Jerram Falkus Construction Ltd v Fenice Investments Inc.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson |
| Judgment Date | 21 July 2011 |
| Neutral Citation | [2011] EWHC 1935 (TCC) |
| Docket Number | Claim No: HT11109 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 21 July 2011 |
[2011] EWHC 1935 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mr Justice Coulson
Claim No: HT11109
Mr Graeme Sampson (instructed by Davies & Davies Associates Limited) for the Claimant
Mr William Webb (instructed by Field Fisher Waterhouse LLP) for the Defendant
Hearing dates: 11, 12 & 13 th July 2011
INTRODUCTION
The claimant, Jerram Falkus Construction Limited ("JFC"), was engaged by the defendant, Fenice Investments Inc ("Fenice") to carry out the development of a site at 150 Loudoun Road, Camden, London NW8. The contract incorporated the JCT Design and Build Form 2005, although the form was the subject of a number of bespoke amendments. The works were delayed, and the parties fell out as to the causes of that delay.
The parties have been extraordinarily promiscuous in their attempts at dispute resolution. There have been no less than three adjudications between the parties, the first being the subject of a disputed enforcement hearing before me ( [2009] EWHC 3272). The third, which is referred to in greater detail below, led to an acrimonious dispute about the adjudicator's fees, which was resolved recently (against JFC) in a judgment of HHJ Waksman QC at [2011] EWHC 1678 (TCC). The present proceedings, began by JFC in March of this year, sought a number of declarations, but strayed so far into the facts that the court has had to adopt a hybrid CPR Part 7/ CPR Part 8 procedure in order to meet the needs of the parties. All of this activity and acrimony relates to a dispute worth at most £300,000, and the parties have told me that, although this Judgment will resolve the critical issues as to time, it will not address all the remaining disputes between them.
THE ISSUES
The original contract completion date was 25 May 2009. That was extended by Fenice's agent (Sawyer & Fisher) to 15 June 2009. The works were not practically complete until 9 September 2009, a delay of 86 days, for which Fenice have levied liquidated damages. JFC maintain that Fenice and/or their servants or agents prevented completion and that, by reason of the deletions to the extension of time provisions, which meant that no extension of time could be granted in relation to such acts of prevention, time was set at large. This would then mean that Fenice were not entitled to any liquidated damages at all. Moreover, JFC claim an entitlement to loss and expense under the contract. There is an issue as to the extent to which these claims were the subject of the decision in the third adjudication. That is because Fenice claim that the issues which JFC now seek to raise are precisely the same as those decided by the adjudicator, and that, pursuant to the terms of the contract, JFC's failure to challenge the decision in the third adjudication in the stated time means that that decision is conclusive.
In addition, each side maintains that the other is prevented from arguing the substance of these points because of other conclusivity arguments, this time arising out of the Final Account and Final Statement. Again these arguments turn on the terms of the contract. Thereafter, assuming the conclusivity arguments fail, it is necessary to analyse both the prevention principle and the factual delay issues which arise in this case. There was also a separate dispute about an alleged agreement to discount the amount of liquidated damages. On those matters of fact, I heard evidence from Mr Foskett of JFC, and Miss Stockhammer and Mr Christmas on behalf of Fenice.
Accordingly, the particular issues that arise in this case can perhaps be summarised as follows:
Conclusivity Issues
a) Is the decision of the adjudicator in the third adjudication, dated 28.10.10, conclusive, such that JFC's arguments as advanced before the court are simply not open to them?
b) Are JFC's Final Account and Final Statement conclusive as to the matters contained therein, such that Fenice cannot challenge JFC's claim for loss and expense?
c) Conversely, in the events that occurred, is it JFC who are prevented now from raising their delay claims as a result of the conclusivity of their own Final Account and Final Statement?
Prevention Issues
d) What caused the delays to the works?
e) Did Fenice prevent JFC from completing the contract works?
f) If Fenice did prevent completion, but the delay so caused was concurrent with delays which were JFC's fault, was time set at large?
Liquidated Damages
g) Was there an agreement to vary liquidated damages and, if so, what was the effect of that agreement?
h) Are Fenice entitled to £209,840 (gross) or £122,102.36 (net) by way of liquidated damages?
JFC's Final Account Claim
i) Are JFC entitled to £311,393.78 by way of their Final Account or some other sum?
I propose to set out in the next section of this Judgment the relevant contract terms, as amended. In Section 4, I set out an outline chronology. Then, in Section 5, I deal with the three different conclusivity arguments. Thereafter I set out in Section 6 an outline of the delay issues, and in Section 7 I address what I have called the prevention principle. There is an analysis of the factual delay issues in Section 8. I deal with the other matters in dispute in Section 9, and there is a short summary of my conclusions in Section 10.
THE CONTRACT TERMS
Clause 1.9 was entitled 'Effect of Final Account and Final Statement'. It was in these terms:
"1.9 1 The Final Statement, when it becomes conclusive as to the balance due between the Parties in accordance with clause 4.12.4, or the Employer's Final Statement, when it becomes conclusive as to the balance due between the parties in accordance with clause 4.12.7, shall, except as provided in clauses 1.9.2, 1.9.3 and 1.9.4 (and save in respect of fraud), have effect in any proceedings under or arising out of or in connection with this Contract (whether by adjudication, arbitration or legal proceedings) as:
1 conclusive evidence that where and to the extent that any of the particular qualities of any materials or goods or any particular standard of an item of workmanship was described expressly in the Employer's Requirements, or in any instruction issued by the Employer under these Conditions, to be for the approval of the Employer, the particular quality or standard was to the reasonable satisfaction of the Employer, but the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement shall not be conclusive evidence that they or any other materials or goods or workmanship comply with any other requirement or term of this Contract;
2 conclusive evidence that all and only such extensions of time, if any, as are due under clause 2.25 have been given; and
3 conclusive evidence that the reimbursement of direct loss and/or expense, if any, to the Contractor pursuant to clause 4.19 is in final settlement of all and any claims which the Contractor has or may have arising out of the occurrence of any of the Relevant Matters, whether such claim be for breach of contract, duty of care, statutory duty or otherwise.
If any adjudication, arbitration or other proceedings have been commenced by either Party before the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, shall have effect as provided in clause 1.9.1 upon and from the earlier of either:
1 the conclusion of such proceedings, in which case the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, shall be subject to the terms of any decision, award or judgment in or settlement of such proceedings; or
2 the expiry of any period of 12 months from or after the submission of the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, during which neither Party takes any further step in such proceedings, in which case the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, shall be subject to any terms agreed in settlement of any of the matters previously in issue in such proceedings.
3 If any adjudication, arbitration or other proceedings are commenced by either Party within 28 days after the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, would otherwise become conclusive by the operation of clause 4.12. 4 or 4.12.7, the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, shall have effect as conclusive evidence as provided in clause 1.9.1 save only in respect of the matters to which those proceedings relate.
4 In the case of a dispute or difference on which an Adjudicator gives his decision on a date which is after the date of submission of the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, if either Party wishes to have that dispute or difference determined by arbitration or legal proceedings, that Party may commence arbitration or legal proceedings within 28 days of the date on which the Adjudicator gives his decision."
As to the time for completion, the original contract completion date was 25 May 2009. That date could be adjusted pursuant to the extension of time mechanism at clauses 2.23–2.25. Clause 2.26 set out the Relevant Events, that is to say those events which would or might trigger an entitlement on the part of JFC to an extension...
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