Re A Company
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 18 April 2018 |
| Neutral Citation | [2018] EWHC 1143 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No. CR-2017-008654 |
| Date | 18 April 2018 |
[2018] EWHC 1143 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE MATTER OF VICTOR Y HOUSE GENERAL PARTNER LIMITED
Rolls Building
Mr Justice Morgan
Case No. CR-2017-008654
Mr D. Chivers QC and Ms K. Rogers (instructed by Cannings Connolly) appeared on behalf of the Applicant.
Mr P. Shaw QC appeared on behalf of the Respondent/Petitioner.
( )
This is an application to strike out, and to restrain notice being given of, a winding up petition. The petitioner is RGB P&C Limited and the company in question, and the applicant before me, is Victory House General Partner Limited to which I will refer as “the company” or, when I refer to a relevant building contract, as “the employer”.
The matter has been argued for the course of a full court day and I am giving judgment slightly out of hours at the end of that day. I have decided to give judgment straightaway to avoid the delay which would result if I were to reserve judgment.
The petition was presented on 16 November 2017. The petition debt is described in these terms:
“The company is indebted to the petitioner in the sum of £819,363.46 in respect of an adjudicator's decision dated 7 November 2017 in respect of goods supplied and services rendered for the development and conversion at Victory House, Leicester Square, London for the petitioner's interim payment application number 30, dated 11 July 2017.”
There is a very considerable background to the matter coming before the court for decision today. However, a brief summary of that background will suffice for present purposes.
The history begins with a building contract under which the company was the employer and the petitioner was the building contractor. The contract was in the form of a JCT Design and Build Contract 2011. As described in the petition itself, the building contract related to the development and conversion of an office building at Victory House, Leicester Square into a substantial hotel property. Section 4 of the building contact is a lengthy provision, extending I think to nine pages, dealing with payment in relation to the contract sum and adjustments to the contract sum. I will not attempt in this short judgment to summarise those detailed provisions. Suffice to say, so that one understands the later references to “adjudication”, the contractual provisions were drafted against the background of the Housing Grants, Construction and Regeneration Act 1996, s.108–114, as amended by the Local Democracy, Economic Development and Construction Act 2009, and against the background of the Scheme for Construction Contracts (England and Wales) Regulations 1998, as amended by further Regulations in 2011.
There came a point when the parties to the contract disagreed as to their rights and liabilities under the contract and, in particular, as to the sums which were payable by the employe r (the company) to the contractor (the petitioner). The contract and the statutory provisions provided for the dispute which had arisen to be referred to adjudication under the 1996 Act. The contractor had served an interim payment application, number 30, on 11 July 2017 and that was referred to an adjudicator who published his adjudication decision on 7 November 2017. The decision is a lengthy one. It considers a number of matters. It considered, in particular, a contention put forward by the employer company that it was not liable to pay the sum identified in interim application number 30 because the parties had entered into a memorandum of understanding which provided for other payments to be made which were not as large as the figure claimed in application number 30. In summary, the adjudicator, for reasons which he gave, did not accept that case put forward by the employer company.
The employer had a second case which is that it had served the appropriate notice under the contract and under the legislation, in particular, what is called a “pay-less” notice, which meant that the contractor/petitioner was not entitled to be awarded by the adjudicator the figure stated in interim application number 30. The adjudicator rejected that case also. It followed from the reasoning of the adjudicator, and the adjudicator so determined, that the employer was liable to pay the figure in the contractor's interim application number 30. The adjudicator did not go into the question as to what would have been the value of the work, the subject of interim application number 30, if that work had fallen to be valued by him. The figure which he determined was payable by the employer to the contractor was the result of the operation of the contractual and the statutory provisions. It was the figure that had been identified by the contractor, no more and no less.
The adjudicator's award therefore was that the employer should pay to the contractor the sum of £682,802.88 plus any VAT payable thereon, together with a sum by way of interest.
The employer was not content with the result of that adjudication (which I will hereafter call “Adjudication No.1”). The employer brought proceedings against the contractor in the High Court, in particular in the Technology and Construction Court. It bro ught those proceedings by way of a Part 8 claim. It raised three points in particular as to why it should not be obliged to make the payments which had been determined by the adjudicator in Adjudication No.1. That claim form provoked an application by the contractor in the Technology and Construction Court for the enforcement of the award in Adjudication No.1.
The rival applications came before a judge of the Technology and Construction Court, namely, Miss Joanna Smith QC sitting as a deputy judge of the High Court, and she gave a judgment dealing with the matters argued before her on 26 January 2018. She dealt, in particular, with the contractor's application to enforce the determination in Adjudication No.1. She held in para.38 of her judgment that the contractor was entitled to summary judgment in that respect. However, that did not dispose of all the matters raised in the Part 8 claim form. It disposed of one of those matters, namely, whether the adjudication decision was invalid for breach of natural justice, but it did not determine two other matters, one relating to the memorandum of understanding and the second relating to the question as to the notices which had been served by the employer and as to the effect of those notices.
Following the handing down of judgment, the Deputy Judge then made an order. She entered judgment for the contractor in the sum stated in Adjudication No.1 plus interest. She made an order for costs against the employer and in favour of the contractor and she then made case management directions as to what was to happen in relation to outstanding points raised initially in the Part 8 proceedings. Those points were directed to go forward for further litigation and determination and, indeed, I have been shown the plead ings which were served in accordance with the Deputy Judge's order. However, it is important to recognise the fact that those matters are still being pursued does not in any way detract from the final and binding character of the judgment which was made by the Deputy Judge. The reason those other matters are still being litigated, as I understand it, is that they may have a bearing not on a liability to make payment under interim application number 30 but may have a bearing on a liability to make some further payment under the contract.
I also point out that the Deputy Judge did not grant a stay of the judgment she had given. Indeed, she ordered that the judgment be complied with by paying the judgment sum on 2 February 2018. There has been no appeal against that order.
As I indicated, the petition debt is based on the judgment debt. So that it is clear, I consider that the judgment debt is no longer a disputed debt. There is no question of a set-off being asserted against the judgment debt. A set-off, when it can be asserted, is a defence. It is too late here for a defence. The matter has now been the subject of the judgment. Furthermore, in the absence of a stay, the contractor is entitled to enforce its judgment in any of the ways available to it by way of execution of a judgment.
Some time went by. The employer did not pay the judgment debt. Instead the contractor served a further interim application notice, number 31, and that led to a second adjudication before a different adjudicator, and the second adjudicator made his decision, extending to some 64 pages, on 7 February 2018. I will refer to this as “Adjudication No. 2”. My attention has been drawn to some only of the paragraphs in this lengthy decision. It appears from the text, between paras.270–271 of the decision, that the adjudication was pursuant to a reference by the contractor seeking a determination that the value of the work done, for which an interim payment should be made, was in excess of £11 million. It also appears from the same place that the employer had, prior to the date of this adjudication, paid on account a sum in excess of £8.5 million. Accordingly, the contractor was seeking to have a further sum of approximately £3 million by way of further interim payment. The total sum of £11.7 million, which was claimed, did, of course, include all of the work done and, therefore, included the work done which was the subject of interim application number 30. In other words, application number 31 rolled up all of the work to be the subject of an interim payment up to that date and therefore included all of the work the subject of application...
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