PC Harrington v Multiplex Constructions
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 30 November 2007 |
| Neutral Citation | [2007] EWHC 2833 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-07–320 |
| Date | 30 November 2007 |
[2007] EWHC 2833 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Mr Justice Christopher Clarke
Case No: HT-07–320
Miss Fiona Parkin and Mr Simon Crawshaw (instructed by Speechly Bircham) for the Claimant
Mr Manus McMullan and Mr Mark Chennells (instructed by Nabarro) for the Defendant
Hearing dates: 20 November 2007
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.
The claimant – P C Harrington Contractors Limited (“PCH”) – is a subcontractor to the defendant—Multiplex Constructions (UK) Limited (“Multiplex”) – which is the main contractor for the design and construction of the New Wembley National Stadium. Multiplex's employer was Wembley National Stadium Limited (“WNSL”). PCH was engaged as Multiplex's concrete works package sub contractor under a subcontract dated 26 th September 2002 containing certain Conditions. The parties are in dispute as to the effect of an Interim Certificate—No 44 – issued by Multiplex on 20 th April 2007 under that sub-contract in relation to a pending adjudication.
WNSL took possession of the Stadium on 9 th March 2007. This was over two years later than expected.
All outstanding disputes between WNSL and Multiplex have been settled. Disputes between Multiplex and PCH remain. PCH has a dispute with Multiplex about the proper valuation of PCH's works and a claim for extension of the time for completion. It has begun an action in which it claims, inter alia, further payment under the sub contract of more than £ 17 million.
Multiplex claims that some of PCH's work was defective or incomplete and has had to be carried out by others. It has reflected its claims against PCH for loss and damage in the monthly valuation and certification process laid down by the Conditions.
Condition 21 is headed “Payment of Sub-Contractor”. It contains a scheme for interim payments. Clause 21.2.1 of the conditions provides that “All interim payments shall be made by the Contractor to the Sub-Contractor in accordance with the following clauses”. Under the scheme there is to be a progress inspection on the third Business Day prior to the end of each month: clause 21.2.2.Within 5 business days of that inspection PCH is entitled to make an Application for Payment in respect of the previous month: clause 21.3.1.
Each Application for Payment is by clause 21.3.2 to “specify the total amount claimed up to and including the Relevant Month by reference to:
. 1 the Gross Valuation …;
…
Less
5. … The Retention…; and
6. all previous payments made to the Sub-Contractor under the Sub-Contract”,
Clause 21.4. provides that the Gross Valuation is to be the lesser of:
“1. the amount specified in the Cumulative Monthly Account column as shown in the Payment Profile;
And
2. the value of the works properly completed… and the value of goods and materials brought to the Site”
Clause 21.7 provides for the parties to review each Application for Payment and try to agree the amount due to the Sub-Contractor. If they cannot agree the Sub-Contractor is to issue its Application as it sees fit and the Contractor is to issue a Certificate of Payment in accordance with clause 21.9 “for such amount as the Contractor considers to be due. Any outstanding disagreement between the Contractor and the Sub-Contractor shall be determined in accordance with clauses 38A and/or 38C”. Clause 38A provides for adjudication and clause 38C for litigation.
Clause 21.9 is headed “Issue of Interim Payment Certificates” and provides as follows:
“1. Within twelve (12) Business Days days after the receipt of the Application for Payment under clause 21.3. the Contractor shall issue a certificate (a “Certificate of Payment”) certifying what mounts are due to the Sub-Contractor pursuant to this clause 21.9, less any amounts which are to be deducted pursuant to clause 21.10….
2. All Certificates of Payment shall specify the amount which the Contractor proposes to pay to the Sub-Contractor and basis on which that amount was calculated. Such amount shall become due on the date of issue of the Certificate for payment and final date for payment shall arise ten (10) business days after the date of issue of the said Certificate for Payment”
Clause 21.10 is headed “Sums due to Contractor”. It provides:
“.1 Where by virtue of any provision in the Sub-Contract, the Sub-Contractor becomes liable to pay sums to the Contractor or the Contractor becomes entitled to abate amounts against sums due to the Sub-Contractor, the Contractor may:
.1 deduct such sums in computing the amount in any Certificate of Payment:
.2 issue an invoice to the Sub-Contractor for such sum identifying the amount and the grounds for the Contractor's claim; or
.3 do a combination of Clauses 21.10.1 and 21.10.2
.2 The amounts specified in such Certificate of Payment and/or invoice shall become due and the final date for payment shall arise ten (10) Business Days after the date of issue of such Certificate of Payment and/or invoice as applicable.”
Clause 21.11 provides as follows:
“21.11 Deductions and Disputes
.1 …
In the event that the Contractor proposes to withhold any amount included in a Certificate of Payment he shall give to the Sub-Contractor a notice of intention to withhold payment specifying:
The amount proposed to be withheld and the grounds for withholding payment; or
If there are more than one ground [sic], each ground and the amount attributable for each.
Such notice shall be given not less than five (5) business days before the final date for payment of the amount from which the withholding is proposed to be made.
.2 …
In the event that the Sub-Contractor questions the Contractor's entitlement to withhold any amount notified under clause 21.11.1. it shall notify the Contractor in writing no later than two (2) business days before the relevant final date for payment.
Upon receipt of the notice, the Contractor and the Sub-Contractor shall meet in good faith to agree the amount, if any, to be withheld.
.3 If the contractor and the Sub-Contractor cannot agree the sum payable then either the Contractor or the Sub-Contractor may refer the matter for resolution under clauses 38A and/or 38C.”
There is an issue between the parties as to whether deductions can be made under clause 21.10 otherwise than by agreement. The dispute arises because clause 3 of the Conditions provides:
“Where in Sub-Contract it is provided that an amount is to be added to or subtracted from the Sub-Contract Sum or dealt with by adjustment of the Sub-Contract Sum or included in the computation of the Ascertained Final Sub-Contract Sum, then as soon as such amount is ascertained and agreed in whole or in part such ascertained amount shall be taken into account in the computation of the payment next following such whole or partial ascertainment and agreement”.
I do not regard this clause as having the effect that any deduction under clause 21.10 can only be made with the agreement of the Sub-Contractor. Clause 21.10 makes no reference to any agreement being required nor does clause 21.9.1, which requires the making of clause 21.10 deductions, contain any indication that the only deductions to be made in the interim certificate process are consensual ones. That would be somewhat inconsistent with the interim nature of the process. Even if a deduction under clause 21.10.1 had to be by agreement, a withholding under clause 21.11 does not.
The facts
The events which led to the present dispute are these. In April 2007 PCH submitted its Application for Payment No 53 to Multiplex in respect of the works executed by it up to March 2007 in which it sought payment in the sum of £ 13,437,726.30. Perhaps because it is PCH's position that Practical Completion was deemed to have occurred the Application for Payment claimed that 100% of the work comprised in the Tender Summary had been done producing a total value for the works of £ 45,185,925. The Application then added (i) claims for variations and claim items, (ii) made no allowance for a previous deduction (effectively reversing it), (iii) deducted certain amounts in respect of “Abatement” and “MPX contra charges” and (iv) made no allowance in respect of a previous positive adjustment, again effectively reversing it.
The application produced a balance of £ 13,437,726.30 after allowing for the last payment as follows:
|
| Last Payment | This Application | Balance |
| TOTAL | £ 47,057,523.87 | £ 45,185,925 | - £ 1,871,598.87 |
| Variations | £ 4,778,610.30 | £ 11,468,704.64 | £ 6,690,094.34 |
| PCH Claim items | £ 1,775,482.83 | £ 11,555,051.02 | £ 9,779,568.19 |
| Client deduct | -£ 250,000 | £— | £ 250,000.00 |
| Abatement | -£ 18,477.50 | -£ 266,897.37 | -£ 248,419.87 |
| MPX Contra charges | -£ 1,424,850.73 | -£ 383,690.19 | £ 1,041,160.54 |
| Moratorium Adjustment | £ 2,203,078.03 | £— | -£ 2,203,078.30 |
| Gross Values | £ 54,121,366.80 | £ 67,559,093.10 | £ 13,437,726.30 |
On 20th April Multiplex wrote to PCH enclosing Interim Certificate of Payment No 44. together with various appendices giving detailed grounds for deducting and/or withholding. The letter with its enclosures was expressed to constitute Multiplex's notice of intention to deduct and/or withhold payment of £ 24,063,199.73. (This was the total amount of withholdings/deductions in respect of the contract to date).
The Certificate contains the following entries:
|
| TO DATE | MPX MAY 2005 | BALANCE DUE IN |
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