Wycombe Demolition Ltd v Topevent Ltd

[2015] EWHC 2692 (TCC)

This was an adjudication enforcement dispute. An adjudicator decided that the employer Topevent should pay £114k plus interest and his fees to Wycombe.

Mr Justice Coulson commented that the Referral Notice, which ran to 56 closely typed pages, was much too long and managed to complicate a simple claim. Topevent’s Response raised two key issues. First, the ascertainment of a fair and reasonable valuation of Wycombe’s claim for varied and extra work and the sums due under the contract, and second, the circumstances in which Wycombe left the site. Topevent said Wycombe were in breach of contract and they set out a counterclaim of some £180k, being the costs of completion.

Topevent also wanted the adjudicator to visit the site in order to complete his assessment of any revaluation. The adjudicator felt that such a visit would be neither necessary nor cost-effective and he made his decision on the basis of the documents only.

The adjudicator decided that on the evidence before him the Parties probably ended the Contract by mutual consent: Topevent, because of the escalating costs, and WDL because it was not being paid. As to the valuation of Wycombe’s work:

“Much of Topevent’s Response is comprised of bare allegations without supporting evidence. WDL’s case is, in contrast, well supported with documentary and witness evidence and also appears to be reasonably complete …”

Topevent raised three challenges. The first, an alleged reference to the adjudicator of two entirely separate disputes, was rejected. Here there was a claim for payment of all outstanding sums, including the sum of £4k, which Wycombe said was due in respect of what they claimed was the wrongful termination of their contract. Wycombe wanted one final payment so as to be able to close their books on this contract. That could only be achieved if the adjudicator addressed all their outstanding financial claims. In that context, there was therefore a clear and obvious link between their modest claim for the cost consequences of the allegedly wrongful termination and the overall claim for all sums outstanding. They were not separate disputes. In any event, paragraph 11.1 of the TeCSA Rules makes clear that the adjudicator can deal with “any further matters which all Parties agree should be within the scope of the Adjudication”.

The Judge considered that the suggestion that the failure to visit the site was a material breach of natural justice was “hopeless”. The Judge noted that:

“the organisation of an adjudication, the procedure and process to be adopted and the steps required before the decision is issued to the parties, are all matters uniquely for the adjudicator. It is up to him or her to decide what he or she needs in order to reach their decision. In this case, the adjudicator did that, and he carefully explained why a site visit/meeting was not a proportionate use of his time and therefore the costs of the adjudication. It is not and cannot be for this court to second-guess that decision.”

Further, the Judge agreed that a site visit or meeting would have been of no assistance in valuing the variations and the works carried out on site. The valuation exercise was a paper exercise and, if necessary, photographs of the site could be – and were – provided.

The final challenge was that the adjudicator failed to decide the valuation dispute on the basis of the parties’ respective submissions, and instead decided it on a basis on which the parties had not had an opportunity to address him. Here the Judge noted that the adjudicator was faced with “a myriad of different approaches to valuation”. The adjudicator then concluded that “the invoices generally properly reflect the sums due”, although he too made a number of adjustments.

The Judge thought that the adjudicator had therefore carefully considered both parties’ submissions and then, as he was entitled to do, provided his own valuation based on those submissions. The Judge suggested that the following analysis was appropriate:

“An adjudicator has to do his best with the material with which he is provided. He has considerable latitude to reach his own conclusions based on that material, and he is certainly not bound to accept either one or other of the figures advanced by the parties. In my view, this latitude will inevitably be even wider now that the original constraint provided by the 1996 Act, that there had to be a written contract between the parties, has been removed by amendment. As happened here, an adjudicator’s conclusion about the nature and terms of the contract could affect his approach to valuation issues.”

What an adjudicator cannot do, without warning to the parties in advance of his decision, is to make good deficiencies in the claiming parties’ case. That had not happened here.

Topevent had also at one point sought to avoid summary judgment by suggesting that they had a counterclaim in respect of the costs of completion. However, the counterclaim was raised by Topevent during the adjudication and was rejected by the adjudicator. A defending party cannot seek to prevent enforcement of an adjudicator’s decision by reference to a counterclaim that the adjudicator has himself considered and rejected.

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