Atkins Ltd v The Secretary of State for Transport
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 01 February 2013 |
| Neutral Citation | [2013] EWHC 139 (TCC) |
| Docket Number | Case No: HT-12-433 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 01 February 2013 |
[2013] EWHC 139 (TCC)
Mr Justice Akenhead
Case No: HT-12-433
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Justin Mort (instructed by Reed Smith LLP) for the Claimant
Daniel Lewis (instructed by the Treasury Solicitor) for the Defendant
Hearing date: 24 January 2013
Introduction
The Claimant, Atkins Ltd ("Atkins"), seeks to challenge pursuant to Section 68 of the Arbitration Act 1996 an arbitrator's award on the grounds that there was a "serious irregularity", said to be a failure on the part of the arbitrator to determine the or an issue put to him. Alternatively, Atkins seeks permission to appeal from that award.
The Factual Background
Much of what follows is taken from the uncontroversial parts of the arbitrator's award. The Secretary of State for Transport ("the Authority") and Atkins entered into what was called the "Area 6 MAC" Contract on 26 February 2008 ("the Contract"), by which Atkins was appointed as managing agent and contractor for Area 6 of the highways network for a contract period of 5 years, subject to extension for a further 2 years. Area 6 comprised trunk roads in East Anglia. Pursuant to the currently continuing Contract, Atkins is obliged to maintain the roads in Area 6. The work consists primarily of two functions, namely routine and cyclic maintenance and winter maintenance including remedying of minor defects in the roads and management of more substantial works, being the replacement or renewal of network assets, referred to as "schemes" or "renewal schemes". Maintenance is carried out by Atkins either through directly employed or sub-contracted labour. Schemes may be carried out by Atkins up to a certain value, over which they are carried out by others under the management of Atkins. For maintenance work, Atkins are to be paid a Lump Sum over the period of the contract, which is payable in tendered monthly tranches with additional payment for mobilisation and demobilisation. Maintenance includes an obligation to remedy defects which appear in the road surface, including potholes. The lump sum payment thus includes work required to remedy any defects, including potholes.
The Contract made provision by Clause 90.1 for disputes initially to be referred to adjudication but that, if a party was dissatisfied with the adjudicator's decision, it could refer the dispute to arbitration. The agreed arbitration procedure was the Institution of Civil Engineers ("ICE") Arbitration Procedure (1997).
A dispute arose between the parties relating to the circumstances in and the extent to which the costs of and occasioned by repairing potholes on the trunk roads in Area 6 should be paid for. Atkins claimed that the prevalence of potholes on the network was significantly greater than it anticipated and that it was accordingly entitled to additional payment pursuant to the compensation event provisions under clause 60 of the Contract, either under clause 60.1(11) (in relation to defects) or clause 60.1(22) (in relation to a breach of an implied term of the Contract). The Authority disputed Atkins' entitlement to any compensation event. On 3 February 2012, Atkins referred the dispute to an Adjudicator pursuant to Clause 9 of the Conditions; Mr. Andrew Bartlett QC, well known and respected in construction law circles (and elsewhere), was appointed as the Adjudicator. The parties agreed that the Adjudicator should determine the issue of principle as to whether, assuming the material facts were established, there was a compensation event.
Atkins put forward essentially three bases of claim, only one of which was pursued to arbitration. That was referred to as the "Secondary Case" which was, broadly, that potholes occurring after the Contract Date are defects within Clause 60.1(11) where they exceed in volume the number of potholes that it would have been reasonable for an experienced contractor or consultant to have allowed for. As the hearing involved effectively preliminary issues, no "number" of reasonably allowable potholes was identified. The Adjudicator in his decision of 9 March 2012 rejected the two other bases of claim but accepted the Secondary Case.
By Notice to Refer dated 4 April 2012 the Authority gave notice under clause 93.2 of the Contract disputing the Adjudicator's Decision accepting Akins' Secondary Case and referring the dispute to arbitration. Professor John Uff CBE, QC, also a well known and respected construction law practitioner and arbitrator, was appointed as arbitrator by agreement between the parties.
Essentially, Professor Uff reached a decision the other way in finding as he did in Paragraph 8.1 (ii) of his Interim Award issued on 22 November 2012 that "an excess volume of potholes beyond what it was reasonable to allow in the Contract is not capable of constituting "a defect in the physical condition of the area network" under Clause 60.1 (11) of the Contract".
Atkins is unhappy with the outcome of the arbitration and complains that the arbitrator did not effectively or even at all address a key issue upon which it relied. It argues in any event that the arbitrator either came to an obviously wrong decision or a decision that was in the event wrong and that permission to appeal should be granted and the appeal allowed.
The Contract
To understand the contentions of both parties, it will be helpful if I set out what the Contract provided. The Contract contained what are well-known within construction circles as the NEC3 Conditions, albeit somewhat modified. These Conditions are used throughout the construction and engineering industries and are highly regarded in the sense that they are perceived by many as providing material support to assist the parties in avoiding disputes and ultimately in resolving any disputes which do arise. There are some siren or other voices which criticise these Conditions for some loose language, which is mostly in the present tense, which can give rise to confusion as to whether and to what extent actual obligations and liabilities actually arise. Very few cases involving material disputes as to the interpretation of the NEC3 Conditions have made their way through to reported court decisions. The Contract incorporated "Contract Data" as well as various other documents. Atkins is referred to as the "Provider" whilst the "Service Manager" was the Authority's representative.
By Clause 20.1, the Provider "provides the Services in accordance with the Service Information". The Service Information sets out general obligations of the Provider including the obligation to:
"(i) ensure that the area network is operated and maintained to no lesser standards than is appropriate for a highway of the character of the Area Network (budgets permitting) and for use by the traffic which is reasonably to be expected to use the Area Network".
The obligation to provide asset maintenance was set out in Paragraph 3.3.3 (1) of the Service Information:
"The Provider maintains the area network asset in a condition which meets the requirements of the Routine and Winter Service Code and the Network Management Manual and Annex 13."
The Pricing Schedule makes it clear in Section A of the Preamble that the lump sums entered in the Pricing Schedule "include full or Routine and Winter Services, and for the general management of the contract". Annex 13 provides performance requirements for routine and winter service. The Routine and Winter Service Code incorporated into the Contract states, materially:
"(i) [Introduction] Routine and winter service is the name for work traditionally carried out under the name of routine and winter maintenance.
3.1.1 Routine and winter service operations include both cyclic and unplanned activities that may be used to keep the highway safe and serviceable, and are needed to preserve the asset value. These activities include reactive repairs and winter, flood and emergency responses but exclude preventative and programmed renewals maintenance …
Routine and winter service activities that are required for the operation of the Network are considered in 17 Technical Areas that make up 4 technical groups.
2.1.1 Defects occur in the condition of all aspects of the Network. The general definition of a defect to an asset is that it:
• Represents a deterioration from the normal condition,
• Prevents an item from acting in the intended manner,
• Is damaged,
• Is likely to increase the rate of deterioration of another item, or
• Causes an unintended as it or nuisance…
Category 1 defects are those that require prompt attention because there is an immediate or imminent risk of either one or more of the following:
• Injury to any party using or repairing the Network
• Significant disruption to the normal flow of traffic through the Network
• Structural deterioration of part of the Work…
Annex 2.1.1… contains examples of aspects of condition that may be considered as Category 1 defects"
Annex 2.1.1 specifically includes in a non-exhaustive list:
"Potholes and other local defect in the carriageway/footway/cycle track…"
Clause 11 contains definitions including the following:
(38) Lump Sum Duties are those of the Services which the Pricing Schedule states will be paid for on a lump sum basis
(58) The Price for Services Provided to Date is the total of
• for Lump Sum Duties
• the total of the monthly lump sum prices stated in section A of the Pricing Schedule for the period since the access date, including any notified extension to the contract period
• a proportion of the Lump Sum Price for mobilisation stated in Section A of the Pricing Schedule which is the proportion of the Mobilisation Period which has elapsed
• The Lump Sum ...
To continue reading
Request your trial
-
B.v Scheepswerf Damen Gorinchem v The Marine Institute The "Celtic Explorer"
...not as such ground a complaint under Section 68(2)(d) ( Petro Ranger [2001] 2 Lloyd's Rep 348, Atkins v Sec of State for Transport [2013] EWHC 139 (TCC), paragraph 24). (x) A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an "issue". It can......
-
The Secretary of State for the Home Department v Raytheon Systems Ltd
...the reasoning is wrong does not as such ground a complaint under Section 68(2)(d) ( Petro Ranger [2001] 2 Lloyd's Rep 348, Atkins v Sec of State for Transport [2013] EWHC 139 (TCC), paragraph 24). (x) A tribunal does not fail to deal with issues if it does not answer every question that qua......
-
RAV Bahamas Ltd and another v Therapy Beach Club Inc. (Bahamas)
...does not as such ground a complaint under section 68(2)(d) (Petro Ranger[2001] 2 Ll Rep 348, Atkins v Secretary of State for Transport[2013] EWHC 139 (TCC), para 24). (x) A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an “issue”. It can “......
-
Therapy Beach Club Incorporated v Rav Bahamas Ltd and Bimini Bay Resort Management Ltd
...not as such ground a complaint under Section 68(2)(d) ( Petro Ranger [2001] 2 Lloyd's Rep 348, Atkins v Sec of State for Transport [2013] EWHC 139 (TCC), paragraph 24). (x) A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an ‘issue’. It c......
-
Case Law On NEC3
...of these decisions and considers the court's evolving approach to the NEC3 form. Atkins Ltd v Secretary of State for Transport [2013] EWHC 139 (TCC), 1 February This case was concerned with the validity of a compensation event under a Highways Agency Managing Agent Contractor contract which......
-
Allocation of Risk in Construction Contracts (Updated)
...dealing with the small chance of occurrence of an event was considered in the case of Atkins Ltd v. Secretary of State for Transport [2013] EWHC 139 (TCC). Atkins’ claim was based on encountering a greater number of potholes than it had anticipated at the time it entered into the contract. ......