Dawnays Ltd v F. G. Minter Ltd and Trollope and Colls Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER of THE ROLLS,LORD JUSTICE EDMUND DAVIES,LORD JUSTICE STAMP |
| Judgment Date | 28 April 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0428-3 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 April 1971 |
[1971] EWCA Civ J0428-3
The Master of The Rolls (Lord Denning),
Lord Justice Edmund Davies and
Lord Justice Stamp.
In The Supreme Court of Judicature
Court of Appeal
Appeal by plaintiff from Order of Mr. Justice Bridge on 7th December,1970.
Mr. MICHAEL STRANDERS, Q.C., and Mr. RICHARD SOPER (instructed by Mr. P.A. Mylles) appeared on behalf of the Appellant Plaintiff.
Mr. BRIAN KNIGHT (instructed by Messrs. Speechley, Mumford & Soames) appeared on behalf of the Respondent Defendants.
We need not trouble you, Mr. Stranders.
This case is about a building contract for a new office building in the Euston Road. The "building owners" were the Hearts of Oak Society. The "main contractors" were two firms combined - Trollope & Colls Limited. and F.G. Minter Limited. The "sub-contractors" for the steel work were Dawnays Limited. The main contract and the sub-contract were on the usual R.I.B.A. printed forms.
According to the sub-contract, the sub-contractors (Dawnays) were due to start in 1968 the steelwork for the roof and the floors of this building. There was some delay in starting. The sub-contractors say it was not their fault. In 1969 they started on the steelwork and did a good deal of it: but the main contractors said that the sub-contractors did not do it properly. In consequence, some of the steelwork had to be altered. Many adjustments had to be made. This took up time and caused delay to other work. Eventually the sub-contractors did their steelwork properly. But the main contractors said that, owing to the sub-contractors' mistake, the rest of the work on the main contract had been held up. The main contractors said this delay had caused them much loss: that it was all the fault of the sub-contractors: and they had a claim for damages against them.
Although the main contractors had this claim against the subcontractors, nevertheless the main contractors put in to the building owners their claim for payment of work done: and in that claim they included sums which were due to the sub-contractors for the steelwork they had one. In particular, they included as being due to Dawnays a sum of £27,870. The architects on 11th November, 1969, duly gave an interim certificate of the amount payable by the building owners to the main contractors. In that certificate they included the sum of £27,870 as being payable to the nominatedsub-contractors. The architects then gave this notice to Dawnays:
"Notice to Nominated Sub-Contractor 28th November, 1969.
Contract/job Hearts of Oak Benefit Society.
General Contractor - Trollope & Colls & F. G. Minter Limited Certificate No. 32.
Sum included now due to you £27,870. Our certificate including the gross sum for yourselves, as indicated above, has now been issued to the general contractor."
There was this footnote:
"We must inform you that we have notified our Clients that the issue of the above-mentioned certificate has not taken into account any claims which they may have for damage arising from delays in completion of the building caused by delay in erection of the steelwork, and have similarly notified the Main-Contractors."
That shows that the architects had issued an interim certificate, payable by the building owners which included that very sum of £27,870. The building owners paid the full amount to the main contractors, including the £27,870. The main contractors have that £27,870 still in their hands, but they have not paid it over to the sub-contractors. They claim to be entitled to keep it because they have a cross-claim for damages for delay. The main contractors have issued invoices against the sub-contractors claiming at first £43,000 and later £61,000 as being due to them as damages for delay. The sub-contractors say that the main contractors have no right to retain the £27,870, which is their (the sub-oontraotors') money. It ought to be paid over to the sub-contractors forthwith, leaving the main contractors to make their claim for delay in other proceedings.
Accordingly, on 31st July, 1970, the sub-contractors sued the main contractors for that £27,870 being their money held by the main contractors. They took out a summons under Order XIV. The main contractors put in an affidavit setting up their cross-claim for delay. They relied on the arbitration clause (No. 24.) They said they were ready and willing for the dispute to be referred to arbitration. They asked for the action to be stayed. The Master and the Judge granted a stay, and now there is an appeal to this Court.
The issue depends on the true construction of the sub-Contract. It contains a very explicit provision dealing with the payment of interim certificates:-
"11(b) Within fourteen days of the receipt by the Contractor of any certificate or duplicate copy thereof from the Architect the Contractor shall notify and pay to the Sub-Contractor the total value certified therein in respect of the Sub-Contract Works and in respect of any authorised variations thereof and in respect of any fluctuations or amounts ascertained under Clause 8(c) hereof less:-
(i) Retention money, that is to say, the proportion attributable to the Sub-Contract Works of the amount retained by the Employer in accordance with the Main Contract:
(ii) A cash discount of 2 1/2 per cent, if payment is made within fourteen days, on the difference between the said total value and the said Retention Money; and
(iii) The amounts previously paid."
I regard that as a specific provision requiring the main contractors to make payment within fourteen days of the issue of the certificate, less only the sums specified. That is the ordinary understanding in these matters. The interim certificate is regarded as the equivalent of cash. The sub-contractor needs the money so as to get on with the rest of his work. On principle, and in practice, once a certificate is issued, it must be paid, save only for the permitted deductions.
But Mr. Knight has argued before us that this cross-claim for delay can be deducted even though the amount of it has not been ascertained. He relies for this purpose on Clause 13, which says:
"The Contractor shall notwithstanding anything in this Sub-Contract be entitled to deduct from or set off against any money due from him to the Sub-Contractor (including any Retention Money) any sum or sums which the Sub-Contractor is liable to pay to the Contractor under this Sub-Contract."
He says that the cross-claim for delay comes within that clause. He has referred us this morning to the parallel clause in the head contract. It contains in paragraph 27(b) these words:
"The Architect shall direct the Contractor as to the total value of the work, materials or goods executed or supplied by a nominated sub-contractor included in the calculation of the amount stated as due in...
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