“Coronation Street” and The Technology & Construction Court
Westshield Civil Engineering Ltd and Another v Buckingham Group Contracting Ltd  EWHC 1825 (TCC)
Some viewers of “Coronation Street” say that the programme went down the drain the day that Ena Sharples left; others refer to the departures of Bet Lynch or Vera Duckworth. Readers will doubtless have their own opinions!
More recently, Mr Justice Akenhead had to deal with disputes arising under a contract for the supply and installation of the drains to “Coronation Street” itself (or rather the studios in which it is filmed).
Buckingham Group Contracting Limited (“Buckingham”) was the main contractor engaged in 2011 to construct the new studio in Salford. In early October 2011, Buckingham asked Westshield Limited (“WL”) to quote for the supply and installation of drainage works for the project. WL provided its quotation on 21 October 2011. A “Pre-order meeting” was then convened on 7 November 2011, attended by representatives of Buckingham and WL. Minutes of that meeting described WL as the “Sub-Contractor” and referred back to WL’s quotation. The minutes identified a start date for the contract of 12 December 201,1 and referred to valuations being carried out on a monthly basis.
Although the written “Conditions of Sub-Contract” dated 20 October 2011 (which remained unsigned) identified Buckingham as the main contractor, another company, Westshield Civil Engineering Limited (“WCEL”), was named as sub-contractor. WCEL was a dormant company at that time and, although it shared some common shareholders with WL, was not a subsidiary of WL. The Appendix to the Sub-Contract referred to the quotation from WL and the signed minutes of the Pre-order meeting as being incorporated documents. WL’s Quality Assurance Plan was also referred to as being material.
The Sub-Contract contained a relatively standard adjudication clause, incorporating the ICE Adjudication Procedure. It is important to note that Clause 14(6) of the Sub-Contract provided that the decision of an adjudicator would be temporarily binding, pending resolution of the dispute either by agreement or by litigation, but also that:
"Should either party be dissatisfied with the decision of the Adjudicator that party may within 28 days of the Adjudicator's decision refer the dispute to… legal proceedings…. If no such proceedings are commenced within the said 28 days then the Adjudicator's Decision shall be final and binding on the parties."
The Sub-Contract works started in December 2011, and monthly applications for payment were submitted to Buckingham in the period up to July 2012, when the work was completed. On 17 June 2012, WL or WCEL submitted its final application, which identified a gross value of £549,954.73. Buckingham issued its own assessment of the final application on 13 August 2012, reducing the gross sum to £363,766.81. A dispute therefore arose as to the proper valuation of the final account.
The First Adjudication
Buckingham commenced adjudication against WCEL by Notice of Adjudication dated 5 December 2012. Buckingham sought a declaration that the sum due to WCEL was £363,766.81 plus VAT “or such other sum as the Adjudicator shall otherwise declare is due”.
In WCEL’s Response to the Referral, it sought to argue that Buckingham had made an error in writing the name of WCEL into the Sub-Contract, given that WCEL was dormant, and the preceding exchanges had been with WL itself. WCEL suggested that Buckingham either withdraw its adjudication, and recommence against WL, or that, effectively, a substitution take place whereby WL becomes the responding party in lieu of WCEL.
Buckingham’s Reply argued that the Sub-Contract was with WCEL, and referred to the fact that WL had been placed into a creditor’s voluntary arrangement and then into receivership prior to the Sub-Contract.
By agreement, the parties gave the Adjudicator jurisdiction to determine who the Sub-Contractor was. In his Decision dated 16 January 2013, the Adjudicator concluded that WCEL was the Sub-Contractor, not WL. The Adjudicator valued the final account somewhere between the two valuations that the parties had put forward. As Buckingham had only sought a declaration, though, the Adjudicator’s Decision noted that he did not have jurisdiction to make an award of money to WCEL. Buckingham did not pay the sums which the Adjudicator had declared were due.
In the meantime, and unbeknown to WL or WCEL, Buckingham issued proceedings in the TCC on 13 February 2013 against both WCEL and WL seeking to recover overpayments said to have been made to either WCEL or WL pursuant to the Sub-Contract. Although issued, the proceedings were not served (and had not been served by the time matters came before Mr Justice Akenhead ) - under the Civil Procedure Rules a party has four months from the date of issue of proceedings to serve them upon the other parties.
The Second Adjudication
As payment of the monies found to be due by the first Adjudicator was not made, WCEL commenced a second adjudication against Buckingham, serving Notice of Adjudication on 27 March 2013.
Curiously, Buckingham sought to persuade the second Adjudicator that the first Adjudication Decision was not enforceable because WCEL was not the correct party to the Sub-Contract (a position which was completely contrary to the stance which it had taken in the first Adjudication). The second Adjudicator declined jurisdiction.
WCEL and WL then commenced proceedings in the TCC seeking enforcement of the first Adjudicator’s Decision.
Somewhat surprisingly, in the course of the litigation, Buckingham disclosed an email which had been written by its solicitors to Buckingham discussing the decision of the first Adjudicator. It was clear from this, Mr Justice Akenhead concluded, that Buckingham was seeking to play tactical games as to the true identity of the Sub-Contractor.
Three main issues arose in the enforcement proceedings.
- 1. Had “proceedings” been “commenced” by Buckingham so as to prevent the first Adjudicator’s Decision becoming final and binding (in accordance with Clause 14(6) of the Sub-Contract)?
Buckingham had issued proceedings in the TCC, but had not served them. Mr Justice Akenhead had little difficulty in concluding that proceedings had been commenced – it was not necessary for the proceedings to be served for them to have been “commenced” pursuant to Clause 14(6) of the Sub-Contract. As such, the first Adjudicator’s Decision had not become final and binding.
- 2. Had there been approbation/reprobation by Buckingham with regard to its shifting stance as to the identity of the Sub-Contractor?
Mr Justice Akenhead took the view that both parties had been playing tactical games with each other as to the correct identity of the Sub-Contractor. WCEL sought to argue that the doctrine of approbation and reprobation meant that it was not open to Buckingham to challenge the first Adjudicator’s finding that WCEL was the Sub-Contractor.
Mr Justice Akenhead held that issues of approbation and reprobation were irrelevant. The parties had given the first Adjudicator jurisdiction to decide the correct identity of the Sub-Contractor, which he had done. In proceedings to enforce the first Adjudicator’s Decision, therefore, the identity of the Sub-Contractor as found by the Adjudicator could not be challenged. Of course, as he noted, it remains to be seen whether that will be an issue in the proceedings that Buckingham had commenced.
- 3. Whether, if the first Adjudicator’s Decision was temporarily binding (i.e. until final resolution of the dispute), there should be a stay of execution by reason of the fact that WCEL was dormant and had no assets?
Mr Justice Akenhead noted that WCEL was a dormant company, and, indeed, had been so since its incorporation, but, particularly, that it was dormant at the time that the Sub-Contract was entered into. It was also noted that WL had agreed to guarantee any of WCEL’s liabilities arising out of proceedings.
Given that WCEL had been a dormant company, and WL had been subject to a CVA prior to the Sub-Contract, the Court concluded that Buckingham must be taken to have known that it was dealing with companies that had “some financial question marks hanging over them” at the time of the Sub-Contract. Referring back to the Judgement of Coulson J in Wimbledon Construction Co 2000 Limited v Derek Vago  BLR 374, Mr Justice Akenhead noted that a stay of execution will not usually be granted if “the claimant’s financial position is the same or similar to its financial position at the time that the relevant contract was made”. The logic being that, if a party choses to contract with a company which is in the same or similar financial difficulties at the time of the contract as it is at the time of a later judgment against that company, that is part of the background to the commercial transaction and should not be used as grounds to prevent payment or enforcement of a judgment.
Further, the Court did not approve of Buckingham’s tactics in seeking to muddy the waters as to the identity of the Sub-Contracting party.
Judgment was therefore entered in favour of WCEL by way of enforcement of the first Adjudicator’s Decision.
Whilst Mr Justice Akenhead’s judgment does not advance any new legal issues, it is a useful reminder of the principles, and particularly how difficult it remains to persuade a Court that an Adjudicator’s Decision should not be enforced.
For further information, please contact Robert Goodlad, Senior Associate on 0207 280 8829
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.