Cofely Ltd (Claimant) Anthony Bingham (1st Defendant) Knowles Ltd (2nd Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 17 February 2016 |
| Neutral Citation | [2016] EWHC 240 (Comm) |
| Docket Number | Case No: 2015-000555 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 February 2016 |
[2016] EWHC 240 (Comm)
Mr Justice Hamblen
Case No: 2015-000555
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Vincent Moran QC (instructed by Stephenson Harwood) for the Claimant
Karen Gough (instructed by Browne Jacobson) for the 1 st Defendant
Jonathan Acton Davis QC (instructed by Wheelers) for the 2 nd Defendant
Hearing dates: 8 February 2016
Introduction
The Claimant ("Cofely") seeks an order that the First Defendant ("Mr Bingham") be removed as arbitrator from an ongoing arbitration between the Claimant and the Second Defendant ("Knowles") pursuant to section 24(1)(a) of the Arbitration Act 1996 ("the Act"), on the grounds that circumstances exist that give rise to justifiable doubts as to his impartiality. Those doubts about his impartiality are alleged to involve apparent bias, not actual bias.
The Defendants dispute the existence of such circumstances and question whether Cofely has lost the right to raise this objection under section 73 of the Act.
The background facts
Cofely is a major construction company.
Knowles is a well known firm of claims consultants in the construction field.
Mr Bingham is a very experienced arbitrator and adjudicator in construction disputes. He worked in the construction business for a number of years before selling his business in 1988 so as to concentrate on his arbitration career. He is a qualified barrister and has practised from 3, Paper Buildings since 1991–2.
Cofely East London Energy Limited (a company related to Cofely) entered into a contract with Stratford City Developments Limited and the Olympic Delivery Authority (the "Employers") to design, build, maintain and operate district energy services to the Olympic Park and Westfield Shopping Centre in Stratford, London (the "Concession Agreement").
Various disputes arose between the parties under the Concession Agreement and Cofely appointed Knowles to advise upon and then progress its claims arising under it for an extension of the time (the "Time Claim") and associated additional costs caused by the delay in completion of the works (the "Money Claim").
Knowles was initially appointed by Cofely pursuant to a written agreement dated 19 August 2010 ("the Appointment") and Knowles was subsequently paid £1,187,082 by Cofely on a time basis pursuant to the Appointment to prepare the Time Claim and Money Claim on Cofely's behalf.
Cofely, however, became concerned about the escalating costs and delay in Knowles pursuing the Time Claim and Money Claim and new terms of remuneration were therefore discussed between the parties.
This culminated in the conclusion of a success fee agreement dated 26 October 2011 (the "Success Fee Agreement"), pursuant to which Knowles was entitled to payment of certain sums and, potentially, a success fee on the occurrence of certain events (set out at sub-headings entitled "AGREEMENT" Nos 1–6).
An adjudication was thereafter commenced by Knowles on behalf of Cofely against the Employers in relation to the Time Claim ("the Adjudication") but, prior to the conclusion of the Adjudication, Cofely says that it became concerned about the advice being provided by Knowles and the approach being taken in the Adjudication. It therefore entered into direct settlement negotiations with the Employers and reached a settlement of the Time Claim, the Money Claim and other issues that had arisen under the Concession Agreement.
Knowles then alleged that in settling their claims without the involvement of Knowles, Cofely had acted in breach of various provisions of the Success Fee Agreement and claimed at least £3.5 million was payable as fees by Cofely.
The Arbitration proceedings
The arbitration agreement in the Success Fee Agreement provided that:
"The Success Fee Agreement and any dispute or claim of whatever nature arising out of or under or relating to this Success Fee Agreement shall be governed by English law and is to be and hereby is referred to arbitration pursuant to the Arbitration Act 1996. Such arbitration shall commence on the giving of notice and on the application by either of the parties to the Chartered Institute of Arbitrators or the Royal Institution of Chartered Surveyors for the appointment of an arbitrator".
On 21 January 2013, Knowles gave notice of arbitration to Cofely and applied to the Chartered Institute of Arbitrators ("CIArb") for the appointment of an arbitrator. It was stated that it was preferable that the arbitrator had both quantity surveying ("QS") and delay analysis experience and the appointment of Mr Bingham was sought.
On 30 January 2013, Cofely's solicitors, Stephenson Harwood ("SH"), wrote to the CIArb stating that it did not agree to the appointment of Mr Bingham, explaining that whilst it was agreed that the arbitrator should have legal experience it was not considered that experience in QS or construction delay was needed. It was proposed that Ms Krista Lee, a barrister at Keating Chambers, be appointed.
On 4 February 2013, the CIArb confirmed the appointment of Mr Bingham as arbitrator.
Knowles served its Particulars of Claim on 2 April 2013 and at the same time made an application for a Partial Award in relation to the Time claim and Money Claim pursuant to section 47(2) (a) (b) of the Act.
Knowles requested that the Arbitration should proceed in two parts: the first dealing with claims made by Knowles which related to defined sums payable under the Success Fee Agreement and the second dealing with Knowles's alleged entitlement to a success fee based on the outcome of the settlement negotiated between Cofely and the Employers.
This application was acknowledged by Mr Bingham the next day and on 17 April 2013 Mr Bingham requested that Cofely indicate its position in relation to Knowles' application.
Cofely served its Defence on 23 April 2013 and a hearing was held on 19 July 2013.
On 21 August 2013, Mr Bingham made a Partial Award entitled "Arbitrator's Decision No 1", finding in favour of Knowles on its claims in relation to defined sums and directing Cofely to pay Knowles £1,000,000 plus interest. No challenge was made to the Partial Award and the sum awarded was duly paid by Cofely.
The parties then tried to agree how the referral would proceed but were unable to do so because of a difference of opinion as to how any entitlement under AGREEMENT SIX of the Appointment (in relation to a success fee) should be approached.
On 11 November 2013, Cofely made its own application for Partial Awards under section 47 of the Act regarding the approach to be taken in connection with AGREEMENT SIX. The application sought a decision on the following issue:
"Whether, on a proper construction of Agreement Six, the sum which is due to the Claimant (if any) is:
(a) The actual value of the Knowles Money Claim within the Deed of Settlement; or
(b) Some other sum and, if so, what."
It is said that the purpose of this application was to avoid the need for an extensive (hypothetical) factual analysis of the likely outcome of the Time Claim and the Money Claim in the adjudication against the Employers as part of a consideration of whether the settlement with the Employers was reasonable.
Mr Bingham acknowledged receipt of this application by email dated 9 November 2013 in which he stated he would "read in and revert".
Thereafter there was a period of inactivity. Mr Bingham did not revert, nor did Cofely chase him to do so.
On 9 April 2014, Mr Bingham responded to the proposed application by issuing "Arbitrator's Memo No. 1 About AGREEMENT SIX" containing his "observations" on the correct approach to be taken to the outstanding claims of Knowles and concluding that "the Arbitrator in short ought to investigate the £23 million claim", but stating that "This is not a Direction or Decision" and "Comment invited".
On 6 June 2014, SH wrote to Mr Bingham regarding the memorandum, stating that Mr Bingham had not addressed Cofely's section 47 application and providing various comments on Mr Bingham's memorandum.
On 4 July 2014, Mr Bingham acknowledged receipt of SH's letter and asked for comments from Knowles.
Thereafter there was a further period of inactivity in the arbitration.
On 24 December 2014, Knowles made an application to Mr Bingham for Cofely to disclose certain documents referred to in the Settlement Deed between the Employers and Cofely. Mr Bingham responded by email almost immediately.
On 22 January 2015, Cofely enquired of Knowles as to when it would be responding to its section 47 application.
On 18 February 2015, Cofely wrote to Knowles requesting information in relation to its dealings with Mr Bingham in light of the decision of Mr Justice Ramsey in Eurocom Ltd v Siemens Plc [2014] EWHC 3710 (TCC) [2015] BLR in which judgment had been delivered on 7 November 2014. The Eurocom case concerned a summary judgment application made by Eurocom against Siemens in respect of an adjudication decision made by Mr Bingham. The application failed on the grounds that Siemens had real prospects of successfully defending the claim on the basis that the adjudicator had no jurisdiction because of a fraudulent misrepresentation allegedly made by Mr Giles of Knowles in applying for the appointment of an adjudicator on Eurocom's behalf.
The outline facts were that Mr Giles made an application to the Royal Institution of Chartered Surveyors ("RICS") for the appointment of an adjudicator and requesting that one of three nominees be appointed, one of whom was Mr Bingham. In the...
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