Enforcement
By Victoria Russell, Fenwick Elliott
Wycombe Demolition Ltd v Topevent Ltd [2015] EWHC 2692 (TCC) (31 July 2015)
This was a case to enforce a decision awarding money from the Defendant Employer to the Claimant Contractor. It was common ground that there was a construction contract between the parties but there was a dispute as to when the contract was made and the relevant terms of the contract. The sum at stake was £113,666, together with interest and the adjudicator’s fees and expenses.
Mr Justice Coulson commented that the Referral Notice, which ran to 56 closely typed pages was “much too long and managed to complicate what was, in essence, a simple claim”.
In their Response, Topevent raised two key issues. First, the ascertainment of a fair and a reasonable valuation of Wycombe’s claim for varied and extra works and the sums due under the contract and, second, the circumstances in which Wycombe left the site. Topevent said Wycombe were in breach of contract and they set out a counterclaim in respect of the value of the works outstanding, for £180,000, representing the costs of completion.
In addition, Topevent wanted the adjudicator to visit the site in order to complete his assessment of any revaluation. The adjudicator felt that such a visit would be neither necessary nor cost effective and made his decision on the basis of the documents only. He decided that, on the evidence before him, the parties had probably ended the contract by mutual consent; as to the valuation of Wycombe’s work:
“Much of Topevent’s Response is comprised of their allegations without supporting evidence. WDL’s case is, in contrast, well supported with documentary and witness evidence and also appears to be reasonably complete”.
Topevent relied on three grounds in seeking to avoid summary judgment, namely:-
(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, and
(iii) An alleged breach of natural justice in the adjudicator’s decision on valuation, said to be on a basis that had not been advanced by either party.
The first challenge, that the adjudicator had not had jurisdiction because more than one dispute had been referred to him, was rejected. Here there was a claim for payment of all outstanding sums; 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. These were not separate disputes. In the event, paragraph 11.1 of the TeCSA Rules, which applied to this adjudication, makes clear that the Adjudicator can deal with “any further matter which all Parties agree should be within the scope of the Adjudication”.
The Judge considered that the suggestion that the adjudicator’s failure to visit the site was a material breach of natural justice was “hopeless”. He said that:-
“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)….
In this case I also conclude that a site visit or meeting would have been of no assistance in valuing the variations and the work 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 [the adjudicator] acted in breach of natural justice, but any alleged breach was simply immaterial and therefore could not prevent enforcement in any event”.
The final complaint was that the adjudicator had failed to decide the valuation dispute on the basis of the parties’ respective submissions and instead decided it on a basis upon which the parties had not had an opportunity to address him. It was alleged that this was a material breach of natural justice.
The Judge concluded that this was not a submission “which ultimately should succeed”. He noted that the adjudicator had been faced with a “myriad of different approaches to valuation” and had concluded that “the invoices generally properly reflect the sums due” although he made a number of adjustments.
The Judge said that:
“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”.
The Judge suggested that the following analysis was 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”.
He said that 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 or to plug what he sees as a gap in that case by having regard to something which he is being told expressly to ignore. That had not happened here.
Topevent had also attempted to avoid summary judgment by suggesting that they had a counterclaim in respect of the costs of completion. That counterclaim had been raised by Topevent during the adjudication but had been rejected by the adjudicator. The Judge said:
“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”.
Summary judgment was given in favour of Wycombe, together with interest and costs.