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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> University of Brighton v Dovehouse Interiors Ltd [2014] EWHC 940 (TCC) (04 April 2014) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2014/940.html Cite as: [2014] BLR 432, 153 Con LR 147, [2014] EWHC 940 (TCC) |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
UNIVERSITY OF BRIGHTON |
Claimant |
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- and - |
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DOVEHOUSE INTERIORS LIMITED |
Defendant |
____________________
Miss Serena Cheng (instructed by Thomas Eggar LLP) for the Defendant
Hearing date : 14 March 2014
____________________
Crown Copyright ©
Mrs Justice Carr :
Introduction
The relevant facts
a) Dovehouse's entitlement to extensions of time to the date for completion;
b) the proper valuation of adjustments to the Contract Sum in respect of instructed variations to the works;
c) Dovehouse's liability for the University's costs to address incomplete and defective works;
d) Dovehouse's entitlement to recover loss and expense in respect of delay and/or disruption to the works.
"University of Brighton
Estate and Facilities Management
Exion 27
Crowhurst Road
Hollingbury
Brighton
BN1 8AF" ("the Exion address")
"2.4 Article 7 has not been deleted and therefore Clause 9.2 of the Conditions applies. The Adjudicator is not named and the nominator of the Adjudicator is not stated. The Referring Party therefore selects from the list included in the Contract the Royal Institution of Chartered Surveyors to nominate an Adjudicator."
"3.0 Nature of Redress
The Referring Party seeks a decision from the adjudicator that
3.1 The Final Certificate is to be corrected to certify that the gross sum of £3,670,692.19 and a net sum after deducting previous payments of £1,702,266.47 plus VAT as applicable and that sum is not to be reduced by the notice to pay less nor for any other reason or in all matters such other sum as the Adjudicator may decide and such sum shall be paid forthwith by the Responding Party to the Referring Party.
3.2 The Date for Completion is to be extended to the 30 October 2012 or such other period or date as the Adjudicator may decide.
3.3 The Responding Party shall forthwith pay interest to the Referring Party on the sum decided at 3.1 above at such rates and on such sum or sums as the Adjudicator may determine.
3.3 (sic) The Responding Party shall pay the Adjudicator's fees and expenses."
These proceedings
a) necessary effect has been given to all the terms of the Contract that require additions to, adjustments or deductions from the Contract Sum, save in regard to any accidental inclusion or exclusion of any item or any arithmetical error in any computation;
b) all and only such extensions of time, if any, as are due under clause 2.19 of the Contract have been given; and
c) that the reimbursement of direct loss and/or expense, if any, to Dovehouse pursuant to clause 4.17 of the Contract is in final settlement of all and any claims which Dovehouse has or may have arising out of the occurrence of any of the Relevant Matters, whether such claim be for breach of contract, duty of care, statutory care or otherwise.
The issues and evidence
a) that under the Scheme an adjudication is not commenced until a Referral Notice is served on a properly appointed adjudicator pursuant to paragraph 7(1) of the Scheme;
b) the First Notice was invalid because it did not comply with the requirements of paragraph 1(3) of the Scheme. It did not identify the contractually required address and was not served at the contractually required address;
c) no adjudication proceedings were in fact commenced. Dovehouse sought to appoint the adjudicator via the wrong nominating body. The appointed adjudicator correctly resigned;
d) the defects in the First Notice and the resignation of the First Adjudicator cannot now be cured.
a) for the University : two statements from the University's solicitor, Mr James Clarke;
b) for Dovehouse : a statement from Mr Rodney Taylor, construction management and costs consultant formerly at Dovehouse, and from Mr Keith Tregunna of Knowles.
Relevant terms of the Contract
"Notices and other communications
1.7.1 Any notice or other communication between the Parties, or by or to the Architect/Contract Administrator or Quantity Surveyor, that is expressly referred to in the Agreement or these Conditions (including, without limitation, each application, approval, consent, confirmation, counter-notice, decision, instruction or other notification) shall be in writing.
1.7.2 Subject to clause 1.7.4, each such notice or other communication and any documents to be supplied may or (where so required) shall be sent or transmitted by the means (electronic or otherwise) and in such format as the Parties from time to time agree in writing for the purposes of this Contract.
1.7.3 Subject to clause 1.7.2 and 1.7.4, any notice, communication or document may be given or served by any effective means and shall be duly given or served if delivered by hand or sent by pre-paid post to :
.1 The recipient's address stated in the Contract Particulars, or to such other address as the recipient may from time to time notify to the sender; or
.2 If no such address is then current, the recipient's last known principle business address or (where a body corporate) its registered or principal office.
1.7.4 Any notice expressly required by this Contract to be given in accordance with this clause 1.7.4 shall be delivered by hand or sent by Recorded Signed for or Special Delivery post. Where sent by post in that matter, it shall, subject to proof to the contrary, be deemed to have been received on the second Business Day after the date of posting."
"Clause 1.7
Address for service of notices etc. by the Parties
Employer
University of Brighton
Mithras House
Lewes Road
Brighton
BN2 4AT" ("the Mithras House address")
and
"Clause 1.8
Electronic Communications All communications are to be in
writing unless agreed otherwise"
"Effect of Final Certificate
1.9.1 Except as provided in clauses 1.9.2 and 1.9.3 (and save in respect of fraud) the Final Certificate shall be conclusive evidence…
.2 that any necessary effect has been given to all the terms of the Contract that require additions to, adjustments of deductions from the Contract Sum, save in regard to any accidental inclusion or exclusion of any item or any arithmetical error in any computation;
.3 that all and only such extensions of time, if any, as are due under clause 2.19 of the Contract have been given; and
.4 that the reimbursement of direct loss and/or expense, if any, to the Contractor pursuant to clause 4.17 of the Contract is in final settlement of all and any claims which Dovehouse has or may have arising out of the occurrence of any of the Relevant Matters, whether such claim be for breach of contract, duty of care, statutory care or otherwise.
1.9.2 If any adjudication, arbitration or other proceedings are commenced by either Party before or not later than 28 days after the Final Certificate has been issued, the Final Certificate shall be conclusive evidence as provided in clause 1.9.1 save only in respect of the matters to which those proceedings relate" ("the saving proviso").
"Issue of Final Certificate
….
.2 Not later than 5 days after the issue of the Final Certificate the Party by whom the balance is stated to be payable ("the Paying Party") shall give a notice to the other Party which shall, in respect of the balance stated as due, specify the amount of the payment proposed to be made, to what the amount relates and the basis on which the amount has been calculated.
.3 The final date for payment of the balance shall be 28 days from the date of the issue of the Final Certificate."
"Adjudication
…
9.2 If a dispute or difference arises under this Contract which either Party wishes to refer to adjudication, the Scheme shall apply, subject to the following :
.1 for the purposes of the Scheme the adjudicator shall be the person (if any) and the nominated body shall be that stated in the Contract Particulars…"
"Adjudication – Nominator of Adjudicator shall be the President or a Vice-President of the Chartered Institute of Arbitrators".
"Notice of Intention to Seek Adjudication
1(1) Any party to a construction contract (the "referring party") may give written notice (the "notice of adjudication") at any time of his intention to refer any dispute arising under the contract, to adjudication.
1(2) The notice of adjudication shall be given to every other party to the contract.
1(3) The notice of adjudication shall set out briefly –
(a) the nature and a brief description of the dispute and of the parties involved,
(b) details of where and when the dispute has arisen,
(c) the nature of the redress which is sought, and
(d) the names and addresses of the parties to the contract (including, where appropriate, the addresses which the parties have specified for the giving of notices).
2(1) Following the giving of a notice of adjudication…
(b)….if… the contract provides for a specified nominating body to select a person, the referring party shall request the nominating body named in the contract to select a person to act as adjudicator…
2(2) A person requested to act as adjudicator in accordance with the provisions of paragraph (1) shall indicate whether or not he is willing to act within two days of receiving the request……
3 The request referred to in paragraphs 2, 5 and 6 shall be accompanied by the notice of referral…
…
5(1) The nominating body referred to in paragraphs 2(1)(b)… must communicate the selection of an adjudicator to the referring party within five days of receiving a request to do so.
(3) The person requested to act as adjudicator in accordance with the provisions of paragraphs (1) or (2) shall indicate whether or not he is willing to act within two days of receiving the request.
…
7(1) Where an adjudicator has been selected in accordance with paragraphs 2, 5 or 6, the referring party shall, not later than seven days from the date of the notice of adjudication, refer the dispute in writing ("the referral notice") to the adjudicator.
9(1) An adjudicator may resign at any time on giving notice in writing to the parties to the dispute.
…
9(3) Where an adjudicator ceases to act under paragraph 9(1)-
(a) the referring party may serve a fresh notice under paragraph 1 and shall request an adjudicator to act in accordance with paragraphs 2 to 7…"
"Conclusive evidence" clauses
"The objects of a clause such as this were well stated by Mr Justice Mocatta in The Himmerland… They are (a) to provide some limits to the uncertainties and expense of arbitration and litigation; and (b) to facilitate the obtaining of material evidence. To these I would add (c) to facilitate the settling of accounts for each voyage as and when they fall due."
"17. Conclusive evidence clauses were originally devised and inserted in commercial documents to obviate cumbersome and painstaking inquiries to prove out-standings on running accounts. Having received the judicial imprimatur both in England (Bache & Co (London) Ltd v Banque Vernes et Commerciale de Paris SA [1973] 2 Lloyd's Rep 437) and in Australia (Dobbs v The National Bank of Australasia Limited (1935) 53 CLR 643), the clauses are now used pervasively in all manner of documentation by all manner of businesses in common law jurisdictions. …
18. The real foundation for the legal efficacy of such a clause is contract. It can be cogently argued that if parties expressly agree on the modalities for determining a matter, such an agreement should be upheld in the absence of any relevant public policy considerations. Indeed, this is the very basis on which the court recognises and gives effect to arbitration agreements, conclusive certificates of engineers and architects found in construction contracts and experts' decisions, among others…"
Commencement of adjudication proceedings
"The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear."
"(18) Mr Mort further submitted that it was the referral notice that completed the commencement of proceedings. If that were right, then cl. 30.9.3 would not be applicable to the first reference, let alone the existing reference. Mr Mort referred me to a passage in Keating on Building Contracts 7th Edn., 2001) p. 791, paragraph 18-430 to the effect that proceedings are commenced in adjudication by a written notice to refer to adjudication. He submitted that that passage was wrong. I reject that submission. For the purposes of cl. 30.9.3, which provides a short time period with a strict time limit, failure to comply with which leads to serious consequences analogous to the consequences of limitation provisions, 'commencement' must, in my judgment, refer to service of the notice of intention. Delay in the appointment of an adjudicator could lead to failure on the part of an applicant to serve a referral notice within 28 days after the issue of the final certificate through no fault on his part. It would take clear words to that effect to lead to such a conclusion. Clause 30.9.3 refers also to the commencement of arbitration proceedings. For the purposes of limitation, arbitration proceedings before a sole arbitrator are commenced by the giving of a notice to concur in the appointment of an arbitrator (see Mustill and Boyd Commercial Arbitration (2nd Edn. 1989) p. 169). In my judgment, it is clearly contemplated by cl.30.9.3 that arbitration can be commenced before the appointment of the arbitrator; and the same, mutatis mutandis, applies in relation to the appointment of an adjudicator."
a) the purpose of clause 1.9.2 was to enable the parties to define for themselves the extent to which, if at all, a final certificate should be evidentially conclusive;
b) on any view, a notice of adjudication under the Scheme is a critical document which defines the scope of the matters to which the adjudication proceedings relate (see paragraph 17 of the judgment of Coulson J in Letchworth Roofing Company v Sterling Building Company [2009] EWHC 1119). Coulson on Construction Adjudication (2nd Edn.) states as follows :
"3.15 It is impossible to over-emphasise the importance of the notice of adjudication. It is the cornerstone of both the adjudicator's jurisdiction and the scope and limit of the referring party's claim in the adjudication. Although the significance of the notice of adjudication is dealt with in greater detail at paragraphs 7.47-7.60 below, it is important to note at this stage that the notice must identify carefully the dispute and the nature of the redress sought. Numerous problems in adjudication and adjudication enforcement have arisen out of the referring party's failure to provide an adequate notice of adjudication, and his subsequent attempts to make good that omission in the referral notice (Part 1, paragraph 7) and other documents served in the adjudication. The courts have made it plain that this is not a legitimate approach… .
7.57 The importance of ensuring that the notice of adjudication properly describes the relevant dispute is even more pronounced if the dispute relates to the contents of a final certificate. Many of the JCT Standard Forms of Building Contract contain detailed provisions relating to the issue of a final certificate, which, unless challenged within a set period, becomes conclusive evidence on a variety of potentially significant matters. If a final certificate is challenged, then the challenger is required to issue a notice of adjudication within a specified period (not usually longer than 28 days), and it therefore becomes critically important for the challenger to ensure that every element of his challenge to the final certificate is enshrined in the notice of adjudication; otherwise, if a point of challenge is omitted from the notice, the final certificate will become conclusive evidence in respect of that omitted matter. In such circumstances, there is a potential benefit to be gained by the party who is content with the final certificate in taking technical points about the notice of adjudication and/or the conduct of the adjudication to which it gives rise because, if such arguments are successful and, say, the decision is a nullity, the final certificate will not have been challenged in time.
...
7.58 Accordingly, subject to the points noted above, the general rule is that it is the notice of adjudication that defines the limits of the adjudicator's jurisdiction, so later documents, and in particular the more detailed referral notice, cannot extend the adjudicator's jurisdiction beyond that which is set out in the notice of adjudication … ."
a) clause 1.9.2 provides that if any adjudication proceedings are commenced within time, the Final Certificate shall be conclusive evidence "save only in respect of the matters to which those proceedings relate";
b) there can be no doubt that the matters to which the adjudication proceedings relate are those matters identified in the notice of adjudication. The document that identifies and governs the scope of the proceedings, namely the notice of adjudication (and not the referral notice), may be said to resonate directly with the document envisaged as engaging the saving proviso in clause 1.9.2 ;
c) paragraph 1(1) of the Scheme does refer to the giving of notice of "intention to refer" a dispute. However, the giving of notice under paragraph 1(1) of the Scheme is defined as the giving of "notice of adjudication". That may be relevant to the question of interpretation, in other words relevant to what the parties can objectively be said to have intended. It suggests that the notice is to be treated as something more than mere notice of intention;
d) there is no doubt that proceedings are commenced in the courts without a judge being appointed, just as arbitration proceedings may be commenced without an arbitrator being appointed;
e) additionally, the requirements of paragraph 1 (3) are very similar to the requirements for a claim form as contained in CPR 16.2 and CPR16PD.2. The notice is required to set out the nature and a brief description of the dispute and of the parties involved. It is required to set out details of where and when the dispute has arisen. It is required to set out the nature of the redress sought. These requirements go well beyond what would be required merely to give notice of an intention to refer;
f) the First Notice demonstrates those requirements. It did not just give notice of an intention to refer the dispute; it expressly sought relief, including interest and costs. Its heading in standard form (of "IN THE MATTER OF AN ADJUDICATION") indicates the existence of actual, not just intended, proceedings;
g) the structure of the Scheme itself suggests that the nothing in the body of the Scheme militates against the notice of adjudication amounting to commencement of proceedings;
h) on the contrary, it is difficult to see why otherwise there would be a need for the provision of a detailed notice of adjudication the type required by paragraph 1(3) of the Scheme. The Scheme could simply have opened with the referral process, but it does not;
i) additionally, it is significant that in the event of resignation of an adjudicator under paragraph 9 it is a fresh notice of adjudication that must be served if the referring party wants to continue, not just a fresh referral notice.
a) the nominating body referred to in paragraph 2(1) b) has up to 5 days from the date of receiving a request to communicate its selection of an adjudicator to the referring party (paragraph 5);
b) the selected adjudicator has up to 2 days of receiving a request to indicate whether he is willing to act (paragraph 2(2));
c) where a selected adjudicator declines to act or does not respond (which could accordingly happen up to 7 days from the notice of adjudication), then under paragraph 6 the referring party may request the nominating body to select another adjudicator who then has another 2 days to indicate whether to accept the nomination (paragraph 6).
Invalidity of the First Notice : breach of paragraph 1(3)(d) of the Scheme
"... the names and addresses of the parties to the contract (including, where appropriate, the addresses which the parties have specified for the giving of notices)."
a) in the schedule of works accompanying the tender documents in the Preliminaries;
b) as the address for the University's representative in the minutes for project meetings;
c) as the University's address on all Valuation Certificates;
d) as the University's address in the certificate of practical completion;
e) as the address for the University's representative on Payment Notices.
"….Generally, apart from exceptional cases such as Cubitt [Building Interiors Ltd v Fleetglade Ltd [2007] 110 Con LR 36] this will mean that the court will treat service of the referral within that period as being mandatory so that the failure by the referring party to serve it in that period will be regarded as making the referral a nullity as not being what the parties intended. In such cases the adjudicator will have no jurisdiction derived from that referral."
"56. ... I have considered whether it is so de minimis that the Court should not take it into account, or make some exception or allowance.
57. However, as I read Lewison LJ's judgment in the Court of Appeal, the rationale of treating the receipt by the court of the required documents as sufficient and transferring to the court the risk of loss or delay thereafter…is that it is unfair to visit such risk on the claimant after he has done all that he reasonably could do to bring the matter before the court for its process to follow. Lewison LJ expressly described what had to be established by the claimants : that the claim was a) to be delivered in due time to the court office, accompanied by b) a request to issue and c) the appropriate fee. In my judgment, the failure to offer the appropriate fee meant that the claimants had not done all that was required of them; and they had left it too late to correct the error, which was a risk they unilaterally took."
"…. operating clause 41A and its mandatory timetable in a sensible and businesslike way means that where there has been a failure to comply with the detailed and procedural aspects of cl. 41A, the : courts should be slow to find that a failure to comply with a detailed procedural aspect of contractual provision renders the relevant part of the process a nullity so as to deprive the adjudicator of jurisdiction. Objectively that cannot have been the intention of the parties or of the provisions of the Scheme. This is consistent with the position that I held applied under the Scheme in OSC Building Services Ltd v Interior Dimension Contracts Ltd [2009] EWHC 248 (TCC)."
"…first, to inform the other party of what the dispute is; secondly, to inform those who my be responsible for making the appointment of an adjudicator, so that the correct adjudicator can be selected; and finally, of course, to define the dispute of which party is informed, to specify the redress sought, and the party exercising the statutory right and the party against whom a decision may be made so that the adjudicator knows the ambit of his jurisdiction."
Invalidity of the First Notice : breach of clause 1.7.3 of the Contract
What is the effect of nomination of an incorrect nominating body? Can there be a cure?
"….It can be worthwhile for a challenger in such circumstances to issue both a notice of adjudication and a claim form (or arbitration notice) at the same time, to ensure that an error by the adjudicator during the reference does not create an insurmountable procedural difficulty."
"36. …. The argument ... is that … clause 18B of the sub-contract conditions permit a party to refer a dispute to adjudication on one occasion only. If the party seeking adjudication….does not follow through the reference, that is the end of the matter. The right to adjudication of the dispute notified in the adjudication is lost forever. Therefore, argues Mr Wilmot-Smith, Galliford having allowed the adjudication before Mr Klein to lapse could not commence a fresh adjudication in respect of the same subject-matter.
37. The court was initially attracted by Mr Wilmot-Smith's submission. The proposition that a claimant can allow an adjudication to lapse because it disapproves of the appointed adjudicator and then start a fresh adjudication before a different adjudicator is not an appealing one…Mr Marrin has persuaded me, however, that there are formidable difficulties in the case which Lane advances. First it does sometimes happen that adjudication is not pursued further after the preliminary steps have been taken. There is no authority to suggest that as a consequence the claimant loses its right to adjudicate that dispute for all time.
38. Secondly, both the Blue Form sub-contract, the ICE Adjudication Procedure and the Scheme recognise a right to restart an adjudication in a variety of circumstances…. It is possible to think of many situations, not all of which are provided for by express terms, in which the adjudication procedure would be thwarted if there were no right to re-start an abortive adjudication. For example, suppose there is a postal delay which prevents the referral documents being served within two days as required by paragraph 4.1 of the ICE Adjudication Procedure. It cannot be right that the claimant's entitlement to adjudicate the dispute is irretrievably lost.
39. Mr Wilmot-Smith seeks to overcome these difficulties by arguing that the claimant only loses the right to adjudicate if he deliberately and without good reason fails to serve referral documents by the due date. In my view, however, it is quite impossible to imply a term of this nature either into the present contract or into the 1996 Act and the Scheme. Furthermore, if such an elaborate provision were to be implied, an expensive factual investigation would be required in some cases in order to determine whether the claimant had or had not lost the right to adjudicate."
Conclusion