Benaim (UK) Ltd v Davies Middleton & Davies Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 15 June 2005 |
| Neutral Citation | [2005] EWHC 1370 (TCC) |
| Docket Number | No.HT-05–71 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 15 June 2005 |
[2005] EWHC 1370 (TCC)
His Honour Judge Peter Coulson Q.C.
No.HT-05–71
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT
St. Dunstan's House
MR. DAVID SEARS Q.C. (instructed by Berrymans Lace Mawer) appeared on behalf of the Applicant/Claimant.
MR. STEPHEN FURST Q.C. (instructed by Burges Salmon, Bristol) appeared on behalf of the Respondent/Defendant.
(As Approved by the Judge)
CONTENTS OF JUDGMENT
| A INTRODUCTION | Paras 1–4 |
| B THE SUBSTANTIVE DISPUTE | Paras 5–10 |
| C THE ARBITRATION | Paras 11–14 |
| D THE AWARD | Paras 15–21 |
| E THE APPLICATION UNDER SECTION 24: REMOVAL | Paras 22–49 |
| The Relevant Sections of the 1996 Act | 22–26 |
| The Basis of the Application to Remove the Arbitrator | 27–28 |
| The Complaint | 29–32 |
| The Ambit of the Hearing in January and March 2004 | 33–42 |
| The Arbitrator's Findings | 43–46 |
| The Arbitrator's Conduct | 47–48 |
| Summary on Delay | 49 |
| F THE APPLICATION UNDER SECTION 68: SERIOUS IRREGULARITY | Paras 50–104 |
| The Relevant Sections of the 1996 Act | 50 |
| Serious Irregularity | 51–60 |
| Substantial Injustice | 57–61 |
| Ground 1/Buildability | 62–67 |
| Ground 2/The Length of the Deviator Block | 68–73 |
| Ground 3/Mr. Hambly's Inexperience | 74–75 |
| Ground 4/The Reason for the Change in Design 76–83 | |
| a) Point Not Put to Mr. Brennan | 78–80 |
| b) Mr. Nicholson's Evidence | 81 |
| c) Absence of Reasons | 82–83 |
| Ground 5/The Finite Element Analysis | 84–87 |
| Ground 6/No Detailed Weight Calculation | 88 |
| Ground 7/The Design of the Reinforcement | 89 |
| Ground 8/Delay | 90 |
| Ground 9/ Miscellaneous Allegations | 91–93 |
| Ground 10/Failure To Provide Reasons | 94–103 |
| a) The Detail of the Award | 98 |
| b) The Caveat in the Award | 99–100 |
| c) The Nature of the Questions | 101–103 |
| Summary/Serious Irregularity | 104 |
| G THE APPLICATION UNDER SECTION 69: APPEAL | Paras 105–158 |
| The Relevant Section of the 1996 Act | 105–106 |
| Question of Law | 107–109 |
| Obviously Wrong | 110 |
| Just and Proper for the Court to Determine | 111–112 |
| Ground 1/Schedule of Principal Quantities | 113–139 |
| a) To Whom Was The Obligation Owed | 114–121 |
| b) Absolute Obligation or Skill and Care | 122–127 |
| c) Comparison with The Final Design | 128–131 |
| d) Criticism Based on Increased Quantities | 132–126 |
| e) The Lack of Modifications Between ADP and TDP | 137–139 |
| Ground 2/Failure to Carry Out a Strut and Tie Calculation | 140–144 |
| Ground 3/Failure to Check the Layout of the Pre-Stress | 145–148 |
| Ground 4/The Negligent Design of the Reinforcement | 149–153 |
| Ground 5/Delay | 154–158 |
| H CONCLUSIONS | 159–160 |
HIS HONOUR JUDGE PETER COULSON QC:
A INTRODUCTION
By an Arbitration Claim Form issued on the 21 st March 2005 the Claimant, Benaim (UK) Ltd., referred to throughout the papers as RBA, seeks a number of remedies arising out of an interim Award dated the 21 st February 2005. The Award was produced by an Arbitrator, Mr. Peter Chapman, the Second Defendant in these proceedings. The arbitration had been commenced against RBA by Davies Middleton & Davies Ltd., in administrative receivership, referred to throughout as DMD, and centred on complaints by DMD about RBA's management of the design process of the new A13 viaduct in Dagenham. The Award, which did not concern quantum, was very largely in DMD's favour and contained a number of important findings against RBA.
In these proceedings RBA seek an order removing the Arbitrator under s.24 of the Arbitration Act 1996 ("the 1996 Act") on the grounds that he failed properly to conduct the proceedings leading up to the Award and, as a result, caused RBA substantial injustice. Further and in the alternative, RBA seek permission to apply to set aside the award pursuant to s.68 of the 1996 Act on the grounds of serious irregularity, including the Arbitrator's alleged failure to comply with the general duty imposed upon him by s.33 of the Act. Finally, RBA seek permission to appeal on certain questions of law arising out of the award pursuant to s.69 of the Act. The parties are agreed that, in respect of the orders sought pursuant to ss.68 and 69, both the applications for permission, and the substantive applications, should be dealt with together.
Following the exchange of evidence between RBA and DMD—the Arbitrator has chosen not to play an active part in these proceedings—there was a hearing before me on the 10 th and 11 th June 2005. The majority of that time was taken up with the parties' submissions on the linked applications under ss.24 and 68 of the 1996 Act. Although there is a considerable amount of material before the Court, I have been greatly assisted in considering these applications by the clear analysis adopted by both Mr. Sears Q.C. for RBA, and Mr. Furst Q.C. for DMD.
I propose therefore to set out briefly the substantive dispute between the parties (Section B below) and the history of the arbitration (Section C). I set out some of the key passages of the Award in Section D. I then go on to deal with each of the three applications in turn in a sequence which is different to that adopted by the parties during the course of argument. This is because, in my judgment, on an application of this sort, it is logical to take the application under s.24 first (Section E), since, if the Arbitrator is removed, that is the end of the arbitration for all practical purposes. Next I consider the application to set aside the Award as a result of the allegations of serious irregularity under s.68 (Section F below) since that application, if successful, would render the Award, or substantial parts of it, a nullity. Only then do I turn to consider the appeal under s.69 (Section G below) because that application assumes the continued role of the Arbitrator and an extant Award, and is simply designed to ensure that the Award is remitted to the Arbitrator on particular questions. A short summary of my conclusions is set out at Section H below.
B THE SUBSTANTIVE DISPUTE
Together with Tarmac Construction Ltd ("TCL"), DMD and RBA were involved (in their different ways) in tendering for and carrying out the design and construction of the A13 viaduct in Dagenham. This major civil engineering project comprised a six-lane elevated viaduct structure that crossed a number of roads and railway lines as well as the vast Ford assembly plant.
The intention was that TCL would construct the substructure of the viaduct, in particular the foundations and piers; DMD would construct the superstructure of the viaduct, in particular the pre-cast concrete segments; and RBA would design both the substructure and the superstructure. However, it is important to note that the main contract for the design and construction of the entire project was always going to be between the Secretary of State for Transport, as the employer, and TCL, as the main contractor. In essence, therefore, DMD were the proposed subcontractors to TCL in respect of the superstructure and RBA were the proposed subcontractors to TCL and DMD in respect of the design.
After at least one earlier design, referred to as the ADP, RBA produced a Tender Design Proposal ("TDP") in respect of the viaduct, which was accepted by the Highways Agency on the 20 th August 1996. RBA also produced a Schedule of Principal Quantities ("SPQ") which was intended to identify and quantify the works encompassed within the TDP. DMD produced a fixed price tender for the superstructure work based on the TDP and SPQ, which was accepted by TCL, who in turn submitted a fixed price tender for the whole of the design and construction works to the Highways Agency. On the basis of that tender TCL were then engaged by the Secretary of State for Transport on the 30 th August 1996 to design and construct the viaduct.
As is common in the construction industry, the legal relationships between TCL, DMD and RBA were not formalised until a later stage. On the 17 th June 1997 DMD entered into a Joint Venture Agreement ("JVA") with TCL, pursuant to which they agreed to design and construct the superstructure of the viaduct for £14,951,461.44. On the same date DMD and TCL entered into a Design Agreement with RBA pursuant to which RBA agreed to carry out a range of services relating to the design of the viaduct. Both contracts were expressly made retrospective and therefore covered some elements of work and services, such as RBA's production of the TDP and the SPQ, which had already been performed.
It was DMD's case in the arbitration that the problems began in about November 1996 when, at a meeting on the 7 th November, RBA's representatives told Mr. Davies of DMD that the TDP was not buildable. DMD also relied on RBA's letter of the 13 th January 1997, which referred to a number of changes to the TDP as offering "the most economic and buildable solution for this project".
It is common ground between the parties that the TDP was changed in a variety of ways in late 1996 and early 1997. The issue between the parties was how and why those changes came about. It was DMD's case that, effectively, the changes had resulted from inherent inadequacies within the TDP and, since their tender had been based upon that TDP, they had suffered losses of £5 million or more as a result. It was RBA's case that there was nothing wrong with the TDP and the changes that occurred were part of usual design development.
C THE ARBITRATION
DMD commenced...
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