GB Building Solutions Ltd ((in Administration)) v Sfs Fire Services Ltd (t/a Central Fire Protection)
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Stephen Davies |
| Judgment Date | 25 May 2017 |
| Neutral Citation | [2017] EWHC 1289 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: B50MA097 |
| Date | 25 May 2017 |
[2017] EWHC 1289 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
Manchester Civil Justice Centre,
1 Bridge Street West, Manchester M60 9DJ
His Honour Judge Stephen Davies
SITTING AS A JUDGE OF THE HIGH COURT
Case No: B50MA097
Lucy Colter (instructed by DAC Beachcroft LLP, Leeds) for the Claimant
Timothy Killen (instructed by Kennedys Law LLP, London) for the Defendant
Hearing dates: 27, 28 March 2017
Supplemental closing submissions: 3, 5, 7 April 2017
Draft judgment disseminated 2 May 2017
Introduction
This case involves a flood which occurred in the basement of an office building under construction in Manchester city centre in late December 2009. The claimant was the design and build main contractor who was responsible for undertaking the main contract works to provide the office building. The defendant was the design and build subcontractor who was responsible for the provision of the sprinkler system in the office building. The claimant contends that the defendant was responsible for the flood. The claimant contends that it has suffered losses resulting from the flood in excess of £600,000.
The court has to decide as a preliminary issue whether the flood occurred before or after the "terminal date", which as relevant is defined simply as the date of practical completion of the subcontract works.
If the flood occurred before the terminal date, it is common ground that the claimant is unable to maintain a claim against the defendant for its losses. If, however, the flood occurred after the terminal date, it is common ground that the claimant is entitled in principle to advance its claim, which would then have to be determined on its merits. That is because it is common ground that under clause 6 of the subcontract conditions the damage which occurred here was a Specified Peril to which clause 6.6.1 applied. Clause 6.6.1 provides as follows:
"The Contractor shall, prior to the commencement of the Sub-Contract Works, ensure that the Joint Names Policy under whichever of Insurance Options A, B or C applies to the Main Contract is issued and/or endorsed in terms that, in respect of loss or damage by the Specified Perils to the Main Contract Works or relevant Section, work executed and Site Materials insured thereunder, either the Sub-Contractor is recognised as an Insured under that Policy or the insurers waive any right of subrogation which they may have against the Sub-Contractor; and that this recognition or waiver shall continue in respect of the Sub-Contract Works or such work in the Section up to and including the Terminal Date."
There are two issues which the court has, or may have, to determine in order to answer the preliminary issue. The first is whether or not the date of practical completion of the subcontract works is defined, by way of agreed modification to the standard form of subcontract used in this case, as "the issue of the certificate of practical completion pursuant to the main contract". If so, then since it is common ground that the certificate of practical completion pursuant to the main contract was issued after the date of the flood the claimant would not be able to maintain the claim.
If not, then it is common ground that clause 2.20.1 applies. Clause 2.20 is headed "Date of practical completion" and clause 2.20.1 provides that:
"The Sub-Contractor shall notify the Contractor in writing of the date when in his opinion the Sub-Contract Works as a whole or such works in a Section are practically complete and he has complied sufficiently with clauses 2.24 and 3.20.4 in respect of that completed work. If the Contractor does not dissent in writing, giving reasons, within 14 days of receipt of the Sub-Contractor's notice, practical completion of such work shall be deemed for all the purposes of this Sub-Contract to have taken place on the date so notified."
If clause 2.20.1 applies the second issue which the court would have to determine is whether or not the defendant did give a valid and effective notification under that clause. If it did, since it is common ground that the claimant did not dissent from any such notice as was given, practical completion would be deemed to have taken place on the date stated in such notification.
On the defendant's case, the court cannot determine that second issue without also considering whether or not the subcontract works had been practically completed by the date of notification, as to which there is a dispute between the parties. Insofar as the court was to conclude that the second issue cannot be determined without reference to the actual position, that is a dispute which the court must resolve.
On the claimant's case, on a proper construction of clause 2.20.1 the actual status of the subcontract works is completely irrelevant. The question is simply whether or not, as it says, the defendant gave a notice in accordance with that clause with which it did not dissent. If so, then the date stated in the notice is the date of deemed practical completion and anything else is irrelevant. If, however, I do not agree with that construction, as I have said the claimant invites me to find that practical completion had been achieved prior to the date of the flood in any event.
I heard oral evidence from three witnesses. The first was Anita McFarlane. She was the regional commercial manager for the claimant's northwest section from 2008 until 2015, when it went into administration. She was an honest and reliable witness, but had no first-hand knowledge of the detail of the subcontract or its performance, thus could say little beyond what the contemporaneous documents themselves said. The second was Richard Gordon. He was a mechanical design engineer at the engineering consultancy instructed by the claimant, known as TACE. He was also an honest and reliable witness. He was present at a demonstration of the subcontract works which took place on 9 December 2009, and I accept his evidence, which albeit given the passage of time was only in general terms, as consistent in my view with the contemporaneous documentation. The third was Scott Ayling, the project engineer employed by the defendant on this subcontract. He was also an honest and reliable witness, who is no longer employed by the defendant. He was not involved in the formation of the subcontract, but took over the job once the subcontract had been awarded to the defendant.
I am extremely grateful to both counsel for their careful, comprehensive and thought-provoking submissions. In summary, my decision is as follows:
(1) The definition of Practical Completion in the schedule of modifications does not apply to section 6. Instead clause 2.20 applies for the purposes of ascertaining the Terminal Date in clause 6.1.
(2) The defendant gave a valid notice under clause 2.20.1 of the date of practical completion as being either 26 October 2009 or, if not, 1 December 2009 and, since the claimant did not dissent in writing within the specified period, practical completion was deemed to have taken place on that date.
(3) Even if, which I do not accept, it is relevant to consider whether or not practical completion in fact had occurred by either date, I am satisfied that it had occurred by 9 December 2009.
(4) It follows that the answer to the preliminary issue is that the flood occurred after the Terminal Date.
My reasons follow.
The first issue
The first issue is a question of construction of the subcontract. Although both parties appeared to suggest at various times that the conduct or beliefs of the parties during the course of performance of the subcontract was, or might be, relevant to the construction of the subcontract, I do not accept that this is so, at least in the absence of a pleaded or developed case of rectification or estoppel by convention or similar. In any event and even if, contrary to my view, such conduct or beliefs were in principle relevant, I do not consider that the evidence in these respects assists me either way on the facts of this case.
The approach to construction
The law in relation to contractual interpretation has been the subject of consideration in many cases, recently and authoritatively by the Supreme Court in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 and again in Arnold v Britton [2015] AC 1619. In a yet more recent case, Wood v Capital Insurance Services [2017] UKSC 24, it was submitted to the Supreme Court that in Arnold it had "rowed back" from the guidance on contractual interpretation which the court gave in Rainy Sky, and that this had caused the Court of Appeal in that case to place too much emphasis on the words of the contract in question and to give insufficient weight to the factual matrix.
The Supreme Court did not allow counsel for the appellant opportunity to develop this argument, stating that it did not accept the proposition that Arnold had altered the guidance given in Rainy Sky. Instead it invited him to present his case without having to refer to what were referred to as "the well-known authorities on contractual interpretation, with which it was and is familiar": see [8] of the judgment given by Lord Hodge, with whom Lords Neuberger, Mance, Clarke and Sumption agreed.
Lord Hodge said this about the correct approach to contractual interpretation:
"10. The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the...
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