England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		St. Dunstan's House 133-137 Fetter Lane London EC4A 1HD
		7th April 2011

 


MR. JUSTICE AKENHEAD:

1. This Part 8 claim has been brought by Lanes Group PLC ("Lanes") against Galliford Try Infrastructure Limited ("Galliford Try") arising out of a subcontract between them made on or about 13th May 2008. This subcontract related to the execution of works by Lanes for Galliford Try at Inverness Train Depot. The background to this application is that the contractual relationship between the parties was terminated, justifiably or not, I cannot decide, and substantive proceedings are on foot between the parties to have the issues arising out of final accounting and the consequences of the termination resolved. Those were initially instituted in court but, by agreement between the parties, they are to be resolved by Ramsey J sitting as an arbitrator appointed under the Arbitration Act. I understand the hearing of that is in the early part of next year.
2. Issues have arisen between the parties relating to one or more adjudications which have been instituted by Galliford Try in relation, apparently, to a number, and possibly all, of the matters which are referable to the arbitration by Ramsey J. What has happened is that on 9 March 2011 Galliford Try had a Mr. Klein appointed by the appointing body which is the Institution of Civil Engineers and, for reasons which are unnecessary for me to rule upon this morning, Mr. Klein has not proceeded in his role as adjudicator, albeit that he has not yet resigned. Galliford Try then made a second application on 11 March 2011 to the ICE to have another adjudicator appointed. The ICE declined to appoint on the basis that it had shortly before appointed Mr. Klein. On 21 March 2011 Galliford Try made its third application to the ICE for a nomination of an adjudicator and on 24 March Mr. Atkinson was appointed as adjudicator to resolve and adjudicate upon the dispute or disputes which had purportedly arisen between the parties.
3. On 24th March 2011 Mr. Atkinson accepted that appointment and what then followed is the subject matter of the immediate dispute in respect of which I give this judgment. Lanes issued these Part 8 proceedings on 1 April 2011 and in fact primarily what they seek is an injunction to restrain Galliford Try from pursuing its adjudication primarily before Mr. Atkinson. That is said to revolve around an issue of whether or not Galliford Try has in some way repudiated the adjudication agreement in relation to the specific dispute referred first of all to Mr. Klein and then, possibly, also to Mr. Atkinson.
4. From the date of this judgment it will be seen that matters have proceeded procedurally very fast and, as it has turned out, rather too fast. I gave an order in this case on Monday, 4 April 2011 calling for an oral hearing today which was the date which I had understood Lanes wished to have these matters resolved and it was only yesterday afternoon, unsurprisingly, that Galliford Try was able to lodge its evidence in response and it was not wholly clear from the evidence filed by Lanes, Mr. Barton in particular, what was the legal basis for the injunction being sought.
5. I have to say I read his witness statement and, although it helpfully dealt with the history of the matter, it did not condescend to explain in any legal detail what the basis of the case was. I do not criticize Mr. Barton for that because the purpose of witness statements is to provide evidence, but it was not clear that a primary ground of complaint is that there has been a repudiation of the adjudication agreement in relation to the specific disputes purportedly referred to adjudication. That only emerged when the skeleton arguments were prepared and, unfortunately, the court did not receive and I did not have the opportunity to read Lanes' Counsel's skeleton until coming into court and by then it has become apparent that there are really two grounds on which Lanes, relies.
6. The first is the repudiation issue and I have made it clear that I am adjourning that to enable Lanes to invite Mr. Klein to comment on certain assertions which are made in the witness statement of Mr. Fraser, the solicitor for Galliford Try, in relation to possible apparent bias in relation to Mr. Klein; that is said to be the reason why, or at least primarily why, Galliford Try was unhappy about proceeding with an adjudication with Mr. Klein as adjudicator. That may be relevant if repudiation is a relevant concept at all in this case because it may be arguable that, if there was a good reason for declining to proceed with the first adjudication of Mr. Klein, that might at least arguably not be repudiatory. Therefore by reason of the of the compressed programme I have decided that that part of this application needs to be adjourned.
7. The second issue is a very discrete point and it relates to the appointment of Mr. Atkinson and is obviously put forward by Lanes without prejudice to its argument about repudiation and I do accept that it fully reserves its position so far as the repudiation argument is concerned.
8. The argument stated simply is that under the adjudication rules agreed by the parties there has been a late sending, service of and receipt by the adjudicator and the defending party in the adjudication, that is Lanes, of the referral and the documents attached forming part of the referral.
9. Before I go into the history it is probably helpful if I look at and consider the terms of the adjudication rules. The underlying agreement between the parties, I am told, is a subcontract agreement dated 13th May 2008 and that, the parties accept, incorporated the Civil Engineering Contractors Association Form of Subcontract July 1998, Reprinted With Amendments in February 2008 for use in conjunction with the ICE Conditions of Contract, 6th Edition. By Clause 18B(1) the parties agreed that they each had:

"... the right to refer any matter in dispute arising under or in connection with the Sub-Contract or the carrying out of the Sub-Contract Works to adjudication and either party may at any time give notice in writing (hereinafter called the Notice of Adjudication) to the other of his intention to do so. The adjudication shall be conducted under 'The Institution of Civil Engineers' Adjudication Procedure (1997)' or any amendment or modification thereof being in force at the time of the said Notice of Adjudication."

Clause18B(1)(b) states:

"(b) Unless the adjudicator has already been appointed he is to be appointed by a timetable with the object of securing his appointment and referral of the dispute to him within 7 days of such notice."

10. The clause goes on to deal with what is to happen thereafter as such. The adjudication procedure rules issued by the ICE have certain material clauses, which are prefaced in Paragraph 1:

"The object of adjudication is to reach a fair, rapid and inexpensive determination of a dispute arising under the Contract and this Procedure shall be interpreted accordingly".

11. Paragraph 3 deals with the appointment of the adjudicator, as in this case, where there is to be a nomination by the Institution of Civil Engineers and it is primarily in clauses 4.1 and 4.2 that the issue which I address is dealt with:

"4.1 The referring Party shall within two days of receipt of confirmation under 3.1, or notification of selection under 3.2, or appointment under 3.3 send to the Adjudicator, with a copy to the other Party, a full statement of his case which should include:

(a) a copy of the Notice of Adjudication;

(b) a copy of any adjudication provision in the Contract, and

(c) the information upon which he relies, including supporting documents.

4.2 The date of referral of the dispute to adjudication shall be the date upon which the Adjudicator receives the documents referred to in paragraph 4.1. The Adjudicator shall notify the Parties forthwith of that date."

I will come back to what that means later.

12. Now, as I understand it, the notice of adjudication in relation to the disputes which led to the referral of Mr. Atkinson was served on 21 March 2011. What followed the appointment of Mr. Atkinson is of some importance and I primarily take the evidence about this from the witness statement of Mr. Fraser which appears to be broadly corroborated by the contemporaneous documents. He says this at paragraph 16, starting at subparagraph (o):

"Mr. Atkinson informed parties of his appointment on 24th March ...

(p) in accordance with the ICE Procedure, therefore GTR had to send its referral/statement of case to Mr. Atkinson, copied to Lanes, not later than Saturday 26th March.

(q) I emailed Mr. Bunton [who was Lanes' claims consultant] to ascertain to where I should send the copy of the referral/statement of case...

(r) Mr. Bunton responded by email, first to query the volume of the referral/statement of case; and then, at 5.53 pm, to say that he did not have instructions to accept service, notwithstanding his previous statement that he had instructions to accept service ... In addition, it did not assist with my principal question: to where I should send the documents.

(s) I completed complication of the referral/statement of case, but too late in the day for a courier to deliver it on 25 March. [It should be pointed out the 25th March was a Friday].

(t) I faxed Mr. Atkinson, copying Lanes and their representatives, the covering letter sending the referral/statement of case ...

(u) The courier uplifted the referral/statement of case from my office on Saturday 26 March, and;

(i) delivered it to Mr. Atkinson on 26 March

(ii) tried to deliver it to Lanes on 26 March, but could not do so because their office was closed

(iii) delivered it to Lanes' office on Monday 28 March. I exhibit the signed docket confirming receipt by Lanes...

(v) Certain of the documents exhibited to the referral/statement of case were a series of so-called Actual Costs Records. These comprised orders and sub-contracts; invoices; payment applications; valuations; labour allocation sheets; timesheets; payroll records, and so on - for GTR's costs and completing Lanes' work post termination.

The Referral documents included a statement from a quantity surveyor explaining the quantum of GTR's claim. In the circumstances I took the view that it would be disproportionate to include these voluminous documents with the referral/statement of case. Lanes already had a full hard copy of them, as they had been included in the hard copy claim served on them in December 2010. It remained to be seen whether the adjudication would focus on any particular part of the Actual Costs Records.

I therefore omitted the hard copy actual costs records from the hard copy of the referral/statement of case, but included an express invitation to the Adjudicator and to Lanes to request a copy if they wished one.

However, I then took the view - out of caution - that we should send the actual costs records, lest Lanes take the point that the referral/statement of case had not been accompanied by all of its supporting documents, within 2 days of the appointment.

My colleague, Kenneth Hill, was working in the office on the evening of 26 March. I instructed him to email the actual costs records to Lanes and the Adjudicator, which he did. Because of the data size of the emails they were not all sent and received until (at the latest) 0106hours on 27 March (which, because of the switch from GMT to BST, was by then 0206hours).

Mr. Atkinson wrote to parties to confirm what he received and when. He stated that the date of receipt of the referral for the purposes of commencement of the 28-day period, was 27 March."

13. Therefore, it appears that the adjudicator was sent by e-mail and received by e-mail before the close of business on 26 March 2011, the referral but not the actual costs records referred to in the referral. There is no challenge to the evidence that the referral was delivered to Mr. Atkinson on 26 March. It is accepted that the actual costs records were partly e-mailed on 26 March to Lanes and the adjudicator but a number of them, it is unclear how many, were e-mailed after midnight on 26/27 March. Certainly it is the case that the hard copy was received by Lanes on Monday 27 March.
14. It is therefore, against that, necessary to determine whether there has effectively been service for the purposes of clauses 4.1 and 4.2. It seems to me there is a proper distinction to be drawn between the words "send" and "receive" here. Clause 4.1 talks about the referring party sending to the adjudicator within two days of, in this case, the appointment of the adjudicator and that must mean, in context, despatch to the adjudicator. The reason that I am confident that the word send means broadly that is that clause 4.2 talks about the date of the referral of the dispute being the date upon which the adjudicator receives the documents. That is logical, fair and sensible because it can often be the case that the date of sending, the date of despatch, is different from the date when the adjudicator receives.
15. The ICE's procedure differentiates between the two. I am supported at least in part in relation to this by Clause 18 of the contract which talks about the adjudication and there being a referral within seven days of the notice of adjudication and, of course, seven days from the notice of adjudication will be 28 March in this case. So it seems to me that this is not inconsistent with the underlying Housing Grants, Construction and Regeneration Act or, indeed, the Scheme which is the default procedure under that Act. Therefore, it is clearly the case here that the referral itself was delivered to the adjudicator within the two days and the remainder of the documentation was delivered either within the two days or within a very short period, a couple of hours thereafter.
16. The question is whether the wording in this contractual adjudication procedure is expressed in terms of a condition subsequent or in terms of it being an unless procedure; by that I mean: is the wording of Clause 4.1 put in terms that if the referring party fails within two days to serve the referral that it is in some way barred? In my view the wording is not put in those terms but there is clearly an overall long stop in this case envisaged by the parties in Clause 18B(1)(b). That overall long stop is a week from the date of the notice of adjudication.
17. This is not an open-ended procedure set out in Clauses 4.1 and 4.2. It does not mean that, once the adjudicator has been appointed, six months later the referring party can serve its referral because that is simply not the case. So, for those reasons I am certainly satisfied that, on a proper construction of Clauses 4.1 and 4.2, the adjudicator was broadly served within time and the fact that the copy did not fully get to Lanes within two days matters not in this case. They certainly had it on the seventh day after the service of the notice of adjudication.
18. I have been referred to a number of authorities which I do take into account but I do not read them out in any detail, but for the avoidance of doubt I refer to the case of Cubitt Building & Interiors Ltd v Fleetglade Ltd [2006] EWHC 3413 and in particular paragraphs 41 to 43 and 44 and 47. I also refer to the decision of PT Building Services Ltd v ROK Build Ltd [2008] EWHC 3434 (TCC) (8th December 2008), a decision of Ramsey J who addressed some of these issues, in particular between Paragraphs 52 and 55. In that particular decision he did address the issue of documents being referred to in the referral but served outside the time for referral. Essentially in Paragraph 55 he said:

"I consider that it is undesirable that every breach of the terms of the scheme, no matter how trivial, should be seized upon to impeach the process of adjudication. To do so would increase the tendency of parties to take a fine tooth-comb to every aspect of the adjudication in the hope of finding some breach of the Scheme on which to impeach an otherwise valid adjudication decision. I do not consider that that was either intended or the natural effect of a failure to comply with the Scheme. There may, of course, be cases where the documents included with the referral notice are so deficient that it affects the validity of the adjudication process. However, I do not consider that a failure to include the relevant construction contract until a day later can do so or does so on the facts of this case. Nor do I consider that a failure to include the construction contract can be said to amount to such a serious breach of the rules of natural justice that the decision should not be enforced. There is nothing obviously unfair in the documents relied on in relation to the construction contract being received by the adjudicator later than the referral notice ..."

19. Of course that is a case in which the construction contract clearly referred to in the referral notice was not served with the referral notice but essentially and indeed it is accepted that it is a matter of fact and degree. This current case is one in which the documents attached to the referral were in fact served by e-mail on Lanes' e-mail within two days, apart from a number of documents which were served by e-mail within two hours of midnight on the weekend that the clocks changed. The fact that there was no one there to pick them up, it seems to me is not particularly important because sending and service can be, in adjudication, by e-mail. If Lanes did not have a system whereby people check the e-mail over the weekend, that is unfortunate and certainly not intended as any criticism of them but in terms of taking a technical objection to service then the technical point can be made back to them that there was service of these documents.
20. It seems to me, therefore, that Mr. Atkinson's jurisdiction cannot be impeached on this ground. In my judgement, this is not a case in which it can be said that service of the referral and the attached documents was late or, if it was late it was so late as to be such as to impeach the process of adjudication. Therefore on that basis and only on that basis at this stage Mr. Atkinson can be considered to have been continuing validly as adjudicator notwithstanding the timing of service of the referral and the attached documents. I say this because there may be other grounds on which Mr. Atkinson's jurisdiction can be challenged and obviously Lanes reserves its position on that and this judgment should not be taken as deciding any other jurisdictional challenges vis-à-vis Mr. Atkinson. I will reserve the costs of today.
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