WALDECK ASSOCIATES LTD v DECOMO UK LTD

WALDECK ASSOCIATES LTD v DECOMO UK LTD

The contractor’s contention that the adjudicator reached his decision in the second adjudication between it and the consultant in contravention of his decision in the first adjudication and therefore without jurisdiction should be rejected
 

WALDECK ASSOCIATES LTD v DECOMO UK LTD

  1. The adjudicator then first set out his decision as to when the contract between the parties had been formed and what documents were incorporated. Those documents included a fee proposal from Waldeck and a schedule of rates. The adjudicator then set out the declarations sought and his decision on each. In each instance, his reason for the decision was that the matter had been agreed between the parties at the meeting on 25 May 2016 and, as he had said, he made decisions which reflected what he understood the parties to have agreed.

 

  1. It is, I think, necessary for me to set out some of those declarations, if not all of them.

 

(i) At paragraph 10.1.1, he declared that under the parties' contract, the proper approach to the valuation of variations required the omission of the value of the work from the original scope of works set out in the fee proposal that had been varied before adding the proper valuations of the varied work carried out, subject to Waldeck being entitled to be paid a minimum total of £136,500 for the entirety of the works carried out.

 

(ii) At paragraph 10.1.2, he declared:

 

"I declare that under the parties' contract, Waldeck's entitlement to payment for the scope of works identified in the Fee Proposal is a maximum of £136,500 and that that sum cannot be modified by reference to the Schedule of Rates agreed on 4 September 2015 or otherwise."

 

(iii) At paragraph 10.3.1:

 

"I declare that the purpose of the Schedule of Rates agreed on 4 September 2015 was to facilitate the valuation of interim payments within the confines of the lump sum of £136,500 and not to permit the revaluation of the works included in the Fee Proposal in excess of the lump sum figure of £136,500."

 

(iv) At paragraph 10.4.1, he declared the proper valuation of Waldeck's measured works, up to 29 February 2016, to be £136,400. The reasons he gave for that were as follows:

 

"[10.4.2] At my meeting with the Parties on 25 May 2016, the parties agreed the value of Waldeck's measured works up to 29 February 2016 to be £136,400.

 

[10.4.3] The sum of £136,400 as measured work has been arrived at by using the rates agreed in the Schedule of Rates dated 4 September 2015, multiplied by the actual quantities of deliverables claimed by Waldeck up to 29 February 2016.

 

[10.4.4] The Parties are agreed that this same mechanism is to be used to determine the value of the "final account" in due course using the same rates and the actual quantity of deliverables supplied by Waldeck on the project."

 

  1. A further dispute then arose as to payment of Waldeck's invoice dated 15 August 2016 and adjudication no. 2 was commenced by Waldeck by a letter dated 14 September 2016. Mr Vinden was, again, appointed and in due course gave his decision. In that decision, he said the following:

 

"This is the second adjudication between the parties that I have dealt with. Where my previous decision touches on the matters I am to address in this adjudication, I have taken cognisance of my earlier decision in order not to transgress on or open up any matter that has already been decided."

 

He decided that Waldeck was entitled to receive a sum of £184,142.81 plus VAT on its invoice dated 15 August 2016.

 

  1. So far as the measured works were concerned, his reasons were as follows and, again, I hope I will be forgiven for quoting in some detail from his reasons.

 

(i) At paragraph 10.1.3: "I am obliged to adhere to the decisions made in the first adjudication between the Parties insofar as those decisions impact on the matters I must now decide in these current proceedings."

 

(ii) Paragraph 10.1.4: "In the first adjudication between the Parties, the Parties reached agreement on the wording of a number of declarations that I subsequently included as part of my first Decision. For ease of reference, I set out those declarations granted below."

 

And he then set out the declarations and the reasons that I have already recited.

 

(iii) Paragraph 10.1.6: "It is apparent that the Parties are in disagreement as to the effect of my Decision in the Parties' first adjudication in the claim now brought by Waldeck."

 

(iv) Paragraph 10.1.7: "Waldeck's adopted methodology for valuing its measured works in its 15 August 2016 invoice and application for payment has been to remeasure the quantities of each drawing prepared by it up to the date of the application and then to apply the rates included in the Schedule of Rates dated 4 September 2015 to value its entitlement."

 

(v) Paragraph 10.1.8: "This methodology is entirely consistent with what the Parties agreed in my presence on 25 May 2016 and as recorded at paragraphs 10.4.2 to 10.4.4 of my decision in the first adjudication between the Parties."

 

  1. I have quoted those paragraphs in full because it is, in my judgment, clear from those paragraphs, firstly, that Mr Vinden had clearly and expressly in mind his decision in adjudication no.1 and, secondly, that his decision no.2 was consistent with and applied decision no.1 and, indeed, that that was what he intended to do.

 

  1. In decision no.1, the adjudicator had decided, because the parties had agreed, that the schedule of rates was to be used to value interim payments "within the confines of the lump sum of £136,500 and not to permit that valuation to exceed £136,500". That decision clearly related to the work within the fee proposal but Decomo says that that must be for the type of work within the fee proposal and not the estimated amounts that are set out in the schedule of rates. I recognise that there is some potential lack of clarity in the declaration since if it only relates to the work within the fee proposal, it is difficult to see how the valuation could ever exceed £136,500 and why the concluding words were necessary. Further, the decision that the schedule of rates could not be used to revalue the works would suggest, contrary to Mr Pimlott's submission, that the amount of work was not to be remeasured so that the risk of the amount of work lay with Waldeck. But in my view, any argument about the meaning of the declaration is put beyond doubt by paragraphs 10.4.3 and 10.4.4 of the decision no.1.

 

  1. What the adjudicator then did was value the measured work to date by using the rates and the actual deliverables. The effect was to reach an interim valuation by applying the rates to works actually done. Decomo says that that must be read subject to the cap of £136,500 and there is clearly some force in that submission given what I have already said about the lack of clarity in the declaration. But the argument falls down in the light of paragraph 10.4.4 of decision no.1, where the adjudicator declared, as I have said, that the same approach should be taken to the final account. There would be no point in doing that if the lump sum were payable in any event or if that sum operated as a cap on payment for the type of work included in the fee proposal. He has then taken exactly the same approach to the interim valuation, the subject of the second adjudication and decision no.2.

 

  1. In his witness statement on behalf of Decomo, to which I have been referred on a number of occasions, Mr Tyrrell, the Operations Director of Decomo says that what was agreed and recorded in decision no. 1 was that the schedule of rates was to be used to value the works on an interim basis. However, any interim valuation of the works, together with the final account, would be bounded by the lump sum figure of £136,500 unless varied by specifically identified and agreed variations. Taken as a whole, that does not seem to me to be what the adjudicator said or what he did in valuing the works in decision no.1 or said should be done for future valuations.

 

  1. Mr Tyrrell also contends that the works invoiced in August 2016 were within the fee proposal and, therefore, are subject to the cap of £136,500 but, in decision no.2, the adjudicator has expressly reached a different conclusion. That is set out at paragraph 10.1.12 of decision no.2 where he says that the scope of the works actually provided by Waldeck changed from that described in its original fee proposal and that that is why the parties, in recognition of this situation, reached the agreement recorded in paragraphs 10.4.2 to 10.4.4 of his first decision. Whether he is right or not as to the meaning of the scope of works within the fee proposal is not a matter with which I am concerned. It was an issue that was clearly within his jurisdiction in the second adjudication and that is what he decided on that issue. Therefore, the adjudicator has valued works that he has decided are not within the fee proposal.

 

  1. For completeness, I should say that Mr Pimlott, for Waldeck, has referred me to a number of authorities including Brown v Complete Buildings Solutions Ltd [2016] EWCA Civ 1 in support of the proposition that my starting point should be what the adjudicator considered he had decided in the previous decision as the best guidance to what the adjudicator had decided. As I said in the course of argument, the authorities referred to are specifically concerned with the approach the court should take where the issue is whether the dispute in the subsequent adjudication is the same as that already decided in the previous adjudication. The issue here is somewhat different but I accept that, by analogy, a similar approach should be applied. However, in this case, in my view, what the adjudicator had decided was clear, in any event, and has been applied by him in decision no.2.

 

  1. Further, if necessary for me to reach my decision, I would have accepted Mr Pimlott's submission that the effect of decision no.1 was a matter within the jurisdiction of the adjudicator in adjudication no.2. I say that because the adjudicator recited the fact that a disagreement had arisen between the parties as to the meaning of decision no.1. No point is taken on that and he clearly reached a decision as to what he had previously decided and that decision is binding in itself. But, as I have said, it is not necessary for me to reach my decision on that basis.

 

  1. So, the outcome of that is that the defence to this application for summary judgment fails.