly put before him by the parties, and so that the parties can understand, in the context of the adjudication procedure, what it is that the Adjudicator has decided and why.”

The question of whether adequate reasons have been given is to be answered by reading the relevant decision as a whole. An adjudicator is not obliged to give reasons for reasons. It is, moreover, to be remembered what is required are reasons for the adjudicator’s decision on the dispute referred to him or her. That does not require the adjudicator to address all the arguments advanced on a given issue although a failure to address particular arguments can indicate that the referred dispute has not been addressed or that there has been an unfair failure properly to consider a party’s case. It is to be remembered that a failure to give reasons can be a separate ground of challenge to an adjudicator’s decision (or a ground of resistance to enforcement of a decision). It is sufficient if the reasons enable the parties to understand what it is the adjudicator has decided and why. That means that reasons which demonstrate that the adjudicator has not addressed the dispute referred to him or her or that he or she has broken the rules of natural justice can be sufficient. Such reasons will give rise to separate grounds of challenge but will not provide a separate ground of defence.

The fact that a party can mount a critique of an adjudicator’s decision identifying the ways in which it is said that the adjudicator erred (as has been done here) is not necessarily conclusive of the question of whether adequate reasons were given. It is, nonetheless, a significant pointer in that regard. A party who can say in detail how an adjudicator erred will find it hard to show that the reasons given did not enable that party to understand what the adjudicator had decided and why.

In this case the Defendant’s argument that the Adjudicator failed to provide adequate reasons is based on an invocation of particular passages in the Decision without having regard to their context and without reading the Decision as a whole.

In their skeleton argument Mr Howells KC and Miss Adams said that the conclusion expressed by the Adjudicator at paragraph 5.160 was a “bare statement” which had no reasons behind it.

I do not accept that characterization of that paragraph let alone of the Decision as a whole. Paragraph 5.160 was avowedly the culmination and summation of the preceding analysis. In the preceding parts of section 5 the Adjudicator had set out the parties’ cases as to whether the Defendant had performed its role as project manager properly. He had identified which contentions he had accepted and which he had rejected in relation to that issue and had given brief reasons for doing so. The Adjudicator had also explained how he had reached his conclusion on causation and loss. The Decision did not address breach, causation, and loss in separate sections in the way which might have been done in a judgment but from reading the Decision as a whole it was clear both that the Adjudicator was addressing those matters and why he had reached his conclusions.

The Defendant criticised the absence from the Decision of any analysis of its argument that the amounts certified had been within an acceptable tolerance. This was not, however, a distinct dispute which had been referred to the Adjudicator rather it was an argument advanced by the Defendant as to why the dispute which had been referred should be resolved in a particular way. The absence of such an analysis was an aspect of the Defendant’s contention that the Adjudicator had failed to address the dispute referred to him which I will consider next but it does not render the reasons given inadequate.

It follows that the reasons set out in the Decision were sufficient to enable the parties to know what had been decided and why in respect of the dispute referred and this line of defence fails.