CSK Electrical Contractors Ltd v Kingwood Electrical Services Ltd [2015] EWHC 667 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

summary

(1)Where a party: (a) fails to pay invoices in accordance with the contract; (b) fails to serve a valid Pay Less Notice within the proper time; and (c) expressly says that the claims were disputed and would be defended when the other party writes to advise that the matter will be referred to adjudication, a dispute has crystallised between the parties.

(2) Where the application for the appointment of an adjudicator in error refers to a list of preferred adjudicators and no such list is attached to the application the situation is entirely different to that in Eurocom Ltd v Siemens Plc [2014] EWHC 3710 (TCC) and fraudulent misrepresentation, as found in that case, has not occurred.

(3) Adjudication is a rough and ready process because it has to be carried out within a very strict timetable. This may cause particular pressure for the responding party but this is a fact of adjudication life and is inherent to the whole process. A party waives the right to challenge an adjudicator’s decision for an alleged breach of natural justice where, first, they are aware of that right and, secondly, they perform a clear and unequivocal act which amounts to waiver of the right.

(4) Where a responding party fails to show that monies would probably not be repaid if a claimant were ordered to do so at the end of a dispute a stay of execution is not justified. If the claimant’s financial position has improved since the date that contracts were entered into this is an additional ground for refusing the stay.

Technology and Construction Court, Mr Justice Coulson

BACKGROUND


In July 2014, Kingwood Electrical Services Ltd (“Kingwood”) engaged CSK Electrical Contractors Ltd (“CSK”) to carry out electrical works at the West Stand and in the executive boxes at Twickenham stadium. Two adjudications arose out of the contracts concluded between the parties. Both adjudication decisions are dated 19 January 2015.

 In the first Adjudicator’s decision Kingwood was ordered to pay CSK the sum of £60,161.40. In the second decision Kingwood was ordered to pay CSK £272,078.03. Kingwood was also ordered to pay interest. CSK brought an application for summary judgment to enforce both of the Adjudicator’s decisions.

 Kingwood challenged the Adjudicator’s decision on a number of grounds.

ISSUES

The Court was asked to decide:

  • Whether a dispute had crystallised before the references to adjudication and therefore whether the Adjudicator had jurisdiction;
  • Whether the Adjudicator’s appointment was valid;
  • Whether the timetable in the adjudication was too onerous and therefore unfair and breached the principles of natural justice; and
  • Whether, if none of the above points are accepted by the Court, there should be a stay of execution.

 DECISION

The Court granted summary judgment in favour of CSK:

  • A dispute had crystallised between the parties. Kingwood had not issued a valid Pay Less Notice within the relevant period. When CSK wrote to advise that a reference to adjudication would be made if the amounts it had claimed were not paid immediately the response received was that the claims were “unfounded and will be strenuously defended”. The Adjudicator therefore had jurisdiction to reach the decision.
  • The sentence, “It is preferred that any of the adjudicators in the attached list are not appointed”, was included in the application to the nominating body for the appointment of the Adjudicator. There was, however, no list attached to the application when it was submitted and CSK’s evidence was that the sentence was included in error. As such, the fraud identified in Eurocom Ltd v Siemens Plc [2014] EWHC 3710 (TCC) (where the claimant’s representatives had fraudulently misrepresented that a list of potential adjudicators could not be appointed for reasons of conflict of interest) had not occurred. There may be circumstances in which a stated preference could amount to a misrepresentation, but this would never be very straightforward.
  • CSK had proper cash flow reasons for pursuing the claim when they did and the timetable set down by the Adjudicator made the best use of the 28 days available. Kingwood had been in possession of the relevant invoices for a month before the adjudication and there was nothing of any great complexity about the disputes and the matter was easily determinable in 28 days. Furthermore, Kingwood did not request further time from the Adjudicator. 
  • If the Court was wrong to reject the challenges to the adjudications, the challenges, whether by way of jurisdiction or breach of natural justice, had been waived by Kingwood. The challenges were waived by Kingwood’s failure to raise objections at the outset despite being aware of its right to challenge the Adjudicator’s decision and thereafter performed clear and unequivocal acts (such as the payment of the Adjudicator’s fees and the submission of corrections to the decisions) to show that the alleged breaches had been waived.
  • CSK began trading in July 2013 and its financial figures showed that the company was growing steadily. They did not indicate any reason why CSK would not be in a position to repay some or even all of the sums ordered by the Adjudicator if this were the end result of the dispute. Moreover, the financial position of CSK at the time of the hearing was at least as good, if not better than, the position at the time the contracts were entered into. The stay of execution was therefore refused.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

 

 

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