AWG Construction Services Ltd -v- Rockingham Motor Speedway Ltd
Case reference:
[2004] EWHC 888 (TCC)
Monday, 5 April 2004
Key terms: Enforcement - jurisdiction - natural justice - impartiality - serious financial doubt - withholding notice - scope of decision - severance - a dispute
AWG Construction Services Limited (previously Morrison Construction Limited) entered into a contract with Rockingham Motor Speedway Limited for the design and construction of a new motor racing track and facilities near Corby in Northamptonshire. They were to design and build an oval racetrack and within that a conventional racetrack together with a four storey grandstand and ancillary works.
On completion of the development problems with the track arose and disruption to a race was caused by seepage of water through the surface of the track. Rockingham claimed loss of revenue and the cost of providing refunds. A withholding notice was served. Remedial works were then undertaken. A dispute arose as to whether the problem had in fact been rectified. One adjudication resulted in a decision in favour of AWG, which was the subject of separate proceedings. Rockingham commenced another adjudication on 1st October 2003 in respect of quality and fitness for purpose.
A decision in favour of Rockingham was challenged on the basis that: (1) the adjudicator decided something that was not referred to him and/or (2) he breached the principles of natural justice because he allowed new matters or new claims to be introduced during the course of the adjudication and did not give the claimant sufficient opportunity to consider those new matters and respond. Finally, AWG argued that there were multiple disputes that were not suitable for the adjudication procedure.
HHJ Toulmin CMG QC considered that the approach in Nuttal v Carter [2003] BLR 312 was too rigid and contrary to the classification of the dispute in Halki Shipping. He preferred the Halki approach of the wide interpretation of the word dispute in order to preserve an adjudicator’s jurisdiction. However, where the decision was on a different basis from that which the dispute had been referred an objection could be made to the jurisdiction of the adjudicator, which would amount to a breach of natural justice.
He concluded that the basis on which the adjudicator found for Rockingham was entirely different to that identified in the referral notice. As a result the adjudicator’s decision for that part of the dispute was beyond the scope of the dispute referred to him. The ability for an adjudicator to conduct an entirely inquisitorial process did not assist the enforcement of the decision. In respect of natural justice, the adjudicator did not give AWG a sufficient opportunity to consider the new matters put to them. This was also a breach of natural justice.
Finally, there were three separate disputes under the contract which by agreement had been referred to adjudication. As only two of them had been challenged the third was severable and Rockingham was entitled to immediate payment of that sum. His Honour did not order a stay in respect of arguments raised about AWG’s financial status. As a result the adjudicator’s decision in respect of the oval track was not enforced because there was no jurisdiction to make that decision, and the adjudicator had failed to comply with the rules of natural justice. Summary judgment was however given in relation to the severable grandstand works.
On completion of the development problems with the track arose and disruption to a race was caused by seepage of water through the surface of the track. Rockingham claimed loss of revenue and the cost of providing refunds. A withholding notice was served. Remedial works were then undertaken. A dispute arose as to whether the problem had in fact been rectified. One adjudication resulted in a decision in favour of AWG, which was the subject of separate proceedings. Rockingham commenced another adjudication on 1st October 2003 in respect of quality and fitness for purpose.
A decision in favour of Rockingham was challenged on the basis that: (1) the adjudicator decided something that was not referred to him and/or (2) he breached the principles of natural justice because he allowed new matters or new claims to be introduced during the course of the adjudication and did not give the claimant sufficient opportunity to consider those new matters and respond. Finally, AWG argued that there were multiple disputes that were not suitable for the adjudication procedure.
HHJ Toulmin CMG QC considered that the approach in Nuttal v Carter [2003] BLR 312 was too rigid and contrary to the classification of the dispute in Halki Shipping. He preferred the Halki approach of the wide interpretation of the word dispute in order to preserve an adjudicator’s jurisdiction. However, where the decision was on a different basis from that which the dispute had been referred an objection could be made to the jurisdiction of the adjudicator, which would amount to a breach of natural justice.
He concluded that the basis on which the adjudicator found for Rockingham was entirely different to that identified in the referral notice. As a result the adjudicator’s decision for that part of the dispute was beyond the scope of the dispute referred to him. The ability for an adjudicator to conduct an entirely inquisitorial process did not assist the enforcement of the decision. In respect of natural justice, the adjudicator did not give AWG a sufficient opportunity to consider the new matters put to them. This was also a breach of natural justice.
Finally, there were three separate disputes under the contract which by agreement had been referred to adjudication. As only two of them had been challenged the third was severable and Rockingham was entitled to immediate payment of that sum. His Honour did not order a stay in respect of arguments raised about AWG’s financial status. As a result the adjudicator’s decision in respect of the oval track was not enforced because there was no jurisdiction to make that decision, and the adjudicator had failed to comply with the rules of natural justice. Summary judgment was however given in relation to the severable grandstand works.