Adjudication – Summary judgment – Jurisdiction – Natural justice – Claimant undertaking works to replace pontoon berthing and mooring piles in river – Claimant seeking summary judgment to enforce adjudicator’s decision in its favour – Whether adjudicator having jurisdiction to adjudicate dispute – Whether contract involving construction operations in England under Housing Grants, Construction and Regeneration Act 1996 – Whether adjudicator’s decision made in breach of natural justice – Claim allowed
The Royal National Lifeboat Institution owned a pontoon at Fowey Harbour in the River Fowey in Cornwall which it used to moor its lifeboat. The lifeboat was moored to two mooring piles driven into the ground below low water level. The mooring piles did not connect to the pontoon, save insofar as when the lifeboat was moored in position it was secured to the pontoon by ropes.
By a contract formed by the claimant’s acceptance of the defendant’s purchase order, the claimant agreed to undertake works to “replace the existing pontoon berthing and mooring piles, including the installation of new piles including rock socket (piles supplied by the defendant) and the supply and installation of grout into rock socket (suitable for underwater marine environment)”.
The works were subject to delays and the claimant referred to adjudication a dispute as to its entitlement under the final account relying on a statutory right to adjudicate under the Housing Grants, Construction and Regeneration Act 1996. The adjudicator determined that the defendant should pay to the claimant the sum of £335,142.33; and that the defendant should be liable for his fees and expenses.
The claimant applied for summary judgment to enforce the adjudicator’s decision. The defendant defended the application on the grounds of jurisdiction and breach of natural justice. The jurisdiction defence raised the question of the true territorial extent of Part 2 of the 1996 Act, as amended, including the right to adjudicate disputes arising under contracts to which the Act applied.
Held: The claim was allowed.
(1) For Part 2 of the 1996 Act to apply, there had to be a construction contract which related to the carrying out of construction operations in England pursuant to section 104(6)(b) of the 1996 Act. The defendant resisted enforcement on the grounds that the contract did not involve construction operations in England because the piles were installed outside the low water line and outside a boundary of England shown on an ordinance survey map.
Unlike section 104(5), which stated that “where an agreement relates to construction operations and other matters, this Part applies to it only so far as it relates to construction operations”, section 104(6)(b) required that the contract had to “relate to the carrying out of construction operations in England”. There was no room for a hybrid contract, where one part was within Part 2 and another part was not.
(2) If construction operations were being undertaken in relation to an enclosed area of water (for example, an internal lake) or within the non-tidal area of a river, then in most cases the answer would be provided solely by reference to the definition in section 105(1) and (2). If they fell within section 105(1), because they related to buildings, structures, or works forming part of land, or operations integral, preparatory or completion related thereto, and were not specifically excluded by section 105(2), they fell within the 1996 Act.
However, if the works involved, for example, construction operations solely to the bed of an enclosed area of water or a non-tidal river, it would be necessary to know whether such works fell within the scope of the Act. A reading of sections 104(6) and 105(1) would not provide the answer by itself. But the Interpretation Act 1978 indicated that, unless any contrary intention appeared, land included land covered with water.
No contrary intention appeared, because the references to “land” in section 105(1) did not clearly show that only land not covered by water was included. It followed that land covered by water was included and that such operations would fall within the 1996 Act.
(3) On a proper interpretation, the 1996 Act applied to construction contracts which related to the carrying out of construction operations in England, where England ended on the baseline as established by the Convention of the Territorial Sea and Contiguous Zone, 1958 and the United Nations Convention on the Law of Sea (UNCLOS), and by the Territorial Waters Order in Council 1964 and the Territorial Sea (Baselines) Order 2014, all of which were, on a proper analysis, mutually consistent. It followed that the references to “the land” in section 105(1) included land covered by water and, hence, land covered by inland waters up to the baseline which, in the case of rivers such as the river Fowey, extended to the mouth of such rivers. On the facts of this case, it was not realistic to argue that the contract for piling works was not a contract for construction operations in England.
(4) As regards any breach of natural justice, the adjudicator had to attempt to answer the question referred to him which might consist of a number of separate sub-issues. If the adjudicator had endeavoured generally to address those issues then, whether right or wrong, his decision was enforceable. If the adjudicator failed to address the question referred to him because he had taken an erroneously restrictive view of his jurisdiction, then that might make his decision unenforceable, either on grounds of jurisdiction or natural justice.
However, the adjudicator’s failure had to be deliberate. If there had simply been an inadvertent failure to consider one of several issues embraced by the single dispute that the adjudicator had to decide, then such a failure would not ordinarily render the decision unenforceable. Any such failure also had to be material with a potentially significant effect on the overall result of the adjudication: Pilon Ltd v Breyer Group PLC [2010] EWHC 837 (TCC) and Global Switch v Sudlows [2020] EWHC 3314 considered.
In the present case, the adjudicator clearly considered the issue and reached a decision which was at least as consistent with his preferring the claimant’s case on the merits as opposed to his making a modest and unintentional oversight in the context of a fiercely contested final account dispute. He produced a detailed reasoned decision and there was no evidence as to the materiality of the oversight. In the circumstances that did not meet the level of seriousness necessary for the decision to be invalidated by breach of natural justice.
James Frampton (instructed by DAC Beachcroft LLP, of Newcastle upon Tyne) appeared for the claimant; Andrew Stevens (instructed by Adams & Moore Solicitors LLP) appeared for the defendant.
Eileen O’Grady, barrister
Click here to read a transcript of Van Elle Ltd v Keynvor Morlift Ltd
