Allied P&L Ltd v Paradigm Housing Group Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 17 November 2009 |
| Neutral Citation | [2009] EWHC 2890 (TCC) |
| Docket Number | Case No: HT-09–402 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 17 November 2009 |
[2009] EWHC 2890 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Akenhead
Case No: HT-09–402
Calum Lamont (instructed by Davies Arnold Cooper) for the Claimant
Christopher Camp (instructed by Owen White) for the Defendant
Hearing date: 5 November 2009
Introduction
This case raises issues arising out of an adjudicator's decision, in particular whether there was a crystallised dispute and if so what it encompassed, whether any part of the adjudicator's decision can be enforced or severed and whether any effective reservation was made as to the jurisdiction of the adjudicator during or before the adjudication.
The factual background
Allied P & L Limited ("Allied") is a building contractor which was engaged in about May 1997 by Paradigm Housing Group Ltd ("Paradigm") to construct some 40 dwellings and other works at 95, London Road, Bishop's Stortford, Hertfordshire. The construction contract provided for interim payments based upon a monthly "Notice of Payment" issued by the Employer's Agent repayment to be made within 15 Working Days thereafter. Subject to any entitlement to extension of time, it seems that Allied was obliged to complete the work by 15 April 2008.
Clause 10.1 of the contract addressed determination:
"Without prejudice to any other rights or remedies which the Employer may possess if the Contractor shall default in any one or more of the following respects that is to say:
10.1.1 if without reasonable cause it wholly suspends the carrying out of the design or construction of the Dwellings before completion thereof
10.1.2 if it fails to proceed regularly and diligently with the performance of its obligations under this Agreement
10.1.3 it refuses or neglects to comply with a written notice from the Employer's Agent requiring it to remove defective works or improper materials or goods and by such refusal/neglect the works are materially affected
Then the Employer may give to the Contractor notice by Registered Post or Recorded Delivery specifying the default. If the Contractor shall continue such default for nine Working Days after receipt of such notice or shall at any time thereafter repeat such default (whether previously repeated or not) the Employer may within six Working Days after such continuance or repetition by notice served by Registered Post or Recorded Delivery forthwith determine the employment of the Contractor under this Contract PROVIDED that such notice shall not be unreasonably or vexatiously given or served. Upon determination of the Contractor shall vacate the Property and remove all plant and machinery from the same."
Clause 10.2 provided that Paradigm would thereafter be under no liability to make any further payments until it had practically completed the dwellings in question.
There was an adjudication clause which materially provided as follows:
"16.1 If any dispute or difference arises under this Agreement either party may refer it to adjudication in accordance with the provisions of this Clause 16…
16.4.1 Where pursuant to this Clause 16 a party requires a dispute or a difference to be referred to Adjudication then that parties shall give notice ("the notice of adjudication") to the other party of his intention to refer the dispute or difference briefly identified in the notice of adjudication. Within 7 days from the date of the notice of adjudication…the party giving notice of intention shall refer the dispute or difference to the Adjudicator for his decision ("the referral") and shall include within that referral particulars of the dispute or difference together with a summary of the contentions on which he relies a statement of the relief or remedy which is sought and any material he wishes the Adjudicator to consider. The referral and its accompanying documentation shall be copied simultaneously to the other party."
The various meeting minutes in 2008 show that the work was delayed. The reasons and responsibility for such delays remained and remain in issue between the parties. At a meeting held on 27 January 2009, the Allied representative indicated that final completion would be 12 weeks from that time.
On 29 January 2009 the Employer's Agent issued its Notice of Interim Payment No 15 in the gross sum of £2,418,727 which after allowing for retention of 5% and previous payments left a net sum to be paid of £30,229. That sum was payable within 15 working days but was not paid. The evidence does not reveal whether Allied forthwith complained about non-payment or about the gross sum certified. However on 1 May 2009, Paradigm's solicitors issued a "Notice of Withholding Payment" in relation to Interim Payment No 15. The reasons for withholding payment were said to be:
"1. That Allied failed to complete the contract by the contractual completion date, and no extension of time has been sought or agreed.
2. That the failure to complete has been caused by Allied's suspension of the design and construction of the dwellings without reasonable cause.
3. That Allied have failed to proceed regularly and diligently with the performance of its obligations under the Agreement.
4. That Allied have failed to complete the site, the access road and the installation of the utilities.
5. That Allied have failed to resolve the wrong positioning of the sub-station and the loss of car parking spaces for Paradigm.
6. That Allied have failed to complete the necessary S278 works to secure access from the site, causing Paradigm potential losses in respect of the cost of completing traffic lights and bridge repairs required by the S. 278 Agreement.
7. That Allied have wrongly used the site as a base for their works on neighbouring sites.
8. That Allied have failed to provide evidence of the Power of Attorney under which the Bank of Scotland has executed a Deed of Variation of the Section 106 Agreement, as required by the Local Authority.
9. That the above breaches have or will cause Paradigm to suffer damages and costs in completing the contract considerably in excess of any monies due under the contract to Allied. The losses include…
Paradigm require Allied to remedy these omissions and faults within 10 working days from the date of service of this Notice, and if such remedies are complete, then the withholding of the stated account will end."
On 8 May 2009, Allied's Quantity Surveyors wrote complaining that Interim Payment No 15 had not been made; if payment was not made within five working days, Allied would then consider itself at liberty to determine the contract.
On 12 May 2009, Allied's solicitors wrote in some detail in response to the Notice of Withholding Payment. Allied denied in effect that it was in breach of contract, for instance asserting that there had been no suspension of the design and construction as alleged.
On 14 May 2009, Mr Morris of Allied e-mailed Mr Main of Paradigm complaining that there had been no payment. He indicated that one of the principal reasons for delay had been the failure of an electricity company to install electricity supplies to programme. Finally, he said this:
"This job can be completed diligently, but only once Paradigm honour the contract they have breached. We have not been paid anything since August 2008, some nine months ago."
On 19 May 2009, Paradigm's solicitors served a notice (the "First Notice") purportedly under Clause 10.1 on Allied. That notice identified seven complaints which were in effect the same as those set out in the Notice of Withholding Payment of 1 May 2009; the suspension and failure to proceed regularly and diligently allegations were elided within one complaint. It called upon Allied to remedy each of these alleged breaches and stated:
"You have 9 working days from receipt of this Notice to rectify the breaches and if those are not rectified within this time limit the contract will terminate in accordance with Clause 10 thereof."
In an accompanying letter of the same date, they wrote to Allied's solicitors about the construction of hoarding around the site saying also:
"The contractual obligations your client has is [sic] to complete the development, which they have singularly failed to do, despite numerous warnings…
We agree that all outstanding issues should be either discussed around the table on a without prejudice basis, and in default that any current disputes be referred to either the court or arbitration. We can discuss details of this later this week…"
On 26 May 2009, Allied's solicitors wrote two letters to Paradigm's solicitors, the first complaining that payment should be made in accordance with the terms of the contract. This clearly related to Interim Payments No. 15. The second letter said this:
"We refer to your letter dated the 19 th May 2009 in which you purport to give Notice alleging breach of the Agreement.
On behalf of Allied…we are replying.
The Notice is in identical terms of the Notice withholding payment and the issues raised have already been answered. A further copy of our letter dated 19 th May is attached.
We would further assert that a number of the matters referred to in the Notice are matters that are not within the control of Allied…who are the Contractor. In particular we will address this point to numbers 4, 5 and 7 of your Notice. These are matters not in any way connected to our clients as the Contractor. It is denied that there has been any breach of the Agreement at all and your clients are not entitled to terminate the Agreement."
Paradigm's solicitors replied on 27 May 2009
"…I note what you say about certain aspects of the Notice, but I do not accept that as being correct. In any event, there are many breaches...
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