Dawes v Treasure & Son Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 10 December 2010 |
| Neutral Citation | [2010] EWHC 3218 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-10214 and HT-10413 |
| Date | 10 December 2010 |
[2010] EWHC 3218 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Before: Mr Justice Akenhead
Case No: HT-10214 and HT-10413
John Marrin QC and Andrew Singer (instructed by Goodman Harvey LLP) for the Claimant
Adrian Hughes QC (instructed by Contract & Construction Consultants (Southern) Ltd) for the Defendant
Hearing date: 26 November 2010
Mr Justice Akenhead:
Introduction
These claims raise interesting issues about the point or stage at which an arbitrator becomes functus officio or ceases to have jurisdiction and the extent, ambit or scope of a settlement of an arbitration.
The Background
Treasure and Son Ltd (“Treasure”) was a main contractor engaged by Martin Dawes to carry out extensive construction works at Mr Dawes' country estate, Dinmore Manor, Hereford pursuant to a building contract made in 2000 which incorporated the JCT Standard Form of Prime Cost Contract (1998 Edition with Amendments 1 and 2). A Mr Bertram was the named Architect. Being a Prime Cost contract, Treasure was entitled to payment on a cost plus percentage mark up basis. There seems to be little doubt that the original contract was expanded to cover other works on the estate and, I was told in an earlier adjudication enforcement case [2007] EWHC 2420 (TCC), that over £15 million was claimed by Treasure against an original estimated Prime Cost of some £3.5 million.
There came a time, although it is unclear to me why, that the parties fell out with each other and, so it was, Treasure secured an initial adjudication decision in its favour in August 2007 to the effect that Mr Dawes was to pay to Treasure £1,018,821.12 plus VAT. That decision was not honoured with the consequence that Treasure successfully secured from the Court enforcement of that decision, as above, with the Court giving judgement on 25 October 2007. There followed what Mr Justice Coulson characterised as “an extremely unusual dispute”, which related to whether payment in relation to the judgement had been made in circumstances in which the money was paid by Mr Dawes' daughter; the judgement was reported at [2008] EWHC 2181 (TCC).
Before the first set of court proceedings, Treasure served on 6 July 2007 a Notice to Refer to Arbitration under the arbitration clause in the building contract. Mr Ian Salisbury was appointed as arbitrator. The dispute was expressed to arise from Mr Dawes' alleged failures to pay sums due under the building contract as well as for Mr Dawes' alleged breaches of contract. At this stage, the dispute relating to the repayment of the sum which was to be the subject matter of the adjudicator's decision had not been referred to arbitration and obviously had not been paid; indeed it was not paid out until after the enforcement in court, in November 2007.
The Course of the Arbitration up to the Settlement
A Statement of Case and Defence were served. The original Defence is headed “Defence and Cross Claim”, dated 17 December 2007 and settled by Counsel. By this stage, the adjudication sum had been paid by or on behalf of Mr Dawes. The Defence referred to the assertion that “the quality of Treasure's work is part of Mr Dawes' Defence and Cross Claim in these proceedings”; the Cross Claim claimed the sums paid to Treasure in the earlier adjudication.
On 11 June 2008, the arbitrator ordered Treasure to serve an amended Statement of Claim by 18 June 2008 and Mr Dawes to re-serve an “amended statement of defence and amended counterclaim by…25 June 2008, with any alleged defects particularised.” The Amended Statement of Case runs to 69 pages and 304 paragraphs. Paragraph 31 referred to various Certificates of Making Good Defects issued by the Architect. Paragraph 297 identified claims for the following sums:
| Item | Value | |
| 1 | The £75,000.00 in respect of the Electrical Installation for the Main House | £75,000.00 |
| 2 | The £18,748.12 in respect of the Site Services | £18,748.12 |
| 3 | Retention on the Site Services and the Music School | £191,321.20 |
| 4 | Prime cost not yet claimed | £145,085.05 |
| 5 | Overheads | £634,360.74 |
| 6 | Cost of the claim | £58,455.00 |
| 7 | Management costs including the management costs in relation to VAT | £60,195.60 |
| 8 | Insurance fee in respect of the Main House | £949.20 |
| 9 | Garden antiques fee in respect of the Landscaping | £1,883.32 |
| 10 | Estate services fee | £5,239.88 |
| 11 | Contract fee on all items apart from item 3 | £99,991.69 |
| Total | £1,291,229.80 |
The total amounts claimed were set out in Paragraph 303:
| Item | Amount | Alternative amount |
| Claimed items from above | £1,291,229.80 | £1,291,229.80 |
| Alternative case —addition of profits | £162,256.90 | |
| Interest | £148,400.00 | £167,348.41 |
| VAT | £238,810.22 | £270,521.14 |
| GRAND TOTALS | £1,678,440.02 | £1,891,356.25 |
Mr Dawes served his Amended Defence and Amended Cross Claim on 25 June 200Relevant paragraphs are as follows:
“2. By way of brief overview Mr Dawes contends that the Adjudicator's Award was wrong and has overcompensated Treasure by up to £869,195 which sum Mr Dawes seeks to be paid back to him by Treasure by way of Defence and/or Cross Claim in these proceedings together with the interest on the sums Mr Dawes is repaid and appropriate cost award [sic].
3. In addition Mr Dawes does not accept that the works are complete and/or had been properly constructed by Treasure. The quality of Treasure's work is part of Mr Dawes' Defence and Cross Claim in these proceedings [this of course is subject to discussion and further information].
16…the certificates of making good defects should not have been issued by the Architect since the day they were issued defects existed in the works carried out by Treasure. Mr Dawes does not know why certificates of making good defects were issued by the Architect but would invite the Arbitrator to rule in due course that the certificates were improperly and invalidly issued. Annexed hereto are Schedules of the defects which still exist in Treasure's work. These Schedules are served pursuant to the Arbitrator's directions order…
21…Treasure is put to strict proof that the work instructed by the Architect is apparently to be valued as an architect's instruction because it is Mr Dawes' case that the work instructed by the Architect post practical completion is work of remedying defects in Treasure's work or competing Treasure's incomplete works…Insofar as the Arbitrator finds that works instructed by the Architect are works of remedying Treasure's defective work or completing Treasure's incomplete work then Mr Dawes invites the Arbitrator to declare that those works are not to be the subject of any further payments by Mr Dawes…the agreement contended for by Treasure…does not allow Treasure to be paid for remedying their own defects or completing their own incomplete work.
42… neither the certificates of practical completion nor the certificate of making good defects should have been issued by the Architect. In the premises therefore no retention is due to Treasure and the entire sum of £191,321.20 is not due to Treasure from Mr Dawes and in so far as it has already been paid to Treasure it falls to be repaid. In particular the reason and basis for the issue of the certificate of making good defects is wholly unknown to Mr Dawes not least because as at the date of issue of the same numerous defects remained at the premises and were being attended to by Treasure, as particularised in the Schedules annexed hereto…
AMENDED CROSS CLAIM
68 The contents of the Amended Defence hereinabove are repeated.
69 Mr Dawes reclaims the sums paid to Treasure in the Adjudication, namely:
• the Prime Costs Not Yet Claimed sum of £127,612.57
• overheads in the sum of £634,360.74
• management costs in the sum of £12,695.60
• contract fee of 76,197.33
• any VAT overpaid
• the interests of £78,327.92
Total £869,195 plus VAT
In the alternative the Learned Arbitrator is invited to decide the amount over-awarded to Treasure by the Adjudicator and to award the same by way of repayment to Mr Dawes, and/or to determine the sums properly due to Treasure in this arbitration and to so declare.”
Two Schedules were attached one of which listed 41 “Faults” and the second with 18 “Defects” listed. The first schedule had six columns, the first with numbers and the others headed “Description of Seen Fault”, “Location”, “Appraisal”, “Remedy” and “Response”. All bar the final column (which was blank) contains more or less detailed descriptions. The second schedule contained columns headed “Description of Defects”, “Reason for Appraisal as defect”, “Location of Defect”, “Effect of Defects and Works Required to Rectify” and “Contractors Liability”. Again all bar the last column (also left blank) contain often detailed pleadings. No sums were actually identified as being cross-claimed. An example is a complaint in the latter schedule that there was an “inability to generate hot water in summer without running the “commercial” boilerhouse and incurring the large standing losses and subsequent running costs”; the design was said to “encourage legionella build-up, excessive running and maintenance costs” and the fourth column identified a solution being “to provide a dedicated hot water system sized to provide adequate hot water for the two people who live in the property, to the areas used by them on a daily basis.”
Then there was a site visit in July 2008 upon which the arbitrator was taken round the property by Mr Dawes and a large number of the defects were brought to the attention of the arbitrator and discussed at length.
Perhaps unsurprisingly, Treasure on a “without prejudice save as to costs”...
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