Dr Jones Yeovil Ltd v The Stepping Stone Group Ltd
| Jurisdiction | England & Wales |
| Judge | Russen |
| Judgment Date | 04 September 2020 |
| Neutral Citation | [2020] EWHC 2308 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: E22YK487 |
| Date | 04 September 2020 |
[2020] EWHC 2308 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN BRISTOL
TECHNOLOGY & CONSTRUCTION COURT
Bristol Civil & Family Justice Centre
2 Redcliff Street
Bristol
BS1 6GR
HH JUDGE Russen QC
(Sitting as a Judge of the High Court)
Case No: E22YK487
James Frampton (instructed by Reeves James Solicitors Limited) for the Claimant
James Pearce-Smith (instructed by Stephens Scown LLP) for the Defendant
Hearing dates: 9 th to 12 th and 17 th June and 7 th and 20 th July 2020
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.
HH JUDGE Russen QC
HH Judge Russen QC:
Introduction
The Claimant (“ DRJ”) is a company which carries on business as a building contractor. The Defendant (“ SS”) is a property developer which specialises in building ‘assisted living’ homes for elderly residents.
Between 2009 and 2012, SS employed DRJ under three building contracts to build ten assisted living units and also to refurbish a building known as The Engine House into an eleventh unit (“ the Works”). These were all on the same site at the property known as Nynehead Court, Nynehead, Wellington, Somerset (“ the Site”). The 11 residential units constructed there are together known as Nynehead Mews.
Those contracts were as follows:
i) “ the Phase 1 Contract”, relating to Units 1 to 6, entered into on 20 August 2009;
ii) “ the Phase 2 Contract”, relating to Units 7 to 10, entered into in March 2011; and
iii) “ the Engine House Contract”, relating to Unit 11, entered into in November 2011.
The Phase 1 and 2 Contracts were in the form of the JCT Design and Build Contract 2005 (Revision 2 2009) as amended by the parties. The Engine House Contract was in the form of the JCT Minor Works Contract 2011, meaning DRJ had no design responsibility.
The Employer's Agent under the Phase 1 and 2 Contracts was the firm of Baker Ruff Hannon (“ BRH”) represented by Mr John Hannon.
Although SS entered into the three contracts for the development of the Site, it did not own the Site. The Site was owned by Nynehead Care Limited (“ NCL”). NCL is a wholly-owned subsidiary of SS. Having disposed of the units on long leases, NCL still owns the freehold of the common parts.
Taken together, all three contracts had a total Contract Sum of £2,319,339.16 excluding VAT.
The Works under the Phase 1 and 2 Contracts achieved practical completion in 2011: 28 January 2011 for Phase 1 and 1 December 2011 for Phase 2. DRJ subsequently attended the Site to carry out certain remedial works. Practical completion under the Engine House Contract was achieved in July 2012.
DRJ was paid the sums due under the Phase 1 and 2 Contracts save for the half of ‘the Retention Percentage’ (of 5%) which Clause 4.18.3 of their Conditions provided might be deducted where practical completion had been achieved but a ‘Notice of Completion of Making Good’ (in respect of a schedule of defects served by SS) had not been issued. Thus:
i) under the Phase 1 Contract, SS withheld £32,085 being 2.5% of the adjusted Contract Sum of £1,283,400; and
ii) under the Phase 2 Contract, withheld £16,676.57 being 2.5% of the adjusted Contract Sum of £667,082.67.
The total withheld by SS was therefore £48,761.57.
The issue of sums outstanding under the Engine House Contract was generally resolved by an Adjudication between the parties in 2016/2017. As I mention below, the Adjudication involved consideration (in the context of the Engine House Contract) of the meeting between the parties on 14 December 2014. In essence, SS argued that the payment of £40,000 as a result of discussions at that meeting discharged its liability to pay any greater sum under that contract. By his Decision of 25 January 2017, the Adjudicator, Mr Robert Sliwinski, rejected that contention in deciding that SS should pay the balance of the sum of £58,304.56 (plus VAT and interest) for which DRJ had applied for payment in July 2012 under that contract. The Adjudicator did decide that the £40,000 had been paid (by two payments of £20,000 on 18 September and 7 October 2015) against the Contract Sum under the Engine House Contract.
However, on 14 February 2013, DRJ had issued an invoice to SS in respect of the VAT element of the cost of carpets and certain electrical items supplied under that contract. DRJ claims it was entitled to do so because the items in question fell within the exception to zero-rated building supplies (under Group 5 of Schedule 8 to the Value Added Tax Act 1994). The invoice was for £1,181.63. It fell due for payment on 28 February 2013 but was not paid. It forms part of DRJ's claim in these proceedings. Subject to its counterclaim, SS admits the sum is due.
On 6 February 2018 DRJ issued its claim against SS in respect of sums retained under the Phase 1 and 2 Contracts and the VAT invoice under the Engine House Contract. The claim in respect of the first two contracts was not for the full amount of the retention (£48,761.57) as DRJ gave credit for the sum of £9,280.40. That credit sum reflects the amount which DRJ accepts was agreed to be deducted from any final payment at a meeting on 9 December 2014 (“ the December 2014 meeting”). I return below to the significance of the December 2014 meeting which SS point to in saying that DRJ has “ admitted liability” (at least in relation to the heat pump issue) for the purposes of these proceedings.
It is evident from the impasse which prevailed over the release of the retention that SS showed no appetite in the 3 years or so following the December 2014 meeting for pursuing the heads of loss now forming the basis of its counterclaim.
Procedural History
As DRJ's claim was for the relatively modest amount of £40,622.80 plus contractual interest, it was issued in the County Court Money Claims Centre and then transferred to Weymouth County Court.
On 6 July 2018, SS served its Defence and Counterclaim. SS sought to set-off and counterclaim for alleged losses, totalling £240,151.90 (as later amended) before credit for sums otherwise due to DRJ. These losses were said to arising from various alleged breaches of all three contracts by DRJ. The largest claim is in respect of alleged additional electricity costs incurred by the residents (and leaseholders) of the units because SS says the heat pumps installed by DRJ were incapable of meeting the Employer's Requirements (“ ERs”) incorporated in the contracts. The topic of “ excessive electricity” had arisen at the December 2014 meeting.
At the CCMC in Weymouth County Court on 30 April 2019 the proceedings were transferred to the TCC in Bristol. District Judge Bridger also made pre-trial directions, including for the exchange of expert evidence in the fields of building surveying and mechanical electrical engineering (and quantum for both) and the calling of experts.
DRJ made Part 18 requests of SS for further information about its case both before and after that transfer. The first request (to which SS had already given an original and amended response) was the subject of an Order, on the occasion of transfer, to provide details of the agreements which SS alleged it had made with leaseholders in respect of electricity costs. That led to a third response on 28 May 2019.
Disclosure and inspection took place in September 2019 and on 22 October 2019, the parties exchanged witness evidence.
On 6 November 2019, before exchange of expert reports, DRJ applied for summary judgment and/or strike out against SS. On 13 December 2019, SS cross-applied to amend its Defence and Counterclaim.
At a hearing on 30 January 2020, I refused DRJ's application for judgment and/or strike out and granted SS's application to amend. By the time of the hearing SS had served the experts reports upon which it wished to rely. A significant part of the argument on the day related to SS's ability to recover damages by relying, if necessary, upon the principle of transferred loss in respect of increased electricity charges paid by residents to whom NCL had granted long leases. For the reasons given in my judgment on the day, I concluded that in all the circumstances it would not be right to grant summary judgment against SS. However, my Order was conditional upon SS paying the sum of £35,000 into Court.
SS served its Amended Defence and Counterclaim on 14 February 2020. DRJ then made a further Part 18 request in respect of it on 19 February 2020. Again, the focus of the requests was generally upon the claim in respect of electricity charges, including the relationship between SS and NCL and any arrangements made with residents to compensate them and DRJ's alleged breaches in relation to the replacement heat pumps and carpets fitted in the units. SS responded to the RFI on 10 March 2020.
On 19 March 2020, SS served its Amended Reply and Defence to Counterclaim.
DRJ served its expert reports on 14 April (SS having served its own before the January hearing). Both sets of experts thereafter made joint statements.
The trial took place before me, by video-link, over 7 days in June and July 2020 (the original trial time estimate of 4 days plus a reading day having proved to be inadequate). Mr James Frampton appeared for DRJ and Mr James Pearce-Smith appeared for SS. I am grateful to them for the clarity of their submissions and to their instructing solicitors for their efforts in making the necessary arrangements to enable the hearing to take place...
To continue reading
Request your trial
-
CC Construction Ltd v Raffaele Mincione
...when it should have been on 30 th November 2020. That argument invoked the approach in DR Jones Yeovil Ltd v Stepping Stone Group Ltd [2020] EWHC 2308 where, at [89], HH Judge Russen QC had based such an approach on the decision in Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [......
-
Principles Governing Cash Retention In Construction Contracts
...retentions in the context of construction contracts. In the recent case of Dr Jones Yeovil Limited v The Stepping Stone Group Limited [2020] EWHC 2308 (TCC), His Honour Judge Russen QC analysed the operation of retention in JCT contracts. The judgment confirmed that the proper purpose of re......
-
Legal Developments In Construction Law: October 2020
...The developer consequently had no defence to the claim for the retention balance. Dr Jones Yeovil Ltd v The Stepping Stone Group Ltd [2020] EWHC 2308 (TCC) 2. Transferred loss claim meets third party In Dr Jones Yeovil Ltd v The Stepping Stone Group Ltd the developer of assisted living unit......
-
Remote Evidence in English Courts: Some Timely Reminders
...[3] See e.g., Dr Jones Yeovil Ltd v. The Stepping Stone Group Ltd [2020] EWHC 2308 (TCC), in which, during a 10-minute mid-morning break, the defendant’s witness, who had left his microphone on, was overheard having a phone conversation with another of the defendant’s witnesses to “ask him ......
-
Remote Evidence in English Courts: Some Timely Reminders
...[3] See e.g., Dr Jones Yeovil Ltd v. The Stepping Stone Group Ltd [2020] EWHC 2308 (TCC), in which, during a 10-minute mid-morning break, the defendant’s witness, who had left his microphone on, was overheard having a phone conversation with another of the defendant’s witnesses to “ask him ......