G.K.N. Foundations Ltd v Wandsworth London Borough Council
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,Sir GORDON WILLMER |
| Judgment Date | 11 February 1972 |
| Judgment citation (vLex) | [1972] EWCA Civ J0211-3 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 February 1972 |
[1972] EWCA Civ J0211-3
In The Supreme Court of Judicature
Court of Appeal
Appeal (by leave) by the plaintiff from order of Mr. Justice Mocatta on 19th November, 1971
The Master of the Rolls (Lord Denning)
Lord Justice Roskill and
Sir Gordon Willmer
Mr. PATRICK GARLAND (instructed by Messrs. Park Nelson, Dennes, Redfern & Co.) appeared on behalf of the Appellant Plaintiffs
Mr. A.G. POLLOCK (instructed by Mr. H.A. Sargant) appeared on behalf of the Respondent Defendants.
This case is a sequel to two others which have recently been in this Court, the first being Dawnays Ltd. v. F.G. Winter and Trollope & Colls Ltd. (1971) 1 W.L.R. 1205; and the second Frederick Mark Ltd. v. Second (1972) Lloyd's Law Reports 9. In 1968 the Corporation of Wandsworth were about to build big blocks of flats as part of their Livingstone Road Housing Scheme. They determined themselves to do a good deal of the work by their own direct labour. But they employed a specialist firm, G.K.N. Foundations Ltd., to make the foundations. They treated their works department as if they were main contractors. They treated these specialists, G.K.N. Foundations Ltd., as if they were sub-contractors to the works department, but they were really first contractors to the Corporation. They drew up a contract with the specialists, G.K.N. Foundations Ltd., which was based on the R.I.B.A. form of sub-contract, but adapted so as to cover the special circumstances of the case. Under this contract G.K.N. Foundation Ltd. agreed to provide concrete cylinder foundations for two blocks of flats. The work was to commence on 27th November, 1968, and to be completed by the March, 1969. The contract price was £19,652. The work for the first block went slower than expected, but the work for the second block went pretty well. The work for the two blocks was completed by 2nd April, 1969. So the whole work was about a week late. The value of the completed work was assessed eventually at £23,212. 5s.6d. (No doubt this sum included variations and extras.) The Wandsworth Corporation made interim payments amounting to £8,870. 9s.7d., leaving £14,041.30 still due. When G.K.N. Foundations Ltd, asked for payment, the Corporation of Wandsworth sought to deduct £14,634. They said that that was their loss due to delay in the first block and on the secondblock, taking each block separately. G.K.N. Foundations did not agree with this deduction for delay. They issued a writ for the £14,041.30 for the balance still due. The Judge has given them judgment for that amount, but he has stayed execution on it pending the counterclaim for over £14,000. The plaintiffs now seek to appeal so as to get the stay removed. There were some interlocutory steps by which the matter has been brought to this Court. I need not go into them, except to say that we gave the plaintiffs leave to appeal, extending the time for the purpose. So we come to the point: Are the plaintiffs to be kept out of their money pending the counterclaim?
This depends on the true interpretation of the contract. The clauses in the agreement are for all practical purposes the same as in the R.I.B.A. form for sub-contracts, such as we considered in Dawnays v. Minter. but with variations because the Corporation were themselves the employers and employed their own staff. The material clause is clause 13 (which is adapted from clause 11 of the R.I.B.A. form for sub-contractors:-
"13(a): The Employer shall at the period of trim Payment (if any) named in the Appendix to these Conditions" -that is every month - "ascertain or cause to be ascertained the total value of the Contract works and of any variations'….
(b) Within fourteen days of the ascertainment by the Employer of any Interim Payment the Employer shall notify and pay to the Contractor the total value as so ascertained in respect of the Contract Works and in respect of any authorised variations thereof …. less (i) Retention Money, not exceeding 10% of the contract sum;(ii) a cash discount of 2½;and (iii) the amounts previously paid.
Clause 14 (which is adapted from clause 13 of the R.I.B.A.form) says:
"The employer shall be entitled to deduct from or set off against any money due from him to the contractor (including any retention money) any sum or sums which the contractor is liable to pay to the employer under this contract."
Those clauses are very like the clause for interim payment in Dawnay's case, save that in this case the sum is to be ascertained by the employer and not by the architect. But that,. to my mind, makes no difference. In this case the employers had the work measured by quantity surveyors and thus ascertained the value of the work done, and issued certificates accordingly. Once ascertained, the amounts were payable without any deductions, save those specified in clause 13.
Mr. Pollock, for the Corporation, says that this case is different from Dawnays Ltd. v. Minter and Trollope & Colls Ltd. because here the sums payable are to be ascertained by the employer and he urges that the valuer (who is employed by the employer) in ascertaining the value, can deduct a sum on account of defects which have to be remedied, and thus render the work of less value. That is no doubt right. But then Mr. Pollock goes on and says that delays are to be put in the same category as defects. Hence he says that, in giving a certificate, the valuer can deduct for claims for delay. I cannot accept this argument. A valuer does not deal with unliquidated damages for delay. He is not qualified to do it. His job is to measure the work, to value the labour and materials there and then on the site, and give his figure accordingly. He may take into account defects which have got to be remedied, but he does not have any regard for unliquidated damages for delay. They are not the subject of measurement, but depend on the state of the employers business...
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Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd
...followed that decision in five other cases all decided in 1972. Frederick Mark Ltd. v. Schield [1972] 1 Lloyd's Rep. 9, G.K.N. Foundations v. Borough of Wandsworth [1972] 1 Lloyd's Rep. 528, John Thomson Horseley Bridge Ltd. v. Wellingborough Steel & Construction Co. Ltd., unreported, Token......