Clark Electrical Ltd v JMD Developments (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Judge Behrens |
| Judgment Date | 28 September 2012 |
| Neutral Citation | [2012] EWHC 2627 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: 2LS 70450 |
| Date | 28 September 2012 |
[2012] EWHC 2627 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
LEEDS DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
The Court House
Oxford Row
Leeds LS1 3BG
His Honour Judge Behrens sitting as a Judge of the High Court in Leeds
Case No: 2LS 70450
Stephen Beresford (instructed by CA Law) for the Claimant
Riaz Hussain (instructed by Weightmans LLP) for the Defendant
Hearing dates: 6 September 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an application for summary judgment by Clark Electrical Limited ("CEL") against JMD Developments (UK) Ltd ("JMD"). CEL seek to enforce an adjudication award of £194,369.12 plus VAT made on 12th April 2012 by Mr Lawless, the adjudicator, pursuant to what he held to be an ad hoc adjudication agreement made between the parties on or about 13th March 2012 when JMD paid him an appointment fee of £6,000.
JMD contend that there is no statutory or contractual right to an adjudication and contend that the adjudicator was wrong to find that the parties had formed an ad hoc adjudication agreement either on the basis that he did or on any other basis. Accordingly it contends there was no jurisdiction to make the award and that it is not bound by the award.
Mr Beresford on behalf of CEL accepts that there was no express contractual right in the contracts to an adjudication and that, for the purpose of this summary judgment application, it is arguable that there is no statutory right to an adjudication. However he contends that it is clear that JMD have agreed to be bound by the adjudicator's decision in the full sense of the word – i.e. both in respect of the award itself and in respect of his jurisdiction to make the award. In support of this contention he relies on an e-mail sent by Mr Teale (an employee of JMD) to Mr Lawless on 7 th March 2012 and on the payment of £6,000 by JMD on 13 th March 2012. In those circumstances he submits that there is no defence to the enforcement of the award.
Before considering the matter in more detail it is right that I should immediately acknowledge the very considerable assistance I have received from Counsel in this application. Mr Hussain helpfully referred to all the relevant decisions in his very full skeleton argument and the oral submissions from both Counsel were concise, clear and extremely helpful.
The facts
The Contract(s)
JMD engaged CEL to carry out certain electrical works at the premises of Sedacol UK Limited at Selby North Yorkshire. The site was being developed as an alcohol distillery. JMD was itself under a subcontractor to the Main Contractor Giordano and C Spa.
As summarised in the Particulars of Claim the works comprised 8 packages:
1. Provision and installation of 11 kv cabling
2. Distillery works and variations
3. Substation works
4. Substation earthing systems
5. Dry Mill works
6. Wet Mill works
7. Gluten Dryer Works
8. Dayworks with materials
There is a dispute as to whether the works were comprised in one or eight subcontracts. There is also a dispute as to whether the works fall within the exception in section 105(2)(c)(ii) of the Housing Grants, Construction and Regeneration Act 1996 (" HGCRA") in that JMD contends that the electrical works were carried out for the process and production on a site for construction of excluded plant.
Both of these disputes are relevant to the question of whether there is a statutory right to an adjudication. However, in the light of Mr Beresford's concession in relation to the statutory right I need say nothing more about these disputes.
CEL carried out works on the site between September 2011 and January 2012. CEL claims (based on an application for payment dated 22 nd December 2011) amount to £487,459.87. Payments totalling £309,610 were made by JMD between 16 th November 2011 and 13 th January 2012.
The adjudication process
On 2 nd March 2012 CEL served on JMD a Notice of Adjudication on the ground that JMD had failed to make adequate and proper payments. It claimed £177,849.87 plus VAT.
On 5 th March 2012 the Construction Industry Council appointed Mr Lawless as adjudicator. On the same day Mr Lawless wrote a long letter with two enclosures to each of the parties. A number of points have been made about this letter. The letter included an outline timetable for the adjudication which provided that JMD respond to the Referral no later than 21 st March 2012. Second he enclosed his Schedule of Conditions. He stated that in line with Section 10 he would raise an Invoice and send it to each party in due course.
The Schedule of Conditions is headed In the Matter of the Housing Grants, Construction and Regeneration Act 1996. Section 9 deals with the adjudicator's fees and provides for an hourly rate and expenses. Section 10 requires each party to contribute equally as security for the fees an appointment fee of £6,000.
On 7 th March Mr Lawless wrote to each of the parties enclosing a fee invoice for £6,000 plus VAT said to be due for payment by 14 th March 2012. The invoice stated that the moneys were due in respect of the Appointment fee as per section 10 of the Schedule of Conditions.
On 7 th March 2012 Shaun Teale sent to Mr Lawless (with a copy to CEL) the e-mail now relied on by Mr Beresford. It reads:
Dear Mr Lawless
We have now had an opportunity to review the attachments to your e-mails. … Thank-you also for your revised timetable.
We have also reviewed the HGCRA and in particular SI 1998 649 Scheme for Construction Contracts 1998, a document that we are unfamiliar with, unlike [CEL]. At this point we do not have representation and are not familiar with the adjudication protocols; accordingly we would appreciate your guidance on the procedures and our responsibilities.
If we have correctly understood the Scheme, clause 7 suggests that at the same time as sending you the Notice and supporting documents, [CEL] are to provide copies of those same documents to us. However, to date we have not received the documents referred to. Consequently we feel it is appropriate to put [CEL] and yourself on notice to this effect and request your guidance. We are sure it was simply an oversight on behalf of [CEL] that they failed to forward copies to us and therefore feel certain that [CEL] will see fit to agree to extend the timetable to take account of this and provide the correct documentation to enable us to proceed.
We would state that this is particularly important in this case, given that the last correspondence from [CEL] claimed the sum due to them was £220,266.87 plus a further £38,135.89 of unspecified works and the sum now claimed is £177,849.87 representing a 31% reduction in the claim, highlighting the ongoing discrepancies that we have continually stated since the first application from [CEL].This was the main reason we requested substantiation from [CEL] in January 2012 to resolve the issues. This detail has yet to be received, despite repeated requests.
I look forward to receiving your proposal for moving forward, and to receipt of [CEL]'s claim.
Yours sincerely
On 13 th March 2012 JMD paid Mr Lawless's invoice for £6,000 plus VAT by direct bank transfer. There was no covering letter.
Shortly thereafter JMD instructed Peter Dale of P W Dale Consulting Ltd to act for them in relation to the adjudication.
On 19 th March 2012 Mr Dale wrote to the adjudicator (with a copy to CEL's agent – Mr Sutcliffe). Mr Dale drew attention to section 105(2) of HGCRA. He submitted that the electrical work was excluded under that section and contended that Mr Lawless had no jurisdiction to proceed with the adjudication. He submitted that the payment of the £6,000 by JMD was not to be treated as its acceptance that Mr Lawless had jurisdiction to adjudicate.
There followed an exchange of submissions between Mr Dale and Mr Sutcliffe on the jurisdiction issue. Mr Sutcliffe maintained that there was statutory jurisdiction and Mr Dale maintained his position that there was not. No part of the submissions were directed to the question of whether the parties had made an ad hoc agreement to adjudicate.
In the light of Mr Beresford's concession as to statutory jurisdiction it is not necessary to refer to the nature of the arguments in any more detail. It is perhaps worth noting that in the letter of March 27 th 2012 Mr Dale concluded:
As to CEL's conclusion that you are not entitled to inquire into or decide the question of your own jurisdiction we agree with the position stated in your letter of 19 th March 2012 … Our client maintains the site and operations fall under the exclusions set out in section 105(2)(c) … and consequently you have no jurisdiction.
Our client's position remains that should you make a non-binding conclusion that you have jurisdiction then [JMD]'s further participation in the purported adjudication is fully reserved. Its position remains that you do not have jurisdiction and for the avoidance of doubt [JMD] will not accept the validity of your decision, nor will it accept liability for any of your fees and expenses, which you may determine it is liable.
The adjudicator's decisions.
On 2 nd April 2012 the adjudicator made a detailed non binding decision on jurisdiction. It is a lengthy document of some 41 pages followed by a number of Appendices. In summary he held:
That there was no statutory jurisdiction. He held that the works were excluded under section 105(c)(ii). He also held that there was one contract comprising different work packages. Thus if the works had not been excluded under...
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