Wates Construction Ltd (“Wates”) appointed Roe Brickwork Ltd (“Roe”) as its brickwork sub-contractor for the construction of three flats in Tower Hamlets, London. Roe referred a dispute to adjudication claiming loss and expense, including additional preliminaries and loss of overheads and profit (“OHP”), loss of productivity and sums for additional management. The adjudicator valued Roe’s claim at £381,459.75, plus interest and directed net sums to be paid to Roe in 10 days (although the net sum due was not determined by the adjudicator).

Roe applied to the court for summary judgement to enforce the decision. Wales resisted the application on the basis that the adjudicator did not have jurisdiction to assess OHP in the way he did. Wales contended that this was a breach of natural justice given that the parties were not afforded the opportunity to make submissions on the adjudicator’s approach in assessing OHP.

In considering what constitutes a material breach of natural justice, the Judge considered the principle set out in Balfour Beatty Construction Ltd v London Borough of Lambeth that an adjudicator should not decide a point on a factual or legal basis that has not been argued before him, unless he gives the parties an opportunity to make submissions on it.

However, this did not mean that the adjudicator is bound to accept only the submissions of one party or the other. The adjudicator could reach a decision on a point on the material before him on a basis for which neither party has contended, so long as the “parties were aware of the relevant material and that the issues to which it gave rise had been fairly canvassed before the adjudicator.” This was the case here and accordingly the Judge found that the adjudicator’s methodology in assessing OHP did not exceed his jurisdiction nor was it a breach of natural justice.