Beumer Group UK Ltd v Vinci Construction UK Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fraser |
| Judgment Date | 13 September 2016 |
| Neutral Citation | [2016] EWHC 2283 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 13 September 2016 |
[2016] EWHC 2283 (TCC)
The Honourable Mr Justice Fraser
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Buildings, London, EC4A 1NL
Michael Curtis QC (instructed by Silver Shemmings LLP) for the Claimant
Christopher Lewis and Felicity Dynes (instructed by Fenwick Elliot LLP) for the Defendant
Hearing dates: 5 September 2016
Introduction
This is an application by Beumer Group UK Ltd ("Beumer") against Vinci Construction UK Ltd ("Vinci") for certain declarations arising as a result of an adjudicator's decision dated 17 June 2016 by Dr Chern. That decision followed a second adjudication between Beumer and Vinci (which I shall refer to as "BV II"). Dr Chern was also the adjudicator on the first adjudication between the parties, the details of which are not relevant to this application.
Beumer and Vinci had contracted for certain works to be performed by Beumer at Gatwick Airport, namely a Works Package that comprised the Baggage Handling System. That contract was dated 8 November 2012. Vinci was the Main Contractor and Beumer was the Sub-Contractor. The Main Contract works concerned the South Terminal Baggage and Pier 1 — Phase 2 works at Gatwick, and the Employer is Gatwick Airport Ltd ("GAL"). The Main Contract is based upon the NEC 3 Engineering and Construction Contract, Option A. The Sub-Contract, as might be expected, is based upon the NEC 3 Engineering and Construction Sub-Contract, Option A. Clause W2 is the relevant option chosen by the parties in respect of dispute resolution. Further details concerning Clause W2 are dealt with below. Effectively, Beumer was appointed by Vinci to perform the entire baggage handling system works, including what is called a Tilt Tray Sorter. The value of Beumer's works is not agreed, but is in the region of approximately £30 million with further claims. The sub-contract value is therefore sizeable. An Interim Final Account Statement was agreed by the parties in October 2014 but works continued after that, and the parties remain in dispute. The effect of the agreement in that Interim Final Account Statement upon the parties' contractual relationship was considered by the adjudicator in the first adjudication.
Beumer also had a sub-sub-contract with another company called Daifuku Logan Ltd ("Logan") in relation to the works, and Logan's works comprised the Tilt Tray Sorter. Beumer and Vinci, and also Logan and Beumer, each found themselves in dispute with their respective contracting parties about certain aspects of the works under the sub-contract, and the sub-sub-contract, respectively. There was an adjudication between Logan and Beumer in which Logan referred a particular dispute to adjudication, the adjudicator being Dr Chern. He was one of three individuals identified in the Sub-Contract data as being a potential adjudicator for disputes under both the Main Contract and the Sub-Contract. Logan and Beumer agreed between themselves that he should act as adjudicator on the first adjudication between them (which I shall refer to as "BL I"). The details of BL I are not relevant, but its existence is, because it explains the way in which Dr Chern came to be the adjudicator in both adjudications which are relevant to this application.
The dispute between Beumer and Vinci which was the subject matter of BV II was whether three instructions issued by Vinci, namely CI 114, CI 115 and CI 116, all issued on 9 March 2016, constituted Compensation Events under the Sub-Contract. Dr Chern decided that they were, and made certain declarations in Beumer's favour to this effect, and ordered that Beumer pay his fees, with the sum paid to be reimbursed by Vinci to Beumer. Beumer made that payment to him, but Vinci did not reimburse Beumer. Beumer therefore seeks summary judgment under CPR Part 24 on its application for declarations by the court commensurate with those decided by the adjudicator, and also seeks payment to it by Vinci of the sums paid by Beumer to him as his costs. As a result of the matters explained further in the next section of this judgment, Vinci opposes enforcement of the decision, relying upon breaches of natural justice. Other, habitual, defences were deployed by Vinci in the adjudication itself, such as non-crystallisation of the dispute affecting Dr Chern's jurisdiction, but these are not relied upon to resist enforcement by the court.
The witness evidence before the court comes from Mr Bhabra for Beumer, Mr Francis and Mr Ashwood for Vinci, and from Mr Silver for Beumer in reply. I am grateful to Mr Curtis QC for Beumer, and both Mr Lewis and Ms Dynes for Vinci, for their clear and succinct submissions, both written and oral, which helped the prompt resolution of the hearing within a period of half a day — a period that a pessimist faced with the volume of material might have concluded was far too short.
The facts
Put briefly, on the same day that Beumer commenced BV II against Vinci, namely 18 March 2016, it also commenced a second adjudication ("BL II") against Logan. That adjudication was also before Dr Chern. It concerned similar issues, although within the context of the Logan sub-sub-contract, namely failure by Logan to complete its works by particular dates and a claim by Beumer for liquidated damages for delay. It therefore concerned delay. That adjudication was conducted at the same time as BV II. However, Vinci did not know that there was a simultaneous adjudication ongoing between Beumer and Logan in which Dr Chern was the adjudicator, or of the content of the submissions Beumer made to Dr Chern in that adjudication. Neither Beumer nor Dr Chern notified Vinci of this other adjudication, and Dr Chern did not disclose to Vinci that he was acting contemporaneously as an adjudicator in another dispute to which Beumer was a party (whether on the same project, or at all).
Dr Chern had been named by Beumer as the potential adjudicator for the dispute in BV II, based upon his having been chosen by both Beumer and Vinci to be the adjudicator for BV I, the first adjudication between the parties, and because he was one of the three individuals named in Option W2. He was in fact the only one of those three with availability at the time of BV I. When that had occurred, in February 2015, Vinci were not told by Beumer that Dr Chern had already been appointed as the adjudicator in BL I. His involvement in adjudications between Beumer and Logan was therefore not brought to Vinci's attention until Beumer's solicitors responded to queries from Vinci's solicitors in July 2016.
The grounds of resistance to enforcement
Vinci argues that by virtue of being the adjudicator in BL II, Dr Chern must have had, or acquired, background knowledge concerning the subject matter of BV II. Vinci submits that no opportunity was available to it to consider that information, which it is said was plainly relevant, and make submissions about it. As a subsidiary or associated point, Vinci maintains that it was unfair that no disclosure was given to it by Beumer of the material deployed, relevant to the Beumer-Vinci dispute, in BL II. Further, Vinci complains that Beumer advanced factually inconsistent cases in the two adjudications, BV II and BL II. In BV II, Beumer maintained that Airport Operational Readiness ("AOR"), an important date in the Sub-Contract relevant to completion, had been achieved by 16 December 2015. In BL II, part (if not the central plank) of Beumer's case against Logan was that Logan's works (which formed part of Beumer's works) had not achieved the condition of AOR by at least 12 April 2016, hence could certainly not have been in the condition of AOR on the date in December 2015 it maintained (to Vinci) in BV II. These rather starkly contrasting positions taken by Beumer were not brought to the attention of Dr Chern during BV II by Vinci in its submissions, for the obvious reason that Vinci did not know that BL II was even taking place, still less the content of the substantive submissions being made to Dr Chern by Beumer. Although this submission is not made before me expressly, Dr Chern would have known that Beumer's position in the two adjudications was different, because he was conducting both adjudications.
The relief sought in BV II by Beumer concerned declarations that each of CI 114, CI 115 and CI 116 were compensation events, that Beumer had been prevented from commencing its works, that Beumer had not caused any delay, that the CIs were changes to the Works Information and that the Subcontract Completion Dates should be extended to named dates between 27 June 2016 and 11 July 2016, or such other dates as the adjudicator may decide. In other words, one of the components of that relief was a claim for an extension, or extensions, of time, and the date of AOR was an important ingredient in the length of extension sought. In BL II, one of the elements of relief sought was liquidated damages for delay and payment of costs in respect of a failure to meet the Condition stated for a Key Date (namely to achieve Completion excepting AOR trials) pursuant to Clause 25.3 of the sub-sub-contract, together totalling approximately £2.8 million, and again the date of AOR was an integral component of considering the state of the works at particular dates so that delay could be considered, as delay affects the calculation of liquidated damages and the the applicability of a claim under Clause 25.3.
Beumer submits before me that there was no obligation upon either Beumer or Dr Chern to inform Vinci either of the existence of BL II, or its content; that Vinci had no right to see the documentation before Dr Chern in that adjudication; and that there was no breach of natural justice. It is...
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