an adjudication claiming the sum of £1,128,106.42 and the adjudicator, Mr Matt Molloy, decided that the parties’ conduct evidenced an agreement that Merit would make applications for payment valuing the work up to the end of each calendar month (amounting toapayee’snotice); that section.110B(4) of the Act was engaged; that MJLwas obliged to pay the notified sum as claimed. In January 2017 Merit made application for payment, no. 8, for £187,980.87 in which for the first time they claimed on the basis of costs allegedly incurred. That application was disputed and Merit commenced a second adjudication in which the adjudicator was again Mr Molloy. They sought payment or alternatively, a declaration as to the basis on which its entitlement to payment was to be calculated. Its case was that it was entitled to be reimbursed its costs wholly and necessarily incurred, in accordance with the terms of the letters of intent. Mr Molloy decided that Merit was not entitled to the sum claimed and that its entitlement to payment was based on the agreed Contract Sum and the QSOR not the costs incurred. MJL gave notice of intention to adjudicate on the value application no. 8 and make declarations in relation to “the final account”. On 27 April 2017, Merit issued a Part 8 Claim Form seeking a declaration later refined orally to this effect: The Claimant is entitled to be paid its costs wholly and necessarily incurred on the project”. The Court recorded concerns about the use of the Part 8 Procedure in this case, for two principle reasons. Firstly, under section 9 of the TCC Guide, dealing with Adjudication Business, paragraph 9.4.1 noted that the Court would deal with applications for declaratory relief arising out of the commencement of an adjudication (emphasis supplied) . Common examples were: • The adjudicator’s jurisdiction. • Whether there was a “construction contract” under the Act. • The scope of the adjudication, including whether there was a pre-existing dispute between the parties. Paragraph 9.4.2 contemplated directions leading to a “speedy resolution” of the proceedings (in common with the abridged directions that are given in adjudication enforcement cases). Despite the adjudication background to this Claim, and the way it was first presented, it was not one which directly related to the commencement of an adjudication, in the sense used in paragraph 9.4.1. Instead it related to the substance of the decision in the adjudication and the risk of the same error being “promulgated” in adjudication no. 3. That had consequently affected the directions, listing and time estimates, and allocation of Court resources. Directions were given leading to a hearing less than two months later.
The Court took the opportunity to emphasise the guidance in the TCC Users’ Guide paragraph 9 and when it was applicable. It was not to be assumed that some relationship to an adjudication and an adjudication label means that it was automatically appropriate for a case to be dealt with in that way. Secondly, and more generally, subject to CPR Part 8.1(6), the Part 8 procedure was only to be used where the Claimant sought the Court’s decision on a question which was unlikely to involve a substantial dispute of fact 26 and by implication, that the question to be decided could be framed with some degree of precision and/or be capable of a precise answer. In the experience of the Court there was a real risk of the Part 8 procedure being used too liberally and inappropriately with the risks both of prejudice to one or other of the parties in the presentation of their case and of the court being asked to reach ill-formulated and ill-informed decisions. The question arose here whether the Claim involved substantial issues of fact, given that Merit’s pleaded case turned substantially on what it said were the consequences of or inferences to be drawn from the conduct of the parties (rather than, for example, from words used). The Court was being asked to determine the very nature of the contractual relationship between the parties, which was highly unusual, on documents only with a short hearing. The court remained concerned both about the scope of the enquiry to be made and whether it was right to make any and if so what declarations(s). Germane to this was the question whether the defendant who did not agree with the Claimant’s entitlement was himself obliged to formulate an alternative declaration. The court said he was not so obliged as otherwise he might be compelled to seek declaratory relief that he did not in fact want to seek. Although MJL were content for the Court to reach decisions that might assist the parties, there was no formulation of any declaration that MJL sought. Despite the flexibility of their approach, the court was reluctant to express non-binding opinions which might well store up trouble later for both parties as to their status and content. All these issues illustrated the care to be taken by the parties and the Court in the deployment of the Part 8 procedure. The April letter of intent clearly stated that it would expire on 29 April 2016. Equally it was clear that the works continued after that date. Neither party contended that this happened on anything other than the basis of a contract between the parties. On the agreed facts the Court concluded that the “far more obvious interpretation of the parties’ conduct” was that it had been agreed that Merit would continue to be paid (in excess of the cap) on the basis of the contract sum. Therefore Merit was not entitled to the declaration it sought. The question then was whether the court should make any alternative declaration, which at first blush might seem appropriate. The difficulty with the various available options was that the court would be making a positive declaration
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