Benfield Construction Ltd v Trudson (Hatton) Ltd
|England & Wales
|MR. JUSTICE COULSON
|17 September 2008
| EWHC 2333 (TCC)
|Case No: HT-08215
|Queen's Bench Division (Technology and Construction Court)
|17 September 2008
 EWHC 2333 (TCC)
Mr. Justice Coulson
Case No: HT-08215
IN THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT
QUEEN'S BENCH DIVISION
Royal Courts of Justice
London, WC2A 2LL
Ms. Camille Slow (instructed by Wright HassallLLP for the Claimant
Mr. Piers Stansfield (instructed by Else Commercial) for the Defendant
This is a contested application to enforce the decision of the adjudicator dated 2nd July 2008, given in the claimant's favour, in the sum of £79,569.79. The defendant maintains that the adjudicator had no jurisdiction to reach this decision because the dispute was the same or substantially the same as an earlier dispute previously referred to and decided by another adjudicator. Accordingly, this is another case illustrating the potential difficulties of what has come to be called serial adjudication.
I set out in Section B below a summary of the relevant facts. At Section C below, I identify the relevant principles and, at Section D below, I analyze whether the adjudicator had the necessary jurisdiction to reach the decision of 2nd July 2008. I have been greatly assisted in this task by the clarity and economy of counsel's submissions.
B. BACKGROUND FACTS
B.1. The Contract
By a contract dated 21st December 2005, which incorporated the JCT Standard Form of Contract (With Contractor's Design) 1998 edition, the defendant employer engaged the claimant contractor to carry out the design and construction of two houses and external works on land known as Hatton Flight, near Hatton in Warwickshire. The defendant's agent for the purposes of the contract was Osborne Clewett Colledge, (“Osbornes”). The date for completion was 29th September 2006. The rate of liquidated damages was £1,500 per week.
Clause 16.1 of the JCT standard form dealt with practical completion and provided that when works have reached practical completion:
“…the Employer shall give the Contractor a written statement to that effect, which statement shall not be unreasonably delayed or withheld and Practical Completion of the Works shall be deemed for all the purposes of this Contract to have taken place on the day named in such statement.”
Pursuant to clause 17.1, the defendant was entitled, prior to practical completion of the works, but with the claimant's contractor's consent, to take possession of any part or parts of the works and, if that happened, clause 17.1.1 provided that practical completion of the relevant part “shall be deemed to have occurred” on the date of partial possession. Clause 24 allowed for the deduction of liquidated damages, and clause 25 allowed the contractor to make a claim for extensions of time on the happening of certain relevant events. Clause 25 permitted the employer to deduct liquidated damages provided that there was a notice of non-completion.
The adjudication provisions of the contract are set out in clause 39A. It is unnecessary for me to recite them all, but it is perhaps important that I set out in full clause 39A.7, which provided:
“7.1. The decision of the Adjudicator shall be binding on the Parties until the dispute or difference is finally determined by arbitration or by legal proceedings or by an agreement in writing between the Parties made after the decision of the Adjudicator has been given.
7.2. The Parties shall without prejudice to their other rights under the Contract comply with the decision of the Adjudicator; and the Employer and the Contractor shall ensure that the decision of the Adjudicator [is] given effect.
7.3. If either Party does not comply with the decision of the Adjudicator the other Party shall be entitled to take legal proceedings to secure such compliance pending any final determination of the referred dispute or difference pursuant to clause 39A.7.1”
The works were seriously delayed. Osbornes granted the claimant an extension of time to 25th May 2007 but the works remained incomplete.
On 17th August 2007, a representative of Osbornes and a representative of the claimant contractor signed a proforma document that had been produced for that purpose by the claimant. The document bore its name and then went on to say:
“Handover Form —COMMERCIAL
Project: Hatton Flights
Client: Trudson (Hatton)
I confirm that on the final inspection of this property the works were accepted as complete, subject only to the following outstanding items being dealt with in a reasonable time…”
The document then set out a list of defects. In addition, there was confirmation that sets of keys and operating and maintenance manuals had been provided. Certain other keys were said 'to follow'.
On 3rd September 2007, Osbornes wrote to the claimant saying that, in view of the existence of a particular defect in the floor screed, it was not possible for them to certify practical completion. In its reply of 5th September, the claimant took issue with this, pointing out that the defect with the screed was not a matter identified in the handover form of 17th August and that, as a result, practical completion was effective from 17th August. The fact and content of the handover form was therefore critical to the claimant's case from the outset.
It is, I think, common ground that the properties suffered from a variety of defects and required extensive remedial works which were carried out by the claimant over the following months. Those works have been recently completed and Osbornes have certified practical completion as having been achieved on 14th August 2008.
B3. Adjudication 1
On 4th April 2008, the defendant's solicitors served a notice of adjudication. The dispute referred to adjudication was said in the notice to arise out of the defendant's contention that practical completion had not at that stage occurred whilst, as we have seen, the claimant was saying that it had occurred on 17th August 2007. The defendant sought a declaration that practical completion had not occurred at the date of referral, namely 4th April 2008.
In the subsequent referral notice, the defendant again identified the claimant's principal contention that practical completion had occurred on 17th August 2007. It was said that that claim arose “both on the basis that as a matter of fact the works were complete and on the basis of the production of certain documents …”. This point was developed in paragraph 5.5 of the referral notice as follows:
“Benfield rely upon a documentary argument that certain documents, namely Handover Forms, were signed by a representative of Osbornes and, therefore, a Statement of Practical Completion has been issued which is binding on the parties regardless of the factual position on site. It appears to be common ground that the ongoing damp/moisture issues on site must have arisen prior to 17th August 2007. There is no evidence that, for example, this is a latent defect which has subsequently appeared.”
In its response, the claimant did indeed allege that practical completion occurred on or about 17th August 2007 and relied expressly upon the handover form: see paragraphs 16.18 to 16.23 of that document. At paragraph 16.20 the claimant alleged that practical completion “was and is deemed for all the purposes of the contract to have taken place on the day named in the written statement [the handover form], 17th August 2007”. In addition paragraph 16.21 alleged that the handover form “has deeming effect”.
Nowhere in that document (or indeed in any of the documents provided to the adjudicator) did the claimant draw any distinction between clauses 16 and 17 of the contract. But in my judgment, the various passages from the adjudication documents to which I have referred above make plain that the dispute as to practical completion was both a matter of fact and also something that, according to the claimant, was deemed to have happened as a result of the contents of the handover form of 17 th August 2007.
At paragraphs 30–34 of his decision of 14th May 2008 the adjudicator, Mr. Don Smith, considered the handover form and concluded that practical completion had not occurred on 17th August 2007, and had still not occurred at the date of the adjudication notice. In reaching that conclusion, he dealt in some detail with the contents of the handover form itself. He expressly rejected the suggestion that the form “can be deemed to be a written statement to the effect that practical completion had taken place”. Paragraph 33 of his decision sets out the particular reasons for that conclusion. He made no express reference to clause 17.
B.4. Adjudication 2
Adjudication 2 was also commenced by the defendant's solicitors on 4th April 2008. It was concerned with the liquidated damages due to the defendant if it was right and no extension of team was due, so that practical completion had still not been achieved. It is common ground that the claimant's response in the second adjudication repeated, in the same or substantially the same terms, the points about deemed practical completion that were set out in their response in adjudication 1 (paragraph 12 above). The same adjudicator, Mr. Smith, considered that the defendant was entitled to liquidated damages for the relevant period and awarded them the sum of £75,428.57. It is also common ground that that sum has been paid by the claimant.
B.5. Adjudication 3
By a notice of adjudication dated 28th May 2008 the claimant's claims consultants sought to initiate a third adjudication. Paragraph 7 of the notice said that the defendant had...
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