ISG Construction Ltd v English Architectural Glazing Ltd

JurisdictionEngland & Wales
JudgeStephen Davies
Judgment Date16 December 2019
Neutral Citation[2019] EWHC 3482 (TCC)
Date16 December 2019
Docket NumberCase No: HT-2019-MAN-000063
CourtQueen's Bench Division (Technology and Construction Court)

[2019] EWHC 3482 (TCC)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS IN MANCHESTER

TECHNOLOGY AND CONSTRUCTION COURT (QB)

Manchester Civil Justice Centre,

1 Bridge Street West, Manchester M60 9DJ

Before:

HIS HONOUR JUDGE Stephen Davies

SITTING AS A JUDGE OF THE HIGH COURT

Case No: HT-2019-MAN-000063

Between:
ISG Construction Limited
Claimant
and
English Architectural Glazing Limited
Defendant

Justin Mort QC (instructed by Mills & Co, 107 Cheapside, London) for the Claimant

Steven Walker QC (instructed by Mills & Reeve LLP, 74–84 Colmore Row, Birmingham) for the Defendant

Hearing dates: 20 November 2019

Draft judgment circulated: 29 November 2019

APPROVED JUDGMENT

I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

His Honour Judge Stephen Davies

Stephen Davies His Honour Judge
1

By these Part 8 proceedings the claimant claims the following declarations, or such modified version of them as the court might consider to be appropriate:

“(1) the defendant failed to comply with clause 9 of the subcontract conditions;

(2) pursuant to clause 9(8) of the subcontract conditions the defendant is not entitled to any extension of time (irrespective of the underlying merits of any such claim);

(3) the defendant was therefore obliged to complete the subcontract works by 6 March 2018 (being the date for completion of the subcontract works conceded by the claimant);

(4) the adjudicator lacked jurisdiction to “set aside” the claimant's bona fide estimate;

(5) further or alternatively: whether or not he had jurisdiction to do so, the adjudicator was wrong to do so having regard to the terms of the parties' subcontract and in particular their agreement that the bona fide estimate was binding and conclusive until final determination;

(6) (without prejudice to the foregoing) that in any event the adjudicator's decision (at paragraph 173.1) that “a fair and reasonable time” for completion of the subcontract works is 22 October 2018

(a) is determinative only for

(i) the limited context of the defendant's application for payment the subject of the adjudication (payment number 35), rather than for the purposes of the subcontract generally; alternatively:

(ii) the limited context of the claimant's bona fide estimate;

(b) is irrelevant for the purposes of the “final determination” of the amount of loss or damage suffered by the claimant as that phrase is used in clause 9(8);

(c) in the circumstances it would be open to either party to refer a dispute as to such “final determination” to adjudication, notwithstanding the terms of the existing decision;

(7) that the adjudicator's decision (at paragraph 173.2) that “ISG has not demonstrated and proved that EAG was responsible for causing 20 weeks delay” is to be understood in the context of the defendant's application for payment number 35, and does not prevent the claimant from now seeking to recover loss and expense in adjudication and/or limit any such claim.”

2

It will be seen from these declarations that the context of these Part 8 proceedings is that the claimant is dissatisfied with the outcome of an adjudication and now seeks the final determination by the court of: (a) certain discrete substantive issues decided by the adjudicator; and/or (b) the ambit and effect of the adjudicator's decision.

3

As regards (a), the claimant's argument is that this is a suitable case to invite the court to determine these discrete substantive issues because: (i) they raise short points of contract interpretation and do not involve substantial issues of fact; and (ii) the adjudicator's decision on these points is wrong and can finally and conveniently be determined to be wrong in these Part 8 proceedings.

4

As regards (b), the claimant's argument is that if the court is not prepared to answer these discrete substantive issues, or does not answer them in its favour, then it is important that the ambit and effect of the adjudicator's decision is determined so that both parties will know for the future what issues each is entitled to refer to a further adjudication and what jurisdiction any future adjudicator will have.

5

The claimant emphasises that this is not a case where it is seeking to invoke the Part 8 jurisdiction to avoid paying the sum which the adjudicator decided it should pay. It has already paid that relatively modest sum of £137,434.53, being its valuation of interim payment application number 35. Its real complaint is that the adjudicator decided that it could not rely upon what it contends is its contractually binding bona fide estimate in the sum of £3,183,000 representing, so it claims, the loss and damage suffered by it due to the defendant's breach in failing to complete the subcontract works by the contract completion date (as extended) and that: (a) this decision can be shown to be demonstrably wrong; and in any event (b) it needs to know the ambit and effect of that decision so that it can decide whether, and if so on what basis, it can seek to enforce its claim for loss and damage in any further adjudication.

6

The defendant's position is that:

(a) the proper determination of the issues raised by declarations (1) to (3) above will require resolution of issues of fact as well as issues of law such that it is not appropriate for those issues to be determined in these Part 8 proceedings;

(b) insofar as the issues raised by declarations (4) to (5) above do not, on the basis argued by the claimant, require resolution of issues of fact, then they can and should be answered in the defendant's favour in these Part 8 proceedings; and

(c) no sufficient reason has been shown for inviting the court to determine the ambit and effect of the adjudicator's decision at this stage. It is more appropriate to do so if and when any further dispute is in fact referred to adjudication, when a clear comparison of the case as advanced in that further adjudication as compared with the case advanced and decision made in this adjudication can be made and a decision of real utility to the parties obtained.

7

I had the benefit of detailed and helpful written and oral submissions from leading counsel for the claimant and for the defendant over the course of a full day on 20 November 2019 and now produce this reserved judgment. In summary, my decision is that I am not prepared to make the proposed or any declarations.

8

My reasons are set out below under the following sub-headings: (A) relevant facts [paragraphs 9–19]; (B) Part 8 declaratory relief – relevant principles [paragraphs 20–25]; (C) the substantive declarations sought by the claimant [paragraphs 26–48]; and (D) the declarations sought as to the ambit and effect of the adjudicator's decision [paragraphs 49–66].

A. Relevant facts

9

This is only a summary of such facts as are necessary for me to make and explain my decision.

10

The claimant and the defendant entered into a subcontract for the design, supply and installation of cladding on a project in Lombard Street, London EC3, where the claimant was the main contractor and the defendant its cladding subcontractor.

11

The subcontract provided for a start on site on 20 March 2017 and a contractual completion date of 11 September 2017.

12

The subcontract also incorporated the claimant's standard subcontract conditions. I can summarise most of the clauses of relevance but need to set out clause 9(8) in full.

(1) Clause 2 contained fairly standard provisions for interim payments which complied with the requirements of the Housing Grants Construction and Regeneration Act 1996 (“ the 1996 Act”). The procedure for interim payments required the defendant to submit applications for payment by reference to the specified payment dates set out in the contract and the claimant to issue a payment notice containing its interim valuation, with the amount stated to be paid by the final date for payment, subject to any timely pay less notice which might be issued by the claimant.

(2) Clause 2 also contained provisions for the determination of the final account, involving the submission by the defendant of its final account within 3 months of practical completion, failing which the claimant might prepare the final account in lieu. Provision was made for the final account to be agreed, failing which the procedure applicable to interim payments would then apply.

(3) There was also a provision in clause 2 requiring the defendant to give notice if it disputed the final account prepared by the claimant, failing which the account would become conclusive. There was also a conclusive evidence provision in relation to the effect of any payment notices or pay less notices issued by the claimant, whether in relation to an interim payment or the final account, which were not challenged by proceedings in court or by adjudication commenced within 30 days of issue. There was also a provision entitling the claimant to deduct any monies recoverable from or payable by the defendant under the subcontract from any sums due to the defendant, but subject to compliance with the pay less notice procedure.

(4) If the claimant instructed a later start date then the defendant should be entitled to an extension of time without the need to give notice (clause 9(2)).

(5) The defendant should notify the claimant “forthwith in the event it becomes aware that progress of the Works is being or is likely to be delayed and/or that it may achieve practical completion of the Works or any section thereof after the Completion Date relevant thereto, together with details of the cause of the delay and the date upon which the Sub-Contractor considers it will achieve practical completion of the Works and/or the relevant section” (clause 9(4)).

(6) If the defendant was delayed in practical completion due to one or more...

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