South West Contractors Limited -v- Birakos Enterprises Limited
Case reference:
[2006] EWHC 2794 (TCC)
Tuesday, 7 November 2006
Key terms: Separate contracts - natural justice - failure to consider defence
South West were project managers employed by Brakos on a conversion project to office premises in Bristol. The claimants were engaged through Brakos' quantity surveyors and their agreement of fees was evidenced in a letter dated 18 February 2005 which confirmed a "fee of 3% on the total of all the work and prelim content of the project, which will be incentivised ...". The parties then entered into a separate JCT Standard Form of Domestic Sub-Contract 2002 edition under which it was agreed that the Claimant would act as Construction Manager and the Defendant would pay the Claimant's costs, including overheads. It was common ground that the parties approached their relationship as if there was only one contract.
On 28 February 2006, Brakos terminated the Claimant's retainer as construction manager. South West claimed this was repudiation of contract which they accepted and claimed £152,606.45 plus VAT as damages. South West subsequently served 2 notices of adjudication. The first one in respect of the Management Contract and the second in respect of the Fee Contract. The same adjudicator was appointed for both adjudications and awarded damages to South West.
Brakos defended payment of the adjudicator's decision on the basis that no dispute had arisen in respect of the profits claim and that there was no contract under which any dispute could arise. The second submission was not pursued and the first submission was without merit. Further Brakos stated that there had been a breach of the rules of natural justice as part of their case was not considered at all (South West's loss should be reduced or mitigated by the amount that South West would have been able to earn between the date of termination and the date of practical completion) by the adjudicator in relation to adjudication two.
Mr Justice Wilcox stated that the adjudicator issued two awards on the same occasion essentially considering aspects of the same transaction with common submissions as to mitigation of damages. It was unlikely that he did not consider the submissions in relation to both claims. Further it was not permissible for the TCC to minutely examine the reasons for an award to see if an adjudicator might have made a mistake. Judge Wilcox referred to Carillion Construction Ltd v Devonport Royal Dockyard and stated that where there had been any substantial waste of time and expense the Court has sufficient powers to make costs order.
Brakos also contended that a defence of set-off was not considered by the adjudicator. Judge Wilcox stated that there was no set-off to consider as it could only arise if Brakos' contention was that South West repudiation had substantial. The adjudicator had rejected this argument. Therefore South West was entitled to summary judgement.
On 28 February 2006, Brakos terminated the Claimant's retainer as construction manager. South West claimed this was repudiation of contract which they accepted and claimed £152,606.45 plus VAT as damages. South West subsequently served 2 notices of adjudication. The first one in respect of the Management Contract and the second in respect of the Fee Contract. The same adjudicator was appointed for both adjudications and awarded damages to South West.
Brakos defended payment of the adjudicator's decision on the basis that no dispute had arisen in respect of the profits claim and that there was no contract under which any dispute could arise. The second submission was not pursued and the first submission was without merit. Further Brakos stated that there had been a breach of the rules of natural justice as part of their case was not considered at all (South West's loss should be reduced or mitigated by the amount that South West would have been able to earn between the date of termination and the date of practical completion) by the adjudicator in relation to adjudication two.
Mr Justice Wilcox stated that the adjudicator issued two awards on the same occasion essentially considering aspects of the same transaction with common submissions as to mitigation of damages. It was unlikely that he did not consider the submissions in relation to both claims. Further it was not permissible for the TCC to minutely examine the reasons for an award to see if an adjudicator might have made a mistake. Judge Wilcox referred to Carillion Construction Ltd v Devonport Royal Dockyard and stated that where there had been any substantial waste of time and expense the Court has sufficient powers to make costs order.
Brakos also contended that a defence of set-off was not considered by the adjudicator. Judge Wilcox stated that there was no set-off to consider as it could only arise if Brakos' contention was that South West repudiation had substantial. The adjudicator had rejected this argument. Therefore South West was entitled to summary judgement.