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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Ove Arup & Partners International Ltd v Coleman Bennett International Consultancy Plc [2019] EWHC 413 (TCC) (29 January 2019) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2019/413.html Cite as: [2019] EWHC 413 (TCC) |
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OF ENGLAND AND WALES
TECHNOLOGY & CONSTRUCTION COURT (QBD)
Fetter Lane, London EC4A 1NL |
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B e f o r e :
____________________
OVE ARUP & PARTNERS INTERNATIONAL LIMITED |
Claimant |
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| - and - |
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| COLEMAN BENNETT INTERNATIONAL CONSULTANCY PLC | Defendant |
MR C. DARTON (counsel) appeared on behalf of the Defendant.
____________________
VERSION
OF JUDGMENT
Crown Copyright ©
MRS JUSTICE O'FARRELL:
Arup
& Partners International Limited ("
Arup"),
against the defendant, Coleman Bennett International Consultancy Plc. ("CBI"), for summary enforcement of the decision of an adjudicator dated 19 October 2018, pursuant to which the defendant, CBI, was required to pay the claimant,
Arup,
the sum of £389,268.43 plus interest. The application to enforce the decision by summary judgment is resisted on the part of CBI by reference to a number of jurisdictional challenges.
Arup
regarding the possibility of engaging
Arup
to provide engineering services in relation to an investigation of the feasibility of using Hyperloop technology to link Manchester and Leeds as part of the Northern Powerhouse scheme. A Hyperloop is a mode of passenger and/or freight transportation in which pods are propelled by magnetic levitation technology through a partially evacuated tube, which is mounted on stilts or sited underground, at speeds of up to 760mph.
Arup
sent to CBI its proposal for an outline scope of work for the feasibility study that it had been asked to consider. The general level of work that was proposed by
Arup
in that letter was as follows:
"(1)Arup
will provide assistance with the overall project management of the Northern Powerhouse feasibility study programme, noting that other consultants will also be working on the feasibility study and their work will need to be coordinated with the
Arup
activities;
(2)Arup
will carry out focused technical feasibility studies in the areas of tunnel design, route selection and station layout;
(3)Arup
will carry out limited operational assessments and transport capacity assessments sufficient to define the system for tunnel and station design purposes;
(4)Arup
will carry out preliminary costing exercises and system economic assessments.
(5)Arup
will provide output material for inclusion in the Northern Powerhouse feasibility study report, which will be produced by others."
Arup
set out in its letter that the studies would comprise:
i) Outline definition of an initial ultrafast transport system, sufficient to enable work to begin in the absence of detailed information from HTI.
ii) Limited operational assessments and transport capacity assessments, sufficient to define the system for tunnel and station concept definition purposes.
iii) The development of generic conceptual designs for the stations.
iv) The development of generic conceptual designs for the tunnels and their interfaces with the stations.
v)
Desk studies of the city centre areas of Leeds and Manchester, sufficient to identify appropriate sites and platforms for each station and to enable the following design requirements to be assessed, namely orientation, number and arrangement of platforms, depth and number of operational levels, passenger and baggage connections to the existing mainline stations, potential for aboveground developments.
vi)
Desk studies of the Leeds/Manchester regional level geology and identification of significant obstructions along the selected route. The overall tunnel design approach will be formed around a fatal floor assessment of the alternatives and will include route definition, developing horizontal and
vertical
alignment corridors between Leeds and Manchester, assessing the impact of topography on the feasibility of a partially/fully tunnelled route, estimating the expected size of the tunnel based on space proofing requirements, defining the interfacing tunnelling aspects of any stations.
vii)
Preliminary construction cost estimates and system economic assessments.
viii)
Development of text and other suitable material for inclusion in the final Northern Powerhouse feasibility study report to be produced by others.
"The fee for conducting the studies defined above will be £350,000 plusVAT,
costed at our normal rates. A definition of the anticipated expenditure profile for the project is appended. We are prepared to discount the above fee to £150,000 plus
VAT
in exchange for a 20% share in the ownership of the enterprise which is to be established as soon as possible between DC and HTI."
Arup
commenced the work as set out in its letter. An initial payment of £75,000 was made by CBI on 6 May 2016.
Arup
would not take a 20 percent stake in the potential joint
venture.
A discussion took place between Sir Peter Michael, of DCN, and
Arup,
as a result of which an email was sent on behalf of Sir Peter Michael on 11 October 2016 stating as follows:
"Further to our telephone call this morning, this note confirms that DCN/CBI acknowledge the debt total of 350k for work undertaken. We are only able to settle this debt in instalments as follows:
(1) 75k paid to date;
(2) A further 75k to be paid 30 days from the date of invoice;
(3) A further 75k to be paid three months later;
(4) The balance to be arranged according to cash availability.
I trust that you will accept the above as good intention and that all material required to complete the DCN brochure currently in preparation will be available by close of business Thursday, 13th October 2016."
Arup.
Arup
submitted invoices to CBI in respect of the work carried out and, by letter dated 8 June 2017,
Arup
demanded payment in full of the balance of the £350,000 fee for work that had been carried out to date. CBI refused to make such payment and, therefore, on 12 September 2018,
Arup
commenced an adjudication seeking balance of the sum due.
Arup
stated at paragraph 3:
"Arup
has provided professional engineering services to CBI pursuant to a contract between the parties ("The Appointment") entered into on or around 14 April 2016 and
varied
by agreement on or around 11 October 2016."
At paragraph 4,
Arup
stated that the appointment was a construction contract and the services to be performed were in relation to construction operations within the meaning of the Housing Grants, Construction and Regeneration Act 1996.
Arup
further stated that the appointment did not contain any express provision for adjudication and, therefore, by reason of section 108 of the Act, the adjudication's statutory scheme applied.
VAT,
being the balance of the fee payable under the appointment; £44,146.43 by way of interest; statutory compensation by way of £300; and the adjudicator's fees of £350, plus £12,060, plus
VAT.
Arup
commenced proceedings and issued an application by way of summary judgment in order to enforce the adjudicator's decision.
varied
the original contract. The adjudicator therefore made decisions on more than one contract or dispute and so did not have jurisdiction.
variation
of the contract of 14 April 2016; and (3) whether Sir Peter Michael had authority to
vary
the contract.
very
grateful to the written and oral submissions from both counsel. It has assisted the court in identifying the real issues in dispute and determining the way forward.
Arup,
firstly on the grounds of waiver. Fortuitously for the court, but perhaps not so much for the defendant, the Court of Appeal has
very
recently handed down a decision which is on point in respect of the issue of waiver and reservations of jurisdictional points taken in the context of adjudication.
v
Michael J. Lonsdale (Electrical) Limited and Primus Build Ltd [2019] EWCA Civ 27, the Court of Appeal considered challenges to jurisdiction and the relevant reservations taken in relation to the two matters that were before it. The judgment in that case was given by Coulson LJ, who considered the relevant authorities in relation to reservations and waiver, and then stated as follows at paragraph 91 and 92:
"91. In myview,
the purpose of the 1996 Act would be substantially defeated if a responding party could, as a matter of course, reserve its position on jurisdiction in general terms at the start of an adjudication, thereby avoiding any ruling by the adjudicator or the taking of any remedial steps by the referring party; participate fully in the nuts and bolts of the adjudication, either without raising any detailed jurisdiction points, or raising only specific points which were subsequently rejected by the adjudicator (and the court); and then, having lost the adjudication, was allowed to comb through the documents in the hope that a new jurisdiction point might turn up at the summary judgment stage, in order to defeat the enforcement of the adjudicator's decision at the eleventh hour…
92. In myview,
informed by that starting-point, the applicable principles on waiver and general reservations in the adjudication context are as follows:
(i) If the responding party wishes to challenge the jurisdiction of the adjudicator then it must do so "appropriately and clearly". If it does not reserve its position effectively and participates in the adjudication, it will be taken to have waived any jurisdictional objection and will be unable to avoid enforcement on jurisdictional grounds (Allied P&L).
(ii) It will always be better for a party to reserve its position based on a specific objection or objections: otherwise the adjudicator cannot investigate the point and, if appropriate, decide not to proceed, and the referring party cannot decide for itself whether the objection has merit (GPS Marine).
(iii) If the specific jurisdictional objections are rejected by the adjudicator (and the court, if the objections are renewed on enforcement), then the objector will be subsequently precluded from raising other jurisdictional grounds which might otherwise have been available to it (GPS Marine).
(iv) A general reservation of position on jurisdiction is undesirable but may be effective (GPS Marine; Aedifice). Much will turn on the wording of the reservation in each case. However, a general reservation may not be effective if:
i) At the time it was provided, the objector knew or should have known of specific grounds for a jurisdictional objection but failed to articulate them (Aedifice, CN Associates);
ii) The court concludes that the general reservation was worded in that way simply to try and ensure that all options (including ones not yet even thought of) could be kept open (Equitix)."
Those guidelines provide a useful test, which I will apply in this case.
very
ably by Mr Darton, is that the defendant made a general reservation, sufficient to identify the objection to jurisdiction now taken, in a letter/email dated 11 October 2018 sent by its Direct Access barrister, Mr Bacon, to the adjudicator, and that challenge was subsequently maintained in the response that was filed in the adjudication. The letter of 11 October 2018 states as follows:
"CBI does not accept that Part 2 of the Housing Grants, Construction and Regeneration Act 1996, or the Scheme for Construction Contracts Regulations 1998, apply to the matter or matters referred to in the notice and fully reserves CBI's position in relation to jurisdiction. CBI does not accept that this adjudication has beenvalidly
commenced or that the appointment adjudicator has jurisdiction in respect of the referring party's claim for the brief reasons set out below."
"Whilst CBI will participate in the adjudication, it will do so under protest and without prejudice to its contention that any adjudicator or adjudicators that are appointed lack jurisdiction. CBI therefore disputes jurisdiction on the grounds summarised above and on further jurisdictional issues that we have not yet had the opportunity to investigate in the limited time we have had since the service of the notice."
"The responding party, CBI, does not accept that this adjudication has beenvalidly
commenced or that the appointed adjudicator has jurisdiction in respect of the referring party's claim, for the reasons set out herein. By an email dated 11 October 2018, CBI gave notice that it challenged jurisdiction, which it will continue to maintain throughout the course of this adjudication. The rest of the submissions made within this document are made without prejudice to CBI's challenge to jurisdiction."
That was then repeated by the witness statement relied upon by Mr Coleman on behalf of CBI.
Arup
sent a response to the adjudicator, copied to CBI, in which it addressed the submissions made by CBI as to jurisdiction. In particular, it stated:
"CBI says, without explanation, the matters referred to the adjudicator do not fall within the scope of Part 2 of the 1996 Act.Arup
disagrees."
"The issue has not been developed in detail by CBI in the response and there has been no issue taken withArup's
letter of 12 October in this regard."
Arup
in its letter of 12 October and, therefore, the adjudicator had nothing other than a bare assertion on which to base his decision. Hardly surprisingly, therefore, the adjudicator simply stated in paragraph 55:
"I accept the case forArup,
as set out in paragraphs 4-7 in its letter of 12 October."
very
specific jurisdictional points, both in its letter/email dated 11 October and in its response. Having decided to pin its colours to the mast and take those
very
specific objections to jurisdiction, both of which were dealt with by the adjudicator in specific terms and both of which had been addressed by
Arup,
and having lost those points in front of the adjudicator, it would be inappropriate now to permit the defendant to raise a new form of jurisdictional challenge in order to resist enforcement.
vague
terms as to fall foul of the test set out by Coulson LJ at paragraph 92(iv), where he said that a general reservation may be effective, but not if:
"(i) At the time it was provided, the objector knew or should have known of specific grounds …
ii) [Or that it] was worded in that way simply to try and ensure that all options … could be kept open …"
Arup
stated:
"The appointment was a construction contract and the services to be performed and each of them was in relation to construction operations within the meaning of section 104 of the Housing Grants, Construction and Regeneration Act 1996."
"Save that CBI expressly denies the jurisdiction of the adjudicator to adjudicate upon this dispute for the reasons set out herein, paragraph 15 is admitted."
"The referred claim is brought under more than one contract and/or raises more than one dispute and, secondly, the adjudication is being brought against the wrong party."
Arup
did not feel the need to deal further with any jurisdictional dispute based on the application of the Act in its reply.
'(1) In this Part a "construction contract" means an agreement with a person for any of the following -
(a) the carrying out of construction operations; …
(2) References in this Part to a construction contract include an agreement -
(a) to do architectural, design, or surveying work, or
(b) to provide advice on building, engineering …
in relation to construction operations.'
"(b) construction … forming, or to form, part of the land, including (without prejudice to the foregoing) walls, roadworks, power-lines, electronic communications apparatus, aircraft runways, docks and harbours, railways [and so forth]."
Arup's
scope of work, they include design work that is in connection with construction operations as so defined. It is clear from the letter that
Arup
would be required to make a number of assumptions because of the absence of detailed information from HTI at the time that it was asked to carry out its work. But those initial assumptions and/or assessment of capacity were simply to enable
Arup
to carry out its design work, namely to define the system for the tunnel and the stations that would be built, assuming that the proposal went ahead. The detailed work that
Arup
was being asked to do and which it was undertaking to do, as evidenced by its letter of 14 April 2016, was the detailed engineering work that falls fairly and squarely within the definition in section 105.
very
early stages of its formation, but nonetheless the work that
Arup
was being asked to do was to assist with the definition and detailed design of construction operations that would subsequently be carried out. Thus, I would have rejected the jurisdictional challenge in any event.
valid,
I would however have had difficulty in carrying out any severance of the matters that fell within or without Part 2 of the Act. I note that both parties have relied upon the decision in Cleveland Bridge UK Ltd
v
Whessoe [2010] EWHC 1076, paragraphs 110, 116 and 120.
Arup
and CBI were parties to a contract that was entered into on or around 14 April 2016. The notice of adjudication was made on that basis. The dispute raised, both in the letter/email dated 11 October and in the submissions before the adjudicator, was that the 11 October exchanges between the parties gave rise to a
variation
or separate contract with a separate party.
Arup
and CBI that was properly referred to adjudication. That being the case, the adjudicator had jurisdiction to determine any dispute between the parties arising under that contract, including issues as to whether or not that contract was
varied
in any respect and/or whether there were subsequent separate contracts that might have affected the original contract.
Arup
and accepted by CBI were for the full fee of £350,000 plus
VAT,
with the possibility of a discounted fee in exchange for a 20 percent stake in the proposed joint
venture.
It was a matter for the adjudicator to determine that and, whether it is right or wrong, it is not a matter that goes to jurisdiction. Therefore, it is not a matter that the court would take into account when deciding whether or not to enforce the adjudication decision.
Arup
by DCN / CBI. It did not refer to a fresh agreement.
variation
alleged by the claimant and the authority of Sir Peter Michael to enter into any form of commitment on behalf of CBI, what they do not do is give any positive evidence of a fresh contract made between
Arup and DCN.
CERTIFICATE Opus 2 International Limited hereby certifies that the above is an accurate and complete record of the Judgment or part thereof. Transcribed by Opus 2 International Limited Official Court Reporters and Audio Transcribers 5 New Street Square, London, EC4A 3BF Tel: 020 7831 5627 Fax: 020 7831 7737 civil@opus2.digital This transcript has been approved by the Judge |