Cases - Carillion Construction Ltd v Devonport Royal Dockland [2003]
Record details
- Name
- Carillion Construction Ltd v Devonport Royal Dockland
- Date
- [2003]
- Citation
- BLR 79
- Legislation
- Keywords
- Construction contracts - adjudication - jurisdiction - natural justice - fairness - adequate reasons - consideration of evidence - defects - power to award contractual interest - Scheme for Construction Contracts (England and Wales) Regulations 1998, paragraphs 20 and 22
- Summary
-
This matter arose out of a very complex series of facts relating to the construction of a nuclear submarine renovation dock at Devonport in Plymouth. Carillion were appointed by Devonport Royal Dockyard Ltd to undertake construction of the dock and for new buildings for a sum of £54m.
This agreement was overlaid by a target price and partnering arrangement whereby Carillion and Devonport would share the benefit of any underspend or the burden of any overspend.
During the course of the works, delays occurred and additional items were instructed such that three amendments to the contract were negotiated between the parties; in a further fourth amendment, Devonport sought to raise the target price to £98m, although this was rejected by Carillion who were arguing for £114m.
After the fourth amendment, Devonport issued two further amendments raising the target price to £105m.
The parties also negotiated a bonus payable to Carillion if they completed their works by February 2002. The purpose of this agreement was to enable a submarine to enter the dock for a re-fit. Although Carillion's works were not fully completed by February 2002, they were sufficiently complete to enable the submarine to enter the dock, and so Carillion claimed their entitlement to their bonus.
Disputes arose as to the true entitlement of Carillion, which Carillion referred to adjudication. The adjudicator decided that Carillion were entitled to a further sum of £7.5m in addition to sums already paid.
Devonport refused to pay the sums awarded by the adjudicator on the basis that the adjudicator's decision relied on an alleged oral agreement, and section 107 of the Act requires the construction contract to be in writing or evidenced in writing.
The judge concluded that the agreement was not evidenced in writing and therefore the adjudicator did not have jurisdiction to make the decision that he did.
Further, Devonport asserted that no dispute had arisen at the time that the matter was referred to adjudication. Devonport argued that Carillion first arguably asserted the claim that it advanced in the adjudication by letter received by Devonport on 9 July 2002. However, that claim did not expressly place reliance on the alleged oral contract. Devonport sought further clarification of this claim, which Carillion referred to adjudication on 6 August 2002 without providing the clarification sought.
The judge concluded that Devonport 'has not in fact been told and is unaware in what respects it is alleged to have broken his obligations'.
Therefore, enforcement of the adjudicator's decision failed because the adjudicator lacked jurisdiction both because he relied on an alleged oral contract and also because there was no dispute as to the matters referred at the time of the notice of intention to adjudicate.