R Durtnell and Sons Ltd v Secretary of State for Trade and Industry
| Jurisdiction | England & Wales |
| Judge | HHJ John Toulmin |
| Judgment Date | 26 May 2000 |
| Date | 26 May 2000 |
| Court | Queen's Bench Division (Technology and Construction Court) |
Queen's Bench Division (Technology and Construction Court).
HHJ John Toulmin QC.
Robert Stevenson (instructed by Berrymans Lace Mawer) for the claimant.
Sean Wilken (instructed by the Treasury Solicitor) for the defendant.
The following cases were referred to in the judgment:
Frota Oceanica Brasileira v Steamship Underwriting Association (Bermuda) Ltd (“The Frotanorte”) [1997] CLC 230.
Secretary of State v Percy Thomas Partnership (a firm)UNK (1998) 65 Con LR 11.
Villa Denizcilik Sanayi Ve Ticaret AS v Longen SA (“The Villa”)UNK [1998] 1 L1 Rep 195.
Wealands v CLC Contractors Ltd [1998] CLC 808.
Building contract — Arbitration — Failure of procedure for appointing arbitrator — Court's discretion to direct or make appointment — Effect of delay on exercise of discretion — Arbitration Act 1996, s. 18.
This was an application by the claimant pursuant to s. 18 of the Arbitration Act 1996 for the court to exercise its powers to direct the respondent to forward a request for the nomination of an arbitrator to one of the institutions named in the arbitration clause, or in the alternative to direct one of the institutions to nominate an arbitrator.
The claimant was employed by the DTI to refurbish a building under the General Conditions of Government Contracts for Building and Civil Engineering Works, Form GC/Works 1 (edn 2). Clause 61 of the conditions required disputes to be referred to a single arbitrator to be appointed in default of agreement by the president of one of a number of named institutions at the request of the DTI. The date for completion of the works was 10 January 1992. Practical completion occurred on 6 April. The claimant gave notice of a claim for delay, loss and expense. In 1993 the claim was formulated. It was rejected on the ground that it was a condition precedent to the contract sum being increased that the contractor provided documents and information in respect of any expense as soon as reasonably practicable after incurring the expense. There was correspondence between the parties in 1994. The claim was again rejected on the ground previously notified and on the ground that the claimant had not given the required notice at the time that the work was being disrupted of the circumstances of the disruption. There was further correspondence in 1995. In 1997 the claimant requested arbitration. The DTI rejected the claim, subject to the advice of counsel, on the basis that it was unreasonable to invoke the arbitration clause five years after completion. In 1999 the claimant applied to the court under s. 18 of the Arbitration Act 1996 for the court to direct the DTI to request the appointment of an arbitrator or direct one of the named institutions to nominate an arbitrator.
Held granting the application:
The court had an unfettered discretion under s. 18 of the Arbitration Act 1996 whether or not to assist in the appointment of an arbitrator. Delay was obviously relevant as were the general principles enshrined in s. 1 of the Act. The court would take into account the fact that a contractor in the claimant's position might wish, for good commercial reasons, not to press the government or other major clients too hard. In this case there was delay which was not due to that desire. The claimant did not have a right to relief so long as the limitation period had not expired. The court could refuse a remedy to someone who had for a long time neglected the right to seek it. The court should refuse an application if it was impossible to obtain a fair resolution of the dispute. It was still possible to have a fair resolution of the dispute. The dispute crystallised in 1993. In all the circumstances, including delay by the DTI, the claimant had not delayed so long in seeking the remedy that it would be wrong for the court to give relief under s. 18 and it would do so.
HHJ John Toulmin QC: 1. This is an application dated 9 April 1999 pursuant to s. 18 of the Arbitration Act 1996 (“the 1996 Act”) for the court to exercise its powers to:
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(i) Direct the respondent to forward a request for the nomination of an arbitrator to one of the institutions named in the arbitration clause.
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(ii) In the alternative to direct one of the institutions to nominate an arbitrator.
2. The parties have agreed that if I accede to this application I should refer the matter to the president of the Royal Institution of Chartered Surveyors or the Chartered Institute of Arbitrators to nominate a sole arbitrator.
3. The case raises the fundamental issue, which has not been addressed in previous cases, of the circumstances in which under s. 18 of the 1996 Act the court should intervene.
4. Although the parties disagree about the cause of the delay which occurred between the time when the dispute crystallised in December 1993 and the date of this application in April 1999, they are agreed for the purposes of this application only, that the delay would not prevent a fair resolution of the dispute between the parties if I should grant the applicants the relief which they request. In a nutshell the defendants say that I should not exercise my discretion to make the order when the applicants have delayed for so long to exercise their rights.
5. On 17 April 1991 Durtnell & Sons Ltd (“Durtnells”) entered into a contract with the Secretary of State for Trade and Industry (“DTI”) for the refurbishment of Building 202 NPL Teddington, Middlesex. The contract was subject inter alia to the General Conditions of Government Contracts for Building and Civil Engineering Works, Form GC/Works 1 (edn 2).
6. Clause 61 of the general conditions, in so far as it is material, provided as follows:
“61(1) All disputes, differences or questions between the parties to the Contract with respect to any matter or thing arising out of or relating to the Contract other than a matter or thing as to which the decision or report of the Authority or of any other person is by the Contract expressed to be final and conclusive, shall after notice by either party to the contract to the other of them, be referred to a single Arbitrator agreed for that purpose, or in default of such agreement, to be appointed at the request of the Authority by the President of such one of the undermentioned as the Authority may decide…”
(e.g. the Law Society of England and Wales, the Royal Institute of British Architects, the Royal Institution of Chartered Surveyors, etc.).
“(2) Unless the parties otherwise agree, such reference shall not take place until after completion, alleged completion or abandonment of the Works or the determination of the Contract.
(3) In the case of the Contract being subject to English Law such reference shall be deemed to be a submission to arbitration under the Arbitration Act 1950, or any statutory modification or re-enactment thereof.”
7. The parties are agreed that, by reason of cl. 61(3), the Arbitration Act 1996 applies to this application although it was not in force at the time when the contract was made. The parties are also agreed that cl. 61 is the arbitration clause which governs the application before me.
8. The date for the completion of the works was 10 January 1992. After an extension of time, practical completion of work on building 202 occurred on 6 April 1992. Durtnells had given notice of a claim for delay, loss and expense in its letter dated 11 February 1992.
9. There followed correspondence between Durtnells and Bampton and Lockwood, the quantity surveyors, regarding the final account on the building. At a meeting on 27 July 1993 with Bampton and Lockwood, Durtnells presented them with an application for additional costs of £109,312 arising both from the twelve week overrun of the contract and also for general disruption throughout the contract.
10. On 8 October 1993 Durtnells made a formal claim for additional sums for loss and expenses in the sum of £103,322. On 15 October 1993 Durtnells agreed the statement of final account for all items other than the valuation of delay costs.
11. On 1 December 1993 Howard Humphreys, the project managers, replied formally to Durtnells' letter of 8 October 1993. They rejected Durtnells' claim in totality on the grounds that condition 9 (valuation of the superintending officers instructions) and condition 53 (prolongation and disruption expenses) of the contract applied and that in respect of properly and directly incurred expense,
“It shall be a condition precedent to the contract sum being increased…that as soon as reasonably practicable after incurring the expense, the contractor shall have provided such documents and information...
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...in which it can be seen that the arbitral process cannot result in a fair resolution of the dispute. In R. Durtnell and Sons Ltd v The Secretary of State for Trade and Industry [2001] 1 Lloyd's Rep. 275 Judge Toulmin C.M.G., Q.C. held, having regard to section 1 of the Act, that an applicat......