AWG Construction Services v Rockingham Mortor Speedway Ltd
| Jurisdiction | England & Wales |
| Judge | JUDGE TOULMIN CMG Q.C. |
| Judgment Date | 05 April 2004 |
| Neutral Citation | [2004] EWHC 888 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | HT03444 |
| Date | 05 April 2004 |
[2004] EWHC 888 (TCC)
His Honour Judge Toulmin Cmg Q.c.
(Sitting as a Judge of the High Court)
HT03444
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
St. Dunstan's House
MR. M. BOWDERY Q.C. (instructed by Eversheds LLP) appeared on behalf of the Claimant.
MR. R. TER HAAR Q.C. (instructed by Lovells) appeared on behalf of the Defendant.
(As approved by the Judge)
In this action the particulars of claim dated 16th December 2003 relate to the enforcement of a decision by the adjudicator, Mr. Allan Wood, dated 18th November 2003.
AWG Construction Services Limited (formerly Morrison Construction Limited) (AWG) seeks the following relief:
(1) An order that the adjudicator's decision dated
th November 2003 be set aside on the grounds that the adjudicator had no jurisdiction to make any such decision; and/or
(2) An order that the adjudicator's decision dated
th November 2003 be set aside because the adjudicator failed to act impartially and failed to comply with the principle of natural justice; and/or
(3) An order that the adjudicator's decision dated
th November 2003 should not be enforced because there is credible evidence that if the decision is reversed in any subsequent proceedings the defendant will not be able to pay the sums awarded.
I shall deal with the third issue after considering the first two issues.
By way of defence and counterclaim, originally filed on
nd December 2003, but subject to later amendment, Rockingham Motor Speedway Limited (Rockingham) denies the claimant's claim, and counterclaims by way of summary judgment the sum of £1,835,061.52, being the total sum awarded by the adjudicator set out in paragraph (xi) of the adjudicator's decision.
By a late amendment, Rockingham seeks to counterclaim in the alternative the sum of £54,328.73 in relation to matters not in dispute. It contends that I should enforce this part of the decision even if I find that the adjudicator's decision on the main part of the claim is unenforceable because I find that the adjudicator lacked jurisdiction, and/or acted in a way that was contrary to natural justice.
Rockingham says that the dispute about the oval track was effectively an entirely separate issue heard, by agreement between the parties, at the same time as the issues about which no objection has been taken to the adjudicator's decision.
In response, AWG says that I should make no such order because the adjudicator made one award whose components all stand or fall together. They are part of the award and if one part of the award is struck down, then the whole award should fall.
The parties have agreed a list of issues a follows:
(1) Is the decision unenforceable on the grounds that what the adjudicator decided in his decision was something that was not referred to him for a decision and therefore his decision was made without jurisdiction?
(2) Is the decision unenforceable because it was made in breach of the principles of natural justice and the principles of fairness and impartiality because:
(2.1) the adjudicator adopted or introduced new matters and new claims upon which he based his decision which the claimant did not have sufficient opportunity to consider and respond to;
(2.2) the adjudicator allowed the defendant to introduce new matters and new claims upon which he based his decision after the adjudication had commenced and late on in the process which the claimant did not have sufficient opportunity to consider and respond to;
(2.3) the matters referred to the adjudicator by the defendant, whether a single dispute or multiple disputes, were not suitable for the adjudication procedure set out in the scheme and could not be and were not determined in accordance with the principles of natural justice or the principles of fairness and impartiality?
(3) If the court decides in the claimant's favour on issues (1) and/or (2) above:
(3.1) can and should the adjudicator's decision be separated so that those parts of the decision relating to the Rockingham Building and/or the Tunnels, and/or any other aspect of the decision which might be isolated from those parts of the adjudicator's decision which deal with "additional drainage" can be enforced; or
(3.2) is the entire decision invalid?
(4) If the court decides in the defendant's favour on issues (1) and (2), is the decision or any part of it enforceable? Should the court order a stay of execution pending final determination of the matters referred to the adjudicator in the arbitration proceedings?
(5) If the court decides, in respect of issue (4), that a stay of execution should be ordered then what, if any, condition should be attached to such an order?
In relation to Issue 1 AWG contend that the adjudicator decided matters that were not referred to him. Rockingham contest this. In relation to Issue 2 AWG contend that the adjudication was unfair for the reasons set out. Rockingham disagree.
I am informed by the parties that issue 2.3 was prompted by some passing comments of mine at the case management conference. Those, in turn, were prompted by references in the correspondence to AWG's claim that the adjudicator would not be able to consider the issues in the time available for the adjudicator to reach a decision.
It seemed to me that as disputes referred to adjudication have become ever more complex, and referrals are made (in contrast to the original purpose of the legislation) long after the relationship between the parties is at an end, there might be a conflict for an adjudicator between reaching a decision within the stringent time limits permitted under ss.108 and 109 of the Housing Grants Construction and Regeneration Act 1996 (the Act), and the adjudicator's duty under the Act to act impartially.
This is a case where the claimants have so far spent £508,200 and the defendants over £600,000 on the adjudication of this dispute and its enforcement. No doubt in many cases the adjudication process required by the ICE contract saves the parties money as compared with other forms of dispute resolution. But in a significant number of cases it clearly does not succeed in this objective. I recognise, of course, that if the dispute proceeds to mediation, arbitration or litigation in the courts, some of the preparation that has taken place will be useful in those other forms of dispute resolution.
I also note that, unlike the time when the Act was passed when there were very significant delays in the courts, the position now is that if the parties had started court proceedings in May 2003, those proceedings would, in all probability, by now have reached a decision at first instance.
In this case the chosen means of final resolution is arbitration. Again, had arbitration proceedings been started in May 2003, the parties would, if they had pressed on with the arbitration diligently, have reached a decision by April 2004. The facts.
It is necessary to set out the facts of the original dispute and the complex history which followed.
By an agreement dated 14th August 2000 Rockingham entered into a contract with AWG's predecessors in title, Morrison Construction Limited, for the design and construction of a new motor racing track and ancillary facilities near Corby in Northamptonshire.
The project consisted of the construction of two race tracks an oval track (the Oval) for the purpose of staging competition high speed oval racing, which is modelled on American-style Indy car racing, and a conventional road racing circuit contained within the Oval (the infield track).
In addition, AWG agreed to design and build a four-storey building at the tracks which would act as a grandstand. The works also included two pedestrian underpasses or tunnels running under the Oval allowing access to the pit area.
On 2nd April 2001 the parties signed an addendum to the contract. AWG handed over the works on a piecemeal basis and achieved practical completion by September 2001.
There were problems with the Oval track, which Rockingham say became apparent at an event in September 2001 in the course of the first CART race when there was seepage of water through to the surface of the Oval which caused disruption to the race.
Rockingham claimed in the adjudication that it should be reimbursed by AWG for lost revenue from ticket sales and for the cost of providing refunds on 21st September 2001. The adjudicator rejected the first claim, but awarded £123,368.88 out of the £210,637.55 claimed for refunds on 21st September 2001.
On 23rd November 2001 the project manager issued the Certificate of Payment No. 29 showing a payment due to AWG of £2,846,686. On 5th December 2001 Rockingham served a withholding notice in the sum of £2,800,000 on the grounds that there was water seepage through the Oval which made it unsuitable for use as a high speed oval racing circuit.
AWG challenged the withholding.
By the end of April 2002, following discussions between the parties concerning release of the monies withheld by Rockingham, and the extent of the remedial works to be undertaken, AWG and its track sub-contractor Colas had finished the remedial works to the oval. There was then a dispute as to whether the remedial works had dealt with the problem. Rockingham released £2.4 million to AWG, but continued to withhold £400,000. AWG maintained that the remedial works had been successful.
On 14th September 2002 the second CART race was held at the Oval. The race went ahead without problems....
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