Caledonian Modular Ltd v Mar City Developments Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson |
| Judgment Date | 29 June 2015 |
| Neutral Citation | [2015] EWHC 1855 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2015000207 |
| Date | 29 June 2015 |
[2015] EWHC 1855 (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 Coulson
Case No: HT-2015000207
Mr William Webb (instructed by Hawkswell Kilvington Ltd) for the Claimant
Mr Christopher Lewis (instructed by Fenwick Elliott LLP) for the Defendant
Hearing Date: 19 June 2015
Pursuant to a Letter of Intent dated 19 December 2013 and subsequently amended on 11 February 2014, the defendant engaged the claimant to carry out extensive construction works at a site at Greenpoint, in Colindale, North London. Following the non-payment of interim application 12, in November 2014, the claimant subsequently suspended works at the site, although those works were already largely completed.
The non-payment of interim application 12 gave rise to the first adjudication between the parties. By a written decision dated 11 March 2015, the well-known adjudicator, Mr John Riches, decided that the total sum of £642,394.23 was due from the defendant to the claimant. This amount included interest, late payment compensation, and his fees and expenses. The defendant made two stage payments of £100,000 each in respect of that decision but failed to pay the balance, namely £442,394.23.
Subsequently, in March 2015, the claimant said that the defendant had again failed to pay sums due under the contract. That dispute was also referred to Mr Riches. In that second adjudication, by a decision in writing dated 1 May 2015, he again found for the claimant, and decided that the net sum of £908,695.61 (having taken into account the balance outstanding on adjudication 1) was due from the defendant to the claimant. Again this amount included interest, late payment compensation and the adjudicator's fees and expenses.
The defendant does not deny that the balance due in respect of the first adjudication decision, namely £442,394.23, is due and payable to the claimant. It was admitted as such in the defendant's defence in these proceedings. Accordingly, at the hearing on 19 June 2015, the parties agreed – and I ordered – that the total sum of £452,555 inclusive of interest, was due from the defendant to the claimant in respect of the claim arising out of that first adjudication.
In respect of the second adjudication, the defendant denies liability for any part of the amount awarded by the adjudicator. The adjudicator's decision of 1 May turned on the date on which the claimant had notified the defendant of the sum due. On the claimant's case, the relevant application was made on 13 February 2015. If that was right, it was common ground that the defendant's payless notice of 25 March 2015 was out of time and invalid. But the defendant said that the documents of 13 February were not a claim for or notice of the sum due for payment, and that the claimant's claim was not made until 19 March 2015. On that basis, it was common ground that the payless notice of 25 March was within time and provided a complete defence to the claim.
The claimant now seeks to enforce the decision in the second adjudication. The defendant resists enforcement, maintaining that the adjudicator was wrong and arguing that, since the issue between the parties is a short point of construction, the court could grant a final declaration as to the status of the documents of 13 February as part of these enforcement proceedings. There is a counterclaim to that effect. Following the crisp submissions of both counsel at the hearing on 19 June, I reserved judgment, with the promise that I would endeavour to provide the answer as soon as I could.
THE CONTRACT
It was common ground that the Letter of Intent was intended to have contractual effect and was therefore a construction contract within the meaning of the Housing Grants (Construction and Regeneration) Act 1996, as amended. It was also common ground that, because the Letter of Intent did not include for any express payment provisions, nor any express agreement to adjudicate, the Scheme for Construction Contracts, as amended, was implied into the contract.
The relevant sections of the 1996 Act, as amended by the Local Democracy Economic Development and Construction Act 2009, provide as follows:
" 110A Payment notices: contractual requirements
(1) A construction contract shall, in relation to every payment provided for by the contract –
a) require the payer or a specified person to give a notice complying with subsection (2) to the payee not later than five days after the payment due date, or
b) require the payee to give a notice complying with subsection (3) to the payer or a specified person not later than five days after the payment due date.
(2) A notice complies with this subsection if it specifies –
a) in a case where the notice is given by the payer –
i) the sum that the payer considers to be or to have been due at the payment due date in respect of the payment, and
ii) the basis on which that sum is calculated;
b) in a case where the notice is given by a specified person—
i) the sum that the payer or the specified person considers to be or to have been due at the payment due date in respect of the payment, and
ii) the basis on which that sum is calculated
(3) A notice complies with this subsection if it specifies —
a) the sum that the payee considers to be or to have been due at the payment due date in respect of the payment, and
b) the basis on which that sum is calculated.
(4) For the purposes of this section, it is immaterial that the sum referred to in subsection (2)(a) or (b) or (3)(a) may be zero.xs
(5) If or to the extent that a contact does not comply with subsection (1), the relevant provisions of the Scheme for Construction Contracts apply.
(6) In this and the following sections, in relation to any payment provided for by a construction contract –
'payee' means the person to whom the payment is due;
'payer' means the person from whom the payment is due;
'payment due date' means the date provided for by the contract as the date on which the payment is due;
'specified person' means a person specified in or determined in accordance with the provisions of the contract.
110B Payment notices: payee's notice in default of payer's notice
(1) This section applies in a case where, in relation to any payment provided for by a construction contract –
a) the contract requires the payer or a specified person to give the payee a notice complying with section 110A (2) not later than five days after the payment due date, but
b) notice is not given as so required
(2) Subject to subsection (4), the payee may give to the payer a notice complying with section 110A (3) at any time after the date on which the notice referred to in subsection (1)(a) was required by the contract to be given.
(3) Where pursuant to subsection (2) the payee gives a notice complying with section 110A(3), the final date for payment of the sum specified in the notice shall for all purposes be regarded as postponed by the same number of days as the number of days after the date referred to in subsection (2) that the notice was given.
(4) If –
a) the contract permits or requires the payee, before the date on which the notice referred to in sub-section (1)(is required by the contract to be given, to notify the payer or a specified person of –
i) the sum that the payee considers will become due on the payment due date in respect of the payment, and
ii) The basis on which that sum is calculated, and
b) The payee gives such notification in accordance with the contract, that notification is to be regarded as notice complying with section 110A(3) given pursuant to subsection (2) (and the payee may not give another such notice pursuant to that subsection).
Requirement to pay notified sum
(1) Subject as follows, where a payment is provided for by a construction contract, the payer must pay the notified sum (to the extent not already paid) on or before the final date for payment.
(2) For the purposes of this section, the 'notified sum' in relation to any payment provided for by a construction contract means –
a) In a case where a notice complying with section 110A(2) has been given pursuant to and in accordance with a requirement of the contract, the amount specified in that notice;
b) In a case where a notice complying with section 110A(3) has been given pursuant to and in accordance with a requirement of the contract, the amount specified in that notice;
c) In a case where a notice complying with section 110A(3) has been given pursuant to and in accordance with section 110B(2), the amount specified in that notice.
(3) The payer or a specified person may in accordance with this section give to the payee a notice of the payer's intention to pay less than the notified sum.
(4) A notice under subsection (3) must specify –
a) The sum that the payer considers to be due on the date the notice is served, and
b) The basis on which that sum is calculated.
It is immaterial for the purposes of this subsection that the sum referred to in paragraph (a) or (b) may be zero.
(5) A notice under subsection (3) –
a) Must be given not later than the prescribed period before the final date for payment, and
b) In a case referred to in subsection (2)(or (c), may not be given before the notice by reference to which the notified sum is determined.
(6) Where a notice is given under subsection (3), subsection (1) applies only in respect of the sum specified pursuant to subsection (4)(a).
(7) In subsection (5), 'prescribed period' means –
a) Such a period as the parties may agree, or
b) In the absence of such agreement, the period provided by the Scheme for...
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