This is a Part 8 claim concerning the meaning and effect of a Tomlin order by which the parties settled adjudication enforcement proceedings. 

The Claimant, Dawnvale Café Components Limited (“Dawnvale”), entered into a contract with the Defendant, Hylgar Properties Limited (“Hylgar”), in February 2020 for the design, supply and installation of the mechanical works at The Beacon, Hoylake, Wirral. The contract price was £631,435 plus VAT.

Following a break down in the relationship between the parties and the termination of the contract in November 2020 (which both put down to the other’s repudiation), Hylgar referred the dispute to adjudication by a notice dated 8 June 2021.

Hylgar sought an adjudication as to the true value of Dawnvale’s work and repayment of £180,322.92 plus VAT and interest. Dawnvale denied any amount was due to Hylgar and itself advanced a ‘smash and grab’ counterclaim of £147,289.25. 

On 19 July 2021 the adjudicator decided that (a) Dawnvale had repudiated the contract, (b) the true value of the works at termination was £272,251.08 plus VAT, (c) Dawnvale's counterclaim had no effect on Hylgar's claim, and (d) Dawnvale had been overpaid and should repay Hylgar £180,322.92 plus VAT as applicable. Dawnvale were also ordered to pay the adjudicator's fees.

Dawnvale failed to pay the outstanding sum and consequently on 9 August 2021, Hylgar issued enforcement proceedings.

By a Tomlin order dated 24 August 2021 (“the Order”) the enforcement proceedings were compromised. The parties had signed a settlement agreement under which Hylgar was obliged to pay Dawnvale £246,170.70 (“the Settlement Sum”).

The Order included the following wording at paragraph 4 of its Schedule:

“This Settlement Agreement shall immediately be fully and effectively binding on the parties. The payment of the Settlement Sum is in full and final settlement of any and all claims the Claimant may have against the Defendant arising from or in connection with these proceedings.”

Two years later, Hylgar issued a Letter of Claim seeking further losses arising from the same repudiatory breach and suggested an intention to refer a claim for these losses to adjudication. The losses in the Letter of Claim totalled £641,594.76 (“the New Claim”).

By these Part 8 proceedings, Dawnvale sought to prevent Hylgar from referring the New 
Claim to adjudication. Dawnvale advanced two arguments. Firstly, that Hylgar’s New Claim is caught by paragraph 4 of the schedule to the Order (re-produced above) and secondly the New Claim is barred because it seeks referral to adjudication of a dispute which has already been determined.

In respect of Dawnvale’s former argument, the Judge found that the New Claim is not caught by paragraph 4. The Judge stated that the term “these proceedings” in paragraph 4 refers to the action in which the Order was made, that is the enforcement proceedings, and rejected Dawnvale’s argument that “proceedings” should be defined as including “the underlying dispute the subject matter of the adjudication including the finding of repudiatory breach”. The Judge concluded that the New Claim is not caught by paragraph 4, as it neither arises from nor is connected with the proceedings. If the parties had intended it to relate to all future claims, the Order would have expressly said so.

In respect of Dawnvale’s latter argument, it submitted that Hylgar's proposed second adjudication is impermissible as it is an attempt to refer to adjudication the same or substantially the same dispute as has already been decided. The Judge considered the case law on the area, recently summarised by Coulson LJ in Sudlows Limited v Global Switch Estates 1 Limited, and noted that the first adjudication decided that Dawnvale was in repudiatory breach of contract, and it determined the true value of the work undertaken. The second adjudication is intended to determine the recoverability and value of certain heads of loss consequential upon the repudiation. The Judge concluded that in his view there is no overlap or question of the second adjudicator deciding the same (or substantially the same) dispute as was decided in the first adjudication. 

The Judge therefore dismissed the Part 8 proceedings. This decision is a reminder of the importance of using clear language in a settlement agreement to ensure it reflects the intentions of the parties.