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England and Wales High Court (Technology and Construction Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> John Sisk & Son Ltd v Duro Felguera UK Ltd [2016] EWHC 81 (TCC) (25 January 2016) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2016/81.html Cite as: [2016] BLR 147, [2016] EWHC 81 (TCC), 165 Con LR 33 |
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QUEEN''S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
JOHN SISK & SON LIMITED |
Claimant |
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- and - |
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DURO FELGUERA UK LIMITED |
Defendant |
____________________
Mr Simon Hughes QC & Mr Matthew Finn (instructed by Freeths LLP) for the Defendant
Hearing date: 4th December 2015
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Crown Copyright ©
Mr Justice Edwards-Stuart :
The pre-determination point
The events up to 17 August 2015
“"In reading the head document and Mr Selby’'s opinion I note amongst other items the challenges raised in connection with both my threshold and internal jurisdiction. At paragraph 2.1 of the Response it is noted that the Responding Party does not confer upon me jurisdiction to determine the issue. By way of clarification I take this to mean that they do not confer the power to allow me to determine the extent of my jurisdiction. That does not in my view prevent me from carrying out an investigation into the challenges made to allow me to form a non-binding view on the merits thereof. It is my intention to carry out such an investigation and accordingly I invite the Referring Party to provide its comments on the challenges by no later than 5 pm on Tuesday, 28 July 2015”".
(My emphasis)
It is to be noted that the Adjudicator referred to “"challenges”" - in the plural - and that these challenges were to both his threshold jurisdiction and what he called his “"internal jurisdiction”". Duro’'s solicitor, Mr Driver, responded by e-mail timed at 17:04 by way of annotations to the Adjudicator’'s e-mail. To the end of the first paragraph quoted above he added: “"I agree”". The expression “"internal jurisdiction”" is not one that I have come across in this context, but it is reasonably clear that what the Adjudicator meant by the challenges to it were the four points made by Duro in its Response, each of which, if good, would defeat Sisk’'s claims in their entirety and therefore bring the referral to an end. Given the nature of his response to the Adjudicator’'s email, I conclude that Mr Driver must have had the same understanding; or, at least, that is how the Adjudicator would reasonably have read it.
“"Therefore having regard to the foregoing I consider that both strands of the Respondent’'s challenge to my jurisdiction are without merit and I have jurisdiction to adjudicate the referred matter. Therefore by this letter I advise the Parties that there is no good reason for me to resign and I confirm my intention to continue with this Adjudication.”"
“"We are concerned by the number of issues dealt with in your letter. We aim to provide a substantive response tomorrow. In the meantime, our client’'s position is reserved generally.”"
The Adjudicator replied, 15 minutes later at 14:08, as follows:
“"I note Mr Driver’'s e-mail and will await his further communication. Whilst writing I also refer to the above noted in previous correspondence in respect of this matter on my proposed meetings with the parties and the date for reaching my decision. Having now had time to consider the submissions made I propose the following:
1. Meeting to consider issues of liability will take place on 17 August 2015;
2. Meeting to consider issues of quantum (which will include issues of measurement) will take place on 19 August 2015;
3. Should the need for further submissions arise these will be made simultaneously on 24 August 2015;
4. I shall reach my decision in this matter by no later than 9 September 2015.
I will provide details of timings, venue and an agenda in advance of both meetings.”"
“"Jurisdictional Matters
1. Matters arising from Adjudicator’'s non-binding decision on his internal jurisdiction.”"
“"I refer to your letter of yesterday in which we were expecting you to give your non-binding view on your jurisdiction. What follows is without prejudice to our right to argue that you do not have (and never have had) jurisdiction to deal with this matter.
As I mentioned yesterday, I was concerned by the number of additional issues you decided in that letter without having given DFUK an opportunity to address important new arguments from Sisk which were central to your decision.
Accordingly, I must respectfully as[k] you to resign forthwith as resignation is the only fair and reasonable resolution of the problem you have created.
In the circumstances, I sought counsel’'s balanced view to see if he concurred with me. I am attaching for your information counsel’'s written opinion. For completeness, I should say that in disclosing this advice I am not waving privilege in relation to any other privileged communications beyond this document. Counsel’'s advice is clear.
In conclusion, counsel is of the view that:
1. When viewed from the perspective of a fair-minded observer, you have in this case done the very thing that the Court of Appeal said was unacceptable in Lanes v Galliford Try (supra) and reached final decisions on a variety of legal points; and
2. This constitutes a breach of natural justice and, given the importance of the points being determined, it is evidently highly material. It is unlikely that any award that is now made in this Adjudication would be enforceable.
I share counsel’'s hope that, when given the chance to reflect, you will recognise that you have acted too hastily in deciding these points without seeking further submissions from DFUK and that there is no way of completely curing this problem other than by stepping aside and allowing another to resolve this dispute.
I should be grateful if you would please give this matter your urgent attention and resign forthwith.”"
The events following the service of Duro’'s Rejoinder on 14 August 2015
(1) That the parties had reached a binding agreement as to the value of the work as at 31 August 2014.
(2) That Sisk failed to comply with clause 22 of the contract and was therefore precluded from pursuing any of its claims, having failed to comply with the relevant time limits.
(3) Payment to Sisk was conditional upon the issue of an invoice by Sisk, and such invoices had not been issued.
(4) It was not open to the Adjudicator to make an order that Sisk should be paid for certain elements of the work only because the work should have been valued on a cumulative basis (in other words, taking everything into account).
“"Having considered the nature of the dispute and upon all the information provided to me by the Parties through the various submissions, I set out the issues that remain to be decided in this Adjudication.”"
“"8.111 At that time I considered the challenge that the need for an invoice prior to payment was inappropriate as it was my view that the provisions contained in the Contract were noncompliant.
8.112 However after full submissions were received and taking into account the further information provided by both parties I consider that the payment provisions in part fall foul of the Act but can be remedied by implying terms from the Scheme.”"
The authorities
“"Predetermination is the surrender by a decision-maker of its judgment by having a closed mind and failing to apply it to the task. In a case of apparent bias, the decision-maker may have in fact applied its mind quite properly to the matter but a reasonable observer would consider that there was a real danger of bias on its part. Bias is concerned with appearances whereas predetermination is concerned with what has in fact happened.”"
“"From R v Gough I derive the following propositions: (1) Any court seised of a challenge on the ground of apparent bias must ascertain the relevant circumstances and consider all the evidence for itself so as to reach its own conclusions on the facts. (2) It necessarily follows that the factual position may appear quite differently as between the time when the challenge is launched and the time when it comes to be decided by the court. What may appear at the leave stage to be a strong case of “"justice [not] manifestly and undoubtedly be[ing] seen to be done”", may, following the court’'s investigation, nevertheless fail. Or, of course, although perhaps less probably, the case may have become stronger. (4) The question upon which the court must reach its own factual conclusion is this: is there a real danger of injustice having occurred as a result of bias? By “"real”" is meant not without substance. A real danger clearly involves more than a minimal risk, less than a probability. One could, I think, as well speak of a real risk or a real possibility.”"
“"In my judgment, the mere fact that the tribunal has previously decided the issue is not of itself sufficient to justify a conclusion of apparent bias. Something more is required. Judges are assumed to be trustworthy and to understand that they should approach every case with an open mind. The same applies to adjudicators, who are almost always professional persons. That is not to say that, if it is asked to redetermine an issue and the evidence and arguments are merely a repeat of what went before, the tribunal will not be likely to reach the same conclusion as before. It would be unrealistic, indeed absurd, to expect the tribunal in such circumstances to ignore its earlier decision and not to be inclined to come to the same conclusion as before, particularly if the previous decision was carefully reasoned. The vice which the law must guard against is that the tribunal may approach the rehearing with a closed mind. If a judge has considered an issue carefully before reaching a decision on the first occasion, it cannot sensibly be said that he has a closed mind if, the evidence and arguments being the same as before, he does not give as careful a consideration on the second occasion as on the first. He will, however, be expected to give such reconsideration of the matter as is reasonably necessary for him to be satisfied that his first decision was correct. As I have said, it will be a most unusual case where the second hearing is for practical purposes an exact rerun of the first.”"
“"the mere fact that the tribunal has decided the issue before is therefore not enough for apparent bias. There needs to be something of substance to lead the fair-minded and informed observer to conclude that there is a real possibility that the tribunal will not bring an open mind and objective judgment to bear.”"
“"It is easy enough to make challenges of breach of natural justice against an adjudicator. The purpose of the scheme of the 1996 Act is now well known. It is to provide a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requiring the decisions of adjudicators to be enforced pending final determination of disputes by arbitration, litigation or agreement. The intention of Parliament to achieve this purpose will be undermined if allegations of breach of natural justice are not examined critically when they are raised by parties who are seeking to avoid complying with adjudicators’' decisions. It is only where the defendant has advanced a properly arguable objection based on apparent bias that he should be permitted to resist summary enforcement of the adjudicator’'s award on that ground.”"
My conclusions as to what the adjudicator did
The involvement of Mr Hutchinson
“"Mr Hutchinson assisted me on the day of the measurement meeting by taking a note for me in order that I could concentrate on the matters in issue. At other times he also did certain items of checking and research into matters that I directed he review on my behalf. I have made no charge for his involvement for the time he worked on this application.”"
1) In relation to the meeting of 3 September 2015:
“"As I recollect not everyone who attended my meeting on 3 September 2015 arrived at the same time. As a courtesy to those who had travelled to my office for the meeting I invited them into my meeting room upon arrival and offered them refreshments. Mr Hutchinson was already in the room and naturally I introduced him to each attendee as they arrived. I cannot recall with any certainty if I stated his role at that time or at the commencement of the meeting, however I did advise the parties of his presence and what he was tasked with doing on my behalf at the meeting.”"
2) In relation to the comment by Ms Matthews that she had not seen any note of the meeting of 3 September 2015 prepared by Mr Hutchinson, the Adjudicator said that in an e-mail sent to the parties on the previous day he had notified them that if matters arose that impinged on liability he would provide the parties with a list of questions following the meeting to allow submissions on those points to be made. He then said:
“"With that in mind I requested Mr Hutchinson to record for me various matters that could impinge on the area of liability which he did and in turn this became my note to the parties recorded in my email sent the same day as the meeting (email timed at 15.44). Therefore I do not understand the comment made that the parties have not had sight of my note.”"
3) In relation to the contents of the spreadsheets in Appendices 1 and 2, the Adjudicator said:
“"If one now refers to the various excel files within appendices 1 and 2 it can quickly be seen that these are derivatives produced by filtering, cutting and pasting the relevant parts from the master document at Appendix 7.
I tasked Mr Hutchinson with producing separate spreadsheets on my behalf in respect of like items that were in dispute in order that I could consider these at the same time and adopt a consistent approach. These sheets being produced from Sisk’'s original document. Therefore to suggest that this is the original work on (sic) Mr Hutchinson is not correct. Once produced I populated the sheets and at various times I requested that Mr Hutchinson check my calculations to ensure that they were correct arithmetically and also to proofread the various sheets. Therefore it is logical based on what I have explained that Mr Hutchinson produced the individual Excel sheets from the master file (Appendix 7) and is seen as the author on the meta data and similarly as I asked him to check my calculations and proof read the various files then it is logical that he was the last person to save the file.”"(My emphasis)
4) The Adjudicator described the inference that Mr Hutchinson was the author of integral parts of his Decision as “"plainly incorrect”".
5) The Adjudicator said that he did not make any separate charge for Mr Hutchinson because he treated his fees as part of his overheads so that they were covered by the Adjudicator’'s own fees.
6) Finally, the Adjudicator summarised Mr Hutchinson’'s role as follows:
“"As can be seen from my response to your questions concerning Ms Matthews’' statement Mr Hutchinson’'s role is set out. He carried out research for me by trawling through the various submissions made by the parties and compiling them into like items such that I could consider them as a whole and in additional (sic) to this he assisted with administrative tasks such as checking my calculations and proofing the documents produced in support of my Decision.”"
“"(i) Plainly, the assessments within Appendices 1 and 2 have guided, and produced, the conclusion stated in financial terms in Appendix 7. Not the other way round as the Adjudicator suggests.
(ii) Given Mr Hutchinson’'s undoubted involvement in Appendices 1 and 2, it is unclear what role the Adjudicator played in these Appendices. The Adjudicator describes his role in these Appendices as him having “". . . populated . . .”" them.
(iii) We know that Mr Hutchinson gathered together “". . . like items . . .”" within Appendices 1 and 2. There is a lot of “"cut and paste”" work within the “"NOTES”" column in Appendices 1 and 2 and it seems very likely that this was done by Mr Hutchinson.”"
“"We know that B2/300 was drafted by Mr Hutchinson, or was based on an undisclosed draft by Mr Hutchinson. However, B2/300 is fundamentally evaluative in nature: it asked questions that the tribunal would or might ask.”"
B2/300 is an e-mail from the Adjudicator to the parties dated 3 September 2015 in which he set out 10 questions which he wanted the parties to answer. Before considering the submissions about this e-mail in detail, I would observe that there is a great deal of difference between the document being drafted by Mr Hutchinson and sent to the parties by the Adjudicator without any consideration or amendment, and the document that was sent to the parties by the Adjudicator being one that he had drafted based on the note prepared by Mr Hutchinson. Even if the former is objectionable, which I regard as open to question, I cannot see any basis for an objection to the latter. Thus, since this submission is put in the alternative, it does not take Duro very far.
“"As I stated at my meeting with the parties on Tuesday this week I confirmed that should matters arise within my meeting to discuss measurement related (sic) items impinging upon liability I would refer this back to the party representatives for further consideration and submission. The meeting now having reached its conclusion, the following questions arise. In some cases I acknowledge that the questions posed below may relate to secondary positions taken in submissions and in turn when I conclude my view on the primary positions these matters may become redundant.”"
There followed the series of 10 questions, which were in a different font, and the e-mail then concluded (reverting to the original font) by saying that the Adjudicator would provide further directions in a separate communication.
The structural concrete
“"By paragraphs 73 to 76 of that Valuation Report, Sisk contended on the proper interpretation of the Contract, it was entitled to £3,497,604.30 in respect of the provision of concrete, essentially on the basis that the rates specified against MTO items 5.01 and 5.03 were only for the placing concrete, and that as such Sisk was entitled to charge Duro the rates specified against MTO item 5.05 in respect of the provision of such concrete.”"
“"2.15 Paragraph 28 - Sisk rely on legal arguments to undermine the BN analysis of the cost of the concrete claimed by Sisk post September 2014 which shows such costs are in fact consistent with the rates at items 5.01 and 5.03 thus illustrating that Sisk are using an error in the MTO as a windfall against the concrete measures by claiming quantities against item 5.05.
2.16 Paragraph 31 - If this document is correct and [Duro] knew that they were going to have to pay extra for the provision of concrete it does not explain why it took Sisk 2 years to make such a claim and why they have claimed the rate of £130.33 per m3 when at the “"exclusions”" document has rates circa £77-£78 m3. This results in an overpayment to Sisk of circa £1.5m.
2.17 Paragraph 35 - Sisk are wrong and if in fact, which is denied, they are entitled to be paid for the provision of concrete there should be a new rate agreed by the parties, see above. It is incorrect for Sisk to use an invalid rate in the concrete which provides them with a significant over-recovery against this item. It is also noted that they do not appear to have advised [Duro] that in error they did not claim the provision of concrete for 2 years rather they include an item at £3.5m in their March Application submitted in June 2015.
. . .
2.20 What is obvious is that whilst Sisk note the rate BN have proffered for the supply and placing of concrete they have not offered an alternative rate based on first principles. This is because presumably to do so would confirm that their incorrect use of Item 5.05 provides them with a significant windfall which [Duro] aver they are not entitled to.
2.20 Paragraph 49 - we are not saying that Sisk should not be paid for the provision of concrete. What we are saying is that the provision of concrete was included in items 5.01 and 5.03.”"
CESMM3 DESCRIPTION | VALUES | |||||
1ST | 2ND | 3TH | UNIT | QUANTITY | UNIT PRICE | |
5.01 | Mass | Bases, footings, pile caps and ground slabs | Thickness not exceeding 150 mm | m3 | 4146 | 115.00 GBP |
5.02 | C25-reinforced | Bases, footings, pile caps and ground slabs, Walls, Columns and piers, Beams | Thickness and Cross sectional area variables | m3 | 0 | 122.34 GBP |
5.03 | C30-reinforced | Bases, footings, pile caps and ground slabs, Walls, Columns and piers, Beams | Thickness and Cross sectional area variables | m3 | 29,633 | 107.50 GBP |
5.04 | Mass | Bases, footings, pile caps and ground | Variable Thickness | m3 | 0 | 100.00 GBP |
5.05 | Standard mix | 5T5 BS 4027 Sulphate resisting Portland | Cement to BS 12 or BS 146 20 mm aggregate | m3 | 0 | 130.33 GBP |
“"11. MTO items 5.01 and 5.04 refer to mass (i.e. standard) concrete. This type of concrete is not reinforced and it would normally be used as cover.
12. MTO items 5.02 and 5.03 refer to reinforced concrete (i.e. concrete including steel rebar).
13. By reference to CESMM3 MTO items 5.01 to 5.04 inclusive refer to the placing of concrete (i.e. not the supply/provision). In the adjudication, Sisk argued that they were entitled to additional payment for the supply.
14. By reference to CESMM3, MTO item 5.05 refers to the provision (i.e. the supply) of concrete but 5.05 only refers to standard mix and not reinforced concrete. Accordingly, the MTO does not provide a rate for the provision/supply of reinforced concrete (only a rate for the provision of standard concrete).”"
“"determined by means of the unit price table set out in Appendix No I.1 applied to the volumes of that variation in accordance with the theoretic measurement on drawings according to the method of measurement CESMM3 [as modified by Appendix No. I. 1] provided always that the varied work to be valued is similar in nature and character to that of the work described in the unit price table otherwise appropriate unit rates shall be agreed.”"
However, there had been no agreement in relation to the provision of structural concrete.
“"8.8 Concrete supply: The parties disagree over the re-measurement of the works concerning the provision of concrete. The question to be addressed therefore is; how does the Contract deal with the provision of concrete.
8.9 Sisk’'s summarised position is that there is an MTO item (5.05) which provides for the provision of concrete. Accordingly Sisk has remeasured this item in line with the Contract.
8.10 The alternative position, again summarised, from Duro is that Sisk are seeking to gain an advantage due to an MTO technical error as the rate for placing of concrete includes is provision. Consequently Duro has valued this as £nil.
8.11 It is clear from inspection of CESMM3 that the method of measurement requires a distinction for measurement purposes between provision and placing of concrete. On analysis of the principles and elements embodied within the Contract it is evident that no items exist within the MTO for the provision of concrete for the works, save for item 5.05 which is not structural concrete provision.
8.12 Accordingly the MTO has not been prepared in accordance with the principles of CESMM3 and therefore needs to be corrected. Accordingly I find that there is a requirement to correct the MTO deficiency for structural concrete provision.”"
Sisk’'s argument based on approbation and reprobation
Conclusions
Note 1 I note that there is a discrepancy as to whether the percentage allowed was 70% or 75% (for example, item 210 refers to 75% but the amount allowed is in fact 70%). The figure of 75% is the one mentioned in the analysis. I have no information about it, but I infer that the Adjudicator originally decided to allow 75%, but then altered it to 70%. However, it does not matter because there is no evidence whatsoever that Mr Hutchinson had any input into this decision. [Back] Note 2 Some columns have been omitted for ease of reference.
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