107772.001 SH Construction Case Booklet

The Court had to exercise its discretion in accordance with CPR r.83.7(4). It was proper to draw an analogy between a stay based on dissipation and a freezing order as the judge had done. The judge was entitled to draw adverse inferences from the lack of any explanation in response to material from which a risk of dissipation could be inferred. That was not reversing the burden of proof. The judge had adequate material before him, namely the risk represented by the company accounts, allegations of fraudulent invoicing, untrue explanation given for belated changes resulting in radically altered figures in the accounts and an inflated figure due to creditors equating to the adjudication sum. The accepted evidence cleared the necessary hurdle such that the exercise of discretion could not be said to be unreasonable. Appeal dismissed. Comment The Court of Appeal reconsidered and extended the circumstances in which the high Court can upon enforcement and stay consider or reconsider evidence used or which could have been used in the adjudication. That included in this case, but was not limited to, allegations of fraud. 10. Waiver – Challenge and Reservation Had to Be Appropriate and Clear Ove Arup & Partners International Ltd v Coleman Bennett International Consultancy PLC 21 The claimant consultancy applied to enforce an adjudicator’s decision ordering the defendant to pay the balance of professional fees due under a professional services contract. The claimant was engaged to assist in feasibility study for a high- speed transport system to link Manchester and Leeds. There was an initial agreement made in April 2016 as varied by further agreement in October 2016. The initial agreement entailed a fee of £350,000 plus VAT or reduced fee for a 20% stake in any potential joint venture if the project went ahead. The proposal was accepted and work commenced. The defendant made an initial payment of £75,000 in May 2016. By October it was apparent that the claimant would not be taking a stake in any potential joint venture and following discussions, the defendant wrote acknowledging a debt of £350,000. The claimant submitted invoices but no further payment was made. By its adjudication notice, the claimant claimed for professional engineering services pursuant to the April agreement, as varied by the October agreement and contended that the Scheme applied. The defendant took part maintaining the view, by a letter from its barrister to the adjudicator and in its response, that the adjudicator lacked jurisdiction. The letter contained what was described as a general reservation on jurisdiction, including any jurisdictional issues it had not yet had the opportunity to investigate. It raised two specific jurisdictional challenges: (a) that the claim referred was brought under more than one contract and (b) that it was brought against the wrong party.

The adjudicator found for the claimant and awarded it the balance of the fees of £275,000 plus VAT with interest, statutory compensation and ordered the defendant to pay his fees. In Court, the defendant resisted the application on several jurisdictional grounds, including, principally, that the contract was not a “construction contract” for the purposes of Part II of the Act and thus there was no right of adjudication. O’Farrell J decided that the defendant was precluded from relying on the principal jurisdictional challenge. Although the barrister’s letter and the response had raised a challenge to the Act’s applicability, neither gave details of the basis on which that assertion was made. Any challenge as to jurisdiction had to be appropriate and clear and the adjudicator had found that that issue had not been developed in detail. 22 A mere general submission was not sufficient for an adjudicator to deal with the nature of the objection. The two specific jurisdictional points which were raised had been dealt with by the adjudicator. It would not be appropriate to allow the defendant to raise a new jurisdictional challenge now. Furthermore, the general reservation of jurisdiction in the letter was too vague to be effective. It failed to articulate the specific ground for the jurisdictional objection which should have been known to the defendant at the time and purported to keep all lines of jurisdictional challenge open. But in any event, the defendant lost its right to challenge jurisdiction because it had admitted in its response that the contract was a construction contract. On that issue, even if the defendant had been able challenge jurisdiction, the scope of work under the contract was within the ambit of Part II of the Act. It related to “construction operations” which, as defined by section 105(1) (b) included future construction operations. The design and engineering work was in connection with such operations.


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