Dawnvale Cafe Components Limited v Hylgar Properties Limited

A settlement of adjudication enforcement proceedings must be construed according to its wording and commercial context. A release of claims arising from or connected with “these proceedings” ordinarily refers to the action in which the settlement order was made, rather than all claims arising from the underlying contract or dispute. A second adjudication is permissible where it concerns new heads of consequential loss, even though they arise from the same breach, provided that the second adjudication does not reopen what the first adjudicator actually decided or produce a fundamentally incompatible result.

The claimant contractor and defendant developer had settled adjudication enforcement proceedings by a Tomlin order. The first adjudication had determined that the claimant repudiated the contract and had assessed the true value of works completed before termination. The settlement required payment of an agreed sum and stated that it was in full and final settlement of claims the claimant might have against the defendant arising from or connected with the enforcement proceedings.

The defendant later proposed a second adjudication concerning consequential losses arising from the repudiatory breach, including delay, remedial works and lost rent. The claimant sought declarations that the settlement barred the claim and that the proposed referral concerned the same or substantially the same dispute as the first adjudication.

1. Construction of the Tomlin order. The court adopted the established unitary approach to contractual construction, considering the language, the agreement as a whole, its purpose, the relevant background and commercial common sense. Subjective intentions were disregarded.
2. Meaning of “these proceedings”. In context, that phrase referred to the enforcement action in which the Tomlin order was made. It did not include a later adjudication or enforcement proceedings arising from a different claim.
3. Scope of the release. The words “arising from or in connection with these proceedings” did not settle all foreseeable future claims arising from the contract, works or underlying dispute. “Arising from” required a causative relationship, while “in connection with” was wider but remained context-dependent. The clause principally prevented the defendant from reopening the true valuation of the claimant’s completed works. The defendant’s entitlement to pursue further losses, and the claimant’s entitlement to challenge adjudications by final determination, remained unaffected.
4. Estoppel. The settlement created no mutual promise not to bring contractual claims. It was a binding agreement, not a representation or convention giving rise to estoppel.
5. Second adjudication. Applying the principles in Sudlows Limited v Global Switch Estates 1 Limited, the court focused on what the first adjudicator actually decided and applied a flexible, robust and common-sense approach. The first adjudication decided repudiation and the true value of pre-termination works. The proposed second adjudication concerned the recoverability and quantum of consequential losses. It therefore did not concern the same or substantially the same dispute and would not require a fundamentally incompatible result.
6. The declarations were refused and the Part 8 proceedings were dismissed. The parties were invited to agree consequential orders, including costs.