Flexidig Ltd v M&M Contractors (Europe) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Waksman |
| Judgment Date | 11 March 2020 |
| Neutral Citation | [2020] EWHC 847 (TCC) |
| Date | 11 March 2020 |
| Docket Number | No. HT-2020-000003 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2020] EWHC 847 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Rolls Building
Fetter Lane
London, EC4A 1NL
Mr Justice Waksman
No. HT-2020-000003
Mr Rupert Choat (instructed by Gateley Plc Solicitors) appeared on behalf of the Claimant
Mr Carlo Taczalski (instructed by Schofield Sweeney, Solicitors,) appeared on behalf of the Defendant.
INTRODUCTION
I have before me an application for summary judgment to enforce the decision of the adjudicator dated 29 December 2019. By that decision, he awarded to the subcontractor, Flexidig Limited (“Flexidig”), and as against its employer, M&M Contractors (Europe) Limited (“M&M”) the sum of £223,597.21 plus VAT, plus interest, plus its costs of the ICE nominating fee. The adjudicator's fees of £15,000 he also ordered to be paid by M&M (“the Enforcement Application”). That application is resisted on a number of grounds by M&M. However, I also have before me M&M's application to dismiss Flexidig's claim altogether on the basis that (a) it has not been served correctly as a matter form, and (b) this court does not have substantive jurisdiction to hear the claim anyway. That application (“the Jurisdiction Application”), is in its turn contested by Flexidig which, to the extent necessary, seeks (a) permission to serve M&M out of the jurisdiction and (b) an order for alternative service or to dispense with the service altogether.
The adjudication which is the subject of the Enforcement Application (“the Adjudication”), is the fourth between these parties. Their disputes arise out of Flexidig's role in carrying out civil works associated with a new Virgin Media underground infrastructure in Louth, Lincolnshire (“the Works”). The infrastructure was a network to facilitate delivery of fibreoptic broadband to people's homes. M&M is a company incorporated in Northern Ireland. It must follow from the Jurisdiction Application, if it succeeds, that I would have no power to entertain and decide the Enforcement Application.
Both applications were listed to be heard by me at the same time as indeed they were on Monday, 9 March. I heard argument on the Jurisdiction Application first and then immediately, and without prejudice to M&M's position on that, as it were, the substantive Enforcement Application. I propose to deal with those matters in the same order here. I will, however, set out the salient background facts first. Before doing that, I should record that I have the following evidence before me. First of all, the witness statement of Mr Van Gelder, solicitor with Gateley on behalf of Flexidig in support of the Enforcement Application dated 6 January. Secondly, the first witness statement of Ms Anderson on behalf of M&M opposing it on 21 February 2020. Then a second statement from Mr Van Gelder dated 28 February, a first witness statement of Mr Lloyd dated 31 January, a second witness statement of Ms Anderson dated 4 March, and then a third witness statement of Mr van Gelder on 5 March and the second witness statement of Mr Lloyd, a director of M&M, of 6 March.
BACKGROUND FACTS — THE CONTRACT
The written subcontract between the parties dated 9 March 2017 (“the Contract”) provides, among other things, as follows, going first to clause 28 headed “Adjudication”:
“(1) Where the Act applies, every party shall have a right to refer a dispute to adjudication at any time;
(2) Either party may give notice to the other at any time of its intention to refer a dispute to an adjudication. Such notice shall be in writing and clearly headed ‘Notice of adjudication’ and include details of the subcontract, the issues which the adjudicator is being asked to decide, details of the nature and extent of the redress sought, and the grounds on which it is sought;
(3) Within seven days of a party giving a notice of adjudication, an adjudicator shall be appointed and dispute referred to the adjudicator for determination.”
Sub-clause (5) says:
“The decision of the adjudicator shall be binding until the dispute if finally determined by legal proceedings in the Northern Ireland court by arbitration or by agreement.”
M&M does not rely on that sub-clause for present purposes. I then go to clause 30 headed “Notices”:
“Any notices that are given under clause 13 or 28 shall either be delivered personally or by recorded delivery post. Any such notice shall be deemed to have been served, if personally delivered, at the time of delivery or posted at the expiry of 48 hours after posting.”
There is a set-off clause in clause 33:
“M&M may deduct, retain, or set off damages, costs, charges, et cetera due from or payable by the subcontractor, Flexidig, arising out of the subcontractor.”
Finally, clause 40, “Governing law”:
“The subcontract is subject to the laws of Northern Ireland and the parties agree to submit to the jurisdiction of the Northern Irish courts.”
It is common ground that for present purposes, this is a non-exclusive jurisdiction clause.
EARLIER ADJUDICATIONS
The works were completed in 2018. M&M contends that they were defective. The first adjudication was brought by Flexidig in respect of reinstatement and by a decision given on 16 August 2018, the adjudicator awarded around £184,000 to Flexidig. On 23 August, M&M issued a writ against Flexidig in Northern Ireland in respect of that adjudication seeking a declaration that the adjudicator did not have jurisdiction to reach its decision that it should be set aside in full and declared to be of no effect and that the decision was made in breach of natural justice, and/or abuse of process, and should be set aside in full and declared to be of no effect.
Those proceedings were never progressed by M&M. That is probably because on 7 September, Flexidig issued proceedings in Northern Ireland to enforce the first adjudication. That ultimately led to a judgment of Horner J to enforce on 13 December 2018. In the meantime, on 25 October, M&M had commenced an adjudication against Flexidig seeking in excess of £1.5 million by way of damages for defects in the works and repayment of the sums said to be overcharged by Flexidig.
THE SECOND ADJUDICATION
That led to a decision by the adjudicator, Mr Baldwin, dated 13 December, to award to M&M the sum of £462,456. He described this award as in respect of an “on account sum”. Flexidig has not paid it.
On 21 December 2018, M&M issued proceedings in the High Court in Northern Ireland to enforce the second adjudication position.
On 7 January, 2019, M&M sought summary judgment in respect thereof.
On 10 January 2019, the parties agreed a stay of the Northern Ireland proceedings to try and resolve their differences. That did not happen and on 6 September 2019, the stay came to an end.
On 2 December 2019, Horner J enforced the second adjudication decision to the extent of £12,000-odd only. This was on the basis that there was no contractual provision for a payment on account. In the meantime, Flexidig had commenced a third adjudication but this was later stayed.
THE PRESENT DISPUTE AND ADJUDICATION
I now turn to the dispute and adjudication in issue before me.
On 26 September 2019, Flexidig made an application for payment number 70 (“the AFP”) in the sum of £2,507,481 and VAT. Of that sum, M&M paid £1.742 million plus VAT leaving £673,374 plus VAT owing according to the AFP. The due date for payment of the latter under the Contract was seven days afterwards, namely 3 October. The Contract provided for a payment notice from M&M also within seven days setting out the sum it considered should be paid and the basis on which it was calculated. No notice of any kind was served by 3 October. However, on 9 October 2019, M&M first of all sent this letter referring to the sum of about £673,000 saying:
“We consider the amount due against this application is zero. The notified sum has been calculated on the basis that M&M dispute Flexidig's submitted measurements used to calculate the application. Furthermore, the works completed by Flexidig have been inspected. The cost of making good the defects has been valued at £1,504,598 and this figure has been submitted to your office previously. Once you have made good the defects and the works signed off by my client, we will evaluate the final account for the project. Please confirm receipt of this formal contract notification.”
Then there is a document attached to that which refers to the claim for £673.000 saying that this was held back from the invoice, as the costs of making good the defects exceeded the value of what was being claimed. It refers again to £1.5-odd million and then refers to the counterclaim, as it were, to bring it to zero of £673,374. However, there was no actual breakdown in those documents of the sum withheld, i.e. the whole of the outstanding AFP or the underlying sum of £1.5 million. On the other hand, it was correct that M&M had previously submitted a claim for the £1.5 million which was broken down. Indeed, it was that claim that led to the second adjudication in which Mr Baldwin awarded the lesser sum of about £462,000. It is common ground that by reason of section 110B(4) of the Housing Grants, Construction and Regeneration Act 1996 (“the Act”), the AFP stood as a payee/default notice and any pay less notice in respect thereof had to be served by 27 October setting out the sum which M&M...
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