Able Construction (UK) Ltd v Forest Property Development Ltd

MR. JUSTICE COULSON:

This is an adjudication enforcement application under CPR Part 24 which raises a number of issues that are becoming a feature of these straightened times. From my particular vantage point, it appears that the current recession is providing the first real test of the adequacy of the adjudication regime introduced by the Housing Grants (Construction and Regeneration) Act 1996 since the initial flurry of cases when the legislation first came into force.

In addition, in view of the fact that neither the claimant nor the defendant has been able to afford to instruct those solicitors who represented them in the adjudication proceedings, and given that the defendant is unrepresented and has chosen not to attend today's hearing at all, I have ordered that a transcript of this short Judgment be prepared and provided to both parties.

The defendant (“Forest”) is a property developer. In January 2008, Forest engaged the claimant, Able Construction Ltd (“Able”), to carry out a residential development at 15 to 19 Northolt Road in Harrow, Middlesex. There is no issue that this contract was anything other than a written construction contract incorporating the JCT Conditions, 1998 edition.

A dispute arose between the parties which was referred to an Adjudicator, Mr. Andrew Dixon. By written decision dated 24 ^th September 2008, he decided that Forest should pay Able £130,927.17 plus VAT, plus interest of £5,151.97. He also ordered Forest to pay his fees of £6,356.95 plus VAT. That made a total of £166,464.33.

The dispute having been referred to adjudication, it appears that the contractual relationship between the parties came to an end. I understand that other contractors are now engaged in carrying out the next stages of the works. Notwithstanding that, the parties met following the adjudication decision and reached a written Settlement Agreement dated 9 ^th October 2008. This Agreement contained the following provisions:

“In consideration of Able Ltd. restraining itself from taking further legal action to enforce the Adjudicator's decision, Forest Ltd. agrees as follows:

(i) Pay £150,000 in cleared funds as follows:

(a) £40,000 on 10 ^th October 2008 by 12.00 p.m.;

(b) £60,000 on or before 31 ^st December 2008;

(c) £25,000 on or before 31 ^st January 2009; and

(d) £25,000 on or before 28 ^th February 2009.

(ii) Forest Ltd. shall pay the Adjudicator's fee of £6,259.95 plus VAT immediately.

(iii) On making the full payment in cleared funds it will be accepted by Able Ltd. in full and final settlement in all claims or liabilities so that neither Able Ltd. will sue Forest Ltd. or Forest Ltd. can sue Able Ltd. on any matter related to the Timber Carriage Project which is the subject of these proceedings.

(iv) If Forest Ltd. fails to pay Able Ltd. the amount payable in full under the adjudication decision as mentioned above, Able Ltd. shall take such legal advice as it sees fit to enforce the adjudication decision or any balance unpaid together with all other liabilities as stated in the Final Account without further reference to Forest Ltd. with full costs and interest.”

The first instalment of £40,000 was paid on 10 ^th October 2008. I am also informed that the Adjudicator's fees were paid by Forest at the same time. However, the second instalment of £60,000 was not paid by 31 ^st December 2008 and has not been paid subsequently. There is no dispute on the papers that Forest are therefore in breach of the terms of the Settlement Agreement.

In consequence of Forest's default, on 7 ^th January 2009 Able commenced proceedings pursuant to CPR Part 8 in the TCC for the outstanding sum due under the Settlement Agreement. The claim was therefore limited to £110,000. On 9 ^th January 2009 Ramsey J gave directions for the early hearing of the Part 24 application.

In a letter dated 23 ^rd January 2009, and received by the court yesterday, Forest sought to adjourn the hearing of the Part 24 application fixed for today. That application was opposed, and so Forest were informed that any such application would have to be made orally at this hearing this morning. Forest have, for reasons which are unknown, chosen not to attend this morning. Having considered all of the relevant material, it seems to me that there is no reason to adjourn the hearing. All the court papers have been properly served on Forest, and no cogent reasons have been put forward as to why the hearing should be adjourned or (as we shall see), what possible defence Forest can have to the Part 24 claim. This is an application to enforce an Adjudicator's decision which is now four months old, and which has been triggered by Forest's admitted default in respect of the terms of the Settlement Agreement, which they agreed in October. There is no basis for an adjournment.

I therefore move on to consider the merits of the enforcement application. The starting point, of course, as with any application to enforce the decision of an adjudicator, is that subject to arguments about jurisdiction and natural justice, the TCC will ordinarily enforce the decision on a summary basis: see the Court of Appeal decisions in Bouygues (UK) Ltd. v Dahl-Jensen (UK) Ltd. [2000] BLR 522 and Carillion Construction Ltd. v. Devonport Royal Dockyard Ltd. [2005] EWCA Civ 1358. No question of jurisdiction arose either in the adjudication itself or subsequently, when the parties were both represented by solicitors. No alleged breach of natural justice has been identified in any of the documents. In short, no defence of any kind to the substantive claims made by Able has been put forward by Forest in any of the documents that I have seen. On that basis, therefore, this would be appear to be an adjudicator's decision which should be enforced.

The first issue which does arise on the facts of this case is whether or not the subsequent Settlement Agreement has any effect on Able's right to pursue this claim for summary judgment under CPR Part 24. It has been suggested in the past that a settlement or compromise agreement may not be a construction contract within the meaning of the 1996 Act: see, for example, Shepherd Construction Ltd. v. Mecright Ltd. [2000] BLR 489 and Latham Construction Ltd. v. Brian and Ann Cross [2000] CILL...