J J Rhatigan & Company (UK) Ltd v Rosemary Lodge Developments Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Jefford |
| Judgment Date | 08 May 2019 |
| Neutral Citation | [2019] EWHC 1152 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2018-000371 |
| Date | 08 May 2019 |
[2019] EWHC 1152 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Jefford DBE
Case No: HT-2018-000371
David Pliener (instructed by Reynolds Porter Chamberlain LLP) for the Claimant
Andrew Kearney (instructed under the Direct Access Scheme) for the Defendant
Hearing date: 12 April 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
On 12 April 2019, I heard this application for summary judgment to enforce the decision of the adjudicator, Paul Jensen, made on 22 November 2018 and amended on 27 November 2018. The application had been adjourned on two previous occasion — at the request of both parties and by consent — to enable them to conduct commercial negotiations. Those negotiations did not result in a settlement and this application was relisted. In the circumstances, I gave my decision, which was that summary judgment should be entered for the claimant, at the conclusion of the hearing and gave brief reasons. I undertook to provide the parties with full written reasons in due course and these are those reasons.
I start by explaining that the amendment to the decision was made to correct an obvious and commonplace error of getting the parties the wrong way round and nothing turns on it. Mr Jensen's decision was that the Respondent (JJ Rhatigan and Co. (UK) Ltd., the claimant in these proceedings) was entitled to be paid the sum of £8.6 million subject to retention and previous payments in full and final settlement of all claims and counterclaims.
It is common ground that resulted in a payment of £1,693,659.69 plus VAT due from the defendant, Rosemary Lodge Developments Ltd (“RDL”) to JJ Rhatigan and Co. (“Rhatigan”).
RDL sought to resist enforcement by way of summary judgment on the basis that Mr Jensen's decision was reached in breach of natural justice.
Principles
In short, it is well established that an adjudicator's decision will normally be enforced by summary judgment and that the court is not concerned with the merits of the decision. There are limited bases on which a defendant may resist enforcement including lack of jurisdiction and a material breach of natural justice.
I can do no better than cite the well-known passages from the decision of the Court of Appeal in Carillion Construction Ltd. v Devonport Royal Dockyard [2005] EWCA Civ 1358 (per Chadwick LJ):
“85. The objective which underlies the Act and the statutory scheme requires the courts to respect and enforce the adjudicator's decision unless it is plain that the question which he had decided was not the question referred to him or the manner in which he had gone about his task is obviously unfair. It should be only in rare circumstances that the courts will interfere with the decision of the adjudicator. The courts should give no encouragement to the approach adopted by DML in the present case, which ….. may, indeed, aptly be described as “simply scrabbling around to find some argument, however, tenuous, to resist payment”.
86. It is only too easy in a complex case for a party who is dissatisfied with the decision of an adjudicator to comb through the adjudicator's reasons and identify points upon which to present a challenge under the labels “excess of jurisdiction” or “breach of natural justice”. It must be kept in mind that the majority of adjudicators are not chosen for their expertise as lawyers. Their skills are as likely (if not more likely) to lie in other disciplines. The task of the adjudicator is to find an interim solution which meets the needs of the case. Parliament may be taken to have recognised that, in the absence of an interim solution, the contractor (or sub-contractor) or his sub-contractors will be driven into insolvency through a wrongful withholding of payments properly due. The statutory scheme provides a means of meeting the legitimate cash-flow requirements of contractor and their subcontractors. The need to have the “right” answer has been subordinated to the need to have an answer quickly. ….. 87. In short, in the overwhelming majority of cases, the proper course for the party who is unsuccessful in an adjudication under the scheme must be to pay the amount that he has been ordered to pay by the adjudicator. If he does not accept the adjudicator's decision as correct (whether on the facts or in law), he can take legal or arbitration proceedings in order to establish the true position. To seek to challenge the adjudicator's decision on the ground that he has exceeded his jurisdiction or breached the rules of natural justice (save in the plainest cases) is likely to lead to a substantial waster of time and expense ….”
Further, as Akenhead J said in Cantillon Ltd. v Urvasco Ltd. [2008] EWHC 282 (TCC) at [57]:
“…. I conclude as follows in relation to breaches of natural justice in adjudication cases: (a) it must first be established that the adjudicator failed to apply the rules of natural justice; (b) any breach of the rules must be more than peripheral; they must be material breaches; (c) breaches of the rules will be material in cases where the adjudicator has failed to bring to the attention of the parties a point or issue which they ought to be given the opportunity to comment upon if it is one which is either decisive or of considerable importance to the outcome of the resolution of the dispute and is not peripheral or irrelevant …..”
It is fair to say that the issues in relation to which RDL, in this case, says that the adjudicator has failed to act fairly are not particularly complex ones. It is not the paradigm case the Court of Appeal had in mind in Carillion. But the same principles apply and it is important to have in mind the distinction between matters on which the defendant says the adjudicator has reached the wrong decision and those in respect of which he has acted unfairly in reaching his decision. Further, save in one respect, the complaint made by RDL is not about the failure to draw to the attention of the parties a point or issue on which they ought to have been given an opportunity to comment. Nonetheless, it is obvious that the breach still needs to be material and the characterisation of a material issue as one which is decisive or of considerable potential importance is equally applicable.
In order to resist enforcement of the adjudicator's decision, RDL, therefore, needed to establish that there was some plain breach of the rules of natural justice; that that breach was material to the outcome of the adjudication; and that that material breach was such that it would be unfair to the enforce the decision. Mr Kearney submitted that on a summary judgment application, he only had to show that he had a real prospect of success of resisting enforcement on this basis, whilst accepting that that was, at least on the facts of this case, probably a distinction without a difference.
The history of the adjudication
In January 2016, RDL (as Employer) and Rhatigan (as Contractor) entered into a contract for the construction of 6 new build residential units and the refurbishment of Rosemary Lodge in Wimbledon. The contract was made on the JCT standard form D&B contract 2011 edition and the contract sum was £6,197,568.
In the adjudication, it was Rhatigan's primary case that, in May 2018, the parties reached an agreement of the final account encompassing all claims and counterclaims.
On 5 September 2018, Rhatigan made an application for payment reflecting that amount. RDL disputed that such an agreement had been reached and on 5 October 2018, Rhatigan made an application for payment as if there were no such agreement in the far greater sum of approximately £12.4 million.
RDL referred to adjudication the dispute as to the value of the payment application in that amount.
In Rhatigan's Response dated 1 November 2018, Rhatigan's primary case was that there was an agreement of the amount due in the sum of £8.6 million. In the alternative, Rhatigan's position was that the greater sum previously applied for was due. The Response was supported by a number of witness statements including the first statement of Mr Tom Neylon. So far as the alleged agreement was concerned, the starting point in Mr Neylon's statement was a letter dated 18 May 2018 from Mr Ger Ronayne (Rhatigan) to Mr Bruce McGlew (RDL but addressed to him at Coronado Property Developments). I was told at the hearing that McGlew is the sole director of RDL. After an introductory paragraph about under valuation, the letter continued:
“I understand the reason given for the under valuation is that you are currently re-financing the project and are not in a position to pay the larger amount. Obviously, this is an entirely unsatisfactory and unacceptable position from our perspective and is a clear breach of Contract on your part. …
I confirm agreeing the following with Iestyn [Mr Lewis of Iesis], (which he in turn confirmed agreeing with you):
1. We would meet with you in London on the 30 th May 2018. The attendees of the meeting are to include:
a. Bruce McGlew
b. Iestyn Lewis
c. Ger Ronayne
d. Tom Neylon
….
3. The purpose of the meeting is to try and agree the following:
a. Value of work as executed to date including design work.
b. Value of changes
c. Value of Loss and Expense.
Alternatively, and preferably we are to try and agree an overall Final Account for the project.
4. Once we agree the amounts due we can then discuss and agree a payment plan in relation to them,...
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Table of cases
...v Sandpit harbour Society (2000) 83 BCLr (3d) 293 III.26.223, III.26.319 JJ rhatigan & Co (UK) Ltd v rosemary Lodge Developments Ltd [2019] EWhC 1152 (TCC) III.24.74, III.24.107, III.26.114 JKC australia LNG pty Ltd v Ch2M hill Companies Ltd [2019] WaSC 177 I.3.197, II.12.57, II.12.88 JKC a......
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Statutory adjudication
...Services Ltd [2016] EWHC 222 (TCC) at [22], per Edwards-Stuart J; JJ Rhatigan & Co (UK) Ltd v Rosemary Lodge Developments Ltd [2019] EWHC 1152 (TCC) at [54]–[55], per Jeford J. 407 Housing Grants, Construction and Regeneration Act 1996 (UK) section 108(2)(d). 408 Housing Grants, Constructio......
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Litigation
...the witnesses colluded, thus casting doubt upon their evidence: see, eg, JJ Rhatigan & Co (UK) Ltd v Rosemary Lodge Developments Ltd [2019] EWHC 1152 (TCC) at [41], per Jeford J. 469 A witness’s evidence may be treated adversely by a court where it is apparent that the witness has been coac......