Associated Bulk Carriers Ltd v Koch Shipping Inc.
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BRIDGE |
| Judgment Date | 20 January 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J0120-2 |
| Docket Number | 1974E No. 3586 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 January 1976 |
[1976] EWCA Civ J0120-2
The Master of the Rolls (Lord Denning)
Lord Justice Lawtqn
and
Lord Justice Bridge
In The Supreme Court of Judicature
Court of Appeal
On Appeal from The High Court of Justice
(Mr. Justice Kilner -Brown
MR. DAVID KEMP Q.C. and MR. RICHARD FLOWER (instructed by Messrs. Bristows, Cooke & Carpmael, Solicitors, London) appeared on behalf of the Plaintiffs (Appellants).
MR. DONALD KEATING Q.C. and MR. JOHN DYSON (instructed by Messrs. Masons, Solicitors, London) appeared on behalf of the Defendants (Respondents).
In this appeal we are concerned with the outcome of a big building project at the old Hendon Aerodrome. Two local authorities combined in it. The Greater London Council were to build a large number of dwelling houses for individuals to occupy. The Barnet Council were to build a comprehensive school and other buildings for the use of the community as a whole. Each of those bodies, the Greater London Council and Barnet, employed Wates Construction Ltd. as the main contractors for each of the contracts. Wates Construction Ltd. in their turn, employed as subcontractors Ellis Mechanical Services Ltd. Ellis's were to provide the heating system and all the mechanical services which were required for both the two contracts. The main contract, between the GLC and Wates, was for an estimated sum of £9½. That was granted in June of 1970. The subcontract with regard to that, by Wates to Ellis's, was for over £lm.
The work went forward: but then, for reasons that we do not know, on 22nd February 1974, the Wates and GLC contract was determined. It came to an end, each of the two parties Saying that the other had repudiated it. That is no concern of Ellis's the subcontractors, except in so far as it entitled them to be paid. The main contract and the subcontract were on the usual RIBA form, with some slight variations, but on this main contract being determined, the subcontractors became entitled to a paid in accordance with clause 21 of the subcontract, which I shall read.
It says: "If for any reason the contractors' employment under the main contract is determined, then the employment of the subcontractor under this subcontract shall thereupon also determine and the subcontractors shall be entitled to be paid".
Then there are four items: (i) the value of the subcontract works in so far as they had been completed at the date ofdetermination; (ii) the value of the work begun and executed, but not completed; (iii) the value of the unfixed materials on the site, in which the property passed to the employer; and (iv) the cost of materials off-site ordered, for which the subcontractor had paid or been charged.
So there it is; it is quite plain on clause 21 that the subcontractor was entitled to be paid in effect for all the work they had done and all the materials they had there available at the date 22nd February 1974.
Ellis's accordingly wanted to be paid by Wates. They had been doing the work hitherto to the order, and under the supervision of, the GLC architect. That was provided in the contracts. Certificates had been given by the GLC architects and engineers. When Ellis's wanted payment they went back to the last interim certificate, which was one of 25th January 1974. Looking at that interim certificate, the engineers had certified a sum of getting on for £700,000. Much of it had been paid already, but there had been retained, as against the subcontractors, a sum of £52,437. That had been retained as against them retention money according to the retention clauses in the contract. It was retained pending completion, but it was payable for work that had already been done. Ellis's having nothing more definite to go upon at that stage, claimed those retention monies as being at least the monies that ought to be paid to them for the work that had been done. But Wates refused to pay that sum, or any sum.
I have no doubt that Wates were arguing their own liability out with the GLC. But eventually further accounts were got out by Ellis's. So much so that, by November 1974, they worked it out that they were entitled to £187,004.93. Having worked that out they issued a writ for the full amount, or the amount as they worked it out then, that was due to them. They applied forjudgment under Order 14. They did not claim the whole of that amount. They realised that arguments might arise about details.
But in support of the claim for judgment under Order 14, Mr. Newman swore that he believed that there was no defence in respect of £52,437 – that is the amount that had been retained. He said that there was no defence to that, and they were ready to refer the balance to arbitration. They were ready to go to arbitration as to any excess amount, but they felt that they ought to be paid that £52,437.
They came before the Master. The Master thought that that was right. He gave Ellis's judgment for the £52,437 and gave Wates leave to defend as to the balance, but said that by consent it was to go to arbitration.
From that order of the Master, Wates appealed to Mr. Justice Kilner-Brown. The judge was evidently in two minds about it, but he thought that perhaps there were points to be taken on the accounts, and it was not altogether clear that the £52,000 was really owing. At all events, he thought that the whole thing should be dealt with in the arbitration. So he allowed the appeal from the Master and set aside that judgment for £52,000. He referred the whole matter to arbitration. Now there is an appeal to this court.
There is a point of procedure which arises at the beginning, Ellis's thought that they could not appeal against what was virtually an unconditional leave to defend. So in their notice of appeal they asked for an order that if the action were stayed it should only be stayed on condition that Wates paid £52,437. I would like to say at once that, as a matter of procedure, an appeal is competent from the decision of Mr. Justice Kilner-Brown. I think that we ought either to allow an amendment or have a notice of appeal put in, so as to enable this court, if it thinksright, to give judgment for such an amount as is undoubtedly due, and let the remainder go on to arbitration.
There is a point on the contract which I might mention upon this. There is a general arbitration clause. Any dispute or difference arising on the matter is to go to arbitration. It seems to me that if a case comes before the court in which, although a sum is not exactly quantified and although it is not admitted, nevertheless the court is able, on an application of this kind, to give summary judgment for such sum as appears to be indisputably due, and to refer the balance to arbitration. The defendants cannot insist on the whole going to arbitration by simply saying that there is a difference or a dispute about it. If the court sees that there is a sum which is indisputably due, then the court can give judgment for that sum and let the rest go to arbitration, as indeed the Master did here. So much for the point of procedure.
Now we have to turn to see whether there is a claim, this £52,000-odd being indisputably due. There has been a large number of affidavits and a tremendous number of accounts put before us but things have been brought up-to-date before us, far more than they were when they were before the Master, or the judge. By the time the case came before us there had been final valuations agreed – agreed by the GLC themselves (and ultimately they are the paymasters) – by which valuations are agreed, in respect of the work done under this very subcontract.
Mr. Keating says that those valuations are not binding upon him or his clients. That is perfectly true. He also says that he is in a very great difficulty: because he had no surveyors, or people on the site, when the work was being done and that he has had to rely only on getting a surveyor afterwards to try and check the figures. He says that the figures given are unreliableand that there is a great number of errors, or possible errors, in them and that there ought to be leave to defend as to the whole amount. He relies on the case of Contract Discount Ltd. v. Furlong (1948) 1 All England Reports, page 274, in which it-was suggested at page 276 that where it is all a matter of account and much has to be sorted out on the accounts, leave to defend as to the whole should be given.
That is all very well; but, as all of us with experience of building and construction cases are aware, there is inevitably something due. In most cases it can be said with certainty that £X is due. In such a case the court gives judgment for the £X and gives leave to defend as to the balance. Otherwise it would mean that the builders and contractors could be kept out of a great portion of their money indefinitely by the employers simply saying "I want to investigate the accounts". The employer could force the builder into bankruptcy by saying that he wants to sort out the accounts. So the court does not allow a guilder or contractor to be kept out of the whole of his money on such an excuse. It gives judgment for such suns as it is reasonably seen is due.
Taking now this particular case, as I have said, when the writ was issued,...
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