Beck Interiors Ltd v UK Flooring Contractors Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 04 July 2012 |
| Neutral Citation | [2012] EWHC 1808 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 04 July 2012 |
| Docket Number | Case No: HT-12-176 |
[2012] EWHC 1808 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Akenhead
Case No: HT-12-176
Michael Wheater (instructed by SGH Martineau LLP) for the Claimant
Adam Temple (instructed by Battens Solictors Ltd) for the Defendant
Hearing date: 28 June 2012
This is an adjudication enforcement and raises two issues, the first being whether all or part of a dispute or disputes had crystallised before the adjudication was commenced and the second being whether part of the adjudicator's decision can be severed leaving the rest to be enforced.
The Background
These findings are based on the documentation and evidence put before the Court and are not intended to bind any final dispute resolution tribunal. On 9 December 2011 Beck Interiors Ltd ("Beck") and UK Flooring Contractors Ltd ("UKFCL") entered into a sub-contract by which UKFCL agreed to install specified floor coverings for renovation work at the Selfridges department store on Oxford Street, London, with a completion date of 5 February 2012; the carpets were to be obtained from specified suppliers, Tim Page Carpets and Altro Floors. This sub-contract was evidenced by Beck's order of the same date and on the face of the order it stated that any "late completion date beyond your Completion Date will result in the Sub-contractor being liable to the deduction/payment of liquidated and ascertained damages at the rates shown in the relevant terms of the Main Contract". A down payment was made by Beck to UKFCL in early January 2012.
It appears that, although the main specified supplier had the carpets in stock, UKFCL did not place an order with the supplier; there is some issue as to whether the main specified supplier had exactly the right quantity of carpet. It may also be the case that a variation was issued in the last week of January 2012. On 10 February 2012, Beck e-mailed UKFCL calling for immediate action to place an order for the carpet with a different supplier saying: "…once this is installed and the project is complete we can discuss who pays what and how much etc…for the replacement carpet." The response on the same day from UKFCL asked for "confirmation that no charges will be placed against UK Flooring for any late fees, temporary carpet or any other counter charges. We have explained the situation to you regarding Tim Page carpets and are not willing to accept any charges due to their delays."
Be that as it may, by 13 February 2012, no carpet had been supplied let alone laid by UKFCL. On that date, UKFCL stated in an email to Beck that it was withdrawing from the contract on the basis that the problems were down to the errors of Beck's named supplier. UKFCL's entitlement to do so is disputed by Beck who argue that this was a repudiation of the sub-contract.
Also on 13 February 2012 Beck asked UKFCL to return the down payment but which are still not been returned by 15 March 2012.
On 15 March 2012 after some other correspondence, Beck's solicitors on its behalf put forward a "Schedule of Costs Incurred" that it alleged were caused by a repudiatory breach of contract by UKFCL, which Beck purported to accept saying that UKFCL was "wholly liable for your failure to properly secure the permanent carpet by failing to make the required down claimant expeditiously or at all". It said that as a result of the "abandonment of the works, our client was left with no alternative but to progress the works by utilising alternative contractors." In relation to the schedule of losses they added that their client "reserves the right and to add to this schedule"; the listed costs amounted to £30,826.15 plus VAT; these losses included such heads as the purchase laying and taking out of temporary carpets. On 27 March 2012 an increased claim for losses in the sum of £31,148.97 was put forward by Beck. No breakdown was given of the small increase.
Easton Bevins, surveyors acting on behalf of UKFCL, had been in touch with Beck's solicitors towards the end of March 2012. Those solicitors wrote on 27 March 2012 saying that Beck would refrain from issuing formal proceedings until 28 March 2012 pending a formal response. Unless UKFCL paid the sum of £31,148.97 by close of business on 28 March 2012, they were instructed to commence proceedings without further notice.
On 2 April 2012 Easton Bevins stated that they had advised UKFCL to return the down payment previously paid by Beck to UKFCL for the procurement of the carpet. Otherwise, Easton Bevins stated that the lack of the Asis Carpet was caused by Beck's nominated sub-contractors and suggested that UKFCL was not liable for the same.
On 5 April 2012 the Thursday before the Easter bank holiday weekend, Beck sent by an e-mail (timed at or shortly after 5 pm) a short letter to UKFCL in which it claimed liquidated and ascertained damages ("LADs") for the first time:
"…pursuant to clause 3.2 of the Sub-Contract, liquidated and ascertained damages in the sum of £20,000 per week (Main Contract rate) from the first day following the Completion Date, i.e. 6 February 2012 up to today's date and continuing thereafter until completion of your Sub-Contract works by others.
For the avoidance of doubt, this is in addition to the sum of £31,148.97 plus VAT previously claimed by us".
On 10 April 2012, the first working day after Easter and a Tuesday (the first business day after 5 April 2012), at 16.48 pm the Claimant issued its notice of intention to refer the dispute, which was sent to RICS as the adjudicator nominating body, and thereafter Mr Jonathon Cope was nominated. That notice set out that UKFCL was liable for £36,000, alleging that the sub-contract works had been completed on 16 February 2012, in addition to the other sums also claimed. The Notice of Adjudication sets out many of the facts set out above. A total of £67,148.97 plus interest was claimed and declarations were sought in effect relating to liability and asking in Paragraph 30 that the adjudicator:
"(d) Decides that the sum of £31,148.97 plus VAT or such greater or lesser sum as the Adjudicator shall decide is due…in respect of losses incurred by Beck.
(e) in addition, decides that the sum of £36,000 plus VAT is due from UKFCL to Beck in respect of liquidated and ascertained damages."
Mr Jonathan Cope was appointed as the adjudicator. Beck served its Referral Notice on 13 April 2012. On 23 April 2012, UKFCL served its Response, which submitted that Mr Cope did not have jurisdiction, as UKFCL had not had a chance to respond to Beck's claimed damages (in particular the LADs but also in relation to the updated claim sent on 27 March 2012). On 26 April 2012 after considering the parties' submissions on jurisdiction, Mr Cope sent the parties his non-binding decision that he did have jurisdiction. It is accepted that there was a valid reservation by UKFCL.
On 17 May 2012 after further rounds of submissions including a Reply, Rejoinder (in which UKFCL expressly maintained its position as to Mr Cope's jurisdiction) and a Surrejoinder, Mr Cope produced his decision, which awarded Beck £19,763.41 for its alleged losses and £33,600 for alleged LADs, together with interest and the requirement that UKFCL, in the first place, pay his fees.
The Notice of Adjudication and the Adjudicator's Decision
It is necessary to look in a little more detail at these two documents. The Notice of Adjudication first sets out details of the sub-contract and then the "The Dispute" between Paragraphs 5 and 29. Paragraph 5 describes that: "in brief terms, Beck claims from UKFCL sum of £67,148.97 plus VAT and interest following Beck's determination of the Sub-Contract…" saying that the detail was set out in the following paragraphs which from paragraphs 6 to 27 describes the history (largely as set out above) up to Easton Bevins' letter of 2 April 2012. Paragraph 28 then states:
"With regards to…("LADs"), Beck wrote to UKFCL on 5 April 2012 setting out its claim in respect of the same. Clause 3.2 of the Sub-Contract states that if UKFCL does not complete works by the Completion date then UKFCL shall be liable to Beck for LADs at the rate in the Order. The rate stipulated in the Order is that of the Main Contract, which is £20,000 per week or pro rata thereof. This equates to £4,000 per working day. Beck therefore claims from UKFCL, the following LADs:
(i) The sum of £24,000 for the period from the first working day following the Completion Date i.e. 6 February 2012 to the date of 13 February 2012 (6 working days) when UKFCL advised it would no longer perform its obligations under the Sub-Contract.
(ii) The sum of £12,000 for the period from 14 February 2012 up to the date of 16 February 2012 when UKFCL's works were completed by others (3 working days)."
In Paragraph 29 Beck claimed the sum of £67,148.97 which was made up of the two sums, £31,148.97 for the costs of completion and £36,000 as set out above for liquidated damages. It claims for interest under the Late Payment of Commercial Debts (Interest) Act 1998.
The decision of the adjudicator addresses the various issues in a logical order identifying the nature of the dispute(s) relating to Beck's claims for £31,148.97 for completion work and liquidated damages of £36,000 (see Paragraph 4). It sets out the "redress sought" as set out in the Notice of Adjudication and the Referral Notice and the issues which were whether Beck was entitled to determine UKFCL's employment, whether Beck was entitled to payment and, if so, how much and whether Beck was entitled to interest and compensation and, if so, how much. He has a chapter on jurisdiction and then moves on to consider the issues which he has...
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