C & B Scene Concept Design Ltd v Isobars Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Murray Stuart-Smith,Lord Justice Rix,Lord Justice Potter |
| Judgment Date | 31 January 2002 |
| Neutral Citation | [2002] EWCA Civ 46 |
| Docket Number | Case No: A1/2001/1484 QBENI |
| Court | Court of Appeal (Civil Division) |
| Date | 31 January 2002 |
[2002] EWCA Civ 46
Lord Justice Potter
Lord Justice Rix and
Sir Murray Stuart-Smith
Case No: A1/2001/1484 QBENI
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MR RECORDER MOXON-BROWNE QC in the
TECHNOLOGY and CONSTRUCTION COURT
Royal Courts of Justice
Strand,
London, WC2A 2LL
Adam Constable (instructed by Foot Anstey Sargent for the Appellant)
Introduction
This is an appeal from a judgment of Mr Recorder Moxon-Browne QC in the Technology and Construction Court given on 21 June 2001 in which he dismissed the Claimant's application for summary judgment. Permission to appeal was granted by Mance LJ.
By its claim the Claimant sought to enforce a decision made on 4 April 2001 by an Adjudicator, Mr Brian Holloway, in an adjudication commenced by the Claimant in relation to its entitlement to payment of three interim applications for payment (Applications Nos 4, 5 and 6) purportedly made under a design and build contract for work done to Unit 2 Leisure Wood, Southampton, involving the design, construction and fitting out of a cafe-bar. The employer under the contract was the Defendant, Isobars Ltd.
The Contract
The contract consisted of a JCT Standard Form of Building contract with Contractors Design, 1988 Edition, "Employer's design requirements" dated 17.8.2000 and certain revised "contractor's proposals" sent under cover of a letter dated 10.10.2000.
The 'Revised contractor's proposals' incorporated a term that any "Specific requirements of the Employers regarding the works notified after [10.10.2000] and/or not expressly contained in the Employers' Requirements annexe 1 hereto, must be agreed between the parties before implementation which agreement shall include express provision as to variation of the work and the contract price."
The letter accompanying the 'revised contractors proposals' stated 'there is no need to sign a formal copy of the JCT contract, but it will be sufficient that the parties are agreed on those terms that incorporate the JCT provisions, subject to any alteration made by the special terms agreed."
Provisions as to payment are contained in Clause 30 of the JCT Form of contract. Clause 30.1 requires the parties to elect which of alternatives 'A' or 'B' they will adopt. The two alternatives are set out in Appendix 2. Alternative 'A' provides for interim payments to be made in accordance with predetermined stages in the work: while Alternative 'B' provides for interim payments to be made according to the elapse of predetermined periods of time. The alternatives are quite different and they govern not only when the payments are to be made, but how they are to be calculated. But the parties did not make an election; they did not complete Alternative 'A' and delete Alternative 'B'; nor did they delete Alternative 'A' and complete Alternative 'B' (though if they had deleted Alternative 'A' but not completed Alternative 'B' by inserting a period of time, the form provides that the period should be one month.)
In the absence of contractual provisions as to how much should be paid by interim payments and when that payment should be made, the provisions of s.109 of the Housing Grants Construction and Regeneration Act 1996 ('the Act') come into play so as to imply the relevant provisions of the Scheme for Construction Contracts (England and Wales) Regulations 1998 ('the Scheme').
The Interim Applications
In January 2000 the Claimant sent to the Defendant 3 applications for interim payments as follows:
(a) No. 4 'as per original agreement' in the sum of £69,000
(b) No. 5, in respect of 7 alleged variations, in the sum of £45,496.33
(c) No. 6 in respect of "AA Print and Design' in the sum of £1500.
The Defendant contended that there were a number of things wrong with these applications. Of the original contract sum of £450,000 the Defendant had paid at least £436,000, so that on any view £69,000 was not owing 'as per original agreement'. While there was a dispute about variations, it was not suggested that the machinery envisaged by the 'revised contractors proposals' was ever implemented (especially in relation to requirements that variations be agreed and priced before implementation). Nor was there any attempt to calculate amounts due in accordance with paragraph 2 of Part II of the Scheme. In relation to Application No. 6 it was contended that this work did not form part of the Design and Building contract.
By letter dated 29 January 2001 the Defendant disputed the applications for payment and said that it was unaware of any variation to the works. It is common ground that the letter was not served in time to satisfy the requirements of clause 30.3.3 of the JCT Form (which requires a written note to be sent within 5 days of receipt of the applications in payment) nor within the time specified in paragraph 9 and 10 of the scheme.
The Referral to Adjudication
Article 5 of the JCT Form of contract provides "that if any dispute or difference arises under this contract either party may refer it to adjudication in accordance with clause 39A." Adjudication is not compulsory: but either party may avail themselves of it. It is unnecessary to refer to the detailed provision of Clause 39A save to note that the Adjudicator must give his decision on the dispute or difference referred to him within 28 days (unless the parties agree to extend it by up to 14 days): Clause 39A.7.1 provides that the decision of the Adjudicator shall be binding on the parties until the dispute or difference is finally determined by arbitration or legal proceedings. Clause 39A.7.3 provides:
"If either Party does not comply with the decision of the Adjudicator the other Party shall be entitled to take legal proceedings to seek compliance pending any final determination of the referred dispute or difference pursuant to clause 39A.7.1."
In its notice of referral the Claimant stated under the heading 'The dispute – the referring party's case'
"31. A dispute has arisen between the parties as to the Employer's obligation to make payment and the Contractor's entitlement to receive payment following receipt by the Employers of the Contractor's Applications for Interim Payments No.'s [1] 4, 5 and 6:"
(Application 1 is no longer material).
In paragraph 32–49 of the Notice of Referral the nature of the claim is set out. In summary it is contended that, in the absence of Alternative 'A' and 'B', the contract is supplemented by the provisions of the Scheme, which provides that the Contractor is entitled to be paid by the Employer on 'the making of a claim'; that the contract by clause 30.3.3 requires the Employer to give notice within 5 days signifying the amount of payment proposed to be made by the employer and the method of calculation of the amount; under clause 30.3.4 the Employer was required to specify any amount proposed to be withheld or deducted from the amount due, the ground or grounds for such withholding or deduction and the amount of withholding or deduction attributable for each ground; no such notice having been served, the Claimant was entitled to payment pursuant to clause 30.3.5.
By its Response to the Referral notice the Defendant in paragraph 39 admitted paragraph 31 of the Referral notice. Mr Constable submits that this shows that there was agreement as to the dispute which was referred to the Adjudicator. I agree. The Defendant in its response did not deal with the argument summarised in paragraph 13 above. It disputed its liability to pay on the grounds to which I have already referred in paragraph 9, namely £69,000 not being due under the original contract, and the variations were not authorised, etc, and also raised allegations of poor workmanship.
The Adjudicator acceded to the Claimant's argument. He said:
"83 Such matters [the grounds upon which liability was disputed] might be germane if the contract conditions were other JCT or alternative institutional standard forms, where applications in respect of interim statement or payments, employ terminology...
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