What constitutes a breach of natural justice in adjudication proceedings? 

In a significant ruling for the construction sector, the High Court in the case of Clegg Food Projects Ltd v Prestige Car Direct Properties Ltd [2025] EWHC 2173 (TCC) has upheld the enforceability of adjudicators’ decisions. This applies even when an adjudicator’s reasoning for a global valuation may lack granularity, highlighting the difficulties of successfully opposing enforcement based on alleged breaches of natural justice.   

Factual context 

The dispute arose out of a JCT Design and Build contract for the construction of a leisure and retail centre in Bishop Auckland. Clegg, the Contractor, submitted a payment application which included certain variations, related entitlements to extensions of time, and prolongation costs. Prestige, the Employer, countered with claims for liquidated damages.  

Clegg referred a dispute relating to eight of these variations to adjudication. Both parties invited the adjudicator to determine a gross valuation of the works based on their own respective valuations, or alternatively, the adjudicator was asked to determine a gross valuation based on “such other sum as he sees fit.”   

The adjudicator decided broadly in favour of Clegg, concluding that Prestige was liable to pay the sum of £541,880.12 plus VAT to Clegg together with interest. Prestige was also liable for the adjudicator’s fees.   

Natural justice arguments 

Prestige challenged the adjudicator’s decision, alleging breaches of natural justice. It argued that the adjudicator had applied his own new “fair and reasonable” rates for five of the eight relevant variations, and also that he had remeasured one item without necessary consultation of the parties. It argued additionally that the adjudicator had failed to provide sufficient reasons for his decision. 

Court’s findings 

HHJ Kelly dismissed Prestige’s arguments and granted summary judgment enforcing the adjudicator’s award. Having helpfully distilled the key principles concerning natural justice at paragraph 11, the court held: 

• what is a breach of natural justice is “exquisitely fact sensitive in the majority of cases.” 

• any breach must be serious or of “considerable potential importance to the outcome” if it is to be upheld 

• decisions falling within the scope of the dispute and based on submitted evidence are enforceable even when a “rough and ready” adjudication process involved errors of fact and law   

• the adjudicator’s use of fair and reasonable rates within the range of figures that had been provided by both sides was acceptable. Adjudicators are not required to consult parties on every element of their reasoning 

• the adjudicator had given sufficient reasons for his decision. The 88-page decision contained sufficient detail to enable the parties to understand how the adjudicator reached his decision “in the round”  

• even if the ddjudicator had not provided sufficient reasons, and the decision was “unintelligible by reason of the inadequacy of the reasons given in the decision”, Prestige had not been able to show that it had suffered substantial prejudice.   

Key takeaways 

1. Any challenges to the enforcement of an adjudicator’s decision based on natural justice must show material breaches causing substantial prejudice. Prompt legal advice should be obtained if parties are considering such arguments. 

2. Adjudicators can adopt intermediate positions and apply their expertise, provided they stay within the scope of the dispute and evidence submitted. To that end, the language adopted by the parties’ submissions is important: the fact that the parties invited the adjudicator to determine “such other sum as he sees fit” in their submission granted the adjudicator broad discretion and may ultimately have precluded the challenge.  

3. The court reaffirmed that adjudication is intended to be a fast, interim remedy, with emphasis on providing a forum for a prompt outcome, as opposed to a full trial. Precision is not the standard; fairness is.   

This case serves as a timely reminder that the courts are inclined to enforce adjudicator’s decisions. Adjudication remains a powerful tool for resolving construction disputes promptly, with the intent of maintaining cash flow and project momentum. Even when adjudicator decisions are imperfect, the courts will strive to uphold them.   

In this context, it is noted that the adjudicator’s decision in Clegg Food Projects Limited v Prestige Car Direct Properties Limited was rendered 87 days after the Referral (as opposed to the standard 28 days). There were multiple party submissions beyond the surrejoinder stage, in addition to the subsequent enforcement challenge and related further costs. Parties are advised to consider any scope for negotiation or alternative dispute resolution, which may provide a more commercial option to the costs and time to be expended during the adjudication process.