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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Dawnvale Cafe Components Ltd v Hylgar Properties Ltd [2024] EWHC 1199 (TCC) (20 May 2024) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2024/1199.html Cite as: [2024] EWHC 1199 (TCC), 214 Con LR 238 |
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KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
____________________
| DAWNVALE CAFE COMPONENTS LIMITED |
Claimant |
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| - and - |
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| HYLGAR PROPERTIES LIMITED |
Defendant |
____________________
Harry East (instructed by C.E.Law) for the Defendant
Hearing date: 9th May 2024
____________________
Crown Copyright ©
NEIL MOODY KC:
I. Introduction
II. The Facts
ORDER
UPON the parties having agreed terms of settlement as set out in the attached Schedule.
BY CONSENT IT IS ORDERED THAT:
(1) The hearing listed for 16 September 2021 be vacated.
(2) All further proceedings in this action be stayed upon the terms set out in the Schedule hereto except for the purpose of enforcing those terms.
(3) Each party shall have permission to apply to the Court to enforce those terms without the need to bring a new claim.
(4) Each party shall bear its own costs.
SCHEDULE
("the Settlement Agreement")
IT IS AGREED AS FOLLOWS:
1. The Defendant shall pay to the Claimant the sum of £246,170.70 hereafter "the Settlement Sum", inclusive of interest and costs, in accordance with the following provisions:
[There followed seven sub-paragraphs allowing for payment in tranches from 27th August 2021 to 15th February 2022.]
2. The Defendant shall pay to the Claimant the Settlement Sum in accordance with the payment terms set out at paragraph 1, into the following account;
[bank details]
3. Should the Defendant fail to pay the any [sic] instalment of the Settlement Sum on the due date then the remaining balance of the Settlement Sum shall become immediately due and payable to the Claimant.
4. This Settlement Agreement shall immediately be fully and effectively binding on the parties. The payment of the Settlement Sum is in full and final settlement of any and all claims the Claimant may have against the Defendant arising from or in connection with these proceedings.
5. This Settlement Agreement is subject to English law and any dispute arising under or in connection with this Settlement Agreement shall be subject to the jurisdiction of the English courts.
[bold added]
a. Costs of assessing Dawnvale's works on repudiation - £71,775.15;
b. Additional build costs - £2,852.08;
c. Remedial works - £15,000.00;
d. Delay arising from the repudiatory breach - £223,274.25;
e. Lost rent - £94,929.86;
f. Lost profit - £175,120.19;
g. Loss of contribution to overheads - £58,642.22;
h. Total: £641,594.76.
III. These proceedings
a. A declaration that the Settlement Agreement (Tomlin Order) dated 24th August 2021 precludes Hylgar from referring a dispute claiming further or additional relief in respect of the established breach of the Contract as now alleged or otherwise howsoever;
b. An order prohibiting Hylgar from referring its proposed dispute claiming further or additional relief in respect of the established breach of the Contract to adjudication;
c. A declaration that Hylgar's proposed dispute claiming further relief in respect of the established breach of the Contract does not fall within the scope of a 'dispute' for the purposes of s108(1) HGCRA and/or would be barred from being adjudicated by reason of paragraph 9(2) of the Scheme for Construction Contracts.
IV. The Parties' Arguments in Outline
V. Is Hylgar's new claim barred by paragraph 4 of the Tomlin Order Schedule?
(a) The approach to construction
[28] The law can be summarised un-controversially, the key principles emerging in a well-known series of high-level authorities including the following: Investors Compensation Scheme Ltd v West Bromwich Building Society (No 1) [1998] 1 WLR 896 (at 912-913); Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101; Rainy Sky SA v Kookmin Bank Ltd [2011] 1 WLR 2900; Makdessi v Cavendish Square Holdings BV [2015] 3 WLR 1373 and Arnold v Britton [2015] UKSC 36.
[29] When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. The court does so essentially as one unitary exercise by focussing on the meaning of the relevant words in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the contract, (iii) the overall purpose of the clause and the [contract], (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions. Commercial common sense and the surrounding circumstances should not be invoked to undervalue the importance of the language of the provision to be construed. A court will not readily accept that people have made linguistic mistakes, particularly in formal documents, but there may be cases where it is clear in context that something has gone wrong, but it requires a strong case to persuade a court that that is the case. Nor should a court reject the natural meaning of a provision simply because it appears to have been imprudent commercially or otherwise. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed.
[30] Agreements should be read as a whole and construed so far as possible to avoid inconsistencies between different parts on the assumption that the parties had intended to express their intentions in a coherent and consistent way. One expects provisions to complement each other…
a. That Hylgar could seek additional sums as part of a true value final determination in court proceedings;
b. That Hylgar may have further claims arising from the repudiatory breach;
c. That Dawnvale could challenge the adjudication decision as part of a final determination in court proceedings;
d. That Dawnvale could advance its own claim arising from invoice 43808 in court proceedings.
(b) "these proceedings"
"The starting point is that as a matter of ordinary language one would say that the proceedings were brought in support of a claim, and were not over until the courts had disposed of that claim one way or the other at whatever level of the judicial hierarchy. The word is synonymous with an action."
"It is common ground that the word proceedings can bear a broad or a narrow interpretation, covering either the proceedings at one level of the court hierarchy... or the proceedings in the case at all levels of the hierarchy."
(c) "arising from or in connection with"
"In my view, reference to earlier authorities as to the meaning of a particular word or phrase is often unhelpful and sometimes dangerous particularly where the context in which that word or phrase may have been used is different from the instant case or wording. Here, it is sufficient to say that as a matter of language, the words 'in connection with' are plainly of wider scope than the words 'arising out of'."
(d) Conclusion
a. First, I consider that if these two commercial parties, acting with the benefit of legal advice, had intended to settle all potentially related future claims, they would have said so. In particular, they would most likely have used wording which achieved that objective by referring to all claims arising from or in connection with one or all of "the contract", "the works" or "the dispute(s)"; they would not have referred to claims arising from or in connection "these proceedings". (It is notable that Dawnvale's solicitor's letter of 12th October 2023, which responded to the new claim, did not refer to the wording of the Order but instead said that the Order had resolved "any and all claims arising from the dispute between the parties.")
b. Second, if paragraph 4 was intended to settle all potentially related future claims, I consider that it would have expressly bound both parties. It was an oddity of Dawnvale's position at the hearing that it was required to argue that its own future claims were barred even though paragraph 4 referred only to the Claimant. I consider it unarguable that the paragraph was intended to bind both parties. If that is what the parties had intended, they would have said "the parties" or identified both the Claimant and Defendant.
c. Third, Mr East submitted and I accept that the purpose of paragraph 4 was to prevent Hylgar "coming back for more"; in other words re-arguing the true valuation of Dawnvale's works by way of a final determination in court proceedings. I agree that this makes sense of the paragraph.
d. Fourth, I consider that, as a matter of language, the new claim does not "arise from" the enforcement proceedings. There is no causative relationship with the proceedings. It could be said to arise from the contract or the works or the dispute between the parties, but not - as a matter of language - from the enforcement proceedings. Likewise, I consider that, as a matter of language, the new claim is not "connected with" the proceedings. It strikes me as a very odd use of language to describe the new claim as "connected with" the enforcement proceedings save in the most indirect manner.
e. Fifth, in reaching these conclusions on construction, I do not consider that it is necessary to identify different claims or heads of loss that could fall into each of the categories of "arising out of" and "in connection with". That could be regarded as untidy, but that is sometimes the result when parties have not thought carefully about what they intend their wording to achieve. But, in any event, to the extent that it is necessary to do so, I would hold that a claim for legal costs would be an example of a claim "arising out of" the enforcement proceedings, whereas a claim by Hylgar for a final determination of the true value of Dawnvale's works would not arise out of the enforcement proceedings, but it would be a claim "connected with" them because it would cover precisely the same subject matter.
(e) Estoppel
VI. Is the proposed second referral an impermissible attempt to refer the same dispute?
"An adjudicator must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication, and a decision has been taken in that adjudication."
"…I consider that there are three over-arching principles to be applied by an adjudicator, or an enforcing court, when considering arguments of overlap.
56. The first is that the purpose of construction adjudication is not easy always to reconcile with serial adjudication (paragraphs 32 and 33 above). If the parties to a construction contract do engage in serial adjudication, and then inevitably get drawn into debates about whether a particular dispute has already been decided, the need for speed and the importance of at least temporary finality mean that the adjudicator (and, if necessary, the court on enforcement) should be encouraged to give a robust and common sense answer to the issue. It should not be a complex question of interpretation of documents and citation of authority.
57. The second is the need to look at what the first adjudicator actually decided to see if the second adjudicator has impinged on the earlier decision (Quietfield, Harding v Paice, Hitachi). Of course it can be relevant to consider the adjudication notice, the referral notice and so on, but what matters for the purposes of s.108 and the paragraphs of the Scheme noted above, is what it was, in reality, that the adjudicator decided. It is that which cannot be re-adjudicated. The form and content of the documentation with which he was provided is of lesser relevance and, as was pointed out in Harding v Paice and Hitachi, can be misleading.
58. The third critical principle is the need for flexibility. That is the purpose of a test of fact and degree. It is to prevent a party from re-adjudicating a claim (or a defence) on which they have unequivocally lost (HG Construction, Benfield), but to ensure that what is essentially a new claim or a new defence is not shut out. In this way, the re-adjudication in Carillion v Smith of the same claims, where the only differences were the figures, was impermissible whilst a new, wider, claim or defence was permissible, even if it included elements of a claim which had been considered before, such as in Quietfield, and Balfour Beatty. Indeed, I consider that the result in each of the reported cases to which I have referred is the product of common sense and fairness.
59. Whilst I accept that it is not an invariable guide, one way of at least testing whether the correct approach has been adopted is to consider whether, if the second adjudication is allowed to continue, it would or might lead to a result which is fundamentally incompatible with the result in the first adjudication. If in that second adjudication, one or other of the parties is asking the adjudicator to do something that is diametrically opposed to that which the first adjudicator decided, then that may be an indication that what they are seeking to do is impermissible."
[bold added]
"One strong pointer as to whether disputes are substantially the same is whether essentially the same causes of action are relied upon in the earlier and later notices of adjudication and referral notices…"
VII. Conclusion and Disposal
a. Paragraph 4 of the Schedule to the Tomlin Order does not prevent Hylgar referring to a second adjudication the claims advanced in its solicitor's letter dated 31st August 2023;
b. If the claims advanced in Hylgar's solicitor's letter of 31st August 2023 are referred to adjudication, that will not entail the adjudicator deciding the same of substantially the same dispute as was decided by Mr Smith.