Bouygues (UK) Limited v Dahl-Jensen (UK) Limited
Case reference:
[2000] EWCA Civ 507
Monday, 31 July 2000
Key terms: Error –– Jurisdiction - Insolvency
This was an appeal from a judgment to enforce an Adjudicator’s decision. Dahl-Jensen was Bouygues’ mechanical subcontractor. Bouygues determined Dahl-Jensen’s employment and arranged for the subcontract work to be completed by others. Dahl- Jensen issued a Notice to Adjudicate claiming payment for work done but not valued, damages for breach of contract and damages for wrongful repudiation. Shortly thereafter, Bouygues issued its own Notice to Adjudicate and it was agreed that this be treated as a counterclaim to Dahl-Jensen’s claim in the adjudication. The Adjudicator made an award in favour of Dahl-Jensen. However, in arriving at the sum of monies awarded, the Adjudicator took account of the gross figure which included 5% retention and deducted it from the sum paid during the subcontract which excluded retention. The effect of this was to pay the retention to Dhal-Jensen when the parties were in agreement that the retention was not yet due under the subcontract.
Bouygues argued that the effect of the decision was outside the Adjudicator’s jurisdiction and therefore the decision was not binding on the parties. However, the Court of Appeal held that when an Adjudicator makes an error in calculating an amount payable to a party, the effect of which is to pay monies which are not due under the contract, that decision would not be void provided the Adjudicator had answered the issue that has been asked of him in which case a mistake in answering that issue did not prevent the decision being enforceable. In this case, the Adjudicator had not answered a question about the release of the retention monies.
However, the Court of Appeal refused the application for summary judgment on grounds that summary judgment should not be given to enforce an Adjudicator’s decision when the paying party has its own claims against the other party who is in liquidation (in this case Dahl-Jensen had gone into liquidation). In accordance with Rule 4.90 of the Insolvency Rules 1986 all claims and cross claims including the payment of the Adjudicator’s decision should be resolved in the liquidation in which full account can be taken and a balance struck.