Elements (Europe) Ltd v FK Building Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Constable |
| Judgment Date | 30 March 2023 |
| Neutral Citation | [2023] EWHC 726 (TCC) |
| Docket Number | Case No: HT-2023-000043 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2023] EWHC 726 (TCC)
Mr Justice Constable
Case No: HT-2023-000043
And in Claim No HT-2023-000022
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Jonathan Lewis and Gideon Shirazi (instructed by Devonshires) for Elements (Europe) Limited
Mr Andrew Singer KC (instructed by Beyond Corporate Law) for FK Building Limited
Hearing date: 21 March 2023
Remote hand-down: This judgment will be handed down remotely by circulation to the parties or their representatives by email and release to The National Archives. A copy of the judgment in final form as handed down should be available on The National Archives website shortly thereafter but can otherwise be obtained on request by email to the Judicial Office (press.enquiries@judiciary.uk). The deemed time and date of hand down is 10.30am on Thursday 30 th March 2023.
Introduction
This is an application for summary judgment brought by Elements (Europe) Limited (‘Elements’) against FK Building Limited (‘FK’). There is a related Part 8 claim brought by FK. Elements seeks summary judgment in the sum of £3,950,190.52 plus interest and costs arising out of an adjudication decision dated 17 January 2023 (‘the Award’). FK does not dispute that the Award is enforceable. FK's Part 8 application relates to what it contends are two short points relating to the validity of the payment application upon which the Award rested. FK argues (as it did before the Adjudicator) that the application was invalid because it was received late. It is said that it is permissible and appropriate for me to consider these points; and that if I consider that FK is correct as a matter of law, it is submitted that it would be unconscionable for this to be ignored and the Award should not be enforced in these circumstances.
The dispute between the parties (which was broader than just the matters in dispute in front of me) settled following the handing down to the parties a draft of this Judgment. However, given that the issue considered relates to the proper construction of an important element of a JCT standard form widely used in the construction industry and which has not, as far as Counsel were aware, been the subject of judicial consideration before, it is appropriate to hand down the judgment notwithstanding the resolution of the underlying dispute (see Barclays Bank v Nylon Capital [2011] EWCA Civ 826 at [74]–[78]). I have come to this decision having considered the communications from the parties in this respect. It is of course important to note that, by reason of the settlement, this matter has been resolved by a Consent Order reflecting the fact of the parties' agreement and no (summary) judgment has in fact been entered by the Court against FK notwithstanding my conclusion at paragraph 44.
The Contract
By a Sub-Contract in writing incorporating the JCT Standard Building Sub-Contract Conditions SBCSub/C 2016 Edition with bespoke amendments (“the Sub-Contract”), FK as main contractor engaged Elements as subcontractor to carry out remediation works to 312 bi-split apartment modules as part of the design and construction of three buildings to comprise a 156 residential apartment scheme at Uptown Riverside, Springfield Lane, Salford. On or around the same date as the Sub-Contract, Elements and FK entered into a Deed of Variation, which varied various terms of the Sub-Contract, including increasing the scope of works and the Contract Sum to £7,405,272.78.
Clause 4.6 (page 68.30) of the Sub-Contract Conditions provides:
“4.6.1. During the period up to the due date for the final payment fixed under Clause 4.22.1 … the monthly due dates for interim payments shall in each case be the date 12 days after the relevant Interim Valuation Date …”
4.6.3. Where Clause 4.6.2 does not apply, the Subcontractor may make a payment application in respect of an interim payment to the Contractor either:
4.6.3.1. so as to be received not later than 4 days prior to the Interim Valuation Date for the relevant payment …”
Sub-Contract Particulars Item 10 provides that:
“The first Interim Valuation Date is 25 th June 2021 and thereafter the same date every fortnight [sic] for a period of two months following which the date shall be the same in each month or the nearest business day in that month.”
Clause 4.7.1. provides that:
“Subject to Clause 4.7.4 the final date for payment of any payment shall be 21 days after the due date as fixed in accordance with Clause 4.6.1 …”
The Specification provides:
“The site will be open for the Sub-Contractor to carry out the Sub-Contract Works from 7.30 a.m. to 6.00 p.m. Monday to Friday except on any dates stated in item 2.2. On Saturdays the site will be open from 8.00 am to 1.00 pm”
Factual Background
It is agreed between the parties, at least for the purposes of this hearing, that Elements issued its Payment Application No. 16 (‘the Application’) by email on 21 October 2022, timed at 22.07. The relevant emails indicate that the Application was sent on behalf of Elements by a Mr Walters of Socotec Advisory Ltd (trading as Base Quantum). He had been retained by Elements to prepare interim applications for payment. The email was sent to Mr Corns of FK and copied to a number of other FK employees, namely Mr. Warhurst, Mr. Bentley and Mr. Brown. Mr. Walters' email attached via a link a 17 page PDF valuation which stated that there was an amount due to Elements of £3,950,190.53. There is no dispute that Mr. Walters' email and its attachment was received into the recipients' email inboxes on the same date it was sent at between 22.07 and 22.08.
During the adjudication, Elements adduced factual evidence in support of the following propositions:
(a) Quantity surveying, management and administrative teams deal with payments and not site staff;
(b) Quantity surveying, management and administrative teams generally do not work site hours but instead work late hours;
(c) Quantity surveying, management and administrative teams generally work late hours, not restricted to business hours;
(d) It is common practice in the construction industry for payment notices under construction contracts to be sent out of site hours and out of business hours;
(e) On 21 October 2022, at least some of the individual recipients of the e-mail serving Application No.16 were checking emails on or after 22.08;
(f) On 21 October 2022, at least some of the individual recipients of the e-mail serving application #16 saw that the e-mail had landed and opened the e-mail and its attachments and all understood that a payment application had been served.
This evidence was served responsively to FK's position in its Response in the Adjudication that factual evidence of both specific site practice and ‘usual’ practice was relevant to the question, which FK contended was the relevant one, of whether the recipient could reasonably be expected to have read the email (see paragraphs 4.10 to 4.12 of the Response).
Elements relied upon the same factual evidence supporting the propositions set out in paragraph 7 above in defence to the Part 8 claim, and no responsive evidence was served by FK. Mr Singer KC, on behalf of FK, did not put the case the same way in this Court, contending that the right answer turned on the proper construction of the Sub-contract, accepting that this question was to be resolved as at the date of the contract and would not be assisted by what in fact happened. Whilst accepting that Element's evidence before the Court was unchallenged in substance, he contended therefore that it was simply not relevant.
The Adjudication
On 5 December 2022, Elements served a notice of adjudication on FK referring the dispute to adjudication. On 17 January 2023, the Adjudicator delivered his decision to the parties. FK disputed that sums were due pursuant to Application No.16 for five reasons in the adjudication, all of which the Adjudicator rejected. Two of those reasons are the matters of law relating to the validity of the Application which the Court is invited by way of Part 8 proceedings to determine today.
Having rejected FK's arguments, the Adjudicator determined that FK was required to pay Elements the sum of £3,950,190.53 ex VAT; £44,155.55 (ex VAT) in interest until the date of the Decision plus interest thereafter at a daily rate of £865.80 (ex VAT) until payment; and to the Adjudicator's fees of £11,074.50 including VAT (and, if Elements paid first, to reimburse Elements for those fees).
These Proceedings
On 24 January 2023, FK indicated that it intended to issue Part 8 proceedings seeking a final determination and, on 25 January 2023, it emailed the Part 8 claim form to Elements' solicitors. FK did not indicate whether it intended to comply with the Adjudicator's Decision.
On 26 January 2023, not having received payment as required by the Decision, Elements' solicitors sent correspondence to FK's solicitors requesting that FK make payment of the Adjudicator's fees. FK did not do so and, on 27 January 2023, Elements served a notice of intention to suspend the Sub-Contract Works if payment was not received within 7 days.
On 3 February 2023, seven days having passed and no payment made, Elements issued its adjudication enforcement Part 7 claim. On 10 February 2023, Elements served the evidence in response to the Part 8 Claim referred to above. On 13 February 2023, the court made an order giving directions and listing the adjudication enforcement and Part 8 proceedings together. Further to correspondence between the parties and...
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