Dawnvale Cafe Components Limited vs Hylgar Properties Limited

This case concerned the interpretation and enforcement of a Tomlin order in a construction contract dispute between Dawnvale Cafe Components Limited and Hylgar Properties Limited. The court examined whether a new adjudication claim was barred by the terms of the settlement agreement.

TLDR:

• Dawnvale and Hylgar entered into a contract for mechanical works.
• The relationship broke down, leading to adjudication and a Tomlin order settlement.
• Hylgar sought further losses in a new adjudication claim.
• The court ruled the new claim was not barred by the Tomlin order.

The claimant, Dawnvale Cafe Components Limited, is a kitchen and bar fit-out company. The defendant, Hylgar Properties Limited, is a property developer. In February 2020, the parties entered into a contract for the design, supply, and installation of mechanical works at The Beacon, Hoylake, Wirral. The contract price was £631,435 plus VAT, with a 40% payment due on appointment.

By October 2020, the relationship between the parties had broken down, leading to the termination of the contract in November 2020. Each party alleged the other had committed repudiation. Hylgar referred the dispute to adjudication in June 2021, seeking repayment of overpaid sums, while Dawnvale counterclaimed for unpaid amounts.

The adjudicator, Mark A Smith, ruled in favor of Hylgar, determining that Dawnvale had repudiated the contract and was overpaid. Dawnvale was ordered to repay Hylgar £180,322.92 plus VAT. Dawnvale failed to pay, leading Hylgar to issue enforcement proceedings.

The parties settled the enforcement proceedings via a Tomlin order in August 2021. The order included a settlement sum and stipulated that all further proceedings in the action be stayed, except for enforcement purposes. However, in August 2023, Hylgar sought further losses arising from the same repudiatory breach, intending to refer these to adjudication.

Dawnvale's solicitors rejected the new claim, arguing that the Tomlin order precluded any further claims. Dawnvale initiated Part 8 proceedings seeking to prevent Hylgar from referring the new claim to adjudication. The court had to determine whether the Tomlin order barred the new claim and if the new adjudication was an impermissible referral of the same dispute.

The court examined the construction of the Tomlin order and concluded that the new claim was not barred by the settlement agreement. The court held that the phrase 'these proceedings' referred specifically to the enforcement action and did not encompass future claims arising from the contract. Additionally, the court found that the new claim did not constitute the same or substantially the same dispute as the first adjudication.

The court emphasized the importance of clear and precise language in settlement agreements to avoid future disputes. The ruling clarified that parties to a construction contract could seek further adjudication for additional heads of loss arising from a breach, provided these were not covered by a previous adjudication.

Legal representatives: Timothy Sampson (instructed by Lovetts Solicitors) for the Claimant, Harry East (instructed by C.E.Law) for the Defendant.

Judicial Panel: Neil Moody KC sitting as a Deputy Judge of the High Court.

Case Citation Reference: [2024] EWHC 1199 (TCC)