Adjudication
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KEYWORDS: |
Adjudication, Housing Grants Construction and Regeneration Act 1996, JCT 1998 with Contractors Design, dispute, HH Judge Kirkham. |
The decision in CPL Contracting Ltd v Cadenza Residential Ltd [2005] T.C.L.R.1 on 26 August 2004 by HHJ Kirkham is another in a line of cases on the meaning of dispute in the context of commencement of adjudication proceedings. The judgment was given before the judgment of Jackson J in Amec Civil Engineering Ltd v Secretary of State for Transport, October 2004 referred to with approval by the Court of Appeal in Collins Ltd v Baltic Quay Management (1994) Ltd [2005] 1 BLR. Nonetheless the case is of interest because of the particular facts.
CPL and Cadenza contracted on the JCT standard form 1998 with contractor's design. On 11 September 2003 CPL made application No.13 for £86,395.42 plus VAT, the last interim application on the contract.
Cadenza's agent issued a certificate for £47,736.92 in relation to application no.13.
On 13 October 2003 CPL issued an invoice for £47,736.92 plus VAT stating
"To valuation number 13 for works to ...; [the name of the property] ...; as agreed".
On 15 October 2003 Cadenza served a notice of withholding for £4,500 in respect of liquidated damages and paid the net sum of £43,226.71 plus VAT.
By a Notice to Adjudicate dated 11 May 2004 CPL defined the dispute as the sum to be paid to the claimant in respect of interim application no.13, and the redress sought was payment of £43,168.71. That was the balance of the value of work applied for but not paid, plus the £4,500 liquidated damages which had been deducted.
On 16 May 2004 CPL served its referral to the adjudicator in which the basis of claim was stated as pursuant to c1.30.3 of the contract. On 26 May 26 2004 Cadenza served a response, indicating that it was taking part in the adjudication under protest and contending that the adjudicator had no jurisdiction on the grounds that no dispute existed or had crystallised.
The adjudicator proceeded to make his decision dated 21 June 2004 and ordered Cadenza to pay CPL £46,068.71 plus VAT in respect of application no.13.
CPL applied to HH Judge Kirkham for summary judgment to enforce the decision of the adjudicator.
The primary issue between the parties was whether or not there was a dispute.
CPL argued that Clause 30.3.5 provided that, if the employer did not give written notice, then Cadenza was bound to pay the contractor the amount stated in the application for interim payment. CPL's case was that, because Cadenza had not given notice pursuant to the contract, the whole of the sum claimed by application no.13 was payable. CPL argued that because Cadenza did not pay in full the amount sought by CPL in its application no.13, a dispute arose at that point relying on Halki Shipping Corporation v Sopex Oils Ltd [1998]. CPL argued that the dispute crystallised at the point where Cadenza made only part payment and not full payment of the sum which CPL had sought. CPL argued that until CPL's claim for the balance under application no.13 had been compromised, then there was a dispute which was extant and which CPL was entitled to refer to adjudication. CPL relied upon the decision of His Honour Judge Moseley in Watkin Jones & Son Ltd v Lidl GmbH [2000] 86 Con.L.R. 155. CPL argued that the decision in Watkins Jones was consistent with Halki and that there are strong parallels with the instant case. On that basis the claimant was entitled to refer that dispute as to the balance due under application no.13 to adjudication.
Judge Kirkham found that the only response to the certificate, which set out CPL's view as to what was due on application no.13, was CPL's letter dated 13 October 13 with the invoice. In neither document did CPL seek to challenge the position. There was no indication in these documents that the claimant disputed the figure put on the valuation. Judge Kirkham found that to the contrary-the wording of the letter and of the invoice indicated that CPL accepted the position.
Judge Kirkham considered that if CPL had wanted to make it clear that it reserved its position that would have been an obvious opportunity to have done so, but it did not do so. There was no evidence adduced that there was any challenge to that or any indication given by CPL that it disputed the view which Cadenza took as to the sums payable pursuant to the application.
CPL argued that a letter dated 20 April 2004 was an indication to Cadenza that there was a dispute in relation to application no.13. The letter indicated that consultants were assisting CPL with what were described as CPL's entitlements in relation to the project and it set out matters which were said not to have been accepted by the employer's agent or the employer.
Judge Kirkham found that there was no clear indication in the letter of April 20 that CPL took issue with any question relating to interim application no.13, whether as a matter of detail in relation to different elements of the contract or as to the failure by Cadenza to have responded within five days, as provided by c1.30 of the contract.
Judge Kirkham stated that the authority which she found most helpful was that of Halki and the judgment of Forbes in Beck Peppiatt Ltd v Norwest Holst Construction Ltd [2003] BLR 316 and, in particular, the passages of Forbes J.'s judgment which set out the law relating to this matter. He sais
"It has to be borne in mind that, as observed in Halki, 'dispute' is an ordinary English word which should be given its ordinary English meaning. This means that there will be many types of situation which could be said to amount to a dispute. Each case will have to be determined on its own facts."
Judge Kirkham indicated that she approached the issue on that basis.
Judge Kirkham held that at no stage prior to the notice to adjudicate did CPL indicate that it pursued the balance due under application no.13. To the contrary - CPL made it clear in October 2003 that they were accepting of the position. Looking at the matter objectively, as at October 13 no dispute had arisen between the parties. At no time between that date and the notice to adjudicate in May 2004 did CPL put in issue the balance of payment due under application no.13. Quite simply, there was no dispute. In the absence of a dispute between the parties the adjudicator did not have jurisdiction.
Judge Kirkham indicated that the circumstances in the instant case were different from those in Watkin Jones and the position could therefore be distinguished. In Watkin Jones there was in effect no communication or exchange between the parties. The position in the instant case was was quite different. There was an exchange between the parties. CPL made its claim by the application. It was answered by Cadenza through its agent and CPL simply did not dispute the position thereafter.
Cadenza argued that the parties had in October 2003 reached a binding agreement whereby CPL agreed that it would not seek payment as regards any under-valuation in relation to application No.13. It was argued that the agreement could be found within the wording of the letter and invoice of October 13, 2003.
Judge Kirkham held that an agreement to that effect could not be found simply by the words set out in that letter or that invoice. There was no evidence of offer, acceptance, consideration and so on, all of the elements that one would expect to find in relation to a binding agreement between the parties as to a matter of that nature.
Judge Kirkham held that it could not be said that Cadenza had no real prospect of successfully defending the claim and it was therefore not appropriate for an order for summary judgment to be made.
It is suggested that the case would be decided the same way if the factors listed in Amec Civil Engineering Ltd v Secretary of State for Transport were applied. This was not a case of silence, but of express acceptance of the position taken by the other party short of a binding agreement.