It is the start of autumn and July seems a long way off now, with the summer holidays all over and the World Cup just a distant memory. Consequently, it may be easy to have forgotten about Vinci Construction UK Ltd v Beumer Group UK Ltd, which had its latest outing in the TCC at the end of that month. This time it was Jonathan Acton Davis QC (sitting as a deputy High Court judge) who enforced the adjudicator’s decision and dismissed Beumer’s (the sub-contractor) arguments that the adjudicator was in breach of the rules of natural justice.
I think that the interesting part of the case is the third natural justice argument (failure to disclose material) because it was very similar to (and based on) the natural justice argument that Vinci ran and succeeded with in the proceedings before Fraser J but, on this occasion, Beumer lost.
Vinci Construction UK Ltd v Beumer Group UK Ltd
This is a long-running dispute. As you probably recall, Vinci was employed to carry out works at Gatwick airport’s south terminal and Beumer was sub-contracted to carry out works to the baggage handling system. By October 2014, the sub-contract works were in delay and the parties entered into a settlement agreement that (among other things) extended two sectional completion dates. Subsequently, a dispute arose over the operation of the extended sectional completion dates and the delay damages (liquidated damages) payable.
The latest judgment was concerned with the seventh adjudication between the parties and was the fourth one undertaken by Brian Eggleston (Dr Cyril Chern had been appointed in the first three). Mr Eggleston had found that a sum of £9.67 million was due to Vinci as liquidated damages for Beumer’s delay. When payment was not made, Vinci applied to the TCC to enforce his decision.
The parties’ dispute is no stranger to this blog either, as I discussed Fraser J’s 2016 judgment in Adjudication is not the Wild West of dispute resolution and Matt looked at O’Farrell J’s 2017 judgment in Using Part 8 to “appeal” adjudicator’s decision (that one was all about the adjudicator’s decision on certain contract terms, which was overturned in the declaratory relief application).
Natural justice challenges
Beumer challenged enforcement of the seventh adjudicator’s decision because:
“… the Adjudicator did not keep the requirements of natural justice in mind when writing his decision.”
Beumer based its natural justice challenge on three arguments:
- That the seventh decision was inconsistent with the same adjudicator’s findings in adjudications four and six. Also, that the adjudicator decided a point that was not argued by either party (with regard to clause 61.7 of the parties’ sub-contract).
- The adjudicator failed to provide “any or any proper reasons” for his decision.
- The adjudicator did not disclose or order Vinci to disclose materials from a previous adjudication. This was relevant because Beumer had asserted that Vinci was running a different case in the seventh adjudication to the one it had argued in an adjudication started by Balfour Beatty Engineering Services Ltd against Vinci in September 2016.
In dealing with the first argument, the judge found that there was no inconsistency in the adjudicator’s decisions. He also noted that whether the adjudicator’s conclusion was correct or not was “no concern of this Court” on an enforcement application. He gave the second argument equally short shrift:
“… there is no difficulty in discerning the Adjudicator’s reasoning.”
Failure to disclose material
It is the third argument that I find most interesting, not least because in my “wild west” blog, I referred to the possibility of more applications for disclosure during an adjudication. I didn’t necessarily expect it to be at a further enforcement hearing involving the same parties and the same sub-contract, but stranger things have happened (and I realise that Beumer didn’t actually apply for disclosure, but you get my gist!).
In terms of the third argument, the judge found that the adjudicator did not order disclosure because he was not requested to do so and that nothing was put before him that would have required him to make such an order. He reached this conclusion after considering the parties’ submissions in the seventh adjudication and setting out in detail how the issue was “canvassed in correspondence” between the parties and the adjudicator. He also noted that the adjudicator had given Beumer “every opportunity” to provide more information about the alleged inconsistency but:
“… faced with an absence of anything to support that assertion and the absence of any application for disclosure, Mr Eggleston was entitled to make no reference for that aspect of the dispute in his Decision. Certainly, the failure to do so does not support any allegation of breach of natural justice.”
Lessons to learn
Paragraph 56 deals with the judge’s conclusions on the natural justice points. They give rise to a number of points and lessons that parties and their representatives can take away.
Firstly, from paragraphs 56(i) and (ii), it appears to me that the judge took a dim view of the fact that Beumer had known about Mr Eggleston’s involvement in the Balfour Beatty adjudication since autumn 2016, but had not raised any previous concerns about his ability to act in adjudications four, five and six, which Beumer had started. This may have been because these three adjudications did not concern issues of delay, but this is not clear. Either way, Beumer’s approach of “keeping its powder dry” about Mr Eggleston’s involvement appears to have worked against it. The lesson to learn from this is early disclosure of knowledge of previous involvements may be beneficial.
Paragraph 56(iii) appears to be self-explanatory: a party must set out its case with clarity. If it claims an entitlement to the disclosure of documents, it must set out the legal basis for that claim.
Thirdly, what surprised me the most from reading this judgment is that, despite the significant amounts of correspondence concerning the Balfour Beatty adjudication and Vinci’s failure to disclose documents during the seventh adjudication, at no point did Beumer actually ask Mr Eggleston to order Vinci to disclose the relevant documents. The judge makes this point at paragraph 56(iv).
It isn’t clear why they took that approach but, in my view, it goes without saying that if a party wants a document (or documents) to be disclosed and the other party is refusing to provide it (them), it is incumbent upon that party to ask the adjudicator to order disclosure of that document (documents). If the adjudicator considers that a specific a document (or documents) could be relevant to their decision and the request is not simply a “fishing expedition”, then they should order disclosure. Indeed, I consider that Fraser J confirmed this point at paragraph 45 of his judgment where he said that, if Vinci had been aware of the concurrent adjudication with another party and made an application for disclosure:
“… the adjudicator would have been likely to have ordered such disclosure in order to conduct those proceedings fairly.”
Lastly, in paragraphs 56(v) to (viii) the judge explained that there was no evidence of any inconsistency between Vinci’s cases in the two adjudications (which is different to Fraser J’s judgment regarding the second adjudication). The only point I would make about this is that in the evidence before Fraser J, there was evidence of the inconsistency, and he was therefore able to make the point about taking a “dim view” of parties running inconsistent cases in different adjudications.
However, in this case, without the disclosure having been made, how could it have been known whether there was actually any inconsistent cases being run?