Modern Engineering (Bristol) Ltd (Plaintiffs) (Appellants) Gilbert-Ash (Northern) Ltd (Defendants) (Respondents)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE CAIRNS,LORD JUSTICE LAWTON |
| Judgment Date | 18 January 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J0118-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 January 1973 |
[1973] EWCA Civ J0118-1
In The Supreme Court of Judicature
Court of Appeal
Appeal by Plaintiffs from Judgment of His Honour Judge Edgar Fay, Conducting Official References business on 1st November, 1972.
The Master Of The Rolls (Lord Denning),
Lord Justice Cairns and
Lord Justice Lawton
Mr. PATRICK GARLAND, Q. C, and Mr. ANTHONY MAY (instructed by, Messrs. Hyman Isaacs Lewis & Mills) appeared on behalf of the Appellant Plaintiffs.
Mr. DAVID GARDAM, Q. C, and Mr. A. THORNTON (instructed by Messrs Masons) appeared on behalf of the Respondent Defendants.
We need not trouble you, Mr. Garland.
This is yet another case in which a sub-contractor requires payment of an amount which has been certified as due to him; but the main contractor withholds payment; he says that he has a cross claim for delay and for defects.
A similar point arose in Dawnays Ltd. v. F. G. Minter Ltd. (1971) 1 W. L. R. 1205. The main contractor had received the full amount payable to the sub-contractor, but nevertheless refused to pay it over to him. We then held that the contractor was bound to pay the sub-contractor. Any cross claims of an un liquidated nature were to be dealt with in an arbitration. That would take place after the conclusion of the whole work.
Now we come to this particular case: In 1968 the Bradford Corporation were making a development to the John Street market. The Corporation employed as the main contractors Gilbert-Ash (Northern) Ltd. The head contract was dated 21st February 1969, but it had been negotiated before hand. It was on the usual R. I. B. A. form. The work was to be executed for the contract sum of £94,441. The work was to be started on 1st January, 1969, and finished on 31st July, 1969. In case of delay in completion, such delay if certified as unreasonable, liquidated damages were payable of £400 a week. Gilbert-Ash sub-contracted the steel work to Modern Engineering (Bristol) Ltd. The price given in the sub-contract was £9,771 for the steel work. The tine for completion was 4 weeks from commencement.
That sub-contract was on a sub-contractors' order form. It was a printed form which Gilbert-Ash had specially prepared for their own use. On the top it was stated that Modern Engineering Ltd. were "nominated" sub-contractors. That meantthat they were nominated in accordance with clause 27 of the head R. I. B. A contract.
The sub-contractors did the work and completed it on 12th June, 1969. But the main contractors said that they took 24. B weeks longer than they should have done.
In due course the architect issued certificates in favour of the main contractors. These certificates included the sums payable to the sub-contractors in respect of the steel work done by them. The Corporation paid the main contractors those sums: and sent this statement to the nominated sub-contractors:
"The following statement shows the amounts included in Certificates issued to the General Contractor in respect of your work as a Nominated Sub-Contractor.
"The payment due to you will be the total amount included in the latest certificate indicated below less any retention and cash discount under the terms of your sub-contract and less any previous payments made to you by the General Contractor.
"It would be appreciated if you would notify the City Architect when payment in respect of a certificate is received from the General Contractor to enable effect to be given to the provisions of Clause 27(c) of the Conditions of Contract where necessary…
General Sub-Contractors
Contractors Invoice Total Amount
Certificate Certified to Date
Date issued ££
13-5-69 10,500 10500
9-6-69 5,000 13,500
15-8-69 1.032.18s. lOd. 14,582, 18s.10d."
That statement shows that the total amount certified for the sub-contractors was £14,532. 18s.10d. The main contractors received the whole of that sum from the Bradford Corporation.3ut the contractors only paid £10,000 over to the sub-contractors. So the sub-contractors issued a writ claiming the balance of £4,532. 18s.10d. The main contractors put in a defense and counterclaim. They cross claimed £3,137, 10s,0d. in respect of delays and £1802. 13s.1d. for defective work. They said thatthose cross claims came to more than the certified balance of £4,532.94 due to the sub-contractors. So they did not pay. The action was sent for trial by an Official Referee.
Whilst the matter was pending before the Official Referee. the sub-contractors, relying on Dawnay's case, claimed judgment for the £4,532.94 which had been certified and paid to the contractors. The point was set down as a preliminary issue. The Official Referee, Mr. Edgar Fay, considered it most carefully in a very helpful judgment. He held against the sub-contractors. The reason was because, as he interpreted the sub-contract, the main contractors were entitled to set up their cross claims as a contractual set-off.
There are two contracts here to be considered: first, the main contract, which is on the R. I. B. A. form. Second, the subcontract, which is on Gilbert-Ash's own printed rorm. The main contract was considered by this Court in Dawnay's case. Clause 27 deals specifically with nominated sub-contractors. It provides almost a code of rules applicable to them. In particular, clause 27(b), as interpreted by this Court, provided that, when the architect issued a certificate, which contains a sum which represents the value of the work done by the sub-contractor, then the main contractor must pay that sum to the sub-contractorin cash loss only any retention money, a discount for cash of 2½ and any liquidated sure in respect of delay. But the payment is not to be held up for un liquidated claims of any kind whether for delay or for remedying defects or the like.
It is important to notice also that under clause 27{c), if the main contractor does not pay the sum to the sub-contractor as be should, the employer can pay the sub-contractor direct and deduct the amount from any sum thereafter becoming due to the man in contractor.
Turning now to the sub-contract form of Gilbert-Asht, the first clause to notice is clause 17. It says that:
"The Sub-Contractor is deemed to have full knowledge of the provisions of the Principal Contract and Where such provisions not expressly repeated herein are applicable to the Works, these shall be deemed to be incorporated herein, provided always that if these differ from those embodied in the Sub-contract the latter shall apply and be enforced accordingly."
So prima facie clause 27 of the main R. I. B. A. contract is incorporated and should be given the Interpretation given to It in Dawnay's case. But Mr. Gardam says that it differs from clause 17 of the sub-contract, and that therefore this clause 14 shall prevail. I must therefore turn to clause 14.
The first sentence is as follows:-
"Payments (both interim and final) as stated overleaf will be made to the Sub-contractor as and when the value of such works under the terms of the Principal Contract is included in a certificate to the Contractor and the Contractor receives the monies due there under."
That sentence is in full accord with clause 27 of the main contract as interpreted in Dawnay's case. It says that payments, as and when certified, are to be made to the sub-contractor assoon as the main contractors have received the...
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