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

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		Hearing 31 July 2015

Mr Justice Coulson:

1. This is an adjudication enforcement dispute. In a written Decision dated 22 April 2015, the adjudicator, Mr Gard, concluded that the sum of £113,666.63, together with interest and his fees and expenses, were due from the defendant employer ("Topevent") to the claimant contractor ("Wycombe"). These monies have not been paid and Topevent now resist Wycombe's claim for summary judgment for three different reasons.
2. It was common ground that there was a construction contract between the parties, pursuant to which Topevent engaged Wycombe to carry out demolition works at a site at Lane End in High Wycombe. There was, however, a dispute as to when the contract was made and the relevant terms of the contract. Wycombe's case, that the contract was made on or about 8 April 2014, was rejected by the adjudicator, who instead concluded that the contract was made on or about 17 April 2014. It appears that this had an effect on the adjudicator's approach to valuation, something to which I will return later in this Judgment.
3. The dispute between the parties under the contract crystallised towards the end of 2014. Wycombe had issued various invoices which had not been paid. Topevent was concerned about what they said were the incomplete works. Benchmark, the claims consultants engaged by Topevent, expressly linked these two aspects of the dispute in their letter to Wycombe of 3 October 2014, sent some months before the adjudication. In that letter they said:

"The amount claimed by your client represents 100% of the demolition having been completed and quite simply it can be evidenced even today that this is not the case. The financial claim against Phase 1B is incorrect as a substantial portion of the building is clearly still standing. The Phase 2B building has had the structure above slab demolished but the majority of the works, being the ground floor slabs and foundations, still require to be excavated and crushed, as again can be evidenced even today."

4. Wycombe's Notice of Adjudication was dated 26 February 2015. The relevant parts of the Notice said this:

"3. THE DISPUTE

i) The Dispute concerns Payment comprising

(a) Valuation of Works and Hire Invoicing and/or damages in lieu

(b) Purported Termination and Employment of Others – damages for breach by Topevent.

(c) Default Payment

In addition Wycombe seeks payment of Interest, Statutory Compensation and Costs."

Under paragraph 4 of the Notice, entitled "The Redress Sought", specific figures were given for these various elements of the claim, giving rise to a total claim of £137,252.93. The Notice went on to claim, in the alternative, "in each case such other … amounts … as the Adjudicator shall determine."

5. Wycombe's Referral Notice ran to 56 closely-typed pages. It was much too long and managed to complicate what was, in essence, a simple claim. Within it, Mr Alan Wilson, the consultant acting on behalf of Wycombe, sought to advance a claim by reference to the invoices previously submitted by Wycombe, but he also endeavoured to adjust (i.e. increase) those sums by reference to a claim based on a revaluation. Those adjustments were based on the case as to the formation of the contract which the adjudicator subsequently rejected.
6. Topevent's Response to the Referral, and the further exchanges during the course of the adjudication, made plain that Topevent were concerned in particular about two matters:

i) The ascertainment of a fair and reasonable valuation of Wycombe's claim for varied and extra work and the sums due under the contract;

ii) The circumstances in which Wycombe left site. Topevent said Wycombe were in breach of contract and they set out a counterclaim in respect of the value of the works outstanding. This aspect of the dispute covered pages 19-26 of the Referral and incorporated a counterclaim for "some £180,000" as representing the costs of completion.

7. In addition, Topevent wanted the adjudicator to visit the site in order to complete his assessment of any revaluation. They "recommended" such a course in their Response. The adjudicator considered that request and responded in these terms:

"I see that Topevent is still seeking a meeting on site. I don't yet see any reason to revisit my initial conclusion that this would be either necessary or cost effective. Topevent's reasoning appears to be to evidence the simplicity of the site and outstanding work to be completed by others. Whilst I can see the nature of any outstanding works may be of some relevance to the claim, I am far from persuaded that it will be of significant help to me to decide the proper value of the works for which Wycombe claims payment."

8. There remained difficulties with the precise nature of Topevent's defence on the valuation issues. The adjudicator had made a number of attempts to resolve this, but no avail. On 17 April 2015, he commented:

"It seems pretty clear that Topevent's Schedule does indeed seek to reconstitute Topevent's defence, effectively by way of a claim for the costs of completion. It does not fully reflect the case previously made, nor does it provide any further supporting information for the new value(s) for which it now contends in its Schedule.

In the circumstances I therefore have some sympathy for Wycombe's 18-page Reply to the Scott Schedule plus supporting documents – as opposed to the agreed table requested.

Nevertheless if I try to do justice to the parties' submissions I think I shall require another couple of days for my Decision. I am content that I have sufficient information to reach a Decision and do not ask for anything further in the circumstances, but I do ask the parties to indulge me in an extension of time for my decision to Wednesday 22 April.

I apologise for the short notice but should be grateful for your confirmation of your agreement to this as soon as possible."

Although both parties agree to this requested extension, I should say that, generally, I consider that neither side provided the adjudicator with the assistance or co-operation which he was entitled to expect.

9. The relevant parts of the adjudicator's Decision were in these terms:

i) As to the meeting on site proposed by Topevent:

"Recital 12. I invited the Parties to indicate whether or not they considered either a site visit or meeting to be required. Topevent requested a meeting on site but I was not persuaded that this was either necessary or cost effective, as explained to the Parties in my letter of 16 March 2015 and my email of 10 April 2015. I therefore make this Decision on the basis of the documents only."

ii) As to the cessation of work on site:

"114. Both Parties allege unlawful termination of the Contract by the other. WDL [Wycombe] claiming £4,000 in damages for lost profit and Topevent alleging that WDL's failure to return to site will cost it in the region of £180,000. I find on the evidence before me that the Parties probably ended the Contract by mutual consent; Topevent, because of the escalating costs, and WDL because it was not being paid. In any event I find neither claim made good on the facts before me."

iii) As to the valuation of Wycombe's work:

"9. The dispute principally concerns the terms of the Contract and the proper valuation of the Works. Neither party has produced any independent expert evidence in relation to the valuation of the Works or otherwise.

10. Topevent has not apparently had specialist advice in relation to these proceedings or the presentation of its case. Much of Topevent's Response is comprised of bare allegations without supporting evidence. WDL's case is, in contrast, well supported with documentary and witness evidence and also appears to be reasonably complete …

98. During the following period of August and September 2014 Mr Barber, of Benchmark, got involved with discussions with Mrs Hawes [of Wycombe] as did, towards the end, Mr Duce [of Topevent]. Both Messrs Barber and Duce failed to comprehend the change in contract price from the original February 2013 quotation to the subsequent agreed prices and associated valuations. Nevertheless I find it clear from the above analysis that the jump in price was very largely justified and agreed in accordance with WDL's subsequent quotations as and when the necessary information became available regarding the existing asbestos on site…

117. WDL's outstanding invoices amount to £100,203.18. Whilst it is clear from the correspondence, and its Response, that Topevent accepts some payment is due, at no stage in these discussions, or indeed in these proceedings, has Topevent agreed to pay any part of the sums invoiced.

118. WDL claims £160,415.12 less the sums paid on the basis of a revaluation of the Works and a contractual analysis which assumes the Contract was made on April 2014 and all Works were comprised in one of seven different variations thereafter. I have already found against WDL in relation to the contractual anaysis.

119. It has been very difficult to reconcile the figures claimed and Topevent's responses. This is no doubt complicated by the fact that WDL's claim is based upon a contract formed on 8 April 2014.

120. Topevent bases its response on the original CSA. Whilst Topevent's analysis probably more closely reflects the contractual position, it is not at all clear and almost entirely unsupported by any evidence, as previously noted.

121. I did seek to clarify the position by directing the Parties agree a Scott Schedule. This only served to complicate matters and encouraged Topevent to include a further counterclaim in relation to WDL's alleged failure to complete the Works (which claim I have dismissed – see above). Whilst I am grateful for Mr Wilson's attempt to reconcile the figures in his 18 page reply to Topevent's Scott Schedule, I have given up trying to reconcile the figures and decided to revert to the sums invoiced by Mrs Hawes.

122. This most closely reflects my findings as to the agreement and relevant terms of the Contract. In addition Mrs Hawes' valuations and invoices were the subject of extensive correspondence and challenge and such challenges were largely unsuccessful. In any event, for what it is worth, I suspect WDL would have obtained a similar result had I followed its contractual analysis.

123. Most of Topevent's challenges relate to a misunderstanding as to the pricing of the Works. The Contract provided for fixed prices for the original Works and subsequent variations. These were provided and accepted either expressly or by Topevent's conduct. It is not now open to Topevent to query the reasonableness or otherwise of such claims.

124. In any event, Mrs Hawes engaged at length in relation to the reasonableness of WDL's claims and Topevent has been almost entirely unsuccessful in persuading me that they were anything other than reasonable…

126. In the light of my findings above I find the invoices generally properly reflect the sums due.

127. I therefore attach two appendices:

(a) Appendix A – a summary of all invoices and my findings in relation thereto with brief comments as to the contractual entitlement under which I find they arise.

(b) Appendix B – a summary of my interest calculations thereon (see my findings below)."

10. I now turn to the three grounds which are relied on by Topevent in seeking to avoid summary judgment. They are:

i) An alleged reference to the adjudicator of multiple disputes;

ii) An alleged breach of natural justice in the adjudicator's refusal of the site meeting/visit;

iii) An alleged breach of natural justice in the adjudicator's decision on valuation, said to be on a basis that was not advanced by either party.

(a) Ground 1: Multiple Disputes

11. Topevent complain that the adjudicator had no jurisdiction because more than one dispute was referred to him. They argue that the adjudicator was addressing both the issue of valuation and what they say were the separate issues arising out of the termination/cessation of the works on site, and that these constituted two entirely separate disputes. For the reasons set out below, I reject that complaint.
12. The Notice of Adjudication (paragraph 4 above) makes plain that the dispute between the parties concerned the outstanding payment due to Wycombe, following the cessation of works on site. The payment said to be due was made up of a number of elements, including both the value of variations, and the financial consequences of termination and demobilisation. Accordingly, both elements of the payment said to be due from Topevent to Wycombe were part of the same dispute, in accordance with the well-known definition of 'dispute' in Fastrack Contractors Ltd v Morrison Construction Limited & Anr [2000] EWHC Technology 177 at paragraph 34; and David McLean Housing Contractors Ltd v Swansea Housing Association Ltd [2002] BLR 125 at paragraph 8. They were simply different components of the total sum in dispute.
13. Ms Conroy properly drew my attention to the more recent decision of Akenhead J in Whitney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2332 (TCC), in which he gave guidance as to one way of identifying whether or not two separate disputes had been referred to the adjudicator. He said:

"A useful if not invariable rule of thumb is that if a disputed claim No 1 cannot be decided without deciding all or part of disputed claim No 2, that establishes such a clear link and points to there being only one dispute."

I note that in that case Akenhead J concluded that a claim for a final account and a claim for the financial consequences of termination were a part of a single dispute.

14. In my view that is very similar to the situation here, where there is a claim for payment of all outstanding sums, including the sum of £4,000, which Wycombe said was due in respect of what they said was the wrongful termination of their contract. Wycombe wanted one final payment so as to be able to close their books on this contract. That could only be achieved if the adjudicator addressed all their outstanding financial claims. In that context, there was therefore a clear and obvious link between their modest claim for the cost consequences of the allegedly wrongful termination, which the adjudicator rejected in any event, and the overall claim for all sums outstanding. They were not separate disputes.
15. In addition, there was another obvious link between these two issues: the link suggested by Benchmark in their letter of October 2014 (paragraph 3 above). It was Benchmark on behalf of Topevent who said that the valuation of Wycombe's work could not be carried out properly unless the amount of incomplete work was taken into account. It seems to me that the letter made a direct link between these two issues, of the type envisaged by Akenhead J in Witney. Accordingly I conclude that these two issues were part of a single dispute.
16. Even if I am wrong about that, and these were in truth two separate disputes, it is of no help to Topevent. I note that paragraph 11.1 of the TecSA Rules (pursuant to which Mr Gard was appointed) makes clear that the adjudicator can deal with "any further matters which all Parties agree should be within the scope of the Adjudication". The disputes concerned with the valuation of the work, and the dispute about termination, were addressed without qualification by both parties during the adjudication. Indeed, as I have noted, the latter was the source of Topevent's counterclaim of £180,000 odd. There was never any suggestion by Topevent that, in some way, the termination dispute should not be dealt with in the adjudication: on the contrary, they positively wanted it decided.
17. Accordingly if, contrary to my primary view, these were two separate disputes, then Topevent's acquiescence in, and their concomitant failure to object to, the adjudicator dealing with both disputes, gave him the necessary jurisdiction in any event: see OSC Building Services Ltd v Interior Dimensions Contracts Ltd [2009] EWHC 248, in particular at paragraph 23.
18. Ms Conroy properly accepted that there had been no objection or reservation of position by Topevent, but she sought to argue that, in part because she said Topevent were not in receipt of legal advice at the time of the adjudication, they had no actual or constructive knowledge of the jurisdiction point. She therefore submitted that, by reference to the decision of Akenhead J in CN Associates (a firm) v Holbeton Ltd [2011] EWHC 43 (TCC), Topevent could not be said to have waived their right to rely on this point. In his judgment in CN Associates, Akenhead J said:

"33…if a party does not effectively reserve its position on a given jurisdiction issue, of which it had actual or constructive knowledge, it cannot raise it as an effective objection to a claim for the enforcement of the relevant adjudication decision."

19. Although it was attractively put, I do not agree with Ms Conroy's analysis. First, in my view, all Akenhead J was saying was that a party would not be penalised if it failed to take a point about which it did not know and in respect of which it had no reasonable basis for knowing. He was not saying that the relevant party could take a full part in an adjudication; lose; and then later seek to take an obvious jurisdiction point for the first time, once it was in receipt of legal advice. That could not possibly be right, because it would allow a party to hide behind wilful ignorance or a deliberate failure to take legal advice, in order to avoid the consequences of an adjudicator's decision.
20. Secondly, and in any event, it seems to me that on the facts, this point does not get off the ground. I notice that Topevent were advised by Benchmark, whose Mr Sharman was legally qualified. Moreover Topevent themselves had complete knowledge of the fact that the adjudicator was dealing with both the valuation of the works and the consequences of their cessation; indeed, it was largely at their insistence that this latter point was being considered at all. So it cannot now be suggested that they did not know all the relevant facts. Their alleged failure to appreciate that this point might also give rise to a jurisdictional argument was a matter entirely for them. It does not fall foul of paragraph 33 of Akenhead J's judgment in CN Associates.
21. For all those reasons, the first jurisdictional challenge must fail.

(b) Ground 2: Breach of Natural Justice: No Meeting/Visit

22. Topevent repeat before me the point that they made to Mr Gard during the adjudication, namely that he should have attended a site visit or meeting. They also now argue, which they did not suggest to Mr Gard, that this failure was a material breach of natural Justice.
23. In my view this objection is hopeless. First, the organisation of an adjudication, the procedure and process to be adopted and the steps required before the decision is issued to the parties, are all matters uniquely for the adjudicator. It is up to him or her to decide what he or she needs in order to reach their decision. In this case, the adjudicator did that, and he carefully explained why a site visit/meeting was not a proportionate use of his time and therefore the costs of the adjudication. It is not and cannot be for this court to second-guess that decision. That is particularly so, given the plentiful authority for the proposition that an adjudicator is not generally obliged to arrange or attend any sort of meeting: see ROK Building Ltd v Celtic Composting Systems Ltd No 2 [2010] EWHC 66 (TCC).
24. In this case I also conclude that a site visit or meeting would have been of no assistance in valuing the variations and the works carried out on site, which was the principal issue between the parties. No submissions to the contrary have been provided. The valuation exercise was a paper exercise, and if necessary, photographs of the site could be – and were – provided. So not only was there no basis for the suggestion that Mr Gard acted in breach of natural justice, but any alleged breach was simply immaterial and therefore could not prevent enforcement in any event: see Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC).
25. Ironically, on one view of the papers, it appears that Topevent are now complaining that the adjudicator did not go to site to se the amount of work outstanding/not done, an issue which went (in part) to their counterclaim, which in turn is a matter that Topevent now say the adjudicator had no jurisdiction to address at all. Their position, despite Ms Conroy's best efforts, is irredeemably inconsistent. In my view, there is nothing in the failure to have a meeting or a site visit that could be said to be a material breach of natural Justice.

(c) Ground 3: Breach of Natural Justice: Decision on a Different Basis

26. The final complaint is the one that Ms Conroy, in a series of succinct submissions, indicated was her best point. This was the complaint that the adjudicator failed to decide the valuation dispute on the basis of the parties' respective submissions, and instead decided it on a basis on which the parties had not had an opportunity to address him. Thus it was said that this was another material breach of natural Justice.
27. I have considered this submission carefully by reference to the detailed papers in the case. I have come to the conclusion that it is not a submission which ultimately should succeed, although it is a point on which (because of the unhelpful way the claim was set out in the first place) I need to spend a little time analysing and explaining my conclusions.
28. The original claim in the adjudication was based on Wycombe's invoices, albeit with adjustments to reflect an attempted revaluation exercise: see paragraph 5 above. Topevent, for their part, sought to review and revalue both the original invoices and the adjusted invoices. The adjudicator was therefore faced with a myriad of different approaches to valuation. He concluded that "the invoices generally properly reflect the sums due", although he too made a number of adjustments. It seems to me that, on those facts, far from coming to a decision that was based on his own independent approach to the figures, the adjudicator carefully considered both parties' submissions and then, as he was entitled to do, provided his own valuation based on those submissions.
29. During his oral submissions Mr Newman submitted that the adjudicator's Decision showed that he had come to a conclusion on the valuation issues based upon his analysis of the evidence before him, and he said that that was precisely what the adjudicator was required to do. In all the circumstances of this case, and by reference to the adjudicator's Decision, I consider that these submissions are soundly based. On that basis, of course, no criticism can now be made of the adjudicator.
30. More widely, I consider that the following analysis is appropriate. An adjudicator has to do his best with the material with which he is provided. He has considerable latitude to reach his own conclusions based on that material, and he is certainly not bound to accept either one or other of the figures advanced by the parties. In my view, this latitude will inevitably be even wider now that the original constraint provided by the 1996 Act, that there had to be a written contract between the parties, has been removed by amendment. As happened here, an adjudicator's conclusion about the nature and terms of the contract could affect his approach to valuation issues.
31. The limits of this power are also well-defined in the cases. What an adjudicator cannot do, certainly not without warning the parties in advance of his Decision, is to make good the deficiencies in the claiming party's case (Balfour Beaty Construction Ltd v The London Borough of Lambeth [2002] EWHC 597 (TCC)), or to plug what he sees as a gap in that case by having regard to something which he has been told expressly to ignore (Primus Build Ltd v Pompei Centre [2009] BLR 437)).
32. Ms Conroy submitted that that is what the adjudicator did here but, in my view, this was a mischaracterisation of the adjudicator's Decision. He did not create an entirely new exercise which the parties had not seen before (as in Balfour Beaty), nor did he rely on something which he had been told not to (as in Premus). All the adjudicator did here was to look at the muddled claim documentation and the even more muddled response, and then consider the evidence (including in particular the witness statements) and come to a conclusion. Moreover that conclusion, that the claims in the contemporaneous invoices which had been sent by Wycombe to Topevent were broadly valid and correct, could hardly be described as radical or new, much less the filling in of gaps in Wycombe's case. On the contrary, the invoices were Wycombe's case, or at least one version of it.
33. Finally on this point, I should add that even if I was wrong and there had been a breach of natural justice in relation to the adjudicator's decision on the valuation, it was immaterial and had no effect on the outcome. Why do I say that? Because that was the adjudicator's own conclusion. In his decision, at paragraph 122, the adjudicator said that his finding that what was due by reference to the invoices gave rise to a total which was similar to that which would have resulted if Wycombe's primary case as to the contract (the revaluation) had been accepted. He said in terms: "I suspect WDL would have obtained a similar result had I followed its contractual analysis". Thus on the adjudicator's analysis, there was no material difference between the figures calculated on those two different basses. I therefore readily conclude that this submission (even if it was right, which I do not accept) cannot give rise to a material breach of natural justice in any event.

Counterclaim

34. For completeness, I should say that the statement of Mr Duce of Topevent also sought to avoid summary judgment by suggesting that Topevent had a counterclaim in respect of the costs of completion, now said to be worth £214,029.39. This argument was not maintained by Ms Conroy for one very good reason.
35. This counterclaim, at that time put at £180,000, was raised by Topevent during the adjudication and was rejected by the adjudicator. It is axiomatic that a defending party cannot seek to prevent enforcement of an adjudicator's Decision by reference to a counterclaim that the adjudicator has himself considered and rejected.

Conclusions

36. For all those reasons I consider that the grounds raised by Topevent to avoid summary judgment should each be rejected. There will therefore be summary judgment in favour of Wycombe, together with interest and costs.