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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> How Engineering Services Ltd v Lindner Ceilings Floors [1999] EWHC B7 (TCC) (24 June 1999) URL: http://www.bailii.org/ew/cases/EWHC/TCC/1999/B7.html Cite as: [1999] EWHC B7 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY and CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		24 June 1999

Mr Justice Dyson:

Introduction

There are before me challenges to two arbitration awards made by Mr Jupp arising out of contracts between Lindner Ceiling Floors Partitions PLC ("Lindner") and How Engineering Services Ltd ("How"). Lindner is a suspended ceiling specialist. The two contracts were made in 1990, and were respectively for the Atrium and Station Works which formed part of the redevelopment of Cannon Street Station, London. How was a subcontractor for the project, and Lindner was engaged as sub-subcontractor. Lindner's works were disrupted and delayed on both contracts. Lindner completed work on the Station contract in August 1991, and on the Atrium contract in September 1991. The events that occurred gave rise to claims for loss and expense by Lindner, and counterclaims by How. These were referred to arbitration. On 13 March 1992, Mr Jupp was appointed as arbitrator to determine the disputes that had arisen on both contracts. The awards that have given rise to the proceedings that are before me were made on 20 March 1998 (Atrium) and 29 October 1998 (Station). In the award of 20 March 1998, the arbitrator awarded Lindner £108,956, and by consent dismissed How's counterclaim. In his award of 29 October 1998, he awarded Lindner £34,978, and by consent dismissed How's counterclaim. How appeals both awards under section 1(2) of the Arbitration Act 1979 on the grounds that they contain errors of law, and also contends that they should be set aside under section 23(2) of the Arbitration Act 1950 on the grounds of misconduct. Although the Notices of Motion both allege that the arbitrator was guilty of bias, Mr Tackaberry QC has made it clear that How no longer pursues an argument based on personal bias. The misconduct case is put exclusively on the basis of alleged procedural error. The Notice of Motion in the Atrium contract includes a claim that Mr Jupp be removed as arbitrator for misconduct. The claim for removal has, however, been abandoned. I should add that, although the Notice of Motion in the Atrium proceedings also challenges the award of 28 March 1998, no arguments in support of that challenge have been advanced to me, and I shall say no more about that award.

The Atrium

The award of 6 June 1994

On 6 June 1994, and by consent, the arbitrator made an award as to the documents that comprised the contract between Lindner and How. These included How's order dated 19 September 1990, and certain numbered documents, which included a document described as "Specification and the drawings referred to therein".

The award of 20 March 1998

It will be necessary to consider certain parts of the award in some detail. At this stage it is sufficient to give an overview. As regards liability, the arbitrator found that Performance Specification Work Package 4700 ("Specification 4700") was a contract document, and that there were breaches of some of the provisions of this specification by How. The arbitrator found that How's breaches caused substantial delay and disruption to Lindner in the carrying out of its work, and the disruption was continuous.

The ceiling work started on 26 November 1990, but it was not until 20 December 1990 that Lindner gave notice in writing to How. Since notice was a prerequisite to a claim for loss and expense caused by delay and disruption under the contract, the Arbitrator dismissed Lindner's claim in relation to the period prior to 20 December. Practical completion of Lindner's work occurred on 5 September 1991. Lindner alleged that during the following three months, it carried out work of realignment of the metal grids supporting the ceiling panels, and that this work was necessary because tiles had been removed by other trades. The arbitrator dismissed Lindner's claim for loss and expense arising from this work of realignment on the grounds that it should have been dealt with as a variation, whose cost effects fell to be included in the measured account.

Turning to quantum, the arbitrator recorded correctly that, apart from a number of discrete issues, the claim was a total cost claim, that is, one based on actual costs compared with the costs that would have been incurred had delay and disruption not occurred (paragraph 32). He concluded that he had "no difficulty in accepting the global nature of much of the claim currently before me" (paragraph 37). He examined the calculations that were placed before him, and found that the tender assessment of labour costs and requirements put forward by Lindner was realistic and reasonable. He accepted Lindner's figures of costs actually incurred as set out in Schedule 1 to the Points of Claim, and arrived at a figure of £130,346. From this he deducted £4186 in respect of the three weeks before notice was given, £32,611 in respect of the realignment work done after practical completion, and £3155 for filling joints in gypsum ceiling (which was remedial work for which Lindner was responsible). The resultant figure was £90,394. He then dealt with certain other miscellaneous heads of claim. He dismissed all but two, namely (i) additional site management costs, for which he awarded £17,660, and (ii) hoisting, for which he allowed £902.

Summary of criticisms by How

On behalf of How, Mr Tackaberry QC makes a number of criticisms of the award which may be summarised as follows:

(1) the arbitrator erroneously concluded (paragraph 10) that it was more probable than not that the contract specification was Specification 4700;

(2) the arbitrator erred in his approach to the quantification of Lindner's claim for loss and expense in that:

(a) he accepted a series of assessments put forward on behalf of Lindner, which lacked the precision that was necessary to support a claim;

(b) he made no deduction from the claim to reflect the fact that (i) some of the notices had been annotated by Lindner "no cost" or "information only", and (ii) work of realignment was done before practical completion, and this should have been excluded from the claim for loss and expense, and included in the measurement claim.

(3) The arbitrator made an insufficient deduction from the claim in respect of the glass reinforced gypsum problem for which Lindner was responsible.

Specification 4700

Mr Tackaberry argued tentatively that, in determining what document comprised the specification, the arbitrator exceeded his jurisdiction since this issue had already been determined by the consent award of 6 June 1994. He did not, however, press this point, and in my view was right not to do so. It is clear that there was some doubt as to which document was denoted as the Specification in the award of 6 June 1994. By the end of the Atrium hearing, How was contending for the specification enclosed by Lindner with its tender of September 1989, whereas Lindner was contending for Specification 4700. Since the award of June 1994 gave no clue as to which was the relevant document, the arbitrator correctly regarded it as his function to identify that document. That is what he did. There is no question of want of jurisdiction.

Mr Tackaberry submits that the finding that Specification 4700 was the contract specification was perverse. I shall assume for present purposes that a perverse finding is capable of being an error of law. Mr Tackaberry argues that it was common ground that Lindner did enclose a specification with its tender of September 1989, and that there was no basis for finding that the contract specification was anything other than that document.

What the Arbitrator said at paragraph 10 was this:

"10. The original signed Contract Documents were not made available to me and no conclusive evidence was adduced by either Party as to exactly what the contract Specification comprised or required. However, two competing documents were adduced, and, although differing in other respects, they were both called Performance Specification Work Package 4700, were both prepared by the Architect, were both dated March 1990 and were both at one in regard to the clauses cited by Lindner. Further, the Architect, with a letter dated 26 March 1990 and appearing in the bundle, forwarded a copy of Work package 4700 suspended ceiling specification to its client for final comment, and indicated that it would be included in the contract documents for this package. I conclude that it is more probable than not that the contract Specification was performance Specification Work Package 4700 and that it contained the clauses cited by Lindner."

There was evidence on the point. Mr Rogers of Lindner said that Lindner based its tender on a version of Specification 4700. Two of the witnesses from Building Design Partnership, the architects to the Project, said that a subcontractor tendering for the suspended ceilings would have had to have that document for tendering purposes. It is true that the earliest version of the document that was before the arbitrator was dated December 1989 (ie post-tender), but Mr Broughton of the architects said that it did not undergo any changes. In my view, there clearly was evidence on the basis of which it was open to the arbitrator to make the finding that he did.

I would in any event go further and say that, even if there were no such evidence, no error of law would have been demonstrated. I refer to The Baleares [1993] LLR 215. Although unable to reach a final conclusion on the point, Neill LJ (page 227), said that he was impressed by the argument that it was inconsistent with the thrust and purpose of the Arbitration Act 1979 to allow findings of fact to be reviewed by means of an examination of the evidence that was before an arbitrator, where the object of the examination was to establish that there was no or no sufficient evidence to support the finding.

Steyn LJ, however, did not feel inhibited. The issue in question in that case was whether the arbitrators had erred in their approach to quantum. It was said that they had failed to take into account both sides of the equation in determining the issue of loss. Steyn LJ regarded such an error as a mistake of fact. It was suggested in argument that this was an error of law, since there was no evidence to support the finding of fact that there was a loss. At page 232, Steyn LJ said:

"The power to review a finding of fact of a tribunal on the ground that there is no evidence to support it, and that there is therefore an error of law, is a useful one in certain areas of the law, notably in the administrative law field. But in the limited appellate jurisdiction of the Court under section 1 of the Arbitration Act 1979 this concept has no useful role to play."

In my view, these observations of Steyn LJ are applicable to the challenge that How seeks to make to paragraph 10 of the award.

Mr Tackaberry sought to overcome this difficulty by contending that, even if paragraph 10 did not contain any error of law, a finding unsupported by any evidence is misconduct. I cannot accept this submission. As Lloyd LJ said in Blexen v G Percy Trentham 54 BLR 37, 42: "if the arbitrator has erred in his approach the error must be one of fact or law. If it was an error of fact his finding of fact is conclusive. If it was an error of law then it would be open to the claimants to apply for leave to appeal on that question of law". In that case, an application had been made to remit under section 22 of the Arbitration Act 1950 on the grounds of alleged misconduct. The misconduct relied on was the arbitrator's application of what was said to be the wrong test when making an award of costs. The Court of Appeal held that it had no jurisdiction to remit: the only route by which the award could be challenged was by appeal on a point of law. By parity of reasoning, there is no jurisdiction to set aside an award on grounds of misconduct where the real complaint is that the arbitrator made a mistake of fact.

Finally, even if all that I have said so far on this issue were wrong, I would have refused to exercise my discretion to allow the appeal or to remit the award to the arbitrator for further consideration. This is because, if the arbitrator were to conclude that the relevant specification was that which was enclosed with the tender in September 1989, that would not have affected his decision on liability or quantum. The relevant clauses in the specification enclosed with the tender are not materially different from the corresponding provisions in Specification 4700. It is sufficient to compare the tenth page of the former document with the paragraphs in item 7.01 of the latter document, which are pleaded at paragraph 8 of the Points of Claim.

Quantification of the claim

(i) Assessments

As has already been seen, the arbitrator accepted that, for the most part, the claim was a "total cost" claim. Counsel had placed before him a number of authorities which consider the circumstances in which such a claim may properly be allowed. He was aware of the difficulties. At paragraph 33, he said that "this approach is open to very considerable criticism, all of which is to be overcome for a claim to be successful". One of these authorities was Crosby v Portland UDC 5 BLR 126. At page 136, Donaldson J considered the position where it is difficult or even impossible to make an accurate apportionment of the total extra cost between several causative events. He said:

"An artificial apportionment could of course have been made; but why, they ask, should the arbitrator make such an apportionment which has no basis in reality?

I can see no answer to this question. Extra costs are a factor common to all these clauses, and so long as the arbitrator does not make any award which contains a profit element....and provided he ensures there is no duplication, I can see no reason why he should not recognise the realities of the situation and make individual awards in respect of those parts of the claim which can be dealt with in isolation and a supplementary award in respect of the remainder of these claims as a composite whole."

No criticism is made of the decision of the arbitrator to make an award in respect of the bulk of the claim as a composite whole, based on total cost. Nor could there be, since the decision whether it is impossible to make an accurate apportionment of total extra costs between several causative events is one of fact.

Mr Tackaberry submits, however, that the arbitrator erred in a number of respects in his approach to the quantification of the global claim. His first complaint is that the arbitrator did not "ascertain" the loss, but made an assessment of it. Clause 4.45 of the conditions of contract provides as follows:

"If [Lindner] makes written application to [How] stating that he has incurred or is likely to incur direct loss and/or expense in the execution of the Works Contract for which he would not be reimbursed by a payment under any other provision in the Works Contract by reason of the regular progress of the Works or any part thereof having been or being likely to be materially affected by....or any one or more of the matters set out in clause 4.46, [How] shall ascertain the amount, if any, of that direct loss and/or expense."

The arbitration clause of the contract provides:

"..the Arbitrator shall, without prejudice to the generality of his powers, have power to direct such measurements and/or valuations as may in his opinion be desirable in order to determine the rights of the parties and to ascertain and award any sum which ought to have been the subject of or included in any certificate...".

Mr Tackaberry fastens on to the word "ascertain", and submits that in particular the arbitrator failed, as he was required to do, to find out for certain what costs Lindner would have incurred but for the disruption and delay. Reference was made to Alfred McAlpine Homes North Ltd v Property and Land Contractors Ltd 76 BLR 59, a decision of Judge Humphrey Lloyd QC. At page 88, the judge said:

"Furthermore "to ascertain" means "to find out for certain" and it does not therefore connote as much use of judgment or the formation of an opinion as had "assess" or "evaluate" been used. It thus appears to preclude making general assessments as have at times to be done in quantifying damages recoverable for breach of contract."

Judge Lloyd applied this approach when answering a question of law that had been raised in relation to a claim in respect of plant. He said (page 93) that in ascertaining direct loss or expense, the actual loss or expense incurred must be ascertained, and not any hypothetical loss or expense that might have been incurred whether by way of assumed or typical hire charges or otherwise.

I do not understand Judge Lloyd to be saying that there is no room for the exercise of judgment in the process of ascertainment. I respectfully suggest that the phrase "find out for certain" might be misunderstood as implying that what is required is absolute certainty. The arbitrator is required to apply the civil standard of proof.

In my view it is unhelpful to distinguish between the degree of judgment permissible in an ascertainment of loss from that which may properly be brought to bear in an assessment of damages. A judge or arbitrator who assesses damages for breach of contract will endeavour to calculate a figure as precisely as it is possible to do on the material before him or her. In some cases, the facts are clear, and there is only one possible answer. In others, the facts are less clear, and different tribunals would reach different conclusions. In such cases, there is more scope for the exercise of judgment. The result is always uncertain until the damages have been assessed. But once the damages have been assessed, the figure becomes certain: it has been ascertained. In my view, precisely the same situation applies to an arbitrator who is engaged on the task of "ascertaining" loss or expense under one of the standard forms of building contract. Indeed, it would be strange if it were otherwise, since a number of the events which give rise to a right to recover loss or expense under the contract would also entitle the claimant to be awarded damages for breach. I would hold, therefore, that, in ascertaining loss or expense, an arbitrator may, and indeed should, exercise judgment where the facts are not sufficiently clear, and that there is no warrant for saying that his approach should differ from that which may properly be followed when assessing damages for breach of contract.

Thus, in cases such as the present, the arbitrator must decide inter alia whether the costs built into the tender rates were realistic on the footing that the contract proceeded without delay or disruption. That decision inevitably involves an element of judgment, just as the tendering process itself involves an element of judgment. There is no place for pure speculation in the ascertainment of loss or expense, any more than there is in the assessment of damages. Moreover, I think that an arbitrator should not readily use typical or hypothetical figures, but it would be wrong to say that they can never be used. This is a difficult area, and in my view, the court should be slow to interfere with an arbitrator's ascertainment of loss.

With these observations in mind, I turn to consider what the arbitrator said. At paragraph 40 he referred to How's argument that the requirement to "ascertain" connoted a "rigid" test, "and that every figure appearing in the calculation is to be proven beyond any measure of doubt. Anything short of this rigour would cause collapse of the claim". The arbitrator rejected the rigid approach in these terms:

"42. Any loss and expense claim is based on additional expenditure caused by the delay or disruption complained of; additional, that is to expenditure had the delay or disruption not occurred. And so the calculation is based on what did occur (occurrence of disruption or delay) and what did not occur (no disruption or delay). This comment already introduces a note of caution regarding over-rigid interpretation of the contractual requirement for ascertainment, because there can be no absolute certainty in what did not occur, and so there is no absolute certainty in expenditure additional to what did not occur, simply because there is no certain starting point against which to measure what is additional. This dilemma is overcome by making a practical assumption as to what would have been the situation had no delay or disruption occurred, and this practicality is no different in principle from what Lindner is arguing.

43. Loss and expense calculations may be straightforward in simple situations where additional expenditure can be discretely recorded and attributed to a particular event and when safe assumptions can be made as to the situation had the event not occurred. Where the situation is complex, and discrete recording and attribution and safe assumptions are not possible, the calculation inevitably contain a measure of uncertainty.

44. When such a situation has been engendered by a respondent and not by a claimant, it would be common sense turned on its head to insist that the claimant abides by an over-rigid interpretation of the contract requirement that, because of the engendered situation, is impossible of achievement.

45. For that reason, I favour the argument of Lindner, with the strongest proviso that every attempt is to have been made by Lindner toward certainty, but where this is impractical, I will use my discretion as to what is reasonable."

The arbitrator then proceeded to consider the figures. He said that he had thoroughly examined Lindner's calculations, and traced their path to test their validity (paragraph 46). The claim was entirely based on labour costs. Lindner's evidence was that, in its tender, it had assessed that 6 fixers would be sufficient per floor to install the ceilings within the programme allowance. At paragraph 48, the arbitrator found that there was "an almost complete concurrence" between Lindner's assessment and the priced bills of quantities, and gave reasons for this finding.

It will be apparent from my earlier observations that I consider that this approach of the arbitrator cannot be faulted. I can detect no error of law in this part of the award.

(ii) Notices annotated "no cost" and "information only"

Schedule 1 to the Points of Claim takes each week of the contract. It identifies the events of disruption, the basis of claim, the estimated and actual cost of labour for that week, and, where they exist, the notices given allegedly pursuant to clause 4.45 of the contract. Some of the pleaded notices, after they had been submitted to How, were endorsed by Lindner with the words "no cost" or "information only". Mr Tackaberry submits that the arbitrator has failed to make any deduction to reflect the fact that the events referred to in some of the notices relied on did not in fact cause any loss to Lindner.

There are two answers to this complaint. First, if the arbitrator made a mistake, it was not one of law, any more than the failure in the Baleares to take into account both sides of the equation when computing the damages was an error of law.

Secondly, as Mr Kirk points out, (and as the arbitrator found), the disruption was continuous. It ran from day to day, week to week and month to month. The case was pleaded on a week by week basis in order to present the voluminous material in a digestible form. It did not, however, follow that, because some notices were given during the contract which referred to matters which, in the event, did not cause loss, some of the disruption suffered by Lindner did not cause loss. The arbitrator was entitled simply to ignore these notices.

(iii) Realignment before practical completion

At paragraph 29 of the award, the arbitrator rejected the claim for loss and expense for realignment and tile replacement in respect of the period after practical completion on the grounds that this was additional work, and should have been dealt with as a variation, and included in the measured work and dayworks account. It is submitted on behalf of How that the arbitrator should have adopted the same approach to the claim for loss and expense in respect of realignment before practical completion, and that his failure to do so was an error of law. Here too there are two answers. First, if it is an error, this is not an error of law.

Secondly, the arbitrator was entitled to take the view that it was not possible to value the work of realignment which was carried out while the other work was going on as measured work or on a dayworks basis. This is an entirely understandable conclusion to reach in view of his decision that the disruption to the work was substantial and continuous. Once practical completion had been achieved, the situation was different. Lindner was off the site. The arbitrator must have concluded that there was now no difficulty in measuring (or valuing on a dayworks basis) the work of realignment. Accordingly, I reject this complaint.

Glass reinforced gypsum

The arbitrator deducted £3155 for this. It is common ground that a deduction fell to be made since it was for the cost incurred by Lindner in resolving a problem with a filler used for the GRG, and for which it was contractually responsible. £3155 was one sixth of the bill of the specialist subcontractor called in to do the work: it represented the cost of work to one floor. How's point is that the evidence of Mr Cole, Lindner's witness, was that, although he could not remember exactly, he believed that the problem probably affected two floors. The arbitrator did not give reasons for allowing the cost of one floor. No error of law has, however, been identified, and I reject this challenge.

The Station Contract

The award of 6 June 1994

As in the case of the Atrium contract, so too in the case of the Station contract, on 6 June 1994, the arbitrator made a consent award as to the documents that comprised the contract. These were inter alia How's order dated 19 September 1990, and certain numbered documents including (i) "Specification and the drawings referred to therein" and (ii) Bills of Quantities priced by Claimant".

Challenges to the award of 29 October 1998

The following criticisms are made:

(i) the arbitrator exceeded his jurisdiction in finding that the method statement submitted by Lindner with its tender in September 1989 was of contractual effect, since that was not one of the documents listed in the consent award of 6 June 1994;

(ii) even if his decision as to the status of the method statement was not outside his jurisdiction, the arbitrator committed errors of law in reaching his decision that it had contractual effect;

(iii) even if the method statement was of contractual effect, the contract did not upon its true construction permit recovery by Lindner of loss and expense or damages for breach of contract for any failure by British Rail to allow it to have possession in accordance with the contract;

(iv) the arbitrator was guilty of procedural misconduct in the period between 1 May and late July/early August 1998: the conduct complained of culminated in his order that a without prejudice meeting take place between the parties' experts and himself from which their legal representatives were excluded.

(V) the arbitrator should not have awarded any sum for additional site management and preliminaries: he awarded £3897.

The method statement

I shall take the first two complaints together. What the arbitrator said was this:

"1.3 The basis of Lindner's claim is that, when it submitted its tender to How in September 1989, it accompanied its tender with a construction method statement it had prepared pursuant to instructions in Section B, paragraph 9.3 of the Specification and item 1172 of the Price Analysis Format section of the Tender Documentation.

1.4 Item 1174 of the Price Analysis Format section provides that all rates within the Tender analysis Schedule (in other words, within the bills of quantities) were to be "inclusive of all necessary on and off site storage, transportation and construction to suit the sequence of work and the method of construction presented by the tenderer for approval" (my underlining).

1.5 Although subject to approval, the construction method statement therefore forms part of the basis of the tender pricing set out in the bills of quantities, and I believe it to be safe to assume that, had the construction method statement not been approved, an adjustment to tender pricing would have been the subject of negotiation. An example of the type of tender price adjustment I have in mind concerns the programme for the work. The programme was required by item 1160 of the Price Analysis Format. It was changed after Lindner had submitted its tender and the change gave rise to a financial adjustment of the tender.

1.6 How's Order mentions Lindner's tender sum of £1,282,000.00 and refers to the bills of quantities. I have not seen any evidence that the method statement was not approved in regard to its storage provision, and mention of Lindner's tender sum on How's Order without alteration lends support to Lindner's contention that the method statement was accepted by How.

1.7 I therefore FIND that, since the bills of quantities are a contract document, the pricing therein and all matters affecting that pricing, including the method statement, are binding between the Parties, save for any agreed amendment subsequent to the date of the tender and included within the Order."

The method statement was referred to in the Specification and the Bills of Quantities, both of which were undeniably contract documents. It was required to be submitted by the Specification. In my view, the method statement that was submitted pursuant to the contract documents plainly did have contractual effect. There was no excess of jurisdiction by the arbitrator. He found that the method statement was agreed between the parties. His reasoning has been criticised, but in my view there is no substance in the criticisms. At paragraph 1.5, he said that it was safe to assume that, if the method statement not been approved, there would have been a renegotiation of the tender price. He then pointed out that there had been no evidence that the statement had not been approved, which supported Lindner's "contention" that it had been accepted. I am unsure whether he used the word "contention" because there had been no evidence from Lindner on the point. But in my view, this does not matter. There was plainly material on the basis of which it was open to the arbitrator to find that the method statement was approved. That is a finding of fact which cannot be impugned by way of appeal to this court.

Was the right of recovery excluded by the contract?

Lindner sought to recover the cost incurred by it as a result of British Rail reducing or cancelling possession of the site at short notice. The arbitrator awarded Lindner £31081 under this head. On behalf of How, it is submitted that the only relief to which Lindner was entitled in respect of its claim for what was called "lost possessions" was an extension of time in the event of delay being caused inter alia by a "Relevant Event". Clause 2.10 defined Relevant Events as including "the cancellation or alteration of possessions, isolations or speed restrictions in respect of the Special Requirements relating to the British Railways Board" (clause 2.10.14). There is no similar provision in clause 4.45 and 4.46. Mr Tackaberry argues, therefore, that there is no right to recover loss and expense for the cancellation or alteration of possessions.

It is not at all clear that this point was taken before the arbitrator. He did not deal with it and has not been criticised for failing to do so. Be that as it may, the point cannot avail How. The basis of the claim was that there was cancellation or alteration of the length of the working shifts stated in the British Rail specification "Cannon Street Air Rights Development, revision 4 Engineering Conditions and Requirements of the Board". The claim was put forward as a claim for loss and/or expense under the contract, and alternatively as a claim for damages for breach of contract. Even if the juxtaposition of clause 2.3 and 2.10 with clause 4.45 and 4.46 shows that it was intended that there should not be an entitlement to loss and expense under clause 4.45 for cancellation or alteration of possessions, Lindner was entitled to recover an equivalent amount as damages for breach of contract. I do not accept that the absence of the cancellation or alteration of possessions from clause 4.46 shows that the parties intended that How should be immune from liability for damages for breach of contract for such an event. It is trite law that clear language is required if parties wish to exclude the normal incidents of the common law. Normally, nothing less than express words will do: see per Lord Diplock in Modern Engineering v Gilbert-Ash [1974] AC 689, 717G-H. It is arguable that there may also be exclusion by necessary implication. But in this case, it is quite clear that the rights conferred by clause 4.45 and 4.46 were not intended to be exhaustive of Lindner's rights. Clause 4.51 provided:

"The provisions of clauses 4.45 to 4.51 are without prejudice to any other rights or remedies which How or the Works Contractor may possess."

In London Borough of Merton v Leach 32 BLR 51, 105-109, Vinelott J came to the same conclusion on a contract which is not materially different from that with which I am dealing. I respectfully agree with his reasoning.

It is unclear whether the arbitrator awarded the sum under this head as loss and expense under the contract, damages for breach of contract, or both. In my view it does not matter. Even if the award was firmly based on clause 4.45, and even if that was wrong, I would refuse to set aside the award or remit it to be arbitrator for further consideration, since it is obvious that he would simply award the same sum of £31081 as damages for breach of contract. No useful purpose would be achieved by following such a course.

Procedural misconduct May to July/August 1998

The hearing of the Station claim started on 16 March and was due to be completed on 9 April 1998. Between 2 and 6 April, Lindner submitted a number of amendments to its claim. Many of these were modifications to the sums claimed which were put forward by Lindner by way of revision to take account of the evidence that had been adduced. The arbitrator allowed the amendments, despite objection from How, and ordered Lindner to pay the costs of the amendments. The factual evidence had been completed, but the experts were still giving evidence.

The arbitration was adjourned to give the parties' experts an opportunity to agree as many of the new figures as possible. Mr Mason was the expert instructed by Lindner, and Mr Wren by How. They reassembled before the arbitrator on 1 May. Some agreement had been reached, but much remained in issue. Miss Gough, who appeared for How, cross-examined Mr Mason. She asked many detailed questions. The arbitrator felt that Mr Mason should be given advance notice of the points that Miss Gough sought to explore. The case was adjourned yet again to enable Miss Gough to formulate her questions in writing and submit them for Mr Mason to answer in writing by 1 June. Miss Gough duly submitted 11 questions. Mr Mason produced his written answers in early July. His answers involved yet further amendments to Lindner's claim, which the arbitrator allowed Lindner to introduce by way of amendment.

It seems that early in July, Mr Mason suggested to Mr Wren a without prejudice meeting to identify the areas of agreement and disagreement between them. On 6 July, the arbitrator wrote to the parties saying that he had in mind a sequence whereby Mr Wren indicated whether he wished to take up Mr Mason's offer of a without prejudice meeting between experts, either with or without the arbitrator. On 10 July, How's solicitors made various complaints about Mr Mason's responses to the questions, and refused to agree to a meeting of experts, whether with or without the arbitrator.

On 14 July, the arbitrator explained in more detail his thinking. He thought that Mr Wren could and should have done more to try to reach agreement with Mr Mason. He saw no reason why such a meeting should not take place even at this late stage of the proceedings. He said that, having looked at Mr Mason's response in some detail, he shared the concern of How's solicitors that new headings were being introduced. He said that he would not permit this new evidence, and that his presence at the meeting would ensure that this would not happen. On the same day, he made an order that a without prejudice meeting be held between the experts in his presence. The order also provided that, in preparation for the meeting, Mr Mason should serve on Mr Wren a list of the documents and other evidence to which he would be referring at the meeting in support of his figures; and that he (the arbitrator) would serve on both parties a list of all documents and other evidence referred to at the meeting, annotated to show whether he accepted it as existing evidence, or rejected it as new evidence. Paragraph 4 of the order provided that by no later than 17 August, the parties were to make representations to him as to his decisions concerning the evidence.

On 24 July, How's solicitors wrote to the arbitrator again. They said that if a meeting was to take place, it could not be without prejudice. They also complained about the latest amendments. They went on to say that, unless they received an unequivocal statement from him that he would not allow fresh evidence to be introduced, How would have to attend the meeting (which had been fixed for 31 July) with solicitor, counsel as well as a shorthand writer. On 28 July, the arbitrator asserted again that the meeting was to be without prejudice. The role of the experts, he said, was to assist him, and any agreements reached between the experts would not bind the parties. He agreed that what was or was not new evidence was a matter for submissions by the parties, and this was adequately dealt with in paragraphs 3 and 4 of the order of 14 July.

On 29 July, How's solicitors repeated their concerns, particularly in relation to what amounted to new material that was being put forward by Mr Mason. How wished to be able to make submissions on this issue to the arbitrator, and to do so through its lawyers. Accordingly, How was only prepared to attend the meeting if permitted to do so on the basis that Mr Wren was accompanied by counsel and a shorthand writer.

On 30 July, the arbitrator replied saying that he saw no role for counsel at the meeting, adding that there would be adequate opportunity for counsel to be involved as was provided for by his order of 14 July. There was a flurry of further correspondence on 30 July. The arbitrator stood his ground, although he did permit Mr Wren to be accompanied by a shorthand writer. In the event, Mr Wren was instructed by How not to attend the meeting. The arbitrator, therefore, decided to cancel the meeting. Lindner complained that the last-minute cancellation of the meeting had caused it to suffer abortive costs. The arbitrator ordered How to pay the costs thrown away by the cancellation of the meeting. In his letter of 18 August, he said that as a result of the "contumacious" behaviour of How, he did not have the benefit of a constructive technical examination of Mr Mason's figures by Mr Wren. He did not, however, propose to accept Mr Mason's response without examining it critically.

It has been necessary to set out this unhappy history in a little detail, since Mr Tackaberry makes the serious allegation that it shows that the arbitrator was guilty of misconduct. Although Mr Tackaberry relies on the cumulative effect of the whole of the history that I have summarised, his real complaint concerns the arbitrator's insistence that the meeting of experts fixed for 31 July should be without prejudice in his presence, but in the absence of How's lawyers, when How wished to have its lawyers present. He submits that a without prejudice meeting in the presence of the arbitrator is a nonsense. His more important complaint, however, is that matters were to be discussed at the meeting in relation to which How wished to be able to make representations through its lawyers, and that, in the absence of consent, it was wrong to prevent How from being able do so.

There are two short answers to this complaint which do not require me to decide whether the arbitrator was guilty of misconduct. First, since the meeting did not take place, the arbitrator's insistence that it be without prejudice and in the absence of the lawyers did not affect the decision which found expression in the award of 29 October 1998. It is that award, and no other, that is under challenge in relation to the Station contract. I understand How's concern that the arbitrator described its behaviour as "contumacious", but it is not suggested that his objectivity was undermined by the events relating to the abortive meeting of 31 July. One of the striking features of this case is how many of Lindner's claims were dismissed. In its final pleaded formulation, the claim was quantified in a sum of almost £350,000. The arbitrator awarded Lindner £34978.

Secondly, none of the amendments put forward by Mr Mason which were the subject of Miss Gough's questions, and which gave rise ultimately to the fixing of the meeting of 31 July, concerned either of the two claims which were eventually allowed by the arbitrator. Thus, even if the meeting had taken place in circumstances which could be said to amount to misconduct, that misconduct could have had no impact on the award of 29 October.

For these reasons alone, I would refuse to set aside the award or remit it to the arbitrator for further consideration.

But, not without considerable hesitation, I have come to the conclusion that there was no misconduct in the present case. I shall concentrate on the proposed meeting. I accept that to characterise the proposed meeting as "without prejudice" when the arbitrator intended to be present was bizarre, to say the least. But it became clear as the saga progressed that what he meant by "without prejudice" was that any agreements concluded between the experts would not be binding on the parties (see, in particular, his letter of 28 July). Although the choice of words was unfortunate, it was no more than that. Nor do I consider that, in deciding, in the unusual circumstances of this case, that he wished to preside over the meeting, the arbitrator misconducted himself. He had clearly become increasingly exasperated at what he considered to be the obstructions to progress in agreeing as many of the figures as possible. He thought that Mr Wren and those who instructed him were largely to blame for this. The parties before me have wisely not sought to ask me to find who was to blame for the procedural chaos that seems to have existed from April 1998 onwards.

Mr Tackaberry concentrated his fire, however, on the decision of the arbitrator to exclude the lawyers from the proposed meeting. At first blush, a decision to exclude legal representatives from a hearing in the absence of consent to such a course, would appear to be unfair and a breach of the rules of natural justice. No authority was cited to me by counsel on the point, but it seems to me that an arbitrator who insists on such a course will usually be guilty of misconduct. But this was no ordinary case, and the circumstances were unusual. It is clear that the arbitrator intended the meeting to be one between experts at which they would attempt to reach agreement on as many of the outstanding issues as possible, and identify what remained in dispute for his benefit. If such a meeting had been held earlier in the proceedings, and the arbitrator had ordered that the lawyers were to be excluded from it, I suspect that no-one would have thought such a course was unusual. Such meetings are commonplace and sensible. It is undoubtably unusual for such a meeting to be presided over by the arbitrator, but I do not think that this was unfair in the particular circumstances of this case, bearing in mind that a shorthand writer was to be present, and that any agreements reached at the meeting would be subject to the approval of the parties.

So why should the exclusion of the lawyers from the meeting of 31 July be regarded as exceptionable? As they explained in their letter of 29 July, How's solicitors wished to make representations to the arbitrator as to which parts of the material put forward by Mr Mason should be rejected as new. The arbitrator made it clear in his letter of 14 July that he would not allow new evidence to be introduced. In his order of that date, he made elaborate provision to enable How to make representations after the meeting if they considered that he was mistaken in his view as to what constituted new evidence. That is why the arbitrator said in his letter of 30 July that there would be adequate opportunity for counsel to be involved after the meeting as provided for by his order.

The arbitrator's decision to hold the meeting on the conditions on which he insisted was unusual. It was not, however, unfair. I think that it is most unfortunate that How instructed Mr Wren not to attend the meeting. The arbitrator clearly thought that there was scope for narrowing the issues if only the experts could have constructive discussions. It was no doubt because of what he perceived to be the unhelpful attitude adopted by Mr Wren, whether on instructions from How or not, that he decided to preside over the meeting himself. By refusing to attend the meeting, How simply inflamed an already difficult situation.

I conclude, therefore, that even if the conduct of the arbitrator of which complaint is made had had any effect on the award of 29 October, it did not amount to misconduct.

Additional site management and preliminaries: £3897

The complaint here is that there was no evidence to justify the arbitrator's finding. In my view, the arbitrator was entitled to reach the conclusion he did on the basis of the material set out at paragraph 3.13 of the award. In any event, for the reasons mentioned earlier, no error of law has been disclosed.

Conclusion

Accordingly, I reject all of How's arguments in relation to both awards, and dismiss these applications.