Dalkia Energy and Technical Services Ltd v Bell Group UK Ltd

This is a claim under CPR Part 8 arising out of an ongoing adjudication between the same parties. The claimant ("Dalkia") seeks a variety of declarations against the defendant ("Bell") relating to the terms of the contract agreed between the parties and the alleged lack of jurisdiction on the part of the adjudicator. Many of the points taken by Dalkia are unashamedly technical and devoid of any obvious merit, but that does not mean that they can be peremptorily dismissed. The courts have repeatedly made it clear that, because of the potentially draconian effects of the summary adjudication process, the parties are obliged to follow the proper procedure for appointing an adjudicator with the necessary jurisdiction to decide the dispute between them, and that failure to do so can be fatal to the validity of an entire adjudication.

It is agreed by the parties that, in May 2007, Dalkia subcontracted to Bell certain repair and painting works at 143 stations and 22 footbridges owned or controlled by Central Trains. The parties are agreed that this was a construction contract in writing, but they disagree over whether or not the Bell conditions of contract were incorporated into that contract.

In 2008 Bell sought payment of sums allegedly due under the contract, together with payment for variations. Having not received any further monies from Dalkia, they decided to commence adjudication proceedings. Following one false start, the second notice of intention to adjudicate ("the adjudication notice") was dated 8^th December 2008 and delivered by post to Dalkia on 9^th December 2008.

The same day Bell sought a nomination of the adjudicator from the RICS. Their letter was received by the RICS on 10^th December. Mr Geoff Brewer was nominated on 11^th December and was appointed as the adjudicator on 15^th December. It is common ground that this nomination and appointment occurred by reference to Bell's standard terms and conditions. Both before and after the appointment of Mr Brewer, Dalkia took a number of points to the effect that the adjudicator did not have the necessary jurisdiction to determine the dispute. Some of those contentions are now no longer relied on. But Dalkia argued - and maintained in these proceedings - that either the Bell conditions were not incorporated into the contract, or, if they were, they did not comply with section 108 of the Housing Grants, Construction and Regeneration Act 1996 ("the 1996 Act") and that, as a result, the Scheme for Construction Contracts applied instead. Dalkia submitted that in such circumstances the adjudicator, who had been appointed under the Bell standard terms and conditions, had no jurisdiction to determine the dispute.

On 18^th December the adjudicator decided that the Bell conditions were incorporated into the contract and that he did have the necessary jurisdiction. He reiterated this view in writing on 22^nd December 2008. On 14^th January 2009, having played no active part in the adjudication in the meantime, and having failed to serve a response on 9^th January in accordance with the adjudicator's order, Dalkia commenced these proceedings under CPR Part 8 seeking declarations that:

Dalkia's entitlement to these declarations is disputed, but, in addition to those points, Mr Black QC, on behalf of Bell, contends that this entire claim is unsuitable for CPR Part 8 and/or amounts to an abuse of the process. He also submits that the court has no jurisdiction to deal with the application. Obviously, given the threshold nature of these submissions, they are the most appropriate place to start. I deal with the suitability/abuse argument in Section B below and the arguments as to the court's jurisdiction in Section C below.

Mr Black contends that this claim is unsuitable for CPR Part 8 because two matters of fact are in dispute which cannot be resolved without hearing oral evidence. The first issue concerns whether or not a document referring to Dalkia's terms and conditions was sent to Bell in April 2007 and the second relates to the provision of the notice of adjudication in early December 2008.

I accept that there is an issue, which cannot be resolved on paper, as to the provision or otherwise by Dalkia to Bell of their prequalification form in April 2007. Bell say they did not receive it until the beginning of May. However, that debate seems to me to be of very limited relevance to the contract issue, because Dalkia do not say that their terms and conditions (which were apparently sent out with the prequalification form) formed any part of the contract between the parties. Indeed, this document was never even referred to in any of the correspondence or emails which both parties agree make up the relevant contract in writing.

It is also right to say that, when theses Part 8 proceedings were commenced, Dalkia may not necessarily have known that this matter was going to be in issue at all. It seems to me that the TCC's procedure should be flexible enough to avoid the result that one, potentially unexpected, issue, in connection with what is an almost entirely irrelevant factual matter, should derail an otherwise valid Part 8 claim.

As to the issue relating to the service of the notice of adjudication, I am satisfied that, on analysis of the written material before me, there is, in truth, no dispute at all on the facts. It appears clear that the notice of adjudication was faxed to one of Dalkia's outlying offices on 8^th December 2008 and delivered by recorded delivery to the correct address on 9^th December, although it was not marked for the attention of Ms Maria Gonoude, the individual at Dalkia dealing with the dispute. The only issue is whether the date of delivery of the notice of adjudication should be taken to be 8^th or 9^th December, or, on Dalkia's primary case, 11^th December, which is when it was first seen by Ms Gonoude.

That issue (as explored in Section F3 of this judgment, paragraphs 85-87 below) would seem to me to be a matter of law. There is no dispute as to the underlying facts. It is therefore suitable for determination under CPR Part 8.

For those reasons, therefore, I do not accept Mr Black's contention that the dispute between the parties is unsuitable for CPR Part 8. More widely, it seems to me that the application is at least broadly in accordance with paragraph 9.4.1 of the TCC Guide, which sets out the TCC's jurisdiction to deal with proceedings arising out of ongoing adjudications, and the relevant guidance summarised in Vitpol Building Service v Samen [2008] EWHC 2283 (TCC).

The abuse of process argument is more complicated, because it involves a consideration of the communications between the parties and the adjudicator during December 2008. However, it can be simply summarised. Bell say that, because of the delays on the part of Dalkia, and their repeated taking of points before the adjudicator - which were misleading or at the very least were so bad that they have now been abandoned - Dalkia are, as Mr Black neatly put it, "an unworthy recipient" of a discretionary remedy, such as the granting of the declarations currently sought. In support of that proposition Mr Black relies on the decision of Neuberger J (as he then was) in FSA v. Rourke(19^th October 2001, unreported).

The first notice of adjudication was dated 1^st December 2008 and sent out by Bell on 2^nd or 3^rd December. It suggested that a Mr Mackinnon should be appointed as the adjudicator, and enclosed his CV.

Dalkia did not respond to that notice until very late on 8^th December. They did not agree to the appointment of Mr Mackinnon because there was no information as to his fees. Amongst the other points they took was the suggestion that Bell had failed to serve the referral notice or appoint the adjudicator within seven days of the notice of adjudication. I am bound to say that that seems to me to be an extraordinarily bad point, since that delay was almost entirely due to Dalkia themselves.

In addition, they also took the points, both subsequently abandoned, that there was no contract in writing between the parties and that no dispute had yet crystallised. It is difficult not to conclude that, at least at that stage, Dalkia were prepared to take every possible point - whether good, bad or indifferent - in the hope of avoiding, or at least delaying, the adjudication process.

In any event, Bell had realised that the seven-day period had, or might have, elapsed, and so on 8^th December 2008 they sent a second notice of adjudication. That is the operable notice of adjudication for present purposes. It was that notice that was faxed on 8^th December and sent to the right address on 9^th December and to which I have previously referred.

On 9^th December 2008 Bell wrote to the RICS seeking the nomination of an adjudicator in connection with that (second) notice of adjudication. The RICS received that letter on 10^th December, and they wrote to the parties on the 11^th to say that "they will nominate" an adjudicator. They nominated Mr Brewer the following day, 12^th December.

In the meantime, there was continuing correspondence between the parties over the range of points taken by Dalkia in their letter of 8^th December. Dalkia now maintained that the second notice of adjudication was invalid because of the existence of the first notice, another thoroughly bad point.

On 16^th December 2008 Dalkia wrote to the adjudicator. This lengthy letter made plain that Dalkia contended that he did not have jurisdiction for a variety of reasons, some at least of which have now been abandoned. At page 10 of that letter Dalkia said this:

"The Way Forward

For the reasons set out above, Dalkia contends that you lack the jurisdiction to decide the dispute referred to you by Bell and respectfully invite you to withdraw forthwith.

Pending the outcome of your investigations into your own jurisdiction, Dalkia strictly reserves its position as to participation in the adjudication thereafter. However, for the avoidance of doubt, at present, Dalkia is not prepared to sign up to your terms of appointment.

In the event that you do decide that you have jurisdiction, this letter is intended to put you on notice that, should Dalkia wish to participate further, such participation of course being strictly without prejudice to the fact that you have no such jurisdiction, Dalkia will advance a robust defence of set-off and a substantial counterclaim."

The following day they wrote to the adjudicator again, and they said this:

"We trust that you are now in receipt of our fax of yesterday's date in which we challenge your jurisdiction to decide the dispute before you. We invite you to consider these challenges and inform us of your conclusions in this regard as soon as practicable.

Until you have ruled accordingly upon your jurisdiction (and it remains our view that you have no option but to withdraw), we consider that it is premature to order directions in relation to the dispute.

As you are aware, we are currently reserving our position with regard to participation in the adjudication, but, should you decide that you have jurisdiction to decide the dispute and should we decide to participate, for the reasons set out in our letter of yesterday's date we would request that time be extended for the service of a response until mid-January 2009."

Dalkia followed up that letter with another long letter (10 pages in total) which was largely a rehash of the points previously made. This letter said, amongst other things, that there was no agreed price in writing and therefore no construction contract, a point that is now clearly contrary to Dalkia's principal submissions. The letter concluded:

"Now that you have received our submissions in reply, we look forward to receiving your rulings as to your jurisdiction as soon as is practicable. Should you rule that you have jurisdiction, Dalkia hereby requests that the time for service of a response be extended beyond 22^nd December 2008 and that Bell be asked to properly reconsider its refusal to extend the time for the communication of your decision."

This last was a reference to the adjudicator's original order that Dalkia respond to the substantive matters in issue in the adjudication by 22^nd December

The following day, 18^th December, Dalkia wrote yet again to the adjudicator on the jurisdiction points. The letter restated Dalkia's principal submission that "you do not have jurisdiction at all", and again sought the adjudicator's ruling as to his jurisdiction.

On the same day the adjudicator decided as follows:

"I have considered the above submissions and I conclude that the Issue for me to decide upon at this stage is one of threshold jurisdiction. That is, whether despite the opposing arguments of the parties concerning jurisdiction, I consider that I nevertheless have jurisdiction to move the matter forward, although not being in a position at this point to decide on the matters contended by each side.

I conclude that I do have jurisdiction to proceed at this stage and set out below my reasoning in respect of the main issues raised."

The adjudicator then went through and rejected each of Dalkia's propositions on jurisdiction. In so doing, he expressly found that the Bell standard terms and conditions were incorporated into the contract between the parties.

On 19^th December 2008 Dalkia wrote to ask the adjudicator to reconsider his decision on jurisdiction and warned the adjudicator that they were "taking advice with regard to issuing Part 8 proceedings in the TCC". They somewhat peremptorily sought a response from the adjudicator by 22^nd December 2008, which was the next working day.

The adjudicator complied with that request, reiterating in writing on 22^nd December his conclusions as to jurisdiction and the incorporation of the Bell standard terms and conditions. He also extended Dalkia's time to respond in writing to Bell's substantive claims in the adjudication until 9^th January 2009.

Thereafter, for reasons which have not been clearly explained to me, nothing happened for over three weeks. Dalkia did not comply with the adjudicator's order; nor did they commence Part 8 proceedings until 14^th January 2009. Thus the requirement that they imposed on the adjudicator to respond to their request for clarification by 22^nd December 2008, with which he complied, seems to have had no purpose or point at all. I also note that the time for the adjudicator's decision has now been extended by agreement to 29^th January 2009.

In addition to those events, Mr Black also complains about events regarding the service of some of the evidence in the Part 8 proceedings at the end of last week. From what I have heard, I am not willing to make findings of fault or blame in relation to those events and, in any event, I do not consider that they are relevant to the abuse of the process argument.

In essence, the chronology which I have set out above provides some support for the two principal criticisms made by Mr Black of Dalkia's behaviour: the taking of points before the adjudicator which were palpably wrong, if not misleading; and the delays concerning the commencement of these Part 8 proceedings. I am particularly troubled by the unacceptable and unexplained delay of over three weeks from 19^th December to 14^th January prior to the commencement of these Part 8 proceedings, at a time when the adjudication was continuing but Dalkia were apparently playing no part in it.

However, all of that said, I have reached the conclusion that, on balance, I should not dismiss Dalkia's Part 8 claim simply because of that conduct, however regrettable I may regard it. If Dalkia are entitled to a declaration to the effect that the adjudicator does not have the necessary jurisdiction to decide this dispute, it would still be better for everyone if, having got this far, that declaration were granted now, rather than everyone waiting for the point to arise in subsequent enforcement proceedings.

For those reasons, I do not accept the submission that I should decline to deal with these matters on the grounds of abuse of process.

Mr Black took two separate points as to the court's jurisdiction. First, he submitted that Dalkia had given the adjudicator the authority to reach a binding decision on his own jurisdiction, which could not therefore be opened up by the court. Secondly, he contended that, because the parties were agreed that there was a written construction contract, the adjudicator's decision as to whether or not that contract incorporated a particular set of contract conditions was a decision which he was entitled to reach as part of the dispute referred to him, and thus the court had no jurisdiction to review, let alone overturn, that decision. I deal with each of those points in turn below.

The parties agreed that the adjudicator should investigate and rule on his own jurisdiction. The question is whether, in so doing, Dalkia had submitted to the adjudicator's jurisdiction in the full sense of having agreed not only that the adjudicator should rule on the issue, but also that Dalkia would then be bound by the ruling: see the test propounded by Simon Brown LJ (as he then was) in Thomas-Fredric's (Construction) Ltd v. Keith Wilson [2004] BLR 23).

In short, the issue before me is whether this was a case like The Project Consultancy Group v. The Trustees of the Gray Trust [1999] BLR 377 where the responding party reserved its position at the outset and participated in the adjudication only subject to that reservation, or whether it is similar to the case of Nordot Engineering Services Ltd v. Siemens PLC (SF 00901TCC 16/00) where the responding parties' agreement to abide by, and comply with, the adjudicator's decision on jurisdiction was regarded by His Honour Judge Gilliland QC as a submission to the adjudicator's jurisdiction in the full sense.

I have set out in paragraphs 20 to 26 above the relevant correspondence surrounding the adjudicator's investigation into, and determination of, his own jurisdiction. I consider it clear beyond argument that:

Mr Black relies on the fact that, in their letters, Dalkia refer to the adjudicator's "ruling" on jurisdiction and that they also referred to the need for him to consider and decide the point. He says that the use of these words indicates that Dalkia intended to be bound by the adjudicator's decision on jurisdiction. I disagree with that. In my judgment, when the documents are looked as a whole, I consider that the letters from Dalkia have precisely the opposite effect: they always regarded themselves as being able to challenge that decision.

In short, it seems to me that this case is very similar on the facts to the case of Project Consultancy where Dyson J (as he then was) decided that there was no agreement on the part of the responding party to be bound by the adjudicator's decision on jurisdiction. There was no unequivocal acceptance by Dalkia (as there was by the responding party in Nordot) that they would abide by and comply with the decision on jurisdiction. Accordingly, Bell's argument on that point must fail.

The adjudicator decided that the Bell standard terms and conditions were incorporated into the contract. It is common ground that, if they were not, there was still a written construction contract between the parties. No differences as to the parties' underlying rights and liabilities, if the Bell conditions were not incorporated, have been drawn to my attention. The only difference (which the parties have addressed in their submissions) is that, if the Bell conditions were not incorporated, then clause 12, which dealt with adjudication, would be lost and the Scheme for Construction Contracts would apply instead. On a relatively quick comparison, I am bound to say that the differences between clause 12 and the Scheme in relation to adjudication appear to be largely cosmetic.

Mr Black submits that the adjudicator's decision that the Bell terms were incorporated into the contract was part of the dispute referred to him, and that this decision cannot now be reopened by the court. He submits that it was an entirely mundane element of a contractual dispute which the adjudicator had the jurisdiction to consider and which the court should now not disturb: see, by way of example of such matters, the Court of Appeal decisions in C&B Scene Concept Design Limited v Isobars Limited[2002]BLR 93 and Carillion Construction Limited v. Devonport Royal Dockyard Limited[2005] EWCA Civ 1358.

In response, Mr Lamont relies on the decision of the Court of Appeal in Pegram Shopfitters Ltd v.Tally Wiejl (UK) Ltd[2003]EWCA Civ 1750. There the Court of Appeal held that, because there was a bona fide dispute between the parties as to the basis of the contract between them, the decision of the adjudicator, who had been appointed on the basis of a contested set of contract conditions, should not be enforced. Mr Lamont contends that Pegram is authority for the proposition that, if there is a dispute about the contractual basis of the appointment of the adjudicator, such a dispute is a matter which goes to the adjudicator's jurisdiction and can be the subject of an investigation by the court.

It is, I think, necessary to explore in a little more detail what was actually happening in Pegram. It seems to me that the critical point in that case was that the defendant, who was resisting enforcement, had an alternative argument that there was no contract at all between the parties. The Court of Appeal regarded that argument as having a more than fanciful prospect of success. Accordingly, there was an important question-mark over the adjudicator's jurisdiction: if there was in fact no contract, he would not have had any jurisdiction. That seems to me to be the principal explanation for the decision by the Court of Appeal to refuse to enforce the adjudicator’s decision.

That critical feature is missing here. As I have said, in the present case there is no dispute that there was a written construction contract between the parties. Thus, there is no dispute that an adjudicator would have had to have been appointed, whether under the Bell conditions or under the Scheme, to decide any dispute that arose between the parties under that contract. In such circumstances the adjudicator's decision as to whether or not a particular set of contract conditions were incorporated or not would seem to me to be part of the dispute properly referred to him and would not ordinarily be a matter with which the court could interfere on enforcement.

Some support for that proposition can be found in the decision of His Honour Judge Havery QC in AveatHeating Ltd v Jerram Falkus Construction Ltd [2007] EWHC 131 (TCC). There the learned judge concluded that a particular set of conditions did not comply with the 1996 Act, so that the Scheme applied instead. The point was taken that, because the adjudicator had not been appointed under the Scheme, he had not been validly appointed and he was without jurisdiction. Pegramwas cited in supported of that proposition. Judge Havery rejected that argument and said that Pegram did not support any such case. He found that the adjudicator did have the necessary jurisdiction and enforced the vast majority of his decision.

The views that I have expressed above would appear to lead to the conclusion that Mr Black is right and that, now that the adjudicator has decided the point about Bell’s standard terms and conditions, this is not a matter on which the court should intervene. However, this is not an ordinary case: it does not arise before me on enforcement where, if this jurisdiction point had arisen, it could have been comprehensively dispatched for the reasons that I have noted. Instead, the point arises here in Part 8 proceedings, where the court is being asked to give a final and binding determination on the issue: were Bell's standard terms and conditions incorporated into the contract? There can be no question of a want of jurisdiction on the part of the court in those circumstances. The issue arises for final determination in these Part 8 proceedings, and it seems to me that, to paraphrase the judgment of May LJ in Pegram, I should not duck that issue. Accordingly, for that specific reason alone, I reject the contention that the court does not have the jurisdiction to consider and determine this issue at this stage.

Of course, not every issue in an ongoing adjudication will be suitable to the Part 8 procedure under the CPR: far from it. For example, in Dorchester Hotel v. Vivid[2009] EWHC 70 (TCC), I ruled that the pre-emptive use of Part 8 in order to seek declarations as to natural justice in an ongoing adjudication was, on the facts of that case, entirely inappropriate. Indeed, I suspect that the use of CPR Part 8 will rarely be appropriate in an ongoing adjudication, but I can see that there will be times when an issue as to, for example, which contract conditions apply, may be suitable for decision before or at the time of the ongoing adjudication.

Accordingly, I do not accept Mr Black's second jurisdictional argument, not on the ground that the adjudicator was not entitled to or did not have the jurisdiction to reach his decision about the Bell standard terms and conditions (in my judgment, he did), but because, by these proceedings, Dalkia seek the final determination of the issue as to the incorporation of Bell's standard terms and conditions. It is therefore that issue to which I now turn in Section D below.

After all that preamble, the facts relating to the incorporation of the Bell terms and conditions are disappointingly straightforward. On 22^nd February 2007 Dalkia asked Bell to tender for dilapidations work at 199 stations owned by or controlled by Central Trains. On 8^th March 2007 they also asked Bell to tender for painting 22 footbridges. At the same time they asked Bell to add Dalkia's own 10% margin to their tender prices.

On 13^th March 2007 Bell provided three quotations for the 199 stations, divided up respectively into stations A-F, stations G-M and stations N-Z. Each quotation came with these words:

"We thank you for your valued enquiry and have pleasure in providing the following quotation, as all Bell Group standard terms and conditions …"

It is common ground that the Bell conditions were attached to these quotations. It is unnecessary at this stage to set out those conditions in full, but it seems to me that one of those conditions does have relevance to the incorporation issue. That is clause 1.1. That said:

"Any contract between Bell Group UK ('the company') and any of its customers ('the customers') for the supply of work and materials ('the work' and 'the materials') shall incorporate these terms and conditions, which shall prevail over any other terms and conditions contained in the customer's order form or offer, or in any other oral or written intimation which shall not be incorporated into any contract made by the company unless otherwise agreed in writing by the company."

On 19^th March 2007, Bell amended their quotation for one group of stations. On the following day, 20^th March 2007, provided their quotation for the work to the footbridges. That further quotation did not contain a separate reference to the Bell terms and conditions.

In mid-April 2007 it was said by Dalkia that they sent Bell a "vendor approval prequalification form", which included Dalkia's general conditions of supply. Bell deny that they received this form until the beginning of May. It appears to be common ground that it was not completed until 25^th May 2007, which was after the parties say that the contract had been agreed. As I have already indicated, I cannot resolve factual disputes in these Part 8 proceedings. It is, however, common ground that:

On 23^rd April 2007 Dalkia accepted Bell's offer, although this acceptance was limited to 143 stations and the 22 footbridges. This was all the work that Central Trains were prepared to let to Dalkia. The 143 stations were in two groups: East and West Zone 1. The work at the remaining stations was let by Central Trains to another contractor. The acceptance was contained in an email to Craig Bell from Sean Marsh of Dalkia on 23^rd April in these terms:

"I have attached the Footbridges, East and West Zone 1 schedules for your information. These sheets now show a breakdown of all the services required by Central Trains and identify the total works we would require Bell Group to complete. The total of your works is approximately £403K, although this includes Dalkia's 10% margin, which you included in your rates. I will leave you to resubmit these worksheets back to me with the removal of our margin so we can contract you for the correct value of the works. As discussed, for commercial reasons only platform markings will be delivered via a separate contractor."

It is common ground that the reworked prices sought by Dalkia were provided by Bell and accepted by Dalkia on or around 9^th May 2007. I have seen an email of that date which has attached to it pricing schedules showing, amongst other things, the various percentages for discounts and margins. The full contract price, I am told, was around £332,000 odd. A programme of work was agreed later in the month and the work started on 21^st May 2008. This would therefore seem to be the last date on which it could be said that the contract came into force, and that was before Bell had completed the pre-qualification form (see paragraph 51 above).

On behalf of Dalkia, Mr Lamont submitted that the quotations of 13^th March 2007 were speculative quotations only and that, when the workscope changed in April, detailed prices were sought and provided without there being any reference to the earlier quotations or the Bell standard terms and conditions. Mr Lamont said that the scope of the works agreed in the contract was "entirely different" to that quoted for in March. He said that the quotations and the terms were merely tender documents which formed no part of the contract, and in support of that proposition he relied on Davis Contractors Limited v. Fareham UDC[1956] AC 696. He also submitted that, on a proper construction of the March quotations, they were not saying that the Bell conditions would apply to work which they might be asked to carry out in the future.

Mr Black submitted that the quotations plainly incorporated the terms and conditions, and that clause 1.1 made it clear that those terms and conditions would be incorporated into any contract that was concluded between the parties. He said that the quotations of 13^th March formed Bell's original offer, which was amended on 19^th and then again on 20^th March 2007. He said that on 23^rd April there was an agreement as to part of the re-amended offer, namely, insofar as it related to 143 of the 199 stations and all of the footbridges. He said there was a counter-offer as to price which was subsequently agreed no later than 9^th May. Accordingly, he said there was a contract which incorporated the Bell terms and conditions.

For a variety of reasons which I will outline below, I am in no doubt that Mr Black's submissions as to the formation of the contract are correct. First, I consider that the quotations of 13^th March 2007 were not preliminary or speculative. They were, and remained, Bell's only detailed quotations for the work. Those quotations incorporated Bell's terms and conditions.

Secondly, as a matter of construction, Dalkia could have been in no doubt that Bell's offer incorporated those terms and conditions and, unless expressly rejected or modified (which rejection or modification would have had to have been agreed by Bell expressly), they would form part of any contract that may be agreed between the parties in the future. That is, so it seems to me, the only possible interpretation of clause 1.1.

Thirdly, I reject the notion that in some way the workscope changed so that the March quotations became irrelevant. The workscope did not change. All that happened was that a part of the workscope to which the quotations related was deleted from the eventual contract that was agreed. The workscope may have been the subject of a more detailed set of schedules provided in April, but there is nothing to say that the workscope itself was any different. Indeed, the fact that the March quotations, and the prices contained therein, were then carried forward into the agreements of April and May indicates precisely the contrary.

Fourthly, I note that, with the Bell terms and conditions in play, at no stage in the communications between the parties were those terms and conditions ever queried by Dalkia. It was never suggested that they might be something that were even potentially in issue. Neither was this a battle of the forms case (see Chitty on Contracts, 30^th Edition, paragraphs 2-034-2-037). The Bell terms and conditions were never queried by Dalkia at any stage.

Fifthly, the Dalkia pre-acceptance form was irrelevant. For the reasons noted in paragraph 51 above, I am confident that it has no factual or legal significance.

Sixthly, I am clear that Davis v. Fareham is irrelevant to the present case. That was a dispute over whether a letter, which purported to modify contractual terms but which did not itself form part of the executed contract, was admissible or relevant to the proper construction of the contract. Here, there was no executed contract, and the parties are agreed that the contract was in writing only because all the relevant terms of that contract are recorded in the correspondence and emails to which I have referred. Thus the Davis v. Fareham point does not arise. The contract plainly included the Bell terms and conditions sent on 13^th March 2007.

Finally, just standing back from the detail for a moment, it seems to me that Dalkia's case amounts to this: that, even if a tenderer has made clear that his quotation, and any eventual contract, will incorporate his terms and conditions and, even if that suggestion is not discussed, let alone queried or challenged by the other party, if those terms and conditions are not re-stated again when the final discussions as to price take place, they somehow become irrelevant and form no part of the contract agreed between the parties. No authority was provided for such a startling and, I would suggest, artificial conclusion, and I reject it.

For those reasons I have concluded that the Bell standard terms and conditions were incorporated into the subcontract between the parties. Accordingly, if I was wrong to conclude (at paragraphs 44 to 46 above) that this was a topic which the court had the jurisdiction to consider afresh, my conclusion and determination of the issue makes no difference to the underlying rights and liabilities of the parties, since I have reached precisely the same conclusion as the adjudicator.

I now turn to address, in Sections E, F, and G below, the various arguments put forward on behalf of Dalkia to the effect that, even if the Bell conditions were incorporated into the contract, the adjudicator did not have the necessary jurisdiction to deal with the dispute.

Mr Lamont's first point in this group of submissions was to the effect that, even if the Bell standard terms and conditions were incorporated, clause 12.4 thereof did not comply with the 1996 Act, so that the contractual adjudication provisions were rendered irrelevant, and the Scheme for Construction Contracts was incorporated instead. The significance of this, said Mr Lamont, was that if that was right, the adjudicator had been appointed under the Bell conditions, not the Scheme, and therefore had no jurisdiction.

Clause 12 of the Bell standard terms and conditions dealt with adjudication. The relevant parts of that provision were as follows:

"12.1

Either party to the contract may give notice ('notice of intention to refer to adjudication') of its intention to refer a dispute, difference or question arising under, out of or relating to the contract for adjudication at any time and, within seven days of such notice of intention to refer to adjudication, refer the same by notice of referral ('notice of referral') to the adjudicator specified in the appendix hereto ('the appendix'). The party referring such dispute shall be called 'the referrer', and the party responding shall be called 'the respondent', collectively referred to as 'the parties'…

12.3

The adjudicator to decide the dispute or difference shall be either one of the individuals named in paragraph 1 of the appendix, or an individual agreed by the parties, or, on the application of either party, an individual to be nominated as the adjudicator by the person named in paragraph 2 of the appendix ('the nominator'), provided that, where either party has given notice of intention to refer to adjudication then: …

12.3.3

Any application to the nominator must be made with the object of securing appointment of and referral of the dispute or difference to the adjudicator within seven days of the notice of the date of the notice of intention to refer to adjudication.

12.4

Upon the appointment of the adjudicator, the parties shall comply with all the directions which he may issue for the purposes of considering the facts and issues in the dispute and so that the adjudicator shall notify his decision to the parties not later than 28 days from the date of the referral to him, or such longer period as is agreed by the parties after the dispute has been referred and the adjudicator may extend the period of 28 days by up to 14 days with the referrer's consent. The adjudicator's decision shall nevertheless be valid if issued after the time allowed. The adjudicator's decision shall state how the cost of the adjudicator's fee shall be apportioned between the parties and whether one party is to bear the whole or part of the reasonable legal and other costs and expenses of the other party relating to the adjudication. It shall be a condition precedent to the appointment of an adjudicator that he shall notify the parties that he will comply with this condition and its time limits."

The appendix was in the following terms:

"1.

Under condition 12 the adjudicator shall be such person as the customer or company choose by mutual agreement in writing or, failing such agreement, such other person as may be chosen by the President, or a Vice-President, or Chairman or a Vice-Chairman of the Royal Institution of Chartered Surveyors at the request of either the customer or the company."

Section 108(2) of the 1996 Act provides that a construction contract such as this must:

……

(c)

require the adjudicator to reach a decision within 28 days of referral or such longer period as is agreed by the parties after the dispute has been referred;

(d)

allow the adjudicator to extend the period of 28 days by up to 14 days, with the consent of the party by whom the dispute was referred; …"

There are two decisions of His Honour Judge Havery QC which Mr Lamont relied on to suggest that a provision such as clause 12.4 did not comply with the 1996 Act. In Epping Electrical Company Limited v. Briggs and Forrester [2007] EWHC 4 (TCC), the judge was considering paragraph 25 of the CIC Model Adjudication procedure, which purported to provide that any decision reached after the expiry of the 42 days would still be valid, provided it was reached before the appointment of a replacement adjudicator.

Judge Havery concluded that such a provision did not comply with the 1996 Act, holding that "the apparent effect of paragraph 25 of the CIC Procedure is inconsistent with the mandatory nature of section 108(2)". He went on to conclude that, as a result, in accordance with section 108(5) of the 1996 Act, the Scheme for Construction Contracts applied in place of the adjudication provisions of the contract. He ruled that, on the facts of that case, the decision was not enforceable because it had been reached outside the statutory time limits.

The second case is Aveat Heating, to which I have already referred above. There the judge was concerned with clause 38A5 of the JCT conditions. That was in almost exactly the same terms as the condition here. Judge Havery ruled that the term did not comply with the Act and that the Scheme applied instead. His reasoning was confined to a reference to his own decision in Epping, where he said that he had "held a provision equivalent to [the term in question in Aveat] not to be compliant with the Act". It should be noted that, despite reaching this conclusion, the learned judge did not conclude that the adjudicator did not have the necessary jurisdiction - a point I have already made in paragraph 43 above.

In reliance on those decisions, Mr Lamont argued that the Bell adjudication provision at clause 12.4 did not comply with the Act and had therefore to be replaced by the Scheme. Mr Black disagreed. He said that, whilst Epping was concerned with time limits for reaching the decision, the clause in Aveat was dealing solely with when the decision was issued - not when it was reached. He said that the difference between when a decision was reached and when it was issued to the parties was a matter that had been considered in a number of authorities, and that the clause in Aveat and the clause here merely reflected the decisions in those cases, to the effect that an adjudicator had a certain (small) amount of leeway in the issuing of his decision. He therefore submitted that Judge Havery was wrong to say what he said in Aveat, albeit that in any event it did not affect his conclusion.

In my judgment, Mr Black is right. A decision has to be reached within the mandatory time limits, and so I would regard Epping as being entirely correct. But it is settled law that, provided that a decision is reached within the statutory time limits, the adjudicator does have a short additional period in which to issue that decision: see, for example, Barnes & Elliott Limited v. Taylor Woodrow Holdings Limited[2003] 3100 (TCC) and Cubitt Building & Interiors Limited v Fleetglade Limited[2006] EWHC 3413 (TCC).

Of course, whether or not the actual delay in issuing the decision after it has been reached will invalidate that decision must always depend on the facts of the particular case. But the general statement that a decision reached within the time limits can be issued after the expiry of the time limits is in general accordance with the law.

For that reason, it seems to me that Judge Havery may have been in error in expressing the view that he did, that the clauses in Epping and Aveat were very similar, when in truth they referred to different aspects of the adjudication process. In any event, as I have said, that view made no difference to his decision in Aveat. Here, I consider that clause 12.4 does no more than reflect the case law to which I have referred and that, as a result, the Bell terms and conditions were in accordance with the 1996 Act. On this basis, therefore, the adjudicator was validly appointed by reference to conditions which were in accordance with that Act. The Scheme for Construction Contracts is irrelevant.

I should add by way of completeness that, if both the adjudicator and I were wrong, and the Bell conditions were not incorporated into the contract, and if I was also wrong on the previous point, and the Bell conditions did not comply with the Act, it would, in my judgment, make no difference to the adjudicator's jurisdiction. On this analysis the Scheme, not the Bell conditions, would apply, but I do not consider that that would have any effect on the adjudicator's jurisdiction.

My reasons are really those outlined in paragraphs 38 to 43 above. In circumstances where the parties accept that there is a written construction contract, the only issue is whether an express or implied set of adjudication provisions were incorporated into the contract. Such a situation is different to that in Pegram and such a dispute is one which the adjudicator has the jurisdiction to determine (see Aveat).

Mr Lamont's next point was that Bell failed to follow their own terms and conditions in the appointment of the adjudicator, so that on this ground too he had no jurisdiction. His first argument was that the Bell conditions required an attempt to agree an adjudicator before any application could be made to the RICS. His second argument was that, on a proper construction of clause 12, the approach to the RICS had to be made after the service of the notice of adjudication, and here it was not.

In response to these submissions, Mr Black contended that, as a matter of construction, the Bell conditions did not require an attempt at agreement before an application to the RICS. Secondly, he submitted that the conditions did not require the notice of adjudication to be provided before the approach to the RICS, but that, even if it did, that is what actually happened here. I deal with those points in turn below.

There is no doubt that clause 12 of the Bell conditions (paragraph 66 above) envisaged either that the parties would agree an adjudicator, or that the adjudicator would be appointed by the RICS. But there is nothing in the form of words used to indicate any mandatory sequence, or that any attempt must be made to agree an adjudicator before there can be a valid approach to a nominating body (in this case the RICS). A failed attempt at agreement is not, as a matter of construction of clause 12, a condition precedent to an approach to the RICS.

My attention was drawn to the judgment of Dyson LJ inAmec Capital Projects Ltd v.Whitefriars City Estates Ltd[2004] EWCA Civ 1418 in which, in addressing similar provisions, he described them as “a number of different methods by which an adjudicator may be appointed”. I consider that that is also an apt description of clause 12 of the Bell conditions. I reject the submission that clause 12 required an attempt to agree the identity of an adjudicator before there could be a valid approach to the RICS.

I should add that, in any event, this is not an argument which Dalkia could legitimately expect the court to favour, in circumstances where their delays in early December only served to highlight the practical and logistical difficulties inherent in the suggestion that such a two-stage process can be squeezed into what may only be seven days. Their own delays in dealing with the first notice of adjudication make plain that, unless such a procedure was plainly made mandatory by the contract, it would be unreasonable and impracticable to require a party to try and agree an adjudicator after the service of the notice of adjudication and before applying to the nominating body.

In IDE Contracting Ltd v RG Carter Cambridge Ltd[2004]BLR 172, a decision under the Scheme, His Honour Judge Havery QC held that a failure to serve a notice of adjudication before making an approach to the nominating body in question was a failure to comply with the Scheme because, under paragraph 2(1) of the Scheme, the various ways in which an adjudicator may be appointed only become relevant "following the giving of a notice of adjudication". By contrast, in Palmac Contracting Ltd v. Park Lane Estates Ltd[2005] BLR 301, a case arising under a set of contractual adjudication provisions in different terms, Her Honour Judge Kirkham QC concluded that there was no such requirement.

Clause 12 of the Bell conditions is in very similar terms to those under consideration in Palmac. As a matter of construction, I would conclude (for the same reasons as Judge Kirkham) that, unlike the Scheme, clause 12 did not require a notice of adjudication in advance of an approach to the nominating body (in this case the RICS).

However, even if I was wrong about that, I am in no doubt that, on the facts, this point does not arise in any event. As set out above, the notice of adjudication was delivered to the appropriate address at Dalkia on 9^th December. No approach was made to the nominating body until that day (although there had been an earlier approach to the RICS on 5^th December, that related to the first, and now superseded, notice, and is therefore irrelevant). Accordingly, it is impossible to say that the approach to the RICS was made before the provision to Dalkia of the relevant notice of adjudication. That is only confirmed by the fact that the RICS did not even receive the request until the following day, the 10^th December.

Mr Lamont's argument on this point was that, because the notice was addressed simply to the managing director of Dalkia rather than the individual dealing with this dispute, the notice did not come to her attention until 11^th December, and so it should be 11^th December that is taken as the date on which the notice was given or provided.

I am afraid that I reject that contention out of hand. The suggestion that the date on which a notice of adjudication was given, from which so many other things may flow, is to be controlled by reference to the vagaries of the recipient's internal mail arrangements, is simply untenable. The notice was delivered to Dalkia’s principal business address on 9^th December. It was delivered by recorded delivery, so it should have been apparent to everyone that it was important. It should therefore have found its way to those concerned with this dispute during the course of that day. I therefore consider there is nothing in this point on the facts.

For those reasons, I conclude that the appointment of the adjudicator was in accordance with the Bell standard terms and conditions and that the adjudicator was validly appointed in accordance with those conditions.

Mr Lamont's final point was to say that, because the matters referred to the adjudicator included claims under the contract as well as a claim for variations, this meant that more than one dispute had been referred to the adjudicator in contravention of the 1996 Act.

As I pointed out during oral submissions, in the light of the somewhat inglorious history of the ‘more-than-one-dispute’ point, that was a bold submission. The broad definition of a single dispute habitually used by the courts is that of His Honour Judge Thornton QC in Fastrack Contractors Limited v. Morrison Construction Limited [2000] BLR 168 which is in these terms:

"During the course of a construction contract many claims, heads of claim, issues, contentions and causes of action will arise. Many of these will be, collectively or individually, disputed. When a dispute arises, it may cover one, several or many of one, some or all of these matters. At any particular moment in time it will be a question of fact what is in dispute. Thus, the ‘dispute’ which may be referred to adjudication is all or part of whatever is in dispute at the moment that the referring party first intimates an adjudication reference. In other words, the ‘dispute’ is whatever claims, heads of claim, issues, contentions or causes of action that are then in dispute which the referring party has chosen to crystallise into an adjudication reference."

This statement has been approved in a number of subsequent cases, including by His Honour Judge Lloyd QC in David McLean Housing Ltd v. Swansea Housing Association Ltd[2002] BLR 125. That was a case in which the claim referred to the adjudicator included both measured works and variations and where the judge concluded that that was all part of the same dispute.

In my judgment, it is plain that Bell's claim does not encompass more than one dispute. The single issue for the adjudicator is: what, if anything, is due from Dalkia to Bell pursuant to this contract? That would necessarily include claims for variations. That is one dispute which has been properly and validly referred to the adjudicator. Thus, Dalkia’s final jurisdiction ground must also fail.

For the reasons set out in Sections B and C above, I reject Bell's submission that these CPR Part 8 proceedings are inappropriate or an abuse of the process or outside the court's jurisdiction

For the reasons set out in Section D above, I find that the Bell conditions were incorporated into the contract between the parties.

For the reasons set out in Section E above, I reject Dalkia's submissions that clause 12.4 of the Bell conditions did not comply with the 1996 Act.

For the reasons set out in Section F above, I reject Dalkia's submissions that the adjudicator was not properly appointed in accordance with the Bell terms and conditions.

For the reasons set out at Section G above, I reject Dalkia's submissions that more than one dispute was referred to the adjudicator.

As a result of my conclusions in Sections E, F and G above, I conclude that the adjudicator has the necessary jurisdiction to determine the dispute between the parties.