ICE Architects Ltd v Empowering People Inspiring Communities
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Lambert |
| Judgment Date | 16 February 2018 |
| Neutral Citation | [2018] EWHC 281 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: QB/2017/0261 |
| Date | 16 February 2018 |
[2018] EWHC 281 (QB)
Mrs Justice Lambert
Case No: QB/2017/0261
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Alexander Wright (instructed by Berryman's Lace Mawer LLP) for the Claimant
Matthew Finn (instructed by DWF LLP) for the Defendant
Hearing date: 24 th January 2018
This is an appeal from the judgment of HHJ Parfitt of 13 th October 2017 in which he found, on a trial of a preliminary issue, that the Claimant's action for payment of the balance of an invoice dated 23 rd April 2009 was statute barred under section 5 of the Limitation Act 1980. The appeal raises a single issue: whether HHJ Parfitt was wrong to find that the Claimant's cause of action accrued on the date upon which the work which formed the subject matter of the invoice was completed rather than, as contended by the Claimant, 30 days after receipt of the invoice by agreement between the parties.
The Facts
The Appellant (“ICE”) is an architectural practice and the Respondent (“EPIC”) a registered provider of social housing. In 2007, it was agreed that ICE would provide design services for a social housing scheme in Stoke on Trent which was in the process of development by EPIC. Discussions between the parties were ongoing from around May 2007. On 10 th July 2007 a letter was sent by Ms Claire Moyes, the Project Manager at EPIC, to Mr Michael Rushe, the Director of ICE, appointing ICE as the architects for the housing project. The letter set out that there was a current annual limit of £50,000 for architectural services; that ICE was commissioned to start design work on the housing project in accordance with the specification which had been submitted by ICE; that although the specification was acceptable, this may be subject to change depending on the level of capital funding available. The specification, which was attached as an appendix to the letter, described the scope of the design work, the anticipated duration of the contract and associated fees. Ms Moyes also recorded that, whilst the budget for each individual component of the specification was acceptable, this also was subject to EPIC receiving the anticipated level of grant funding from the City Council.
The letter included the following under the heading “ Basis of Payment”:
“You will invoice EPIC on a monthly basis for work completed to date. The basis of payment proposed in the appendix to the document described above is acceptable. EPIC Ltd will endeavour to make payment within 30 days of receipt (unless otherwise stated)”.
The terms of the letter of 10 th July 2007 were accepted by ICE and although there were subsequent discussions between the parties which related to the scope of the works to be undertaken by ICE and the annual limit on works to be undertaken, it was common ground between the parties that there was no amendment to, or amplification of, the terms as to payment in that letter.
On 23 rd April 2009, ICE issued an invoice (number 04–260) for services provided under the terms of the contract. The invoice was in the sum of £42,375 plus VAT. The sum claimed in the invoice was disputed by EPIC. Following an adjudication process, ICE was awarded £24,033.85. On 21 st May 2015 ICE commenced civil proceedings for recovery of the balance of the invoice sum of £24,697.40. HHJ Parfitt ruled that the claim was statute barred under section 5 of the Limitation Act 1980, proceedings having been commenced more than 6 years after the accrual of the cause of action which he found to be the date of performance of the services which were the subject of the invoice.
The Preliminary Issue Hearing before HHJ Parfitt
The hearing took place on 14 th September 2017 and HHJ Parfitt handed down his judgment on 13 th October 2017.
The central argument advanced by EPIC before HHJ Parfitt was that the cause of action relied on by ICE arose at the latest when the relevant design work (for which payment was claimed in the invoice) was completed. The Judge found (and it was not disputed before me) that, whilst some of the work may have been completed as late as December 2008, most of the work in respect of which payment was sought had been completed in March 2008. Given that proceedings were commenced on 21 st May 2015, nothing turned on the Judge's conclusion on this point: whether completed in March 2008 or December 2008, if the cause of action accrued at the conclusion of the design work, the claim was statute barred. ICE contended before HHJ Parfitt that the relevant limitation period was 12 years on the basis that the parties had entered into an agreement to that effect (the Project Partnering Agreement); alternatively, that the cause of action did not accrue until 30 days after receipt of the invoice either because “RIBA SFA 99” had been incorporated into the agreement or because this is what had been agreed by the parties in the letter of 10 th July 2007.
HHJ Parfitt found that neither the terms of the Project Partnering Agreement nor RIBA SFA 99 had been incorporated into the parties' agreements. ICE does not appeal the Judge's conclusions on those two points. The sole focus of the arguments on the appeal before me therefore related to the Judge's conclusions on the effect of the letter of 10 th July 2007 on the time of accrual of the cause of action.
On this point, HHJ Parfitt found, as follows (at paragraph 26 of his judgment):
i) on the authority of Coburn v Colledge [1897] 1 QB 702, in the absence of agreement to the contrary, the starting point is that a provider of services is entitled to be paid once the work has been done and so its cause of action for payment arises at that time;
ii) the agreement reached between the parties in Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [2005] EWCA Civ 814 provided an illustration of an agreement to the contrary;
iii) in Coburn the Court of Appeal identified a material distinction between (as described by HHJ Parfitt) “ facts which are a necessary part of the right to be paid and those matters which might bar that right (such as limitation itself but also facts such as a failure to comply with statutory requirements eg statutes about solicitors bills in Coburn).”
HHJ Parfitt considered the authority of Legal Services Commission v Henthorn [2011] EWCA Civ 1415, noting the obiter statement of Lord Neuberger MR that, save where it is the essence of an arrangement between the parties that a sum is not to be paid until demanded, “ clear words would normally be required before a contract should be held to give a potential or actual creditor complete control over when time starts torun against him”. He considered Levin v Tannenbaum [2013] EWHC 4457, albeit briefly, commenting that the case was an application of the so-called Coburn principle. He then set out the question which he considered was at the heart of identifying the time of accrual of the cause of action: “ what has to happen for an entitlement to be paid to arise?”. He said that in a case where the right to payment is based on a demand, or the issue of a certificate, then it was those facts which are essential to the cause of action; when however the entitlement to be paid is based on work having been done then, once that work is done, the entitlement and right to be paid for it arises.
It was against this legal framework that HHJ Parfitt considered the construction of the relevant section of the letter of July 2007. He set out in paragraph 30 of the judgment the following: “ the invoicing arrangements provided for by the 10 th July 2007 letter are to invoice monthly for work completed to date. The issuing of the invoice is not the fact which entitles the Claimant to be paid (although the non-issue of the invoice might provide the Defendant with a defence to the claim) but the fact that work has been done both entitles the Claimant to be paid and the Claimant to issue an invoice”. He concluded that the fact that invoices were to be paid monthly made no relevant difference as the invoices related to work done; nor did it make a difference that the 30 days were given for payment. He considered that this provision may be a matter of “ potential defence” but it did not impact on the Claimant's substantive right to be paid for what it has done. Accordingly, the Judge ruled the Claimant's cause of action to be statute barred.
Legal Framework
There was much common ground between the parties on the relevant general legal principles. Both agreed that the “default position” (as described by Mr Wright for the Appellant) in an action for payment for works or services was that the cause of action arose at the time of completion of the work. The central question for the Court was whether that default position had been displaced by the contractual terms set out in the letter of 10 th July 2007. Stripped back to its essentials the exercise for the Court was the objective interpretation of the intentions of the parties derived from the letter.
Both parties relied upon Coburn v Colledge [1897] 1 QB 702; the first clear iteration of the default position. The Claimant in Coburn was a solicitor who was suing for outstanding fees. He appealed a ruling that his claim was out of time under the relevant statute of limitations. He argued that the effect of section 37 Solicitors Act 1843, which provided that “ no solicitor shall commence an action for recovery of fees until the expiration of one month from delivery of the bill” was to delay the accrual of his cause of action until one month following his delivery of the bill of costs. Lord Esher MR rejected the argument. In the case of a person “ who does work for another person at his request on the terms that he is to be paid for it, unless there is...
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