Lidl Great Britain Ltd v Closed Circuit Cooling Ltd t/a 3CL
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 11 September 2023 |
| Neutral Citation | [2023] EWHC 2243 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | HT-2023-MAN-000027 HT-2023-MAN-000029 |
[2023] EWHC 2243 (TCC)
His Honour Judge Stephen Davies sitting as a High Court Judge
HT-2023-MAN-000027 HT-2023-MAN-000029
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
TECHNOLOGY AND CONSTRUCTION COURT (KB)
Manchester Civil Justice Centre
Jonathan Acton Davis KC and Christopher Reid (instructed by Clarke Willmott LLP, Manchester) for Lidl
Charlie Thompson (instructed by Hill Dickinson LLP, Manchester) for 3CL
Hearing date: 23 August 2023
Date draft judgment circulated: 4 September 2023
APPROVED JUDGMENT
Remote hand-down: This judgment was handed down remotely at 10am on 11 September 2023 by circulation to the parties or their representatives by email and by release to The National Archives.
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
| A | Introduction and summary of decision | 001–014 |
| B | The correct procedure to follow in a case such as the present | 015–016 |
| C | Is there any genuine defence to summary enforcement of the decision? | 017–035 |
| D | Is it appropriate to determine any other claims for declaratory relief at this hearing? | 036–045 |
| E | Declarations 1, 2 and 4.1: The alleged failures to comply with the Milestones identification requirement, the photographic requirement and the insurance requirement | 046–067 |
| F | Declarations 3 and 4:2: The alleged failure to serve AFP19 in accordance with the requirements of clause 1.3 | 068–084 |
| G | Declarations 6 and 7: Lidl's case that the final date for payment provisions of the contract comply with s.110(1)(b) HGCRA 1996 and that the failure to submit a VAT Invoice complying with the terms of the payment schedule means that no final date for AFP19 has occurred and thus that no sum can be payable thereunder | 085–130 |
| Appendix 1 – the relevant terms of the agreement |
A. Introduction and summary of decision
This is my judgment following the hearing on 23 August 2023 of:
1.1. The Part 8 claim issued on 14 June 2023 by Lidl (as the Part 8 claimant and Part 7 defendant) seeking the determination of issues arising out of an adjudicator's decision dated 1 June 2023 by way of the declaratory relief claimed in paragraphs 6 and 7 of its details of claim.
1.2. The application seeking summary judgment of the adjudicator's decision in the Part 7 claim issued on 30 June 2023 by 3CL (as the Part 7 claimant and Part 8 defendant).
The declaratory relief sought in the draft order accompanying the Part 8 claim gives a clear idea of the nature and breadth of the determinations sought and their intended purpose. It is, therefore, worth setting out in full at the outset:
“1. In order to comply with the requirements of clause 7.4.3 of the Framework Agreement, Applications for Payment must include the matters specified in sub-paragraphs 7.4.3(a)(i) – (vi) of that contract.
2. In particular, a valid Application for Payment:
2.1. must adequately identify the particular Milestones for which payment is sought in each individual Application for Payment;
2.2. must include photographic evidence that the particular Milestones for which payment is sought have been achieved;
2.3. must include evidence of renewals of the relevant insurances (or evidence that insurance is otherwise being maintained).
3. Further, in order for an Application for Payment to be ‘received’ by the Claimant – such that the Due Date can be calculated – an Application for Payment must be submitted to the Claimant in accordance with clause 1.3 of the Framework Agreement.
4. Accordingly:
4.1. AFP19 was not a valid Application for Payment and was of no effect under the Framework Agreement or the Order; and/or
4.2. AFP19 was not validly ‘received’ by the Claimant such that neither the Due Date nor the Final Date for Payment have occurred.
5. PAY-7 was a valid Payment Notice under the Framework Agreement and the Order. Accordingly, no sum is payable to the Defendant by the Final Date for Payment for AFP19.
6. The Parties' agreement for the ‘Final Date for Payment’ complies with the requirements of section 110(1)(b) of the Housing Grants, Construction, and Regeneration Act 1996 (as amended).
7. In the absence of a VAT Invoice complying with the terms of the Payment Schedule, the Final Date for Payment for AFP19 has not yet occurred and no sum is therefore payable to the Defendant.
8. The Adjudicator was therefore wrong to decide that any sums were payable to the Defendant further to AFP19.
9. The Adjudicator determined that PAY-7 was invalid on the basis of a conclusion of law for which neither of the Parties had contended.
10. The Decision is therefore unenforceable by reason of a material breach of the rules of natural justice.”
It will be seen that:
3.1 Paragraphs 1 to 8 are seeking declaratory relief with a view to obtaining determinations from the court that 3CL's contentions before the adjudicator, on which they largely succeeded, in relation to: (a) the validity of 3CL's application for payment; (b) the validity of the service of that application; (c) the invalidity of Lidl's payment notice; (d) the validity of 3CL's invoice; and (e) the non-compliance of the terms for the final date for payment with the requirements of section 110(1)(b) of the Housing Grants, Construction, and Regeneration Act 1996 (as amended) (“the Act”) are wrong with the result that the adjudicator's decision should not be enforced.
3.2 Paragraphs 9 and 10 are seeking declaratory relief that the decision is also and separately unenforceable by reason of the adjudicator's alleged failure to comply with the rules of natural justice.
Acting sensibly in accordance with the relevant provisions of the TCC Guide 2022 the parties had agreed that the summary judgment application and the Part 8 claim should be heard together on the first convenient available date after the parties had completed the exchanges of evidence with a time estimate of one day. That hearing proceeded on 23 August 2023. I was able to pre-read the very helpful and detailed written submissions of counsel beforehand and to consider the key relevant documents. The hearing still took the full day, due to the number and complexity of the issues argued and I reserved judgment.
The essential background is conveniently summarised by Lidl's counsel in their written submissions which I paraphrase as follows.
Lidl is a well-known national retailer. 3CL carries on business as an industrial refrigeration and air-conditioning contractor. Lidl and 3CL entered into a framework agreement which enabled the parties to enter into individual works orders, each of which was to constitute a separate contract incorporating both the terms of the framework agreement and the order. The first order issued under the framework agreement is the subject of this case.
The framework agreement and the order contain provisions entitling 3CL to make applications for interim payment (“a payment application”) following the achievement of defined milestones. The relevant payment application in this case is the 19 th such application (“AFP19”), in which 3CL sought payment of £781,986.22.
The first major dispute between the parties concerns the effect of AFP19. Lidl's position is that it was an invalid payment application because of its failure to comply with one or more of the requirements of the contract in terms of: (a) the identification of the milestones achieved and amounts claimed against each; (b) the provision of the required supporting photographs and insurance evidence; and (c) its method of service, so that it did not engage the subsequent steps (being service of a payment notice and pay less notice) in the payment provisions. 3CL maintains that none of these requirements were conditions precedent to AFP19 being a valid payment application and that in any event either it did comply with the contractual requirements, properly understood or, even if it did not, Lidl is estopped by convention from contending that it failed to do so.
The second major dispute concerns the effect of Lidl's response to AFP19, which was to issue a document entitled ‘2011-PAY-7’ and valuing the works at nil (“PAY-7”). Lidl maintains that it was a valid payment notice, while 3CL contends that it was not and that it was in reality an invalid pay less notice served without a prior payment notice.
The third major dispute concerns the compliance of the payment terms of the contract with the Act. 3CL contends that the terms of the contract as regards the final date for payment do not comply with the requirements of the Act. Lidl disagrees. 3CL argues this point as an answer to the defence raised by Lidl to the effect that the contract made the final date for payment conditional upon 3CL delivering a compliant VAT invoice which, Lidl says, 3CL did not do. This dispute raises a question of more general importance as to whether the court should follow the approach of Cockerill J in Rochford Construction Limited v Kilhan Construction Limited [2020] EWHC 941 (TCC), as 3CL submits that it should, or whether it should follow what Lidl submits is the different and preferable approach of other judges in earlier decisions.
On 26 April 2023, 3CL referred the dispute over its entitlement to payment under AFP19 to adjudication. In a detailed reasoned decision the adjudicator (Mr. Robert J. Davis) rejected all of Lidl's submissions as to the invalidity of AFP19 and as to the validity of PAY-7 and, thus, rejected Lidl's defences that no sum was payable because the final date for payment had not arrived...
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