Devon County Council v Celtic Composting Systems Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stuart-Smith |
| Judgment Date | 17 January 2014 |
| Neutral Citation | [2014] EWHC 552 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 17 January 2014 |
| Docket Number | Case No: HT-13-468 |
[2014] EWHC 552 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT
The Rolls Building
Fetter Lane
London EC4A 1NL
Mr Justice Stuart-Smith
Case No: HT-13-468
Ms Jessica Stephens (instructed by Harrison Clark Rickerbys Ltd) appeared on behalf of the Claimant
Ms Serena Cheng (instructed by Knowles appeared on behalf of the Defendant
This is another matter in what is developing into a protracted procedural war between the parties. This application was issued on 18 December 2013 and by it the Council apply first of all for an injunction restraining the Defendant ("Celtic") from taking any further steps in an adjudication commenced pursuant to the Notice of Adjudication dated 6 December; and second, for a declaration that the adjudicator did not have jurisdiction to conduct the adjudication which had been referred to him.
On 20 December Ramsey J made an order refusing the application for an injunction, which he did in rather unusual circumstances which meant that his refusal does not preclude the Council from pursuing the balance of its application. The reason for the refusal was that the application for an injunction had been based upon Celtic's non-payment of monies owed as a result of an earlier adjudication, despite request for payment. On the night before the application was heard by Ramsey J, Celtic took the point that no invoice had ever been issued and gave an assurance that if only an invoice were to be issued, it would be paid. This ingenious approach, which seems to me to be typical of the way in which the parties have been conducting themselves by resorting to every available tactical step that they consider will give them proper advantage, had the effect that Ramsey J accepted an indication that the Council would issue an invoice and on the expectation that Celtic would pay it, refused to grant the injunction. Instead he adjourned the application with liberty to restore. After an invoice was promptly presented, it was cleared by Celtic.
I shall deal with the background chronology as swiftly as I may because all parties in court know it very well. Devon engaged Celtic to carry out the design and construction of an investment composting facility in Devon. There was an arbitration clause and a decision on adjudication was a pre-requisite to referring a dispute to arbitration. The contract was entered into on 29 March 2007 and was in the form of NEC3 Option C as amended. I am not going to refer specifically to any of the clauses now, but I was taken to two pages which contained the relevant clause in the course of the hearing.
The works were completed on 9 April 2010 and on 16 February 2011 the Project Manager issued his final assessment by Payment Certificate No 32 (page 296 of Bundle 2).
Celtic wrote a letter on 8 March 2011 making it quite clear that it did not think much of the Final Assessment and although I will not read them out the paragraphs on page 13.7 make clear that there was trouble brewing.
After that there have been a total of nine attempted reference to adjudication, which have been numbered 1 to 5, 5(a) and 6 to 8. All I need say about that is that in adjudication 5(a) what was referred could at one sight have been seen as alternative claim, first, for time to be put by; and, secondly, for an extension of time under the contract, but by a decision dated 16 March 2009 Mr Hoover decided that time should not be set at ( inaudible) and that delay damages should not be returned. Adjudication 6 sought an adjustment to the sum certified by the Project Manager in his Final Assessment by reference to eleven specific elements in the adjudication and those are specific CE numbers which I am not going to read out, but which the parties know. That was referred to Mr Twine who gave his decision on 16 May 2011. The effect of his decision was to reduce the sum payable by Celtic to Devon to about £70,000 from the very much larger sum which had been certified to be payable by the Final Assessment. That production led to the sum which formed the basis for the payment made once the invoice was issued after the hearing before Ramsey J. Adjudication 7 was aborted when the adjudicator – again, Mr Twine – resigned, but he has not given his reasons for so doing.
After Adjudication 6 Celtic served a notice of dissatisfaction and referred the dispute to arbitration. The Particulars of Claim included at paragraphs 29 to 31 a claim to a "319 calendar day extension of time" and the "return of £196,000 in liquidated damages". The basis for that was set out in a schedule known as Appendix E (page 684).
The Council then took jurisdictional objections, including paragraphs 17 and 18 (page 1026), a submission that the arbitrator only had jurisdiction in so far as there had been an adjudicator's decision in respect of extension of time and that the claim that was being advanced had not been decided upon. It is apparent from that, and also from the fact that the Council applied for security for costs, that the Council had had and has no intention of conceding anything in relation to Celtic's claim for an extension of time. The arbitrator's decision on jurisdiction ruled that he did not have jurisdiction in relation to any matters not included in the decision in Adjudication 6 (pages 317 and 319).
After that happened there was an exchange of correspondence. In an email to the arbitrator on 24 September 2013, the Council said:
"Before an adjudication can be held there must first be a dispute [which probably should be in dispute] a matter which requires come claim to have been made. That too would need to be set out and for the avoidance of doubt the Respondent has not been given or required to respond to such a claim."
Celtic replied to that (page 1410) in the following terms (page 1411):
"Regarding the paragraph commencing 'before an adjudication' the Claimant will prepare a claim which it plans to issue to the Respondent part way through the twelve week period mentioned in the Claimant's application of 23 September 2013."
Without further presentation of this claim Celtic issued the Notice of Adjudication on 6 December 2013 and followed it with its referral on 13 December, which sets out Celtic's case. Celtic provided, I am told, eleven volumes of supporting documents, including two volumes relating to the extension of time. In briefest outline, the summary of the Adjudication 8 claim can be seen at page 243; it has four subheadings: total of the prices; final price for work done to date; amount given to Celtic; and claims by Devon County Council. The response the Council was to apply to the adjudicator to resign on the basis that he does not have jurisdiction to deal with the matters referred and they issued this application. Proceedings were issued on 18 December 2013; multiple witness statements were produced on both sides, so the parties accumulated just short of 2200 pages of documents for consideration of the court on this application.
One complicating feature of this ongoing saga is that Celtic is insolvent. It is not in administration or liquidation, but it acknowledges that it cannot pay for its representation in these proceedings and the management accounts that are before the court show that it is probably only able to continue in business at all given the forbearance of its immediate creditors. One of its present and prospective creditors is Knowles, who not only represent Celtic in their battles against Devon but also provide one of their directors to act as an expert witness. This financial stringency on Celtic's part led to the execution on 19 November 2010 of a remarkable deed of assignment (page 1263). That deed is remarkable because, although it assigns the right to receive money to Knowles, it...
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Celtic Bioenergy Ltd v Knowles Ltd
...due to Knowles as fees. 8 This rather curious set of documents has already been the subject of comment by this Court in Devon County Council v Celtic Composting Systems [2014] EWHC 552 (TCC) at [11] and [12], proceedings in which DCC sought to restrain CBL from taking further steps in an ad......