Gosvenor London Ltd v Aygun Aluminium UK Ltd, Court of Appeal - Technology and Construction Court, March 28, 2018, [2018] EWHC 227 (TCC)

Resolution Date:March 28, 2018
Issuing Organization:Technology and Construction Court
Actores:Gosvenor London Ltd v Aygun Aluminium UK Ltd
 
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Neutral Citation Number: [2018] EWHC 227 (TCC)

Case No: HT-2017-000377

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT (QBD)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date 28 March 2018

Before :

THE HONOURABLE MR JUSTICE FRASER

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Between :

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Helena White (instructed by Womble Bond Dickinson (UK) LLP) for the Claimant

Timothy Sampson (instructed by Arlington Crown) for the Defendant

Hearing date: 1 and 27 February 2018, 21 March 2018

Mr Justice Fraser :

Introduction

  1. This is an application for summary judgment by the claimant, Gosvenor London Ltd (``Gosvenor'') in respect of an adjudicator's decision dated 16 November 2017 which was made in its favour against the defendant, Aygun Aluminium Ltd (``Aygun''). The amount of the decision is £553,958.47 plus Value Added Tax and the adjudicator was Mr Simon Whitfield. Mr Whitfield was appointed, having been nominated by the Chairman of TECBAR, which is the specialist Bar Association that deals with this type of work. The application was resisted by Aygun on the basis of fraud. Aygun also brought its own application for a stay of execution, in the event that its opposition to the summary judgment application was unsuccessful. Following the distribution of the draft judgment on these two applications to the parties on 20 February 2018, Gosvenor made an application to recall and reconsider the findings following further argument; made an application to adduce fresh evidence; and also (in the alternative) sought permission to appeal. Aygun opposed these applications. I deal with this further in the section of the judgment headed ``Events following distribution of the First Draft Judgment.''

    The facts

  2. Gosvenor and Aygun were parties to a contract entered into in May 2016 (``the Contract'') for Gosvenor to perform certain cladding and other associated works for the installation of a façade at the Ocean Village Hotel in Southampton. Aygun was itself a sub-contractor to the main contractor for the project, which was Bouygues (UK) Ltd. The Contract was described as a Secondary Sub-Contract and was for installation only, with the design of the installation and supply of all necessary materials being provided by Aygun. The contract sum was approximately £440,000 and the works were intended to run from 20 June 2016 to 11 November 2016. The project fell into delay, and there was a meeting between the parties on 15 March 2017 to discuss the way forward. This meeting led to what was called in the adjudication itself the Completion Agreement, which was reached between Aygun and Gosvenor.

  3. Notwithstanding that agreement, the parties later found themselves in dispute and a Notice of Adjudication was served by Gosvenor on 29 September 2017, and Gosvenor also requested appointment of an adjudicator from TECBAR. Mr Whitfield was nominated and confirmed his willingness to act to the parties on 3 October 2017. He also indicated his intention to apply the TECBAR Adjudication Rules 2012 to the adjudication; those rules incorporate the adjudication rules in the Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment)(England) Regulations 2011 (``the Scheme''). These set out, amongst other things, the timetable for different steps for service of the Referral and so on, and these were applied during the adjudication. There were no challenges to the jurisdiction of Mr Whitfield - he expressly confirmed this with the parties at the earliest stage of the adjudication on 3 October 2017 - and he conducted the adjudication. Although there were some muted expressions of breaches of natural justice in some of the pre-action correspondence, these formed no part of the arguments before me. From the papers in the adjudication that I have studied, this was no doubt because Mr Whitfield conducted the adjudication fairly, as one would expect. Both sides were represented by counsel and solicitors, the same solicitors and counsel who acted for each of the parties in the proceedings before me. Mr Whitfield decided that the amount due to Gosvenor in respect of the sum claimed, which was for outstanding labour costs, was £553,958.47 plus Value Added Tax.

  4. There is no question that Mr Whitfield had jurisdiction to determine the dispute, and there is no question of any arguable breaches of natural justice being alleged by Aygun. The substance of the adjudicator's decision would therefore ordinarily be enforced by means of granting summary judgment in the relevant amount. As is well known, and as was stated in Amey Wye Valley Ltd v The County of Herefordshire District Council [2016] 2368 EWHC (TCC) at [30], as a way of a reminder to parties generally rather than stating any innovative principle:

    ``Adjudicators' decisions will be enforced by the courts, regardless of errors of fact or law. This has been stated many times. Carillion v Devonport Royal Dockyard [2005] EWCA Civ 1358 is the most often quoted appellate authority.''

    There are so many other well-known cases that state, re-state, and emphasise this fundamental point that those who practice in this field barely need such reminders. They include the first judgment on this topic, by Dyson J (as he then was) in Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] EWHC 254 (TCC) [1999] BLR 93; the first Court of Appeal authority in Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] EWCA Civ 1358 [2000] BLR 49; and an enormous number since.

  5. Mr Sampson for Aygun accepts all of these authorities, but in the particular circumstances of this case relies upon fraud by Gosvenor to justify his defence to the application, and to lead to what he submits should in this case be a refusal by the court to grant summary judgment.

  6. The evidence before the court on 1 February 2018 on these two applications (namely summary judgment and for a stay on enforcement) was contained in the following witness statements. Mr Skelton of the solicitors acting for Gosvenor served a witness statement dated 7 December 2017 in which he set out the grounds for summary judgment, supporting as it did the Part 7 proceedings issued in the Technology and Construction Court as adjudication business in the usual way, and he sought directions including the usual abridgement of time. That witness statement did not address fraud, nor could one expect or require it to do so. No allegations of fraud were raised in the adjudication proceedings themselves at all. Mr Skelton's witness statement was entirely sensible and proportionate, and included all that could have been expected at that stage on what may have appeared at the time to be a completely standard adjudication enforcement. On 19 December 2017 directions were given by Coulson J, in accordance with the usual approach to adjudication proceedings in this court, with evidence (if any) from Aygun to be served by 15 January 2018 and any evidence in response thereto from Gosvenor to be served on 22 January 2018, one week afterwards. The hearing was set down for 2 hours on 1 February 2018.

  7. This is, so far, an entirely conventional narrative for adjudication enforcement proceedings. The judges of the Technology and Construction Court issue such directions on a regular basis, and they are effectively standard ones. The aim is to achieve a hearing of an opposed adjudication enforcement as speedily as possible, bearing in mind that a defendant may wish to serve its own evidence, and to ensure that time is available for this to be done without oppression. Section 9.2 of the Technology and Construction Guide (2nd ed, 3rd revision) makes this clear. An acknowledgement of service was required from Aygun but nothing more in terms of any pleading. However, on 15 January 2018 Aygun served a Defence, settled by counsel, together with three witness statements. The pleading was supported by a statement of truth from Esser Guneysel, who is a director of Aygun. It contained the following statements. ``As a direct result of those enquiries it is now the Defendant's case that a substantial proportion of the Claimant's award is based on sums fraudulently invoiced to the Defendant by the Claimant in the period between 15 May 2017 and the end of October 2017.'' The pleading accepted that ``the allegations of fraudulent invoicing set out below were not and could not reasonably have been raised during the adjudication process as much of the relevant information was not available to the Defendant at the time and/or could not have been obtained in the highly restricted timetable imposed on statutory adjudication under the 1996 Act.''

  8. The allegations of fraudulent invoicing were set out in a great number of paragraphs between paragraphs 23 and 43 of the Defence. There is no one particular section of that pleading that sets out ``Particulars of Fraud'' or something similar, which in the usual way is to be expected, if fraud is being alleged. Fraud must be properly particularised. However, upon analysis, the complaints are clear and are that the sums invoiced by Gosvenor for operatives simply could not reflect the amounts due as a result of an ``enormous discrepancy'' in sums invoiced to Aygun, and works actually done or labour actually provided. A valuation assessment had been performed by Aygun that showed that the very maximum of £100,000 of labour costs could and/or should have been invoiced, rather than the figure of over five times that. Indeed the The sums claimed in the adjudication were for the period from 12 November 2016. range of ``proper'' labour costs is said to have been between £20,000 and £100,000. By 15 May 2017 (the date of the Completion Agreement) the works were 97% completed. It was said by Aygun that Gosvenor ``deliberately slowed progress of the works to further increase its opportunity to overcharge Aygun'' and...

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