Goldsworthy and Others v Harrison and another
| Jurisdiction | England & Wales |
| Judge | Mr Andrew Bartlett |
| Judgment Date | 01 July 2016 |
| Neutral Citation | [2016] EWHC 1589 (TCC) |
| Date | 01 July 2016 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-201600132 |
[2016] EWHC 1589 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings, Fetter Lane, London, EC4A 1NL
Mr Andrew Bartlett QC
Sitting as a Deputy High Court Judge
Case No: HT-201600132
Omar Eljadi (instructed by Stephens Scown LLP) for the Claimants
Robert Stokell (instructed by Michelmores LLP) for the Defendants
Hearing date: 27 June 2016
Mr Andrew Bartlett QC:
Introduction
This is an application for summary judgment to enforce a decision made by an adjudicator of a construction dispute. By a corrected decision dated 22 April 2016 the adjudicator decided that the defendant homeowners were to pay to the claimant builders the sum of £72,400.25, plus any applicable VAT, as interim payments due under a building contract, inclusive of interest at 5.5% per annum up to the date of the decision, with further sums as continuing interest and reimbursement of the adjudicator's fee.
The defendants were residential occupiers, so there was no statutory requirement for adjudication.
The primary issue between the parties is whether they had agreed contract terms which contained an adjudication clause. If they did not, the adjudicator had no jurisdiction. If they did agree contract terms containing an adjudication clause, there is a secondary argument arising from the issue of a final certificate.
Since this is a summary judgment application, I can only decide the application in the claimants' favour if I conclude that the defendants have no real prospect of successfully defending the enforcement claim and that there is no other compelling reason for a trial ( CPR 24.2). The claimants submit that the position is clear because the relevant material is all in writing. My principal conclusions are in paragraphs 85–86 below.
The contract issue
The claimants' case is that the parties agreed, and proceeded on the basis that, the JCT Minor Works terms (MW 2011) were to apply, and that these terms contain a provision for adjudication, which was therefore incorporated into the parties' contract.
The defendants' case is that, although the parties expressed an intention that they would enter into a Minor Works form of contract the parties did not do so because they never reached final agreement on the terms of such a contract. Instead, the work proceeded under an informal agreement, which did not include an adjudication clause. Moreover, the defendants say that the parties' conduct is not consistent with a concluded agreement that the MW conditions should apply, because the payment mechanism that was actually followed was not the same as in the MW contract. As an alternative, even if the parties incorporated the MW terms which regulated the work, they did not incorporate the adjudication clause.
The secondary issue
The secondary issue is a contention that the adjudicator had no jurisdiction to decide on the dispute over interim payments, because that dispute was overtaken, during the adjudication, by the issue of a final certificate, and by a statement of account issued by the claimants themselves, showing a balance due of only £8,661.46 plus VAT.
The Minor Works Contract
At the time of the works the current edition of the standard form Minor Works Building Contract was MW 2011. This consists of Articles of Agreement (Recitals, Articles and Contract Particulars), Conditions, and three Schedules. The Articles contain various blanks to be filled in by the parties. At the end there are printed Guidance Notes.
There are three kinds of blanks and other optional elements in the Minor Works form:
i) Elements for which the printed wording stipulates a default option which applies if no positive choice is indicated. For example, if the retention percentage for the purposes of clause 4.3 is not filled in, the percentage is 95%, and if no rectification period is specified, the default period is three months from practical completion.
ii) Elements which are only applicable in certain circumstances, so can be left uncompleted if they are not required. For example, the contract is only supplemented by a Framework Agreement if such an agreement is identified in the Contract Particulars, and the insurance provisions in clauses 5.4A, 5.4B and 5.4C only apply if positively selected.
iii) Elements which need to be filled in or otherwise agreed by the parties in order to make a Minor Works contract sufficiently complete and workable. These include the identity of the contracting parties and the Contract Sum.
Article 6 states:
If any dispute or difference arises under this Contract either Party may refer it to adjudication in accordance with clause 7.2.
Clause 7.2 of the Conditions states:
If a dispute or difference arises under this Contract which either Party wishes to refer to adjudication, the Scheme shall apply except that for the purposes of the Scheme the Adjudicator shall be the person (if any) and the nominating body shall be that stated in the Contract Particulars.
The 'Scheme' is the statutory scheme for adjudication applying to construction contracts.
The provision for adjudication in the Contract Particulars is the first kind of option, ie, a default option. Where the parties do not select a named adjudicator or any particular nominating body, the body to nominate the adjudicator is to be any one of five bodies listed, as may be selected by the party requiring the reference to adjudication.
Guidance Note 7 states:
… a contract with a residential occupier within the meaning of section 106 of the Act …… does not need to contain adjudication provisions, but, unless amendments are made, a residential occupier in entering into a Minor Works Building Contract will be accepting adjudication as a means of resolving disputes.
The MW Conditions make provision for interim payments in clause 4 on the following lines:
i) The 'due' dates are at intervals of 4 weeks calculated from the Date for Commencement of the Works.
ii) Not later than 5 days after each due date the Contract Administrator is required to issue interim certificates for 95% (or other chosen percentage) of the value of the work and materials, net of VAT.
iii) The final date for payment is 14 days from the due date (ie, if the certificate is issued on the last possible day, 9 days after the certificate).
iv) The Employer must pay, in addition to the certified sum, any VAT properly chargeable. (There is no express provision for Contractor's invoices but in practice a Contractor would provide an invoice before the final date for payment showing any VAT due.)
v) If the Contract Administrator does not issue an interim certificate within the stipulated time, the Contractor may issue a payment notice, and the final date for payment is then adjusted to allow for any delay between the last date for an interim certificate and the date of the Contractor's payment notice.
The Minor Works form contains provisions for a defined completion date, for the grant by the contract administrator of extensions of time for completion for reasons beyond the control of the Contractor, and, in the event of failure to complete by the original or any extended date for completion, for the payment by the Contractor of liquidated damages at a rate stated in the Contract Particulars.
The provisions of the Minor Works form constitute a carefully designed package which, when properly filled in, sets an agreed balance of costs, liabilities and risks. This feature needs to be kept in mind when considering whether an incomplete Minor Works form constitutes a binding contract. When parties intend that they will contract on a Minor Works form, but fail to complete it, the Court needs to be wary of imposing on them a less complete contract, with a different balance of risks partly reflecting the Minor Works form and partly inconsistent with it: a contract which, if asked, they would not have agreed to. However, this does not prevent a finding, if justified by the evidence, that the parties did in fact choose to bind themselves contractually on the basis of an incomplete package.
Facts
The defendants appointed Gryffydd John Ringe Architects Ltd ('GJR') to act for them. On 27 October 2011 GJR sent to the claimants a proposed schedule of works to the main roof of the claimants' house. This identified the defendants as the Employer and GJR as the contract administrator. The Contractor was to provide a programme, but no duration was specified for the works. The schedule included a term which provided:
The work will be certified for payment by the architect within 7 days of valuation and the Employer is to pay within 14 days of the certification.
On 23 November 2011 the claimants provided a quotation for the roof works in the sum of £26,945 exclusive of VAT.
The project did not proceed at that stage because of delays in obtaining necessary approvals and the like.
The claimants were subsequently asked to quote for some further works, involving some demolition, a new garden access, and three trial pits; and they did so in writing on 15 August 2012, proposing the further sum of £21,919 exclusive of VAT.
Up to this point there was no mention of MW terms.
The evidence is not clear as to exactly when work began, but it appears possible that it was in about late October 2012. It seems that there must have been discussions about acceptance of the existing quotations and about further extending the works so as to include a major programme of alterations to the house. On 30 October 2012 GJR emailed the claimants, stating—
… It seems...
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Table of cases
...the City of Sydney [2001] NSWCA 246 III.23.37 Goldswain v Beltec Ltd [2015] EWHC 556 (TCC) II.14.17, II.14.27 Goldsworthy v Harrison [2016] EWHC 1589 (TCC) I.2.12, III.24.70 Golets v Southborne Homes Pty Ltd [2017] VSC 705 II.6.119, III.24.246 Golf Australia Holdings Ltd v Buxton Constructi......
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Statutory adjudication
...other date: ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC) at [45], per Edwards-Stuart J. 390 Goldsworthy v Harrison [2016] EWHC 1589 (TCC) at [64], per DHCJ Bartlett QC. 391 CSC Braehead Leisure Ltd v Laing O’Rourke Scotland Ltd [2008] CSOH 119 at [33], per Lord Menzies. 392 ......
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Contract formation
...of the Stratield Saye Estate v AHL Construction Ltd [2004] EWHC 3286 (TCC) at [41], per Jackson J. 36 See, eg, Goldsworthy v Harrison [2016] EWHC 1589 (TCC) at [77], per DHCJ Bartlett QC. ContraCt ForMation 2.13 Secondly, a term may be essential in the sense that, if it is not agreed by the......