Building project — Defendant appointing construction manager — Parties negotiating separate management and fee contracts — Defendant terminating contracts — Adjudicator awarding damages for repudiatory breach — Whether adjudicator failing to consider mitigation submissions — Whether claimant entitled to summary judgment — Application granted
The claimant company was employed by the defendant as project manager to convert offices. The defendant’s quantity surveyors had hired it and an agreement has been reached for the on-site construction manager’s fee, which was to be effective when the project commenced.
Development works started and the parties entered into a separate contract on the JCT standard form of domestic sub-contract (2002 ed), which stated 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 fee contract was separate from the management contract and related to the claimant’s profit element, whereas the management contract related to the claimant’s costs. However, both parties approached their relationship as though only one contract was in place.
The defendant subsequently terminated the claimant’s contract with immediate effect in relation to the fee contract and the management contract. The claimant contended that the defendant was in repudiatory breach of contract and brought an action for, inter alia, damages for loss of profit. In the course of correspondence between the parties, a copy of the fee agreement was sent to the defendant’s solicitor as evidence.
The claimant served separate notices of adjudication in respect of each contract and both were determined in the claimant’s favour by the same adjudicator in two simultaneous awards. The defendant did not pay and a dispute arose as to the management costs and the overheads and profit claim. The claimant sought to enforce the adjudication in relation to the fee contract and applied for summary judgment under CPR 24. The defendant contended that the adjudicator’s award was fatally flawed since, inter alia, he had failed to consider mitigation submissions on the second adjudication.
Held: The application was granted.
The claimant was entitled to the summary judgment, as claimed. The proper course was to adopt a rigorous and commonsense approach and to look to the substance of the claim identified and denied. It was not permissible for the court to minutely examine the reasons for an award to see if an adjudicator might have made a mistake. In reality, the adjudicator had issued two awards at the same time, essentially considering aspects of the same transaction on the basis of common submissions on mitigation of damages. It was unlikely that he had not considered them in relation to both claims as he had been asked to, considering the conscientious and careful way in which he had dealt with the claims and defences as a whole: All in One Building & Refurbishments Ltd v Makers UK Ltd [2005] EWHC 2493 (TCC) applied.
The court was required to respect and enforce the adjudicator’s decision unless it was clear that the question that he had decided was not that referred to him, or that he had carried out his task in unfairly. It was important to bear in mind that the majority of adjudicators were not chosen for their expertise as lawyers. The task of the adjudicator was not to act as arbitrator or judge, but to find an interim solution to meet the needs of the case. Where significant time and expense had been wasted, the court had sufficient powers to make costs orders that would reflect such abuse: Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWHC 788 (TCC) considered.
Lynne McCafferty (instructed by Clarke Willmott, of Bristol) appeared for the claimant; Robin Neill (instructed by Lindleys, of Bristol) appeared for the defendant.
Eileen O’Grady, barrister
