John Sisk & Son Ltd v Carmel Building Services Ltd ((in Administration))
| Jurisdiction | England & Wales |
| Judge | The Hon. Mrs Justice Carr DBE |
| Judgment Date | 15 April 2016 |
| Neutral Citation | [2016] EWHC 806 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2015000424 |
| Date | 15 April 2016 |
[2016] EWHC 806 (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. Mrs Justice Carr DBE
Case No: HT-2015000424
Mr Adrian Williamson Q.C. (instructed by Weightmans LLP) for the Claimant
Lord Marks Q.C. (instructed by C.J. Hough & Company Limited) for the Defendant
Hearing date: 23rd March 2016
Introduction
This is an appeal brought by the Claimant contractor ("Sisk") by way of Part 8 proceedings pursuant to section 69 of the Arbitration Act 1996 ("the Act") seeking variation, alternatively remission, of a Partial Award dated 20 th November 2015 ("the Award"). The Award arose out of arbitral proceedings between Sisk and the Defendant mechanical and services contractor ("Carmel") before Mr Nigel Dight BSc FRICS MCIArb ("the Arbitrator") relating to a mechanical and electrical services sub-contract entered into between Sisk and Carmel in 2008 ("the Sub-Contract").
By the Award the Arbitrator awarded to Carmel £975,965.48, together with VAT, compensation for late payment (in the sum of £100) and interest on the late payment of £975,965.48 (in the sum of £359,329.10). The late payment compensation and interest awards were made pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 ("the Debts Act").
Sisk contends that in doing so the Arbitrator made errors of law on the following three questions:
a) The burden of proof in relation to Carmel's claim under Clause 7.7.4 of the JCT Conditions incorporated into the Sub-Contract ("Clause 7.7.4") ("Issue 1");
b) Whether or not Sisk's primary claim to set-off under Clause 7.7.4 was a global claim and thus irrecoverable ("Issue 2");
c) The rate of interest to be applied to sums awarded to Carmel ("Issue 3").
There is no suggestion that the Arbitrator did not have jurisdiction to rule on these matters. Sisk's sole complaint is that he was wrong in law on each issue. Nor is there any suggestion that this claim falls outside the scope of section 69 of the Act, or that leave to appeal is required under section 69(2)(b) of the Act (since it is common ground that the parties agreed in the Sub-Contract (pursuant to section 69(2)(a) of the Act) that either party could (on notice) appeal to the courts on any question of law arising out of an award made in an arbitration under the Sub-Contract).
Thus, it is open to this Court to confirm the Award, vary the Award or remit to the Arbitrator the Award in whole or in part for reconsideration pursuant to section 69(7) of the Act, or to set the Award aside in whole or in part.
The relevant background
Sisk was engaged by Bolsover Street Limited under a JCT 2005 Rev 1 2007 Without Quantities contract for the construction of a nine-storey reinforced concrete frame mixed-use building at 41–51 Bolsover Street, London W1S 5AQ ("the Project"). The Project was for the creation of forty apartments, together with a new Outpatients Department for the Royal National Orthopaedic Hospital.
By the Sub-Contract, which was dated 22nd September 2008, Carmel agreed with Sisk to carry out the supply and installation of mechanical and electrical services on the Project. The Sub-Contract was contained in and consisted of the following documents:
a) The Sub-Contractor Order;
b) The Sub-Contract Particulars published by Sisk (SFQS 12 Rev 06) ("the Sisk Particulars");
c) The Conditions of Sub-Contract published by Sisk (SFQS 13 Rev 10) ("the Sisk Conditions");
d) Minutes of Pre-order Meeting of 15 th August 2008 (SFQS 15 Rev 13), together with Sub-Contractor's Pre-Order Trade Checklist;
e) Sub-Contractor Enquiry Sheet 28 th February 2008;
f) Sisk enquiry to tender letter of 28 th February 2008 and subsequent tender addendums;
g) The ascertainment of the Sub-Contract sum, being a breakdown of the Sub-Contract sum and a materials documents;
h) Carmel's quantified Schedule of Rates of 3 rd September 2008 and Carmel's tender of 11 th April 2008;
i) Health and Safety code of practice SFSA (12 Rev 06);
j) Target Programme IMH/TP/01.
Clause 2.0 of the Sisk Particulars expressly incorporated the conditions of the JCT Conditions of Sub-Contract SBCSub/C2005 Rev 1 2007 ("the JCT Conditions"). In the event of conflict between the JCT Conditions and the Sisk Conditions, the Sisk Conditions were to prevail:
" …In the event of any divergence between the Sub-Contractor Order and the documents expressly referred to therein…the Standard Sub-Contract Conditions and the terms and conditions of the Principal Contract, then the Sub-Contractor Order Documents shall prevail over the Standard Sub-Contract Conditions and the Standard Conditions of Sub-Contract shall prevail over the terms and conditions of the Principal Contract."
Clause 16.4 of the Sisk Conditions provided that any disputes arising out of or in connection with the Sisk Conditions should be referred to arbitration in accordance with the procedures set out in the JCT Conditions.
On 1 st June 2009 Carmel submitted its Application for Interim Payment No 8 to Sisk in respect of work carried out up to 29 th May 2009. On 4 th June 2009 following a joint site inspection earlier that day Sisk notified Carmel that it had valued Carmel's work (for the purpose of determining the amount of further payment to be made by Sisk to Carmel under Interim Payment Application No 8) at £2,688,728.86 (gross) ("Valuation No 8"). Final payment was then due on 3 rd July 2009.
However, on 19th June 2009 Carmel entered into administration. It ceased work under the Sub-Contract. Sisk terminated the Sub-Contract on 23 rd June 2009 by notice pursuant to Clause 7.5.1 of the JCT Conditions which provided:
" If the Sub-Contractor is insolvent, the Contractor may at any time by notice to the Sub-Contractor terminate the Sub-Contractor's employment under this Sub-Contract."
Clause 7.7 of the JCT Conditions set out various provisions in the event of Carmel's employment were terminated materially as follows:
" 7.7.3 The provisions of clause 7.7.4 shall thereupon apply and the other provisions of this Sub-Contract which require any further payment or any release of Retention to the Sub-Contractor shall cease to apply. ("Clause 7.7.3")
7.7.4 Upon completion of the Sub-Contract Works and the making good of defects of the kind referred to in clause 2.22 or earlier termination of the Contractor's employment, however arising, the Sub-Contractor may apply to the Contractor and the Contractor shall pay to the Sub-Contractor the value of any work executed or goods and materials supplied by the Sub-Contractor to the extent not included in previous payments. Without prejudice to his other rights, the Contractor may deduct therefrom the amount of any direct loss and/or damage caused to the Contractor as a result of the termination and any other amounts payable to the Contractor under this Sub-Contract. To the extent that the amounts due to the Contractor exceed the amounts due to the Sub-Contractor the balance shall be recoverable from the Sub-Contractor as a debt."
On 26th April 2013, the Works having completed, Carmel gave notice of reference to arbitration. The Arbitrator was appointed on 5th September 20It is common ground that the CIMAR Rules applied. Rule 5.4 provides:
" 5.4 The Arbitrator is not bound by the strict rules of evidence and shall determine the admissibility, relevance or weight of any material sought to be tendered on any matters of fact or opinion by any party."
This of course reflects section 34(2)(f) of the Act.
Pleadings and other documents were exchanged in the arbitration between October 2013 and October 20Carmel's principal claim was to be paid the sums allegedly due to it under Clause 7.7.4 in the sum of £1,975.286.44. Sisk's position was that, on a proper operation of Clause 7.7.4, no sum was due to Carmel. Moreover, Carmel had a counterclaim pursuant to Clause 7.7.4 in respect of the amount of the direct loss and/or damage caused to it as a result of the termination and other amounts payable to it under the Sub-Contract. The sum claimed by Sisk in was £646,281.99. Each party claimed associated late payment interest and, in the case of Carmel, statutory fixed compensation, from the other. Carmel also had a claim for damages for conversion against Sisk in relation to computer records left on site.
There were multiple interlocutory hearings, culminating in an evidential hearing spanning 7 days between 27 th April and 6 th May 2015, at which the parties were fully represented. Witnesses of fact and expert opinion gave evidence.
As indicated above, the (thirty-seven page) Award was published on 20 th November 2015. This claim was issued on 17 th December 2015.
The Award
Issue 1
Before considering the issues, the Arbitrator addressed the question of burden of proof. In the context of Carmel's claim under Clause 7.7.4 he referred to Valuation No. 8. This valuation had, as indicated above, been issued by Sisk on 29th May 2009, some three weeks prior to the termination. It had been prepared by Mr Melges of Sisk, and reviewed during the arbitration by the respective quantity surveyor experts: Mr Collins for Sisk and Mr Simper for Carmel. All three gave evidence before the Arbitrator.
The Arbitrator found materially as follows:
" L Burden of Proof
1. Before considering the issues, I remind myself of the incidence of the burden of proof, and the practical consequences of that burden in relation to...
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