Fleming Builders Limited V. Mrs. Jane Forrest Or Hives+mr. William Forrest
| Jurisdiction | Scotland |
| Judge | Lord Menzies |
| Neutral Citation | [2008] CSOH 103 |
| Court | Court of Session |
| Docket Number | CA106/07 |
| Published date | 16 July 2008 |
| Date | 15 July 2008 |
| Year | 2008 |
| OUTER HOUSE, COURT OF SESSION [2008] CSOH 103 | |
| CA106/07 | OPINION OF LORD MENZIES in the cause FLEMING BUILDINGS LIMITED Pursuers; against MRS JANE FORREST OR HIVES First Defender: and MR WILLIAM FORREST Second Defender ________________ |
Pursuers: S. Smith, MacRoberts
Defenders: Malone, Solicitor Advocate, Bell & Scott
15 July 2008
Introduction
[1] In about May 2001 the first defender purchased a house and ground at 17 Fairyknowe Gardens, Bothwell. She and her husband, the second defender, intended to build an extension to this house and thereafter to live in it themselves. The extension was constructed but the work was defective and the defenders decided to demolish the extension and the original house and build a new house on the site. They instructed Mr Gordon Gibb to be their architect and Mr Peter Imrie to be their chartered surveyor. In August 2005 invitations were sent out to contractors to submit tenders for this project, and in September 2005 the pursuers returned the completed tender documents offering to do the works for about £833,000.00. The tenders at this stage were too high, and contractors were invited to tender for a revised project in October 2005. The pursuers returned the completed tender documents for this work in the sum of £521,791.03. The pursuers attended a meeting with the defenders and others on 30 November 2005, and by letter dated 2 December 2005 the pursuers wrote to the defenders' architect offering a saving to the client of £8,000.00, making a revised tender sum of £513,791.03. By letter dated 20 December 2005 Peter Imrie wrote to the pursuers stating inter alia
"We have been authorised by the client KWF Holmes Ltd whose registered office is at Silverwells House, 114 Cadzow Street, Hamilton, ML3 6HP, to accept the tenders submitted by you on the 2 November 2005 in the amount of £521,791.03 further revised by your letter dated 2 December 2005 in the amount of £513,791.03."
[2] There was a pre-start meeting on 10 January 2006 and work commenced on the site on about 23 January 2006. On 17 July 2007 the pursuers' solicitors served a notice of adjudication on the defenders. In the course of the adjudication proceedings, the defenders' solicitors submitted inter alia that there was no contract between the parties and accordingly the adjudicator had no jurisdiction and should resign. After sundry procedure, including hearing the evidence of three witnesses for the pursuers and four witnesses for the defenders, and legal submissions on behalf of both parties, the adjudicator found that the parties to the contract were the pursuers and the defenders. In her decision letter, which was dated 26 September 2007, she decided that the defenders were to pay the pursuers the sum of £112,598.75, within seven days of the date of the decision, together with interest on sums certified in interim certificates and a joint and several liability for the adjudicator's fees and expenses in relation to the adjudication.
[3] The defenders have made no payment to the pursuers in respect of these sums, so the present commercial action for payment was raised in late October 2007. The matter came before me by way of a preliminary proof, which lasted for eight days in March and May 2008. The issues to be canvassed in this preliminary proof were set out by the Court in interlocutors dated 6 February and 17 March 2008. These were first the issues contained in statement A and B3 of the pursuers' note of issues (No 9 of Process). These were in the following terms:-
"A. Whether or not the Adjudicator's decision is ultra vires
1. The power to refer the parties' dispute to adjudication is
derived from a clause in the pursuers' revised tender of 2 December 2005. Only if this tender was accepted by the defenders, and a contract concluded between the parties thereby, did the Adjudicator have jurisdiction.
2. The defenders set out additional grounds upon which they seek to have the Adjudicator's decision set aside ope exceptionis. These are: that she failed to take account of the evidence of Mr Thomson, and the affidavit of Mr Imrie; and that she failed to have regard to the argument that there was no contract at all (ie. neither with the defenders nor with KWF Homes Ltd). This raises the issue:
2.1 Whether it is open to the defenders to seek to reduce the Adjudicator's decision on any of these grounds;
2.2 Where it is open to them to do so, whether any of these grounds are well-founded.
B. Retention and set-off
3. The defenders have pleaded retention and set-off on the basis of an (as yet) unspecified claim for damages. Whether or not they may do so depends on whether a valid notice of intention to withhold payment was in accordance with the contract."
The Court also allowed the preliminary proof to consider the question "if no notice of intention to withhold was given, does that preclude the right of retention or set off by the defenders?". Finally, the Court extended the scope of the preliminary proof to include the "breach of natural justice" point as contained in paragraph 3 of the defender's note of argument No 18 of process, which was in the following terms:
"3. The adjudicator's decision should in any event be reduced as being
contrary to the rules of natural justice.
3.1 The principle issue for determination was whether there was a contract between the parties.
3.2 A key witness for the Defenders was the QS Mr Peter Imrie. Mr Imrie provided an affidavit confirming that a building contract had been completed in the name of KWF Homes Ltd, and KWF Homes Ltd was to be the party to the contract. Mr Imrie was on holiday and was not contactable during the adjudication. On his return, he advised that he would be willing to participate in a conference call.
3.3 Whilst Mr Imrie had provided an affidavit, he did so prior to the issues becoming focused by the adjudication, and it was not possible to put the evidence of the Pursuers' witnesses in respect of the written contract to him. The Defenders were grossly prejudiced by the Adjudicator's refusal to hold a conference call with Mr Imrie. Mr Imrie was available for a conference call on 21st September 2007. The adjudicator's decision was not due until 26th September 2007. In these circumstances, given the short timescales within which adjudication is meant to operate, it would have been reasonable for the adjudicator to conduct a conference call with Mr Imrie."
[4] There was a considerable body of documentary evidence referred to at the preliminary proof. In addition, I heard evidence from four witnesses on behalf of the pursuers and four witnesses on behalf of the defenders. In their closing submissions parties laid considerable emphasis on the question of the credibility and reliability of these witnesses. In these circumstances it is appropriate that I should attempt to summarise the most important of the productions relied on (although I make it clear that I have taken account of all of the productions and also the terms of the Joint Minute for the Parties, No 20 of process), and thereafter set out the evidence of the witnesses rather more fully than is my normal practice.
Documentary Evidence
- By letter dated 22 December 2004 Gordon Gibb wrote to the defenders with an amended fee proposal, the architect's appointment being administered under the terms conditions and limitations of SCA/2000 published by the RIAS.
- The application for building warrant for the erection of a building at 17 Fairyknowe Gardens, Bothwell which was received by the Local Authority on 1 March 2005 was made by Mr & Mrs Forrest. Building Warrant was granted on 14 July 2005.
- By letters dated 11 August 2005 Peter Imrie invited contractors to submit a tender for a proposed new build house at 17 Fairyknowe Gardens, Bothwell for Mr & Mrs Forrest.
- By letter dated 5 September 2005 the pursuers returned completed tender documents; again the covering letter indicated that the proposed new build house was for Mr & Mrs Forrest.
- On 4 October 2005 Peter Imrie wrote to the pursuers inviting them to submit a fresh tender. Again this was for "proposed new build house at 17 Fairyknowe Gardens, Bothwell for Mr & Mrs Forrest".
- By letter dated 2 November 2005, bearing the same heading, the pursuers submitted a tender. The formal tender document, on the page signed on behalf of the pursuers, bore the following heading:
"Form of Tender
Tender for: New Build House, 17 Fairyknowe Gardens, Bothwell
Client: Mr & Mrs Forrest"
- The bill of quantities defined the employer "client" as Mr & Mrs Jane Forrest. At page 1/7 it is provided that the works shall be completed in accordance with the SBBC form of contract with contractors Designed Portion with Quantities. (It was not disputed that this was a reference to the SBCC Scottish Building Contract Contractors designed portion with quantities, which provides by clause 7 that if any dispute or difference arises under or by reason of breach of this contract either party may refer it to adjudication in accordance with clause 41a.).
- No. 6/17 of process was a minute taken by Ken Rodger of the pursuers of a meeting held at the office of Gibb Architects at 11am on Wednesday 30 November 2005. This minute stated that the meeting followed the revised tender of £521,000,00 for the house, that the architects pointed out that a few areas of the pursuers' tender were higher than others and wondered if the pursuers could look again at their price and get back to them before Friday 2 December. It was recorded that Ken Rodger would look at prices and discuss overall response with other directors. The list of those present included John & Jane Forrest as "clients".
- By letter dated 2 December 2005, the pursuers wrote to John Thomson of Gibb Architects. Again the heading showed the new house "for Mr & Mrs Forrest". The pursuers offered a saving "to your client" of £8,000.00.
- No. 6/19 of Process was a draft letter (apparently not sent) from John Thomson of Gibb...
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