“On balance therefore I find that the defects observed to the drainage works were more likely than not caused by reasons other than Walker's workmanship and consequently the cost of works applied for in application dated11 May 2007 should have been allowed by the Project Manager. The value allowed in Certificate 3 should be increased by the sum of£13,298.36 (including retention of£1952.40 ) and this amount should have been paid to Walker by14 June 2007 .”
“As you are aware, following the decision of Mr Turner under the contract to which this claim relates our client has been paid its claimed entitlement in full, with the exception of retention of£1,773.65 . Apart from that retention, our client’s claim in the current proceedings has been satisfied. If the court was to agree with Mr Turner’s decision, in particular his view that defects were not caused by our client’s workmanship (see paragraph 29), then there can be no doubt that our client would be entitled to its costs in these proceedings. However, in order to bring the dispute to an end and to avoid further costs being incurred by your client our client is willing to forego its entitlement to costs and the outstanding retention. 1. our client will discontinue its claim. 2. there will be no order as to costs. There is no counterclaim in these proceedings and this offer does not therefore take into account any counterclaim. This offer will remain open for acceptance for 21 days and can be accepted thereafter only if the parties agree costs or the court gives permission. For the avoidance of doubt, if your client accepts this offer then it is agreed that neither party will bring any further proceedings (in court, adjudication or arbitration) in relation to our client’s entitlement to payment as claimed in these proceedings. If this offer is not accepted and the court confirms that our client would have succeeded in its claim (disregarding the payment made pursuant to Mr Turner’s Decision) then our client will claim indemnity costs and interest on costs on the basis that this offer should have been accepted. If there is any aspect of this offer that, in your opinion, renders it ineffective as a Part 36 offer then please would you advise us of your concerns immediately so that they may be addressed.”
“Our client's position on the Adjudicator's decision, as you are well aware, is that it is plainly wrong and was the result of precipitate action taken by your client thereby not allowing the parties sufficient time to fully particularise or evidence the full extent of the defects. Obviously this matter has now been addressed and we will furnish you with the relevant information requested shortly…. If however your client is not prepared to agree liability in respect of all defects, including those relating to drainage, we are instructed to pursue our client’s claim through the Courts.”
“For commercial reasons our client has instructed us that it offers the sum of£30,000 plus VAT in full and final settlement of our client’s claims and your client’s counterclaims in these proceedings. This is not a formal Part 36 offer to pay a sum plus costs because there were various offers made by our client to rectify defects that must be taken into account in deciding any liability of our client for costs as must your client’s unreasonable conduct in relation to investigation and rectification of defects and claims for work that has not been done or was unnecessary. These are not matters for a Costs Judge because they relate to primary liability for costs rather than to detailed assessment and can only properly be taken into account by the trial judge who hears the case and understands the issues. It is our client’s position that this matter should have been resolved by your client’s acceptance of one of our client’s offers and that when your client’s conduct is taken into account any primary liability of our client for costs will be reduced significantly. On this basis our client assesses its total liability, including costs and interest, as substantially less than the amount it is prepared to offer to dispose of these proceedings. In your letter of24 December 2010 you referred to our client’s recent survey. This shows that the manholes have “sunk” substantially since the last survey, a fact that your client may wish to take into account in considering this offer. This offer will remain open for acceptance for 14 days from the date of this letter.”
“22. As to Paragraph 12 [of the Amended Defence (above)], the Claimant maintains its entitlement to payment. Insofar as the defects were not caused by the Defendant’s piling operations they were caused by matters that were the responsibility of the Defendant as detailed above.”
“Because your client has refused to accept previous offers our client has subsequently incurred substantial legal costs. It is not therefore prepared to repeat those offers. However, on a purely commercial basis and to dispose of this matter our client is prepared to make a final offer to pay£10,000 in full and final settlement of the claims and counterclaims in these proceedings including interest and costs. Payment would be within 21 days from acceptance. This offer will remain open for acceptance for 7 days from the date of this letter after which it will lapse.”
“108 Right to refer disputes to adjudication. (1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section. For this purpose “dispute” includes any difference. (2) The contract shall— (a) enable a party to give notice at any time of his intention to refer a dispute to adjudication; (b) provide a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him within 7 days of such notice; (c) require the adjudicator to reach a decision within 28 days of referral or such longer period as is agreed by the parties after the dispute has been referred; (d) allow the adjudicator to extend the period of 28 days by up to 14 days, with the consent of the party by whom the dispute was referred; (e) impose a duty on the adjudicator to act impartially; and (f) enable the adjudicator to take the initiative in ascertaining the facts and the law. (3) The contract shall provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement. The parties may agree to accept the decision of the adjudicator as finally determining the dispute. (4) The contract shall also provide that the adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as adjudicator unless the act or omission is in bad faith, and that any employee or agent of the adjudicator is similarly protected from liability. (5) If the contract does not comply with the requirements of subsections (1) to (4), the adjudication provisions of the Scheme for Construction Contracts apply. (6) For England and Wales, the Scheme may apply the provisions of theArbitration Act 1996 with such adaptations and modifications as appear to the Minister making the scheme to be appropriate. …”
“Notice of Intention to seek Adjudication 1. (1) Any party to a construction contract (the “referring party”) may give written notice (the “notice of adjudication”) of his intention to refer any dispute arising under the contract, to adjudication. (2) The notice of adjudication shall be given to every other party to the contract. (3) The notice of adjudication shall set out briefly— (a) the nature and a brief description of the dispute and of the parties involved, (b) details of where and when the dispute has arisen, (c) the nature of the redress which is sought, and (d) the names and addresses of the parties to the contract (including, where appropriate, the addresses which the parties have specified for the giving of notices). … Powers of the adjudicator 13. The adjudicator may take the initiative in ascertaining the facts and the law necessary to determine the dispute, and shall decide on the procedure to be followed in the adjudication. …. Adjudicator’s decision 20. The adjudicator shall decide the matters in dispute. He may take into account any other matters which the parties to the dispute agree should be within the scope of the adjudication or which are matters under the contract which he considers are necessarily connected with the dispute. In particular, he may— (a) open up, revise and review any decision taken or any certificate given by any person referred to in the contract unless the contract states that the decision or certificate is final and conclusive, (b) decide that any of the parties to the dispute is liable to make a payment under the contract (whether in sterling or some other currency) and, subject to section 111(4) of the Act, when that payment is due and the final date for payment, (c) having regard to any term of the contract relating to the payment of interest decide the circumstances in which, and the rates at which, and the periods for which simple or compound rates of interest shall be paid. 21. In the absence of any directions by the adjudicator relating to the time for performance of his decision, the parties shall be required to comply with any decision of the adjudicator immediately on delivery of the decision to the parties in accordance with this paragraph. 22. If requested by one of the parties to the dispute, the adjudicator shall provide reasons for his decision. Effects of the decision 23. (1) In his decision, the adjudicator may, if he thinks fit, order any of the parties to comply peremptorily with his decision or any part of it. (2) The decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties.”
“110. In the course of the adjudication, the adjudicator awarded the balance claimed by Walker on the invoice application 28061, dated11 May 2007 , at£13,298.36 , which sum included£8,941.16 , which was not certified by PBA’s project manager. Quayside paid the award in full; it now claims the return of this sum. 111. Quayside submits the adjudicator’s decision has no status or value whatsoever in subsequent legal proceedings. The determination, the reasons and the evaluation of parties’ case in adjudication are to be ignored by the court. The slate is wiped clean. The burden of proof lies where the law placed it. The adjudicator’s decision does not affect this burden. In other words, submits Quayside, the court, when considering claims which have been the subject of an adjudication must turn the clock back to the position prior to the adjudication. 112. The argument now becomes entirely technical. In paragraphs 10-12 of the re-re-amended Defence and Counterclaim, Quayside plead, “10. By an adjudicator’s decision, dated2 December 2008 , the Defendant was directed to pay the Claimant£23,440.72 . Such a decision was to be of temporarily binding effect, pending the final determination of the dispute between the parties in the court or arbitration. This sum was duly paid on15 December 2008 . 11. This leaves the sum of£131.64 outstanding on the Claim which the Defendant denies. 12. Further, of the sum claimed by the Claimant and paid by the Defendant pursuant to the adjudicator’s decision,£8,941.16 was not properly due. This sum was not certified by the contract administrator, Peter Brett Associates. This sum, claimed under application 28061 was in respect of repair work to defects in the drains in the LAP, said by the Claimant to have been caused by the Defendant’s piling operation. It is denied that the defects were caused by the Defendant’s piling work, and averred that the Claimant should have rectified these defects at no cost, pursuant to its obligations under the contract. It is therefore denied that the Claimant was entitled to the sum of£8,941.16 , or any part of it, and the Defendant is entitled to, and claims repayment of the said sum.”
“122. If, as I would respectfully agree, the proper analysis of the rule as it applies in policy consideration arising from the court’s power to force litigants to transfer benefits to other litigants with the right of appeal having, as a necessary concomitant, the right to recover payments under a judgment set aside, so as to prevent the appeal process being rendered nugatory as an idle exercise, then the reasoning that there is a restitutionary claim in Jim Ennis falls away. 123. The adjudicator’s decision is a temporarily binding decision. Temporary, in the words of Section 108(3), ‘until the dispute is finally determined by legal proceedings’. The decision is not appealed against, or set aside in the manner which applies in the context of civil proceedings. The court does not rule that the temporary decision should not have been made, and so its consequences require a reversal in the same way a Court of Appeal may rule on a circuit judge’s decision. Or in the same way, that having an appeal on a point of law, a court may set aside an arbitrator’s decision. An appeal to the Court of Appeal from a trial judge who has determined the relevant matters in a different way to that of the adjudicator is not a second appeal. There is no policy imperative to correct the effect of the adjudicator’s decision, always known by the parties to be of a purely temporary binding nature until there is litigation. 124. If this principle does apply, as I consider to be the case, Quayside is, in my judgment, hard-put to find some alternative principle on which to place a restitutionary remedy. There is no single simple principle in English law that any person who has been unjustly enriched at the expense of another may be required to make an appropriate restitution to that other, much as the original authors of Goff & Jones may have wished. The money paid to Quayside was not paid by mistake, neither was it paid without consideration. It was paid under the terms of a statutory scheme designed to ensure, as far as possible, that parties to lengthy construction contracts could have a swift mechanism to determine disputes that might otherwise interfere with the continued smooth operation of the contract, but on a temporary basis only. 125. Mr Townend, conscious perhaps that his approach, namely ‘Walker have no evidence so I must win’, might be viewed by the court with less than fervent favour, did address me on a number of points to indicate that Walker really did not deserve this money. He may be right. The facts of the dispute were not aired before me. Mr Webb’s submission that in the light of the adjudicator’s decision there was some initial evidential threshold that Quayside had to cross before the court could apply the use of burden of proof and find against the contractor because he had no evidence was, it would seem, part of a high risk strategy, and incidentally incorrect. 126. It is not for me to speculate as to why Walker did not adduce the evidence necessary to support its case on the work for which they obtained an adjudicator’s decision, nor indeed why Quayside did not do more than prepare to meet a case that payment was due beyond proof that PBA did not certify it, although Quayside’s approach is the more understandable. Both sides arrived at trial to argue this claim on a purely technical basis. At the end of the day this court may only award money judgments to litigants who establish that they have a good cause of action for the money, and demonstrate that the cause of action in question has been pleaded within the rules. In this respect Quayside fails. In the circumstances, I will not order repayment of the sums awarded in adjudication”
“this claim must fail. There is insufficient evidence to overturn the adjudicator’s decision on this point.” iii) The judge accepted that Walker had failed to adduce any evidence of its entitlement to this sum; see paragraph 126of the judgment. The judge also described Walker’s arguments on this point as being “part of a high risk strategy and incidentally incorrect”; see paragraph 125 of the judgment. Quayside, however, paid this sum over as required by the adjudicator’s decision. In circumstances where the question of Walker’s entitlement to that sum had been validly raised by Quayside in the pleadings, and the judge had found on the evidence against Walker, the judge should have set that sum off against Walker’s claim, as pleaded. Pursuant toCPR 16.6 , where a defendant contends that he is entitled to money from the claimant and relies on this as a defence to the whole or part of the claim, the contention may be included in the defence and set off against the claim, whether or not it is also a Part 20 claim. As such, the right of set-off existed irrespective of the quality of the pleadings in relation to breach of contract and the judge failed to correctly analyse the consequences of his factual findings. iv) By way of analogy and confirmation of the error into which the judge fell, Walker succeeded in recovering the sum of£3,909.14 in respect of adjudicator’s fees. That claim had not been referred to in the Particulars of Claim and was only pleaded by way of set-off in Walker’s Reply. v) The matter was sufficiently pleaded in contract, and sufficiently clear and compliant with the CPR, such that the judge ought not to have found against Quayside on what the judge himself accepted to be “purely technical grounds”; see paragraph 126. The pleadings referred to the particular contract and the express or implied terms thereunder to carry out the work with reasonable skill and care. The counterclaim clearly arose out of the same contract as that relied upon by Walker. Quayside's pleadings referred to the sum not being properly due under the adjudicator’s decision, which itself was predicated upon the contract. The pleadings also referred to the fact that “the Claimant should have rectified these defects at no cost, pursuant to its obligations under the contract”
"Costs to be paid as the contract component schedule unless workmanship defects found during exposure of above height lengths."
“The purpose of this procedure is to enable a quick and interim, but enforceable, award to be made in advance of the final resolution of what are likely to be complex and expensive disputes”
“The purpose of those provisions is not in doubt. They are to provide a speedy method by which disputes under construction contracts can be resolved on a provisional basis. The adjudicator's decision, although not finally determinative, may give rise to an immediate payment obligation. That obligation can be enforced by the courts. But the adjudicator's determination is capable of being reopened in subsequent proceedings. It may be looked upon as a method of providing a summary procedure for the enforcement of payment provisionally due under a construction contract.”
“[55] The dispute was referred to adjudication, and the adjudicator held that, in addition to the extension of time awarded by the architect, the defenders were entitled to a further extension of time of five weeks. The issue which has arisen, and which was briefly debated, is whether the adjudicator's decision to award an extension of time has any effect on the onus of proof in this action. [56] Mr Keen submitted that the adjudicator's decision on extension of time had no effect on the burden of proof in the action. It remained for the defenders to justify the extension of time which they sought. He referred to the marginal note which appears beside clause 41A.8.1 in the Scottish Building Contract With Quantities (April 1998 Revision) which was incorporated into the parties' contract. That note is in the following terms: "The arbitration or court proceedings are not an appeal against the decision of the Adjudicator but are a consideration of the dispute or difference as if no decision had been made by the Adjudicator." Mr Keen submitted that the note correctly stated the law. [57] Mr Cormack, on the other hand, submitted that the effect of the adjudicator's decision was to throw onto the pursuers the burden of showing that the extension of time which the adjudicator awarded was not justified. That, he submitted, was the effect of clause 41A.8.1, which implementedsection 108(3) of the Housing Grants, Construction and Regeneration Act 1996 . The binding quality of the adjudicator's decision continued, not merely until the dispute was made the subject of litigation, but until the court proceedings were finally determined. That must mean that, during the proceedings, the adjudicator's decision remained binding, and had to be rebutted by the party arguing for a different result. [58] In my opinion, Mr Keen's submission is correct. As has been observed in a number of cases, the function of adjudication, as contemplated in the 1996 Act, is to provide a speedy means of reaching a binding interim determination of disputes arising under construction contracts. It goes no further than that. I agree with Mr Keen that the side note to clause 41A.8.1 correctly states the law. It is, in my view, no part of the function of an adjudicator's decision to reverse the onus of proof in any arbitration or litigation to which the parties require to resort to obtain a final determination of the dispute between them. It is reading too much into the reference in clause 41A.8.1 (and section 108(3)) to the adjudicator's decision being binding "until the dispute or difference is finally determined" to construe it as affecting the burden of proof in the arbitration or court proceedings. The burden of proof in any such action lies where the law places it, and is unaffected by the terms of the adjudicator's decision.”
“14.47 A potentially difficult question concerns the status of the adjudicator’s decision in any subsequent litigation or arbitration. Let us take, by way of an example, a claim advanced by a contractor in adjudication that he was entitled to a 20-week extension of time, and assume that this claim was advanced to the satisfaction of the adjudicator, who decided that 20 weeks was a reasonable entitlement, even though there was an absence of detail that, in arbitration or litigation, might have proved fatal to the whole claim. The employer then says that he wishes to challenge the adjudicator’s decision, and there is subsequent litigation between the parties. Is the contractor entitled to rely in his pleaded defence upon the adjudicator’s decision in support of his claim for an extension of time of 20 weeks, contending that it was for the employer to demonstrate that the adjudicator was wrong in reaching this decision? 14.48 It seems that the unequivocal answer to this question is no. Once the decision has been formally challenged by the issue of subsequent litigation or arbitration, the contractor in the example noted above is not entitled to rely on the existing decision as having any status whatsoever, let alone one that changes or displaces the ordinary burden of proof. In City Inn Ltd v Shepherd Construction Ltd, [2002] Scots Law Times 781. Lord MacFadyen stated that it was no part of the function of an adjudicator’s decision to reverse the onus of proof in any arbitration or litigation to which the parties might resort to obtain a final determination of the dispute between them. He said that the burden of proof lay where the law placed it and it was unaffected by the terms of the adjudicator’s decision. Thus, in the example previously noted, it would be for the contractor properly to plead and prove his entitlement to the 20-week extension of time. 14.49 The decision in City Inn was followed in another Scottish case, Citex Professional Services Ltd v Kenmore Developments Ltd. [2004] Scots CS 20 (28.1.04). There, the judge agreed with the reasoning of Lord MacFadyen in City Inn. However, in that case, the dispute was principally concerned with the correct interpretation of the contract, and the judge observed that, as a matter of practicality, he could not conceive that questions as to the burden of proof would play any significant part in the court’s determination of the issue in any event. That is rather different to the situation in City Inn, and in the example postulated above, where the potential difficulties that can arise out of the onus of proof in delay cases are such that a contractor might welcome the opportunity of reversing the normal burden of proof. 14.50 A rather unusual case on this topic, again from Scotland, is Stiell Ltd v Riema Control Systems Ltd. [2001] 3 TCLR 9. There an adjudicator awarded the claiming party less than half the sum sought and that sum was duly paid by the defenders. The pursuers were unhappy with the adjudicator’s decision. Sums in the hands of a third party were arrested under a warrant for arrestment See Paragraph 14.57 and the defenders, having paid the sum ordered by the adjudicator, moved that the arrestment should be recalled. However, this was refused by the court on the ground that the action by the pursuer for the remaining part of the sum allegedly due (namely that part not ordered by the adjudicator) was one that involved no conditional contingency, because the sums claimed were outstanding, and thus the debt existed. The court held that the fact that the issue in the action may, in certain circumstances, have to be determined first by an adjudicator not mean that there was any change in the issue to be determined in the proceedings, and the determination by the adjudicator did not make claims, which were pure, become contingent. It is respectfully suggested that this case turns on the particular operation of Scots law, and that in England and Wales a different result would have occurred: because the adjudicator had found that the claimant was not entitled to part of the sum claimed, the claimant would not have been able to conduct itself on the basis that that part of the sum was indeed due. If the claimant purported to do so, the defendant would have been entitled to a declaration to that effect, or to obtain summary judgment on its defence. There is no question Stiell is an unusual case. It is difficult not to agree with the commentary in the TCLR which suggests that the case might be seen as authority for the curious proposition that an adjudicator’s decision is binding when it is in favour of the claimant, but not otherwise. ”
“The adjudicator was wrong in relation to Walker's claim for payment in respect of the section 38 works. He was wrong to conclude that the evidence did not establish that the remedial drainage works were not necessitated by Walker's original defective construction works. He wrongly ordered Quayside to pay. The adjudicator's decision is only interim. Therefore Quayside is automatically entitled to repayment from Walker, without more, unless Walker establishes its entitlement to payment under the Contract. To do so Walker has to adduce evidence and establish that it was entitled to payment under the Contract because the damage to the drainage works was not caused by its originally defective drainage construction.”
“Decisions on costs after a trial are pre-eminently matters of discretion and evaluation. Further, it is particularly important to bear in mind that a trial judge – especially after a trial such as this one – will have a knowledge of and feel for a case which an appellate court cannot begin to replicate. The ultimate test, of course, for the purposes of an appeal of this kind is whether the decision challenged is wrong. But it is well established that an appellate court may only interfere if the decision on costs is wrong in principle; or if it involves taking into account a matter which should not have been taken into account or failing to take into account a matter which should have been taken into account; or if it is plainly unsustainable.”
“(i) In commercial litigation, where each party has claims and asserts that a balance is owing in its own favour, the party which ends up receiving payment should generally be characterised as the overall winner of the entire action.”
“51. … even a Part 36 offer made here at the first reasonable opportunity would have attracted wholly disproportionate costs consequences. 52. … I agree with the President that the Appellants might appropriately have made a Calderbank type offer which would have rendered this debate unnecessary. Such an offer would have been of very considerable benefit to the Claimant if you are accepted because it would have insulated him from an order such as is now being made to pay the Defendant’s costs, or a substantial part thereof, incurred in defending over a long period the ultimately unsuccessful claim. Had the Defendants at the first reasonable opportunity offered£3,000 together with costs proportionate to that recovery, their claim to recover the entirety of their costs thereafter incurred would, in my view, have been strong, if not unanswerable. However, the failure of the Defendants to make such an offer, which would not have been accepted, does not compel the court to make an order for costs which does not reflect the realities of the litigation.”
“having to pay costs assessed on the basis of the counterclaims that then stood at£169,000 , producing a wholly disproportionate sum of costs”
“46. A not uncommon scenario is that both parties turn out to have been over-optimistic in their Part 36 offers. The claimant recovers more than the defendant has previously offered to pay, but less than the claimant has previously offered to accept. In such a case the claimant should normally be regarded as “the successful party” within rule 44.3 (2). The claimant has been forced to bring proceedings in order to recover the sum awarded. He has done so and his claim has been vindicated to that extent. 47. In that situation the starting point is that the successful party should recover its costs from the other side: see rule 44.3 (2) (a). The next stage is to consider whether any adjustment should be made to reflect issues on which the successful party has lost or other circumstances. An adjustment may be required to reflect the costs referable to a discrete issue which the successful party has lost. An adjustment may also be required to compensate the unsuccessful party for costs which it was caused to incur by reason of unreasonable conduct on the part of the successful party”. 48 . In a personal injury action the fact that the Claimant has won on some issues and lost on other issues along the way is not normally a reason for depriving the Claimant of part of his costs: see Goodwin v Bennett UK Limited[2008] EWCA Civ 165 . For example the claimant may succeed on some of the pleaded particulars of negligence but not others…. 49. Nevertheless in other cases as stated above the fact that the successful party has failed on certain issues may constitute a good reason for modifying the costs order in his favour. This is commonly achieved by awarding the successful party a specified proportion of its costs. In Widlake the facts were so extreme that the successful party was ordered to bear all of its own costs.”