Dawnus Construction Holdings v Amey LG Ltd
| Jurisdiction | England & Wales |
| Judge | HHJ Keyser |
| Judgment Date | 26 January 2017 |
| Neutral Citation | [2017] EWHC B13 TCC |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 26 January 2017 |
| Docket Number | Case No: C50CF010 |
[2017] EWHC B13 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CARDIFF DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
His Honour Judge Keyser QC
sitting as a Judge of the High Court
Case No: C50CF010
Mr Quiney QC appeared on behalf of the Claimant
Mr Kearney appeared on behalf of the Defendant
Judgment Approved
HHJ Keyser QC:
By this Part 8 claim the claimant seeks the answer to a point of construction in respect of the contract between the parties arising out of a major construction and engineering project known as the Plymouth Eastern Corridor Integrated Transport Scheme, which I shall refer to as 'the Project'.
The basic facts are not in issue and are briefly as follows. Plymouth City Council appointed the defendant as the main contractor for the project. The contract governing the relationship between Plymouth and the defendant was made on 27 August 2008 and was called the Highway Services Contract. I shall refer to it as the 'Main Contract'.
The defendant sub-contracted part of the work under the Project. The sub-contract, which was dated 3 August 2010, was variously called Target Cost/Framework-related Agreement and Services Agreement; for convenience, I shall refer to it as the 'Services Agreement'. Both the Main Contract and the Services Agreement were construction contracts within Section 104 of the Housing Grants, Construction and Regeneration Act 1996, which I shall refer to as 'the 1996 Act' or just 'the Act'. Because both agreements were made before October 2011, the relevant statutory regime for adjudication was that set out in the Act before it was amended.
In the course of the Project there were four adjudications between the claimant and the defendant, resulting in four decisions: (1) 2 November 2011, decision of Mr A J Turner; (2) 26 April 2013, decision of Mr D H Simper; (3) 8 June 2015, decision of Mr D White; (4) 24 July 2015, decision of Mr P Higgins. These have been referred to as 'the Turner decision', 'the Simper decision', 'the White decision' and 'the Higgins decision' respectively. Matters decided in the Turner decision and the Simper decision were relied on as the basis of valuations by the adjudicators in the White decision and the Higgins decision. Now that the Project has been completed, the claimant wishes to litigate those matters in court because it says that, if they were determined in its favour, it would recover something in the order of an additional £1 million. However, there is an issue between the parties as to whether the Services Agreement, on its true construction, precludes the claimant from now seeking to litigate those matters.
The present claim was agreed by both parties to be a convenient way to determine this construction issue. In those circumstances, the claim form shows that the claimant seeks to establish 'that it is permitted to commence legal proceedings, in order to finally determine matters which were the subject of adjudicators' decisions dated 2 November 2011 and 26 April 2013', that is the Turner decision and the Simper decision.
The specific question put forward for my answer, and agreed by the defendant to be the appropriate question, is as follows: Does recital (3) of the contract between Dawnus and Amey [that is, the Services Agreement] operate so as to incorporate clause 63 of the contract between Amey and Plymouth County Council [that is, the Main Contract] such that there is a condition precedent (being the service of a notice of dissatisfaction) with which Dawnus must comply before it can ask the court to finally determine the matters which were subject of decisions of Mr A J Turner and Mr D Simper? The claimant says that the answer to the question is 'no', and the defendant says that it is 'yes'.
The relevant principles governing the construction of the contracts in this case may be shortly stated. The starting point is the language used by the parties in the written agreement. This was made clear by the Supreme Court in Arnold v Britton and Others [2015] UKSC 36, [2015] AC 1619. The proper approach to construing the language was summarised by Lord Bingham of Cornhill in Derry Containers Ltd. v Tasman Orient Line CV [2005] 1 WLR 215, paragraph 12: 'The contract should be given the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person, or class of persons, to whom the document is addressed.' The ramifications of those basic principles have been discussed in detail in many cases. I refer in particular to Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900, at paragraphs 15–30, and to the judgment of Lord Neuberger PSC in Arnold v Britton and Others [2015] UKSC 36, [2015] AC 1619, at paragraphs 15–22. For brevity's sake, I shall not recite those passages in this judgment.
I turn to the agreements in this case.
The Services Agreement referred to the claimant as the 'Services Supplier,' to the defendant as the 'Contractor', to itself as the 'Agreement', and to the Main Contract as the 'Main Contract'. At the head of the Services Agreement stood four recitals. Recital (1) referred to the Main Contract. Recital (2), which is significant, said that the claimant should be deemed to have full knowledge of the provisions of the Main Contract. Recital (3) was in these terms; I emphasise the parenthesis as being especially material:
'The terms and conditions of the Main Contract shall apply (save where the provisions of the agreement conflict or otherwise specifically require) as if they were repeated in this agreement, without prejudice to the generality of the foregoing. All provisions and obligations within the main contract which require the contractor to include the same within the agreement shall be deemed to be included within this agreement'.
Clause 20 was headed 'Dispute Resolution'. Clause 20(a) read: 'Any dispute or difference between the parties may be referred to adjudication by notice to the other, in accordance with the provisions of appendix 12'. The remaining paragraphs of clause 20, paragraphs (b) to (e), dealt with an optional procedure, to be adopted by agreement between the parties in writing, to seek to resolve disputes informally by a mechanism there set out and, if no resolution were achieved pursuant to that mechanism, requiring the matter to go to adjudication, or 'dispute resolutions' as it was called under appendix 12. However, paragraph (f) provided: 'Nothing in this clause 20 shall prevent either party from proceeding directly to referring any matter for resolution in accordance with appendix 12.'
Appendix 12, headed 'Dispute Resolution Procedure', with the sub-heading 'Adjudication', made provision in respect of the appointment, functions and duties of an adjudicator. I have regard to the entirety of the appendix, but in particular it contained two passages of importance, as follows:
'The contractor and the services supplier each has [sic] the right to refer any dispute or difference under this agreement for adjudication, and either party may at any time give notice in writing…to the other at any time of its intention to refer the dispute or difference to adjudication'.
'The decision of the adjudicator shall be binding until the dispute is finally determined by legal proceedings or by agreement in writing between the contractor and services supplier'.
I turn to the Main Contract. The section of the Main Contract dealing specifically with disputes and termination comprised clauses 59–67. Clause 60.1 provided: 'A dispute arising under or in connection with this contract may be referred to and decided by an adjudicator. A party may refer a dispute to the adjudicator at any time'. Clause 61 made provision in respect of the appointments, functions and duties of the adjudicator. Clause 62 contained provisions relating to the procedure in an adjudication, and the adjudication decision. Clause 62.11 provided:
'The adjudicator's decision is binding on the parties unless or until revised by the tribunal, and is enforceable as a matter or contractual obligation by the parties, and not as an arbitral award. The adjudicator's decision is final and binding if neither party has notified the other within the times required by this contract that he is dissatisfied with a matter decided by the adjudicator, and intends to refer the matter to the tribunal'.
(The reference to 'the tribunal' appears to be an unedited hangover from the standard contract form that was the ultimate source of the drafting.)
For present purposes, the most important provision of the main contract is clause 63, headed 'Review by the Courts'.
'63.1 A party does not refer any dispute under or in connection with this contract to litigation in the English courts unless it has first been decided by the adjudicator in accordance with this contract.
63.2 If, after the adjudicator notifies his decision, a party is dissatisfied, that party may notify the other party of the matter which he disputes and state that he intends to refer it to litigation. The dispute may not be referred to litigation unless this notification is given within four weeks of the notification of the adjudicator's decision.
63.3 In any litigation proceedings, the relevant court has the powers to reconsider any decision of the adjudicator, and to review and revise any action or inaction of the service manager related to the dispute. A party is not limited in litigation proceedings to the information or evidence put to the adjudicator.
63.4 A party does not call the adjudicator as a witness in litigation proceedings.'
(The 'service manager' mentioned in clause 63.3 is...
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