CG Group Ltd v Breyer Group plc (No 1)

The adjudicator could not be said to have acted in breach of the rules of natural justice on the ground that he came up with an approach which neither party had argued, namely different payment due, final payment and pay less notice dates to those put forward by the parties.



Technology and Construction Court
Akenhead J

The sub-contractor ceased carrying out its works before their completion. The sub-contractor submitted its draft final account showing a sum due and referred the dispute as to its entitlement to the sum claimed to adjudication. The adjudicator found that the sub-contractor was correct in submitting that there was a supplemental “determination agreement” with the result that the contractor was incorrect in submitting that it had accepted a repudiatory breach by the sub-contractor. The due and final payment dates and the consequent date for giving a pay less notice were those he determined (rather than the dates contended for by the sub-contractor). The contractor had failed to serve the requisite payment notices or any pay less notice. The adjudicator awarded the sub-contractor the sum it claimed in its draft final account.
Akenhead J rejected the contractor’s contention. The dispute referred to the adjudicator was wide enough to enable him to decide what payment if any was due to the sub-contractor in relation to its draft final account and what was due for the work it carried out in the period leading up to the sub-contract’s termination. Whilst the referral notice put forward a specific approach substituting and based on the payment arrangements in the Scheme for Construction Contracts because of the sub-contract’s payment provisions not complying with the Construction Act, there were extensive issues raised on the parties’ written submissions which provided a variety of permutations on which the adjudicator had to decide It was at least misleading for the contractor to argue in its response that even if there were discrepancies about payment within the sub-contract documents, "the payment terms of the Sub-Contract Conditions would prevail" since those terms were the very terms on which the adjudicator relied to reach his decision and the adjudicator referred to this argument in his decision. The fact that the contractor might have been able to deploy (possibly good) arguments if it had realised that the adjudicator might decide as he did is not material because they could have been deployed in any event since his permutational finding was open to him by accepting the very point which the contractor put forward, namely that "the payment terms of the Sub-Contract Conditions would prevail" regardless of whether there were contractual discrepancies.