Liverpool City Council v Vital Infrastructure Asset Management (Viam) Ltd ((in Administration))
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 24 May 2022 |
| Neutral Citation | [2022] EWHC 1235 (TCC) |
| Docket Number | Case No: HT-2022-MAN-000001 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2022] EWHC 1235 (TCC)
His Honour Judge Stephen Davies sitting as a High Court Judge
Case No: HT-2022-MAN-000001
IN THE HIGH COURT OF JUSTICE
[BUSINESS AND PROPERTY COURTS IN MANCHESTER]
TECHNOLOGY AND CONSTRUCTION COURT (QB)
Manchester Civil Justice Centre
Mr Vivek Kapoor (instructed by DWF LLP, Solicitors, Liverpool) for the Claimant
The Defendant did not appear and was not represented
Hearing dates: 29 April 2022
Further submissions 5 and 16 May 2022
Date draft judgment circulated: 18 May 2022
APPROVED JUDGMENT
This judgment was handed down remotely by circulation to the parties' representatives by email. It will also be released for publication on the National Archives caselaw website. The date and time for hand-down is deemed to be 10:00am on 24 May 2022.
I direct that pursuant to CPR PD 39A paragraph 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.
His Honour Judge Stephen Davies
Introduction and summary of decision
In this case the claimant, Liverpool City Council (“LCC”), was the respondent to an adjudication, brought by the defendant, Vital Infrastructure Asset Management (Viam) Ltd (“Vital”). The appointed adjudicator, Mr Howard Klein, proceeded with the adjudication in the face of jurisdictional objections raised by LCC and decided that LCC should: (a) pay Vital the sum of £128,500 and interest in relation to its maintenance of temporary fencing for highways works undertaken by Vital pursuant to a contract with LCC; and (b) be responsible for his fees and expenses.
Vital went into administration the day before the decision. LCC has not paid the amount decided by the adjudicator. LCC made an insolvency application seeking permission to bring Part 8 proceedings against Vital for declarations to the effect that the adjudicator had no jurisdiction because: (a) the adjudicator had no jurisdiction to determine the dispute referred, which arose under two contracts (“the two contracts issue”); (b) even if the adjudicator did have jurisdiction under what was known as the call-off contract, then (i) it failed to serve LCC in accordance with that contract so that the adjudicator was not validly appointed and had no jurisdiction (“the service issue”); and/or (ii) the adjudicator decided a question which had not been referred to him, so that his decision was a nullity (“the nullity issue”).
I gave permission for LCC to bring the proceedings subject to terms as to costs as against the administrators. I also permitted the adjudicator to participate should he wish to do.
The proceedings having been commenced, the administrators decided that they did not wish to take any part in the proceedings. The adjudicator decided that he did not wish to participate in any formal way but he did, through his solicitors, make written representations. He also attended the hearing as an observer.
The hearing was conducted on 28 April 2022. Having made able and persuasive submissions on the two contracts issue and the notice issue Mr Kapoor proceeded to make similar submissions on the nullity issue. I observed that on one view the case being advanced might more properly be seen as a breach of natural justice argument than a nullity argument. I said that if LCC wished to argue the case on this basis I would need to be referred to the exchanges in the adjudication — not all of which had been placed before me — to see whether or not the argument was well-founded. I permitted LCC to advance this issue (the “natural justice issue”), since it was closely connected with the nullity issue which had been raised, giving directions for service by LCC of a supplemental skeleton and provision of the additional material.
I also permitted the adjudicator to see the supplemental skeleton and additional material and to make any observations he wished upon it, given that the natural justice argument as advanced involves some criticism of his conduct of the adjudication. He did so. His witness statement also raised matters which went beyond the natural justice issue. LCC complained about this. I directed that I would ignore those parts of this witness statement which did not respond to the natural justice issue. Mr Kapoor responded to his observations on the natural justice issue and I now produce this judgment.
In summary, my decision is that the claim fails on the two contracts, the notice and the nullity issues but succeeds on the natural justice issue. My reasons are as follows.
The relevant contracts
On 22 May 2019 LCC and Vital entered into a framework agreement in relation to highways planned work projects to a value of £500,000. This was a detailed bespoke contract comprising 59 clauses and 18 schedules. In summary, the framework agreement provided that each work project was to be the subject of an individual call-off contract, to be procured in accordance with a detailed procedure contained within schedule 7.
The framework agreement provided that the call-off contract should be in the form of the NEC3 engineering and construction contract (“the NEC3 contract”) as amended and supplemented by the provisions in schedule 9 of the framework agreement. Clause 2.3 of the framework agreement stated that the provisions of the framework agreement should “supplement and compliment” the provisions of the call-off contract and also identified the order of precedence as between the documents forming each call-off contract. By recital (c) Vital agreed to be bound by the terms and conditions of the framework agreement in carrying out the projects.
On 25 September 2021 LCC and Vital entered into a call-off contract for what was referred to as “framework lot 1 — K1-006”, accepting Vital's tender in the sum of £488,992.41 on the basis that the “Works are to be carried out in accordance with the terms and conditions of the Highways Planned Works Framework Agreement – Lot 1 (Works and Services
The dispute resolution and notification provisions of the framework agreement and the call-off contracts
The dispute resolution provisions of the framework agreement and the call-off contracts are key to the two contracts issue and the service issue.
Clauses 47.1 and 47.1.1 of the framework agreement read, relevantly, as follows:
“47.1. … Should any dispute arise between the Parties under or in relation to this Framework Agreement: 47.1.1 where such dispute or difference involves matters which arise under and/or relate to any Works and Services for Projects, such dispute or difference shall be resolved in accordance with the dispute resolution provisions of the relevant Call-off Contract forming part of the Memorandum of Agreement (including, where applicable, the mediation, adjudication and/or litigation provisions of such agreement).”
Clause 47.3 stated: “where the dispute or difference relates solely to this Framework Agreement and does not involve matters which arise under and/or relate to any Projects then the dispute or difference shall be resolved in accordance with clauses 47 to 48 (inclusive), as applicable”.
Clause 48 referred to mediation, clause 49 referred to consultation, clause 50 referred to adjudication and clause 51 referred to legal proceedings. It is likely that the reference in clause 47.3 to clauses 47 to 48 is an error and should refer to clauses 48 to 51, but that is not critical to my decision.
Clause 50 stated: “Nothing in this Framework Agreement shall prevent the Parties from referring a dispute to adjudication at any time. Either Party may at any time refer such dispute or difference to adjudication in accordance with the provisions of the Scheme except for the purposes of the Scheme the nominating body shall be that stated in the Framework Particulars”,
The Scheme was defined as: “Part 1 of the Schedule to the Scheme for Construction Contracts (England and Wales) Regulations 1998 as amended by the Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (England) Regulations 2011”. The Framework Particulars identified the nominating body as the Royal Institution of Chartered Surveyors.
Clause 53, titled “Notices”, stated by clause 53.1, relevantly, that:
“All notices under this Framework Agreement shall be in writing and all certificates, notices or written instructions to be given under the terms of this Framework Agreement shall be served by sending the same by first class post, email or by hand to the following addresses: … If to the Employer: The Head of Procurement, Liverpool City Council, Commercial Procurement Unit, 4th Floor, Liverpool City Council, Cunard Building, Water Street, Liverpool L3 1DS”.
In my judgment what is apparent from these provisions is that disputes arising under and in relation to the framework agreement and any individual call-off contract should be resolved in accordance with the dispute resolution provisions of the relevant call-off contract, whereas disputes arising only under or in relation to the framework agreement should be resolved in accordance with the dispute resolution provision of the framework agreement. It follows in my judgment that the adjudication provisions of clause 50 and the notice provisions of clause 53 have no application to such a case.
As regards the call-off contracts Appendix A, entitled “contract data”, identified the “conditions of contract” as being the core clauses and other specified clauses from the NEC3 contract and the framework agreement. It also identified “the Employer” as “name: Liverpool City Council (LCC)” and its address as “Cunard Building, Pier Head, Water Street, Liverpool, L3 1DS”. It stated that “the Employer is represented...
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