Victory in NEC Subcontract Adjudication Against Major Contractor and Expert Evidence
Hard material recognised as a Compensation Event, with valuation directed and 100% of adjudicator’s fees payable by the main contractor.
The background
Optimum Resolution acted for a specialist civil engineering subcontractor in a significant adjudication against one of the UK’s largest main contractors.
The client was engaged under an NEC3 Option B subcontract to carry out drainage works for a major infrastructure road project.
During the works, extensive hard material was encountered in drainage runs. The Bill of Quantities had excluded quantifying Hard material. The main contractor refused to recognise this as a Compensation Event under the contract, despite the Method of Measurement for Highway Works (MMHW) clearly requiring a separate measured item for such material.
Our client faced a determined defence by the main contractor, who engaged a leading law firm and a RICS-qualified expert witness to argue that no Compensation Event arose and that no additional payment was due.
Optimum Resolution led the adjudication strategy and prepared the full legal and contractual argument, including a detailed technical rebuttal of the main contractor’s expert evidence.
The Adjudication
The adjudication centred on:
- Correct application of NEC3 clause 60.6 in relation to a mistake in the Bill of Quantities
- The correct interpretation of MMHW and the definition of Hard Material
- Whether the omission of the item from the Bill of Quantities constituted a mistake
- Whether the subcontractor was entitled to additional payment for encountering Hard material
- Validity of the main contractor’s Pay Less Notice, and subsequent conduct
The main contractor’s legal team advanced procedural arguments and relied heavily on a report by their RICS-qualified expert.
Optimum Resolution exposed multiple flaws in that report, including critical misinterpretation of MMHW and failure to acknowledge the correct contractual definition of Hard Material.
The Outcome
The adjudicator found decisively in favour of our client:
- Declaring that the encounter of Hard material constituted a Compensation Event under clause 60.6
- Ordering that the Compensation Event be valued in accordance with the Shorter Schedule of Cost Components
- Rejecting the main contractor’s reliance on clause 28 exclusions and procedural defences
- Dismissing key elements of the expert’s evidence, specifically finding that the contractual definition of Hard Material had been misinterpreted
- Ordering the main contractor to pay 100% of the adjudicator’s fees, and Confirming our client’s full success in the adjudication
Reflection
This case demonstrates:
- The importance of detailed understanding of NEC contractual mechanisms and industry standards such as MMHW
- The value of a robust, evidence-based challenge to expert witness reports where the evidence does not support their findings
- The power of correctly deployed clause 60.6 argument in protecting subcontractors where Bills of Quantities are defective
- The ability of an SME subcontractor, with expert support, to overcome heavy main contractor legal and expert resources
The adjudicator found in our client’s favour and dismissed key elements of the Responding Party’s expert evidence.
