Vinci wins £9.7m Gatwick dispute in High Court

30 July 2018 | By Neil Gerrard

Vinci Construction has won a £9.7m dispute with a subcontractor over a Gatwick Airport project, after the High Court ruled in the main contractor's favour.

The battle with Beumer Group centred on a contract Vinci held to upgrade Gatwick Airport's South Terminal.

Vinci entered a subcontract with Beumer in 2012 under which the specialist firm would design, build and install a new baggage handling system as part of the new Pier 1 at the terminal.

But Beumer was delayed in completing the baggage works by the agreed completion dates, resulting in a dispute between the two firms.

The issue was referred to adjudication and in May 2016, the adjudicator Dr Cyril Chern found that the provision for delay damages were "uncertain, inoperable and unenforceable".

In October 2016, Vinci took the matter to the High Court, in a bid to determine whether or not its claim for delay damages was valid, as it contended, or whether they were unenforceable, as Beumer argued.

Liquidated damages

In a judgement in August last year, Mrs Justice O'Farrell found that Vinci's claim was valid, and in October Vinci issued a payment certificate setting out its entitlement for nearly £9.7m as liquidated damages for Beumer's delay in completing the work.

But Beumer refused to pay and by 30 November 2017 its payment of £9.7m was overdue.

The case was further complicated by the fact that Vinci and Beumer had already engaged in a total of six adjudications under the subcontract prior, all of which were commenced by Beumer.

The first adjudication was decided by Dr Chern in Beumer's favour and was the subject of the proceedings decided by Mrs Justice O'Farrell (mentioned above).

Vinci took a claim for payment of £9.7m worth of damages to a seventh adjudication in March 2018, with the adjudicator finding in favour of Vinci against Beumer.

In May 2018, Vinci wrote to Beumer to demand payment of £9.7m plus interest of £54,552, but on 14 May, Beumer's legal representatives said the company wasn't satisfied with the adjudicator's decision and that Beumer did not intend to pay.

Vinci then went back to the High Court on 16 May this year and applied for summary judgement.

Beumer's defence

Beumer defended its non-payment of damages on the basis that the decision in the seventh adjudication was inconsistent with findings made in a previous adjudication, and that the adjudicator did not give any adequate reasons for his decision.

It also argued that the adjudicator did not order Vinci to disclose material from a previous adjudication between Vinci and Balfour Beatty Engineering Services, which Beumer said it had good reason to believe would have demonstrated that Vinci's arguments in this adjudication were inconsistent with those it had advanced in the other adjudication.

But deputy judge Mr Jonathan Acton Davis QC dismissed Beumer's first two arguments on the basis that the validity of previous decisions was not a matter for the enforcement proceedings.

He also rejected Beumer's arguments that it ran an inconsistent case in the Balfour Beatty adjudication to the one it advanced in its seventh adjudication.

As a result, the deputy judge found that Beumer's challenges to the enforcement failed.

Vinci declined to comment further about the case.

Beumer has been contacted for comment.

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