Bouygues (UK) Ltd v Febrey Structures Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Jonathan Acton Davis |
| Judgment Date | 10 June 2016 |
| Neutral Citation | [2016] EWHC 1333 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 10 June 2016 |
| Docket Number | Case No: HT-2016-000052 & HT-2016-000054 |
[2016] EWHC 1333 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Jonathan Acton Davis QC SITTING AS A DEPUTY HIGH COURT JUDGE
Case No: HT-2016-000052 & HT-2016-000054
Mr William Webb (instructed by Clarke Willmott) for the Claimant
Mr Adam Robb (instructed by Fenwick Elliott) for the Defendant
Hearing date: 29 th April 2016
The Deputy High Court Judge:
There were two sets of proceedings listed for hearing before the Court. The first was Febrey Structures Limited's application for summary judgment in respect of the enforcement of a decision dated 10 th February 2016 by an Adjudicator (Claim No: HT-2016–000054). The second was proceedings for declarations brought by Bouygues (UK) Limited as to the interpretation of the contract between Bouygues (UK) Limited and Febrey Structures Limited (Claim No. HT-2016–000052)
This case is an illustration of the practice of parties seeking to upset an Adjudicator's Decision by way of the swift final determination of the dispute. In Caledonian Modular Limited v. Mar City Developments Limited [2015] EWHC 1855 (TCC) at paragraph 12, Coulson J said:
"If the issue is a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing, then the defendant may be entitled to have the point decided by way of a claim for a declaration."
That is the approach agreed by the parties to be applicable in these proceedings.
On 28 th April 2016, Bouygues (UK) Limited stated that it would not be pursuing any of the issues that it had raised with respect to the enforcement proceedings. The parties agreed that the focus of the hearing on 29 th April 2016 would be the claim brought by Bouygues (UK) Limited for declarations. Henceforth, therefore, I refer to Bouygues (UK) Limited as the Claimant and to Febrey Structures Limited as the Defendant, as was done by both Counsel during the course of the argument.
The claim arises out of a construction contract dated 28 th May 2015, whereby the Claimant sub-contracted to the Defendant works to construct an in situ concrete frame and structural topping for a new building at the University of Bath for a sum of £626,315.79. The Claimant and the Defendant entered into the Sub-Contract as follows (see paragraph 3 of the Amended Defence and Counterclaim):
(i) Following negotiations between the parties, the Claimant provided the documentation to the Defendant under cover of a letter dated 18 th March 2015;
(ii) The Defendant then signed the documentation and returned it to the Claimant;
(iii) The Defendant started work on site on or about 22 nd or 23 rd March 2015;
(iv) Under cover of a letter dated 28 th May 2015, the Claimant returned a countersigned Sub-Contract.
The Sub-Contract Order is in the Bundle at 83–260. The Sub-Contract Order incorporates the terms of the GC/Works Sub-Contract which is at 261–317 of the Bundle, although as far as this claim is concerned, the key terms are the subject of deletion and full replacement by way of amendments.
The dispute between the parties relates to the payment terms of the Sub-Contract with respect to the Defendant's October 2015 payment application. In particular, the dispute centres on whether, under the Sub-Contract, the Claimant was entitled to serve a Payment Notice or Pay Less Notice with respect to the Defendant's October 2015 payment application on 23 rd November 2015 (as the Claimant contends) or whether the Claimant was required to serve any such notice prior to that date (as the Defendant contends). It is common ground that the Notice was not served until 23 rd November 2015.
The key parts of the Contract as far as this claim is concerned are:
(i) Clause 21 regarding payment dates and, in particular, the amended Clauses 21.1 and 21.2; and
(ii) Appendix 10 to the Contract which sets out a schedule of agreed payment dates.
Clause 21 of the Sub-Contract Conditions, as amended by the Schedule of Amendments, includes the following:
"21.1.1 The Sub-Contractor shall submit to the Contractor applications for interim payment on those dates stated in any schedule of dates for application for interim payment that may be contained in Appendix 8.
21.1.2 Where no such schedule as referred to in clause 21.1.1 is contained in Appendix 8, the Sub-Contractor shall submit to the Contractor applications for interim payments in accordance with the following provisions…"
The Minutes of the Pre-Let Meeting (in fact entitled "Sub-Contract Pre-Let Meeting Minutes") included the following:
(i) At page 10 of 15:
"(6) Sub-Contract Payment Schedule – first app 28/4/15 by 4/3/15 to Edifice."
(ii) At page 13 of 15:
"(68) Honouring period for payment – due date for payment 60% within 21 days final by 35 days."
Appendix 8 of the Sub-Contract contained delivery route information.
Appendix 10
The copy of Appendix 10 in the Bundle is almost illegible. Counsel for the Defendant helpfully transcribed Appendix 10 and it is an Appendix to his Skeleton Argument. If this case is considered by the Court of Appeal, that transcription should be appended to this Judgment.
Appendix 10 was entitled:
"Sub-Contract Payment Schedule – 21 day payment terms for 60%; 35 days for 40%. University of Bath, 4 East South (new construction act compliant)."
The relevant entry is headed "Oct 2015" and reads as follows:
| Application Date | Assessment Date | Due date for payment | Payment notice date | Pay less notice date | Final date for payment |
| 23 Oct 2015 | 2 Nov 2015 | 16 Nov 2015 | 23 Nov 2015 | 20 Nov 2015 | 23 Nov 2015 |
| 40% balance of payment | 4 Dec 2015 | 7 Dec 2015 |
Having started work on site on or about 22 nd or 23 rd March 2015 (Defence and Counterclaim paragraph 3.3) the Defendant submitted its first payment application on 23 rd March 2015. Thereafter, the Defendant continued to submit its monthly payment applications in accordance with Appendix 10 and there were no material disputes until November 2015 when a dispute arose with respect to the payment application for October 2015.
The Defendant submitted its payment application for October 2015 on 23 rd October 2015 as set out in Appendix 10. The sum claimed in the October 2015 payment application was £144,582.06.
As appears from Appendix 10, for the October 2015 application:
(i) The due date for payment was 16 th November 2015;
(ii) The final date for payment for the 60% was 23 rd November 2015, 21 days after the Main Contractor Assessment Date;
(iii) The date for the Claimant to serve its Payment Notice for the whole application was 23rd November 2015;
(iv) The date for the Claimant to serve its Pay Less Notice for the initial 60% of the application was 20th November 2015.
The Defendant argues that the date for the Payment Notice was an obvious error and on an objective construction of the Sub-Contract, that date should be read as 20 th November 2015.
The Claimant did not serve any notice (whether described as a Payment Notice or a Pay Less Notice) on or before 20 November 2015. Instead, the Claimant served a Payment Notice on 23 rd November 2015.
In that Payment Notice, the Claimant valued the Defendant's entitlement as minus £2,041.27.
The Defendant considered that the Claimant had failed to comply with the terms of the Sub-Contract, such that the Defendant was entitled to payment of its October 2015 application notice, mainly:
(i) 60% by 23 rd November 2015; and
(ii) 40% by 7 th December 2015.
The Claimant failed to pay those sums, relying on its Payment Notice dated 23 rd November 2015. So, the Defendant commenced adjudication proceedings by a Notice of Adjudication served on 2 nd January 2016. It did so on the basis that the date for the Payment Notice in Appendix 10 did not comply with the Housing Grants, Construction and Regeneration Act 1996 because the deadline was more than five days after the due date. Thus, it was said by the Defendant that whilst the Claimant had served its Notice in accordance with the Schedule, it was out of time under the 1996 Act.
The Claimant agreed that the Payment Notice date in Appendix 10 was not compliant with the Act but argued inter alia:
(i) The dates in Clause 21 (being compliant with the Act) apply to the application; or
(ii) If Appendix 10 applied, the Pay Less Notice deadline and final date for payment both also had to be replaced by equivalent scheme dates to render the Contract fully compliant.
Thus, on either basis, its Notice of 23 rd November 2015 was in time.
The approach adopted by the Adjudicator did not find favour with either party. In any event, I consider the issues afresh.
In these Part 8 proceedings, the Claimant seeks declarations:
(i) as to the date for Pay Less Notices to be served against the Defendant's October application; and
(ii) that its Notice of 23 rd February 2015 was a valid Pay Less Notice.
Those declarations give rise to two central issues, namely:
(a) the applicability of Appendix 10; and
(b) the construction of Appendix 10.
There is a further issue which arises if the Claimant's Notice of 23 rd November 2015 was served in time, namely whether it was, in form, a valid Pay Less Notice. In addition, the Defendant claims rectification at paragraph 9 of the Defence. The parties agreed that the rectification arguments would not be heard on 29 th April 2016 although there is...
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