Crest Nicholson (Eastern) Ltd v Western
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE AKENHEAD |
| Judgment Date | 16 June 2008 |
| Neutral Citation | [2008] EWHC 1325 (TCC) |
| Docket Number | Case No: HT 08 09 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 16 June 2008 |
[2008] EWHC 1325 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
St Dunstan's House
133137 Fetter Lane
London, EC4A 1HD
Mr. Justice Akenhead
Case No: HT 08 09
Mr Sebastian Isaac (instructed by Messrs Nabarro) for the Claimant
Mr Daniel Crowley (instructed by Messrs WSM Solicitors) for the Defendants
DRAFT JUDGMENT
Introduction
This claim relating to an arbitrator's jurisdiction raises several matters of interest in respect of arbitration under the National House Builders Council (“NHBC”) new dwellings insurance arrangements.
Crest Nicholson (Eastern) Limited (“CNEL”) is part of the Crest Nicholson group which is a substantial house builder throughout the country.
By a written contract made in 2005 between CNEL and Mr and Mrs Western (“the Purchase Contract”), CNEL sold and the Westerns bought a dwelling, then in the course of construction, whose address is now 34 Witham Road, Wickham Bishops, Essex. It was then one of a number of houses being built by CNEL as part of a development.
The dwelling was sold with the benefit of the NHBC Buildmark Scheme by which CNEL and the NHBC gave certain undertakings in respect of defects and damage over a period of 10 years after completion of the construction.
Following completion and the Westerns moving in, a number of alleged defects were reported by the Westerns. In accordance with its normal procedure, the NHBC investigated and on 10 October 2006 published its Resolution Report which found that CNEL was responsible for a number of the defects. The NHBC called on CNEL to carry out various remedial works by 17 November 2006.
CNEL indicated that it was prepared to carry out the requisite work but a further dispute arose between the Westerns through their surveyor, Mr Antino, and CNEL which related to whether CNEL was responsible also for professional fees incurred by the Westerns as a result of the alleged defects.
For reasons which I do not have to decide, CNEL has not yet carried but the work. I was told by CNEL's Counsel that the Westerns would not allow the work to be done pending resolution of the professional fees dispute whilst the Westerns' Counsel rejected that. I can certainly see no good reason for the work not to be done.
On 18 April 2007, the President of the Royal Institution Chartered Surveyors (“RICS”), at the invitation of the Westerns, appointed Mr E Malone BSC Dip Arb, FRICS, FCIArb, MAPM as arbitrator. Mr Malone put forward his Terms and Conditions; his fees equated to £140 per hour.
Over the following months CNEL through its solicitors, Nabarro, asserted that Mr Malone did not have jurisdiction essentially on two grounds: that there was no arbitration agreement or, if there was, it was the Chartered Institute of Arbitrators (“CIA”) which was required to appoint.
Following representations from the parties, Mr Malone considered that he had jurisdiction and so informed the parties in his letter dated 19 November 2007.
The underlying dispute is small. I was told by the Westerns' Counsel without demur from CNEL's Counsel that the remedial works cost is about £20,000 and the professional fees and costs are some £7,000. It is unfortunate both that the parties cannot resolve at least how their dispute is to be resolved and that they now come to court for a decision as to whether Mr Malone was properly appointed.
The Contract
The Purchase Contract in relation to the dwelling was in a relatively common form:
“Clause 3
The Seller sells and the Buyer buys the Property at the Price
(b) Clause 6
6.1 The Seller will complete the Dwelling in a good and workmanlike manner in accordance with the plans and specifications of the Dwelling … and in compliance with all relevant planning permissions and building regulation approvals.
6.2 Unless a date for completion is specified in clause 1 of this Agreement completion shall take place on the eighth working day after whichever is the later of the following dates:—
6.2.1 service of notice in writing by the Seller or his Solicitors on the Buyer or his Solicitors that the Dwelling has been substantially completed
6.2.2 the receipt by the Buyer's Solicitors or Licensed Conveyancers of the Warranty Scheme Cover Note issued by the National House-Building Council which Cover Note shall be sent by the Seller's Solicitors by post, DX or fax.
when the Buyer shall pay the balance of the Price together with any outstanding monies payable under this Agreement.
(c) Clause 13 NHBC Insurance
The Seller undertakes to provide the form of Buildmark Scheme as is prescribed by the National House-Building Council and the liability of the Seller for defects shall be governed in all respects by the terms of such Agreement or Scheme and the Seller shall not be responsible for any consequential loss suffered by the Buyer due to the existence in the Property of any defect.”
There is no definition in this Contract as to what the expression “the form of Buildmark Scheme as prescribed by the National House-Building Council” actually was.
The NHBC Cover
The Court has been provided with three documents which are said by one side or the other to comprise “the form of Buildmark Scheme as prescribed by the National House-Building Council”:
(a) A document entitled “NHBC Buildmark Your warranty and insurance cover Applicable to newly built or converted properties registered with NHBC from 1 October 2005”. This document is said to be “a winning document” for the purpose of Clear English Standard awarded by the Plain Language Commission.
(b) The NHBC Claims Charter
(c) The Rules for Builders and Developers registered with NHBC.
These are all documents said to be available on the NHBC website.
It is necessary to consider each of these sets of documents to determine whether any or all of them can be considered to be “the form of Buildmark Scheme” referred to in Clause 13 of the Purchase and Sale Contract.
As to the NHBC Buildmark Warranty and Insurance Cover document, this document is, as its front page suggests, a warranty and insurance. The first inner page of the document has two sub-chapter headings “Your right to cancel” and “Accepting the cover”. In the first sub-chapter, the Purchaser is entitled to cancel cover under Buildmark within 14 days of receiving the Buildmark policy documents, which must be returned to the NHBC with the cancellation request. Under the second sub-chapter, the following is stated:
“In accepting this cover you agree to enter into a contract with NHBC and that as an Owner you require the insurance, subject to the relevant financial limits, to protect you
(1) if the Builder becomes insolvent or fails to meet his obligations before completion of the Home, or during the first two years after completion.
(2) against Damage caused by Defects in specified parts of the Home during years three to ten.
There is also additional cover where NHBC Building Control Services Ltd carried out the building control.”
On page 1, the Definitions are set out. The relevant ones seem to be:
“Builder – the Company or person named on the Buildmark Offer document who is responsible for the building or conversion of the Home.
Buildmark – the document contained in the cover provided by NHBC and the Builder.
Buildmark Offer -The form which contains the offer of cover on the Buildmark made by NHBC and the Builder.
Insurance certificate – The certificate we issue on Completion, which brings sections 2, 3 and 4 of this cover into operation.”
On page 5, there is the Introduction:
“ To the Owner
This booklet describes the insurance cover given by NHBC and the Builder's obligations for newly built or converted Homes. Please note that this cover is different to that offered under your buildings and contents insurance. …
There is useful information on our website – www.nhbc.co.uk– about NHBC, our insurance cover and our claims and resolution procedures.
Each section of the Buildmark is subject to a number of conditions, exclusions and financial limits, and you should read these with particular care. There are also special provisions for claims on Common Parts.
This is an important document. We suggest you keep it and your Insurance Certificate (which will be sent separately) in a safe place. If you sell your Home within ten years of the start of the cover (this date is printed on the Insurance Certificate), you should give this booklet and the Insurance Certificate to the New Owner.
….
The role of NHBC
NHBC is the standard setting body and leading warranty and insurance provider for new and newly converted homes in the UK.
NHBC registers around 85% of new homes in the UK and around 1.6 million home owners currently benefit from our 10-year warranty and insurance cover. NHBC has protected over 30% of the existing homes in the UK.
Established in 1936 as a non-profit distributing company, NHBC's primary purpose is to help to raise standards in the house-building industry and provide consumer protection for new home owners.”
The insurance cover is set out in five Sections: “Cover before completion”, “The first two years after completion”, “Cover in years 3 to 10”, “Additional cover in years 3 to 10 if NHBC's subsidiary did the building control” and “Additional cover in years 3 to 10 for contaminated land”. It is quite clear that in effect this is a policy of insurance. Each Section has a period of cover and financial limits on what the NHBC will or will not pay or be responsible...
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