Enforcement

C&B Scene Concept Design v Isobars [2002] 1 BLR 94 [2002] EWCA 46

7.15 Facts: The adjudicator had been asked to determine whether the contractor was entitled to payment under a JCT 1998 with Contractor’s Design standard form. The parties had not elected Alternative A or B and therefore the Scheme applied by virtue of s. 109 of the Act. The adjudicator allowed clause 30.3.5 to operate and decided that the full amount applied for by the contractor was payable. The contractor sought summary judgment to enforce the decision, but the employer argued that the Scheme replaced the whole of clause 30, and that in failing to appreciate that, the adjudicator had addressed himself to the wrong question and in so doing had exceeded his jurisdiction. The TCC declined to enforce the adjudicator’s decision and the contractor appealed to the Court of Appeal.

7.16 Held: The Court of Appeal allowed the appeal, finding that the decision of the adjudicator should be enforced regardless of any errors of procedure, fact, or law he made. The adjudicator had asked himself the correct question: what was the contractor’s entitlement to payment for application six? Any error he made in answering that question, by applying the contract instead of the Scheme, or by finding that the contractor was entitled to be paid £1,500 for claims which did not in fact arise under the contract, were errors of law which did not affect the enforceability of that decision:

22. The real question is whether this error on the part of the Adjudicator went to his jurisdiction, or was merely an erroneous decision of law on a matter within his jurisdiction. If it was the former the Recorder was right to hold that summary judgment should not be entered. If it was the latter, then in my judgment the proper course, subject to any question of stay of execution, is that the Claimant is entitled to summary judgment.

23. The whole purpose of s. 108 of the Act, which imports into construction contracts the right to refer disputes to adjudication, is that it provides a swift and effective means of resolution of disputes which is binding during the currency of the contract and until final determination by litigation or arbitration: s. 108(3). The provisions of s. 109–111 are designed to enable the contractor to obtain payment of interim payments. Any dispute can be quickly resolved by the Adjudicator and enforced through the courts. If he is wrong, the matter can be corrected in subsequent litigation or arbitration …

26. Errors of procedure, fact or law are not sufficient to prevent enforcement of an adjudicator’s decision by summary judgment …

29. But the Adjudicator’s jurisdiction is determined by and derives from the dispute that is referred to him. If he determines matters over and beyond the dispute, he has no jurisdiction. But the scope of the dispute was agreed, namely as to the Employer’s obligation to make payment and the Contractor’s entitlement to receive payment following receipt by the Employer of the Contractor’s Applications for interim payment Nos 4, 5 and 6 (see paragraph 12 above). In order to determine this dispute the Adjudicator had to resolve as a matter of law whether Clauses 30.3.3–6 applied or not, and if they did, what was the effect of failure to serve a timeous notice by the Employer. Even if he was wrong on both these points that did not affect his jurisdiction.

30. It is important that the enforcement of an adjudicator’s decision by summary judgment should not be prevented by arguments that the adjudicator has made errors of law in reaching his decision, unless the adjudicator has purported to decide matters that are not referred to him. He must decide as a matter of construction of the referral, and therefore as a matter of law, what the dispute is that he has to decide. If he erroneously decides that the dispute referred to him is wider than it is, then, in so far as he has exceeded his jurisdiction, his decision cannot be enforced. But in the present case there was entire agreement as to the scope of the dispute, and the Adjudicator’s decision, albeit he may have made errors of law as to the relevant contractual provisions, is still binding and enforceable until the matter is corrected in the final determination.

Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2006] BLR 15, [2005] EWCA Civ 1358 (CA)

7.17 Facts: Devonport was employed by the Secretary of State for Defence to carry out works to upgrade the facilities at a dockyard. The contractual relationship between Devonport (the owner of the dockyard) and Carillion (the subcontractor to Devonport) was governed by a subcontract and an Alliance Agreement, which contained a target cost and pain/gain share mechanism. Certain disputes arose between the parties and the adjudicator decided that Carillion was entitled to be paid sums including £1,167,436 (excluding VAT) for the adjusted target cost. Devonport challenged the award on the grounds that the adjudicator lacked jurisdiction and/or had breached natural justice in reaching his decision.²⁵

7.18 Held: At first instance, Jackson J granted Carillion’s application for summary judgment enforcing the adjudicator’s decision (reported at [2005] BLR 310) stating:

80. …

1. The adjudication procedure does not involve the final determination of anybody’s rights (unless all the parties so wish).

2. The Court of Appeal has repeatedly emphasised that adjudicators’ decisions must be enforced, even if they result from errors of procedure, fact or law: see Bouygues, C&B Scene and Levolux;

3. Where an adjudicator has acted in excess of his jurisdiction or in serious breach of the rules of natural justice, the court will not enforce his decision: see Discain, Balfour Beatty and Pegram Shopfitters.

4. Judges must be astute to examine technical defences with a degree of scepticism consonant with the policy of the 1996 Act. Errors of law, fact or procedure by an adjudicator must be examined critically before the Court accepts that such errors constitute excess of jurisdiction or serious breaches of the rules of natural justice: see Pegram Shopfitters and Amec.

…

87. … The adjudicator’s assessment of target cost is highly likely to be revised either upwards or downwards, if and when an arbitrator or this court comes to determine the matters in issue between the parties. The adjudicator’s approach to or assessment of target cost may well embody errors of both fact and law. This would be unsurprising in view of the statutory constraints under which he was operating and the sheer volume of evidence and intricate submissions which were thrust upon him. Nevertheless, any such errors of law and fact cannot be characterised as excess of jurisdiction.

7.19 The Court of Appeal upheld the decision, finding no reason to disagree with Jackson J’s conclusions that in determining the primary sum due to Carillion, this inevitably involved determination of the target cost under the Alliance Agreement.

Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] All ER (D) 143 (TCC)

7.33 Facts: Macob was engaged as a subcontractor to Morrison to carry out groundworks at a retail development in Wales. A dispute arose concerning payment application number six, which was referred to adjudication. The adjudicator directed that Morrison pay forthwith £302,366.34 plus interest together with the adjudicator’s fees. The adjudicator’s decision:

1. Was purported to be issued in accordance with paragraph 23(1) of the Scheme which provides that an adjudicator may order the parties to comply peremptorily with his decision.

2. Stated that in the event of non-compliance by Morrison, he gave permission under s. 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.

7.34 Morrison did not comply with the decision, which it claimed was invalid and unenforceable due to breach of natural justice, and referred to arbitration the disputes arising out of or in connection with the adjudicator’s decision. Macob sought to enforce the adjudicator’s decision and Morrison issued a summons to stay the proceedings under s. 9 of the Arbitration Act because the contract contained a valid arbitration clause which it argued applied to all disputes raised concerning the adjudicator’s decision. Morrison argued that disputes concerning the validity of the decision had to be decided by an arbitrator and therefore rendered the adjudicator’s decision unenforceable unless it was confirmed by an arbitrator.

7.35 Held: Even if there was a challenge to the validity of an adjudicator’s decision, it was nevertheless a decision within the meaning of the Act, the Scheme, and the contract in question. The decision was binding and enforceable until the challenge was finally determined by arbitration, legal proceedings or agreement. Dyson J found that the usual course of enforcement would be to issue proceedings claiming the sum due, followed by an application for summary judgment:

31. Mr Furst submits that there is no power in the court to make an order under section 42 of the Arbitration Act 1996 (as modified by paragraph 24 of Part 1 of the Scheme). His argument is that the power given by section 42 is exercisable ‘unless otherwise agreed by the parties’. He says that the parties have otherwise agreed in the present case by agreeing to refer to arbitration disputes arising out of the decision of an adjudicator. In my view, the arbitration clause is not an agreement of the kind envisaged by section 42(1). What that subsection contemplates is an agreement expressly directed to the section 42 power. Ordinarily, this would be an agreement expressly excluding that power, although I accept that there may be other ways of achieving the same object. A general reference of disputes to arbitration is surely insufficient.

32. In my view, therefore, the court can enforce this decision under section 42.

33. There was some limited discussion as to whether, section 42 apart, the appropriate procedure was by way of writ and an application for summary judgment, or by way of a claim for a mandatory injunction. …

34. I do not consider that the mere fact that the decision may later be revised is a good reason for saying that summary judgment is inappropriate. The grant of summary judgment does not pre-empt any later decision that an arbitrator may make. It merely reflects the fact that there is no defence to a claim to enforce the decision of the adjudicator at the time of judgment.

35. I am in no doubt that the court has jurisdiction to grant a mandatory injunction to enforce an adjudicator’s decision, but it would rarely be appropriate to grant injunctive relief to enforce an obligation on one contracting party to pay the other. Clearly, different considerations apply where the adjudicator decides that a party should perform some other obligation, e.g. return to site, provide access or inspection facilities, open up work, carry out specified work etc. Nor do I intend to cast any doubt on decisions where mandatory judgments have been ordered requiring payment of money to a third party, e.g. to a trustee stakeholder as in Drake & Scull Engineering Ltd v McLaughlin & Harvey Plc [1992] CILL 768.

36. The words of section 37 of the Supreme Court Act 1981 are widely expressed viz: ‘the High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears just and convenient to do so’. But a mandatory injunction to enforce a payment obligation carries with it the potential for contempt proceedings. It is difficult to see why the sanction for failure to pay in accordance with an adjudicator’s decision should be more draconian than for failure to honour a money judgment entered by the court.

37. Thus, section 42 apart, the usual remedy for failure to pay in accordance with an adjudicator’s decision will be to issue proceedings claiming the sum due, followed by an application for summary judgment.

38. It is not at all clear why section 42 of the Arbitration Act 1996 was incorporated into the Scheme. It may be that Parliament intended that the court should be more willing to grant a mandatory injunction in cases where the adjudicator has made a peremptory order than where he has not. Where an adjudicator has made a peremptory order, this is a factor that should be taken into account by the court in deciding whether to grant an injunction. But it seems to me that it is for the court to decide whether to grant a mandatory injunction, and, for the reasons already given, the court should be slow to grant a mandatory injunction to enforce a decision requiring the payment of money by one contracting party to another.

39. The adjudicator did not explain why he thought it appropriate to make a peremptory order. [Counsel for the claimant] was unable to suggest any reason why an injunction should be granted (other than the one which I have already referred to and rejected). In these circumstances, I am not persuaded that I ought to exercise my discretion in favour of granting an injunction.

40. The plaintiff has not claimed a money judgment in these proceedings. In the result, I think that the relief that I ought to grant is a declaration that (i) the decision of the adjudicator is binding on the defendant until the dispute arising from the decision is finally determined by arbitration, legal proceedings or agreement; and (ii) the defendant was required by the decision to pay the sums identified by the adjudicator forthwith in accordance with the Scheme, and is now in default.

Multiplex Constructions (UK) Ltd v Mott MacDonald Ltd [2007] All ER (D) 133, [2007] EWHC 20 (TCC)

7.36 Facts: Multiplex was the main contractor for the construction of the stadium at Wembley. The employer was Wembley National Stadium Ltd (WNSL). Mott was originally engaged as a consultant structural engineer by WNSL but after Multiplex was taken on, WSNL novated its agreement for civil and structural engineering services with Mott to Multiplex. Clause 13.1 of Schedule 4B of the novation agreement required Mott to retain ‘all pertinent records’ including records of costs; permit the client or its representatives, at all reasonable times, to have access to such records; and deliver copies of the records free of charge at the time and in the manner directed by the client.

7.37 Multiplex sought to exercise its right of access and identified that whilst no definition of ‘records’ existed in the novation agreement, it sought to broadly define ‘records’. Mott considered Multiplex’s definition too wide (without providing an alternative definition), but agreed it would provide access to ‘appropriate records’ which did not include records which it was contractually obliged to keep confidential to WNSL, unless WNSL gave its permission. It also proposed providing the records to a programme which did not interfere with critical elements of the works.

7.38 A dispute was referred to adjudication concerning the meaning of the words ‘all records pertinent to the Services’ in the novation agreement. Multiplex sought a declaration and/or a decision that it was correct in its definition and/or a declaration as to the true meaning of the words. The adjudicator rejected both the broad definition advanced by Multiplex and the narrow definition advanced by Mott and found that there was no relevant confidentiality obligations and that Mott must provide access to the records within seven days of the decision and then deliver copies as directed by Multiplex.

7.39 Mott was unhappy with the decision but advised Multiplex it would be making a substantial amount of documentation available. Multiplex formed the view that the documents made available were insufficient and that Mott had failed to comply with the adjudicator’s decision. Accordingly, Multiplex commenced proceedings in the TCC seeking:

1. A declaration that the decision was binding and that Mott was contractually obliged to render full performance forthwith; and

2. Specific performance ordering compliance with the decision; and/or

3. Alternatively an injunction ordering and/or requiring Mott to comply; and/or

4. Alternatively damages together with interest under s. 35A of the Supreme Court Act 1981.

7.40 Held: Jackson J considered the proper course was to grant the declaration sought:

44. … Mott has spent approximately 1000 man hours in identifying and retrieving the documents which have been disclosed. The documentation disclosed amounts to well over 100,000 pages. Multiplex, on the other hand, has only spent two days inspecting that material. Indeed, only one day before the commencement of this litigation. On the first inspection day the representative sent by Multiplex to inspect, namely Mr Edwards, was a relatively junior person.

45. I am bound to say that I am not favourably impressed by the extent of the inspection carried out by Multiplex before embarking upon this litigation. Nevertheless, it remains the case that there are factual issues between the parties in relation to compliance which this court is not in a position to resolve.

…

47. … On the present evidence I cannot say whether or not there are gaps in the material disclosed by Mott. There is no basis on which this court in Part 24 proceedings could make an order for specific performance or grant an injunction, as sought in Multiplex’s application dated 11th December. Nor is there any basis for giving a toned down version of those remedies, as suggested by [Multiplex] in oral argument.

48. … I cannot at the moment reach any conclusion on the question whether Mott has complied with the adjudicator’s decision. Accordingly, Multiplex fails in its application for summary judgment on its claims for specific performance, an injunction and/or damages…

49. … the only issue upon which Multiplex has succeeded is the jurisdiction issue. A question then arises as to whether this court should grant a declaration…

…

52. The position therefore remains as it was at the outset of this hearing. There is a dispute on the facts, as to whether Mott has complied with the adjudicator’s decision. That factual dispute awaits resolution at a later date. There is also a fully articulated dispute on jurisdiction. Both parties’ cases are set out in writing. In addition, both counsel have developed their submissions on jurisdiction in oral argument. Mott maintains its contention that the adjudicator reached a decision which was in excess of its jurisdiction.

53. … I consider that the proper course is for this court to grant the declaration sought. I reach this conclusion for three reasons. These are as follows:

          (i) The jurisdiction issue has been fully argued. … Multiplex’s case on this issue is of sufficient strength to warrant summary judgment.

         (ii) The question of the adjudicator’s jurisdiction remains a live issue between the parties.

        (iii) As a matter of policy the Technology and Construction Court should at each stage of litigation resolve every live issue which is then capable of resolution. It is a tenet of case management that this court is constantly seeking to narrow the issues between the parties.

…

55. Let me now draw the threads together. For the reasons set out above, Multiplex is entitled to a declaration along the lines set out in the particulars of claim, although the precise wording will require some modification. Multiplex’s application for summary judgment on the balance of its claim is dismissed.