Amey Wye Valley Ltd v The County of Herefordshire District Council

JurisdictionEngland & Wales
JudgeMr Justice Fraser
Judgment Date03 October 2016
Neutral Citation[2016] EWHC 2368 (TCC)
Docket NumberCase No: HT-2015000162
CourtQueen's Bench Division (Technology and Construction Court)
Date03 October 2016

2016 EWHC 2368 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Fraser

Case No: HT-2015000162

Between:
Amey Wye Valley Limited
Claimant
and
The County of Herefordshire District Council
Defendant

Piers Stansfield QC (instructed by Veale Wasbrough Vizards LLP) for the Claimant

Michael Curtis QC and Charles Pimlott (instructed by Pinsent Masons LLP) for the Defendant

Hearing dates: 14–15 September 2016

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Fraser Mr Justice Fraser

Introduction

1

This case concerns an adjudication, and the relevant adjustment for inflation purposes of sums paid to one party by the other, for works to the highways and roads of Herefordshire over a ten-year period between 2003 and 2013. There are two sets of proceedings between the parties, in each of which one party is the claimant and the other the defendant. These two sets of proceedings were ordered by Edwards-Stuart J to be heard together. They both arise out of the same contract, and indeed both arise out of the same adjudication, which was conducted by Mr Molloy some time ago and which led to a decision by him dated 26 February 2015. Both parties, the County of Herefordshire District Council ("HDC") and Amey Wye Valley Ltd ("Amey"), agreed a stay following that decision ("the Molloy Decision") in an attempt to agree their differences. However, those attempts did not succeed, the stay was lifted and both sets of proceedings were heard together over two days before me. HDC was successful in the adjudication before Mr Molloy, which was commenced by Amey.

2

One set of proceedings has action number HT-2016–145 and are conventional adjudication enforcement proceedings issued by HDC against Amey, seeking summary judgment under CPR Part 24 to enforce the Molloy Decision. The other set of proceedings has action number HT-2015–162, and were issued as CPR Part 8 proceedings by Amey against HDC. They essentially constituted an attempt at a pre-emptive strike by Amey to prevent HDC relying upon the Molloy Decision by seeking certain declarations in relation to that adjudication. Nothing turns upon which set of proceedings was issued before the other. Edwards-Stuart J approved a consent order dated 25 March 2015 staying the Part 8 proceedings issued by Amey ("the Amey Proceedings") which was, by the terms of that order, to remain in effect unless and until either party gave notice to the court and to the other party to lift the stay. That stay was finally lifted in June 2016.

3

On 8 July 2016, Edwards-Stuart J also gave further directions, which were again conventional ones for enforcement of an adjudicator's decision, and directed in paragraph 3 of his Order that the two sets of proceedings be case managed and heard together. I shall refer to the HDC proceedings which proceeded under CPR Part 7 as "the HDC Proceedings". Amey was also given permission to amend its Particulars of Claim in the Amey Proceedings.

4

It should be noted that at that stage there was no detailed evidence before Edwards-Stuart J on the substantive issues either in the HDC Proceedings or the Amey Proceedings. This much can be seen from the fact that the Order of 8 July 2016 gave directions in paragraph 6 for the service of substantive evidence and exhibits, and also from the provision in paragraph 9 of the Order that either party was given permission to make an application to sever the two claims and have them heard by the court separately. Neither party sought to do so, and therefore the hearing before me made no distinction between the two sets of proceedings.

5

In suitable cases, CPR Part 8 can be used to obtain final determination of an issue which is co-existent with the issue before an adjudicator, and it can also be used to obtain declarations concerning jurisdiction of adjudicators. Some losing parties in adjudications seek to use CPR Part 8 in this way. CPR Part 8.1(2) states as follows:

"A claimant may use the Part 8 procedure where –

a) he seeks the court's decision on a question which is unlikely to involve a substantial dispute of fact."

Here, three declarations were sought in the Particulars of Claim in the Amey Part 8 proceedings, once they were amended, although the first was split into a number of parts, and the second and third were in the alternative. The first is that the Molloy Decision is unenforceable because it is inconsistent with an earlier decision by another adjudicator called Mr Entwistle ("the Entwistle Decision"). Five particulars of that inconsistency are given, and they all go either to the interpretation of the Entwistle Decision by Mr Molloy, or Mr Molloy's actual calculations which are said to be wrong. The second declaration is that the Molloy Decision should be severed so that one error in one of the calculations which Mr Molloy made should be corrected so that "the Molloy Decision is not enforceable to the extent of the said error". The third declaration sought by Amey is that the:

"…calculation in the Molloy Decision is contrary to that required by the Contract and/or VOP3 in the respects set out…..above and, as a consequence of the final determination of these matters of contractual interpretation, the Molloy Decision should not be enforced".

6

To put both sets of proceedings into context, it is first necessary to explain the background to the two adjudications. The parties are agreed that the issues which arise do so in both sets of proceedings together. No distinction is made in the agreed issues regarding whether they arise in the HDC Proceedings or in the Amey Proceedings. Evidence was provided by Mr Woodburn of Amey, Mrs Ward, the Solicitor to the HDC employed by Legal Services, and Mr Hall who is employed by the HDC and who is the Head of Highways and Community Services. Mr Hall is also a Chartered Civil Engineer.

The dispute

7

HDC and a company called Herefordshire Jarvis Services Ltd entered into a contract, called a Service Delivery Agreement ("the SDA") on 1 September 2003 for repair and maintenance works to the highways and roads in Herefordshire. In due course, as part of the acquisition of Herefordshire Jarvis Services Ltd or its parent by the Amey group of companies, the name of the relevant contracting party was changed to Amey in 2007, although nothing turns on that. I will refer to the contracting party as Amey regardless of the previous name or the acquisition. By the terms of the SDA, Amey agreed to provide a range of services to HDC, broadly comprising highway maintenance and other construction and related works. The period for these services was to be ten years, ending on 31 August 2013. There was an option for that period to be extended for a further five years by HDC, but it was not exercised.

8

The SDA agreement itself expressly incorporated Option A of the Engineering and Construction Contract (2 nd edition 1995), together with Contract Data in Parts One and Two, and also expressly "together with and adjusted by the items listed in Schedule 5 ("the NEC Conditions")". That Schedule identified in Part A the Core Clauses, and Secondary Option Clauses, and expressly stated in clause 3:

"The Secondary Options Clauses included in this Contract are:….Option N: Price Adjustment for inflation, clauses N1.1, N2.1, N3.3, N3.1 and N4.1, as adjusted by Schedule 6."

9

Within the Contract Data Part One, Clause 4 Payment stated the following against a number of bullet points:

"1. The assessment interval is monthly.

2. The period within which payment is made is four weeks.

3. The proportions used to calculate the Price Adjustment Factor are as defined in Schedule 6."

10

Paragraph 4.3 of SDA Schedule 6 stated as follows:

"4.3 The Contract data required for option N is as follows:

Until such time as the Parties agree a mechanism to adjust prices in line with actual cost fluctuation via. open book accounting, the proportions used to calculate the Price Adjustment Factor are:

For the Highway Service as defined in Schedule 2: the following indices prepared by the Department of Trade and Industry and published as the Monthly Bulletin of Construction Indices (Civil Engineering Works) 1990, namely:

a) the Index of the Cost of Labour in Civil Engineering Construction

b) the Index of the Cost of Providing and Maintaining Construction Plant and Equipment.

c) The Indices of Construction Materials Prices.

Shall be used in the proportions listed in the table below

Construction Indices

Proportion

Labour

0.35

Plant

0.18

Aggregates

0.12

Cements

0.1

Coated Macadam and Bituminous Products

0.1

DERV Fuel

0.15

1.00

For all Works other than the Highway Service, the Retail Prices Index (RPI) prepared by the Office for National Statistics shall apply.

• The base date for indices is March 2003 with the date of assessment being 1 st April 2004 and every anniversary thereof."

[emphasis added]

11

The indices for the Highway Service referred to in Schedule 6, produced by what was then called the Department of Trade and Industry or DTI, are colloquially referred to as "the Baxter indices". The agreement contained within the SDA was for the provision of services of uncertain scope in terms of how much maintenance would be needed, the extent of which would undoubtedly vary (and which the parties knew would vary) over the ten years of the contract term. The payment provisions contained within the SDA...

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