Walter Lilly & Co Ltd v Dmw Developments Ltd

Construction adjudication does not prevent either party seeking a final determination from the court. CPR Part 8 may be used where the dispute falls within its relatively tight confines and can be resolved without substantial factual investigation. A declaration should be confined to the legal point actually suitable for determination. The mere fact that supplied materials have faded cannot, without an identifiable breach of an express or implied contractual term, establish liability. Issues concerning the cause of fading, compliance with contractual specifications, samples, and sale by description may require factual investigation and remain for determination under the ordinary procedure.

The claimant supplied and installed American Black Walnut veneer at the defendant’s property. After the veneer faded, the defendant withheld approximately £90,000 and referred the dispute to adjudication. The adjudicator concluded that the change of colour caused loss of the material’s identity and constituted a breach of contract.

The claimant commenced CPR Part 8 proceedings seeking a declaration that natural fading did not constitute a breach. The defendant argued that the proceedings were an impermissible appeal from the adjudicator and were unsuitable for Part 8 because several factual disputes remained. The central issues were the proper scope of the declarations and whether the remaining contractual arguments could be determined summarily.

1. Final determination after adjudication. The adjudicator’s decision was temporarily binding, but either party remained entitled to seek a final court determination of the point considered by the adjudicator. The Part 8 claim was therefore not an impermissible appeal.
2. Part 8 procedure. Part 8 offers a speedy and cost-effective means of finally determining a dispute where the issue falls within its limited scope. Substantial disputes concerning the selection, quality, finish, cause and extent of discolouration, and contractual conformity were unsuitable for determination under Part 8.
3. Scope of declaration. The claimant’s broad declaration was refused because it assumed that the fading was natural and caused only by natural light, whereas the defendant disputed both matters. A narrower declaration was appropriate: liability for fading required breach of an express or implied contractual term; fading alone could not establish liability.
4. Contractual arguments preserved. The defendant could still argue that it had received inadequate samples under clause 300(a) of the NBS specification, or that the veneer supplied failed to correspond with its contractual description under the Supply of Goods and Services Act 1982. Those arguments depended on factual comparisons and could not be decided in the Part 8 proceedings. If the court had considered them under CPR Part 24, both would have had a realistic prospect of success.
5. Two declarations were granted. Their effect was limited to clarifying the parameters of the dispute and did not prevent the defendant advancing the identified contractual allegations. Costs were provisionally to be reserved.

Not stated in the judgment.