All in One Building & Refurbishments Ltd and Makers UK Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 19 December 2005 |
| Neutral Citation | [2005] EWHC 2943 (TCC) |
| Date | 19 December 2005 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Claim No: HT–05–319 |
[2005] EWHC 2943 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
St Dunstan's House
133–137 Fetter Lane
London, EC4A 1HD
His Honour Judge David Wilcox
Claim No: HT–05–319
Calum Lamont (instructed by Nelsons) for the Claimant
Kim Franklin (instructed by Over Taylor Biggs) for the Defendant
His Honour Judge Wilcox
All In One Building & Refurbishments Limited (AIO) are building contractors. They were engaged under a sub-contract dated 22 November 2004 by Makers Ltd (Makers) to refurbish flats in a development at Northampton. AIO were incorporated on 19 th May 2004. They used agency labour and hired in necessary plant. The interim payment provisions it seems were operated satisfactorily during the early part of the contract.
It is evident from the correspondence between the parties in July 2005 that there were issues as to the provision of labour to the project by AIO. On 26 July 2005 Makers proposed that in relation to 28 flats other sub-contractors should undertake AIO's work and prepared an agreement to that effect.
On 27 July a counter proposal was put forward by AIO that they would leave the site completely allowing other sub-contractors of Makers' choice to complete the works subject to payment of a reasonable financial sum from Makers for AIO to depart the site.
On 27 July 2005 Makers noted AIO's letter characterising it as an acceptance of the need to sub-let their works and confirming that in relation to a proposed financial package such a settlement should be based upon the value of the works to date:
"… as such it is not in our financial interests to allow All In One to void their contractual obligation …"
On 29 July Makers issued a notice under Clause 14 of the sub-contract notifying an intention to determine the sub-contract alleging default under Clause 14.2.1.1 for having no supervision or labour on site to carry out the works, and, as they were obliged to do, giving AIO five days in which to remedy the situation.
On 29 July 2005 AIO issued a written Confirmation of Verbal Instruction (CVI) given by Makers Ltd dated 29 July 2005, it said:
"… as per Makers Ltd verbal instruction all of our labour has been asked to leave site at 9.30 am …"
It bore the signature of Maker's quantity surveyor, Mr Steve Bullen, and was countersigned on behalf of AIO.
On 12 August 2005 AIO wrote to Makers:
"We formally put on record that on Thursday 28 July 2005, Makers UK Ltd engaged third parties to undertake our works and on Friday 29 July 2005 Makers instructed our site management and operatives to vacate the site at 09.30 hours. This instruction has been recorded on Confirmation of Verbal Instruction No.1/204141 and is signed by an authorised agent of our Makers. As a result, All In One Building & Refurbishments Ltd are excluded from the project's premises and therefore no longer have possession of the site.
Your company's action is a repudiatory breach of contract and as such, we are no longer bound by the sub-contract and hereby terminate our employment under the sub-contract.
We shall be forwarding our account shortly, which will include our claim for damages flowing from your breach.
A dispute now exists under the sub-contract."
On 15 August AIO sent a draft assessment of account and claim up to the date of their determination of employment under the contract.
It amounted to £547,411.05. It was made up of five items. Four of those items were supported by eleven spreadsheets with detailed information. Those items comprised: a contract schedule of works £239,855.88; instructions £118,097.59; flooring package £4,810.24; materials on site £14,811.95 and loss and expense matters £9,922.80.
The fifth item amounted to £159,912.59, it was for "claim for loss of overheads and profit on element of incomplete works arising out of the repudiatory breach by Makers UK Ltd". The only detail vouchsafed then or later was that this was 21.10%. No breakdown was given and it was not a figure that was implicit in the build up of figures provided.
On 15 August AIO served a notice of referral invoking the adjudication procedure under the Housing Grants Construction & Regeneration Act 1996.
It was drafted by their solicitors. The requirement for such a notice is to give the receiving party notice of the dispute to be referred, to give the appointing body precise details of the dispute to avoid appointing an adjudicator who may have conflicting interests, and to enable the adjudicator to be able to consider the acceptance of an appointment to resolve such a dispute within a very tight timescale.
The referral notice states:
"The nature of the dispute is non payment by Makers of AIO's Interim Application dated 15 August 2005 in the gross sum of £547,411.05 in respect of which £309,866.90 is outstanding together with VAT.
2.
No notices to withhold have been given by Makers with respect to this application.
Further AIO will say that Makers is in repudiatory breach of contract in that on 29 July Makers informed AIO that it was to leave site and thereby deny AIO possession of the site in question.
AIO will ask the adjudicator to:
(1) make a decision as to whether or not Makers acted in repudiatory breach of contract by ordering them to leave site on 29 July 2005;
(2) direct that Makers do pay to AIO the outstanding sum of £309,866.90 or such other sum as the adjudicator shall direct."
This was followed by a claim for interest and payment of fees.
Miss Franklin contends that the notice defines the extent of the adjudicator's jurisdiction and that at the time of the referral there were no disputes between the parties at all. Mr Lamont submits that the notice of referral should be read together with AIO's letter of 12 August which clearly identified the claims for money owed and for a declaration that Makers had wrongfully repudiated the contract and for damages for breach.
It was clear that disputes had arisen. It is a matter of fact whether a dispute has arisen. Denial of a claim gives rise to a dispute.
A denial of a claim may be express or by conduct. In Collins Ltd v Baltic Quay Management (1994) Ltd [2005] 1 BLR p.63 the Court of Appeal approved the approach of Jackson J as to some relevant considerations for a court ascertaining whether or not a dispute had arisen in Amec Civil Engineering Ltd v Secretary of State for Transport, October 2004, unreported.
Relevant to the present case are the propositions 4, 5 and 7 in paragraph 68 of that judgment:
"4. The circumstances from which it may emerge that a claim is not admitted are Protean. For example, there may be an express rejection of the claim. There may be discussions between the parties from which objectively it is to be inferred that the claim is not admitted. The respondent may prevaricate, thus giving rise to the inference that he does not admit the claim. The respondent may simply remain silent for a period of time, thus giving rise to the same inference.
5. The period of time for which a respondent may remain silent before a dispute is to be inferred depends heavily upon the facts of the case and the contractual structure. Where the gist of the claim is well known and it is obviously controversial, a very short period of silence may suffice to give rise to this inference. Where the claim is notified to some agent of the respondent who has a legal duty to consider the claim independently and then give a considered response, a longer period of time may be required before it can be inferred that mere silence gives rise to a dispute.
7. If the claim as presented by the claimant is so nebulous and ill-defined that the respondent cannot sensibly respond to it, neither silence by the respondent nor even an express non-admission is likely to give rise to a dispute for the purposes of arbitration or adjudication."
Miss Franklin relies upon the oft cited passages as to what constitutes a dispute in Fast Track Contractors v Morris [2000] 1 BLR 171 at p.176 and in KNS Industrial Services (Birmingham) Ltd v Sindall Ltd [2000] Con LJ 170 at p.179. These early helpful analyses with others were considered in Amec v Baltic Quay (supra).
It is evident that the proper approach is to adopt a rigorous and common sense approach, bearing in mind that these issues arise in a comparatively modest construction dispute and there is no warrant for being legalistic and overly technical when considering what labels are used when identifying whether and what dispute has arisen.
The court must look to the substance of the claims identified and denied and not to the descriptive labels variously attached by lay persons and professionals.
Thus, in this case, I do not accept Miss Franklin's argument that since the original demand for payment was described in terms of an interim application that the claim could not be considered as a dispute until the 30 days contractually allowed for interim payments had lapsed.
From the very outset, and by 13 August it was clear that both parties accepted that the contract had wrongfully been brought to an end although each party blamed the other for being the contract breaker, Makers later going as far as saying that the CVI was not signed by their quantity surveyor. It was also evident that Makers were not going to pay what was claimed by AIO for the alleged financial consequences of the breach. By the time of the notice of referral issue was joined as to the claims.
Miss Franklin's fallback argument that the assessed figures were akin to a draft final account, and that because under the contract two months was allowed for payment of a final account a dispute would not crystallise until the expiration of that period I also reject. The...
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