Owen Pell Ltd v Bindi (London) Ltd
| Jurisdiction | England & Wales |
| Judge | Frances Kirkham |
| Judgment Date | 19 May 2008 |
| Neutral Citation | [2009] EWHC 1420 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 19 May 2008 |
[2008] EWHC 1420 (TCC)
IN THE HIGH COURT OF JUSTICE
BIRMINGHAM DISTRICT REGISTRY
TECHNOLOGY & CONSTRUCTION COURT
BIRMINGHAM CIVIL JUSTICE CENTRE
33 BULL STREET
BIRMINGHAM B4 6DS
Her Honour Judge Frances Kirkham
sitting as a deputy High Court Judge
Ms Charlotte Ellis of Counsel (instructed by Wragge & Co) for the Claimant
Mr Thomas Rochford of Counsel (instructed by Humfrys & Symonds) for the Defendant
The claimant applies for summary judgment to enforce the decision of an expert.
Background
In August 2003 the claimant and defendant contracted whereby the claimant agreed to build an extension and undertake M&E work at the defendant's property at Holme Lacy. The claimant left site in October 2004 before work was complete. A dispute arose as to the claimant's entitlement to payment under its final account and the defendant complained of defects in the claimant's work.
At that stage, the claimant was represented by Wragge & Co, solicitors, and the defendant by Messrs Brook Barnes James (BBJ) a firm of chartered quantity surveyors.
On 15 November 2005, the parties agreed to have their dispute determined by an independent expert, to be appointed by the RICS. That agreement (the Agreement) was set out in a letter, the relevant terms of which are:
“The parties entered into a building contract for construction works to … Garenin Cottage, Holme Lacy…. Owen Pell was the Contractor and Bindi the Employer on the project. Owen Pell has submitted its final account to Bindi for payment. The parties are in dispute concerning the value of the works and wish to have the dispute settled by an independent expert appointed by RICS.
The proposed independent expert will be asked to determine the following:
The value of Owen Pell's work and therefore the sum due to Owen Pell pursuant to submission of its final account; alternatively the amount to be deducted from sums paid to Owen Pell under the contract; and
The entitlement (or otherwise) of Bindi to contra charge Owen Pell in respect of work carried out on the project.
We would suggest that in carrying out his investigations and making his decision, the expert should have regard to Owen Pell's final account and all supporting documents including site diaries and Bindi's documentation concerning the project.
The independent expert should conduct the proceedings in any way that he sees fit but the parties suggest that it would be beneficial for him to conduct a site visit and hold a meeting between the parties.
The timescale for conducting the proceedings is in the hands of the independent expert. Nevertheless the parties agree that the process should take no longer than two months.
The parties agree that they should be bound by the decision of the independent expert and, following the decision, that they are not able to refer the dispute to a subsequent tribunal, including adjudication under the [1996 Act].”
In January 2006, the RICS appointed Mr Cartwright. The parties made submissions. Mr Cartwright directed that the parties prepare a Scott Schedule. A site visit was arranged for 4 September 2006. The following people attended that day: Mr Cartwright; two representatives of the claimant; Mr Woods of Wragge & Co (the claimant's solicitor); Mr Hamed of the defendant, Mr Jerrison (an architectural technician engaged on the project) and Mr Barnes (a surveyor acting for the defendant). Separate meetings and inspections of the property were held as the defendant was not prepared to have a joint inspection. In the morning, Mr Cartwright met Mr Hamed and Mr Barnes and inspected the property in their company. Mr Cartwright acceded to Mr Woods' request that he be entitled to be present as a “silent” observer. In the afternoon, Mr Cartwright met the two representatives of the claimant and Mr Woods and inspected the property with them. No representative of the defendant was present during that afternoon meeting and inspection. It would appear that, at the end of that day, Mr Cartwright called the parties and representatives together and gave directions for further steps to be taken. He confirmed these in an e mail sent on 5 September 2006.
Mr Jerrison wrote a letter which was dated 22 November 2006, but which Mr Cartwright did not receive until 5 January 2007. Mr Cartwright refused to have regard to it, on the grounds that it had been submitted out of time.
Mr Cartwright issued his decision on 11 September 2007. He set out his reasons for that decision in a detailed document, which included the Scott Schedule which each party had completed and showing his comments against each item. By letter dated 22 October 2007, Mr Cartwright clarified his decision. He decided that the claimant was entitled to be paid £53,487.65 plus VAT and that such sum should be paid within seven days of his decision. He also decided that the defendant should pay 80% of his fees.
The issues
The defendant has refused to make payment. The claimant commenced proceedings in December 2007 to recover the sums due to it pursuant to the decision. The claimant now applies for summary judgment.
The claimant's case is that Mr Cartwright answered the question put to him. His decision is binding, even if it is wrong. The rules of natural justice do not apply to expert determination. Even if they do, Mr Cartwright did not breach these.
The defendant served a defence and counterclaim in February 2008. By that pleading, it contends that that there was an implied term of the Agreement, namely that the decision of the expert would be of no effect and/or would be liable to be set aside in the event that
(a) the expert failed to conduct himself in accordance with the principles of natural justice; or
(b) the expert conducted himself in such a way as either was biased or gave the appearance of bias; or
(c) in conducting himself and/or reaching his conclusions, the expert was guilty of gross or obvious error and/or was perverse in his conclusions.
The defendant contends that such term is to be implied as a matter of obvious inference (the officious bystander test) and to give business efficacy to the Agreement.
The defendant also contends that Mr Cartwright was guilty of bias or partiality, both actual and perceived, and acted in breach of the principles of natural justice in a number of ways, namely:
1) He heard from the claimant in private at the site meeting on 4 September 2006.
2) He gave the impression of being dismissive of the defendant's complaints throughout the meeting on 4 September 2006.
3) He declined to consider Mr Jerrison's letter of 22 November 2006.
4) He concluded that the parties had “effectively agreed a walk away situation” as at [the date when the claimant left site]; the defendant had not so agreed.
5) He reached that conclusion without having given the defendant the opportunity to comment on it.
6) He reached conclusions which contained gross and obvious error and which were perverse.
The defendant's case is that the decision is void and unenforceable, alternatively that the court should conclude that it should be set aside.
In its defence, the defendant relied on the fact that Mr Cartwright and Mr Woods lunched together on 4 September 2006. In circumstances where the evidence suggests that Mr Hamed of the defendant had been asked, in advance, about such an arrangement and had made no objection, the defendant no longer relies on that complaint. In its pleading, the defendant also raised concerns about possible previous dealings between the claimant's solicitors and Mr Cartwright. The defendant does not rely on those matters.
Authorities
I have been taken to the following authorities.
Lord Denning, in Dean v Prince [1954] 2 WLR 538, said that the decision of an expert could be impeached not only for fraud but also for mistake or miscarriage. That must, however, be treated with great caution in the light of Lord Denning's judgment in Campbell v Edwards: see below
In Campbell v Edwards [1976] 1 WLR 403, the Court of Appeal was concerned with a non-speaking valuation and the question whether a valuer might be liable in negligence. In his judgment, Lord Denning said:
“In former times (when it was thought that the valuer was not liable for negligence) the court used to look for some way of upsetting a valuation which was shown to be erroneous. They used to say that it could be upset, not only for fraud or collusion, but also on the ground of mistake: see for instance what I said in Dean v Prince. But those cases have to be reconsidered now. I did reconsider them in Arenson v Arenson [1973] 2 WLR 553. I stand by what I there said. It is simply the law of contract. If two persons agree that the price of property should be fixed by a valuer on whom they agree, and he gives a valuation honestly and in good faith, they are bound by it. Even if he has made a mistake they are still bound by it. The reason is because they have agreed to be bound by it. If there were fraud or collusion, of course, it would be very different. Fraud or collusion unravels everything. It may be that if a valuer gives a speaking valuation —if he gives his reasons or his calculations —and you can show on the face of them that they are wrong it might be upset.”
The comment in the last sentence was obiter. It simply raised the possibility that the legal position might be different with a speaking determination.
In Baber v Kenwood [1978] 1 Lloyd's Rep. 175 the Court of Appeal was concerned with a non-speaking share valuation. Megaw LJ referred to the obiter dicta of Lord Denning in Campbell v Edwards and said: “It was suggested that, somehow or other, the facts of the present case should be treated as being equivalent to a 'speaking certificate'. I am unable to see how that could be.” Megaw LJ expressed no view on Lord...
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John Brian Hopkinson v Jane Hickton and Others
...was that he had acted unfairly by failing to give both parties a proper opportunity to make submissions. 26 Similarly in Owen Pell Ltd v Bindi (London) Ltd [2008] EWHC 1420 (TCC); [2008] B.L.R. 436 HH Judge Kirkham rejected a submission that the expert was obliged to follow the rules of nat......