Lane End Developments Construction Ltd v Kingstone Civil Engineering Ltd

JurisdictionEngland & Wales
JudgeHalliwell
Judgment Date28 August 2020
Neutral Citation[2020] EWHC 2338 (TCC)
Date28 August 2020
Docket NumberCase No: HT-2020-MAN-000021
Year2020
CourtQueen's Bench Division (Technology and Construction Court)

[2020] EWHC 2338 (TCC)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS IN MANCHESTER

TECHNOLOGY AND CONSTRUCTION COURT (QBD)

Before:

His Honour Judge Halliwell sitting as a Judge of the High Court at Manchester

Case No: HT-2020-MAN-000021

Case No: HT-2020-MAN-000173

Between:
Lane End Developments Construction Limited
Claimant
and
Kingstone Civil Engineering Limited
Defendant
Between:
Kingstone Civil Engineering Limited
Claimant
and
Lane End Developments Construction Limited
Defendant

Ms Serena Cheng QC (instructed by Gateley plc) for Lane End Developments Construction Limited

Mr Anthony Philpott (instructed by Direct Access) for Kingstone Civil Engineering Limited

Hearing date: 30 th June 2020

APPROVED JUDGMENT

I direct that, pursuant to CPR PD 39A para 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.

Halliwell

HHJ

(1) Introduction

1

These proceedings relate to an adjudicator's decision dated 27 th April 2020 (“the 27 th April Decision”) under the Scheme for Construction Contracts (England and Wales) Regulations 1998, as amended (“the Scheme”).

2

There are two claims before the Court, namely a claim under CPR Part 8 for a “declaration” that the 27 th April Decision “should be set aside and/or not enforced” and a cross claim under CPR Part 7 for the payment of £358,970.39 under the Decision.

3

Lane End Developments Construction Limited (“Lane End”) is the Claimant in the Part 8 proceedings and the Defendant in the Part 7 proceedings. It was the main contractor on a housing development (“the Development”) at Rilshaw Lane, Winsford, Cheshire (“the Site”). Kingstone Civil Engineering Limited (“Kingstone”) is the Defendant in the Part 8 proceedings and the Claimant in the Part 7 proceedings. It was sub-contracted to carry out enabling works for the Development.

4

Lane End now seeks the substantive determination of its Part 8 claim and Kingstone seeks summary judgment on its Part 7 claim.

5

The main issues are whether the adjudicator had jurisdiction to make the 27 th April Decision and, if not, whether, as responding party, Lane End has waived the defect by election or is estopped from relying upon it.

(2) Factual and procedural sequence

6

On 19 th November 2018, the parties entered into the relevant sub-contract (“the Sub-Contract”). It was denoted as a “Minor Works Sub Contract Agreement” for “the supply of all supervision, labour and materials needed to carry out enabling works including cabin foundations, temporary compound and carpark and connection for cabins at…” the Site. The Sub-Contract sum, fixed for the duration of the main contract, was £54,158.40.

7

The Sub-Contract did not make express provision for disputes to be referred to adjudication. By virtue of Section 108(5) and Section 114(4) of the Housing, Grants, Construction and Regeneration Act 1996, the Scheme applied and the provisions of the Scheme were incorporated as implied contractual terms.

8

On 2 nd March 2020, Kingstone issued Interim Payment Application No. 17 in the sum of £356,439.19 for the period ending on 29 th February 2020. Lane End did not serve a Pay Less Notice nor, until 26 th March, did it serve a Payment Notice.

9

On 20 th March, Kingstone submitted a request (“the Request”) to the RICS for the appointment of an adjudicator. This request was contained in an email, timed at 07:46, from Mr Barker of Qualsurv Consulting Limited, to the RICS Dispute Resolution Service.

10

Later that day, there was a meeting (“the 20 th March Meeting”) at Lane End's offices between representatives of Kingstone and Lane End in which Mr Barker gave the representatives of Lane End a document headed “Notice of Referral” recording Lane End's putative failure to make payment and seeking redress, at Adjudication, in the sum of £356,439.19. This notice was apparently served shortly after 11 am and it is now common ground that, subject to issues of timing, it was apt to amount to a notice of adjudication. I shall thus refer to this notice as “the Notice of Adjudication”. It has recently emerged that Mr Barker covertly recorded the 20 th March Meeting and there is an issue as to whether I should admit, in evidence, his recording together with a witness statement dated 19 th June 2019 from Mr Barker incorporating his own commentary based on the recording.

11

By letter dated 23 rd March, Mr Paul Jensen advised the parties that the RICS had nominated him to act as Adjudicator and he accepted the nomination. He also made directions providing for Kingstone to send its “Referral” incorporating particulars of the dispute and Lane End to provide its Response.

12

Pursuant to Mr Jensen's directions, Kingstone circulated another document dated 23 rd March and headed “Notice of Referral” in which substantial parts of the Notice of Adjudication were copied and pasted.

13

By email timed at 18:25 on 24 th March, Lane End through its agent Mr John Mason challenged Mr Jensen's nomination on the grounds that Kingstone had failed to give Lane End notice of adjudication under the Scheme. The email was sent to Mr Jensen himself and copied to Kingstone's representatives. When referred to the Notice of Adjudication, Mr Mason initially contended that it did not comply with the Scheme but he did so by taking a point of interpretation, suggesting it did not do enough to disclose an intention to refer the dispute to adjudication. Mr Mason did not specifically take a point about the timing of the Notice of Adjudication but, by an email timed at 15:04 on 25 th March, he “reserved the position of our client as to the Adjudicator's jurisdiction”.

14

By an email timed at 16:17 on 25 th March, Mr Jensen advised the parties that, contrary to Mr Mason's comments, “I find that the [Notice of Adjudication] contains a clear intention to refer the dispute described therein to adjudication”.

15

By an automatically generated email timed at 8:39 on 8 th April, Mr Steven Anders, of Lane End, advised Mr Jensen that “due to the Government guidance relating to the Covid-19 pandemic, Lane End Group is currently closed for business until further notice”. In reply, Mr Jensen advised Mr Anders, by email timed at 10:00 that morning (“the Termination Email”), that this “effectively terminates this adjudication. You are of course responsible for my fees and an invoice will be sent later from staff working at home”. Mr Jensen copied in Mr Mason but not anyone on behalf of Kingstone. Mr Jensen's invoice dated 8 th April for £1,688.40 for his fees as Adjudicator was addressed to each of the parties.

16

Lane End did not notify Kingstone that Mr Jensen had purported to terminate the adjudication until 15 th April. By an email timed at 17:04 later that day, Mr Barker requested Mr Jensen to “continue with [his] appointment and issue [his] decision accordingly.” In another email to Mr Jensen, timed some three hours later at 20:06, Mr Barker confirmed that Kingstone had “not received any formal notification from the Adjudicator that the Adjudication has been terminated” and submitted that Mr Jensen's purported notice of termination was thus “null and void”. Meanwhile, Lane End electronically transferred to Mr Jensen the full amount outstanding under his invoice dated 8 th April 2020.

17

By an email timed at 09:18 on 16 th April, Mr Jensen advised both parties that it was apparent to him that Lane End was “not closed for business; I have not resigned and therefore I will continue”. Some thirty minutes later, at 09:53, Mr Mason asked Mr Jensen for leave to serve a Rejoinder having specifically “reserved [Lane End's] position as to your jurisdiction”. This prompted Mr Jensen to email revised directions to the parties later that morning. At 11:45, Mr Mason emailed Mr Jensen agreeing to his revised directions.

18

By an email timed at 15:44 on 23 rd April, Mr Mason emailed Mr Jensen its Rejoinder again having expressly reserved its position as to his jurisdiction.

19

By the 27 th April Decision, Mr Jensen concluded that Kingstone was entitled to the full amount in Interim Application No. 17, ie £356,439.19, on the basis it had first become due on 9 th March 2020, 7 days after the claim was first issued, and the final date for payment was 26 th March, 17 days later, in accordance with Paragraphs 7(b) and 9(2) of Part II of the Schedule to the Scheme. Whilst Lane End had apparently issue a Payment Notice, this was not issued until 26 th March 2020 and was thus outside the period allowed by Paragraph 9(2) of the Scheme, namely five days after the payment due date.

(3) The regulatory framework

20

The 1998 Regulations were amended by the Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment)(England) Regulations 2011. The relevant provisions of the Scheme are contained in the Schedule in its amended form. They are as follows.

Part 1

Adjudication

Notice of Intention to seek Adjudication

“1 (1) Any party to a construction contract (the ‘referring party’) may give written notice (the ‘notice of adjudication’) at any time of his intention to refer any dispute arising under the contract, to adjudication.

(2) The notice of adjudication shall be given to every other party to the contract.

(3) The notice of adjudication shall set out briefly –

(a) the nature and a brief description of the dispute and of the parties involved,

(b) details of where and when the dispute has arisen,

(c) the nature of the redress which is sought, and

(d) the names and addresses of the parties to the contract (including, where appropriate, the addresses which the parties have specified for the giving of notices).

2 (1) Following the giving of a notice of adjudication and subject to any agreement between the parties to the dispute as to who shall act as adjudicator—

(a) the referring party shall request the...

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