Northumbrian Water Ltd v Doosan Enpure Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell DBE,Mrs Justice O'Farrell |
| Judgment Date | 14 November 2022 |
| Neutral Citation | [2022] EWHC 2881 (TCC) |
| Docket Number | Case No: HT-2022-000192 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2022] EWHC 2881 (TCC)
Mrs Justice O'Farrell DBE
Case No: HT-2022-000192
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Royal Courts of Justice
Rolls Building
London, EC4A 1NL
Alexander Hickey KC (instructed by Holman Fenwick Willan LLP) for the Claimant
Justin Mort KC (instructed by Fenwick Elliott LLP) for the Defendants
Hearing date: 21 st July 2022
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 judgment will be handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Monday 14 November 2022 at 10.30am
This is an application by the claimant (“NWL”) for summary judgment to enforce the adjudication decision of Mr Michael Turgoose dated 23 May 2022, directing the defendants, acting in an unincorporated joint venture (“the JV”), to pay to NWL the sum of £22,458,540.04 (including VAT) plus interest and 90% of the adjudicator's fees and expenses.
The JV resists enforcement of the sum claimed on the ground that the dispute the subject of NWL's claim is required to be referred to arbitration. The JV has an application for stay of the proceedings pursuant to section 9 of the Arbitration Act 1996.
The central issue for the court is whether any dispute about non-payment of the adjudicator's decision, including enforcement, must be referred to arbitration.
Background to the Dispute
NWL is a statutory undertaker engaged in the supply of potable and raw water and the collection, treatment and disposal of sewage in England. It serves 2.7 million people in the North East of England, including the major population centres of Tyneside, Wearside and Teesside, and rural areas such as Northumberland and County Durham. NWL services an area from Berwick in the North, to Darlington and Middlesbrough in the South.
The JV, comprising Doosan Enpure Limited and Tilbury Douglas Construction Limited (formerly known as Interserve Construction Limited), was formed for the purpose of performing a contract with NWL.
On about 23 March 2016 NWL entered into a contract with the JV based on the NEC3 Engineering and Construction Contract Option C for the design and construction of the ‘Phase 2 Horsley Water Treatment Works’ (“the Contract”).
The works, the subject of the Contract, are described in the contract data as the design, supply, construction, installation, testing, commissioning and putting into operation an upgrade to Horsley Water Treatment Works (WTW) to achieve a maximum 150Ml/d with a rapid turn up / down rate of change from the existing capacity of 120Ml/d with a slow turn up / down rate.
The Contract Data defines the Conditions of Contract as the core clauses for NEC3 Engineering and Construction Contract Option C (Target Contract with Activity Schedule), dispute resolution Option W2 and secondary Options X2, X4, X7, X15, X16, X18, Y(UK)2 and Y(UK)3 and Z, as amended by the Employer's Amendments to the Conditions of Contract in the Z Clause Appendix.
The law of the Contract is stated to be the law of England and Wales.
Clause Z37.2 of the Contract provides that each of the JV parties are jointly and severally liable to NWL for the performance of the Contractor's obligations under the Contract and for all obligations and liabilities of the Contractor arising under or in connection with the Contract.
In the Contract Data, “the tribunal” is specified as “arbitration”. The arbitration procedure is the Institution of Civil Engineers Arbitration Procedure (2012) or any amendment or modification to it in force when the arbitrator is appointed.
Dispute resolution procedure Option W2 is stated to be used in the UK when the Housing Grants, Construction and Regeneration Act 1996 (“the Construction Act”) applies. Although parts of the works include water treatment works which the parties agree would not fall within the ambit of the Construction Act, the parties explicitly agreed in the Contract that Option W2 should apply.
Dispute resolution Option W2 includes the following provisions:
“W2.1 (1) A dispute arising under or in connection with this contract is referred to and decided by the Adjudicator. A party may refer a dispute to the Adjudicator at any time.
…
W2.2 (1) The Parties appoint the Adjudicator under the NEC Adjudicator's Contract current at the starting date.
(2) The Adjudicator acts impartially and decides the dispute as an independent adjudicator and not as an arbitrator.
W2.3 …
(4) The Adjudicator may
• review and revise any action or inaction of the Project Manager or Supervisor related to the dispute and alter a quotation which has been treated as having been accepted,
• take the initiative in ascertaining the facts and the law related to the dispute
…
(8) The Adjudicator decides the dispute and notifies the Parties and the Project Manager of his decision and his reasons within twenty-eight days of the dispute being referred to him. This period may be extended by up to fourteen days with the consent of the referring Party or by any other period agreed by the Parties. The Adjudicator may in his decision allocate his fees and expenses between the Parties.
(11) The Adjudicator's decision is binding on the Parties unless and until revised by the tribunal and is enforceable as a matter of contractual obligation between the Parties and not as an arbitral award. The Adjudicator's decision is final and binding if neither Party has notified the other within the times required by this contract that he is dissatisfied with a matter decided by the Adjudicator and intends to refer the matter to the tribunal.
…
W2.4 (1) A Party does not refer any dispute under or in connection with this contract to the tribunal unless it has first been decided by the Adjudicator in accordance with this contract.
(2) If, after the Adjudicator notifies his decision a Party is dissatisfied, that party may notify the other Party of the matter which he disputes and state that he intends to refer it to the tribunal. The dispute may not be referred to the tribunal unless this notification is given within four weeks of the notification of the Adjudicator's decision.
(3) The tribunal settles the dispute referred to it. The tribunal has the powers to reconsider any decision of the Adjudicator and to review and revise any action or inaction of the Project Manager or the Supervisor related to the dispute. A Party is not limited in tribunal proceedings to the information or evidence put to the Adjudicator.
(4) If the tribunal is arbitration, the arbitration procedure, the place where the arbitration is to be held and the method of choosing the arbitrator are those stated in the Contract Data…”
Disputes arose between the parties arising out of cost-overruns, delays to the works and quality issues. On 7 May 2021, NWL issued a notice to the JV under Clause 90.1 of the Contract, terminating the JV's obligation to perform the works on the grounds that the JV had substantially failed to comply with its obligations under the Contract; alternatively, relying on termination for convenience. The JV disputed NWL's purported termination and claimed that NWL was in repudiatory breach, which the JV purported to accept on 7 June 2021.
NWL claimed that the amount due to it following the termination for Contractor default was £50,999,343.30 (including VAT). The JV disputed that any sums were payable to NWL and claimed it was entitled to an adjustment to the Prices under the Contract in respect of Claims and Compensation Events in the sum of £32,854,840.23.
The above matters constituted a dispute arising under or in connection with the Contract for the purpose of clause W2.
The Adjudication
On 10 March 2022 NWL commenced the adjudication by serving its Notice of Adjudication on the JV, seeking declarations as to the correct assessments of disputed ‘Compensation Events’, adjustments to the ‘Completion Date’ and the financial consequences of this under the Contract by reference to DIJV's Pay Less Notice. Further, NWL sought a decision that the JV should pay NWL £26,168,652.47 (including VAT), together with any delay damages that the Adjudicator decided were due and interest.
The parties jointly appointed Mr Michael Turgoose as the Adjudicator in accordance with the NEC3 Adjudicator's Contract and additional conditions identified by the Adjudicator.
Both parties participated in the adjudication and served documentary evidence and written submissions.
The JV's position in the adjudication was that NWL's purported termination of the Contract under clause 90 was wrongful and amounted to repudiatory breach which was accepted by the JV in its letter dated 17 May 2021, as confirmed in its letter dated 7 June 2021. The JV sought declarations that the NWL acted in repudiatory breach, the JV was entitled to extensions of time, NWL had no entitlement to delay damages and correct assessment of its entitlement to Compensation Events. The JV sought an order that NWL should pay to the JV the sum of £1,926,981.99.
By agreement, the date for the Adjudicator's decision was extended to 23 May 2022.
On 23 May 2022 the Adjudicator issued his decision, finding that the termination by NWL was valid and granting the following relief:
i) a declaration that the correct assessment in respect of the Disputed Compensation Events on termination was £2,103,491.68;
ii) a...
To continue reading
Request your trial
-
Adjudication Enforcement: Arbitration Provisions
...followed a number of months later by Northumbrian Water Limited v (1) Doosan Enpure Limited (2) Tilbury Douglas Construction Limited [2022] EWHC 2881 (TCC). Again, the case related to an adjudication enforcement, but this time the dispute was worth some '22 million. Again, enforcement was r......
-
Legal Developments In Construction Law: December 2022
...revised in arbitration. For those reasons, it refused the JV's application for a stay. Northumbrian Water Ltd v Doosan Enpure & Anor [2022] EWHC 2881 2. Repudiation and acceptance - was the adjudicator wrong not to consider A claimant asked the court for a declaration that an adjudicator wa......