John Roberts Architects Ltd and Parkcare Homes (No. 2) Ltd
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE RICHARD HAVERY Q.C. |
| Judgment Date | 25 July 2005 |
| Neutral Citation | [2005] EWHC 1637 (TCC) |
| Date | 25 July 2005 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-04–379 |
[2005] EWHC 1637 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
His Honour Judge Richard Havery Q.c.
Case No: HT-04–379
Mr. Ronald Walker Q.C. (instructed by Squire & Co) for the Claimant
Mr. Francis Tregear Q.C. (instructed by Fladgate Fielder) for the Defendant
Hearing dates: 4 th, 5 th July 2005
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.
This claim is brought under part 8 of the Civil Procedure Rules. It arises out of adjudication proceedings that were abandoned. The defendant instituted adjudication proceedings against the claimant and, after the parties had incurred substantial costs, abandoned its claim. The adjudicator subsequently directed that the defendant should pay the claimant's costs of the adjudication and his own fees and disbursements. He assessed the claimant's costs at £87,131.04 plus any VAT payable, and directed the defendant to pay him £14,643.44 including VAT (in addition to what he had already been paid, as explained below) as his costs and disbursements. By this claim, the claimant claims the sum of £87,131.04 which the adjudicator directed the defendant to pay to the claimant, or the same sum, or a sum at large, as damages for breach of contract. The defendant contends that the adjudicator had no jurisdiction to make the direction that he did, and denies any liability to the claimant.
The relevant facts are these. On or about 7 th October 2002 the claimant was engaged by the defendant to provide certain architectural services in connection with building works to be carried out at premises at Charles House, Salford. The contract between the parties incorporated the RIBA Conditions of Engagement for the Appointment of an Architect (CE/99), which provided for adjudication.
On 11 th May 2004 the defendant's parent company, evidently on behalf of the defendant, sent a letter to the claimant claiming the sum of £1,363,834 said to represent loss suffered by the defendant consequent upon failings in the standard of service provided by the claimant pursuant to the contract mentioned above. The letter required a response within seven days failing which, or failing an acceptable offer of settlement, the sender would conclude that a dispute existed between the parties and the matter would be referred to adjudication. On 21 st May 2004, in the absence of a response to that letter, the defendant served on the claimant a notice of adjudication. On 2 nd June 2004, Mr. Colin Moore was appointed to act as adjudicator. The claimant agreed to participate in the adjudication without prejudice to a contention on its part that the adjudicator lacked jurisdiction. Four grounds were given for that contention, in particular the ground that having regard to the limited time given for the claimant's response to the claim, there was no dispute prior to the appointment of the adjudicator. On 9 th June 2004, following discussions between the parties, both parties invited Mr. Moore to resign as adjudicator, which he did.
On 10 th June 2004, the defendant served a further notice of adjudication in the same terms as the earlier notice. Mr. Paul Greenwood was appointed adjudicator by agreement between the parties. The claimant undertook with the defendant not to take any points as to jurisdiction. On 6 th July the claimant served its response. In that response, it did take the points as to jurisdiction, as a result of some failure of communication. On 7 th July, the defendant's solicitors wrote to the adjudicator and to the claimant's solicitors stating that the defendant accepted the point that the adjudicator did not have jurisdiction on the ground that a relevant dispute between the parties had not arisen prior to the issue of the notice to refer to adjudication, and that it was therefore inappropriate that any further steps should be taken in the adjudication. The adjudicator responded on the same day asking for confirmation, for the avoidance of any doubt, that the adjudication was discontinued and that he should accordingly submit his account to Parkcare (the defendant before me) for time expended on the matter. On 8 th July the claimant's solicitors wrote to the adjudicator and to the defendant's solicitors noting that the referring party had discontinued the adjudication, and reserving the claimant's position in relation to the costs of the adjudication. On 9 th July the defendant's solicitors wrote to the adjudicator (sending a copy to the claimant's solicitors) confirming that the adjudication was discontinued and that the adjudicator should submit his account accordingly. He did so, and the defendant paid the account.
The claimant asked the adjudicator for an award of costs in its favour. The defendant actively opposed that application, without prejudice to a contention on its part that the adjudicator had no jurisdiction to make such an award. The claimant subsequently asked the adjudicator also for a formal order that the claim be dismissed. The adjudicator, having taken counsel's opinion for the purpose, decided that he had jurisdiction to make an award of costs, but did not have jurisdiction to order that the claim be dismissed. He imparted his decision to the parties on 12 th November. The sum of £14,643.44 mentioned above constituted the additional fees of the adjudicator incurred after the discontinuance of the substantive adjudication.
The contract between the parties provided, by clause 9.2 of CE/99, that the adjudication procedures and the Agreement for the Appointment of an Adjudicator should be as set out in the 'Model Adjudication Procedures' [MAP] published by the Construction Industry Council current at the date of the reference, save that clause 28 should be deleted and replaced as follows:
"The Adjudicator may in his discretion direct the payment of legal costs and expenses of one party by another as part of his decision. The Adjudicator may determine the amount of costs to be paid or may delegate the task to an independent costs draftsman".
It is common ground that the reference to clause 28 of the MAP should be a reference to clause 29. The other relevant provisions of the MAP are these:
1. The object of adjudication is to reach a fair, rapid and inexpensive decision upon a dispute arising under the Contract and this procedure shall be interpreted accordingly.
8. Either Party may give notice at any time of its intention to refer a dispute arising under the Contract to adjudication by giving a written Notice to the other Party. The Notice shall include a brief statement of the issue or issues which it is desired to refer and the redress sought. The referring Party shall send a copy of the Notice to any adjudicator named in the Contract.
20. The Adjudicator shall decide the matters set out in the Notice, together with any other matters which the Parties and the Adjudicator agree shall be within the scope of the adjudication.
30. The Parties shall be jointly and severally liable for the Adjudicator's fees and expenses…..but the Adjudicator may direct a Party to pay all or part of the fees and expenses. If he makes no such direction, the Parties shall pay them in equal shares. The Party requesting the adjudication shall be liable for the Adjudicator's fees and expenses if the adjudication does not proceed.
The notice of adjudication sought damages and the defendant's costs of the adjudication pursuant to clause 9.2 of CE/99 plus a decision of the amount of those costs.
I consider first the effect of the MAP agreement. The question turns on the words "as part of his decision" in clause 29 as amended. Mr. Francis Tregear Q.C. submitted that once the adjudication was discontinued, the adjudicator ceased to have any jurisdiction in relation to the dispute. In particular, he had no jurisdiction under clause 29 to direct payment of legal costs. That could be done only as part of his decision. The word "decision" referred to the decision of the matters set out in the notice. An award of costs could not be a decision on its own.
Mr. Ronald Walker Q.C. submitted that the words "as part of his decision", or at any rate the words "part of" were otiose. Given that the agreement empowered the adjudicator to award costs, the parties to the agreement could not be taken to have intended, he submitted, that the referring party could discontinue an adjudication, perhaps just before the giving of a decision which the party believed would be against him, thereby leaving the other party without any remedy for the recovery of its costs. In litigation, discontinuance was subject to rules which enabled the other party to recover its costs if appropriate. Mr. Walker accepted that there was nothing to stop a referring party to an adjudication from abandoning it. In my judgment, nothing turns on the use of the word discontinuance. A referring party can discontinue an adjudication. The question is what are the consequences. Mr. Walker submitted that the abandonment of a claim did not remove the jurisdiction of the adjudicator to decide the dispute (though he did not need to decide it) or to make an award of costs. The adjudicator evidently reached the conclusion (in my judgment rightly) that he had no jurisdiction to decide the dispute, since he expressly concluded that he did not have jurisdiction to order that the claim be dismissed.
Mr. Walker relied on the speech of Lord Hoffman, with the reasoning of whom Lord Hope of Craighead and Lord Clyde agreed, in Investors...
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