ROE BRICKWORK LTD v WATES CONSTRUCTION LTD
The adjudicator did not exceed his jurisdiction or act in breach of the rules of natural justice in by applying an uplift for overheads and profit to other heads of loss so as to increase the amounts awarded without informing the parties that he intended to do so.
11 November, 2013
Technology and Construction Court
11th November 2013
The sub-contractor claimed loss and expense due to delay, including additional preliminaries and loss of overheads and profit (“OHP”), loss of productivity and additional supervision and management. The adjudicator did not decide that a particular sum was due, instead assessed the value of the claims and stated in his decision that (i) A specified sum should be awarded and (ii) The sum payable was to reflect the amounts known by the parties to have been paid on account by the contractor.
The contractor on enforcement contended that (i) The adjudicator did not have jurisdiction to assess OHP by increasing the amounts awarded in respect of the other heads of loss by 13%; (ii) Whilst whether the sub-contractor was entitled to recover loss and/or expense on the basis of the contracted daywork rates was disputed (a) The parties agreed that the contracted daywork rates were 'all inclusive', including for OHP, and (b) The sub-contractor did not suggest that it should recover daywork rate plus OHP. The adjudicator was not entitled and did not have jurisdiction to identify the number of hours, to apply the contractual all inclusive daywork rates and to add an allowance for overhead and profit. Alternatively the adjudicator was in breach of natural justice by not allowing the parties to make submissions on his approach.
Edwards-Stuart J rejected the contractor’s contentions. The contractor’s real complaint was that the adjudicator treated the daywork rates as representing the sub-contractor labour costs. Whilst he did not produce a calculation consistent with the sub-contractor’s approach, his methodology differed in only one minor respect from how the case had been presented to him because (i) His figure of 13% was clearly derived from material put forward by the sub-contractor and (ii) The difference in his approach was to apply the 13% uplift for OHP to the figure representing the total loss of productivity and not to the figure arrived at by multiplying the contract’s weekly value by the number of weeks extension of time following the Hudson formula. The effect of his approach was to produce a lower figure for overheads and profit than the sum which would have been produced under the sub-contractor’s methodology. Even if he should have consulted the parties before adopting his approach, the result would probably have been the award of a greater amount for overheads and profit than he actually made.