SIMONS CONSTRUCTION LTD V AARDVARK DEVELOPMENTS LTD

SIMONS CONSTRUCTION LTD v AARDVARK DEVELOPMENTS LTD

Technology and Construction Court

His Honour Judge Richard Seymour QC

29 October 2003

THE FULL TEXT OF THE JUDGMENT

Introduction

1. The action which has given rise to the Part 20 proceedings now before the court was commenced in the Chelmsford County Court by Mr. Anthony Barker as what, on its face, was a simple claim by him against both the Part 20 Claimant, Simons Construction Ltd. ("Simons"), and the Part 20 Defendant, Aardvark Developments Ltd. ("Aardvark"), for his fees for acting as an adjudicator in relation to disputes which were said to have arisen between Simons and Aardvark in respect of a project ("the Project") described as Ely Central Area Redevelopment. There were in fact two references to Mr. Barker for his adjudication of what were contended to be disputes in relation to the Project. The first was made by Simons and Mr. Barker decided that it was premature because at the date of the reference to adjudication, so Mr. Barker considered, there was no crystallised dispute between Simons and Aardvark. He having communicated his view to the parties, Simons, by its solicitors, Messrs. Birketts ("Birketts"), then purported to notify him that his services as adjudicator were no longer required. Mr. Barker has sought to charge the sum of £200 plus Value Added Tax in respect of services provided by him between his appointment in relation to the reference made by Simons, to which it is convenient to refer as "the First Reference", and the purported termination of that appointment. Subsequently a reference ("the Second Reference") of disputes in relation to the Project was made to Mr. Barker by Aardvark. There was no dispute that by the date of the Second Reference there was a crystallised dispute which was fit for determination in adjudication. Mr. Barker proceeded to consider that dispute and in due course produced what he described as "ADJUDICATOR'S DRAFT DECISION For the Parties' comment" ("the Draft Decision"). The Draft Decision was published on 17 June 2002. The Draft Decision was published again, unchanged as to substantive text, on 25 June 2002 as a final decision ("the Final Decision"). Mr. Barker has sought to charge fees of £2,880 plus Value Added Tax in respect of his services which led, eventually, to the production of the Final Decision. By the Final Decision Mr. Barker found that Aardvark was substantially the successful party in the Second Reference and directed that his fees in respect of the Second Reference should be paid by Simons. Simons contended by way of defence to the claim of Mr. Barker for his fees in relation to the First Reference in the main action that the First Reference was a valid and effective reference, that Mr. Barker made plain that he was not prepared to reach a decision within 28 days of the making of the First Reference, and that in those circumstances Simons was entitled to determine his appointment and he was not entitled to any fees. So far as the claim for fees in relation to the Second Reference was concerned, Simons's case was that the Draft Decision, being a draft issued for comment by the parties, was not a decision in respect of the matters referred by the Second Reference, but, as it were, an invitation to debate the conclusions set out in it, while the Final Decision was not binding upon Simons or Aardvark because it was published later than the rules governing the Second Reference permitted. Simons added a Part 20 claim for declaratory relief in respect of its contentions as to the validity of the Draft Decision and the Final Decision to its defence in the main action and sought to pursue that Part 20 claim against both Mr. Barker and Aardvark. By an order made by Deputy District Judge Edgington on 13 May 2003 the Part 20 claim was dismissed as against Mr. Barker and the main action was stayed pending determination of the Part 20 claim as between Simons and Aardvark. The Part 20 claim was transferred to this court by an order made by me on 8 July 2003 and clarified on 7 October 2003.

The Part 20 statements of case

2. The relief claimed on behalf of Simons in its Part 20 claim was a declaration that:-

"In respect of the adjudication between Aardvark Developments Limited and Simons Construction Limited, referred to Anthony G. Barker as Adjudicator on 25 April 2002:

a) The document published by Mr. Barker on 17 June 2002 entitled "Adjudicator's Draft Decision" is not a valid "Decision" within the meaning of s 108 of the [Housing Grants, Construction and Regeneration] Act [1996] and clause 39A of the Contract.

b) The document published by Mr. Barker on 25 June 2002 entitled "Adjudicator's Decision" is not a valid "Decision" within the meaning of s 108 of the Act and clause 39A of the Contract.

c) Consequently no Decision has been reached in respect of the disputes referred pursuant to the said adjudication."

3. The contentions advanced on behalf of Simons which it was said led to its entitlement to declarations in the terms quoted in the preceding paragraph were set out at paragraph 28 of its Defence and Part 20 claim as follows:-

"In relation to Invoice A/892 and the Second Adjudication:

28.1 Mr. Barker failed to reach a Decision within the time prescribed by the Contract and the Adjudication Agreement (that is, 28 days, extended in this case to 17 June 2002).

28.2 The "Draft Decision" published on the 17 June cannot amount to a "Decision" for these purposes as:

28.2.1 It invited the parties to make further comments and did not therefore represent the final view of Mr. Barker as it left open the possibility of him changing his mind on the issues in dispute.

28.2.2 Mr. Barker stated in publishing the "Draft Decision" that he would publish his "Final Decision" 7 days later.

28.3 The "Decision" published on 25 June 2002 cannot amount to a "Decision" within the meaning of the Contract as it was not reached on or before 17 June 2002 as prescribed by the Contract and by agreement of the parties. Accordingly it is not binding on the parties.

28.4 Accordingly, paragraph 4 of the "Decision" directing Simons to pay Mr. Barker's costs of £2,880 plus VAT of £504 is not binding on Simons."

4. A Defence to Simons's Part 20 claim was served on behalf of Aardvark which itself included a Part 20 claim. After a paragraph in the Part 20 claim in which it was recorded that Aardvark repeated, for the purposes of its Part 20 claim, the allegations in its Defence, the Part 20 claim went on:-

"46. By reasons of the matters aforesaid and in particular paragraph 41, if Aardvark is found to be jointly and severally liable to Mr. Barker for his fees, Aardvark will claim:-

46.1 a declaration requiring Simons to pay Mr. Barker's fees of the First Adjudication on the basis that Simons acted in breach of contract by hindering and/or preventing the Adjudicator reaching a decision in the First Adjudication; and/or

46.2 damages for the said breach of contract equivalent to any sum Aardvark has to pay to Mr. Barker;

46.3 interest on the said damages pursuant to s. 69 of the County Courts Act 1984 on such sum and at such rate and for such period as the Court may think fit.

47. Further, by reasons of the matters aforesaid and in particular paragraphs 42 and 43, the Claimant seeks a declaration:-

47.1 that the Draft Decision (including the order that Simons pay the costs of Mr. Barker) is a valid decision within the meaning of the Building Contract and/or s. 108 of the HGCRA and is enforceable; and/or

47.2 that the Final Decision (including the order that Simons pay the costs of Mr. Barker) is a valid decision within the meaning of the Building Contract and/or s. 108 of the HGCRA and is enforceable

47.3 requiring Simons to pay Mr. Barker's fees of the Second Adjudication."

5. In relation to the Second Reference the declarations sought on behalf of Aardvark in its Part 20 claim were simply the converse of the declarations sought on behalf of Simons in its Part 20 claim. Unsurprisingly, therefore, the parties before me agreed that the issues which arose in respect of the Second Reference were these:-

"1. Did the Adjudicator reach a decision within the time agreed by the parties?

2. Was the "draft decision" published on 17 June 2002 an effective decision or was it invalid for the reasons set out at paragraph 28.2 of the First Defendant's [that is, Simons's] Defence?

3. Was the "decision" published on 25 June 2002 an effective adjudication decision or was it invalid for the reasons set out at paragraph 28.3 of the First Defendant's Defence? "

6. The issues raised by the Part 20 claim of Aardvark in relation to the liability of the parties to pay the fees of Mr. Barker in relation to the First Reference do not fall for determination by me because the Part 20 claim of Aardvark has not been transferred to this court. Nonetheless, in reality the issues raised by that Part 20 claim in respect of the Second Reference will be resolved by my decision concerning the Part 20 claim of Simons which has been transferred.

7. The principal contentions on behalf of Aardvark set out in its Defence to Simons's Part 20 claim in respect of liability to pay the fees of Mr. Barker for his services in respect of the Second Reference were these:-

"42. It is expressly denied that Mr. Barker failed to reach a "decision" within the time prescribed by the Building Contract and the Adjudication Agreement and/or that the Draft Decision cannot amount to a "decision" within the meaning of the Building Contract, the Second Adjudication Agreement and/or the HGCRA and/or that is not enforceable. Without prejudice to the generality of that denial, Aardvark make the following specific averments to the allegations made at sub-paragraph 28.2:-

42.1 It was clear to the parties, as evidenced by Birketts letter dated 17 June 2002 (which is quoted at paragraph 29 above) that the parties recognised and accepted that the Draft Decision did in fact constitute a final and binding decision on the merits.

42.2 The Draft Decision did represent Mr. Barker's final view on the merits of the dispute and did not leave open the possibility of his changing his mind on the substantive issues. It was clear that by issuing the Draft Decision Mr. Barker was intending to give the parties the opportunity to point out any errors which he might have made and was not intending to and did not as a fact give the parties the opportunity to comment on the core or merits of his decision.

42.3 The fact that Mr. Barker stated in publishing the Draft Decision that he would publish the "final decision" 7 days later does not effect [sic] the actual legal effect of the Draft Decision.

43. Further, it is expressly denied that the Final Decision published on 25 June 2002 cannot amount to a "decision" within the meaning of the Building Contract, the Second Adjudication Agreement and/or s. 108 of HGCRA and/or that it is not enforceable because it was not reached on or before 17 June 2002. If, which is denied, the Draft Decision was not a valid and enforceable decision, it is averred that the failure by Mr. Barker to deliver his Decision until 25 June 2002 when he published the Final Decision is a procedural irregularity and does not invalidate the Final Decision."

The relevant contractual terms

8. By an agreement in writing dated 28 January 1999 ("the Building Contract") and made between Aardvark and Simons Simons undertook to carry out the Project for Aardvark. The Building Contract was in the Standard Form of Building Contract With Contractor's Design 1981 Edition issued by the Joint Contracts Tribunal, and incorporated Amendments 1 to 12 inclusive. Clause 39A of the Building Contract made provision for the reference to adjudication of disputes arising under the contract. The terms of clause 39A which are material for present purposes are:-

"39A.4.1 When pursuant to Article 5 a Party requires a dispute or difference to be referred to adjudication then that Party shall give notice to the other Party of his intention to refer the dispute or difference, briefly identified in the notice to adjudication. Within 7 days from the date of such notice or the execution of the Adjudication Agreement by the Adjudicator if later, the Party giving the notice of intention shall refer the dispute or difference to the Adjudicator for his decision ("the referral"); and shall include with that referral particulars of the dispute or difference together with a summary of the contentions on which he relies, a statement of the relief or remedy which is sought and any material he wishes the Adjudicator to consider. The referral and its accompanying documentation shall be copied simultaneously to the other Party. …

39A.5.1 The Adjudicator shall immediately upon receipt of the referral and its accompanying documentation confirm the date of that receipt to the Parties. …

39A.5.3 The Adjudicator shall within 28 days of his receipt of the referral and its accompanying documentation under clause 39A.4.1 and acting as an Adjudicator for the purposes of S. 108 of the Housing Grants, Construction and Regeneration Act 1996 and not as an expert or an arbitrator reach his decision and forthwith send that decision in writing to the Parties. Provided that the Party who has made the referral may consent to allowing the Adjudicator to extend the period of 28 days by up to 14 days; and that by agreement between the Parties after the referral has been made a longer period than 28 days may be notified jointly by the Parties to the Adjudicator within which to reach his decision. …

39A.7.1 The decision of the Adjudicator shall be binding on the Parties until the dispute or difference is finally determined by arbitration or by legal proceedings or by an agreement in writing between the Parties made after the decision of the Adjudicator has been given.