Galliford Try Building Ltd v Estura Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Edwards-Stuart |
| Judgment Date | 27 February 2015 |
| Neutral Citation | [2015] EWHC 412 (TCC) |
| Date | 27 February 2015 |
| Docket Number | Case No: HT-2014-000113 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2015] EWHC 412 (TCC)
Mr. Justice Edwards-Stuart
Case No: HT-2014-000113
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
London EC4A 1NL
Alexander Hickey Esq, (instructed by Pinsent Masons LLP) for the Claimant
Adrian Williamson Esq, QC (instructed by Mishcon de Reya) for the Defendant
Hearing date: 15 th January 2015
Introduction
This is an application for summary judgment by the claimant contractor, Galliford Try Building Ltd, ("GTB") to enforce the decision of an adjudicator dated 20 November 2014, by which he ordered the defendant, Estura Ltd, ("Estura") to pay GTB £3,928,227 (plus VAT as applicable), together with interest.
GTB was engaged by Estura, as employer, under an amended JCT Design and Build Contract 2011, dated 26 April 2012, to design and build certain works at the Salcombe Harbour Hotel, in Devon. The contract contained payment terms that complied with the Housing Grants Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009, ("the Act").
Under the provisions relating for interim payments the contract provided that if, following receipt of an application for an interim payment, the employer did not agree with the amount stated in the application it was entitled to serve a payment notice within five days of the due date or, if later, receipt of the application. If it did not serve a payment notice, then the amount payable under the application became the amount stated in the application. In addition, the employer had a right to serve a further notice, a pay less notice, if it considered that it was entitled to set off against the amount claimed other sums which were not the subject of the application. The adjudicator noted that it was not in dispute that Estura had failed to serve either notice with the result that GTB became entitled to the sum stated in the application.
Estura submits that, in what it describes as the exceptional circumstances of this case, it should not be required to submit to summary judgment in respect of the sums awarded by the adjudicator.
Mr. Alexander Hickey, instructed by Pinsent Masons, appeared for GTB. Mr. Adrian Williamson QC, appeared for Estura, instructed by Mishcon de Reya.
Estura's case
The application in dispute is GTB's Interim Application 60 (" IA 60"). It is described on its face as "Indicative Final Account and Valuation Summary". The sum stated as the anticipated Final Account was £12.66 million. That is almost £5 million more than the contract value. The value of the work as stated in IA 60 was only about £4,000 less than the amount of the anticipated Final Account.
Estura submitted that IA 60 represented an increase on GTB's previous application of only about £147,000, made up of about £72,000 for Employer's Instructions and about £76,000 for "Anticipated Instructions". Estura's case, as advanced before the adjudicator, was that the sum due on that application was in truth £147,000 plus VAT, and not the sum claimed by GTB. That case was rejected by the adjudicator.
Thus the effect of the adjudicator's award is that GTB has recovered almost everything that it was hoping to recover and so, submits Estura, it has no incentive whatever to submit its final account so that the sum that is properly due to it can be challenged and reassessed. This is the real reason why Estura is resisting this application.
The adjudicator held (at paragraph 11) that the issues that he had to address were as follows:
i) Is GTB entitled to payment and, if so, how much?
ii) Is GTB entitled to interest and, if so, how much?
iii) Is GTB entitled to the RICS adjudicator nomination fee?
In its evidence before the court Estura submitted that the notice of adjudication gave rise to three potential questions for the adjudicator. They were:
i) What was the sum stated as due in the application?
ii) What sum should have been stated as due in the application?
iii) Whether the sum that was stated as due in the application was in fact payable?
It can be seen at once that the second and third of these questions were not ones identified by the adjudicator. This is understandable, because at paragraph 4 of its Rejoinder Estura said this:
"Estura continue to submit that this adjudication raises a very short point: what was the sum that the Contractor considers to be due to him in Application 60? This can admit, on any proper reading of the application, of only one answer: £147,266 plus VAT (£158,679.41 inclusive of VAT). GTB's Reply represents an elaborate attempt to cover this simple fact with a complex smokescreen."
(original emphasis)
Estura accepts that in so far as the conclusion reached by the adjudicator was one that was within his jurisdiction and otherwise in accordance with the applicable principles in adjudication, his decision would be unassailable. This is because it is well accepted that an error — however glaring — committed by an adjudicator acting within his jurisdiction will not of itself, and absent a breach of natural justice, be a bar to enforcement: see for example Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] BLR 49.
Summary judgment
Mr. Williamson submitted in his skeleton argument that the decision of the adjudicator was perverse because he did not address himself to the second and third of Estura's three questions. In my view, this point can be disposed of at once. In the light of Estura's submissions during the adjudication, as reflected in the extract from the Rejoinder that I have quoted above, the adjudicator clearly answered the question that was referred to him. There is nothing whatever in this point and I did not understand Mr. Williamson to press it.
In my judgment, therefore, on this aspect there is no available defence to the application for summary judgment. The adjudicator determined the question that was referred to him and there is no allegation that he failed to observe the rules of natural justice. Accordingly, his decision, right or wrong, is not amenable to challenge on this application.
The point which was really at the heart of Mr. Williamson's submissions arises out of a decision of this court in ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC). Judgment in that case was delivered on 3 December 2014 and published on BAILII shortly afterwards. That judgment was, therefore, delivered shortly after the adjudicator's decision. Mr. Williamson was, I think, submitting that this decision provided a compelling reason why the issue should be disposed of at a trial and not by way of summary judgment pursuant to CPR 24.2 (b).
The decision in ISG v Seevic
That case involved an application for summary judgment by ISG to enforce an adjudicator's decision, Adjudication No 1, and for a declaration that a decision by the same adjudicator following a later Notice of Adjudication, in Adjudication No 2, was invalid for want of jurisdiction.
The facts are set out in paragraphs 2–5 of the judgment as follows:
"2. In Adjudication No 1 the adjudicator, a Mr. Robert Juniper, decided that ISG was entitled to £1,097,696.29 being the sum claimed in ISG's Application No 13 plus interest, because the Defendant ("Seevic") had not served either a payment notice or a pay less notice in accordance with the provisions of the contract.
3. The Notice of Adjudication in Adjudication No 2 was served four days before Mr. Juniper made his decision in Adjudication No 1. It is clear that Seevic, aware that it had not served the relevant notices in time, was seeking to frustrate or reduce the impact of the likely decision in Adjudication No 1 in the hope that it could obtain a decision in Adjudication No 2 that the value of ISG's works up to the date of the application was less than the amount claimed by ISG.
4. In that it succeeded. By his decision dated 10 October 2014 (as corrected under the slip rule on 13 October 2014) the adjudicator decided in Adjudication No 2 that the value of ISG's works as at the date of Application No 13 was £315,450.47. In fact, the adjudicator accepted ISG's valuation of its measured works but did not accept the sum claimed by ISG for loss and expense, which was a little over £1 million. He concluded that the true value of the loss and expense claim was a little over £300,000 so that ISG had been overpaid. He therefore directed, on the assumption that Seevic had already paid ISG against Adjudication No 1 that ISG should repay the difference, which was £768,525.36.
5. Seevic did not comply with the decision in Adjudication No 1, although it now accepts that it must do so, subject to the decision in Adjudication No 2. On 15 October 2014 Seevic issued a cheque for the sum of £315,450.47 in favour of ISG."
I held that if an employer fails to serve the relevant notices under this form of contract it must be deemed to have agreed the valuation stated in the relevant interim application, right or wrong. Accordingly, the adjudicator must be taken to have decided the question of the value of the work carried out by the contractor for the purposes of the interim application in question.
However, I made it clear that this agreement as to the amount stated in a particular interim application (and hence as to the value of the work on the relevant valuation date) could not constitute any agreement as to the value of the work at some other date (see paragraph 31).
This means that the employer cannot bring a second adjudication to determine the value of the work at the valuation date of the interim application in question. But it does not mean any more. There is nothing to prevent the employer...
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