Ground Developments Ltd (‘GDL’) brought proceedings for enforcement of an adjudicator’s decision against Merseylink Civil Contractors JV (‘the Joint Venture’) in relation to works undertaken during the construction of the Mersey Gateway Project.
Counsel for the Joint Venture sought to resist enforcement of the adjudicator’s decision on 7 grounds, which broadly fell under three categories:
- The first set of grounds relied on the adjudicator’s assessment of the valuation of the works as comprising the resolution of a different dispute to that in the referral notice, namely the sums due to GDL by operation of the payment mechanisms and in the absence of any payment certificate or pay less notice.
- The second set of grounds arose out of a dispute between the parties as to the existence and terms of the contract agreed between the parties, and in particular whether the contract was contained in an email sent to GDL or whether the parties had instead entered into an NEC3 form subcontract.
- The third set of grounds argued that GDL should not be entitled to summary judgment of the adjudicator’s decision and instead there should be a contested trial on the issue of the contract.
Issue 1: Multiple DisputesThe first two grounds advanced by the Joint Venture relied on the decision of the Court of Appeal in MJ Harding Contractors v Paice and Springall. In MJ Harding Contractors the parties had referred the final account claim to adjudication on the basis that a final payment application had been served with no corresponding payless notice, and so payment of the sums in the application was now due. The adjudicator determined that payment was due without considering the merits of the substantive final account claim, in particular the true valuation of the works. A second dispute was then referred to adjudication challenging the final account claim on the basis of the true valuation of the final account, and the Court of Appeal determined that this was a separate dispute to the contractual issue of whether a valid pay less notice had been served.
The Joint venture relied on MJ Harding Contractors as establishing that the sum due by operation of the contractual payment mechanisms was a different dispute to the true valuation of the works. The decision therefore founded the following two grounds for resisting enforcement:
- The adjudicator had determined a different dispute to the one referred to him, namely that he had determined the true valuation of the works rather than the sum due by operation of the payment mechanisms; or
- GDL had referred two different disputes to the adjudicator, the first being the sums due by operation of the payment mechanisms and the second being the true valuation of the works, which the adjudicator had determined without the Joint Venture’s consent.
Fraser J was not convinced by either ground. He considered that the referred dispute was the failure to make a payment by the Joint Venture, which was wide enough to include issues as to the operation of the payment mechanisms and the proper valuation:
“It is clear to me, when one considers the whole of the Notice, the Referral and the Decision itself, that the dispute that was referred was the failure to make payment to the Referring Party in relation to three applications for payment made to the Responding Party dated 23 September, 22 October and 30 November 2015. One of its limbs was the lack of Pay Less Notices. That was the basis upon which the Adjudicator decided the dispute. He did not decide that dispute on the valuation basis.”
As to the second ground, Fraser J considered that it was clear only a single dispute had been referred to the adjudicator and that the alternative “is verging upon, if not completely, unarguable.”
Issue 2: The Contractual Dispute
The contractual dispute between the parties founded a number of the Joint Venture’s grounds for resisting enforcement. If the contract had been contained within the email sent to GDL then it was clear that the provisions of the Scheme would apply and the adjudication would have to proceed on that basis, whereas under the NEC3 contract the adjudication procedure would have instead been governed by the NEC3 procedural rules.
The issue had still been live at the time of the referral notice and so GDL had set out its primary case that the Scheme applied and the adjudication would be conducting accordingly, but that:
“Alternatively should the Adjudicator decide that the NEC3 Sub-Contract forms the basis of the contract between the parties then the Referring Party gives notice in accordance with the TeCSA Adjudication Rules Version 3.2.1 (2015) and shall request that an Adjudicator is appointed by the President of the Institute of Civil Engineers.”
Counsel for the Joint Venture described this as “schizophrenia” on the part of GDL, who had equivocated in the adjudicator’s appointment and had recognised that at least one of the bases on which it was applying was invalid. However, Fraser J considered it was clear that GDL’s primary case had was that the contract was contained within the email and the Scheme applied, and the alternative did not arise:
“The device adopted by GDL in that paragraph, namely seeking in the alternative to give notice of adjudication, did not and does not arise. In my judgment, the inclusion in the Notice of that paragraph setting out one part of the Responding Party's case does not invalidate the Notice itself. What the situation might have been had the Adjudicator decided that GDL's primary case on the contract (under which he was appointed) was flawed, and what he may have then done, is academic because this is not what happened."
Accordingly, the referral notice was valid.
Issue 3: Full Trial
Counsel for the Joint Venture submitted that in order to grant summary judgment, Fraser J would have to determine that none of the grounds for resisting enforcement had any real prospects of success and that there was no other compelling reason to go to full trial, or else the summary judgment application would fail. However, Fraser J considered that this was not the case and the orthodox approach would prevail:
“It is not necessary, and in my view would be contrary to that approach, to have to conclude on the material currently before this court that each, all, or any of the arguments that the Joint Venture has marshalled to resist this summary judgment application had no real prospect of success in order to give summary judgment to GDL on this Decision. The approach of the court should be the conventional one on an enforcement, namely was the adjudicator validly appointed, did he act within his jurisdiction and in accordance with the rules of natural justice?”
Accordingly, every ground for resisting enforcement failed and GDL was granted summary judgment on the full amount of the decision.