Midland Expressway Limited -v- Carillion Construction Limited, Alfred MacAlpine Construction Limited, Balfour Beatty Group Limited, AMEC Capital Projects Limited, John E Price (No 2)
Case reference:
[2005] EWHC 2963 (TCC)
Thursday, 24 November 2005
Key terms: Concession Agreement - Jurisdiction - Payment Recovery subject to conditions precedent - no dispute
The four defendant contractors worked together in a joint venture known as CAMBBA. The Secretary of State granted a Concession Agreement in February 1992 for MEL to design, construct and operate the Birmingham Northern Relief Road, known as the M6 Toll Road. Midland and CAMBBA entered into a design and construct contract in September 2000.
CAMBBA contended that a dispute had arisen in connection with payment arising from Change No. 11 to the design and construct contract. CAMBBA wished to refer the dispute to adjudication. Midland sought a declaration and injunction to prevent the building contractors from referring the claim to adjudication.
MEL contended that on the true interpretation of the contract, the Adjudicator did not have any jurisdiction. The proper dispute was between the Secretary of State and MEL and CAMBBA, where MEL were simply a conduit between CAMBBA and The Secretary of State. Further, clause 7.1.3(a) stated that the contractor would only be entitled to payment if it followed the conditions precedent set out in the design and construct contract. Clause 7.1.4 required a determination of the price adjustment to the Concession Agreement, and further that the money had been certified and paid to MEL under the Concession Agreement.
HHJ Jackson QC noted that the parties had conceded that the design and construct contract was a construction contract under the HGCRA. CAMBBA’s request for payment had been rejected. As a result there was a dispute between the parties which could be referred to adjudication. The condition precedent requiring a resolution under a separate contract for payment before making payment under the design and construct contract was exactly the sort of thing that Section 113 of the Act guarded against. The pay-when-paid provision was therefore ineffective. CAMBBA did not have to wait until any issue in respect of its payment had been resolved under the dispute resolution procedure in the Concession Agreement.
In conclusion, the declaration and injunction sought by MEL was not granted. CAMBBA was entitled to proceed with the adjudication.
CAMBBA contended that a dispute had arisen in connection with payment arising from Change No. 11 to the design and construct contract. CAMBBA wished to refer the dispute to adjudication. Midland sought a declaration and injunction to prevent the building contractors from referring the claim to adjudication.
MEL contended that on the true interpretation of the contract, the Adjudicator did not have any jurisdiction. The proper dispute was between the Secretary of State and MEL and CAMBBA, where MEL were simply a conduit between CAMBBA and The Secretary of State. Further, clause 7.1.3(a) stated that the contractor would only be entitled to payment if it followed the conditions precedent set out in the design and construct contract. Clause 7.1.4 required a determination of the price adjustment to the Concession Agreement, and further that the money had been certified and paid to MEL under the Concession Agreement.
HHJ Jackson QC noted that the parties had conceded that the design and construct contract was a construction contract under the HGCRA. CAMBBA’s request for payment had been rejected. As a result there was a dispute between the parties which could be referred to adjudication. The condition precedent requiring a resolution under a separate contract for payment before making payment under the design and construct contract was exactly the sort of thing that Section 113 of the Act guarded against. The pay-when-paid provision was therefore ineffective. CAMBBA did not have to wait until any issue in respect of its payment had been resolved under the dispute resolution procedure in the Concession Agreement.
In conclusion, the declaration and injunction sought by MEL was not granted. CAMBBA was entitled to proceed with the adjudication.