England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER DISTRICT REGISTRY
(HIS HONOUR JUDGE RAYNOR QC)

		Royal Courts of Justice Strand London WC2A 2LL
		22 October 2015

1. LORD JUSTICE BURNETT: On 14 October 2014 His Honour Judge Raynor QC dismissed the appellants' application to set aside a summary judgment he had entered against them on 10 July in their absence for £118,000-odd and costs. This is their renewed application for permission to appeal against the refusal to set aside the summary judgment.
2. The appellants instructed Dr Timothy Sampson of counsel at the last moment, who has focussed the arguments. He readily accepts that it was nigh-on impossible to discern from the papers what the real points in this proposed appeal would be, and describes the refusal on paper as "entirely understandable".
3. The appellants engaged Complete Building Solutions Limited (whom I will call "the builders") to do substantial building work by demolishing a house in Surrey and the building a new one. The contract was for something in the order of £600,000. The contract was governed by the JCT Minor Works Contract standard provisions. That incorporated the disputes procedure of the scheme under the Housing Grants, Construction and Regeneration Act 1996. A feature of that scheme is that disputes may be referred to an adjudicator, the results of which bind the parties pro tem without prejudice to their underlying legal rights. A sum must be paid if the adjudicator so decides. Arguments can then follow about whether more or less is in fact due, with a final accounting after legal or arbitration proceedings.
4. An important feature of the scheme is reflected in clause 7.2 of the contract, which provides:

"An adjudicator must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication and a decision has been taken in that adjudication."

5. The builders referred a dispute to an adjudicator in early 2014, in which they claimed an outstanding sum under the contract of £115,440.56. One of their contentions was that the final certificate was defective. The adjudicator accepted that contention, but also found that the builders had failed to serve a payment notice in accordance with the terms of the contract. In the result, they were not entitled to the money, and he so decided. That adjudication is dated 1 April 2014.
6. That very same day, the builders served a new notice pursuant to the "right" clause in the contract. The appellants refused to pay and the builders again referred the matter to adjudication. The appellants argued that clause 7.2 applied with the result that the new adjudicator should resign. He dealt with this issue at some length in his adjudication and concluded that even though the sum claimed was identical, representing what the builders contended was outstanding under the contract, the dispute was not the same, or substantially the same, as the one previously referred and decided. That was because the central issue in the earlier adjudication was the validity of the certificate. The judge took the same view. The proceedings in the County Court were commenced because the sum adjudicated upon was not paid. They were issued to recover that award.
7. With that by way of background, Dr Sampson's submission is that the two grounds first set out in the appellants' homemade notice capture the grounds that he wishes to advance on their behalf. The remaining six grounds as they were articulated by the appellants he does not press. The way in which they articulated those first two grounds were as follows:

"1. There were matters relating to jurisdiction of the second adjudicator that we consider the court and judge did not take into consideration in either of the two hearings that took place.

2. There were matters relating to natural justice that we consider the judge and court overlooked at both hearings."

8. In the course of argument, I suggested a reformulation of the first of those grounds to reflect the way in which Dr Sampson now puts it, with which he agreed:

"The judge erred in concluding that the appellants had no real prospect of successfully defending the claim on the basis that the second adjudicator should have resigned pursuant to clause 7.2 of the contract."

I am persuaded that this point is arguable, having regard to the language of the clause itself, read in the light of three judgments drawn to my attention. The first is a judgment of Coulson J in Benfield Construction [2008] EWHC 2333 (TCC); the second a judgment of Akenhead J in Carillion Construction [2011] EWHC 2910 (TCC); the third a decision of the Court of Appeal referred to extensively by Akenhead J, namely Quietfield [2006] EWCA Civ 1737. Those decisions relate to the identical language in the statutory scheme itself. The statutory scheme does not apply directly to the agreement but was incorporated into the contract. For that reason the interpretation of the statutory provision is likely to determine the meaning of the parallel contractual provision.

9. In short, the appellants say that the dispute was the same or substantially the same before both adjudicators because in each adjudication the builders sought a decision requiring the appellants to pay what the builders contended was the outstanding sum under the contract. The decision in the first adjudication went against the builders. The builders say that the dispute was much narrower for the purposes of the clause for the reasons given by the judge and the second adjudicator. Despite the carefully expressed contrary opinions both of the judge and the adjudicator, in my view that is a real prospect that this court will conclude that the appellants are right.
10. The second ground as developed by Dr Sampson amounts to a complaint that the judge should not, in the circumstances of this case, have used the accelerated enforcement procedure provided for under paragraph 9 of the Technology and Construction Court Guide. The procedural history of this matter in the County Court is tortuous and, as it seems to me, does not reflect well on the appellants. I am entirely unpersuaded that they have any real grounds for complaint. In any event, the early procedural history leading to the summary judgment in July last year is very much water under the bridge. At the hearing on the appellants' application to set aside that judgment, which as it happens they chose not to attend but relied upon written submissions, the judge considered their arguments afresh in the light of CPR part 24; was there or was there not a real prospect of success? That is the real issue in this case.
11. Thus I will grant permission to appeal on the single ground.
12. I should mention that Dr Sampson quite properly drew to my attention the fact that the appellants' notice was lodged two days out of time. In the circumstances of this case, given that the appellants were acting in person and, as it appears, trying to gain what might be described as informal advice from the court, I extend time. There is no conceivable prejudice to the respondent, and having concluded that the single point is properly arguable and has a real prospect of success on appeal, it would not be appropriate to shut them out on time.
13. Dr Sampson recognises that there is a need to file and serve amended grounds to reflect the single ground that I have identified, and also a skeleton argument directed to that ground and shorn of extraneous and irrelevant matters. I direct that both of those documents must be filed and served by Friday, 20 November.
14. Secondly, given that this is an interlocutory appeal relating to contractual provisions which are themselves designed to achieve a rapid preliminary resolution of building disputes, it is an appropriate case for expedition. I have made inquiries of the listing office which indicate that absent such an order the appeal would be unlikely to be heard for about a year. It seems to me that a time estimate of three hours is sufficient for the hearing of the appeal.
15. This case falls within the Court of Appeal mediation scheme and I recommend it for mediation. As is apparent from a reading of the papers, what underlies this is a relatively commonplace dispute about how much is in fact due under a building contract in which the builders suggest one figure and the client suggests a lower figure. It cries out for settlement, if that is possible.