ANOTHER PART 8 CASE THAT HAS TO GO TO PART 7: THE RISK THAT THE COURT WILL MAKE “ILL-INFORMED DECISIONS THAT WILL NOT FINALLY DISPOSE OF THE DISPUTES BETWEEN THE PARTIES”

In TClarke Contracting Ltd v Bell Build Ltd [2024] EWHC 992 (TCC) Mr Justice Pepperall decided that an action, commenced under Part 8, must proceed under Part 7.

In my judgment, the proposed use of the Part 8 procedure in this case is laden with risk that the court might reach ill-formulated and ill-informed decisions that will not finally dispose of the disputes between the parties.”

THE CASE

The claimant issued Part 8 proceedings seeking relief as to a purported pay Less Notice and as to an adjudicator’s decision that it should pay the defendant £2,129,627.69 plus VAT.  It sought a declaration that the adjudicator’s decision should be set aside.

THE DEFENDANT’S OBJECTION TO THE USE OF THE PART 8 PROCEDURE

    1. Bell objected to use of the Part 8 procedure when acknowledging service. Although not required under Part 8, it pleaded a Defence. It pleaded that the issues were to be determined by the court afresh and that the adjudicator’s reasoning was not therefore relevant to this claim. Nevertheless, it asserted that the adjudicator had been right to find that the subcontract had varied the procedure for assessment of interim payments. Accordingly the question of the validity of the Pay Less notice would depend, among other matters, on the court’s findings as to whether, and if so how, the payment procedure had been amended and whether TClarke’s conduct in relation to payment applications 16 and 17 and its failure to respond to Bell’s queries as to the status of the purported notice estopped TClarke from now asserting that it was valid.

 

THE DECISION: NOT SUITABLE FOR PART 8 DETERMINATION

 

 

    1. The claim is pleaded on the flawed assumption that the court will review or hear an appeal from the adjudicator’s decision. That is not the function of the court; rather it must finally determine the parties’ rights for itself. Subject to narrowly defined exceptions, the TCC routinely enforces adjudication decisions as temporarily binding upon the parties pending such final determination of their rights. This is not, however, an enforcement claim.

 

 

    1. The proper construction of a written contract where there is no dispute as to its terms is a paradigm example of a case that might be suitable for the Part 8 procedure. Before the court can construe a contract, it does, however, need to establish that there was a binding agreement and then identify the terms of such contract.

 

 

    1. In this case, the parties are in dispute as to whether there was any contractual variation at all. Further, the alleged variation is said to have been evidenced by, rather than being contained in, writing. Accordingly, issues as to the existence of and terms of any contractual variation must be determined by witness evidence.

 

 

    1. While TClarke does not accept that the contract was varied, it seeks a declaration as to the true effect of the alleged variation on the basis of Bell’s own case. A declaration contrary to TClarke’s pleaded case would not, however, necessarily be the end of the matter since it might thereafter seek to argue that there was no such variation or alternatively that the terms of any such variation were not as alleged by Bell.

 

 

    1. Furthermore, Bell’s estoppel argument will necessarily depend upon evidence both as to the conduct alleged and any detrimental reliance upon such conduct that is said to give rise to the estoppel.

 

 

    1. In my judgment, the proposed use of the Part 8 procedure in this case is laden with risk that the court might reach ill-formulated and ill-informed decisions that will not finally dispose of the disputes between the parties. Further, I am not satisfied that TClarke has identified one or more precise legal questions that can be properly tried upon clearly identified agreed facts and which will be determinative of the current dispute between the parties.

 

 

  1. Accordingly, I conclude that the use of the Part 8 procedure was plainly inappropriate and that this case must proceed under Part 7.