Construction Adjudication Cases: Part 7 of 2020

1) Enforcement - serious error of law - post-award agreement leading to estoppel: Flexidig v MVM Contractors (Europe) Ltd [2019] NIQB 117 judgment 2 December 2019 In this unusual case, Horner J had to consider an application for summary judgment by the defendant, M&M, to enforce the award of an adjudicator in its favour against Flexidig the plaintiff for the sum of £462,456.20 plus fees and VAT. The dispute referred to adjudication arose from a sub-contract between Flexidig as sub- contractor and M&M as main contractor for excavation and reinstatement works for the installation of ducts in footpaths, verges and carriageways for Virgin Media in Louth and for which Virgin Media had employed M&M as main contractor. M&M complained that the works were defective and claimed the estimated costs of future reinstatement and the adjudicator accepted that M&Wwas entitled to claim those costs. Post adjudication award, the parties entered into a standstill in order to negotiate a commercial settlement. It was agreed that Flexidig would repair the defects in their original works and they did in fact carry out extensive repairs to a substantial proportion of the defects and there was evidence that this was accepted by Virgin Media and Lincolnshire County Council as the highway authority. In answer to the claim for summary judgment Flexidig relied on the standstill as giving rise to an estoppel by convention.

It also contended that the adjudicator had made an egregious error in awarding the costs of repair not incurred when the subcontract provided that either Flexidig should make good the defective works themselves or if they failed to do then M&M could employ and pay others and recover the cost incurred. It did not provide for the recovery of estimated costs not incurred. Relying on Caledonian Modular Ltd v City Developments Ltd[6] the judge, Horner J, held this was a short self-contained point which could be decided without the need for evidence. In Caledonian Modular Ltd Coulson J had recognised the importance of enforcing awards and that the court should not be asked to deal with the very issue ruled upon by the adjudicator, but went to say: “That is, of course, the general rule and it will apply in 99 cases out of 100. But there is an exception. If the case is a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing, then the defendant may be entitled to have the point decided by way of a claim for a declaration.” The short answer in this case was that the adjudicator had obviously erred. He was not entitled to award costs not incurred. If the court was wrong in this conclusion there was the estoppel. M&M had an award which it did not seek to enforce. Rather it attempted to negotiate a settlement under a standstill agreement which then broke down. Having done so M&M was estopped from relying on the award. There was residual sum due to M&M of some £12,679 which the judge ordered Flexidig to pay into court. It would have been unconscionable for M&M to have more.

[6] [2015] EWHC 1855 (TCC) at paragraph [12]

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