Balfour Beatty Engineering Services (HY) Ltd v Shepherd Construction Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 01 September 2009 |
| Neutral Citation | [2009] EWHC 2218 (TCC) |
| Docket Number | Case No: HT-09-295 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 01 September 2009 |
[2009] EWHC 2218 (TCC)
Before: THE HONOURABLE MR JUSTICE AKENHEAD
Case No: HT-09-295
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Martin Bowdery QC (instructed by Mayer Brown International LLP) for the Claimant
Stephen Furst QC (instructed by Hawkswell Kilvington) for the Defendant
Hearing date: 11 August
Mr Justice Akenhead:
Introduction
Balfour Beatty Engineering Services (HY) Ltd, formerly known as Haden Young Ltd (“HYL”), was employed as a subcontractor by Shepherd Construction Ltd (“SCL”) to carry out mechanical and electrical work on a construction project at Castle Hill Hospital, Hull. In this Claim, HYL seeks to enforce the decision of an adjudicator, Mr Anthony Bingham, issued on 2 July 2009. In that decision, the adjudicator decided that SCL should pay HYL sums totalling £1,435,617.20.
SCL resists the enforcement proceedings not only on jurisdictional grounds but also on the basis that the adjudicator was biased and otherwise acted in breach of the rules of natural justice. The jurisdictional grounds raise an interesting albeit factually complex issue as to the extent to which an adjudicator may or may not within jurisdiction deal with an expanded scope of the dispute as referred to adjudication.
The Sub-Contract
SCL was the main contractor engaged by Health Care Solutions (Hull) Ltd to design and construct Oncology and Haematology facilities. The Sub-Contract was dated 23 April 2007. The original completion date under the Sub-Contract was 18 February 2008.
It is unnecessary to set out many of the sub contract terms. HYL by Article 1 undertook to design and construct, test, commission and complete the Sub-Contract Works. By Clause 5.2 (h), HYL undertook to procure that the Sub-Contract Works were performed “in a regular and diligent manner in accordance with the Programme for the Subcontract Works contained in Schedule 9”. Clause 14.1 was headed “Access during Construction”:
“… until the date of completion of the Subcontract Works under this Agreement… the Contractor grants a licence to the Subcontractor…to:
(b) enter upon the Sub contract Works Site…
solely for the purposes of implementing the Subcontract Works and carrying out the Subcontractor's Pre-Completion Commissioning.”
By Clause 19.1, HYL undertook to complete the Contract Works by 18 February 2008, subject to any entitlement to extension of time. Clauses 19.2 to 19.4 addressed the Programme. Clause 9.3 make clear that the initial Programme was set out at Schedule 9. Provision was made for further programmes to be produced, in particular if delays were not attributable to any acts, omissions or the defaults of HYL; the corollary was that if delays were attributable to other factors, HYL could be asked to produce a revised programme showing steps to be taken to eliminate or reduce delay. Clause 22B provided for liquidated damages to be payable by HYL for culpable delays.
Clause 41 addressed delays and extensions of time. Clauses 41.1 and 41.4 required HYL to give notices and provide various details when delays or Delay Events arose. The Delay Events included “any breach by [SCL] of any of the Contractor's express obligations under this Agreement to the extent in each case that any such breach is not caused, or contributed to, by the Subcontractor…” Subject to Clause 41 SCL was to fix a revised Contract Completion Date. Clause 41.1 states as follows:
“If, at any time, the Subcontractor becomes aware that there will be (or is likely to be) a delay in completion of the Subcontract Works, the Subcontractor shall forthwith give notice to the Contractor's Representative to that effect specifying the relevant delay or impediment. In relation to any such delay or impediment, if the Contractor's Representative is satisfied…that such delay or impediment has arisen as a result of the occurrence of a Delay Event, then…the Contractor shall allow the Subcontractor an extension of time equal to the delay or impediment caused by such Delay Event (taking into account reasonably foreseeable consequences of the Delay Events) and shall fix a new Contract Completion Date which shall replace the existing Subcontract Completion Date.”
It was primarily this clause that gave rise to some debate during the adjudications and in this claim as to the extent to which HYL was entitled to a prospective extension of time, that is, one which estimated in advance what delay was likely to be caused by the relevant Delay Events, as opposed to a retrospective extension of time, that is, one which determined how much delay, retrospectively, had been caused by the Delay Events.
Clause 56 provided for the dispute resolution procedures to be followed which were set out in Schedule 26. This Schedule provided for various stages of dispute resolution, reference to a “Liaison Committee”, followed by mediation, then adjudication and finally arbitration. So far as adjudication was concerned, the adjudicator was to be appointed either from a panel of experts or, if experts could not be agreed for the panel, the President of the Chartered Institute of Arbitrators was to appoint. The adjudication was to result in a decision within 28 days of the adjudicator's appointment, unless extended. The adjudicator was to state any reasons for his decision which was to be “final and binding on both parties who shall forthwith give effect to the decision.” It should be pointed out that the HGCRA 1996 statutory Scheme also requires reasons.
Schedule 9 comprised the programme referred to in the body of the Sub-Contract. It identifies seven zones and a number of different Blocks and mechanical and electrical commissioning occurring in the seven Zones. There were three Levels in the buildings and a number of Blocks split through the seven Zones. Zones 3 and 4 were on Level 01. So far as is material Zone 3 comprised Blocks W, which included the Pharmacy area, and X and Zone 4 comprised five blocks which included Block Z which was the Main Entrance. Some of these blocks (albeit not Block Z) extended to other Levels and Zones as well.
The Sub Contract Works were completed on 10 June 2008, some 16 weeks later than the agreed date of completion. Liquidated damages were deducted by SCL from sums otherwise due to HYL. Issues arose between the parties as to whether extensions of time were due to HYL. Consequently, on 19 September 2008, HYL served its Notice of Adjudication on SCL. The adjudicator in the First Adjudication was Mr Stephen Bickford Smith, a barrister well known in construction law circles (the “First Adjudicator”). Paragraphs 3.11 and 3.12 of the Notice clearly limited the dispute which was to be referred as follows:
“A dispute has therefore arisen in relation to SCL's right to deduct the sums for LADs and alleged Prolongation Costs…and HYL's entitlement to an extension of time to the Subcontract Completion Date owing to SCL's failure to provide access for HYL to commence its works in Block Z in accordance with the Subcontract Programme.
3.12 For the avoidance of doubt, although HYL contends that there are a number of grounds on which it is entitled to an extension to the Subcontract Completion Date; this Adjudication concerns only its entitlement to an extension of time owing to SCL's failure to provide access to Block Z in accordance with the Subcontract Programme.”
HYL's Referral Notice served on 26 September 2008 reflects this limited claim. Thus, the substantive relief claimed was for declaration that there should be an extension of time to “22 September 2008…as a result of SCL's failure to provide access to Block Z”.
The First Adjudicator issued his decision on the dispute referred to him in the First Adjudication on 4 November 2008. Essentially, he dismissed HYL's case that it was entitled to an extension of time by reason of delayed access to Block Z. He set out at Paragraph 59 the explanation given by HYL as the basis on which extension of time was claimed, which was that it was claimed on a prospective basis judged as at October 2007 when the extent of the alleged failure to provide access to Block Z became known. The claim was not pursued on a retrospective basis, that is looking at the events which had happened to see how much actual delay had been caused by the Delay Event relied upon.
In dealing with individual issues, which made up the dispute he considered the status of the Schedule 9 Programme and subsequent programmes issued by HYL in April and August 2007. He found at Paragraph 82 that the Schedule 9 Programme, while certainly a contractual document, did not have the effect contended for by HYL, which was that it determined HYL's right to be given access to particular areas of the site for specific periods. He found in Paragraph 87 that the purpose of the Programme was to enable the SCL Representative to monitor progress of the Sub Contract Works. He found in Paragraph 89 as follows:
“In my finding, SCL is obliged to make areas of the works available in sufficient time to enable HYL… to achieve the Programme dates. It is a question of fact in each case whether this obligation has been complied with or not.”
He found that the later programmes were revised programmes under the Sub-Contract (Paragraph 98). He then moved on to address the question as to whether HYL was entitled to claim an extension on the basis of the situation as at October 2007 or as to whether it was necessary to have regard to subsequent events. Because he also found that there were no valid delay notices under Clause 41 prior to October 2007, he found at Paragraph 112 that SCL's obligation to grant an extension under Clause 41.7 never arose, at least at...
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