BDP Construction Limited v Cygnet Behavioural Health Limited

Courts adopt a robust approach to enforcing adjudicators’ decisions by summary judgment. An adjudicator may find that neither party has proved its asserted contractual position, even where each advances a single opposing case. Competing contentions do not, without clear words or an admission, create a jurisdictional ringfence requiring a binary choice. Such a finding is not a new positive answer and does not generally require further submissions where it rejects evidence and issues already canvassed. A natural justice challenge requires a significant and material failure capable of causing prejudice. A proposed submission cannot establish materiality where it has no reasonable prospects of success. A contractual provision allowing a lesser liquidated-damages rate cannot operate where no contractual rate has been established against which to measure it.

BDP sought summary judgment to enforce an adjudicator’s decision arising from a construction contract for a hospital. The adjudicator decided that neither party had established the applicable liquidated-damages rate, that Cygnet was not entitled to recover liquidated damages, and that Cygnet had to pay the balance of retention monies.

Cygnet resisted enforcement, arguing that the adjudicator had exceeded his jurisdiction by rejecting both parties’ competing rate cases. It also alleged a material breach of natural justice because the adjudicator had not invited further submissions before reaching that conclusion.

The central questions were whether the parties had agreed that the adjudicator had to choose between the two rates, and whether rejecting both cases without further notice was a material breach of natural justice.

The application was granted. Summary judgment was entered for BDP for £136,769, together with £4,779 for the adjudicator’s costs and interest.

1. Enforcement framework. The court adopted the robust approach to adjudication enforcement stated in Bexheat Limited v Essex Services Group Limited [2022] EWHC 936 (TCC) and Carillion Construction Limited v Devonport Royal Dockyard Limited [2005] EWCA Civ 1358. Errors of procedure, fact or law do not ordinarily prevent enforcement. Intervention is confined to excess of jurisdiction or a serious and material breach of natural justice.
2. Jurisdiction. The jurisdictional scope began with the Notice and the defences available to Cygnet, consistently with Pilon Limited v Breyer Group Plc [2010] EWHC 837 (TCC). Parties may restrict an adjudicator’s jurisdiction by agreeing a fact or basis for determination. As illustrated by Shimizu Europe Ltd v LBJ Fabrications Ltd [2003] BLR 381, that may arise from an assertion followed by an admission. Here, neither party accepted the other’s contractual version. The competing rates and the use of the word which did not create a binding binary choice. The adjudicator was entitled to find that neither rate had been proved and that the liquidated-damages notice was ineffective. That finding did not determine a different positive rate or exceed the reference.
3. Natural justice. The adjudicator was not required to choose one party’s submissions. Under Stellite Construction Limited v Vascroft Contractors Limited [2016] EWHC 792 (TCC) and Roe Brickwork Limited v Wates Construction Limited [2013] EWHC 3417 (TCC), an adjudicator may decide on the material and issues canvassed, including by rejecting both parties’ cases. No new positive answer or unconsidered evidence was introduced, so there was no breach requiring further submissions.
4. Materiality. In any event, the alleged breach was not material. The principles in Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 and Corebuild Limited v Cleaver [2019] 186 ConLR 203 require significant or causative potential prejudice and ordinarily reasonable prospects of success. Cygnet’s proposed reliance on clause 2.29.2.1 was plainly wrong: without an established contractual rate, no lesser rate could be identified conceptually or numerically. The adjudicator’s infelicitous language about proof was, at most, an error of law within his jurisdiction.