Quartzelec Limited v Honeywell Control Systems Limited
Case reference:
[2008] EWHC 3315 (TCC)
Friday, 5 December 2008
Key terms: Natural Justice - Grounds of Defence - Jurisdiction
Quartzelec, commenced summary judgment proceedings against Honeywell to enforce an adjudicator's decision. Honeywell resisted the enforcement on the grounds that the adjudicator misconstrued his jurisdiction by declining to consider a discrete ground of defence raised by Honeywell; that in failing to consider this, the adjudicator breached the rules of natural justice; and finally that as a result of these two factors the decision is unenforceable.
The dispute surrounded a development in Liverpool whereby Quartzelec had initiated an adjudication against Honeywell in which it sought an increased valuation of the works carried out. In the Notice of Adjudication, Quartzelec argued that following several changes in the scope of work, they were entitled to the sum of £465,000. Honeywell's defence was that there had been significant omissions on the project which it had failed to consider previously, and thus these omissions substantially reduced the amount that could be found in Quartzelec's favour.
Quartzelec's position regarding this was that Honeywell was attempting to widen the jurisdiction of the adjudication beyond what was set out in the Notice of Adjudication. They argued that the adjudicator did not have jurisdiction to consider the defence, and in addition argued that Honeywell's failure to issue an appropriate withholding notice, in respect of the alleged omissions, prevented the matter from being considered in the adjudication. The adjudicator found favour with Quartzelec's views and awarded the sum accordingly.
HHJ Davies in the Manchester District Registry of the TCC reviewed the relevant case law, in particular Cantillon v Urvasco [2008], and agreed with Mr Justice Akenhead that a defendant is entitled to raise any defence open to him to defend himself against that claim, regardless of whether or not it was raised as a discrete ground of defence. A failure of the adjudicator to consider such a defence was contrary to the rules of natural justice. HHJ Davies concluded that the decision in its entirety was not enforceable, and thus application for summary judgment was not successful.
The dispute surrounded a development in Liverpool whereby Quartzelec had initiated an adjudication against Honeywell in which it sought an increased valuation of the works carried out. In the Notice of Adjudication, Quartzelec argued that following several changes in the scope of work, they were entitled to the sum of £465,000. Honeywell's defence was that there had been significant omissions on the project which it had failed to consider previously, and thus these omissions substantially reduced the amount that could be found in Quartzelec's favour.
Quartzelec's position regarding this was that Honeywell was attempting to widen the jurisdiction of the adjudication beyond what was set out in the Notice of Adjudication. They argued that the adjudicator did not have jurisdiction to consider the defence, and in addition argued that Honeywell's failure to issue an appropriate withholding notice, in respect of the alleged omissions, prevented the matter from being considered in the adjudication. The adjudicator found favour with Quartzelec's views and awarded the sum accordingly.
HHJ Davies in the Manchester District Registry of the TCC reviewed the relevant case law, in particular Cantillon v Urvasco [2008], and agreed with Mr Justice Akenhead that a defendant is entitled to raise any defence open to him to defend himself against that claim, regardless of whether or not it was raised as a discrete ground of defence. A failure of the adjudicator to consider such a defence was contrary to the rules of natural justice. HHJ Davies concluded that the decision in its entirety was not enforceable, and thus application for summary judgment was not successful.