Empyreal Energy Ltd v Daylighting Power Ltd
| Jurisdiction | England & Wales |
| Judge | Stuart-Smith J |
| Judgment Date | 22 July 2020 |
| Neutral Citation | [2020] EWHC 1971 (TCC) |
| Date | 22 July 2020 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Claim No HT-2020-000178 |
[2020] EWHC 1971 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HON. Mr Justice Stuart-Smith
Claim No HT-2020-000178
Claim No HT-2020-000199
Ms Jennifer Jones (instructed by Stephens Scown LLP) for Empyreal Energy Limited
Mr Tom Coulson (instructed by Bird & Bird LLP) for Daylighting Power Limited
Hearing date: 20 July 2020
Introduction
Two sets of proceedings have been issued, which arise out of an EPC contract dated 19 November 2015 (“the Contract”) made between Empyreal Energy Limited (“EEL”) as employer and Daylighting Power Limited (“DPL”) as contractor. The contract was for DPL to carry out the design, supply, installation, testing and commissioning of a solar park in Essex. EEL alleges that DPL's work was defective.
DPL issued Part 8 proceedings on 14 May 2020. EEL commenced Part 7 proceedings on 29 May 2020. For present purposes the issues they raise are identical, namely whether Mr Robert Sliwinski, acting as an expert, had jurisdiction to determine and order that DPL pay to EEL the sum of £1,708,474.00 in respect of the cost of remedying works which EEL asserts but DPL denies were defective. Mr Sliwinski made ancillary orders for the payment of interest and his fees of the determination. EEL seeks to enforce Mr Sliwinski's order; DPL resists enforcement.
Before the court today are:
i) EEL's application for summary judgment to enforce Mr Sliwinski' s order; and
ii) The trial of DPL's Part 8 proceedings.
It is common ground that the outcome will be determined by the court's answer to two questions, namely:
i) Was the dispute which EEL purported to refer to the expert determiner, and which he purported to decide, a dispute which the Contract permitted to be referred to expert determination in accordance with Clause 36?
and
ii) Did EEL serve a notice on DPL of its intention to refer the dispute for expert determination in accordance with the requirements of Clause 36.1 of the Contract?
The principles to be applied
The applicable principles are well established and largely common ground between the parties.
General principles of contractual interpretation
The Contract is to be interpreted in accordance with well established principles for the construction of commercial contracts: see, for example, Arnold v Britton [2015] UKSC 36 at [15]–[23] and Wood v Capita Insurance [2017] UKSC 24 at [10]–[15]. In briefest outline, and without derogating from the many full and authoritative expositions of principle in Wood, Arnold and many other decisions of the highest authority, the court's task is to identify the intention of the parties by reference to what a reasonable person, with the parties' shared background knowledge, would have understood them to have meant by the language which they used in the agreement. The words of the contract must be interpreted in the context of the agreement as a whole as well as taking into account any admissible wider context that qualifies to be included as part of the factual matrix.
The approach of the court to provisions for expert determination
It is sufficient to refer to two authorities on the approach of the Court when interpreting provisions for expert determination.
In Homepace Ltd v Sita South East Ltd [2008] EWCA Civ 1, Lloyd LJ summarised the law on expert determination as follows at [18]:
“Each case depends on the terms of the contract under which the determination is made, both as to what it is the expert has to decide, and as to how far his decision is binding on the parties. In each case it is necessary to examine the determination, in order to see whether it lies within the scope of the expert's authority. If it does not, then it has no effect as between the parties.”
In Barclays Bank plc v Nylon Capital LLP LLP [2011] EWCA Civ 826, Thomas LJ (with whom Etherton LJ and Lord Neuberger MR agreed) summarised the correct approach to the construction of expert determination clauses as follows at [27]–[28]:
“27. However, although the parties must adhere to the agreement which they have made, I do not consider that the approach to an expert determination clause should be the same as that which is now taken to an arbitration clause. The rationale for the approach in the Fiona Trust case is that parties should normally be taken, as sensible businessmen, to have chosen one forum for the resolution of their disputes. As arbitration will usually be an alternative to court for the resolution of all disputes between the parties, it would not accord with the presumed intention of sensible businessmen to draw fine distinctions between similar phrases to allow a part of the dispute to be outside the arbitration and allocated to the court.
28. In contradistinction expert determination clauses generally presuppose that the parties intended certain types of dispute to be resolved by expert determination and other types by the court (or if there is an arbitration clause by arbitrators). The rationale of the Fiona Trust case does not therefore apply, as the parties have agreed to two types of dispute resolution for disputes which might arise under the agreement… The simple question is whether the dispute which has arisen between the parties is within the jurisdiction of the expert conferred by the expert determination clause or is not within it and is therefore within the jurisdiction of the English court. It is a question of construction with no presumption either way.”
What the expert may decide
EEL relies upon the decision of the Court of Appeal in Norwich Union Life Insurance Society v P&O Property Holdings Ltd [1993] 1 EGLR 164 at 168–169 as support for the submission that an expert may take into account and determine the factual matters that are necessary for their decision on the point or points that have been referred to them. That submission is not contentious and, in my judgment, is correct; but it requires that close scrutiny be given to determine what point or points have been (lawfully) referred to the expert. In Norwich Union the question that was referred was whether the works had been completed in accordance with the design documents. This question, of necessity, required the expert to engage in a detailed investigation. As to completion, it required the expert to consider in what respects the works had not been completed and the significance of any failures to complete. As to whether there had been completion in accordance with the design documents, it required the expert to consider whether the original design documents had been subject to an approved variation. The cited passage establishes that the starting point will be to decide what question has been referred to the expert and then to decide what facts and matters that question requires the expert to consider and determine in order to decide the question. It does not follow that referral of any question permits the expert to decide any and everything that may be material to the question. The terms of the agreement between the parties will define and circumscribe the scope of what may be referred to the expert for their decision and may do so in terms that preclude the expert from considering some matters that would otherwise be considered relevant to the question the expert is required to decide. In other words, the terms of the contract or the terms of the question that the expert is asked to decide may put some potentially material facts or matters beyond the reach of the expert's consideration and determination.
Criteria for referral notices
The criteria for valid unilateral notices were considered in Mannai Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. The question, which must be approached objectively, is how a reasonable recipient would have understood the notice. In considering that question, the notice must be construed taking into account the relevant objective contextual scene. Even if a notice contains errors, it may be valid if it is sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when it is intended to operate: see Lord Steyn at 767G-H, 768G-H. Many other statements of principle to like effect could be cited including Easybiz Investments v Sinograin (The Biz) [2010] EWHC 2565 (Comm) at 11 per Hamblen J, a decision on s. 14(4) of the Arbitration Act 1996 which provides a timely reminder that the need is for a notice sufficiently to identify the dispute to which it relates and that one should concentrate on the substance rather than the form of the notice.
In Atlanska Povidba v Consignaciones Astrugianas SA (the “Lapad”) [2004] EWHC 1273 at [17], a decision on the meaning of s. 16(3) of the Arbitration Act 1996, Moore-Bick J emphasised the need to concentrate on substance rather than form, but drew the distinction between giving notice of an intention to refer rather than merely threatening to do so if demands are not met. In my judgment it is not possible to elaborate this point further: it is common ground that, in the present case, what is required is notice of a party's intention to refer the dispute to expert determination as provided by clause 36.1. That requirement would not be satisfied by a document which is properly characterised as merely threatening to refer if a party's demands are not met. The only observation I would make is that the phrase “an intention to...
To continue reading
Request your trial