Thermal Energy Construction Ltd v AE & E Lentjes UK Ltd

JurisdictionEngland & Wales
Judgment Date30 January 2009
Neutral Citation[2009] EWHC 408 (TCC)
Docket NumberCase No. TCC15208
CourtQueen's Bench Division (Technology and Construction Court)
Date30 January 2009

[2009] EWHC 408 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

MANCHESTER DISTRICT REGISTRY

TECHNOLOGY AND CONSTRUCTION COURT

Manchester Civil Justice Centre

Bridge Street West

Manchester

Before His Honour Judge Stephen Davies

Case No. TCC15208

Between
Thermal Energy Construction Limited
(Claimant)
and
AE & E Lentjes UK Limited
(Defendant)

APPEARANCES:

For The Claimant:Mr. Anthony Edwards (Instructed By Brooke North Llp, Solicitors)

For The Defendant:Mr. Stephen Furst Qc (Instructed By Pinsent Masons Llp, Solicitors)

JUDGE DAVIES:

1

This is an application by the Claimant, Thermal Energy Construction Limited, to enforce against the Defendant, AE & E Lentjes UK Limited, a decision of an Adjudicator, Mr. Bruce Griffin, made 16 December 2008, in which he decided that the Defendant should pay the Claimant the sum of £904,567.60, together with VAT as appropriate, on or before 23 December 2008. The Defendant not having complied with that decision, the Claimant issued proceedings in the Manchester Technology and Construction Court to enforce that decision, and made an application for summary judgment which has come on for hearing today under an order providing for expedition in accordance with the normal procedure in the TCC in relation to adjudication enforcement claims.

2

The application is opposed by the Defendant. In summary the Defendant's case is that the Adjudicator failed to give reasons in respect of an issue which was a necessary element of his decision on the underlying dispute, in consequence of which the Defendant has suffered substantial prejudice such that the decision should not be enforced by the Court.

3

The claim arises out of a contract under which the Claimant was sub-contractor to the Defendant in relation to a project at the Fiddlers Ferry Power Station near Warrington, Cheshire. The Defendant, who was contracted to fit three flue gas desulphurisation plants for the benefit of its client, Scottish and Southern Energy, at that power station, sub-contracted the mechanical erection services element of that work to the Claimant.

4

It is common ground before me, and it was common ground in the adjudication, that there was a sub-contract between the parties and that the sub-contract included a provision for adjudication in accordance with the TeCSA Adjudication Rules 2002 version 2.0 Procedural Rules for Adjudication. There was a dispute before the Adjudicator as to whether that sub-contract was contained in various documents the last one being a contract amendment in April 2007, or whether it was contained in some further revisions concluded in October 2007; the Adjudicator decided in favour of the latter contention, and that is not the subject of any challenge for the purposes of this enforcement action.

5

The Notice of Adjudication was submitted on 17 October 2008, and the letter enclosing the Notice succinctly identified the dispute as being the Defendant's failure properly to value and certify payment for certain elements of the mechanical erection services works carried out in accordance with the terms and conditions of the contract. The Notice itself under Paragraph 6 identified four specific elements of claim: preliminary management claims, direct labour claims, repayment of risk claim and an interest claim, and specifically restricted the Adjudicator's jurisdiction to those particular claims. It also, by Paragraph 11, requested the Adjudicator to provide reasons for his decision. It is common ground that by virtue of Paragraph 31 of the TeCSA Rules, the Adjudicator was obliged to provide written reasons for any decision if any or all of the parties make a request for written reasons within seven days of the date of the referral of the dispute. It is common ground therefore that the Adjudicator was required to provide reasons for his decision.

6

On 20 October 2008, Mr. Griffin was appointed by the appropriate nominating body, and on the next day he notified the parties that he had accepted that appointment. Mr. Griffin is I am told a qualified engineer, and also a qualified solicitor and a partner in a firm of solicitors.

7

I need say nothing about the Referral Notice, but in the Response, following a lengthy section dealing with the claims made by the Claimant, there was a separate section beginning at Paragraph 3.1.3 headed “Amounts owed to the Defendant due to breaches of contract by the Claimant”. What was said, in summary, was that the Defendant had a defence by way of counter-claim operating by way of set-off in relation to its liability to its client for liquidated damages under the main contract, as a result, it was said, of the Claimant's failure to achieve completion of certain tie-in dates provided for by the contract programme agreed between the parties as part of the contractual arrangements. What was said was that the total liability of the Defendant for liquidated damages amounted to £3.75 million, and that sum was asserted by way of defence of set-off and also by way of counter-claim.

8

In its Reply, the Claimant took issue with that part of the response on two grounds, firstly asserting that the Adjudicator had no jurisdiction to consider the defence, and secondly asserting that in any event the claim itself was barred by Clause 9 of the overriding conditions of the contract, which in summary provided that:

“The parties agree that liquidated or unliquidated damages shall not be applicable to the contract in the event of delays to completion of the works, irrespective of the causes of such delays, and accordingly the purchaser shall not hold the contractor liable for late completion and/or any consequential costs arising therefrom”.

9

There was a response to that by the Defendant. In addition to taking issue with the jurisdictional point, the Defendant's response to the reliance upon Clause 9 was to assert that as a matter of construction of the contract, whilst that provision might apply to a claim based on a delay in overall completion, it did not apply to a claim based on a delay in achieving the individual tie-in dates. There were further exchanges between the parties in which the respective contentions were re-stated and amplified and in due course the Adjudicator, as I have already indicated, gave his decision on 16 December 2008.

10

The decision is a document running to 23 pages. It began by identifying the structure of the decision in a Contents page, and there were then eight separate sections, the first being titled “Introduction”, the second “The nature of the dispute”, the third “The issues to be decided”, the fourth “The remedy sought”, the fifth “The Adjudicator's decision, including reasons”, the sixth “Decision on the remedies sought”, the seventh “Adjudicator's fees and expenses” and finally the eighth “Adjudicator's signature”. I do not need to refer to the Introduction. Section 2 (“The nature of the dispute”) referred to the individual claims made by the Claimant in accordance with the Notice of Adjudication, but made no express reference to the set-off and counter-claim advanced by the Defendant in its response. Section 3 (“The issues to be decided”) did not in any conventional way set out a list of issues to be decided, but was instead more in the nature of a discursive section of the decision. So that for example, Section 3.1 was headed “The contract”, and there the Adjudicator made a positive finding as to which of the competing versions of the contract was the correct one, deciding that it was the October 2007 amendment. Under Section 3.2, headed “Contract comment”, he made a number of comments on the contract. In Section 3.3, under the heading “The 3rd October 2007 contract”, he referred to five of the conditions of the overriding conditions, including Condition 9 to which I have referred. However, it is right to observe that he made no specific comment on that condition; he did not say in terms that that was something in respect of which there was an issue between the parties in relation to the set-off and counter-claim.

11

He went on to refer to a number of further contractual clauses in some detail. Then at the end of that section at 3.4.4, headed “Jurisdiction”, he referred to various jurisdictional matters, but it is to be observed, he did not make any reference to the jurisdictional challenge which the Claimant had made in relation to the Defendant's set-off and counter-claim.

12

Under Section 4 entitled “The remedy sought”, he effectively adopted the content of the Notice of Adjudication and included, therefore, in his recital of “The remedy sought” a remedy that the Adjudicator should decide the sum due and payable.

13

In Section 5, which as Mr. Furst QC for the Defendant submits, one would expect to find the Adjudicator's decision, including reasons, as intimated in the Contents page, the Adjudicator began by setting out in Section 5.1 what are described as “General principles”, where he made findings as to the basis under which the Claimant was entitled to payment...

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