Macob Civil Engineering Ltd v. Morrison Construction Ltd [1999] EWHC Technology 254 (12th February, 1999)

Macob Civil Engineering Ltd v. Morrison Construction Ltd [1999] EWHC Technology 254 (12th February, 1999)

Case No:1999/TCC/30

IN THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

TECHNOLOGY and CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date:Friday 12 February 1999

B e f o r e : THE HON MR JUSTICE DYSON

MACOB CIVIL ENGINEERING LTD

v

MORRISON CONSTRUCTION LTD

(Delia DUMARESQ instructed by Morgan Cole for the Plaintiff )

(Stephen FURST QC and Michael BOWSHER instructed by Wragge and Co for the Defendant )

Adjudication.

Housing Grants etc Act, 1996

"JUDGMENT: Approved by the Court for handing down (subject to editorial corrections)"

Mr Justice Dyson:

Introduction

1. This is the first time that the court has had to consider the adjudication provisions of the Housing Grants, Construction and Regeneration Act 1996 ("the Act"). The plaintiff entered into a contract with the defendant to carry out groundwork’s as sub-contractor at a retail development known as Greyfriars in Camarthen, South Wales. The plaintiff alleged that the defendant failed to make payment in accordance with its application number 6 and required the dispute to be referred to an adjudicator. Mr Eric Mouzer FRICS, FCIArb was duly appointed. On 6 January 1999, he published his decision. He directed that the defendant forthwith pay the plaintiff £302,366.34 plus VAT, accrued interest of £2849.70 continuing at the daily rate of £66.27 until payment, and fees of £2197.75. He purported to issue his decision peremptorily under paragraph 23(1) of the Scheme for Construction Contracts ("the Scheme"), adding that, in the event of non-compliance with his decision, he gave permission under section 42 of the Arbitration Act 1996, as modified by paragraph 24 of the Scheme, for either party to apply to the court for an order requiring such compliance.

2. The defendant has not complied with the adjudicator's decision. It contends inter alia that the decision is invalid and unenforceable on the grounds that the adjudicator was guilty of procedural error in conducting the adjudication in breach of the rules of natural justice. By a letter dated 13 January 1999, the defendant gave notice to the plaintiff requiring the reference to arbitration of disputes arising out of or in connection with the adjudicator's decision.

3. The plaintiff seeks to enforce the decision in this court. The defendant has issued a summons to stay the plaintiff's proceedings under section 9 of the Arbitration Act 1996, on the grounds that the contract contains a valid arbitration clause which, properly construed, applies to all of the disputes that have been raised as to the decision of the adjudicator. These proceedings raise questions as to the enforceability in the courts of an adjudicator's decision in circumstances where the contract contains a clause by which the parties agree to refer to arbitration disputes about a decision. In short, it is submitted on behalf of the plaintiff that the existence of such a clause does not affect the enforceability of an adjudicator's decision. On behalf of the defendant, it is said that, if the dispute concerns the validity of the decision, (as opposed to the adjudicator's conclusion on the merits), the decision is not enforceable unless, and then only to the extent that, it is confirmed by the arbitrator following the reference to arbitration.

4. It is common ground that the contract was a construction contract within the meaning of the Act.

The contract

5. It is unnecessary for me to set out the payment provisions in full. Suffice it to say that clause 13(ii) of the conditions provided that payment was due to the plaintiff 30 days after the value of the Sub-Contract Works was included in a Principal Contract Valuation, or the making of a claim by the plaintiff, whichever was the later, and that, subject to clause 13(v), the final date for payment was 15 days from the date that payment became due. Clause 13(v) dealt with set-off. It provided that any notice of intention to withhold payment should be given not later than 7 days before the final date for payment. Another contract document (Document No 4) provided that the period of payment was 13 days. The effect of the apparent inconsistency between clause 13(ii) of the conditions and the provision in Document No 4 was one of the issues that was before the adjudicator. This was because the defendant gave notice of its intention to withhold payment on 10 December 1998, and a critical question was whether this was within the 7 day period specified in clause 13 (v) or in paragraph 10 of Part II of the Scheme.

6. Clause 27 of the contract conditions was headed "Adjudication and Arbitration" and provided as follows:

1. "(i) In the event of any dispute arising between M.C.L. and the Sub-Contractor

2. under or in connection with the Sub-Contract it is to be submitted to and settled

3. by the Adjudicator. The appointment of an Adjudicator shall be agreed between

4. the Parties or failing such agreement be appointed by the President for the time

5. being of the Chartered Institute of Arbitrators on the application of either M.C.L.

6. or the Sub-Contractor.

7. The Adjudicator will settle the dispute by notifying M.C.L. and the Sub-Contractor

8. of his decision together with his reasons within 28 days of submission of the dispute

9. to him. Any dispute or difference must be submitted to the Adjudicator within 14

10. days of the subject matter of the dispute coming to the attention of the aggrieved

The full version of the judgement can be found at: https://www.bailii.org/ew/cases/EWHC/TCC/1999/254.html

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