Hart & Son v Smith
| Jurisdiction | England & Wales |
| Judgment Date | 03 September 2009 |
| Neutral Citation | [2009] EWHC 2223 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 03 September 2009 |
| Docket Number | Case No: HT-09298 |
[2009] EWHC 2223 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Before : HIS HONOUR JUDGE TOULMIN CMG QC
Case No: HT-09298
Stuart Kennedy (instructed by Michelmores LLP) for the Claimant
Patrick Clarke (instructed by Ashfords LLP) for the Defendants
Hearing dates: 19 August 2009
HH JUDGE TOULMIN CMG, QC :
There are before me two applications dated/sealed 17 July 2009 and 4 August 2009 to enforce decisions by Mr David Simper (the adjudicator) made on 17 June 2009 and 22 July 2009. Each arises in respect of a contract between the Claimant, Mr S.G. Hart trading as D.W. Hart and Son (the contractor), and the Defendants, Mr and Mrs Smith (the employer), in respect of a contract to convert three agricultural barns at Chelston Manor, Chelston, Wellington TA21 9HP into four dwelling houses.
The contract for the work was dated 27 March 2006. The contract price was £568,000. The contract was on the JCT Standard Building Contract with Quantities 2005 Edition and was therefore an agreement within sections 107(2) and (4) of the Housing Grants Construction and Regeneration Act 1996 (the Act) which under section 108 gives the parties a right to refer any such dispute to adjudication.
The initial dispute, which was the subject of the first adjudication, relates to Interim Certificates 21 and 24. Interim Certificate 21 was due for payment not later than 24 November 2008. The particulars of claim allege that there was no valid notice of withholding in accordance with Clause 4.13.4 of the contract. Such a notice would need to have been issued by no later than 19 November 2008 to comply with the time limit for the giving of such a notice under the contract. Under cover of a letter dated 16 December 2008 the Defendants made a payment of £20,190.28 leaving a balance of £9,514.04.
The Claimant issued Interim Certificate 24 on 24 March 2009 in the sum of £70,386.38 with a final date for payment of 7 April 2009. Under the terms of Clause 4.13.4 of the contract, the notice of withholding, to be effective, would need to have been issued no later than 2 April 2009.
By a letter dated 25 April 2009, the Defendants issued a notice of withholding. The Claimant contended in the adjudication that this did not relate specifically to either Interim Certificate and was in any event issued too late.
By a letter dated 20 May 2009 the Claimant gave notice of a referral to adjudication. Mr Simper was appointed and after submissions gave his decision on 17 June 2009 that the Defendants should pay the Claimant the sum of £79,900.43 being the sum of £9,514.04 in respect of Interim Certificate 21 and £70,386.38 in respect of Interim Certificate 24.
By a Notice dated 16 June 2009 the Defendants' solicitors gave notice on behalf of the Defendants to refer a further dispute under the contract to adjudication. This referred to the Notice of Intent to Refer dated 10 June 2009.
The brief details of this dispute allege that the Claimant failed to complete the works on the three barns by the due dates (Barns B and C by 16 November 2006 and Barn A by 5 August 2007), and claimed that the Defendants were entitled to a certificate for non-completion in respect of each of the 3 barns and to deduct/or be paid LAD's (liquidated and ascertain damages) at the rate stated in the contract.
On 26 May 2009 the contract administrator issued Interim Certificate 25 certifying a balance of £7,381.20 due to be repaid to Mr and Mrs Smith. The final date for payment was to be 9 June 2009.
On 29 May 2009 Mr and Mrs Smith purported to serve a Notice of Withholding of £138,185.79. This sum was added to the claim of the certified sum of £7,381 which was referred to the adjudicator. Mr and Mrs Smith stipulated that this sum was to be paid by 9 June 2009.
In his decision dated 22 July 2009 Mr Simper set out the relief sought by each of the parties. Mr and Mrs Smith sought the following relief:
) Payment by Hart of the sum of £7,381.20 under Interim Certificate 25.
) Payment by Hart in the sum of £138,185.79 under the Notice of Withholding.
) Payment of interest on (1) and (2).
) A declaration that Mr and Mrs Smith were entitled to a Certificate of Non-Completion in respect of each section of the work on the barns.
) Payment of the adjudicator's fees.
) Payment of Mr and Mrs Smith's legal costs.
In response Hart contended that:
) There was no sum due in respect of Interim Certificate 25.
) There was no sum due under the Withholding Notice.
) No interest was due.
) While an entitlement to sectional certificates of non-completion may exist, the adjudicator could only reasonably give a one word positive or negative answer to the question posed. The adjudicator had not been asked in the referral to determine the extent of any delay to the works nor was he in a position to do so.
) Mr and Mrs Smith should pay the adjudicator's fees.
) Mr and Mrs Smith were not entitled to recover the costs of the referral.
In relation to the first three issues the adjudicator found as follows:
Issues 1 and 3: Mr and Mrs Smith are entitled to be repaid the sum of £7,381.20 by Hart together with interest at the contract rate.
Issues 2 and 3: Mr and Mrs Smith are entitled to be paid the sum of £4,112.04 under the Notice of Withholding together with interest at the contract rate.
It is clear that this sum related to the claim in respect of the collapsed wall.
In relation to other issues Mr Simper explained at Paragraph 36 of his decision:
“In response Hart does not consider that the Smiths are entitled to any of the monies set out in the Withholding Notice. I agree with Hart that monies are not due for LD's, refinancing and legal costs and I set out below my reasons”
In relation to liquidated damages the adjudicator gave his decision at Paragraph 37 as follows:
“37. I have found under Issue 4 that the Smiths are entitled to Certificates of Non-Completion. Clause 2.32 makes it clear that until the certificates are issued the Smiths cannot require Hart to pay the LD's”
Paragraph 38 of the decision deals with the claim for additional re-financing charges. The adjudicator's decision does not read entirely clearly but he appears to be making the point that until the contract administrator has dealt with delays to the project and either issued an extension of time or refused to do so, it was not possible to assess liquidated damages.
In relation to Issue 4 in his list of issues the adjudicator found that Mr and Mrs Smith were entitled to a Certificate of Non-Completion in respect of each of Barns A, B and C.
Mr Simper gave his reasons as follows:
“49. Clause 2.31 of the contract is quite specific 'if the contractor fails to complete the works or a section by the relevant completion date, the architect/contract administrator shall issue a certificate to that effect' I have underlined the word 'shall' as that is the important word which makes the requirement mandatory. Hart did not complete any of the Sections by the contractual dates and no extensions of time have been granted. Therefore as soon as the completion dates in the contract were passed without the work being completed, a certificate of delay should have been issued.”
The adjudicator went on to say that he was unable himself to issue the Certificates of Non-Completion but he was able to make a Declaration of Entitlement. The Claimant set out in the adjudication his applications for extensions of time under the contract, but in view of the adjudicators findings, it was unnecessary for the adjudicator to deal with this issue.
On 23 July 2009 the Contract Administrator issued the certificates “under the terms of the contract dated 27 March 2006 and as directed by the adjudicator his decision dated 22 July 2009. Each certificate notes that “(1) Deduction of any damages is at the discretion of the Employer”.
On 27 July 2009 Mr and Mrs Smith wrote to Hart claiming liquidated damages for non-completion of the work on Barns A, B and C. The total sum claimed is £71,314.29. The sum of £40,371.43 is claimed for Barns B and C and £30,942.86 in respect of Barn A. Significantly the letter ends as follows: “We look forward to receiving payment of the above sum by return. We also look forward to payment of the sums awarded by the adjudicator in the recent adjudication”. This letter seems to indicate that the claim for £71,314.29 is a new claim and separate from payment of the sums awarded by the adjudicator in the recent adjudication.
On 4 August 2009, even before 7 days had elapsed, the TCC Registry issued the Application dated 30 July 2009.
On 22 July 2009 the Claimant offered to set off the monetary sums awarded in the second adjudication amounting to £11,835.31.
The Contentions of the Parties
The Defendants admit that, subject to the right of set off, they are liable to pay the sums awarded against them in the first adjudication.
The Claimant admits that he is liable to repay to the Defendants the specific sums awarded against him in the second adjudication.
The dispute which I have to decide relates to the claim by the Defendants that the Claimant is liable to pay liquidated damages in the sum of £71,314.29 in relation to the declaration by the adjudicator that the defendants were entitled to Certificates of Non-Completion and the subsequent issue of Certificates of Non-Completion by the Contract Administrator, and to set off that sum against the sum of £79,900.43 awarded to Hart in the first adjudication.
The Defendants contend that the debt in the sum of £71,314.29 is a natural...
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