DALKIA ENERGY AND TECHNICAL SERVICES LTD V BELL GROUP UK LTD
Technology and Construction Court
Coulson J
21 January 2009
THE FULL TEXT OF THE JUDGMENT OF COULSON J
A. BACKGROUND
1. This is a claim under CPR Part 8 arising out of an ongoing adjudication between the
same parties. The claimant ("Dalkia") seeks a variety of declarations against the
defendant ("Bell") relating to the terms of the contract agreed between the parties and
the alleged lack of jurisdiction on the part of the adjudicator. Many of the points taken by
Dalkia are unashamedly technical and devoid of any obvious merit, but that does not
mean that they can be peremptorily dismissed. The courts have repeatedly made it clear
that, because of the potentially draconian effects of the summary adjudication process,
the parties are obliged to follow the proper procedure for appointing an adjudicator with
the necessary jurisdiction to decide the dispute between them, and that failure to do so
can be fatal to the validity of an entire adjudication.
2. It is agreed by the parties that, in May 2007, Dalkia subcontracted to Bell certain repair
and painting works at 143 stations and 22 footbridges owned or controlled by Central
Trains. The parties are agreed that this was a construction contract in writing, but they
disagree over whether or not the Bell conditions of contract were incorporated into that
contract.
3. In 2008 Bell sought payment of sums allegedly due under the contract, together with
payment for variations. Having not received any further monies from Dalkia, they decided
to commence adjudication proceedings. Following one false start, the second notice of
intention to adjudicate ("the adjudication notice") was dated 8th December 2008 and
delivered by post to Dalkia on 9th December 2008.
4. The same day Bell sought a nomination of the adjudicator from the RICS. Their letter
was received by the RICS on 10th December. Mr Geoff Brewer was nominated on 11th
December and was appointed as the adjudicator on 15th December. It is common
ground that this nomination and appointment occurred by reference to Bell's standard
terms and conditions. Both before and after the appointment of Mr Brewer, Dalkia took a
number of points to the effect that the adjudicator did not have the necessary jurisdiction
to determine the dispute. Some of those contentions are now no longer relied on. But
Dalkia argued - and maintained in these proceedings - that either the Bell conditions
were not incorporated into the contract, or, if they were, they did not comply with section
108 of the Housing Grants, Construction and Regeneration Act 1996 ("the 1996 Act")
and that, as a result, the Scheme for Construction Contracts applied instead. Dalkia
submitted that in such circumstances the adjudicator, who had been appointed under the
Bell standard terms and conditions, had no jurisdiction to determine the dispute.
5. On 18th December the adjudicator decided that the Bell conditions were incorporated
into the contract and that he did have the necessary jurisdiction. He reiterated this view
in writing on 22nd December 2008. On 14th January 2009, having played no active part
in the adjudication in the meantime, and having failed to serve a response on 9th
January in accordance with the adjudicator's order, Dalkia commenced these
proceedings under CPR Part 8 seeking declarations that:
a) The Bell standard terms and conditions were not incorporated into the contract
between the parties.
b) If they were, the Bell standard terms and conditions did not comply with
section 108 of the 1996 Act, and so therefore the Scheme applied instead.
c) The adjudicator did not have the jurisdiction to decide the dispute referred to
him, principally because:
i) He had been appointed under the Bell standard terms and conditions
and not the Scheme;
ii) The approach to the RICS took place before the provision of the notice
of adjudication to Dalkia;
iii) The notice of adjudication purported to refer more than one dispute to
the adjudicator.
6. Dalkia's entitlement to these declarations is disputed, but, in addition to those points,
Mr Black QC, on behalf of Bell, contends that this entire claim is unsuitable for CPR Part
8 and/or amounts to an abuse of the process. He also submits that the court has no
jurisdiction to deal with the application. Obviously, given the threshold nature of these
submissions, they are the most appropriate place to start. I deal with the suitability/abuse
argument in Section B below and the arguments as to the court's jurisdiction in Section C
below.
B. SUITABILITY/ABUSE OF THE PROCESS
B1 Suitability
7. Mr Black contends that this claim is unsuitable for CPR Part 8 because two matters of
fact are in dispute which cannot be resolved without hearing oral evidence. The first
issue concerns whether or not a document referring to Dalkia's terms and conditions was
sent to Bell in April 2007 and the second relates to the provision of the notice of
adjudication in early December 2008.
8. I accept that there is an issue, which cannot be resolved on paper, as to the provision
or otherwise by Dalkia to Bell of their prequalification form in April 2007. Bell say they did
not receive it until the beginning of May. However, that debate seems to me to be of very
limited relevance to the contract issue, because Dalkia do not say that their terms and
conditions (which were apparently sent out with the prequalification form) formed any
part of the contract between the parties. Indeed, this document was never even referred
to in any of the correspondence or emails which both parties agree make up the relevant
contract in writing.
9. It is also right to say that, when theses Part 8 proceedings were commenced, Dalkia
may not necessarily have known that this matter was going to be in issue at all. It seems
to me that the TCC's procedure should be flexible enough to avoid the result that one,
potentially unexpected, issue, in connection with what is an almost entirely irrelevant
factual matter, should derail an otherwise valid Part 8 claim.
10. As to the issue relating to the service of the notice of adjudication, I am satisfied that,
on analysis of the written material before me, there is, in truth, no dispute at all on the
facts. It appears clear that the notice of adjudication was faxed to one of Dalkia's outlying
offices on 8th December 2008 and delivered by recorded delivery to the correct address
on 9th December, although it was not marked for the attention of Ms Maria Gonoude, the
individual at Dalkia dealing with the dispute. The only issue is whether the date of
delivery of the notice of adjudication should be taken to be 8th or 9th December, or, on
Dalkia's primary case, 11th December, which is when it was first seen by Ms Gonoude.
11. That issue (as explored in Section F3 of this judgment, paragraphs 85-87 below)
would seem to me to be a matter of law. There is no dispute as to the underlying facts. It
is therefore suitable for determination under CPR Part 8.
12. For those reasons, therefore, I do not accept Mr Black's contention that the dispute
between the parties is unsuitable for CPR Part 8. More widely, it seems to me that the
application is at least broadly in accordance with paragraph 9.4.1 of the TCC Guide,
which sets out the TCC's jurisdiction to deal with proceedings arising out of ongoing
adjudications, and the relevant guidance summarised in Vitpol Building Service v Samen
[208] EWHC 2283 (TCC).
B2 Abuse of Process
13. The abuse of process argument is more complicated, because it involves a
consideration of the communications between the parties and the adjudicator during
December 2008. However, it can be simply summarised. Bell say that, because of the
delays on the part of Dalkia, and their repeated taking of points before the adjudicator which were misleading or at the very least were so bad that they have now been
abandoned - Dalkia are, as Mr Black neatly put it, "an unworthy recipient" of a
discretionary remedy, such as the granting of the declarations currently sought. In
support of that proposition Mr Black relies on the decision of Neuberger J (as he then
was) in FSA v. Rourke (19th October 2001, unreported).
14. The first notice of adjudication was dated 1st December 2008 and sent out by Bell on
2nd or 3rd December. It suggested that a Mr Mackinnon should be appointed as the
adjudicator, and enclosed his CV.
15. Dalkia did not respond to that notice until very late on 8th December. They did not
agree to the appointment of Mr Mackinnon because there was no information as to his
fees. Amongst the other points they took was the suggestion that Bell had failed to serve
the referral notice or appoint the adjudicator within seven days of the notice of
adjudication. I am bound to say that that seems to me to be an extraordinarily bad point,
since that delay was almost entirely due to Dalkia themselves.
16. In addition, they also took the points, both subsequently abandoned, that there was
no contract in writing between the parties and that no dispute had yet crystallised. It is
difficult not to conclude that, at least at that stage, Dalkia were prepared to take every
possible point - whether good, bad or indifferent - in the hope of avoiding, or at least
delaying, the adjudication process.
17. In any event, Bell had realised that the seven-day period had, or might have,
elapsed, and so on 8th December 2008 they sent a second notice of adjudication. That
is the operable notice of adjudication for present purposes. It was that notice that was
faxed on 8th December and sent to the right address on 9th December and to which I
have previously referred.
18. On 9th December 2008 Bell wrote to the RICS seeking the nomination of an
adjudicator in connection with that (second) notice of adjudication. The RICS received
that letter on 10th December, and they wrote to the parties on the 11th to say that "they
will nominate" an adjudicator. They nominated Mr Brewer the following day, 12th
December.
19. In the meantime, there was continuing correspondence between the parties over the
range of points taken by Dalkia in their letter of 8th December. Dalkia now maintained
that the second notice of adjudication was invalid because of the existence of the first
notice, another thoroughly bad point.
20. On 16th December 2008 Dalkia wrote to the adjudicator. This lengthy letter made
plain that Dalkia contended that he did not have jurisdiction for a variety of reasons,
some at least of which have now been abandoned. At page 10 of that letter Dalkia said
this:
"The Way Forward
For the reasons set out above, Dalkia contends that you lack the jurisdiction to
decide the dispute referred to you by Bell and respectfully invite you to withdraw
forthwith.
Pending the outcome of your investigations into your own jurisdiction, Dalkia
strictly reserves its position as to participation in the adjudication thereafter.
However, for the avoidance of doubt, at present, Dalkia is not prepared to sign up
to your terms of appointment.
In the event that you do decide that you have jurisdiction, this letter is intended to
put you on notice that, should Dalkia wish to participate further, such participation
of course being strictly without prejudice to the fact that you have no such
jurisdiction, Dalkia will advance a robust defence of set-off and a substantial
counterclaim."
21. The following day they wrote to the adjudicator again, and they said this:
"We trust that you are now in receipt of our fax of yesterday's date in which we
challenge your jurisdiction to decide the dispute before you. We invite you to
consider these challenges and inform us of your conclusions in this regard as
soon as practicable.
Until you have ruled accordingly upon your jurisdiction (and it remains our view
that you have no option but to withdraw), we consider that it is premature to order
directions in relation to the dispute.
As you are aware, we are currently reserving our position with regard to
participation in the adjudication, but, should you decide that you have jurisdiction
to decide the dispute and should we decide to participate, for the reasons set out
in our letter of yesterday's date we would request that time be extended for the
service of a response until mid-January 2009."
22. Dalkia followed up that letter with another long letter (10 pages in total) which was
largely a rehash of the points previously made. This letter said, amongst other things,
that there was no agreed price in writing and therefore no construction contract, a point
that is now clearly contrary to Dalkia's principal submissions. The letter concluded:
"Now that you have received our submissions in reply, we look forward to
receiving your rulings as to your jurisdiction as soon as is practicable. Should you
rule that you have jurisdiction, Dalkia hereby requests that the time for service of
a response be extended beyond 22nd December 2008 and that Bell be asked to
properly reconsider its refusal to extend the time for the communication of your
decision."
This last was a reference to the adjudicator's original order that Dalkia respond to the
substantive matters in issue in the adjudication by 22nd December
23. The following day, 18th December, Dalkia wrote yet again to the adjudicator on the
jurisdiction points. The letter restated Dalkia's principal submission that "you do not have
jurisdiction at all", and again sought the adjudicator's ruling as to his jurisdiction.
24. On the same day the adjudicator decided as follows:
"I have considered the above submissions and I conclude that the Issue for me to
decide upon at this stage is one of threshold jurisdiction. That is, whether despite
the opposing arguments of the parties concerning jurisdiction, I consider that I
nevertheless have jurisdiction to move the matter forward, although not being in a
position at this point to decide on the matters contended by each side.
I conclude that I do have jurisdiction to proceed at this stage and set out below
my reasoning in respect of the main issues raised."
The adjudicator then went through and rejected each of Dalkia's propositions on
jurisdiction. In so doing, he expressly found that the Bell standard terms and conditions
were incorporated into the contract between the parties.
25. On 19th December 2008 Dalkia wrote to ask the adjudicator to reconsider his
decision on jurisdiction and warned the adjudicator that they were "taking advice with
regard to issuing Part 8 proceedings in the TCC". They somewhat peremptorily sought a
response from the adjudicator by 22nd December 2008, which was the next working day.
26. The adjudicator complied with that request, reiterating in writing on 22nd December
his conclusions as to jurisdiction and the incorporation of the Bell standard terms and
conditions. He also extended Dalkia's time to respond in writing to Bell's substantive
claims in the adjudication until 9th January 2009.
27. Thereafter, for reasons which have not been clearly explained to me, nothing
happened for over three weeks. Dalkia did not comply with the adjudicator's order; nor
did they commence Part 8 proceedings until 14th January 2009. Thus the requirement
that they imposed on the adjudicator to respond to their request for clarification by 22nd
December 2008, with which he complied, seems to have had no purpose or point at all. I
also note that the time for the adjudicator's decision has now been extended by
agreement to 29th January 2009.
28. In addition to those events, Mr Black also complains about events regarding the
service of some of the evidence in the Part 8 proceedings at the end of last week. From
what I have heard, I am not willing to make findings of fault or blame in relation to those
events and, in any event, I do not consider that they are relevant to the abuse of the
process argument.
29. In essence, the chronology which I have set out above provides some support for the
two principal criticisms made by Mr Black of Dalkia's behaviour: the taking of points
before the adjudicator which were palpably wrong, if not misleading; and the delays
concerning the commencement of these Part 8 proceedings. I am particularly troubled by
the unacceptable and unexplained delay of over three weeks from 19th December to
14th January prior to the commencement of these Part 8 proceedings, at a time when
the adjudication was continuing but Dalkia were apparently playing no part in it.
30. However, all of that said, I have reached the conclusion that, on balance, I should not
dismiss Dalkia's Part 8 claim simply because of that conduct, however regrettable I may
regard it. If Dalkia are entitled to a declaration to the effect that the adjudicator does not
have the necessary jurisdiction to decide this dispute, it would still be better for everyone
if, having got this far, that declaration were granted now, rather than everyone waiting for
the point to arise in subsequent enforcement proceedings.
31. For those reasons, I do not accept the submission that I should decline to deal with
these matters on the grounds of abuse of process.
C. THE COURT'S JURISDICTION
C1 Introduction
32. Mr Black took two separate points as to the court's jurisdiction. First, he submitted
that Dalkia had given the adjudicator the authority to reach a binding decision on his own
jurisdiction, which could not therefore be opened up by the court. Secondly, he
contended that, because the parties were agreed that there was a written construction
contract, the adjudicator's decision as to whether or not that contract incorporated a
particular set of contract conditions was a decision which he was entitled to reach as part
of the dispute referred to him, and thus the court had no jurisdiction to review, let alone
overturn, that decision. I deal with each of those points in turn below.
C2 The Parties' Agreement
33. The parties agreed that the adjudicator should investigate and rule on his own
jurisdiction. The question is whether, in so doing, Dalkia had submitted to the
adjudicator's jurisdiction in the full sense of having agreed not only that the adjudicator
should rule on the issue, but also that Dalkia would then be bound by the ruling: see the
test propounded by Simon Brown LJ (as he then was) in Thomas-Fredric's
(Construction) Ltd v. Keith Wilson [2004] BLR 23).
34. In short, the issue before me is whether this was a case like The Project Consultancy
Group v. The Trustees of the Gray Trust [1999] BLR 377 where the responding party
reserved its position at the outset and participated in the adjudication only subject to that
reservation, or whether it is similar to the case of Nordot Engineering Services Ltd v.
Siemens PLC (SF 00901 TCC 16/00) where the responding parties' agreement to abide
by, and comply with, the adjudicator's decision on jurisdiction was regarded by His
Honour Judge Gilliland QC as a submission to the adjudicator's jurisdiction in the full
sense.
35. I have set out in paragraphs 20 to 26 above the relevant correspondence
surrounding the adjudicator's investigation into, and determination of, his own
jurisdiction. I consider it clear beyond argument that:
a) Dalkia reserved their position at the outset in the letter of 16th December.
b) Dalkia never resiled from that reservation and repeatedly said that the
adjudicator did not have the necessary jurisdiction.
c) Dalkia never expressly agreed to be bound by, or comply with, the
adjudicator's ruling on jurisdiction.
36. Mr Black relies on the fact that, in their letters, Dalkia refer to the adjudicator's
"ruling" on jurisdiction and that they also referred to the need for him to consider and
decide the point. He says that the use of these words indicates that Dalkia intended to be
bound by the adjudicator's decision on jurisdiction. I disagree with that. In my judgment,
when the documents are looked as a whole, I consider that the letters from Dalkia have
precisely the opposite effect: they always regarded themselves as being able to
challenge that decision.
37. In short, it seems to me that this case is very similar on the facts to the case of
Project Consultancy where Dyson J (as he then was) decided that there was no
agreement on the part of the responding party to be bound by the adjudicator's decision
on jurisdiction. There was no unequivocal acceptance by Dalkia (as there was by the
responding party in Nordot) that they would abide by and comply with the decision on
jurisdiction. Accordingly, Bell's argument on that point must fail.
C3 The Adjudicator's Decision As To The Bell Terms and Conditions
38. The adjudicator decided that the Bell standard terms and conditions were
incorporated into the contract. It is common ground that, if they were not, there was still a
written construction contract between the parties. No differences as to the parties'
underlying rights and liabilities, if the Bell conditions were not incorporated, have been
drawn to my attention. The only difference (which the parties have addressed in their
submissions) is that, if the Bell conditions were not incorporated, then clause 12, which
dealt with adjudication, would be lost and the Scheme for Construction Contracts would
apply instead. On a relatively quick comparison, I am bound to say that the differences
between clause 12 and the Scheme in relation to adjudication appear to be largely
cosmetic.
39. Mr Black submits that the adjudicator's decision that the Bell terms were incorporated
into the contract was part of the dispute referred to him, and that this decision cannot
now be reopened by the court. He submits that it was an entirely mundane element of a
contractual dispute which the adjudicator had the jurisdiction to consider and which the
court should now not disturb: see, by way of example of such matters, the Court of
Appeal decisions in C&B Scene Concept Design Limited v Isobars Limited [2002] BLR
93 and Carillion Construction Limited v. Devonport Royal Dockyard Limited [2005]
EWCA Civ 1358.
40. In response, Mr Lamont relies on the decision of the Court of Appeal in Pegram
Shopfitters Ltd v. Tally Wiejl (UK) Ltd [2003] EWCA Civ 1750. There the Court of Appeal
held that, because there was a bona fide dispute between the parties as to the basis of
the contract between them, the decision of the adjudicator, who had been appointed on
the basis of a contested set of contract conditions, should not be enforced. Mr Lamont
contends that Pegram is authority for the proposition that, if there is a dispute about the
contractual basis of the appointment of the adjudicator, such a dispute is a matter which
goes to the adjudicator's jurisdiction and can be the subject of an investigation by the
court.
41. It is, I think, necessary to explore in a little more detail what was actually happening
in Pegram. It seems to me that the critical point in that case was that the defendant, who
was resisting enforcement, had an alternative argument that there was no contract at all
between the parties. The Court of Appeal regarded that argument as having a more than
fanciful prospect of success. Accordingly, there was an important question-mark over the
adjudicator's jurisdiction: if there was in fact no contract, he would not have had any
jurisdiction. That seems to me to be the principal explanation for the decision by the
Court of Appeal to refuse to enforce the adjudicator's decision.
42. That critical feature is missing here. As I have said, in the present case there is no
dispute that there was a written construction contract between the parties. Thus, there is
no dispute that an adjudicator would have had to have been appointed, whether under
the Bell conditions or under the Scheme, to decide any dispute that arose between the
parties under that contract. In such circumstances the adjudicator's decision as to
whether or not a particular set of contract conditions were incorporated or not would
seem to me to be part of the dispute properly referred to him and would not ordinarily be
a matter with which the court could interfere on enforcement.
43. Some support for that proposition can be found in the decision of His Honour Judge
Havery QC in Aveat Heating Ltd v Jerram Falkus Construction Ltd [2007] EWHC 131
(TCC). There the learned judge concluded that a particular set of conditions did not
comply with the 1996 Act, so that the Scheme applied instead. The point was taken that,
because the adjudicator had not been appointed under the Scheme, he had not been
validly appointed and he was without jurisdiction. Pegram was cited in supported of that
proposition. Judge Havery rejected that argument and said that Pegram did not support
any such case. He found that the adjudicator did have the necessary jurisdiction and
enforced the vast majority of his decision.
44. The views that I have expressed above would appear to lead to the conclusion that
Mr Black is right and that, now that the adjudicator has decided the point about Bell's
standard terms and conditions, this is not a matter on which the court should intervene.
However, this is not an ordinary case: it does not arise before me on enforcement where,
if this jurisdiction point had arisen, it could have been comprehensively dispatched for
the reasons that I have noted. Instead, the point arises here in Part 8 proceedings,
where the court is being asked to give a final and binding determination on the issue:
were Bell's standard terms and conditions incorporated into the contract? There can be
no question of a want of jurisdiction on the part of the court in those circumstances. The
issue arises for final determination in these Part 8 proceedings, and it seems to me that,
to paraphrase the judgment of May LJ in Pegram, I should not duck that issue.
Accordingly, for that specific reason alone, I reject the contention that the court does not
have the jurisdiction to consider and determine this issue at this stage.
45. Of course, not every issue in an ongoing adjudication will be suitable to the Part 8
procedure under the CPR: far from it. For example, in Dorchester Hotel v. Vivid [209]
EWHC 70 (TCC), I ruled that the pre-emptive use of Part 8 in order to seek declarations
as to natural justice in an ongoing adjudication was, on the facts of that case, entirely
inappropriate. Indeed, I suspect that the use of CPR Part 8 will rarely be appropriate in
an ongoing adjudication, but I can see that there will be times when an issue as to, for
example, which contract conditions apply, may be suitable for decision before or at the
time of the ongoing adjudication.
46. Accordingly, I do not accept Mr Black's second jurisdictional argument, not on the
ground that the adjudicator was not entitled to or did not have the jurisdiction to reach his
decision about the Bell standard terms and conditions (in my judgment, he did), but
because, by these proceedings, Dalkia seek the final determination of the issue as to the
incorporation of Bell's standard terms and conditions. It is therefore that issue to which I
now turn in Section D below.
D. WERE BELL'S STANDARD TERMS AND CONDITIONS INCORPORATED?
D1 The Relevant Facts
47. After all that preamble, the facts relating to the incorporation of the Bell terms and
conditions are disappointingly straightforward. On 22nd February 2007 Dalkia asked Bell
to tender for dilapidations work at 199 stations owned by or controlled by Central Trains.
On 8th March 2007 they also asked Bell to tender for painting 22 footbridges. At the
same time they asked Bell to add Dalkia's own 10% margin to their tender prices.
48. On 13th March 2007 Bell provided three quotations for the 199 stations, divided up
respectively into stations A-F, stations G-M and stations N-Z. Each quotation came with
these words:
"We thank you for your valued enquiry and have pleasure in providing the
following quotation, as all Bell Group standard terms and conditions …"
49. It is common ground that the Bell conditions were attached to these quotations. It is
unnecessary at this stage to set out those conditions in full, but it seems to me that one
of those conditions does have relevance to the incorporation issue. That is clause 1.1.
That said:
"Any contract between Bell Group UK ('the company') and any of its customers
('the customers') for the supply of work and materials ('the work' and 'the
materials') shall incorporate these terms and conditions, which shall prevail over
any other terms and conditions contained in the customer's order form or offer, or
in any other oral or written intimation which shall not be incorporated into any
contract made by the company unless otherwise agreed in writing by the
company."
50. On 19th March 2007, Bell amended their quotation for one group of stations. On the
following day, 20th March 2007, provided their quotation for the work to the footbridges.
That further quotation did not contain a separate reference to the Bell terms and
conditions.
51. In mid-April 2007 it was said by Dalkia that they sent Bell a "vendor approval
prequalification form", which included Dalkia's general conditions of supply. Bell deny
that they received this form until the beginning of May. It appears to be common ground
that it was not completed until 25th May 2007, which was after the parties say that the
contract had been agreed. As I have already indicated, I cannot resolve factual disputes
in these Part 8 proceedings. It is, however, common ground that:
a) The form was required to be completed by the supplier (in this case Bell);
b) The form was not completed by Bell until after the contract had been agreed;
c) Bell were never chased up to complete the form prior to the conclusion of the
contract, and it was not mentioned in the correspondence/emails which both
sides agree constituted the contract in writing;
d) The construction contract was therefore agreed in May 2007 without the form
having been completed and without any reference either to the form or the Dalkia
terms;
e) The May contract did not include or incorporate the Dalkia terms.
52. On 23rd April 2007 Dalkia accepted Bell's offer, although this acceptance was limited
to 143 stations and the 22 footbridges. This was all the work that Central Trains were
prepared to let to Dalkia. The 143 stations were in two groups: East and West Zone 1.
The work at the remaining stations was let by Central Trains to another contractor. The
acceptance was contained in an email to Craig Bell from Sean Marsh of Dalkia on 23rd
April in these terms:
"I have attached the Footbridges, East and West Zone 1 schedules for your
information. These sheets now show a breakdown of all the services required by
Central Trains and identify the total works we would require Bell Group to
complete. The total of your works is approximately £403K, although this includes
Dalkia's 10% margin, which you included in your rates. I will leave you to
resubmit these worksheets back to me with the removal of our margin so we can
contract you for the correct value of the works. As discussed, for commercial
reasons only platform markings will be delivered via a separate contractor."
53. It is common ground that the reworked prices sought by Dalkia were provided by Bell
and accepted by Dalkia on or around 9th May 2007. I have seen an email of that date
which has attached to it pricing schedules showing, amongst other things, the various
percentages for discounts and margins. The full contract price, I am told, was around
£332,000 odd. A programme of work was agreed later in the month and the work started
on 21st May 2008. This would therefore seem to be the last date on which it could be
said that the contract came into force, and that was before Bell had completed the prequalification form (see paragraph 51 above).
D2 The Parties' Submissions
54. On behalf of Dalkia, Mr Lamont submitted that the quotations of 13th March 2007
were speculative quotations only and that, when the workscope changed in April,
detailed prices were sought and provided without there being any reference to the earlier
quotations or the Bell standard terms and conditions. Mr Lamont said that the scope of
the works agreed in the contract was "entirely different" to that quoted for in March. He
said that the quotations and the terms were merely tender documents which formed no
part of the contract, and in support of that proposition he relied on Davis Contractors
Limited v. Fareham UDC [1956] AC 696. He also submitted that, on a proper
construction of the March quotations, they were not saying that the Bell conditions would
apply to work which they might be asked to carry out in the future.
55. Mr Black submitted that the quotations plainly incorporated the terms and conditions,
and that clause 1.1 made it clear that those terms and conditions would be incorporated
into any contract that was concluded between the parties. He said that the quotations of
13th March formed Bell's original offer, which was amended on 19th and then again on
20th March 2007. He said that on 23rd April there was an agreement as to part of the reamended offer, namely, insofar as it related to 143 of the 199 stations and all of the
footbridges. He said there was a counter-offer as to price which was subsequently
agreed no later than 9th May. Accordingly, he said there was a contract which
incorporated the Bell terms and conditions.
D3 Analysis
56. For a variety of reasons which I will outline below, I am in no doubt that Mr Black's
submissions as to the formation of the contract are correct. First, I consider that the
quotations of 13th March 2007 were not preliminary or speculative. They were, and
remained, Bell's only detailed quotations for the work. Those quotations incorporated
Bell's terms and conditions.
57. Secondly, as a matter of construction, Dalkia could have been in no doubt that Bell's
offer incorporated those terms and conditions and, unless expressly rejected or modified
(which rejection or modification would have had to have been agreed by Bell expressly),
they would form part of any contract that may be agreed between the parties in the
future. That is, so it seems to me, the only possible interpretation of clause 1.1.
58. Thirdly, I reject the notion that in some way the workscope changed so that the
March quotations became irrelevant. The workscope did not change. All that happened
was that a part of the workscope to which the quotations related was deleted from the
eventual contract that was agreed. The workscope may have been the subject of a more
detailed set of schedules provided in April, but there is nothing to say that the workscope
itself was any different. Indeed, the fact that the March quotations, and the prices
contained therein, were then carried forward into the agreements of April and May
indicates precisely the contrary.
59. Fourthly, I note that, with the Bell terms and conditions in play, at no stage in the
communications between the parties were those terms and conditions ever queried by
Dalkia. It was never suggested that they might be something that were even potentially
in issue. Neither was this a battle of the forms case (see Chitty on Contracts, 30th
Edition, paragraphs 2-034-2-037). The Bell terms and conditions were never queried by
Dalkia at any stage.
60. Fifthly, the Dalkia pre-acceptance form was irrelevant. For the reasons noted in
paragraph 51 above, I am confident that it has no factual or legal significance.
61. Sixthly, I am clear that Davis v. Fareham is irrelevant to the present case. That was a
dispute over whether a letter, which purported to modify contractual terms but which did
not itself form part of the executed contract, was admissible or relevant to the proper
construction of the contract. Here, there was no executed contract, and the parties are
agreed that the contract was in writing only because all the relevant terms of that
contract are recorded in the correspondence and emails to which I have referred. Thus
the Davis v. Fareham point does not arise. The contract plainly included the Bell terms
and conditions sent on 13th March 2007.
62. Finally, just standing back from the detail for a moment, it seems to me that Dalkia's
case amounts to this: that, even if a tenderer has made clear that his quotation, and any
eventual contract, will incorporate his terms and conditions and, even if that suggestion
is not discussed, let alone queried or challenged by the other party, if those terms and
conditions are not re-stated again when the final discussions as to price take place, they
somehow become irrelevant and form no part of the contract agreed between the
parties. No authority was provided for such a startling and, I would suggest, artificial
conclusion, and I reject it.
63. For those reasons I have concluded that the Bell standard terms and conditions were
incorporated into the subcontract between the parties. Accordingly, if I was wrong to
conclude (at paragraphs 44 to 46 above) that this was a topic which the court had the
jurisdiction to consider afresh, my conclusion and determination of the issue makes no
difference to the underlying rights and liabilities of the parties, since I have reached
precisely the same conclusion as the adjudicator.
64. I now turn to address, in Sections E, F, and G below, the various arguments put
forward on behalf of Dalkia to the effect that, even if the Bell conditions were
incorporated into the contract, the adjudicator did not have the necessary jurisdiction to
deal with the dispute.
E. THE APPOINTMENT OF THE ADJUDICATOR
E1 Introduction
65. Mr Lamont's first point in this group of submissions was to the effect that, even if the
Bell standard terms and conditions were incorporated, clause 12.4 thereof did not
comply with the 1996 Act, so that the contractual adjudication provisions were rendered
irrelevant, and the Scheme for Construction Contracts was incorporated instead. The
significance of this, said Mr Lamont, was that if that was right, the adjudicator had been
appointed under the Bell conditions, not the Scheme, and therefore had no jurisdiction.
66. Clause 12 of the Bell standard terms and conditions dealt with adjudication. The
relevant parts of that provision were as follows:
"12.1 Either party to the contract may give notice ('notice of intention to refer to
adjudication') of its intention to refer a dispute, difference or question arising
under, out of or relating to the contract for adjudication at any time and, within
seven days of such notice of intention to refer to adjudication, refer the same by
notice of referral ('notice of referral') to the adjudicator specified in the appendix
hereto ('the appendix'). The party referring such dispute shall be called 'the
referrer', and the party responding shall be called 'the respondent', collectively
referred to as 'the parties'…
12.3 The adjudicator to decide the dispute or difference shall be either one of the
individuals named in paragraph 1 of the appendix, or an individual agreed by the
parties, or, on the application of either party, an individual to be nominated as the
adjudicator by the person named in paragraph 2 of the appendix ('the
nominator'), provided that, where either party has given notice of intention to refer
to adjudication then: …
12.3.3 Any application to the nominator must be made with the object of securing
appointment of and referral of the dispute or difference to the adjudicator within
seven days of the notice of the date of the notice of intention to refer to
adjudication.
12.4 Upon the appointment of the adjudicator, the parties shall comply with all the
directions which he may issue for the purposes of considering the facts and
issues in the dispute and so that the adjudicator shall notify his decision to the
parties not later than 28 days from the date of the referral to him, or such longer
period as is agreed by the parties after the dispute has been referred and the
adjudicator may extend the period of 28 days by up to 14 days with the referrer's
consent. The adjudicator's decision shall nevertheless be valid if issued after the
time allowed. The adjudicator's decision shall state how the cost of the
adjudicator's fee shall be apportioned between the parties and whether one party
is to bear the whole or part of the reasonable legal and other costs and expenses
of the other party relating to the adjudication. It shall be a condition precedent to
the appointment of an adjudicator that he shall notify the parties that he will
comply with this condition and its time limits."
67. The appendix was in the following terms:
"1. Under condition 12 the adjudicator shall be such person as the customer or
company choose by mutual agreement in writing or, failing such agreement, such
other person as may be chosen by the President, or a Vice-President, or
Chairman or a Vice-Chairman of the Royal Institution of Chartered Surveyors at
the request of either the customer or the company."
68. Section 108(2) of the 1996 Act provides that a construction contract such as this
must:
(c) require the adjudicator to reach a decision within 28 days of referral or such
longer period as is agreed by the parties after the dispute has been referred;
(d) allow the adjudicator to extend the period of 28 days by up to 14 days, with
the consent of the party by whom the dispute was referred; …"
Clause 12.4 of the Bell standard terms and conditions replicated both the 28-day
mandatory period and the possible 14-day extension with the referring party's consent.
But the clause went on to provide (in the underlined passage above) that the decision
"shall nevertheless be valid if issued after the time allowed". It is Dalkia's case that, in
providing such an open-ended extension to the adjudication time limits, clause 12.4 was
not in accordance with the 1996 Act.
E2 Two Decisions of His Honour Judge Havery QC
69. There are two decisions of His Honour Judge Havery QC which Mr Lamont relied on
to suggest that a provision such as clause 12.4 did not comply with the 1996 Act. In
Epping Electrical Company Limited v. Briggs and Forrester [207] EWHC 4 (TCC), the
judge was considering paragraph 25 of the CIC Model Adjudication procedure, which
purported to provide that any decision reached after the expiry of the 42 days would still
be valid, provided it was reached before the appointment of a replacement adjudicator.
70. Judge Havery concluded that such a provision did not comply with the 1996 Act,
holding that "the apparent effect of paragraph 25 of the CIC Procedure is inconsistent
with the mandatory nature of section 108(2)". He went on to conclude that, as a result, in
accordance with section 108(5) of the 1996 Act, the Scheme for Construction Contracts
applied in place of the adjudication provisions of the contract. He ruled that, on the facts
of that case, the decision was not enforceable because it had been reached outside the
statutory time limits.
71. The second case is Aveat Heating, to which I have already referred above. There the
judge was concerned with clause 38A5 of the JCT conditions. That was in almost exactly
the same terms as the condition here. Judge Havery ruled that the term did not comply
with the Act and that the Scheme applied instead. His reasoning was confined to a
reference to his own decision in Epping, where he said that he had "held a provision
equivalent to [the term in question in Aveat] not to be compliant with the Act". It should
be noted that, despite reaching this conclusion, the learned judge did not conclude that
the adjudicator did not have the necessary jurisdiction - a point I have already made in
paragraph 43 above.
E3 Analysis
72. In reliance on those decisions, Mr Lamont argued that the Bell adjudication provision
at clause 12.4 did not comply with the Act and had therefore to be replaced by the
Scheme. Mr Black disagreed. He said that, whilst Epping was concerned with time limits
for reaching the decision, the clause in Aveat was dealing solely with when the decision
was issued - not when it was reached. He said that the difference between when a
decision was reached and when it was issued to the parties was a matter that had been
considered in a number of authorities, and that the clause in Aveat and the clause here
merely reflected the decisions in those cases, to the effect that an adjudicator had a
certain (small) amount of leeway in the issuing of his decision. He therefore submitted
that Judge Havery was wrong to say what he said in Aveat, albeit that in any event it did
not affect his conclusion.
73. In my judgment, Mr Black is right. A decision has to be reached within the mandatory
time limits, and so I would regard Epping as being entirely correct. But it is settled law
that, provided that a decision is reached within the statutory time limits, the adjudicator
does have a short additional period in which to issue that decision: see, for example,
Barnes & Elliott Limited v. Taylor Woodrow Holdings Limited [2003] 3100 (TCC) and
Cubitt Building & Interiors Limited v Fleetglade Limited [206] EWHC 3413 (TCC).
74. Of course, whether or not the actual delay in issuing the decision after it has been
reached will invalidate that decision must always depend on the facts of the particular
case. But the general statement that a decision reached within the time limits can be
issued after the expiry of the time limits is in general accordance with the law.
75. For that reason, it seems to me that Judge Havery may have been in error in
expressing the view that he did, that the clauses in Epping and Aveat were very similar,
when in truth they referred to different aspects of the adjudication process. In any event,
as I have said, that view made no difference to his decision in Aveat. Here, I consider
that clause 12.4 does no more than reflect the case law to which I have referred and
that, as a result, the Bell terms and conditions were in accordance with the 1996 Act. On
this basis, therefore, the adjudicator was validly appointed by reference to conditions
which were in accordance with that Act. The Scheme for Construction Contracts is
irrelevant.
E4 Alternative Position
76. I should add by way of completeness that, if both the adjudicator and I were wrong,
and the Bell conditions were not incorporated into the contract, and if I was also wrong
on the previous point, and the Bell conditions did not comply with the Act, it would, in my
judgment, make no difference to the adjudicator's jurisdiction. On this analysis the
Scheme, not the Bell conditions, would apply, but I do not consider that that would have
any effect on the adjudicator's jurisdiction.
77. My reasons are really those outlined in paragraphs 38 to 43 above. In circumstances
where the parties accept that there is a written construction contract, the only issue is
whether an express or implied set of adjudication provisions were incorporated into the
contract. Such a situation is different to that in Pegram and such a dispute is one which
the adjudicator has the jurisdiction to determine (see Aveat).
F. COMPLIANCE WITH THE BELL STANDARD TERMS AND CONDITIONS
F1 Introduction
78. Mr Lamont's next point was that Bell failed to follow their own terms and conditions in
the appointment of the adjudicator, so that on this ground too he had no jurisdiction. His
first argument was that the Bell conditions required an attempt to agree an adjudicator
before any application could be made to the RICS. His second argument was that, on a
proper construction of clause 12, the approach to the RICS had to be made after the
service of the notice of adjudication, and here it was not.
79. In response to these submissions, Mr Black contended that, as a matter of
construction, the Bell conditions did not require an attempt at agreement before an
application to the RICS. Secondly, he submitted that the conditions did not require the
notice of adjudication to be provided before the approach to the RICS, but that, even if it
did, that is what actually happened here. I deal with those points in turn below.
F2 Agreement First?
80. There is no doubt that clause 12 of the Bell conditions (paragraph 66 above)
envisaged either that the parties would agree an adjudicator, or that the adjudicator
would be appointed by the RICS. But there is nothing in the form of words used to
indicate any mandatory sequence, or that any attempt must be made to agree an
adjudicator before there can be a valid approach to a nominating body (in this case the
RICS). A failed attempt at agreement is not, as a matter of construction of clause 12, a
condition precedent to an approach to the RICS.
81. My attention was drawn to the judgment of Dyson LJ in Amec Capital Projects Ltd v.
Whitefriars City Estates Ltd [2004] EWCA Civ 1418 in which, in addressing similar
provisions, he described them as "a number of different methods by which an adjudicator
may be appointed". I consider that that is also an apt description of clause 12 of the Bell
conditions. I reject the submission that clause 12 required an attempt to agree the
identity of an adjudicator before there could be a valid approach to the RICS.
82. I should add that, in any event, this is not an argument which Dalkia could
legitimately expect the court to favour, in circumstances where their delays in early
December only served to highlight the practical and logistical difficulties inherent in the
suggestion that such a two-stage process can be squeezed into what may only be seven
days. Their own delays in dealing with the first notice of adjudication make plain that,
unless such a procedure was plainly made mandatory by the contract, it would be
unreasonable and impracticable to require a party to try and agree an adjudicator after
the service of the notice of adjudication and before applying to the nominating body.
F3 Notice Prior to Application to RICS
83. In IDE Contracting Ltd v RG Carter Cambridge Ltd [2004] BLR 172, a decision under
the Scheme, His Honour Judge Havery QC held that a failure to serve a notice of
adjudication before making an approach to the nominating body in question was a failure
to comply with the Scheme because, under paragraph 2(1) of the Scheme, the various
ways in which an adjudicator may be appointed only become relevant "following the
giving of a notice of adjudication". By contrast, in Palmac Contracting Ltd v. Park Lane
Estates Ltd [2005] BLR 301, a case arising under a set of contractual adjudication
provisions in different terms, Her Honour Judge Kirkham QC concluded that there was
no such requirement.
84. Clause 12 of the Bell conditions is in very similar terms to those under consideration
in Palmac. As a matter of construction, I would conclude (for the same reasons as Judge
Kirkham) that, unlike the Scheme, clause 12 did not require a notice of adjudication in
advance of an approach to the nominating body (in this case the RICS).
85. However, even if I was wrong about that, I am in no doubt that, on the facts, this
point does not arise in any event. As set out above, the notice of adjudication was
delivered to the appropriate address at Dalkia on 9th December. No approach was made
to the nominating body until that day (although there had been an earlier approach to the
RICS on 5th December, that related to the first, and now superseded, notice, and is
therefore irrelevant). Accordingly, it is impossible to say that the approach to the RICS
was made before the provision to Dalkia of the relevant notice of adjudication. That is
only confirmed by the fact that the RICS did not even receive the request until the
following day, the 10th December.
86. Mr Lamont's argument on this point was that, because the notice was addressed
simply to the managing director of Dalkia rather than the individual dealing with this
dispute, the notice did not come to her attention until 11th December, and so it should be
11th December that is taken as the date on which the notice was given or provided.
87. I am afraid that I reject that contention out of hand. The suggestion that the date on
which a notice of adjudication was given, from which so many other things may flow, is to
be controlled by reference to the vagaries of the recipient's internal mail arrangements, is
simply untenable. The notice was delivered to Dalkia's principal business address on 9th
December. It was delivered by recorded delivery, so it should have been apparent to
everyone that it was important. It should therefore have found its way to those concerned
with this dispute during the course of that day. I therefore consider there is nothing in this
point on the facts.
88. For those reasons, I conclude that the appointment of the adjudicator was in
accordance with the Bell standard terms and conditions and that the adjudicator was
validly appointed in accordance with those conditions.
G. JURISDICTION - MORE THAN ONE DISPUTE
89. Mr Lamont's final point was to say that, because the matters referred to the
adjudicator included claims under the contract as well as a claim for variations, this
meant that more than one dispute had been referred to the adjudicator in contravention
of the 1996 Act.
90. As I pointed out during oral submissions, in the light of the somewhat inglorious
history of the 'more-than-one-dispute' point, that was a bold submission. The broad
definition of a single dispute habitually used by the courts is that of His Honour Judge
Thornton QC in Fastrack Contractors Limited v. Morrison Construction Limited [2000]
BLR 168 which is in these terms:
"During the course of a construction contract many claims, heads of claim,
issues, contentions and causes of action will arise. Many of these will be,
collectively or individually, disputed. When a dispute arises, it may cover one,
several or many of one, some or all of these matters. At any particular moment in
time it will be a question of fact what is in dispute. Thus, the 'dispute' which may
be referred to adjudication is all or part of whatever is in dispute at the moment
that the referring party first intimates an adjudication reference. In other words,
the 'dispute' is whatever claims, heads of claim, issues, contentions or causes of
action that are then in dispute which the referring party has chosen to crystallise
into an adjudication reference."
91. This statement has been approved in a number of subsequent cases, including by
His Honour Judge Lloyd QC in David McLean Housing Ltd v. Swansea Housing
Association Ltd [2002] BLR 125. That was a case in which the claim referred to the
adjudicator included both measured works and variations and where the judge
concluded that that was all part of the same dispute.
92. In my judgment, it is plain that Bell's claim does not encompass more than one
dispute. The single issue for the adjudicator is: what, if anything, is due from Dalkia to
Bell pursuant to this contract? That would necessarily include claims for variations. That
is one dispute which has been properly and validly referred to the adjudicator. Thus,
Dalkia's final jurisdiction ground must also fail.
H. CONCLUSIONS
93. For the reasons set out in Sections B and C above, I reject Bell's submission that
these CPR Part 8 proceedings are inappropriate or an abuse of the process or outside
the court's jurisdiction
94. For the reasons set out in Section D above, I find that the Bell conditions were
incorporated into the contract between the parties.
95. For the reasons set out in Section E above, I reject Dalkia's submissions that clause
12.4 of the Bell conditions did not comply with the 1996 Act.
96. For the reasons set out in Section F above, I reject Dalkia's submissions that the
adjudicator was not properly appointed in accordance with the Bell terms and conditions.
97. For the reasons set out at Section G above, I reject Dalkia's submissions that more
than one dispute was referred to the adjudicator.
98. As a result of my conclusions in Sections E, F and G above, I conclude that the
adjudicator has the necessary jurisdiction to determine the dispute between the parties.