Factual and Procedural Background
This Part 8 claim concerns the interpretation and effect of a Tomlin order that settled adjudication enforcement proceedings between two commercial parties: a kitchen and bar fit-out company ("Plaintiff") and a property developer ("Defendant"). In February 2020, the parties contracted for mechanical works at a property in The City, with a contract price of £631,435 plus VAT. By October 2020, their relationship had broken down, and the contract was terminated around November 2020, with each party alleging repudiatory breach by the other.
In June 2021, the Defendant referred the dispute to adjudication seeking repayment of an alleged overpayment. The adjudicator decided in July 2021 that the Plaintiff had repudiated the contract and ordered repayment of £180,322.92 plus VAT. The Plaintiff failed to pay, prompting the Defendant to commence enforcement proceedings in August 2021 for the adjudicator's award, VAT, fees, and interest, totaling £233,170.70 plus costs and statutory interest.
By a Tomlin order dated 24th August 2021, the enforcement proceedings were compromised with a settlement agreement providing for staged payments totaling £246,170.70 inclusive of interest and costs. The agreement stated that this sum was in full and final settlement of any and all claims the Plaintiff may have against the Defendant arising from or in connection with these proceedings.
Two years later, in August 2023, the Defendant sought further losses arising from the same repudiatory breach, amounting to £641,594.76, and intimated an intention to refer this new claim to adjudication. The Plaintiff rejected this claim, contending that the Tomlin order precluded such further claims.
The Plaintiff commenced Part 8 proceedings seeking declarations that the settlement agreement barred the Defendant from referring the new claim to adjudication and an order prohibiting the referral. The Defendant did not oppose the Part 8 procedure.
Legal Issues Presented
- What is the proper construction and effect of the Tomlin order and its settlement agreement, specifically paragraph 4 of the Schedule, in relation to future claims arising from the contract or proceedings?
- Whether the Defendant’s proposed referral of a second adjudication concerning additional losses constitutes an impermissible referral of the same or substantially the same dispute already decided in the first adjudication.
Arguments of the Parties
Plaintiff's Arguments
- The new claim is caught by paragraph 4 of the Schedule to the Tomlin order, which precludes any further claims arising from or connected with "these proceedings".
- The new claim is barred because it seeks to refer to adjudication a dispute that has already been determined, relying on paragraph 9(2) of the Scheme for Construction Contracts, which prohibits adjudication of the same or substantially the same dispute.
- There is an estoppel argument that the Defendant is prevented from bringing further claims due to mutual promises in the Order and detrimental reliance by the Plaintiff.
Defendant's Arguments
- Upon proper construction, the Tomlin order did not settle the new claim; it remains a fresh dispute capable of referral to a second adjudication.
- The new claim concerns additional heads of loss and their quantum, not the question of repudiation, which was already decided.
- The proposed second adjudication does not amount to an impermissible referral of the same dispute but rather a new dispute arising from the same repudiatory breach.
- The Defendant did not oppose the use of Part 8 procedure for determination.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Rainy Sky SA v Kookmin Bank [2011] UKSC 50 |
Principles of contractual construction focusing on reasonable interpretation in commercial context |
Adopted as part of the framework for interpreting the Tomlin order and settlement agreement objectively, emphasizing commercial common sense and natural meaning. |
| Arnold v Britton [2015] UKSC 15 |
Contract interpretation principles emphasizing the importance of the language used over subjective intentions |
Reinforced the approach to construction applied to the Tomlin order language and context. |
| Wood v Capita Insurance Services Ltd [2017] UKSC 24 |
Contractual interpretation principles |
Referenced in support of the construction approach. |
| Lamesa Investments Limited v Cynergy Bank Limited [2020] EWCA Civ 821 |
Contract interpretation principles |
Supported the court’s approach to construction. |
| EE Limited v Mundio Mobile Limited [2016] EWHC 531 (TCC) |
Summary of key principles on contractual interpretation |
Provided a concise summary of the interpretive approach adopted by the court. |
| Plevin v Paragon Personal Finance Limited [2017] UKSC 23 |
Meaning of "proceedings" in legal context |
Applied to determine the meaning of "these proceedings" in the Tomlin order as the enforcement action itself. |
| Kitchen Design and Advice Ltd v Lea Valley Water Co [1989] Lloyds LR 2 |
Interpretation of prospective claims in settlement wording |
Accepted that "may have" can encompass prospective claims. |
| Bank of Credit and Commerce International SA v Ali [2001] UKHL 8 |
Interpretation of claims and knowledge at time of agreement |
Supported the view that claims foreseeable at the time of the order are caught by its terms. |
| Khanty-Mansiysk Recoveries Limited v Forsters LLP [2016] EWHC |
Interpretation of "arising from or in connection with" in settlement agreements |
Guided the court’s broader interpretation of "in connection with" as wider than "arising out of". |
| Sudlows Limited v Global Switch Estates 1 Limited [2023] EWCA Civ 813 |
Principles on whether a dispute is the same or substantially the same for adjudication purposes |
Adopted to determine that the second adjudication claim is not the same or substantially the same dispute as the first. |
| Carillion Construction Ltd v Smith [2011] EWHC 2910 |
Whether disputes are substantially the same based on causes of action relied upon |
Considered but distinguished on facts, as the second adjudication concerns different heads of loss rather than the repudiation itself. |
Court's Reasoning and Analysis
The court began by applying established principles of contractual construction, emphasizing the objective meaning of the Tomlin order and its Schedule, particularly paragraph 4. The court rejected the Plaintiff’s submission that "these proceedings" should be construed broadly to include the underlying dispute or future adjudications. Instead, it held that "these proceedings" refers narrowly to the enforcement action in which the order was made.
The court found that the wording "any and all claims ... arising from or in connection with these proceedings" did not encompass the new claim for additional losses. The reasoning was that if the parties had intended to bar all future claims related to the contract or dispute, they would have used broader language specifying the contract or dispute rather than "these proceedings." Moreover, the paragraph only bound the Defendant (the party liable to pay), not both parties, which further suggested a limited scope.
The court also dismissed the estoppel argument, noting the absence of mutual promises and that the order was a binding agreement rather than a representation giving rise to estoppel.
On whether the second adjudication constituted an impermissible referral of the same dispute, the court adopted the principles summarized by Coulson LJ in Sudlows. It emphasized the need to identify what the first adjudicator actually decided and to avoid allowing a second adjudication that would produce a result fundamentally incompatible with the first.
The court concluded that the first adjudication determined repudiation and valuation of works up to termination, while the second adjudication concerned new heads of loss consequential on the repudiation. There was no overlap or risk of contradictory decisions. The ruling recognized the commercial reality that some losses (such as delay) may only become apparent later, and requiring all claims to be adjudicated simultaneously would frustrate the purpose of adjudication to facilitate cashflow and avoid delay.
Accordingly, the court held that the Defendant was not barred from referring the new claim to adjudication, and the proposed second adjudication was permissible.
Holding and Implications
The court’s final decision was as follows:
a. Paragraph 4 of the Schedule to the Tomlin order does not prevent the Defendant from referring to a second adjudication the claims advanced in its letter dated 31st August 2023.
b. Referring these claims to adjudication will not result in the adjudicator deciding the same or substantially the same dispute as was decided in the first adjudication.
The court therefore DISMISSED the Plaintiff’s Part 8 claim and declined to make the declarations sought.
The direct effect is that the Defendant may proceed with the proposed second adjudication concerning additional heads of loss. The Plaintiff remains able to challenge either adjudication by way of final court determination. No new precedent was established; the decision applies established principles to the facts at hand and clarifies the interpretation of settlement orders in the context of serial adjudications.