Home Group Ltd v MPS Housing Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Constable |
| Judgment Date | 25 July 2023 |
| Neutral Citation | [2023] EWHC 1926 (KB) |
| Court | King's Bench Division |
| Docket Number | Case No: HT-2023-000178 |
[2023] EWHC 1926 (KB)
Mr Justice Constable
Case No: HT-2023-000178
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Matthew Thorne (instructed by Devonshires Solicitors LLP) for the Claimant
Mr Edmund Neuberger (instructed by Mishcon de Reya LLP) for the Defendant
Hearing date: 24 July 2023
APPROVED Judgment
.
Introduction
The Claimant (‘Home Group’) seeks summary enforcement of the adjudication decision (“the Decision”) of Mr Derek Pye (“the Adjudicator”) dated 28 April 2023. In the Decision, he ordered payment by the Defendant (“MPS”) to Home Group of £6,565,831.94 plus interest and 85% of his fee.
Home Group claimed termination losses said to have been caused by MPS' repudiatory breach of a JCT Measured Term Contract under which MPS had been carrying out maintenance and repair works to Home Group's properties in the South-East of England. The works under the Contract generally comprised a high volume of individual work items, each of which had a relatively low value. On 11 May 2022 MPS purported to terminate the Contract pursuant to Clause 8.7.2. Home Group did not accept that MPS were entitled to terminate the Contract and asserted that MPS' purported termination was a repudiation of the Contract, which Home Group accepted on 16 May 2022. The validity of the termination was referred to the first adjudication. On 25 November 2022, it was determined that MPS' purported termination was invalid, and that MPS had repudiated the Contract. The second adjudication was commenced in order to recover Home Group's losses.
Home Group's Referral, served on 17 March 2023, included a quantum expert report of 155 pages, with 76 appendices, which comprised 202 files in 11 sub-folders, amounting to 338 megabytes of data and a further 2,325 files in 327 sub-folders and five factual witness statements (which amounted to 88 pages, with hundreds of exhibited pages sitting behind). MPS had 19 days (or 13 working days) to produce its response to the Referral. It claimed at the time, and now, that this was an inadequate period of time. MPS contend that it was unable to properly digest and respond to the material served with the Referral and that this was a breach of natural justice which has led to a material difference in the outcome, and that as such the Decision is unenforceable. MPS does not contend that the dispute was incapable of adjudication per se. Rather, it contends that Home Group should simply have provided MPS with a greater opportunity to understand the claim, whether in advance of the Notice of Adjudication or by agreeing to an extended timetable in the adjudication.
I am grateful for the efficient and clear way both Mr Thorne, for Home Group, and Mr Neuberger, for MPS, have advanced their clients' cases in both written and oral submissions.
Chronology leading up to the Adjudication
Following termination of the Contract, but prior to the conclusion of the first adjudication, on 5 October 2022 the Contract Administrator provided the parties with the Final Account issued pursuant to clause 4.6.3 of the Contract. This assessed that a sum of £7,813,201.89 was due from MPS to Home Group. The calculation included a sum of £7,532,049.48 as the sum Home Group was entitled to recover from MPS as a result of MPS' breaches of contract. The Final Account enclosed a single page spreadsheet setting out the basis on which the amounts had been calculated.
Shortly after the Termination Decision, on 23 December 2022 Home Group wrote to MPS requesting payment of £8,297,521.01 plus VAT as applicable, stating that if MPS failed to make payment by 6 January 2023 a dispute would have crystallised and it would have no option but to seek recovery of its losses by way of a third party tribunal. The letter did not give more than a high level breakdown of how the sum of £8,297,521.01 had been calculated and there was no supporting documentation or analysis. The sums claimed by Home Group essentially comprised sums said to have been paid out to third parties to complete works that MPS ought to have completed, less the sums it would have had to pay MPS (plus various other heads of claim).
By letter dated 4 January MPS observed that despite claiming in excess of £8m Home Group had not provided either the information or level of detail required to assess and respond to the claim, nor any supporting documents and, as a result, any reference to adjudication would be premature. MPS proposed a methodology for resolution of the claim and requested that certain documents (listed in a schedule to the letter) were provided by Home Group. It was suggested that following the provision of the requested information, MPS would require 8 weeks to respond.
In response, on 6 January 2023, Home Group rejected the suggested timetable and proposed an alternative way forward which involved the agreement of a random 5% sample of Orders which had been placed by Home Group with third parties for work which was otherwise required under the Contract as a proportionate and representative sample, following which MPS would attend Home Group's office to review the information and evidence in relation to the agreed sample. Home Group stated that within 7 days of MPS review of the information, it would require MPS to provide it with an offer of payment of Home Group's losses, as set out in its letter dated 23 December 2022. It gave a short timetable for the agreement of a sample and attendance at its office.
On 10 January 2023, MPS did not agree to the sampling proposal, and requested instead a spreadsheet which showed for each work order 8 categories of information as a minimum. On 12 January 2023, MPS appears to have commenced its assessment of the claim, in light of the data on a spreadsheet appended in due course to its Response. Home Group responded to MPS' 10 January 2023 letter (and a chaser on 23 January 2023) on 26 January 2023, revising its claim upwards by £478,087.812 and providing eleven spreadsheets to support its claim. In its letter, Home Group asserted that MPS was in possession of all details for the pre-termination losses and a significant amount of information in relation to the post-termination losses, and repeated its offer that MPS attend Home Group's offices to review a sample. MPS responded on 1 February 2023. Its position was that Home Group had still not provided the bare minimum of information required, contended that the spreadsheets were inadequate as essential detail was missing and noted that a number of the claimed heads of loss had not been broken down at all.
On 10 February 2023 Home Group provided a copy of a draft of the expert report on a ‘ without prejudice save as to costs basis’. This was materially the same expert report on which it would rely in the adjudication in due course, and was provided therefore almost two months before MPS would be required to serve its responsive evidence. On 24 February 2023, Home Group provided, on a without prejudice basis, revised appendices to the draft expert report. These were the same appendices ultimately served with the Referral.
On 16 February 2023, MPS indicated that it would need until 19 May 2023 to provide a formal response. It refers in its letter to ‘our own expert’, but Mr Neuberger on instructions informed the Court that Mr Porter was not in fact instructed until 27 February 2023. On 24 February 2023, after Home Group had refused to permit such an extended period prior to the commencement of an adjudication, MPS contended that, ‘ it was impossible for us to commence any meaningful review (or ultimately for an adjudicator to properly consider the position) in the absence of a full and detailed description of the work that was undertaken against each and every work order’. I regard this as a wholly unrealistic position. In no case – whether in adjudication or in court – would it ever be proportionate for a full evaluation of each of many thousands of small value work orders to take place. The analysis would always be undertaken by way of sampling and/or categorisation against an assessment of the representative nature of the exercise, as indeed MPS own expert accepted in his responsive report in the adjudication. It was not correct that it was impossible for MPS to undertake a ‘ meaningful’ review without all the information sought. Whilst MPS maintained that it needed 3 months to review the report, as noted above, MPS was ultimately given almost 2 months from the date of the provision of the draft report to do so.
On 28 February 2023, Home Group responded, and again repeated its offer for MPS to attend Home Group's office in order to access the various systems. This offer was not taken up at any time before the commencement of the adjudication.
The Adjudication Submissions including Jurisdictional Challenges
The Notice of Adjudication was issued on 13 March 2023. Mr Pye, an experienced adjudicator, was nominated by the RICS on 15 March 2023. MPS raised three jurisdictional challenges on 15 March 2023: (1) no dispute had crystallised; (2) the case referred to was too large and/or complicated to be suitable for adjudication; and (3) two different disputes had been referred. The Adjudicator reached a non-binding view on 16 March 2023 that he had jurisdiction.
On 17 March 2023, Devonshires (on Home Group's behalf) served the Referral Notice. The supporting documents to the Referral Notice were provided by way of an online portal. By email of the same date, Mr Pye acknowledged receipt of the Referral and confirmed that he had downloaded the electronic files. Access to the data room was provided to MPS' solicitors on 17 March 2023 and directly to MPS on 18 March 2023. The Referral included the formal version of the...
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