REUTERS | Maxim Shemetov

Parties in same dispute jam on M25 contract

I’ve written about expert determination before, but not for some time as it is relatively rare that the courts get to consider this method of dispute resolution. This is probably due to the fact that there are normally such limited grounds on which an expert’s determination can be challenged. Therefore, I was interested to see the judgment in Connect Plus (M25) Ltd v Highways England Company Ltd, where Coulson J had to consider a determination by the now retired former head of the TCC, Sir Robert Akenhead.

Connect Plus (M25) Ltd v Highways England Company Ltd

As the names of the parties suggest, the contract in question involves a motorway, namely everyone’s favourite orbital motorway, the M25. Highways England Company Ltd (HEC) engaged Connect Plus (M25) Ltd (CP), under a design, build, finance and operate contract (DBFO) to provide various services over a 30-year period. Coulson J described the contract as “ridiculously unwieldy”, but this can probably be explained by the fact that it is worth £6.2 billion.

It appears from the judgment that the contract’s dispute resolution provisions provide for a tiered procedure, whereby disputes are initially referred to a Network Board and then (if needs be) to an expert for determination. Clause 6.5 of schedule 19 provides that an expert’s determination is binding on the parties unless and until it is “revised, cancelled or varied” by a court, and clause 8.3 permits the referral of “any matter comprised in the Dispute to the Court for determination”. The same clause gives the court “full power to open up, review and revise any… determination of the Expert”.

Pausing there for a minute, the contract might call this process expert determination but, given that the expert’s determination appears to be temporarily binding and the full extent of the dispute determined by the expert can be referred to the court, the process appears to be more akin to adjudication than expert determination.

The parties’ dispute

The parties disagreed over how a specific part of the compensation mechanism, known as the Critical Incident Adjustment (CIA) operated. The dispute was referred to the Network Board, and then to Sir Robert Akenhead, who preferred HEC’s interpretation. Not satisfied, CP decided to have another crack of the whip and commenced proceedings in the TCC. HEC applied to strike out and/or stay part of CP’s claim on the grounds that the court did not have jurisdiction to consider it because it was not a claim that had been determined by Sir Robert.

The question for Coulson J was whether this was the case. If so, then the court would have jurisdiction to address CP’s claim but, if not, it would have to be referred to the Network Board and then an expert before the court could decide it.

I confess that the legal argument was far more detailed, but we don’t need to go there for the purposes of this blog. What I want to concentrate on is the “same dispute” issue.

Same dispute referred to or decided by the expert?

Coulson J said that what he had to decide was whether the alleged new claim amounted to “any matter comprised in the Dispute” referred to Sir Robert, pursuant to clause 8.3. The judgment does not set out clause 8.3 in full. However, there is an interesting point arising from this clause. Although clause 8.3 refers to a party’s right to refer “any matter comprised in the Dispute” referred to the expert “to the Court for determination”, the court only has power to “open up, review and revise” the expert’s determination. Therefore, I wonder if there is a lacuna here, whereby if a matter has been referred to the expert but not decided by them, whether the court still has jurisdiction to hear it.

I raise this because a similar issue can arise in adjudication. As we know, paragraph 9(2) of Part I of the Scheme for Construction Contracts 1998 states that an adjudicator must resign where the dispute:

“… is the same or substantially the same as one which has previously been referred to adjudication and a decision has been taken in that adjudication.”

Jackson LJ made it clear in Harding, Paice and Springall’s trip to the Court of Appeal that in order for paragraph 9(2) to bite, a dispute had to have been previously referred to adjudication AND that dispute must have been decided. It was not enough that it had previously been referred to adjudication, but the adjudicator did not decide the issue. This point was reiterated by the Court of Appeal in Mr and Mrs Brown v Complete Building Solutions.

Same dispute findings

Relying on well-known authorities including Quietfield Ltd v Vascroft Construction Ltd and HG Construction Ltd v Ashwell Homes (East Anglia) Ltd, Coulson J found that the dispute referred to the court was the same as that referred to Sir Robert for a number of reasons, including that:

  • The underlying dispute was the same, namely it concerned the interpretation of the CIA.
  • Although CP was relying on a number of contract clauses that were not referred to the expert, it did not follow that this was a different dispute.
  • Although CP was relying on a number of documents that were not referred to the expert, this:

    “… cannot mean that those documents are irrelevant or inadmissible in the court proceedings.”

While Sir Robert had been unable to determine how the compensation mechanism was to be operated between 2009 and 2013 due to a lack of evidence, CP’s case (as set out in the Particulars of Claim) addressed this question.

This was a question that had been referred to Sir Robert, but it had not been decided by him, so this comes back to my point above concerning the court’s jurisdiction. It doesn’t appear from the judgment that this was an issue raised by the parties or decided by the court. It may be a red herring on my part, but it’s nevertheless interesting.

In the end, Coulson J refused to strike out the claim and/or grant a stay.

Discretion not to grant a stay

I think that the final part of the judgment is possibly the most interesting. Coulson J said that, even if he was wrong and there was a breach of the contract’s dispute resolution provisions, he would exercise his discretion not to grant a stay of the court proceedings. This, in my view, was for sound pragmatic reasons, namely:

  • It would be “impossible to draw any sort of dividing line” between those aspects of the case that the court could properly deal with, and those that should be referred to the Network Board and an expert first. A stay would be contrary to the overriding objective and would “merely cause delay and increase expense”.
  • It was likely that any future decision by the Network Board and an expert would be challenged by one of the parties. If so, the court would then have to consider two experts’ determinations, with potentially different results. Coulson J rightly noted that it was “difficult to see any useful purpose being served by such an exercise”.

As a consequence, even if my point about the extent of the court’s jurisdiction under the dispute resolution provisions is correct, it is irrelevant because no stay would have been granted in any event.

Implications for adjudication?

This judgment is relevant to adjudication because it deals with the question of whether two disputes are the same. Although I don’t consider that it changes any of the current law concerning same disputes, I nevertheless think that it will make a useful addition to the “same disputes” section of the adjudication case law library, not least because Coulson J confirmed that relying on different clauses of a contract and different evidence does not mean that a dispute is different to one previously decided.

MCMS Ltd Jonathan Cope

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