Ground Developments Ltd v FCC Construccion SA & Ors

Case reference: 
[2016] EWHC 1946 (TCC)
Wednesday, 27 July 2016

Key terms: 
Building contract – Adjudication – Award - Jurisdiction to make award - Summary judgment to enforce award

The claimant, Ground Developments Ltd (“GDL”) and the defendants are a joint venture (the Joint Venture) involved in constructing a toll bridge over the River Mersey.

The claimant entered into a sub-contract for deep soil mixing with the Joint Venture. GDL and the Joint Venture entered into discussions with the aim of agreeing an NEC3 Sub-Contract, but ultimately no NEC3 contract was agreed. Following a dispute between the parties, the claimant left site and subsequently commenced adjudication. The defendants challenged the adjudicator’s appointment but, the adjudication continued and, by a decision dated 22 April 2016, the adjudicator awarded the claimant the sums it had applied for.

Mr Justice Fraser held that the adjudicator did not breach the rules of natural justice, did not exceed his jurisdiction and the claimant is entitled to summary judgment on this application to enforce the adjudicator’s decision. The court rejected the seven defences   the  defendants advanced adopting approach of  Lord Justice Chadwick  in the Court of Appeal judgment of Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358 [2006]  BLR 15, particularly in relation to defences  one,  two,  four and five.

The first defence was that the adjudicator’s valuation of the sub-contractor’s works lacked jurisdiction or was a material breach of the rules of natural justice. Mr Justice Fraser rejected this argument that in this case a narrow dispute was referred, suggesting it was “factually incorrect” and that the adjudicator answered the wrong question.

The second defence was that the adjudicator had decided more than one dispute at the same time.  Given its findings in relation to defence one, Mr Justice Fraser rejected this defence, suggesting it was “verging upon, if not completely, unarguable”.

The third defence was that the adjudicator had been appointed by the ICE under the provisions of the NEC3 sub-contract, not the Scheme for Construction Contracts 1998. The court rejected this defence, finding that the sub-contractor’s application to the ICE made it clear that there was a dispute over the nature of the parties’ contract and it was the sub- contractor’s primary case that the NEC3 terms did not apply.

The  fourth  defence was  that  it  was unclear which adjudication rules applied to  the  adjudication, the  Scheme  for Construction  Contracts 1998 or the TeCSA  adjudication rules. The court rejected this defence, describing it as “factually wrong” as the sub-contractor had made it clear that its primary case was that the contract was on the terms as set out in its email of 8 August 2015 (which was sent to the defendants on 8 September 2015), and that the Scheme for Construction Contracts 1998 applied to the adjudication.

The fifth defence was that the adjudicator lacked jurisdiction or breached the rules of natural justice when he decided the parties’ contract was entered into in June 2015, and then supplemented or updated by the sub-contractor’s letter of 8 September. The court rejected this defence, describing it as a substantive attack on the adjudicator’s findings of fact disguised to look like a jurisdictional or natural justice challenge.

Finally, the sixth and seventh defences were combined because they related to the submission that there should be no enforcement of the adjudicator’s decision as   a  trial  was   needed on the question of whether there was  a contract between the parties and if so, the terms of that contract.  The Judge was not impressed by the arguments of the Joint Venture, which had not set out a clear positive case, and considered the arguments were ‘insubstantial and advanced for tactical reasons’.

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