Dawes v Treasure and Son Ltd [QBD (TCC)]
| Jurisdiction | England & Wales |
| Judge | Akenhead J |
| Judgment Date | 10 December 2010 |
| Date | 10 December 2010 |
| Court | Queen's Bench Division (Technology and Construction Court) |
Queen's Bench Division (Technology and Construction Court).
Akenhead J.
John Marrin QC and Andrew Singer (instructed by Goodman Harvey LLP) for the claimant.
Adrian Hughes QC (instructed by Contract & Construction Consultants (Southern) Ltd) for the defendant
Arbitration — CIMAR rules — When arbitrator became functus officio or ceased to have jurisdiction — Extent of settlement of arbitration — Contractor engaged to carry out construction work under JCT Standard Form of Prime Cost Contract (1998 Edition with Amendments 1 and 2) — Adjudication followed by arbitration — Binding settlement agreement — Further reference to arbitration — Arbitrator ruling that he had jurisdiction to decide that settlement agreement covered all defects raised in arbitration — Arbitrator did retain jurisdiction after settlement — Parties settled not only money claims but also claims for defects — Arbitration Act 1996, s. 30, 51(2).
These were claims challenging an arbitrator's ruling on his own jurisdiction and his decision on the scope of a settlement agreement.
The claimant (D) engaged the defendant contractor (Treasure) to carry out extensive construction works at D's property pursuant to a building contract which incorporated the JCT Standard Form of Prime Cost Contract (1998 Edition with Amendments 1 and 2) and provided for arbitration under the Construction Industry Model Arbitration Rules (CIMAR).
The parties fell out and Treasure served a notice to refer to arbitration under the arbitration clause in the building contract. The dispute was expressed to arise from D's alleged failures to pay sums due under the building contract as well as D's alleged breaches of contract. D put in a defence and cross-claim with two schedules listing alleged faults and defects in Treasure's work.
The parties then reached a binding settlement but neither the parties nor the arbitrator drew up any order or award reflecting the terms of the settlement. The arbitrator made a number of costs awards. Treasure then served a further notice of arbitration referring to the arbitrator a dispute in relation to D's ongoing allegations in relation to the defects and Treasure's assertion that the defects pleaded previously in the arbitration had been compromised by the settlement between the parties. The arbitrator ruled under s. 30 of the Arbitration Act 1996 that he did have jurisdiction and was not functus officio in relation to that dispute. He then made an award holding that the settlement covered all defects raised in the arbitration. D challenged both those decisions.
Held dismissing D's claims:
1. The arbitrator had and retained unqualified jurisdiction after the settlement. He would undoubtedly have retained jurisdiction if there had been an issue between the parties as to whether there was any settlement at all. Unless and to the extent that the terms of the settlement itself or of the building contract were such as to preclude or limit his jurisdiction, there should be no limitation on his jurisdiction. There was no room for an implication in this case that the arbitrator's jurisdiction ceased save simply and only to deal with costs. Clearly, to the extent that the parties' dispute had in fact and in law been settled, the arbitrator could not go behind that. The parties did not proceed as if the arbitrator had no jurisdiction after the settlement. The CIMAR, agreed by the parties, expressly give a party a right, after an arbitrator had been appointed, to refer another dispute to the same arbitrator and he had the right in effect to consolidate it with the existing arbitral proceedings. That was what in practice the arbitrator did in relation to the issue as to whether D's defects claim was effectively encompassed by the settlement. The arbitrator did not, by issuing his first costs award, put himself in a position whereby he accepted in effect that he had terminated the substantive proceedings. The jurisdiction, which he retained, was complete and full save and in so far as it had been circumscribed or effectively removed by the settlement agreement. Thus the arbitrator had jurisdiction to consider and decide whether or not the settlement encompassed the defects claim which D wished to pursue.
2. In the settlement agreement the parties settled not only the money claims but also the claims for defects and the arbitrator's award on that issue was right. The defects put forward by D were deployed to support various defences to Treasure's claims, but they were undoubtedly also expressly deployed as cross-claims. The arbitrator was clearly invited in effect, possibly amongst other things, to find that defects existed and take them into account in deciding or determining what sum was due to Treasure. Treasure's offer to settle referred to all of the claims and counterclaims in the arbitration and an important part of the counterclaim was the cross-claim for defects. The offer was accepted unconditionally and therefore D had settled his claims for those defects as against Treasure.
Akenhead J:
1. These claims raise interesting issues about the point or stage at which an arbitrator becomes functus officio or ceases to have jurisdiction and the extent, ambit or scope of a settlement of an arbitration.
2. Treasure and Son Ltd (“Treasure”) was a main contractor engaged by Martin Dawes to carry out extensive construction works at Mr Dawes” country estate, Dinmore Manor, Hereford pursuant to a building contract made in 2000 which incorporated the JCT Standard Form of Prime Cost Contract (1998 Edition with Amendments 1 and 2). A Mr Bertram was the named Architect. Being a Prime Cost contract, Treasure was entitled to payment on a cost plus percentage mark up basis. There seems to be little doubt that the original contract was expanded to cover other works on the estate and, I was told in an earlier adjudication enforcement case [2007] EWHC 2420 (TCC), that over £15 million was claimed by Treasure against an original estimated Prime Cost of some £3.5 million.
3. There came a time, although it is unclear to me why, that the parties fell out with each other and, so it was, Treasure secured an initial adjudication decision in its favour in August 2007 to the effect that Mr Dawes was to pay to Treasure £1,018,821.12 plus VAT. That decision was not honoured with the consequence that Treasure successfully secured from the Court enforcement of that decision, as above, with the Court giving judgement on 25 October 2007. There followed what Coulson J characterised as “an extremely unusual dispute”, which related to whether payment in relation to the judgment had been made in circumstances in which the money was paid by Mr Dawes” daughter; the judgment was reported at [2008] EWHC 2181 (TCC).
4. Before the first set of court proceedings, Treasure served on 6 July 2007 a Notice to Refer to Arbitration under the arbitration clause in the building contract. Mr Ian Salisbury was appointed as arbitrator. The dispute was expressed to arise from Mr Dawes' alleged failures to pay sums due under the building contract as well as for Mr Dawes' alleged breaches of contract. At this stage, the dispute relating to the repayment of the sum which was to be the subject matter of the adjudicator's decision had not been referred to arbitration and obviously had not been paid; indeed it was not paid out until after the enforcement in court, in November 2007.
5. A Statement of Case and Defence were served. The original Defence is headed “Defence and Cross Claim”, dated 17 December 2007 and settled by Counsel. By this stage, the adjudication sum had been paid by or on behalf of Mr Dawes. The Defence referred to the assertion that “the quality of Treasure's work is part of Mr Dawes” Defence and Cross Claim in these proceedings”; the Cross Claim claimed the sums paid to Treasure in the earlier adjudication.
6. On 11 June 2008, the arbitrator ordered Treasure to serve an amended Statement of Claim by 18 June 2008 and Mr Dawes to re-serve an “amended statement of defence and amended counterclaim by…25 June 2008, with any alleged defects particularised.” The Amended Statement of Case runs to 69 pages and 304 paragraphs. Paragraph 31 referred to various Certificates of Making Good Defects issued by the Architect. Paragraph 297 identified claims for the following sums:
| Item | Value | |
| 1 | The £75,000.00 in respect of the Electrical Installation for the Main House | £75,000.00 |
| 2 | The £18,748.12 in respect of the Site Services | £18,748.12 |
| 3 | Retention on the Site Services and the Music School | £191,321.20 |
| 4 | Prime cost not yet claimed | £145,085.05 |
| 5 | Overheads | £634,360.74 |
| 6 | Cost of the claim | £58,455.00 |
| 7 | Management costs including the management costs relation to VAT in | £60,195.60 |
| 8 | Insurance fee in respect of the Main House | £949.20 |
| 9 | Garden antiques fee in respect of the Landscaping | £1,883.32 |
| 10 | Estate services fee | £5,239.88 |
| 11 | Contract fee on all items apart from item 3 | £99,991.69 |
| Total | £1,291,229.80 |
7. The total amounts claimed were set out in paragraph 303:
| Item | Amount | Alternative amount |
| Claimed items from above | £1,291,229.80 | £1,291,229.80 |
| Alternative case — addition of profits | £162,256.90 | |
| Interest | £148,400.00 | £167,348.41 |
| VAT | £238,810.22 | £270,521.14 |
| GRAND TOTALS | £1,678,440.02 | £1,891,356.25 |
8. Mr Dawes served his Amended Defence and Amended Cross Claim on 25 June 2008. Relevant paragraphs are as follows:
”2. By way of brief overview Mr Dawes contends that the Adjudicator's Award was wrong and has overcompensated Treasure by up to £869,195 which sum Mr Dawes seeks to be paid back to him by Treasure by way of Defence and/or Cross Claim in these proceedings together with the interest...
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