Cases - Bouygues UK Ltd v Dahl-Jensen UK Ltd

Record details

Name

Bouygues UK Ltd v Dahl-Jensen UK Ltd

Date

[1999]; [2000]; [2000]; [2000]

Citation

EWHC 182 (TCC); BLR 49; EWCA Civ 507; BLR 522 CA

Legislation

• Housing Grants, Construction and Regeneration Act 1996
• Insolvency Rules 1986
• Civil Procedure Rules 1998

Keywords

Construction Contracts - Adjudication - Adjudicator's error - Retention - Valuation of Works - Liquidation - Insolvency - Effect of latent claims and cross claims - Housing Grants, Construction and Regeneration Act 1996, section 108 - Insolvency Rules 1986, rule 4.90 - Construction Industry Model Adjudication Procedure - enforcement of adjudicator's decision

Summary

[1999] EWHC 182 (TCC); [2000] BLR 49

This was an application for summary judgment to enforce the decision of an adjudicator. Dahl-Jensen resisted the application on the basis that the adjudicator had made an error on the face of his decision.

The dispute related to the amount of money owing between the parties. The adjudicator valued the works and then deducted the value of the previous valuation. Unfortunately, the adjudicator made a mistake by deducting the previous valuation before deduction of retention whereas he had deducted retention from the total value of the works that he had calculated. The result was that he found that a net sum of approximately £208,000 was due in favour of Dahl-Jensen, whereas if the error were corrected he should have found that a net sum of approximately £141,000 was due in favour of Bouygues.

The judge concluded that the adjudicator simply made a mistake in calculating the overpayment. There can be no doubt that what the adjudicator was doing in his counterclaim analysis was calculating the amount of the overpayment. That was an issue that had been referred to him. He was doing precisely what he had been asked to do, and was answering the right question, but he was doing so in the wrong way.

In subsequent correspondence the adjudicator said that he did not make a clerical mistake or slip and therefore refused to apply the slip rule.

The judge concluded that the purpose of adjudication is to provide a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requiring the decisions of adjudicator to be enforced pending final determination of disputes by arbitration, litigation or agreement, whether those decisions are wrong in point of law or fact. It is inherent in the scheme that injustices will occur, because from time to time, adjudicators will make mistakes. Sometimes those mistakes will be glaringly obvious and disastrous in their consequences for the losing party. The victims of mistakes will usually be able to recoup their losses by subsequent arbitration or litigation, and possibly even by a subsequent adjudication. Sometimes they will not be able to do so, where, for example, there is intervening insolvency, either of the victim or of the fortunate beneficiary of the mistake.

The judge therefore gave Dahl-Jensen summary judgment in respect of the adjudicator's decision.

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[2000] EWCA Civ 507; [2000] BLR 522 CA

Dahl-Jensen commenced an adjudication claiming outstanding sums for work done. Bouygues disputed the claim on the grounds that Dahl-Jensen:

• had already been overpaid for its works; and
• owed Bougues damages for delay and costs incurred by reason of the termination.

The adjudicator awarded Dahl-Jensen approximately £200,000. Dahl-Jensen made an application under Civil Procedure Rules Part 24 for summary judgment for the sum due under the award.

It was held by the Court of Appeal: An adjudicator's decision would not be enforced in favour of a company in liquidation, where there were latent claims and cross-claims between the parties.

Under rule 4.90 of the Insolvency Rules 1986, every creditor was entitled to an account in respect of all the mutual dealings and all sums due between itself and the insolvent company. The result was that all claims and cross-claims were reduced to a single claim, i.e. the balance of the account between the two parties. Prior to the account being taken, the insolvent company could not claim payment of any single outstanding sum due.