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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 >> GPS Marine Contractors Ltd v Ringway Infrastructure Services Ltd [2010] EWHC 283 (TCC) (17 February 2010) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2010/283.html Cite as: [2010] Bus LR D129, [2010] BLR 377, [2010] EWHC 283 (TCC) |
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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 :
____________________
GPS Marine Contractors Limited |
Claimant |
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- and - |
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Ringway Infrastructure Services Limited |
Defendant |
____________________
Mr Justin Mort (instructed by Barlow Robbins LLP) for the Defendant
____________________
Crown Copyright ©
The Hon. Mr. Justice Ramsey:
Introduction
Background
"Our client does not accept that this adjudication has been validly commenced or that you have jurisdiction in respect of the referring party's claim for a number of reasons. These include the following:…"
"There may well be further jurisdiction issues which we have not yet had time or opportunity to investigate. Our client's position in this respect is reserved and the above list should not be understood to be exhaustive.
In the circumstances our client does not consent to or accept your appointment as adjudicator "
"Firstly, we note that you have decided to continue with the adjudication notwithstanding our client's objections to jurisdiction. We resist the temptation to comment further on that issue. For the avoidance of doubt our client reserves its position on jurisdiction, both in respect of those matters specifically raised and other jurisdiction matters which have now become apparent or will do so. Participation in this adjudication is without prejudice to such reservation. We do not propose to repeat that reservation in every letter or submission but trust that our client's position is understood "
"2. This document is served without prejudice to Ringway's objection to this adjudication and to the jurisdiction of the adjudicator. As previously notified to the adjudicator and to the referring party the responding party's position is reserved. Specifically the responding party reserved the right to:
(1) refuse to comply with the adjudicator's decision (including and decision as to payment of costs) on the grounds that such decision is made without jurisdiction;
(2) dispute any enforcement proceedings brought in Court either on the grounds previously identified in correspondence and/or further grounds.
3. Any issues raised below relevant to
(1) the scope of the adjudication;
(2) the jurisdiction of the adjudicator;
are put forward without prejudice to such general reservation."
The Application
(1) That there was a compromise or withdrawal of the dispute.(2) That more than one dispute was referred to the Adjudicator.
(3) That the decision of the Adjudicator is no longer binding
(4) That the Adjudicator's decision was obtained by fraud.
(5) That there has been a breach of natural justice.
Compromise or Withdrawal
"I would approach that further question in this way. The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, at p 95, that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all."
The alleged agreement at the meeting of 30 July 2008
"We were somewhat surprised to receive your letter given our meeting on 30th July 2008, where we refuted your claim in its entirety. We explained in some detail at that meeting why we refute your claim and our position regarding this matter remains unaltered. We draw your attention specifically to your comments at the end of the meeting where you expressed most definitely that you would not pursue the claim. Following your final comments at the meeting the invoice for measured works (calculated from PLA surveys) was paid in good faith as the full and final settlement of any monies due to you. We reiterate that our position with regard to the claim remains unchanged and no further sums are due to you. Furthermore we have had no communication from your company since the meeting and deemed this to be your acceptance of the position on this matter."
The decision of the Adjudicator on the compromise
Ringway's jurisdictional reservation
"No point was expressly taken by the employer as to the adjudicator's jurisdiction to deal with more than one point, but unfortunately the employer made it clear that he reserved his position in relation to jurisdiction in very wide terms; so wide indeed that Mr Newman has very properly not pursued an argument that, in some way, the employer had consented to more than one point being argued or consented, or waived any question of jurisdiction on that basis. "
"It must follow that there may be numerous types of jurisdictional challenge and there can also be different types of reservation. One can reserve generally or specifically. I will leave open the issue as to whether a general reservation as to jurisdiction without any hint or suggestion as to what the grounds are can be effective; it may be so indefinite as to be a meaningless and ineffective reservation but it may be that in a particular context a general reservation may suffice. In this case however, Counsel both accepted, properly and correctly in my judgement, that, if a specific reservation was made on one ground and it was established that the ground in question was an invalid jurisdictional objection, the party in question must be taken to have acceded to the jurisdiction only subject to the specific failed ground; in those circumstances, the parties will be taken to have submitted to the jurisdiction even if there are other good grounds which existed but were not mentioned."
"Mr. Justice Hobhouse made clear that what matters is a clear qualification at the time of the appointment of the arbitrator and, implicitly, that if that is done then subsequent participation in the arbitration under the umbrella of the original reservation will not, without more, amount to a waiver or ad hoc submission."
Conclusion
More than one dispute referred to the adjudicator
Decision no longer Binding
Decision Obtained by Fraud
"In its Response Ringway contends that GPS had provided little evidence to substantiate elements of its claim. Certainly such evidence as was provided up to and including the Referral was limited to the make up of labour hours and materials. Some further detail is contained in the Reply.
GPS makes a sweeping dismissal of the need to substantiate its claim but it should be aware that any claimant must be prepared to provide reasonable substantiation of its claim whatever the agreement giving rise to the claim might say or not say in that respect. That said, the tight timescale of adjudication generally prevents a thorough examination of the supportive detail of claims of any substance."
"In putting together the Referral Notice, I just asked my office staff what rates we paid and I put the claim together based upon details of the personnel on site provided by another employee, Mr Viernes. I knew the type of work each of the people did and charged Ringway according to the rates my office staff had given me for each grade of worker. I did not, at that point, go through every timesheet. I do not accept that in failing to do this I have been fraudulent. The hourly rates in fact paid were not, as it alleged at 11(7)(a), typically less than the rates claimed. In the example in 11(7)(b) Mr Stuckvynski was off that day but he was replaced by a Mr Skalski who in fact worked a 15 hour [not] a 10 hour shift. If there were minor errors in the rates because one individual was paid at a very slightly higher or lower rate to that paid to other similar operatives, then that was accidental. In the overall analysis we forgot to charge for the labour used in fabricating the grilles and there was a substantial undercharge for the labour on the hours booked. Therefore the value claimed in the Referral was understated. "
"20. Some basic propositions can properly be formulated in the context albeit only of adjudication decision enforcements:
(a) Fraud or deceit can be raised as a defence in adjudications provided that it is a real defence to whatever the claims are; obviously, it is open to parties in adjudication to argue that the other party's witnesses are not credible by reason of fraudulent or dishonest behaviour.
(b) If fraud is to be raised in an effort to avoid enforcement or to support an application to stay execution of the enforcement judgement, it must be supported by clear and unambiguous evidence and argument.
(c) A distinction has to be made between fraudulent behaviour, acts or omissions which were or could have been raised as a defence in the adjudication and such behaviour, acts or omissions which neither were nor could reasonably have been raised but which emerge afterwards. In the former case, if the behaviour, acts or omissions are in effect adjudicated upon, the decision without more is enforceable. In the latter case, it is possible that it can be raised but generally not in the former.
(d) Addressing this latter case, one needs to differentiate between fraud which directly impacts on the subject matter of the decision and that which is independent of it. Examples of the first category are where it is later discovered that the certificate upon which an adjudication decision is based is discovered to have been issued by a certifier who has been bribed or by a certifier who has been fraudulently misled by the contractor into issuing the certificate by a fraudulent valuation. Examples of the second category are fraud on another contract or cross claims arising on the contract in question which can only be raised by way of set off or cross claim. Whilst matters in the first category can be raised, generally those in the second category should not be. The logic of this is that it is the policy of the 1996 Act that decisions are to be enforced but the Court should not permit the enforcement directly or at least indirectly of fraudulent claims or fraudulently induced claims; put another way, enforcement should not be used to facilitate fraud; fraud which does not impact on the claim made upon which the decision was based should not generally be deployed to prevent enforcement.
21. In formulating and applying these propositions, courts need to be aware and take into account what goes on construction sites up and down the country. On numerous occasions, contractors and subcontractors and even consultants will submit bills or invoices which are or are believed by the recipient to overstate the entitlement. Whilst there are some "cowboy" and fraudulent builders who prey on the public, it will only rarely be the case that one can presume fraud to have taken place where an invoice or bill is overstated. The claiming party may believe that it is entitled to what it is claiming; there may be a simple and honest mistake in the formulation of the claim; the claim may be based on a speculative but arguable point of law or construction of the contract. In none of these cases can it be said that there was fraud on the part of the claiming party. The Court should be astute and cautious on adjudication enforcement applications in assessing pleas of fraud by the party against whom the adjudication decision has been made. I doubt very much whether there will be any significant number of challenges to enforcement on the basis of fraud."
Natural Justice
"It was not my intention that there would be any submissions after the Reply and Ringway, wrongly, has taken upon itself to assume that it may do so. That said I accept that parties to adjudication do feel the need to keep making further comment but the timescale does not permit this.
Having considered again GPS's communication of 9th July I do not intend to request an extension as it would be wrong to deny Ringway an opportunity to comment on the Reply solely as a means of obtaining an extension from GPS."
"I do not know how Ringway thinks I can accommodate such a submission only two days before my Decision is due. I advised on 22nd July that its assumption that it could make a further submission was wrong.
The time for my Decision has already been restricted due to the jurisdictional challenge, Ringway's delay in submitting its Response and the short extension for GPS's Reply. Nevertheless it is effectively complete except for quantum calculations and final check."
"From this and other cases, I conclude as follows in relation to breaches of natural justice in adjudication cases:
(a) It must first be established that the Adjudicator failed to apply the rules of natural justice;
(b) Any breach of the rules must be more than peripheral; they must be material breaches;
(c)Breaches of the rules will be material in cases where the adjudicator has failed to bring to the attention of the parties a point or issue which they ought to be given the opportunity to comment upon if it is one which is either decisive or of considerable potential importance to the outcome of the resolution of the dispute and is not peripheral or irrelevant.
(d) Whether the issue is decisive or of considerable potential importance or is peripheral or irrelevant obviously involves a question of degree which must be assessed by any judge in a case such as this.
(e) It is only if the adjudicator goes off on a frolic of his own, that is wishing to decide a case upon a factual or legal basis which has not been argued or put forward by either side, without giving the parties an opportunity to comment or, where relevant put in further evidence, that the type of breach of the rules of natural justice with which the case of Balfour Beatty Construction Company Ltd -v- The Camden Borough of Lambeth was concerned comes into play. It follows that, if either party has argued a particular point and the other party does not come back on the point, there is no breach of the rules of natural justice in relation thereto."
Was there a breach of the Rules of Natural Justice?
Conclusion