Everwarm Ltd v BN Rendering Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Alexander Nissen |
| Judgment Date | 18 November 2019 |
| Neutral Citation | [2019] EWHC 3060 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2018-000172 |
| Date | 18 November 2019 |
[2019] EWHC 3060 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Alexander Nissen QC
(sitting as a Deputy High Court Judge)
Case No: HT-2018-000172
Iain Quirk (instructed by Harper Macleod LLP) for the Claimant
Catherine Piercy (instructed by Goodman Derrick LLP) for the Defendant
Hearing dates: 22, 23, 24, 25 and 30 July 2019
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.
Mr Alexander Nissen QC
Mr Alexander Nissen QC:
Introduction
In these proceedings and in the circumstances described below, the Claimant, Everwarm Limited (“Everwarm”) claims £798,468 against the Defendant, BN Rendering Limited (“BN”). In turn, BN counterclaims against Everwarm, as explained below, in the sum of £1,957,905. Alternative sums are claimed to be due to BN based on differently formulated causes of action.
Although the facts and matters to which these proceedings relate date back to as long ago as December 2013, the present trial date was only fixed in January 2019 once the case had been transferred to the TCC. In March 2019, Fraser J ordered that the trial to which this judgment gives rise would be of all matters save for those contained in paragraphs 57 to 60 of the Amended Defence and Counterclaim. It was ordered that directions for the trial of the issues raised by those paragraphs were only to be given following a hand-down of this judgment which was intended to deal with all other issues in the case.
At the trial, I heard from the following witnesses on behalf of Everwarm: Mr Grandison, an assistant quantity surveyor for Everwarm; Mr Stirling, the managing director of Everwarm; Mr McMahon, an earlier commercial manager for Everwarm; Mr McMaster, the current commercial manager for Everwarm; Mr Johnston from Turner & Townsend, quantity surveyors. I heard from the following witnesses on behalf of BN: Mr Pristyak, a supervisor/administrator for BN; Mr McGill, another supervisor; Mr Nemeth, who is the sole director and shareholder of BN; and Mr Gordon, the operational manager of BN.
A witness statement of Kathleen Gordon was served on behalf of BN. It was agreed that her evidence could be given in written form as its contents were not controversial. Everwarm reserved the right to make submissions as to the relevance of her evidence but, in the end, none were made by either party.
A witness statement of Mr Wilson had been served by Everwarm. He was previously a site manager and later an area manager for Everwarm. He was unable to attend court but it was agreed that his written evidence was admissible. It was left to me to determine what weight could be placed upon it bearing in mind that Mr Wilson was not subject to cross examination in respect of it. Some submissions were made about this in closing.
At the end of the trial, I concluded that I would benefit from further written submissions relating, particularly, to the Counterclaim, which had attracted greater significance by the end of the trial. Those were duly provided but, in turn, gave rise to further exchanges which were also dealt with in writing. I also gave permission to both parties to comment on a recent case which had been decided by the Court of Appeal after the service of the initial written submissions. Both parties provided me with further material pursuant to that direction.
Background facts
Everwarm is a company which provides energy efficiency advice and related services including the provision of residential external building insulation or EWI as it is known. So far as material for the purposes of these proceedings, the provision of EWI involves two simple but effective steps: the application of insulation board to the external elevations of houses, followed by the provision of a render coating, comprising a mesh and scrim undercoat and then a top coat. In 2014, the Scottish Government injected a massive increase in funding of external wall insulation, under a scheme known as the Home Energy Efficiency Programme Area Based Scheme, the aim of which was to tackle fuel poverty in domestic households. Everwarm found itself well placed to carry out this work and secured plenty of it pursuant to the Heeps Abs Scheme as it was known. Whilst Everwarm procured materials for the insulation works, much of the work and certainly all of the work in these proceedings was carried out pursuant to labour only subcontracts. All of the work was undertaken in Scotland.
In late 2013, BN was a company in its infancy. BN was able to offer competitively priced labour from central and eastern Europe using a recruitment company in Hungary (Mr Nemeth's home country) and, as a result, BN subsequently became the beneficiary of huge quantities of labour only work from Everwarm in respect of the EWI works for various projects. These proceedings concern all 38 subcontracts between the parties. There came a point in time when BN was undertaking around 70 to 80% of Everwarm's EWI work.
At the outset and for some considerable period of time thereafter, the relationship between the two parties was remarkably informal. Very few of the activities undertaken by BN for Everwarm were ever contemporaneously recorded in writing. It is not in dispute that many of the subcontracts were themselves concluded orally. Occasional but irregular meetings took place between the management of both companies but those meetings were not minuted. The records of work undertaken on the sites, particularly in respect of additional work, are poor or non-existent. That is not the result of many documents having been lost. Rather, it reflects the way in which both companies operated. For its part, Everwarm may have had procedures in place for concluding subcontracts, for instructing, identifying and recording work and so on. But having heard from various witnesses, it is as plain as can be that those procedures were seldom adhered to. Quantity surveyors and site supervisors appear to have been quite lax in their approach. As a matter of generality work, including additional work, was instructed and undertaken without any proper record being kept on either side of the instruction or the work done pursuant to it. Occasionally, there is a written record of additional work having been ordered and undertaken e.g. in the form of a site instruction. For its part, BN was just as informal in its approach to the works undertaken pursuant to these subcontracts. Its sole director and shareholder, Mr Nemeth, admitted he was effectively operating the company from his car, without an office base or any proper administration behind him. He had no employees to deal with those matters. Despite the informal manner in which both parties conducted their relationship over the first two years, between them they managed to commission and undertake work to a staggering value of about £8 million.
From late 2015, Everwarm began to issue written subcontract orders. Mr McMahon notified Mr Nemeth that interim payments would be moving from a fortnightly cycle to a monthly one, with which BN was content. I do not have the general impression that much else changed. Mr Nemeth said, and I accept, that Everwarm's site managers continued to do business in the same way as before. Even then, not all the subcontracts were in writing. Over the time which followed, various of the quantity surveyors which Everwarm had employed left the company.
Thus, it is common ground that between 2013 and March 2016, the parties concluded a series of subcontracts pursuant to which the EWI works were undertaken. Each one related to and was generally known by the geographical area within which the relevant properties to receive EWI works were situated e.g. Stenhousemuir or Falkirk. Interim payments were generally made on a fortnightly, later monthly, basis for each subcontract. In each case, a basic labour rate for every square metre of EWI applied was agreed (made up of three sub-rates for insulation, mesh and scrim coat and top coat finish respectively). Since EWI is applied throughout a given property, the area can, if necessary, be measured from the physical dimensions, omitting the door and window openings. In some geographical areas, such as those in Aberdeenshire, which were relatively inaccessible, a higher rate per square metre was agreed to allow for transport and accommodation costs.
Payments were applied for using a standard template which Everwarm had provided and which BN completed. Later, when the payment cycle changed, a new template was used. A single payment was made globally for all subcontracts but, initially at least, this was done in a way which enabled BN to work out what amount had been paid in respect of which subcontract. Later, this was not so clear.
One particular issue that arises between the parties to this dispute concerns “ingoes”. No-one was able to identify the derivation of the word but it was generally used by these parties at the time to describe the window and door reveals. In an ideal world, it would be beneficial to apply insulation and render to those areas in addition to the elevations. Space is obviously needed to open the door or window but, in some cases, thinner insulation could still be applied beneath the render, depending on the available depth, without impairing the functionality of the door or window. Otherwise the areas would simply be finished off with render. There is a dispute about the rate of payment for work to ingoes with which I deal in more detail below. At the time, BN claimed payment for work done on ingoes by simply adding a standard quantity of 1m 2 for each opening...
To continue reading
Request your trial