The case concerns an application for summary judgment by the claimant, Bilton & Johnson (Building) Co Limited (“B&JCL”), to enforce an adjudication decision against the defendant, Three Rivers Property Investments Limited (“TRIL”). The adjudication decision determined that an extension of time for works to 14 November 2019 was due to B&JCL and that TRIL must pay £228.273.48, previously deducted via liquidated damages. The adjudicator further determined that TRIL would also have to pay interest and the costs of engagement. The enforcement proceedings determined whether TRIL had a real prospect of defending B&JCL’s claim to enforce the decision on the basis of a purported breach of natural justice or failure to exhaust jurisdiction.

The focus of this dispute lies in the contractual relationship between the parties. B&JCL had submitted a formal tender of £1,902,633.30 to complete refurbishment works on an industrial park owned by TRIL (“the Works”). The Works agreed to were initially particularised in the form of Tender by written agreement provided 15 August 2018, creating a contractual relationship (“the 2018 Contract”). The 2018 Contract included a term determining that the Tender would constitute the contract for the Works unless a formal agreement was subsequently agreed. 

The works commenced on 17 September 2018. The terms of the 2018 Contract determined the Works would be completed in four sections, each with separate completion dates. The 2018 Contract provisioned for liquidated damages of £2,500 per week per section applied in case of delays. TRIL later provided a formal JCT Design and Build Contract 2016, which B&JCL signed and returned 9 January 2019 (“the 2019 Contract”). The 2019 Contract contained provisions which differed from the 2018 Contract. Specifically, the altered terms determined that all Works would be completed by a single date, 26 April 2019, and that liquidated damages would apply at a rate of £2,500 per week for the Works as a whole (rather than £2,500 per section per week per the 2018 Contract). Due to delays caused by factors outside of B&JCL’s control, B&JCL applied for extensions of time, whereby it was entitled to complete the Works by 14 November 2019. However, while the extensions were granted, they were applied incorrectly to the completion of only certain sections, rather than the Works as a whole. B&JCL proceeded with the works which were certified practically complete on 13 December 2019, however, TRIL had taken partial possession of the Works during August and December 2019. Applying the 2018 Contract terms, TRIL withheld £234,641.56, applying liquidated damage rates of £2,500 per section per week. This lead to B&JCL’s adjudication claim based on the 2019 Contract being the only applicable contractual agreement.

Within the adjudication proceedings, the adjudicator found that the 2019 Contract terms applied as a new contract to the parties and determined that the extension of time to the 14 November applied to the Works as a whole. TRIL had therefore only been entitled to withhold £6,368.08 in liquidated damages. The adjudicator rejected TRIL’s defence that the only contractual relationship had been formed in 2018, and that the 2019 Contract ought to be rectified to reflect the 2018 Contract. Furthermore, he determined the 2018 Contract had in effect been superseded by the 2019 Contract. TRIL had therefore incorrectly applied liquidated damages according to the 2018 Contract terms. The adjudicator directed TRIL to pay B&JCL £228,273.48 (the initial total liquidated damages less the sum it was entitled to withhold), £25,387.82 of interest and the Adjudicator’s fees and expenses. TRIL paid half of the Adjudicator’s fees and expenses but did not make any of the other payments directed, leading to B&JCL’s action for summary judgment to enforce the adjudicator’s decision.

B&JCL applied for summary judgment on the basis of the adjudicator’s findings, that TRIL had applied liquidated damages incorrectly. As the 2019 Contract terms on liquidated damages had been applied with the extension of time, they argued that TRIL was required to pay the sums due at the adjudicator’s direction. 

TRIL defended B&JCL’s claim on two grounds. The first was that the adjudicator had breached natural justice as his findings were based on arguments that had not originally been put forward in either party’s submissions. The second ground was that the adjudicator had taken a restrictive approach to his jurisdiction. TRIL proposed that by refusing to rectify and amend the 2019 Contract to reflect the terms of the 2018 contract, the adjudicator had breached natural justice and failed to exhaust jurisdiction. 

The Judge found concerning TRIL’s first defence, alleging a breach of natural justice, that it had been essential for the adjudicator to determine the correct contractual terms applicable to the parties. On this basis TRIL’s position, the fact that the adjudicator’s reasoning had not been proposed by either parties’ submissions, was insufficient to demonstrate a breach of justice. The judge found that although the Adjudicator’s reasoning did not accord entirely with either party’s position, each party had the opportunity to provide full submissions on the issue and the adjudicator had derived the reasoning for his decision from the parties’ submissions rather than having independently proposed new grounds for B&JCL’s claims. The responding party had not “come close to” establishing a breach of natural justice.

In relation to TRIL’s second defence, namely that the Adjudicator had failed to exhaust his jurisdiction by failing to properly address the rectification issue, the judge noted that this allegation proceeded from “the unpromising starting point that the Adjudicator's decision contains a section entitled Rectification" which spans 21 paragraphs and more than four pages in total.” Unsurprisingly, this part of TRIL’s case was also unsuccessful: the Adjudicator had properly considered TRIL’s rectification defence, and he had valid reasons for rejecting it: whether or not those reasons were right in law was irrelevant for enforcement purposes. 

This case is a reminder that the Court will rarely intervene in adjudicators’ decisions. The Court’s decision demonstrates that the threshold to establish a breach of natural justice is high, meaning that nothing short of an obviously serious breach will elicit the Court to intervene in an adjudicator’s decision. Additionally, the case demonstrates that where a formal contract is signed, it will most likely take precedence over earlier agreements in governing the relationship of the parties.