Eurocom Ltd v Siemens Plc [2014] EWHC 3710 (TCC)

Case No HT 14 250[2014] EWHC 3710 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 7 November 2014
Before
THE HON MR JUSTICE RAMSEY
Between
Eurocom LimitedClaimantSiemens PLCDefendantMs Serena Cheng (instructed by Wheelers LLP) for ClaimantMs Fionnuala McCredie QC and Mr Paul Bury (instructed by Mr Suber Akther, Siemens PLC Legal Department) for Defendant
Judgment

Introduction

[1]In these proceedings the Claimant (“Eurocom”) seeks to enforce an adjudicator’s decision against the Defendant (“Siemens”). Siemens resists the application for summary judgment on a number of grounds: that the adjudicator’s appointment was invalid; that the adjudicator decided a dispute different to the one in the notice of adjudication and/or a dispute that had already been determined in a previous adjudication and that the adjudication procedure was unfair in breach of the requirements of natural justice. Siemens contends that, to the extent that the court decides that there should be summary judgment, there should be a stay of enforcement of any judgment in favour of Eurocom. Background[2]Siemens engaged Eurocom under a sub-contract dated 20 April 2011 to install communications systems at Charing Cross and Embankment underground stations (“the Sub-Contract”). Those systems were designed and supplied by Siemens under a Main Contract with London Underground Limited. Disputes arose between Eurocom and Siemens concerning delay to the commencement of the work, variations, prolongation, delay and disruption. On 20 July 2012 Eurocom served a notice of adjudication on Siemens.[3]On 1 August 2012, Siemens sought to terminate Eurocom’s employment under the Sub-Contract for default and, thereafter, alternatively at will. The notice of adjudication served on 20 July 2012 lapsed and Eurocom gave a second notice of adjudication on 8 August 2012. This led to the appointment of Mr Matthew Molloy as adjudicator in respect of this adjudication (“the First Adjudication”). He made a decision on 27 September 2012 in which he determined that, in fact, there was a net amount of £35,283.98 due from Eurocom to Siemens but that this led to no payment at that stage.[4]Over a year later, Eurocom issued a claim document dated 21 October 2013 (“the October Claim”) which was accompanied by 16 files of supporting documents. That document was served by Eurocom’s representative, Knowles Limited (“Knowles”). In the covering letter Knowles notified Siemens that they required the claim to be satisfied by Siemens within 28 days, failing which Eurocom would instigate proceedings.[5]On 18 November 2013 Siemens responded to that claim requesting documents and stating that they would then agree timescales to assess the claim fully. They said that “for the avoidance of doubt, your client’s claim is currently rejected.”[6]On 21 November 2013 Knowles served notice of adjudication on Siemens in relation to the October Claim and gave notice that they would be applying to the RICS for appointment of an adjudicator forthwith. Mr Peter Giles of Knowles submitted on the same day a “Request for nomination of an adjudicator by RICS on a construction contract” on the RICS standard document “Adjudication Explanatory Note (EN2C) and Application Form (DRS2C) December 2010”. On the application form there is a box underneath the following question:
“Are there any Adjudicators who would have a conflict of interest in this case?”
[7]Mr Giles completed the box as follows:
“We would advise that the following should not be appointed: Mr Leslie Dight and Mr. Nigel Dight of Dight and partners; Mr. Siamak Soudagar of Soudagar associates; Rob Tate regarding his fees - giving rise to apparent bias; Peter Barns for dispute of a minimum fees charge and apparent bias; Additionally Keith Rawson, Mark Pontin, J R Smalley, Jamie Williams, Colin Little, Christopher Ennis and Richard Silver, Mathew Molloy who has acted previously or anyone connected with Fenwick Elliott solicitors who have advised the Referring Party.”
[8]In the RICS explanatory note it stated at paragraph 3.3 in relation to conflict of interest:
“If it is known that specific adjudicators would be unable to act because of a conflict of interest, please give details here. Please note: the form will automatically be copied to the responding party. Where time permits, we will allow 24 hours for a response to be made before making a nomination. RICS reserves the right to copy any correspondence to the adjudicator and to the other party.”
[9]In response, also on 21 November 2013, RICS emailed Knowles acknowledging the application for the nomination of an adjudicator and emailed Siemens confirming that the RICS would nominate an adjudicator in respect of Knowles’ application. The RICS did not send Siemens a copy of the application form completed by Knowles.[10]On 22 November 2013 the RICS nominated Mr Anthony Bingham as the adjudicator in this adjudication (“the Second Adjudication”). The referral was served by email and web link on 22 November 2013 and hard copies of the referral with 16 files of attached documents were served on 26 November 2013. This started the 28 day period in which the adjudicator had to reach his decision. The adjudicator directed that Siemens should put in its response by 5 December 2013. Siemens served its response by email on 5 December 2013 and sent supporting documents in hard copy on the morning of 6 December 2013.[11]On 9 December 2013 Knowles requested leave to serve a reply by 13 December 2013 and agreed to give the adjudicator an additional day in which to make his decision, extending the date to 4 January 2014.[12]Knowles emailed its reply on 13 December 2013 by posting it on a weblink. That weblink, as in the case of the referral, seems to have prompted a security message on Siemens’ computers warning against downloading from the link. In the event Siemens were able to access the weblink. Hard copies of the reply were served on 17 December 2013.[13]On 16 December 2013 Siemens sought leave to serve a short rejoinder. The adjudicator responded the same day and gave Siemens leave to serve a rejoinder on 18 December 2013, with Eurocom having the last word on 21 December 2013. The time for the decision was then extended to 14 January 2014.[14]Siemens served its rejoinder on 18 December 2013. On 20 December 2013 Knowles requested an extension to 23 December 2013 for service of its “last word” submission, and agreed to put back the decision date to 16 January 2014. The adjudicator responded, agreeing. Siemens responded saying that the 28 days could only be extended by the referring party unilaterally to 42 days and that any extension beyond the 42 days required the agreement of the responding party. Given the date of Eurocom’s referral being 26 November 2013, Siemens said that Eurocom could only unilaterally extend the date of decision to 10 January 2014 but that Siemens consented to extending the period for the decision to 14 January 2014. Siemens requested that Eurocom’s final submissions should be served as originally directed on 21 December 2013.[15]On 23 December 2013 Eurocom emailed the weblink from which Siemens could download Eurocom’s final submissions, which was given the title “surrejoinder”. Hardcopies of the surrejoinder were served on the morning of 24 December 2013, accompanied by six lever arch files of documents. In the covering letter Knowles said that, to the extent that the surrejounder referred to and exhibited additional material that had not been addressed by Siemens, Eurocom was prepared to agree a reasonable time in which Siemens could make comments.[16]Siemens objected to the documents by letter dated 24 December 2013 in which it said that Siemens was closed for business from that afternoon until 6 January 2014 and that Siemens’ team was not available until that date. Siemens indicated that it would require at least until 20 January 2014 to respond. Correspondence was exchanged on 27 and 31 December 2013. This culminated in an email from the adjudicator on 31 December 2013, confirming that the decision date remained at 14 January 2014 provided that Siemens served its submissions by 5:00pm on Friday 3 January 2014. Siemens emailed its submissions on 3 January 2014.[17]On 5 January 2014 the adjudicator emailed Siemens with a question concerning the extension of time provisions in clauses SC2.5 and 2.3(a). On 6 January 2014 Siemens responded to those questions and also a question raised by the adjudicator in his email of 31 December 2013 concerning the effect of the decision on extension of time in the First Adjudication.[18]On 7 January 2014 Knowles sought leave to send a further short submission in response. On 9 January 2014 the adjudicator posed questions concerning the variations account and, in particular, which of the “incident numbers” dealt with in the First Adjudication were binding. Knowles and Siemens responded to those queries later on 9 January 2014. The adjudicator asked for the time for his decision to be extended from 14 to 21 January 2014. Knowles agreed on the same day and, after initially imposing conditions on such an extension, Siemens also agreed to extend time to 21 January 2014.[19]Siemens also sought permission to serve submissions in response to the surrejoinder. The adjudicator gave permission and Siemens emailed those submission on 10 January 2014. The adjudicator sent further emails asking for comments on various points. On 11 January 2014 the adjudicator requested Eurocom to provide some “signposting” in relation to various variations. Knowles responded to that request on 14 January 2014 in some seven emails.[20]On 16 January 2014 Siemens objected to the responses provided by Knowles which it said included substantial further documentation. Siemens requested that the adjudicator should refuse to admit any new documents at that late stage. On the basis that the parties agreed to extend time to 28 January 2014 the adjudicator gave Siemens until 22 January 2014 to serve a response in relation to Eurocom’s latest submissions. That extension was granted by the parties on 21 January 2014.[21]On 22 January 2014 Siemens sent its response to Eurocom’s submissions. On 23 January 2014 the adjudicator sent a list of questions which he was intending to answer in his decision, asking whether he had missed any issue. On 24 January 2014 the adjudicator raised queries as to the parties’ case on the quantum of each variation for each “incident number”. Those were responded to on 24 and 25 January 2014.[22]On 26 January 2014 the adjudicator sent an email to the parties saying “The position appears to be that the task of valuing Variations is that of Siemens see clause 6.2. Comment welcome.” He followed that with a further email on 27 January 2024 saying “Does the adjudicator take the values advanced by [Eurocom] if [Siemens], in breach, has not valued at all when the adjudicator accepts that they are to be valued? Must press you for a comment since the Award is to be served tomorrow.”[23]On 27 January 2014 Knowles responded to those points, as did Siemens, who said that the adjudicator’s suggestion as to the effect of Clause 6.2 was not part of Eurocom’s case in the adjudication. However, without prejudice to that submission, Siemens answered the query raised by the adjudicator. Knowles then responded to Siemens’ submissions.[24]On 28 January 20204 the adjudicator issued his decision which, as amended under the slip rule on 6 February 2014, decided that Eurocom was entitled to £1,521,313.75, together with £93,029.38 interest, making a total of £1,614,343.13.[25]Meanwhile, on 29 November 2013, Siemens had asked the RICS to provide a copy of all communications from and on behalf of Eurocom including, in particular, the written request dated 21 November 2013 and any completed application form. In response on 2 December 2013, the RICS case officer said:
“I can advise that we are unable to provide copies of any documentation received. I would suggest you contact the referring party directly to obtain copies of the documents you require.”
[26]Siemens responded, disagreeing with that position and asking for the name of the RICS team manager. This was sent to Siemens on 9 December 2013. Siemens then wrote to the RICS on 6 January 2014 and, as a result of that letter, on 7 January 2014 the RICS provided Siemens with Knowles’ covering letter and the application form dated 21 November 2013.[27]On 10 January 2014 Siemens wrote to Knowles concerning the application form, asking for an explanation, amongst other things, of the conflicts of interest which were alleged against the various individuals identified in the conflict of interest box on the form. No response was received from Knowles and on 14 February 2014 Siemens wrote to both Knowles and the RICS. Attached to those letters, Siemens included a table setting out responses from the individuals identified stating whether or not they had a conflict of interest. No response was received from Knowles to this letter.[28]On 27 May 2014 Wheelers LLP, who were instructed on behalf of Eurocom, wrote to Siemens seeking payment of the sums awarded by the adjudicator, indicating that they would issue enforcement proceedings if the money was not received.[29]In reply, Siemens said that, if enforcement proceedings were brought, they would be resisted and one of the issues would be the nomination process for the appointment of the adjudicator. They attached the letters to Knowles written on 10 January 2014 and 14 February 2014.[30]On 25 July 2014 Eurocom commenced these proceedings against Siemens and issued an application for summary judgment supported by the witness statement of James Palmer; a partner at Wheelers LLP.[31]On 28 July 2014 Mr Justice Edwards-Stuart gave direction leading to a hearing on 29 August 2014. At paragraph 3 of that Order he gave the following direction:
“Within seven days of service of this order the Claimant is to disclose copies of all communications relating to the appointment of the adjudicator and, in relation to any potential adjudicator whom it claimed to have a conflict of interest, within ten days of service of this order it is to state briefly what that conflict of interest was.”
[32]On 1 August 2014 those directions were amended so as to lead to a hearing on 12 September 2014.[33]In response to that direction, Mr. Giles of Knowles put in a witness statement dated 6 August 2014.[34]In response to Eurocom’s application, Siemens served three witness statements dated 29 August 2014, from Mr Suber Akther, a solicitor at Siemens who had been dealing with the adjudication, from Mr. Jason Stephens of EC Harris LLP who had been involved in both the First and Second Adjudications and from Mr. Benjamin Burley of EC Harris LLP, who carried out delay analysis in the two adjudications.[35]In reply Eurocom served four further witness statements dated 5 September 2014: a second witness statement from Mr. Giles and witness statements from Mr. Paul Reynolds of Haslers, Chartered Accountants and Business Advisors who act as accountants and auditors for Eurocom, Mr. Andrew Rainsberry of Knowles and Mr. Niall Tiernan of Knowles, a Chartered Quantity Surveyor and Solicitor, who carried out a quantum role in the Second Adjudication.[36]There were further witness statements: a third Witness statement of Mr Akther dated 8 September 2014 and a second witness statement of Mr. Rainsberry dated 9 September 2014. The Issues on this Application[37]The issues raised on this application to enforce the adjudicator’s decision in the Second Adjudication by way of summary judgment can be summarised as follows:(1) Whether the appointment of the adjudicator in the Second Adjudication was invalid because of the information provided by Mr Giles of Knowles to the RICS in making the application for the appointment of an adjudicator and/or by the action of the RICS in failing to raise conflicts of interest with Siemens in accordance with the procedure in their explanatory notes.(2) Whether the decision in the Second Adjudication sought to adjudicate again on the same or substantially the same matters as had been referred to and/or decided in the First Adjudication.(3) Whether the adjudicator in the Second Adjudication adopted a procedure which contravened the rules of natural justice.(4) Whether there should be a stay of enforcement of any sums awarded by way of summary judgment.[38]On 15 September 2014 I notified the parties of my decision to dismiss Eurocom’s application for summary judgment. I now set out my reasons for that decision. Appointment of the Adjudicator[39]Ms Fionnuala McCredie QC, who appears with Mr. Paul Bury on behalf of Siemens, submits that the application form sent to the RICS seeking the appointment of an adjudicator misrepresented to the RICS that a number of individuals had a conflict of interest. She refers to the application form and says that there was a plain representation that each of the individuals named in answer to the question: “Are there any Adjudicators who would have a conflict of interest in this case?” had a conflict of interest in relation to this case.[40]She refers to the responses from each of the individuals indicating that they have no conflict of interest and to the evidence of Mr Giles and, in particular, his evidence at paragraph 9 of his first witness statement where he said:
“On the same page of the application form there is a box headed “Are there any adjudicators who would have a conflict of interest in this case?”
. I largely use this box as a means of stating to which adjudicators, based on past experience, I would not send a referral document: in effect a pre-emptive rejection list. This saves time and money that would otherwise be expended in allowing notices of adjudication to lapse and reapplying for alternative adjudicators. In the instances where there is a conflict I obviously say why.”[41]Ms McCredie submits that on the basis of this evidence from Mr Giles, he accepts that he did not properly answer the question but merely referred to people without any conflicts of interest who he did not want to be appointed. In relation to two people she refers to Mr. Giles’ explanation in paragraph 10 of his first witness statement where he sets out why he considers they would have a conflict of interest. She submits that those matters would not, in fact, even amount to such a conflict in those cases.[42]In particular, she refers to the inclusion in the list of the adjudicator in the First Adjudication, Mr. Molloy, and the conflict of interest being said to be based on the fact that he had“acted previously”. She says that this would have had the result that, despite the RICS policy set out in the explanatory notes of nominating the same adjudicator in serial adjudications, Mr. Molloy would not be appointed. She then refers to paragraph 11 of Mr Giles’ first witness statement where he says, in relation to Mr. Molloy:
“With regard to Mr. Matthew Malloy who had adjudicated on a previous dispute between the parties, I considered that he had been inundated with jurisdictional challenges during that adjudication and I thought a fresh mind was appropriate.”
[43]She submits that this is an unsustainable basis for Mr Giles to assert that there was a conflict of interest and notes that this reasoning was not put forward at the time.[44]She also refers to paragraph 13 of Mr. Giles’ first witness statement where he concludes, after dealing with what he accepts is an incorrect reference to Fenwick Elliot Solicitors, with the following statement:
“In respect of all other persons listed in the box headed “Are there any adjudicators who would have a conflict of interest in this case?” these do not have a conflict as such. They are, as I described earlier in this statement,”
[45]Ms McCredie submits that on the basis of that evidence there was a clear misrepresentation by Mr. Giles. She submits that a false statement was made deliberately and/or recklessly by Mr. Giles and that a nomination based upon such a misrepresentation is invalid and a nullity so as to go to the foundation of the adjudicator’s jurisdiction. She refers to the decision of the Court of Appeal in Rous v Mitchell [1991] 1 WLR 469 in which a notice to terminate an agricultural tenancy had contained a fraudulent statement and it was held that this rendered the notice a nullity and made it invalid.[46]Alternatively, Ms McCredie referred to the decision of Akenhead J in Makers UK Limited v The Mayor and Burgesses of the London Borough of Camden [2008] EWHC 1836 (TCC) in which Camden had argued that there was an implied term of the construction contract that:
“neither party may seek to influence unilaterally the nominator’s determination regarding the identity of an adjudicator, by making unilateral representations to the nominator concerned whom he should nominate or otherwise”
. In that case, for the reasons set out at [29], Akenhead J held that such a term could not and should not be implied but later in [29] he made the following observation:
“(7) It might be possible to imply a term by which the party seeking a nomination should not suborn the system of nomination. Thus, (wholly irrelevant here) bribing the nominator would by one route or another invalidate the nomination or the nomination of someone one knew was actually biased in favour of the requesting party could be undermined. In the latter example, the adjudicator’s decision would in any event be unenforceable on non jurisdictional grounds. However, that term is not alleged in this case and the facts do not begin to support a breach of such a term. … I am unconvinced that, even if the Implied Terms applied, a breach of it would, in the absence of impropriety, undermine or invalidate the appointment of the adjudicator. The appointment would still be valid having resulted from an application for nomination and the nominator, acting in good faith, would formally have nominated a person properly. The remedy would be damages for breach of the Implied Term, which could include the wasted costs of the adjudication.”
[47]On this basis Ms McCredie submits, in the alternative, that it was an implied term of the Sub-Contract that the party seeking a nomination should not subvert the integrity of the nomination process by knowingly or recklessly making false representations to the adjudicator nominating body or so as improperly to limit or fetter the ability of the nominating body to chose an adjudicator. She submits that the term meets the test for an implied term, as formulated by Lord Hoffmann in Attorney General of Belize v Belize Telecom [2009] UK PC 10.[48]She submits that in this case those representing Eurocom knowingly or recklessly misrepresented that a number of adjudicators had a conflict of interest and that this was improper and had the effect of subverting the integrity of the nomination process and/or limiting or fettering the nomination process. She submits that this was a breach of the implied term. She referred to statements within the explanatory notes indicating that the RCIS would not appoint somebody with a conflict of interest and says that this emphasizes the importance attached by the RICS to the answers given in the application form.[49]In the further alternative, she submitted that there was a breach of natural justice in the nomination process because the RICS had a policy that, if one party claimed that certain adjudicators had a conflict of interest, the application form would be sent to the responding party, Siemens, in this case. She says that, as set out in the evidence, the RICS did not follow this course and therefore denied Siemens the opportunity to make representations to the RICS in response to Eurocom’s misrepresentations. She says that Siemens was not provided with a copy of the application form, either by Knowles or by the RICS. She submits that, had Siemens been given the opportunity to make such representations, it would have been able to clarify the position in relation to conflicts of interest and in particular could have clarified Mr Molloy’s position. She submits that the breach of natural justice was material since, in accordance with the normal policy of the RICS, it would have been likely to have led to Mr Molloy’s appointment; particularly in a case where one of the main issues was the overlap between the First and Second Adjudications.[50]Ms Serena Cheng, who appeared on behalf of Eurocom, submits that Siemens are reading too much into the box on the application form completed by Mr Giles. She refers to the initial words inserted by Mr Giles in the box “we would advise that the following should not be appointed”. She submits that this did not, in terms, say that each one of those individual had a conflict of interest. She says that all that Mr Giles did was to complete a box advising the RICS that certain adjudicators should not be appointed. She says that, as Mr Giles said in his witness statement, he had done this in order to avoid the need for a party dissatisfied with a nominated adjudicator to have to give a further notice of adjudication as it was entitled to do following the decision of the Court of Appeal in Lanes Group PLC v Galliford Try Infrastructure Limited [2011] EWCA Civ 1617.[51]She submits that the fact that the RICS’ nomination was made following representations from Eurocom does not affect the jurisdiction of the adjudicator because there is no implied term preventing a party from making such representations and, even if there was, a breach of any such terms would not invalidate a subsequent nomination. She relies on the decision of Akenhead, J in Makers v Camden.[52]Further Ms Cheng submits that the circumstances do not give rise to a breach of natural justice and that Siemens wrongly seeks to impose natural justice requirements, which apply in the context of the adjudication, to the nomination of an adjudicator by an adjudicator nominating body. She relies on the speech of Lord Bridge of Harwich in Lloyd v McMahon [1987] AC 625 at 702 where he said as follows:
“My Lords, the so-called rules of natural justice are not engraved on tablets of stone. To use the phrase which better expresses the underlying concept, what the requirements of fairness demand when anybody domestic, administrative or judicial has to make a decision which would affect the rights of individuals depends on the character of the decision-making body, the kind of decisions it has to make and the statutory or other framework in which it operates. In particular it is well-established that when a statute has conferred on any body the power to make decisions affecting individuals, the court will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness.”
[53]She says that an adjudicator nominating body is defined for in paragraph 2(3) of Part I of the Scheme for Construction Contracts (“the Scheme”) as a body which holds itself out publicly as a body which will select an adjudicator when requested to do so. She submits that such a body does not make a substantive decision affecting the right and liabilities of the parties. She says that the statutory and judicial framework for the Scheme provides, under paragraph 4 of Part I of the Scheme, for an adjudicator to “declare any interest, financial or otherwise in any matter relating to the dispute” and, under paragraph 12 of Part I of the Scheme, to act impartially. She further submits that the Scheme requires an adjudicator nominating body to make its decision rapidly so as to enable a referring party to refer the dispute to the nominated adjudicator within the overall period of 7 days from the notice of adjudication as provided for in paragraph 7(1) of Part I of the Scheme.[54]She submits that, in relation to an adjudicator nominating body, the character of the decision making body, the kind of decision it has to make, the statutory and judicial framework in which it operates and the limited time for the adjudicator nominating body to act, all mean that in those circumstances the requirements of fairness do not require a body such as the RICS to copy the form to the responding party before making a nomination or to invite, await or consider its representations.[55]In any event, she submits that Siemens was given the opportunity to make representations in relation to the nomination of the adjudicator because Eurocom made it clear in its notice of adjudication that it would be applying to the RICS for the appointment of an adjudicator. She says that Siemens could therefore have made its own representations.[56]Ms Cheng submits that the serious charges of professional misconduct levelled at Mr Giles of Knowles, that he deliberately or recklessly subverted the nomination process and misled the RICS should be rejected. She submits that Siemens has no real prospect of successfully establishing to the contrary. She submits that there is no evidence to show what effect the answers on the application form had and therefore the case fails on causation. She points out that there is no complaint as to the adjudicator actually appointed by the RICS. She submits that no representation was made that Mr. Molloy had a conflict of interest; merely that he should not be appointed because he had “acted previously” and that this could only be understood as a reference to the fact that Mr Molloy had previously acted as adjudicator. Fraudulent misrepresentation[57]I now turn to consider, first, the submissions on fraudulent misrepresentation. There are essentially three issues. First, whether a false statement was made; secondly, whether any false statement was made fraudulently or recklessly and thirdly, the effect of any such statement. Was there a false statement?[58]Despite the very able submissions of Ms Cheng I do not consider that it is possible to read the answer in the box on the application form in any other way than as an answer to the questions posed above the box:
“Are there any Adjudicators who would have a conflict of interest in this case?”
When it was then said “we would advise the following should not be appointed”, I do not consider that the answer can be read other than as an answer to that question. Rather, the plain and ordinary meaning of those words were that Mr Giles was advising that the people named should not be appointed because they would have a conflict of interest in this case. It was a clear statement that the people named would have a conflict of interest and could not be appointed as an adjudicator.[59]This is supported by the reference in respect of two of the people named to “apparent bias”. Equally there was a reference to solicitors, albeit the wrong firm of solicitors, “who have advised the Referring party”. Further, the reference to Mr Molloy “who has acted previously” would be taken to mean that he had acted previously in a way which would give rise to a conflict of interest.[60]There is a reference in the explanatory notes to the policy of the RICS when considering an appropriate nomination. After referring to conflict of interest as one of the factors they refer to another factor:
“Whether this is one of a series of adjudications on the same contract. Normal policy is to nominate the same adjudicator because of potential savings in costs and time. Each application is treated on an individual basis and there may be circumstances where it may not be appropriate to nominate the same adjudicator. These could include: the availability of the adjudicator; court action by one of the parties relating to the adjudicator’s previous decision; different types of dispute; other reasons which RICS consider makes a nomination inappropriate. RICS retains a discretion which will always be exercised fairly;”
[61]Mr Giles said in paragraph 11 of his first witness statement that the reason he included Mr Molloy was not that he considered that there was any conflict of interest but that he considered that Mr Molloy had been inundated with jurisdictional challenges during the First Adjudication and he, Mr Giles, thought that a fresh mind was appropriate. In fact, at paragraphs 13 to 15 of his decision in the First Adjudication Mr Molloy dealt with jurisdictional challenges raised by Siemens early in that adjudication and rejected them, deciding in favour of Eurocom. Such challenges are common in adjudication and there does not seem any justification either in saying that Mr Molloy was inundated with such challenges or in there being a need for a fresh mind on that basis. There was clearly no conflict of interest.[62]In addition, as can be seen from the responses received from those who were asked about potential conflict, they all indicated that there was no conflict. Indeed this is admitted by Mr Giles in paragraph 13 of his first witness statement. On the basis of the evidence it is plain that in answer to the question “are there any Adjudicators who would have a conflict of interest in this case?” Mr Giles answered it falsely both in relation to Mr Molloy and in relation to a number of other potential candidates. Was the false statement made deliberately or recklessly?[63]On an application such as this for summary judgment based upon evidence in witness statements without cross examination it is not appropriate for me to come to a concluded view as to whether Mr Giles acted fraudulently in making that false statement. However the evidence gives rise to a very strong prima facie case that Mr Giles deliberately or recklessly answered the question as to whether there were conflicts of interest so as to exclude adjudicators who he did not want to be appointed. Indeed he says in paragraph 9 of his first witness statement that that was the reason he mentioned those people in that box. It is very difficult to understand how Mr Giles, as a non-practicing barrister, could otherwise complete that box in that way.[64]Again this is supported by Mr Giles’ explanation of the reason he included Mr Molloy within that box. I find it very difficult to accept his explanation as to a fresh mind which, as I have said, is not justified by the facts. It seems much more likely that the reason for including Mr Molloy was that Eurocom did not want Mr Molloy to be appointed because of the result of the First Adjudication being unfavourable to Eurocom in deciding that Eurocom owed money to Siemens.[65]It follows that there is a very strong prima facie case that Mr Giles deliberately or recklessly answered the question “Are there any Adjudicators who would have a conflict in this case?” falsely and that therefore he made a fraudulent representation to the RICS as the adjudicator nominating body. The effect of the false statement[66]On that basis what effect would such a fraudulent misrepresentation have on the nominating process leading to the appointment of the adjudicator in the Second Adjudication?[67]As a matter of general principle where a party makes a material fraudulent representation to an independent body which is exercising a discretion, I consider that the exercise of that discretion would be invalidated. The case of Rous v Mitchell is an illustration of that principle. This general principle is set out in the well-known passage from the judgment of Denning LJ in Lazarus Estates Limited v Beasley [1956] 1 QB 702 at 712 where he said:
“No court in this land will allow a person to keep an advantage which he obtained by fraud. No judgment of a court, no order of a minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever….”
[68]In Rous v Mitchell, after citing that passage from Lazarus Estates, Nourse LJ said this at 496D:
“The principle is that fraud cancels the advantage which would otherwise have been obtained from the transaction by avoiding the transaction altogether.”
[69]In Rous v Mitchell a notice had been given terminating an agricultural tenancy and the notice stated that the reason for recovering possession was a breach of the covenant against assigning or letting. In an action for possession the tenant relied on the fact that written permission to sub-let had been given by the landlord. The judge at first instance found that the landlord had acted recklessly and that this fraud vitiated the notice. One of the arguments was that the fraudulent statement in the notice did not deceive the tenant. Glidewell LJ at 485B-E approved the following passage from the judge’s judgment: “Mr. Pryor, although accepting the principle in the speech of Lord Herschell which I have just cited, submitted that before fraud could be found the court must also hold that the dishonest and false representation was calculated to deceive and did deceive the recipient. That may be necessary in actions in which a party seeks to recover damages based on fraudulent statements, but in a case where the party committing the fraud seeks to rely upon his fraudulent conduct a court will not give effect to that conduct whether or not it deceives the recipient. In practice all fraudulent statements and notices to quit under Schedule 3 are calculated to deceive in that they are assertions that the landlord honestly believes that he has a good ground of complaint, honestly believes the facts stated as reasons for the notice and honestly believes that he has a reasonable case to terminate the tenancy because his interest has been materially prejudiced. But the fact that the tenant is not deceived is irrelevant. The notice if fraudulent is a nullity and the court will refuse to give it effect."[70]Nourse LJ said this at 497A-B:
“On this analysis I am unable to see any material distinction between the declaration which was considered in Lazarus Estates Ltd. v. Beasley and a notice to quit which is given under section 26(2) of the Act of 1986. If in such a notice the landlord fraudulently states that the tenant has committed breaches of covenant which he has not committed, the notice is invalid. It is as if it has not been given and there has been nothing which can bring the tenancy to an end. The tenant's state of mind on receiving the notice is irrelevant. It does not matter whether he is deceived by it or not.”
[71]The principle derived from Lazarus Estates was recently considered by Lord Sumption JSC in his judgment in the case of Prest v Petrodel Resources Ltd [2013] 2 AC 415 at [18] where, after citing the well-known passage from Lazarus Estates, he said:
“The principle is mainly familiar in the context of contracts and other consensual arrangements, in which the effect of fraud is to vitiate consent so that the transaction becomes voidable ab initio. But it has been applied altogether more generally, in cases which can be rationalised only on grounds of public policy, for example to justify setting aside a public act such as a judgment, which is in no sense consensual, a jurisdiction which has existed since at least 1775: Duchess of Kingston's Case (1776) 2 Smith's LC (13th ed) 644, 646, 651. Or to abrogate a right derived from a legal status, such as marriage: R v Secretary of State for the Home Department, Ex p Puttick [1981] QB 767. Or to disapply a statutory time bar which on the face of the statute applies: Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government [2011] 2 AC 304. These decisions (and there are others) illustrate a broader principle governing cases in which the benefit of some apparently absolute legal principle has been obtained by dishonesty.”
[72]I consider that the authorities make it clear that the principle applies in any case where a party is seeking an advantage by making the fraudulent representation. Where a party applies to an adjudicator nominating body and makes a fraudulent representation then the fraud cancels the advantage which would otherwise have been obtained from the transaction by voiding the transaction altogether. In my judgment, applying the principles set out in Rous v Mitchell, where there has been a material fraudulent misrepresentation in the process of applying to the adjudication nominating body, the application for a nomination of an adjudicator is invalid and it is as if no application had been made. The state of mind of the RICS on receiving the application is irrelevant and it does not matter whether RICS was deceived or not.[73]Even if it were necessary to show that the RICS had been deceived by the false statement then the evidence indicates that normally an adjudicator who has been appointed in a previous adjudication would be appointed as the adjudicator in a subsequent adjudication. Mr Molloy was not appointed. His name appeared within the box as being a person with a conflict. Equally where as here a party put forward some names and sought to exclude other names on the false basis that there was a conflict of interest then the likely outcome is that the people with conflicts were wrongly eliminated from the pool of potential adjudicators so that the pool of possible adjudicators was improperly limited. It might be that the adjudicator appointed would have been appointed in any event but the fact that he was appointed after an application which improperly limited the pool of adjudicators is, in my judgment, sufficient in itself to provide sufficient causation between the fraudulent representation and the process of appointment, certainly to defeat an application for summary judgment.[74]The false statement was material. It was made in the context of a process by which an adjudicator had to be nominated by an impartial adjudicator nominating body and, on the basis set out above, was made improperly to eliminate candidates on the basis they had a conflict of interest when they had none.[75]On that basis I conclude that the fraudulent misrepresentation would invalidate the process of appointment and make the appointment a nullity so that the adjudicator would not have jurisdiction. Breach of an implied term[76]I now turn to consider this alternative way in which Siemens puts its case.[77]I gratefully adopt the observations of Akenhead J in Makers v Camden at [29] which I have cited above. I consider that, as a general principle, parties enter into contracts on the basis that the other party to the contract will act honestly. Whether applying the five tests of Lord Simon of Glaisdale in BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 or the reformulated test of Lord Hoffmann in Attorney General of Belize v Belize Telecomat [21], I consider that a party applying for a nomination of an adjudicator by the President or Vice President of the RICS under Clause 24.2 of the Sub-Contract should not act dishonestly.[78]The suggestion in Makers v Camden at [29(7)] that there might be an implied term that a party should not suborn the system of nomination or, as Ms McCredie puts it, should not subvert the system of nomination by making a fraudulent misrepresentation, are both examples of the operation of the implied term that the parties should not act dishonestly. It follows that, in this case, for the reasons set out above there would be a breach of that implied term. I consider that, in so far as necessary, there is a sufficient causal link between any fraudulent misrepresentation and the process of nomination leading to nomination of the adjudicator, again for the reasons set out above.[79]If a party, in breach of contract, fails to follow the correct adjudication process in a way which goes to the heart of the appointment then the adjudicator does not have jurisdiction: see IDE Contracting Ltd v RG Carter [2004] BLR 172 and Hart Investments Ltd v Fidler [2007] BLR 303. I consider that this gives an alternative basis for the appointment being invalid. Breach of natural justice by the RICS[80]In this case, although the RICS explanatory notes indicate that they will send a copy of any application which refers to conflicts of interest to the responding party, they did not do so. Whilst it is evidently good practice, as the explanatory notes state, for the RICS to copy the application form to the other party where there are alleged conflicts of interest, I do not consider that the process of nomination requires that as a matter of procedural fairness under the principles of natural justice.[81]I consider Ms Cheng to be right that the role of an adjudicator nominating body when they are approached unilaterally is limited to a proper exercise of their discretion to make the nomination. Giventhe character of an adjudicator nominating body, the fact that it appoints persons to act as adjudicators rather than making substantive decisions and the statutory framework of s.108 of the Housing Grants, Construction and Regeneration Act 1996, as amended, and the Scheme under which it operates, including the short period for a nomination, I do not consider that such a body has an obligation to consult with the other party or seek to achieve a balance between the parties which may be required by procedural fairness. This view is also supported by the conclusion of Akenhead J in Makers v Camden. Clearly, if one party acts dishonestly so as to affect the exercise of the discretion then, as I have set out above, that is a matter which might invalidate the exercise of their discretion but that is a different consideration.[82]In this case, had the application been sent to Siemens, it is likely that they might have been able to correct the false representation which had been made on behalf of Eurocom. However given that there was no obligation on the RICS, as a matter of procedural fairness, to provide the application form to Siemens, whatever their practice might otherwise have been, I do not consider that there is anything in the process otherwise followed by the RICS to invalidate the nomination of the adjudicator. Conclusion on the jurisdiction of the adjudicator[83]For the reasons set out above I have come to the conclusion that Siemens have established a sufficiently strong case that the nomination of the adjudicator in this case was invalid and therefore the adjudicator was not properly appointed because there was a fraudulent misrepresentation by those acting on behalf of Eurocom in making the application for the appointment of an adjudicator. On that basis the adjudicator would not have jurisdiction.[84]On that basis I consider that Siemens have established real prospects of successfully defending the claim made by Eurocom to enforce the terms of the adjudicator’s decision in the Second Adjudication.[85]Whilst that is sufficient to dispose of Eurocom’s application for summary judgment, having heard argument on the other grounds, it is convenient to set out, briefly, my conclusions in case they should be of relevance to the parties in any future adjudication proceedings. Overlap between first and second adjudication[86]Ms McCredie submits that the claims in the notice of adjudication and the referral notice in the Second Adjudication and, subsequently, the decision, contained a substantial overlap with the claims made and decided in the First Adjudication. She says that a significant part of Eurocom’s claim in the Second Adjudication related to the value of the work and that the value of the work as at the date of termination on 1 August 2012 was decided in the First Adjudication and no further work has been done since that date to give rise to a further claim.[87]She submits that most of Eurocom’s claims in the Second Adjudication are not brought on the basis of a new analysis or new material. She says that Eurocom has sought to argue that the Second Adjudication differs in nature from the First Adjudication on the basis that it relates either to a new claim for damages or that it is a final account claim as distinct from an interim account claim decided by the adjudicator in the First Adjudication. She submits that neither argument permits the opening up of issues which have been decided in the First Adjudication. In addition, to the extent that Eurocom contends that the adjudicator in the First Adjudication was wrong to decide on certain claims, she submits that Eurocom are still bound by the decision in the First Adjudication, unless and until it is successfully challenged in court.[88]Ms. Cheng submits that the dispute referred to and decided by the adjudicator in the First Adjudication arose out of Eurocom’s applications for payment prior to determination which Siemens had valued in a negative sum. She submits that the First Adjudication was limited to the determination of Eurocom’s entitlement to an extension of time for Siemens’s delay and disruption to Eurocom’s works, to payment under the Sub-Contract for five heads of financial claim and payment for variations for which payment had been claimed and rejected by the date of the First Adjudication. She says that the dispute referred to and decided by the adjudicator in the Second Adjudication concerned the October Claim, rejected by Siemens in November 2013. She submits that this claim was for damages for Siemens’ breach of contract in delaying and disrupting Eurocom’s work, damages for Siemens’ repudiatory breach of contract in terminating the Sub-Contract and payment for the variations that remained “to be advised” at the date of the First Adjudication.[89]Ms Cheng submits that, even if the two decisions did overlap, the areas of overlap should be and could be readily severed. In any event she says that on Siemens’ case £255,143.00 of the sums awarded in the decision in the Second Adjudication relate to new claims and that a further £196,736 relates to claims made in relation to new periods of time.[90]The principles to be applied in deciding whether an adjudicator is precluded from deciding a claim because of the effect of an earlier adjudication decision have been considered in a number of cases. In the Court of Appeal in Quietfield Limited v Vascroft Construction Limited [2006] EWCA Civ 1737 an adjudicator had dealt with extensions of time which had been applied for in two letters from the contractor. In a later adjudication the employer claimed liquidated damages for delay and the contractor served a document, Appendix C, which, as the judge held, identified a number of causes of delay which did not feature in the original two letters. He found that the claim for an extension of time in Appendix C was different from the claims for extension of time which were advanced, considered and rejected in the earlier adjudication. In the Court of Appeal, May LJ said this in relation to Appendix C at [25]:
“Appendix C has a fairly sophisticated and new critical path analysis. It could well be that grounds for extension of time, which were not established individually in the first adjudication, could nevertheless legitimately feature in Appendix C, in conjunction with other grounds not advance in the first adjudication, as being on a critical path affected by those other causes of delay. In principle, such a composite claim might legitimately be seen as outside the dispute which the first adjudicator determined.”
[91]In subsequent cases the court has had to consider the degree to which a claim in a subsequent adjudication is the same or substantially the same as the claim in the previous adjudication, which in each case is a question of fact and degree: see HG Construction Limited v Ashwell Homes (East Anglia) Limited [2007] EWHC 144 (TCC); Benfield Construction Limited v Trudson (Hatton) Limited [2008] EWHC 2333 (TCC); the Scottish case of Barr Limited v Klin Investment UK Limited [2009] CSOH 104 and Redwing Construction Limited v Charles Wishart [2010] EWHC 3366 (TCC).[92]It is necessary to consider the claims made and decided in the First Adjudication and the claims made and decided in the Second Adjudication and the extent to which they were dealt with and overlap. It is convenient to deal with those under each head. Compensation Events/ Variations[93]In the First Adjudication, as set out in the decision at paragraph 19, Eurocom claimed at Item 1 “Assessed Compensation Events not yet implemented £203,011.02” and at Item 5 “Un-assessed Compensation Events £497,034.56”.[94]In the First Adjudication there was a spreadsheet dated 23 March 2012 which contained claims by Eurocom for incidents 1 to 214 in the total sum of £644,505.24. It is included in the exhibits to Mr Tiernan’s witness statement. In the First Adjudication Eurocom then deducted from that sum an amount for compensation events which had been included in an “Instruction of a Compensation Event Number 11” (“ICE 11”), in the gross sum of £441,494.22, to give the sum claimed for Item 1.[95]Un-assessed compensation events were dealt with by the adjudicator in the First Adjudication in paragraphs 31 to 34 of his decision. That shows that the claim was based on quotations for which no formal instructions had been issued, totalling £447,034.56 to which Eurocom had added “say” £50,000 for unassessed variations, to give the total sum claimed.[96]In the decision in the First Adjudication, the adjudicator allowed under Item 1 £14,647.03 in relation to incidents 201, 204 and 213 but otherwise did not allow any sum for those compensation events/variations. In relation to Item 5 the adjudicator accepted Eurocom’s claim for QCE 37, 46, 47, 48, 50 and 52 for which he allowed a total sum of £46,482.14.[97]On this basis Ms McCredie submits that Eurocom’s claim for variations in the Second Adjudication has already been the subject of a decision in the First Adjudication because all of the incidents/variations have already been the subject of a decision by the adjudicator in the First Adjudication, including a decision on the claim for those items where the schedule included references to “TBA” and did not include a specific value.[98]Ms Cheng submits that the items which have “tba” next to them were not responded to by Siemens and she refers to Mr. Tiernan’s evidence that there were 195 compensation events where the claim was yet to be advised, “tba”. She therefore says that they were not dealt with in the First Adjudication.[99]In the Second Adjudication the claim was claim number 6, variations, where £427,366 was claimed and the adjudicator held that £329,589 was due.[100]In reaching that conclusion the adjudicator in the Second Adjudication came to the conclusion that:
“There is a real likelihood that the Decisions in Adjudication No. 1 are about sums due, merely on an interim account basis: an interim account is just that… interim. It does not bind or shut out the Final Respondent Account. It is nevertheless open to the parties to elect to adopt decisions of an adjudicator arising out of an interim account Adjudication as appears to be the case here in the list provided by Eurocom. The adjudicator (here) in Adjudication No.2 does not accept that any other Decisions in Adjudication No.1 are binding.”
[101]This led to the adjudicator assessing values for incident numbers “Incident nos. 15, 24, 34, 74, 102, 156, 198, 204, 205, 211, 257, 260, 261, 262, 263, 264, & 265.”[102]Each of those variations was listed in the schedule provided to the adjudicator in the First Adjudication and had against them, either the figure zero or “tba” or a blank. However it is clear that the adjudicator in the First Adjudication dealt with incident 211 and incident 204: see paragraphs 22 and 23 of the decision in the First Adjudication. Equally the last seven items were included in the decision and in paragraph 33 of his decision the adjudicator held that Eurocom’s claims for unassessed compensation events should fail.[103]Under the Sub-Contract there was no provision for interim payments and a final payment, there is only an obligation for Siemens to make payment “within 30 days following receipt of the Sub-Contractor’s valid application.” Eurocom commenced the First Adjudication after the Sub-Contract had been terminated and therefore there was no difference in the work which had been carried out at the stage when the First Adjudication and Second Adjudication took place. The First Adjudication and the Second Adjudication dealt with the same variation claims. I therefore consider that one adjudication did not deal with an interim application and the other a final application. A party who has sought and obtained an adjudication decision dealing with the value of all variations cannot then seek to have another adjudicator determine claims for the same variations by way of a “second bite of the cherry”. Eurocom sought to have the value of all variations dealt with in the First Adjudication, adding the figure of £50,000 for unassessed variations. Siemens had carried out a valuation of the variations within ICE 11.[104]On the evidence before me I consider that Siemens has established real prospects of successfully defending the claim for the compensation events/variations listed above and which the adjudicator in the Second Adjudication assessed at a different value from the value in the decision in the First Adjudication. Management[105]Ms McCredie refers to the claim for preliminaries which was made in the First Adjudication at paragraph 2.38. She says that the adjudicator dealt with this claim at paragraph 28 of his decision in the First Adjudication where he allowed Eurocom £57,361.50. She refers to the decision in the Second Adjudication at paragraph 14.5 where the adjudicator again says that the Second Adjudication is a final claim/account in damages but submits that the claim is for management costs in the same period up to 18 September 2011.[106]Ms Cheng submits that the claim in the First Adjudication was only a claim up to the lifting of the suspension and she refers to the delay claims which were made in the First Adjudication.[107]I consider that in the First Adjudication the adjudicator decided on preliminaries up to 18 September 2011. It can be seen from a comparison of the delay claim in the First Adjudication and the delay claim in the Second Adjudication that the grounds for the delay until September 2011 were the same or substantially the same. The management claim is therefore for the same period up to 18 September 2011. On that basis I consider that Siemens has established real prospects of successfully defending the claim for management, senior person in charge and installer/operative in the period up to 18 September 2011. In any event, it is not possible for the adjudicator in the Second Adjudication to come to a conclusion on this claim without taking account of the decision in the First Adjudication and any new element cannot be severed given the basis of the decision in the Second Adjudication. Protection Master[108]Ms McCredie refers to paragraph 38 of the decision in the First Adjudication where the adjudicator dealt with the claim for additional protection master provision. She refers to the claim in the First Adjudication which shows that the claim is made for the period of 6 March 2011 to 6 July 2012. In the Second Adjudication the adjudicator dealt with these claims at paragraphs 14.8 and 14.14 allowing additional protection master.[109]Ms Cheng submits that there are differences in the claims and that the adjudicator in the Second Adjudication was entitled to award the sums he did.[110]I consider that Siemens has established real prospects of successfully defending the claim for sums awarded in the Second Adjudication in respect of protection master. In the period from 18 September 2011 to 20 July 2012 there are claims for management in the form of prolongation and thickening. In the First Adjudication at paragraph 40 the adjudicator dealt with additional management input which was claimed in the sum of £135,125.01. In the Second Adjudication the adjudicator allowed the sums claimed, both for prolongation and for thickening. There is clearly an overlap between the decision made in the First Adjudication and the decision made in the Second Adjudication but the decision in the Second Adjudication did not take account of the decision by the adjudicator in the First Adjudication.[111]In the First Adjudication the adjudicator held that Eurocom might be entitled to additional management time as a result of delays to the project but he was not persuaded that Eurocom had incurred either the additional costs and/or the losses claimed. The decision in the Second Adjudication has to take account of that finding but does not do so. It merely allows the sums claimed by Eurocom. It is not possible to sever part of the claim for management costs in the period between 18 September 2011 and 20 July 2012 and therefore Siemens has established real prospects of successfully defending the sums awarded in the Second Adjudication in relation to the protection master claims. EC12 Extended Working/NOP[112]Ms McCredie submits that this claim was dealt with in the First Adjudication. Ms Cheng says that the adjudicator in the Second Adjudication was entitled to award sums for this claim.[113]In paragraphs 31 to 34 of the decision in the First Adjudication, the adjudicator allowed claims for weekend working in May to June 2012. The adjudicator allowed the sum of £46,482.00. In addition at paragraph 37 of his decision, the adjudicator in the First Adjudication allowed a sum of £40,000 for overtime costs up to 28 April 2012 in relation to a claim from Eurocom of £58,413.76.[114]In the Second Adjudication the adjudicator allowed £100,772.36 which, as can be seen from the table at paragraph 14.19 of the decision in the Second Adjudication, covers the claims both for the weekends in May and June 2012 and precisely the same figure of £58,413.76 as was dealt with by the adjudicator in paragraph 37 of his decision in the First Adjudication. On that basis I consider that Siemens has established real prospects of successfully defending the claim based on that part of the decision in the Second Adjudication. Subcontractor Claims[115]Ms McCredie submits that this claim was dealt with in the First Adjudication. Ms Cheng says that the adjudicator in the Second Adjudication was entitled to award sums for this claim.[116]In the decision in the First Adjudication the adjudicator dealt with additional subcontractor costs at paragraphs 35 and 36. In the Second Adjudication the adjudicator dealt with subcontractor claims at paragraph 14.20 of his decision. There was a new claim added in the Second Adjudication in respect of Hillmore but this relates to QCE 025 which is dealt with in incident 111 as part of the variation account in the decision in the First Adjudication.[117]As I have said, the adjudicator in the Second Adjudication took the view that the First Adjudication was based on an interim application whereas the Second Adjudication was based on a final account. For the reasons set out above, I do not accept that distinction and therefore the adjudicator in the Second Adjudication has allowed sums which overlap with the decision made in the First Adjudication, without taking those into account. For instance, in respect of one sub-contractor, Lupprians, the claim dealt with by the adjudicator in the First Adjudication was for a sum of £2,300 and that is the same claim dealt with in the Second Adjudication and allowed in full by the Adjudicator. In doing so the adjudicator in the Second Adjudication sought to make decisions on claims which had already been adjudicated on and he did not have jurisdiction to do so. Conclusion[118]If, contrary to my finding, the adjudicator in the Second Adjudication did have jurisdiction, I have therefore come to the conclusion that, subject to the new claims identified in the schedule produced by Ms McCredie at the hearing which do give rise to severable and enforceable parts of the decision in the Second Adjudication, the remaining heads contain elements of claim which have already been raised and determined in the First Adjudication. The adjudicator in the Second Adjudication did not have jurisdiction to decide those elements.[119]Further, given that the adjudicator in the Second Adjudication did not make any allowance for the claims decided in the First Adjudication but treated the claims as being new claims in the Second Adjudication, it is not possible to isolate the new elements of claim. It is not therefore possible to sever the decision in the Second Adjudication so as to enforce part of those claims in respect of those new elements in respect of which the adjudicator did have jurisdiction. Whether the procedure contravened the rules of natural justice.[120]Ms McCredie submits that, throughout the Second Adjudication, the adjudicator failed to exercise control over the proceedings in a manner which was fair to Siemens. In particular she says that he failed to give Siemens sufficient time to produce its Response and failed to order Eurocom to produce native versions of the programmes on which it had based its delay case so that Siemens could properly respond to it. She says that he failed to require Eurocom to give Siemens additional time to respond to voluminous additional material served on 24 December 2013 and failed to require Eurocom to signpost additional material that it submitted on 14 and 15 January 2014. Further she says that the adjudicator put a new argument to Siemens on the second to last day of the adjudication and failed to give Siemens sufficient time to respond to it.[121]Ms Cheng submits that the Response had to respond to the Referral which substantially relied on the October Claim which Siemens had received about a month and a half earlier and had been working on. She says that the period of 13 days from receipt of the electronic copy of the referral or 9 days from the hard copy was sufficient and that Siemens did not need native versions of the programmes to set out its Response. She says that Siemens had 7 working days to respond to the timesheets attached to Eurocom’s Surrejoinder which was sufficient time and the information in those timesheets had already been tabulated and served with the Referral.[122]In relation to signposting, Ms Cheng says that the adjudicator was entitled to admit a lever-arch file of documents and that he gave Siemens a sufficient period of 6 days to respond to these documents which, as Siemens accepted, were part of Eurocom’s submissions in the First Adjudication. In relation to the point raised by the adjudicator on Clause 6.2 of the Sub-Contract she says that the point was raised by the adjudicator and Siemens were given sufficient time to respond and did respond to this point. She therefore submits that there was no breach of the rules of natural justice and that a fair process was followed in the context of the timescales in adjudication.[123]I have set out above in detail the main stages in the chronology of the adjudication. Having reviewed that chronology and the documents which were passing between the parties, I do not consider that there has been a breach of the rules of natural justice in terms of the procedure.[124]The time periods in which a party has to respond to submissions and material produced in the course of adjudication are necessarily short. The adjudicator has a discretion as to what further submissions and documents he allows during the course of the adjudication and, in this case, I do not consider that he can be criticised for admitting the further documents or submissions.[125]The time periods were short and, in particular the need to work over the Christmas/New Year period put pressure on Siemens. However, having considered the responses and submissions which Siemens put in, it can be seen that they were able properly to respond to matters raised by Eurocom. I do not consider that the absence of programmes in native format can found a basis for breach of natural justice.[126]The point raised by the adjudicator in relation to Clause 6.2 of the Sub-Contract was a point which occurred to him, at a late stage, when he was preparing his decision. He took the wholly proper course of raising it with the parties and sought submissions. Siemens stated that the point was not taken by Eurocom but, without prejudice to that, were able to and did make detailed submissions on the point. There was no contravention of the rules of natural justice.[127]I therefore reject Siemens case that the procedure adopted by the adjudicator contravened the rules of natural justice. Stay of enforcement[128]Ms McCredie says that, if summary judgment were to be granted, then there should be a stay of enforcement on the basis that the financial position of Eurocom means that it would not be able to repay the relevant sums if it were later determined that they should not have been awarded to Eurocom. As part of that submission she refers to the fact that Knowles entered into a deed of assignment giving it the right to receive the first £450,000 plus VAT of any sum awarded to pay for its fees.[129]She refers to the net assets of Eurocom which have reduced from £1.83m in 2010 and £1.79m in 2011 to £157,209 in 2012. She refers to the Dun & Bradstreet rating given to Eurocom of C4 which reflects a high risk of business failure and a delinquency score of 5 out of 100. She says that given the sums to be paid to Knowles there would be no prospect of Eurocom being able to repay any sums and therefore any judgment should be stayed.[130]Ms Cheng says that whilst Eurocom’s financial position has deteriorated between 2010 and 2012, it has current net assets of £157,000 which has been described as higher than the average for the sector. She says that the Dun & Bradstreet report should be treated with caution. She also says that the deterioration in Eurocom’s financial position is directly linked to Siemen’s failure to pay as in December 2011 it had assets of £1.7m when work started and by December 2012, some months after termination its assets had reduced to £0.15m, an amount equivalent to the sum awarded in the Second Adjudication.[131]It is evident that this is a case where Eurocom will probably be unable to repay any judgment sum at the end of a final determination. The evidence from Mr Paul Reynolds of Haslers as to Eurocom’s current financial position merely refers to a conversation with Mr Kenny of Eurocom who provided Mr Reynolds with records which show that Eurocom has continued to trade since 31 December 2012, but says no more. Whilst Knowles have now revoked the assignment in the sum of £450,000, this would still mean that Eurocom would have to pay Knowles’ fees, although they are not secured by an assignment. This would further reduce Eurocom’s ability to repay the sums.[132]If the adjudicator in the Second Adjudication had jurisdiction then it follows that, for the reasons set out above, a sum much less than the sum awarded in the decision in the Second Adjudication would have been payable. Taking this into account, it would show that, whilst Eurocom may have lost money by paying subcontractors to carry out work on this Sub-Contract, the majority of the reduction in Eurocom’s assets could not be explained as being caused by a failure by Siemens to pay Eurocom. In those circumstances I do not consider that Eurocom could rely on its impecuniosity being caused by Siemen’s failure to pay. On this basis I would therefore have been likely to grant a stay of enforcement. Summary[133]For the reasons set out above, I do not consider that the adjudicator in the Second Adjudication had jurisdiction. Accordingly, Eurocom's application for Summary Judgment is unsuccessful on the basis that Siemens has established real prospects of successfully defending the claim.

Cited in 6 later judgments