Peter Barnes, Blue Sky ADR Ltd
The use and abuse of Part 8 Applications in attempting to resist the enforcement of Adjudicator’s Decisions was considered and decided upon by Mr Justice Coulson in the recent Hutton Construction Limited v Wilson Properties (London) Limited [2017] EWHC 517 (TCC) case.
The use and abuse of Part 8 Applications in attempting to resist the enforcement of Adjudicator’s Decisions was considered and decided upon by Mr Justice Coulson in the recent Hutton Construction Limited v Wilson Properties (London) Limited [2017] EWHC 517 (TCC) case.
In that case, Mr Justice Coulson expressed his view that many of the Part 8 Applications being made by defendants in an attempt to resist the enforcement of an Adjudicator’s Decisions are an abuse of the court process, and if there was found to be such an abuse, a defendant who unsuccessfully raises this sort of challenge on enforcement will almost certainly have to pay the claimant’s costs of the entire action on an indemnity basis.
It is therefore important to know what the latest ‘rules’ are in respect of this matter, particularly as Mr Justice Coulson made it clear in his judgment in the Hutton case that the approach to this matter, as set out paragraph 9.4.3 of the TCC Guide, had been superseded by the guidance given in his Judgment.
When considering this matter, the starting point, of course, is that, if the adjudicator has decided the issue that was referred to him, and he has broadly acted in accordance with the rules of natural justice, his decision will be enforced (as Macob Civil Engineering Limited v Morrison Construction Limited [1999] BLR 93), and Adjudication Decisions have been upheld on that basis even where the Adjudicator has been shown to have made an error (as in Bouygues (UK) Limited v Dahl-Jensen (UK) Limited [2000] BLR 522).
There are two narrow exceptions to this general position.
The first (as set out in Geoffrey Osborne v Atkins Rail Limited [2010] BLR 363) involves an admitted error. In that case the calculation error was raised by the defendant in a separate Part 8 claim. Because the error was admitted by everyone, including the Adjudicator, and because there was no arbitration clause, which meant that the court had the jurisdiction to make a final decision on the point, there were no reasons why, in that case, the error could not be corrected.
The second exception concerns the proper timing, categorisation or description of the relevant application for payment, payment notice or payless notice, (as Caledonian Modular Limited v Mar City Developments Limited [2015] EWHC 1855 (TCC)). In that case, the defendant had raised one simple issue, in a detailed defence and counterclaim served at the outset, to the effect that a small group of documents could not have constituted a claim for or notice of a sum due for payment. If that argument was right, it was agreed that the claimant was not entitled to summary judgment.
Therefore, based upon the above, it is clear that if the issue is a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing, then the defendant may be entitled to have the point decided by way of a claim for a declaration, although the procedure will rarely be able to be used, because it will be uncommon for a point at issue to be confined in the manner required.
In some cases, the claimant may issue its own enforcement claim or the parties may agree that, if the defendant loses its Part 8 claim, it will pay the sums awarded by the adjudicator in any event.
This largely consensual approach can be seen in a number of the cases, including Leeds City Council v Waco UK Limited [2015] EWHC1400 (TCC); Manor Asset Limited v Demolition Services Limited [2016] EWHC 222 (TCC); Bouygues (UK) Limited v Febrey Structures Limited [2016] EWHC 1333 (TCC); Kersfield Developments (Bridge Road) Limited v Bray and Slaughter Limited [2017] EWHC 15 (TCC); and Surrey and Sussex Healthcare NHS Trust v Logan Construction (South East) Limited [2017] EWHC 17 (TCC).
As noted above, these cases all involved a significant degree of agreement between the parties. In particular, they all involved CPR Part 8 claims issued by the defendant challenging the decision of the Adjudicator, and seeking a final determination by way of court declarations.
Furthermore, the issue of a separate Part 8 claim in those circumstances was not simply a matter of form. It was important in two respects. First, it provided a vehicle whereby the defendant could set out in detail its challenge to the Adjudicator’s Decision, so that the claimant could see and understand the precise basis of the challenge and the consequential declarations sought.
Secondly, the existence of a separate Part 8 claim meant that the TCC knew from the outset what was going to be involved at any subsequent hearing, so that the court would be aware that the arguments will be more involved than would ordinarily arise on an adjudication enforcement hearing, and the court will be able to list the hearing for a longer timeslot, and will be less concerned about fixing it within the normal 28 days for the enforcement of an Adjudicator’s Decision.
However, if the degree of consent noted in the authorities set out in the foregoing cases is not forthcoming, then the following approach must be adopted.
The first requirement is that the defendant must issue a CPR Part 8 claim setting out the declarations it seeks or, at the very least, indicate in a detailed defence and counterclaim to the enforcement claim what it seeks by way of final declarations.
Then, the defendant must be able to demonstrate that:
It is also the case that in any case an issue will only be considered by the court on enforcement if the consequences of the issue raised by the defendant were clear-cut, and did not lead onto other issues. If the effect of the issue that the defendant wishes to raise is disputed in any way, it will be most unlikely for the court to take it into account on enforcement in any event.
Therefore, given the cost implications of ‘abusing’ the Part 8 Application in attempting to resist the enforcement of an Adjudicator’s Decision, it is important that the new "rules" in respect of this matter, as set out above, are taken into account when attempting to resist the enforcement of an Adjudicator’s Decision.
From and contained within the TAS Summer Newsletter 2017
It is therefore important to know what the latest ‘rules’ are in respect of this matter, particularly as Mr Justice Coulson made it clear in his judgment in the Hutton case that the approach to this matter, as set out paragraph 9.4.3 of the TCC Guide, had been superseded by the guidance given in his Judgment.
When considering this matter, the starting point, of course, is that, if the adjudicator has decided the issue that was referred to him, and he has broadly acted in accordance with the rules of natural justice, his decision will be enforced (as Macob Civil Engineering Limited v Morrison Construction Limited [1999] BLR 93), and Adjudication Decisions have been upheld on that basis even where the Adjudicator has been shown to have made an error (as in Bouygues (UK) Limited v Dahl-Jensen (UK) Limited [2000] BLR 522).
There are two narrow exceptions to this general position.
The first (as set out in Geoffrey Osborne v Atkins Rail Limited [2010] BLR 363) involves an admitted error. In that case the calculation error was raised by the defendant in a separate Part 8 claim. Because the error was admitted by everyone, including the Adjudicator, and because there was no arbitration clause, which meant that the court had the jurisdiction to make a final decision on the point, there were no reasons why, in that case, the error could not be corrected.
The second exception concerns the proper timing, categorisation or description of the relevant application for payment, payment notice or payless notice, (as Caledonian Modular Limited v Mar City Developments Limited [2015] EWHC 1855 (TCC)). In that case, the defendant had raised one simple issue, in a detailed defence and counterclaim served at the outset, to the effect that a small group of documents could not have constituted a claim for or notice of a sum due for payment. If that argument was right, it was agreed that the claimant was not entitled to summary judgment.
Therefore, based upon the above, it is clear that if the issue is a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing, then the defendant may be entitled to have the point decided by way of a claim for a declaration, although the procedure will rarely be able to be used, because it will be uncommon for a point at issue to be confined in the manner required.
In some cases, the claimant may issue its own enforcement claim or the parties may agree that, if the defendant loses its Part 8 claim, it will pay the sums awarded by the adjudicator in any event.
This largely consensual approach can be seen in a number of the cases, including Leeds City Council v Waco UK Limited [2015] EWHC1400 (TCC); Manor Asset Limited v Demolition Services Limited [2016] EWHC 222 (TCC); Bouygues (UK) Limited v Febrey Structures Limited [2016] EWHC 1333 (TCC); Kersfield Developments (Bridge Road) Limited v Bray and Slaughter Limited [2017] EWHC 15 (TCC); and Surrey and Sussex Healthcare NHS Trust v Logan Construction (South East) Limited [2017] EWHC 17 (TCC).
As noted above, these cases all involved a significant degree of agreement between the parties. In particular, they all involved CPR Part 8 claims issued by the defendant challenging the decision of the Adjudicator, and seeking a final determination by way of court declarations.
Furthermore, the issue of a separate Part 8 claim in those circumstances was not simply a matter of form. It was important in two respects. First, it provided a vehicle whereby the defendant could set out in detail its challenge to the Adjudicator’s Decision, so that the claimant could see and understand the precise basis of the challenge and the consequential declarations sought.
Secondly, the existence of a separate Part 8 claim meant that the TCC knew from the outset what was going to be involved at any subsequent hearing, so that the court would be aware that the arguments will be more involved than would ordinarily arise on an adjudication enforcement hearing, and the court will be able to list the hearing for a longer timeslot, and will be less concerned about fixing it within the normal 28 days for the enforcement of an Adjudicator’s Decision.
However, if the degree of consent noted in the authorities set out in the foregoing cases is not forthcoming, then the following approach must be adopted.
The first requirement is that the defendant must issue a CPR Part 8 claim setting out the declarations it seeks or, at the very least, indicate in a detailed defence and counterclaim to the enforcement claim what it seeks by way of final declarations.
Then, the defendant must be able to demonstrate that:
- there is a short and self-contained issue which arose in the adjudication and which the defendant continues to contest;
- that issue requires no oral evidence, or any other elaboration beyond that which is capable of being provided during the interlocutory hearing set aside for the enforcement;
- the issue is one which, on a summary judgment application, it would be unconscionable for the court to ignore.
It is also the case that in any case an issue will only be considered by the court on enforcement if the consequences of the issue raised by the defendant were clear-cut, and did not lead onto other issues. If the effect of the issue that the defendant wishes to raise is disputed in any way, it will be most unlikely for the court to take it into account on enforcement in any event.
Therefore, given the cost implications of ‘abusing’ the Part 8 Application in attempting to resist the enforcement of an Adjudicator’s Decision, it is important that the new "rules" in respect of this matter, as set out above, are taken into account when attempting to resist the enforcement of an Adjudicator’s Decision.
From and contained within the TAS Summer Newsletter 2017
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