Taylor Woodrow Holdings Ltd v George Wimpey Southern Counties Ltd Rev 1

Under section 45 of the Arbitration Act 1996, the court retains a discretion to determine a question of law arising during arbitration, even where the parties have agreed that either may refer such a question to the court. The court should give substantial weight to that agreement, while considering whether the question is suitable for determination at that stage. Where the relevant facts are undisputed and the question goes to the legal basis of a substantial claim, early determination may be appropriate and cost-effective. On contractual construction, later correspondence incorporated into the contract may remove an earlier qualification and replace it with a defined provisional sum.

The Employers applied under section 45 of the Arbitration Act 1996 for determination of questions arising in an arbitration concerning the conversion of Long Grove Hospital into residential units. The Contractor objected to the Part 8 proceedings and argued that the question should be left to the arbitrator. The procedural objection was abandoned, and the court ruled that the section 45 application should proceed. Only the question whether the Employers retained the risk of unforeseen structural works remained live.

1. The Contractor’s preliminary objection was dismissed. The threshold conditions in section 45 were satisfied: the question arose in the arbitration, substantially affected the parties’ rights, and was referred with the agreement required by section 45(2)(a).

2. Section 45 confers a discretion. The word “may” indicates that the court is not bound to determine every qualifying question. The guidance in Babanaft International Co. SA v Avant Petroleum Inc. [1982] 1 WLR 871 was applicable. The court should consider the application on its inherent merits and whether the question ought to be determined at that stage.

3. The parties’ agreement that either could refer a question of law to the court deserved substantial weight, reflecting party autonomy. The question was suitable for early determination because the factual evidence was undisputed, the court was in as good a position as the arbitrator to construe the contract and correspondence, and the answer could dispose of most of the Contractor’s pleaded claim.

4. Under the primary contractual provisions, the Contractor was responsible for all structural works necessary to complete the defined works, whether foreseen or unforeseen. The tender qualifications initially sought to modify that obligation, but the contractual correspondence had to be construed chronologically.

5. The Contractor’s letter of 14 July 2000 removed TC1 altogether. The provisional sum of £180,000 replaced TC2 and applied to works to the external façade. The later-document hierarchy confirmed that this correspondence prevailed over earlier inconsistent material.

6. The surviving question was therefore answered: “No, save for those works to the external façade which are the subject of the provisional sum of £180,000.”