Geoffrey Osborne Ltd v Atkins Rail Ltd

JurisdictionEngland & Wales
JudgeMR JUSTICE EDWARDS-STUART
Judgment Date08 October 2009
Neutral Citation[2009] EWHC 2425 (TCC)
CourtQueen's Bench Division (Technology and Construction Court)
Date08 October 2009
Docket NumberCase No: HT–09–327/HT–09–322

[2009] EWHC 2425 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Before: The Hon Mr Justice Edwards-Stuart

Case No: HT–09–327/HT–09–322

Between
Geoffrey Osborne Ltd
Claimant
and
Atkins Rail Ltd
Defendant

Christopher Lewis (instructed by Fenwick Elliott) for the Claimant

Roger ter Haar QC and Andrew Phillips (instructed by Silver Shemmings) for the Defendant

Hearing dates: 24 th September 2009

MR JUSTICE EDWARDS-STUART

MR JUSTICE EDWARDS-STUART:

1

There are two applications before the court. By a claim form issued on 6 August 2009 Geoffrey Osborne Limited (GOL) seeks to enforce an adjudication decision of a Mr Allen Dyer dated 15 July 2009, the net effect of which was to order Atkins Rail Limited (ARL) to pay GOL the sum of £504,385 (in this judgment all figures are in round pounds).

2

By a claim form issued on 11 August 2009 under Part 8 of the CPR ARL seeks declarations that Mr Dyer had no jurisdiction to make the decision that he did and/or that the decision was plainly wrong and should be set aside and/or not enforced. Both applications are therefore essentially concerned with the same issue, namely whether the adjudicator's decision should be enforced. GOL, represented by Mr Christopher Lewis, contends that ARL has no realistic prospect of successfully resisting GOL's claim for enforcement so that GOL is entitled to summary judgment on its claim.

3

ARL, by contrast, represented by Mr Roger ter Haar QC and Mr Andrew Phillips, submits that the award is only binding unless and until overruled or set aside by the court, and that the court can and should decide on this application that it was wrong and set it aside. Alternatively, ARL submits that the adjudicator did not address the questions that were before him and therefore exceeded his jurisdiction.

4

ARL was the main contractor, pursuant to a contract with Network Rail Infrastructure Limited (as employer) (“the Main Contract”), for the design and construction of signalling and related civil works as part of the Basingstoke Area Infrastructure Upgrade Project. The works were to be commissioned in 3 separate stages, known as Stage 1, Stage 2 and Stage 3. ARL engaged GOL (as sub-contractor) to construct certain civil engineering works associated with the Main Contract, pursuant to a sub-contract in writing executed on 10 October 2006 (“the Sub-Contract”).

5

The problem arises because, as is now common ground, the adjudicator made a significant error. By the Notice of Adjudication he was asked to assess the value of two items of work, for which assessments had been included in ARL's Interim Certificate No 35 and which were the subject of further claims in GOL's subsequent Payment Application No 36, and having done so, to order payment of an appropriate amount to ARL (I am deliberately using neutral language so as not to appear to prejudge the issues in dispute). The two items were a ground investigation carried out by GOL and variations in connection with the construction of signal control centre located to the rear of Basingstoke Station (“the SCC”).

6

Unfortunately, having carefully assessed the value of the two items of work (and associated loss and expense) the adjudicator omitted to deduct the amounts already included in respect of those items in Certificate No 35, with the result that he concluded that GOL was owed £504,385 and ordered ARL to pay that sum. In fact, it was common ground between the parties that since there had been included in the total sum certified in Certificate No 35 some £912,147 in respect of the two claims in issue (namely £550,000 in respect of ground investigation and £362,147 for the variations in connection with the construction of the SCC), GOL was not owed the sum that the adjudicator ordered to be paid.

7

The position is complicated by the fact that Certificate No 35 showed a negative balance, namely that GOL's work had been overvalued so that instead of further sums being owed to GOL under the certificate, in fact GOL was said to owe ARL some £552,891. The upshot is that the correct result—on the adjudicator's own findings as to the value of the two claims and the other unchallenged figures in Certificate No 35—was that GOL had been overpaid by over £400,000, rather than being owed some £500,000 odd. The difference between the two positions is both startling and stark.

8

Following the issue of the Decision, the adjudicator was invited by ARL to correct the relevant part of it by which he had ordered ARL to make a payment to GOL. By his letter dated 20 July 2009, the adjudicator declined to do this. He appears to have thought that ARL had specifically submitted that he was not to insert his valuations into Certificate No 35, with the result that the amounts paid or allowed within that certificate were to be ignored.

9

As a result, and perhaps understandably, ARL has taken every possible point in its efforts to resist the enforcement of this award.

The procedure adopted

10

Since the adjudicator's Decision is binding upon the parties until the matters decided by him have been finally determined by a court, ARL issued proceedings under Part 8 of the CPR in order to obtain a final determination in the form of an appropriate declaration to the effect that the Decision, or at least the relevant part of it relating to the order for the payment of money to GOL, was wrong and should be set aside. In effect, it amounts to a pre-emptive strike to defeat GOL's application to enforce the Decision.

11

In Jarvis Facilities Limited v Alstom Signalling Limited [2004] EWHC 1285 (TCC), HH Judge Humphrey LLoyd QC was faced with a similar situation. Alstom pre-empted Jarvis's application to enforce an adjudicator's award in its favour by immediately issuing Part 8 proceedings seeking declarations that Jarvis was not entitled to payment of the sums awarded by the adjudicator. Perhaps unsurprisingly, Jarvis protested at this novel approach by Alstom, but the learned judge overruled its protests. Since his observations at paragraphs 19 and 20 of the judgment are directly relevant to the situation in the present case, it seems to me to be worth quoting them in full. He said:

“19…. Obviously it has been clear since applications for enforcement were first made to this court that the intention of Parliament was that adjudicators' decisions should be honoured, even if the reasoning that justified the decision was erroneous in law or fact. However that policy only applies to decisions which were valid, in that they were decisions which the adjudicator was authorised to make: for example, that the adjudicator had the power to do so (sometimes termed the jurisdiction to do so) and that the decision was not vitiated by some material failure to comply with basic concepts of fairness (sometimes termed compliance with the rules of natural justice, whether in respect of independence or impartiality or in respect of procedural fairness). Accordingly, to speak of a right of enforcement of an adjudicator's decision is misleading; the right is always qualified or contingent. Moreover section 108(3) of the Act says that the decision is “binding until the dispute is finally determined by legal proceedings….”. Naturally the Act assumes that such a final determination is likely to follow the decision. That is consistent with the concept of adjudication whereby a dispute would be resolved during the course of a contract and only resurrected for final determination, if required, at a later stage. “Pay now; argue later”, as some are wont to say. In my judgment there is nothing in the Act (or the Scheme, if applicable) which requires a party who wishes to challenge a decision of an adjudicator to comply with it before being able to advance its case, any more than a party is precluded from subsequently challenging a decision, having complied with it (as Mr Bowdery suggested, at least [at] one stage). Unless a party is estopped from questioning the decision or has waived its right to do so, both of which would require clear evidence (and mere compliance is not) that party is free at any time to obtain a final determination of the dispute which has been provisionally resolved.

20. There is equally no reason why a challenge to a subsequent decision may not encompass or lead to that final determination in respect of an earlier decision, as sought by action 85 [Alstom's Part 8 proceedings]. In reality such a party is rarely in a position to act as Alstom has done, unless, for example, there have been successive adjudications and it is ready before the latest. If, however, before an application to enforce an adjudicator's decision is heard, the point decided by it is finally determined adversely to the party who is relying on the decision then that application and the action will fail. That might be so if the point related to a standard form of contract and the point was determined in proceedings between other parties. Any other conclusion would be verging on the absurd: to allow the application to enforce the decision and then to set it aside (assuming the defendant had its tackle in order to do so). The decision is binding only in so far as the dispute has not been finally determined. The Act does not say when the final determination may take place. In my judgment the Act does not lead to any such technical absurdity, nor is it permissible under the Civil Procedure Rules as it is directly contrary to the overriding objective and other provisions of Part 1. Once the court is seized of the case it has to take a course which saves expense and is expeditious. To proceed first to deal with the application for summary judgment, to allow it and then to track back and to determine the dispute that gave rise to it is not consistent with the principles of Part 1 of the CPR and it is not in...

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    ...claim could even be considered. She argued that this approach was consistent with the decision of Edwards-Stuart J in Geoffrey Osborne Limited v Atkins Rail Limited [2009] EWHC 2425 (TCC). 33 Osborne is, so it seems to me, a case on its own particular facts. First, the parties were expressl......
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2 firm's commentaries
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