Lidl Great Britain Ltd v Closed Circuit Cooling Ltd t/a 3CL
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 29 November 2023 |
| Neutral Citation | [2023] EWHC 3051 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2023-MAN-000046 |
[2023] EWHC 3051 (TCC)
HIS HONOUR JUDGE Stephen Davies
SITTING AS A JUDGE OF THE HIGH COURT
Case No: HT-2023-MAN-000046
Case No: HT-2023-MAN-000050
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN MANCHESTER
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Manchester Civil Justice Centre,
1 Bridge Street West, Manchester M60 9DJ
Jonathan Acton Davis KC (instructed by Clarke Willmott LLP, Manchester) for Lidl
Charlie Thompson (instructed by Hill Dickinson LLP, Manchester) for 3CL
Hearing date: 20 November 2023
Draft judgment circulated: 23 November 2023
APPROVED JUDGMENT
Remote hand-down: This judgment was handed down remotely at 10:30am on 29 November 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
| Paras | |
| Introduction and summary of decision | 1–3 |
| The facts, summarised | 4 – 20 |
| The respective arguments, summarised | 21 – 23 |
| The relevant authorities | 24 – 35 |
| Discussion and conclusions | 36 – 43 |
| Application to the facts of adjudication no 2 and adjudication no 3 | 44 – 56 |
Introduction and summary of decision
This is my judgment following the hearing on 20 November 2023 of:
i) Lidl's Part 7 claim for summary judgment of the adjudication decision of Mr Christopher Hough made 25 September 2023 ( adjudication no 2 and decision no 2)
ii) Two of the three grounds raised in 3CL's Part 8 claim. These grounds relate to decision no 2 and to the further adjudication decision of Dr Franco Mastrandrea made 3 October 2023 ( adjudication no 3 and decision no 3).
In short, as to the two Part 8 claim grounds 3CL contends that decision no 2 is unenforceable, as would be decision 3 if it was sought to be enforced, because they were each made without jurisdiction and/or in breach of public policy, on the ground that Lidl commenced these adjudications before it had complied with its immediate payment obligation under s.111 of the Housing Grants, Construction and Regeneration Act 1996 (as amended) in respect of a previous notified sum obligation (as it was held to be in a previous adjudication). I shall refer to this as the Grove principle, because it is a principle which was stated by Coulson J and upheld and explained in the judgment of Sir Rupert Jackson in S&T(UK) Ltd v Grove [2018] EWCA Civ 2448. This case raises issues as to the scope of the Grove principle and whether decisions 2 and 3 are within the scope of the Grove principle, properly determined.
In summary, my decision is that on a proper application of the Grove principle:
i) Lidl is entitled to summary judgment in relation to decision no 2 to the extent that there is unarguably no defence based on lack of jurisdiction, namely as to £496,946.02 of the £757,845.63 awarded, together with proportionate interest and together with the adjudicator's costs.
ii) 3CL is entitled to a declaration that Dr Mastrandrea had no jurisdiction to determine 3CL's right (or lack of such right) to any extension of time over part of the period in respect of which he was asked to do so, namely 18 June 2022 to 29 September 2022.
The facts, summarised
The first part of this section is lifted directly from my previous judgment in the previous Part 7 and Part 8 proceedings between the parties, in which the positions were reversed, which was delivered on 11 September 2023 and reported under neutral citation number [2023] EWHC 2243 (TCC).
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 for refrigeration works at Lidl's Belvedere 2 Regional Distribution Centre is the subject of this and the previous case and all of the adjudications in issue.
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 was the 19th such application ( AFP19), dated 29 September 2022, in which 3CL sought payment of £781,986.22. That became a notified sum on 12 October 2022, with the final date for payment being 2 November 2022, but nothing was paid by Lidl, based on what it contended was a valid payment notice ( PAY-7) served on 6 October 2022 stating that nothing was payable. PAY-7 included a number of items where it was said that 3CL's work was incomplete and/or defective and also a deduction of £765,000 for liquidated damages for the period from 18 June 2022 (being the date up to which Lidl had previously granted an “ex gratia” extension of time from the contractual completion date of 25 May 2022) to 29 September 2022 (the date of AFP19).
On 26 April 2023, 3CL referred the dispute over its entitlement to payment under AFP19 to adjudication ( adjudication no 1). In a detailed reasoned decision dated 1 June 2023 ( decision no 1) 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 and/or because no sum was payable under PAY-7 as a valid payment notice. He ordered Lidl to pay the sum applied for in AFP19 together with interest by 8 June 2023.
Lidl did not pay and instead issued a Part 8 claim challenging the decision on various grounds. In response 3CL issued its Part 7 claim and summary judgment application. In summary, my decision was that the Part 7 claim succeeded and that Lidl was not entitled to the Part 8 declarations sought, so that there should be summary judgment for 3CL on the claim.
Lidl complied with the order made as a result of that judgment and duly paid the sum due under decision no 1 to 3CL on 18 September 2023.
However, in the meantime, Lidl had commenced two further adjudications.
Adjudication no 2 was referred by Lidl on 28 July 2023, and concerned its entitlement to recover as a debt and/or deduct from any monies due to 3CL or which might become due, alleged costs and/or losses incurred by Lidl in appointing a third party to rectify alleged defects in relation to the works undertaken. I shall refer to the detail of adjudication 2 in more detail when I deal with the Grove point.
By decision no 2 dated 25 September 2023, Mr Hough decided that Lidl could deduct the sum of £757,845.63 from any monies due or which may become due to 3CL and payment of the sum within 7 days.
It will be noted that at the time of the referral Lidl had not paid the sum payable under decision no 1 but, by the time of decision no 2, it had done so.
3CL did not pay the sum payable under adjudication no 2 and, thus, by the current Part 7 claim issued on 6 October 2023 Lidl seeks to enforce decision no 2.
By the current Part 8 claim dated 19 October 2023 3CL seeks a declaration that decision 2 is unenforceable because it was made without jurisdiction and/or in breach of public policy, in that Lidl commenced adjudication 2 before it had complied with its immediate payment obligation under s. 111 of the Act in respect of AFP19. This is the Grove point. Lidl has accepted, rightly, that this Grove point, if made out, would operate as a defence to its Part 7 adjudication enforcement claim and, thus, that it must be determined by the court at the same time.
Adjudication no 3 was referred by Lidl on 1 August 2023 in relation to 3CL's entitlement to an extension of time. By decision no 3 dated 3 October 2023, Dr Mastrandrea decided that 3CL had no entitlement to an extension of time. Again, at the time of the referral Lidl had not paid the sum payable under adjudication no 1 but, again, by the time of decision no 3 it had done so. Again, I shall refer to the detail of adjudication 3 when I come to determine the Grove point.
Although adjudication no 3 did not require 3CL to make any immediate payment it did enable Lidl to say that by virtue of that decision it is entitled to levy liquidated damages against 3CL for the period of time in respect of which it was decided that 3CL had no entitlement to an extension of time. This included the period from 25 May 2022 to 18 June 2022 (the date up to which the previous ex gratia extension of time had been granted) and the period from 29 September 2022 to 26 October 2022 (the date of practical completion as decided by Mr Hough in a further previous adjudication, to which it is not necessary to refer further). By letters dated 5 October 2023 Lidl contended that in consequence of decision no 2 it was entitled to recover liquidated damages amounting to £1,155,000 as a debt and threatened winding-up proceedings if payment was not made by 9 October 2023. The current position is that Lidl has referred a further claim to adjudication seeking a decision that 3CL is liable to pay liquidated damages in such amount.
By the current Part 8 claim 3CL seeks a declaration that decision 3 is unenforceable: (a) on the same Grove point as regards decision 2 and; (b) because there was no crystallised dispute as at the time of referral.
Lidl has objected to these further points being determined at the same time as its Part 7 adjudication...
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