Brims Construction Ltd v A2m Development Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 28 October 2013 |
| Neutral Citation | [2013] EWHC 3262 (TCC) |
| Docket Number | Case No: HT-13-335 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 28 October 2013 |
[2013] EWHC 3262 (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-13-335
James Bowling (instructed by DAC Beachcroft LLP) for the Claimant
Peter Oliver (instructed by Clarke Mairs LLP) for the Defendant
Hearing date: 17 October 2013
Introduction
By these proceedings, Brims Construction Ltd ("Brims") seeks to enforce an adjudicator's decision dated 28 August 2013. Issues are raised concerning the adjudicator's jurisdiction and whether there was a breach of the rules of natural justice on his part. These largely arise out of arguments relating to whether the Notice of Adjudication was sufficiently broadly drafted, and if not, whether the way in which the parties chose and were invited by the adjudicator to argue matters in the adjudication reference amounts to a waiver of any jurisdictional challenge and, if not, whether the adjudicator wrongly shut out one of the parties from adducing evidence.
The Background
By a written contract (the "Contract") entered into in October 2012, A2M Developments Ltd (A2M") employed Brims to construct a new care home at Whickham View, Denton, Newcastle-Upon-Tyne. The contract was in the JCT 2011 form of the Intermediate Building Contract with contractor's design. There was an adjudication clause, Clause 9.2, which incorporated the Scheme for Construction Contracts.
Relevant provisions of the Contract are:
(a) The Contract Particulars specified that the Date of Possession (which heralded commencement of the works) was to be 25 June 2012 and that the "first due date" for interim payments (in relation to Clause 4.7.1) was to be "July 2012 and thereafter the same date in each month or the nearest Business Day in that month". A footnote said that the "The first date should not be more than one month after the Date of Possession". The contractual Date for Completion of the Works was specified as 1 April 2013.
(b) Clause 4.7 stated:
".1 Subject to any agreement between the Parties as to stage payments, the due dates for interim payments by the Employer are:
.1 for the period up to the date of practical completion of the Works, the monthly dates specified in the Contract Particulars…
.2 The Architect/Contract Administrator shall not later than 5 days after each due date issue an Interim Certificate, stating the sum that he considers to be or have been due at the due date to the Contractor in respect of the interim payment, calculated in accordance with clause 4.8, and the basis on which that sum has been calculated…"
(c) Clause 4.10 is in these terms:
".1 In relation to any interim payment the Contractor may not less than 7 days before the due date make an application to the Quantity Surveyor (an 'Interim Application'), stating the sum that the Contractor considers will become due to him at the relevant due date in accordance with clause 4.8 and the basis on which that sum has been calculated.
.2 If an Interim Certificate is not issued in accordance with clause 4.7.2, then:
.1 where the Contractor has made an Interim Application in accordance with clause 4.10.1, that application is for the purposes of these Conditions an Interim Payment Notice; or
.2 where the Contractor has not made an Interim Application, he may at any time after the 5 day period referred to in clause 4.7.2 give an Interim Payment Notice to the Quantity Surveyor, stating the sum that the Contractor considers to be or have been due to him at the relevant due date in accordance with clause 4.8 and the basis on which that sum has been calculated."
(d) Material parts of Clause 4.11 are as follows:
".1 Subject to clause 4.11.4, the final date for payment of an interim payment shall be 14 days from its due date.
.2 Subject to any Pay Less Notice given by the Employer under clause 4.11.5, the sum to be paid by the Employer on or before the final date for payment shall be the sums dated as due in the Interim Certificate.
.3 If the Interim Certificate is not issued in accordance with clause 4.7.2, but an Interim Payment Notice has been given under clause 4.10, the sum to be paid by the Employer shall, subject to any Pay Less Notice under clause 4.11.5, be the sum stated as due in the Interim Payment Notice.
.4 Where an Interim Payment Notice is given under clause 4.10.2.2, the final date for payment of the sum specified in it shall for all purposes be regarded as postponed by the same number of days as the number of days after the expiry of the five-day period referred to in clause 4.7.2 that the Interim Payment Notice is given.
.5 If the Employer intends to pay less than the sum stated as due from him in the Interim Certificate or Interim Payment Notice, as the case may be, he shall not later than 5 days before the final date for payment give the Contractor notice of that intention in accordance with clause 4.12.1 (a 'Pay Less Notice'). Where a Pay Less Notice is given, the payment to be made on or before the final date for payment shall not be less than the amount stated as due in the notice."
The Works proceeded into 2013 apparently without any great issue between the parties other than alleged late payments. Towards the end of the project, however, issues did arise in relation to the payment due up to and including June 2013. The adjudicator was later to hold that the "due date" under the Contract was 25 June 2013 (in effect calculating that as one month from the Date of Possession). Brims did not issue any Interim Application before then but did dispatch on 28 June 2013 to the Quantity Surveyor a detailed "Interim Application for Payment and Payment Notice" for June 2013. That showed a net sum due including VAT of £391,630.37. The history does not relate precisely what happened over the next few days but there was evidence that Brims called for a meeting with the Quantity Surveyor which was held on 8 July 2013, at which the application was considered in detail albeit that no agreement was reached as to a figure which the Quantity Surveyor would recommend to the Architect. Practical Completion was certified on 12 July 2013.
However, on 15 July 2013, the Architect issued an Interim Certificate in the net sum of £120,340.30, apparently exclusive of VAT. By letter dated 18 July 2013, A2M's solicitors by letter purported to issue a Pay Less Notice explaining that the Employer considered that the sum due to Brims was £62,940.30, and seeking to justify the deduction by reference to alleged defects and alleged culpable delay. Brims' solicitors responded on 22 July 2013 to the effect that Brims had made a contractually valid Interim Application on 28 June 2013 which led to an entitlement to payment for the full amount because no Pay Less Notice was served in time. A2M's solicitors responded on 23 July 2013 that the "due date" was 25 June 2013 and that in effect the 28 June 2013 "application" was not an Interim Application at all. However the letter went on to refer to the meeting between Brims and the Quantity Surveyor on 8 July 2013:
"…on which date your client made its application to the Quantity Surveyor. Were the date of your client's application relevant to the determination of the Due Date, the date of that application was 8 July 2013 and not 28 June 2013.
In the alternative, by requesting that the Quantity Surveyor not to issue any evaluation of your client's application until he had met with your client, your client estopped itself from relying on any earlier date than that of the meeting as being the date of that application.
Your client made an Interim Application which could have taken effect with respect to the Due Date not more than 14 days after the date of Practical Completion…"
Shortly thereafter, Brims instituted adjudication proceedings.
The Adjudication
Brims' Notice of Adjudication was issued and served on 30 July 2013. Materially, it said as follows:
" The nature and a brief description of the dispute
6. A dispute has arisen between the parties to the Contract. The dispute concerns the failure by [A2M] to pay the amount to which [Brims] was entitled for work done up to 28 June 2013 by the final date for payment.
7. [Brims] claims two amounts in the alternative. The first is the amount due to [Brims] pursuant to the Interim Payment Notice issued on 28 June 2013 or, in the alternative, the amount due to [Brims] pursuant to the Interim Certificate issued on 15 July 2013.
8. [Paragraphs 8 to 10 refer to the applicability of the Scheme for Construction Contracts where payment becomes due in seven days after the relevant period or the making of the claim by the payee, the relevant period being that within which the work for which payment was being sought was carried out]
11. In respect of its works undertaken during the course of June 2013, [Brims] submitted an application and payment notice to the Quantity Surveyor…and the Architect…on 28 June 2013.
12. Accordingly, the latest date in July 2013 for the due date for payment for the work carried out in June 2013 was 7 July 2013.
13. [Paragraphs 13 and 14 refer to Clauses 4.7.2 and 4.10.1 of the Contract which were said to require the Architect not later than 5 days after the due date to issue an Interim Certificate and to permit an Interim Application to be made no less than seven days before the due date. Paragraph 15 referred to Clause 4.10.2.1 set out above. Paragraph 16 referred to Clause 4.11.5 also set out above]
17. Accordingly, in respect of the works undertaken by [Brims] during the course of June, the due date of payment was, at the latest, 8 July 2013…, the final date for payment was, therefore, 22 July and the last date by which a pay less notice could be issued was 17 July 2013. Further, the date...
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