The Dorchester Hotel Ltd v Vivid Interiors Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson |
| Judgment Date | 19 January 2009 |
| Neutral Citation | [2009] EWHC 70 (TCC) |
| Docket Number | Case No: HT-09-15 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 19 January 2009 |
[2009] EWHC 70 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
St Dunstan's House
133-137 Fetter Lane
London EC4A 1HD
Mr Justice Coulson
Case No: HT-09-15
Mr A Hickey (instructed by Campbell Hooper LLP) for the Claimant
Mr P Buckingham (instructed by Pinsent Masons LLP) for the Defendant.
Mr Justice Coulson:
A. INTRODUCTION
The Claimant engaged the Defendant to carry out the refurbishment of its hotel. The works were completed in about September 2007. On 19 th December 2008, the Defendant commenced adjudication proceedings on its final account claim. The Referral Notice was accompanied by 37 lever arch files, which included six substantial witness statements and two experts' reports of 30 and 20 pages respectively. Although an extension of the 28 day adjudication period has been agreed, extending the Adjudicator's time to reach his decision until 28th February 2009, the Claimant maintains that, in all the circumstances, the timetable is too tight and that there is a very real risk of there being a breach of natural justice. It seeks declarations to that effect in these Part 8 proceedings. Accordingly, this claim raises the novel question of the extent, if at all, to which the TCC should intervene in an ongoing adjudication in connection with potential breaches of the rules of natural justice.
The background to this dispute can be briefly summarised. The contract between the parties incorporated the JCT Standard Form of Building Contract (1998 Edition). Clause 41A of those conditions stipulates that the Adjudicator must reach his decision within 28 days of the Referral Notice, or 42 days if the claiming party (in this case the Defendant) consents to such extension. It is also open to the parties to agree a longer period than 42 days.
The Defendant's draft final account in the approximate gross sum of £4.39 million was provided on 28th March 2008 at the end of the six month deadline provided by the contract. The documentation made plain that further information would be provided by the Defendant. That information was provided in a relatively piecemeal fashion between May and October 2008, with consequential changes to the total sum sought. By 28th October 2008, the gross final account claim stood at £4.032 million, with a net sum allegedly due of £1.788 million. It appears that little happened after that until 12th December 2008, when the Defendant served the Notice of Intention to Refer in respect of the final account, in the revised net sum of £1.538 million.
The Referral Notice itself was issued on 19th December 2008. It was 92 pages long. As noted above, it incorporated 37 lever arch files divided into six sections. The claims covered a variety of heads, including a net claim for executed works, including variations, of £1,106,091.11; a claim for a full extension of time of 16 weeks to 28th September 2007; a claim for loss and expense of £432,126.98; and a claim for the return of liquidated damages in the sum of £60,000.
It appears that within the 37 files there were five entirely new files. Three of those contained the statements and the experts' reports to which I have previously referred. One file is said to contain a remeasurement exercise, although it is now alleged by the Defendant, somewhat oddly, that that remeasurement exercise is actually irrelevant to its final account claim. I am bound to say that the Referral Notice does not make that clear at all. The fifth and final new file is said to contain material specifically requested by the Claimant during what final account negotiations there were in the autumn of 2008. In addition, and perhaps more importantly for present purposes, it seems that many of the individual claim figures within the final account have been recast or revised so that, on the material that I have seen, the majority of the individual claim figures are different, albeit by a relatively modest amount, from those claimed in March 2008.
The Adjudicator, Mr Eric Mouzer, has been previously involved in valuation disputes on this contract. He was not prepared to accept the reference unless the Defendant agreed to disregard the holiday period from 24th December 2008 to 4th January 2009 for the purposes of calculating the 28 days. The Defendant properly agreed to this. That extended time for completion of the adjudication to 28th January 2009. It is my understanding that it remains the Adjudicator's view that this timetable is sufficient, although it may be that he reached that conclusion before looking at the detail within the 37 files.
At all events, the Defendant has accepted that such a period is not long enough. The Defendant has proposed a timetable pursuant to which:
(a) the Claimant has until 28th January 2009 to respond to the claim;
(b) the Defendant can serve a Reply by 11th February 2009;
(c) the Claimant can serve a Rejoinder by 18th February 2009; and
(d) the Adjudicator will provide his decision by 28th February 2009 or such later date as the Adjudicator may reasonably require.
Without prejudice to the points raised in this Part 8 claim, the Claimant has agreed to this timetable as representing the best that it could achieve, the Defendant having made clear that no further extensions in relation to the time for service of the Claimant's response will be entertained.
In this Part 8 claim, the Claimant seeks the following declarations:
“(1) There is a serious risk of a breach of natural justice in the conduct of the adjudication if the adjudication is conducted in accordance with the present timetable … because
(i) In the context of a complex final account dispute the brevity of the time afforded by Vivid to The Dorchester, namely a period of only 18 working days between 5th January and 28th January 2009, precludes The Dorchester from a reasonable and fair opportunity adequately to review the 92 page Referral and the accompanying 37 lever arch files of evidence (some of which contains new material and/or different amounts or bases of claim) and hence from formulating and submitting its response and factual and expert evidence. In consequence, in breach of natural justice, The Dorchester is or would be deprived of a reasonable and fair opportunity to be heard in answer to the dispute referred to adjudication.
(ii) Absent The Dorchester being allowed a reasonable and fair opportunity adequately to review the Referral and the accompanying evidence and to formulate and submit its response and factual and expert evidence in response to each of the claims made in the final account, the Adjudicator is unable to carry out his duty of deciding the case impartially and fairly as between the parties within the time limits allowed. Vivid would have an unfair tactical advantage over The Dorchester with regards to its submissions and evidence in support given the size and complexity of the claim and the length of time which it has had to consider and formulate its claim compared to the significantly less time that The Dorchester has been permitted to respond.
(2) Unless the parties agree a realistic timetable which allows The Dorchester a reasonable and fair opportunity adequately to review the 92 page Referral and the accompanying 37 lever arch files of evidence and to formulate and submit its own Response and factual and expert evidence in response, any decision issued by the Adjudicator against the existing timetable … would be unenforceable by reason of breach of natural justice.
(3) In the light of declarations 1 and 2, the Adjudicator is entitled to resign the reference if the timetable is not extended by agreement of the parties to allow The Dorchester a reasonable and fair date to serve its response. In the event that the Adjudicator resigns, Vivid will be held responsible for the Adjudicator's fees in full.”
The Claimant's particular concern is the date for its response of 28th January 200It is said that this is only 18 working days after 5th January and is simply not long enough to respond to the detailed claim now made, particularly given the new evidence and the wide variety of altered figures.
In response, the Defendant has taken two principal points. First, it maintains that the Court has no jurisdiction to grant the declarations sought, principally because this would involve interference with the Adjudicator's discretion and in particular his right to set his own timetable. Secondly, the Defendant contends that the extended timetable set out above is more than sufficient in all the circumstances, particularly given that the Claimant has had the majority of the final account documentation since March 2008.
B. JURISDICTION
Paragraph 9.4.1 of the TCC Guide (Second Edition, First Revision) is set out at page 446 of volume 2 of the White Book. The paragraph provides that:
“9.4.1 As noted above, the TCC will also hear any applications for declaratory relief arising out of the commencement of a disputed adjudication. Commonly, these will concern:
(a) Disputes over the jurisdiction of an adjudicator. It can sometimes be appropriate to seek a declaration as to jurisdiction at the outset of an adjudication, rather than both parties incurring considerable costs in the adjudication itself, only for the jurisdiction point to emerge again at the enforcement hearing …
(c) Disputes over the permissible scope of the adjudication, and, in particular, whether the matters which the claimant seeks to raise in the adjudication are the subject of a pre-existing dispute between the...
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