Redwing Construction Ltd v Wishart
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 01 January 2011 |
| Neutral Citation | [2010] EWHC 3366 (TCC),[2011] EWHC 19 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-10424,Case No: HT-10-424 |
| Date | 01 January 2011 |
[2010] EWHC 3366 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Akenhead
Case No: HT-10-424
Samuel Townend (instructed by CJ Hough & Co) for the Claimant
Camille Slow (instructed by Quercus Law) for the Defendant
Hearing date: 2 December 2010
This adjudication enforcement claim raises two issues of interest, the first being whether the dispute decided in a second adjudication had been effectively decided in an earlier adjudication and secondly relating to whether the second adjudicator's correction or amendment to his decision went beyond the correction of a clerical error.
The History and the Contract
The Claimant, Redwing Construction Ltd ("Redwing") was employed as a building contractor by the Defendant to complete a refurbishment of a domestic property at 3, Lyall Mews, London SW1. The refurbishment related to 4 floors of a mews house. The written contract (the "Contract") was in the standard JCT Prime Cost Building Contract form (2006 Revision 1 with amendments). Clause 8.2 was an adjudication clause by which either party could refer any dispute or difference arising under the Contract to adjudication.
Essentially under this Contract Redwing was entitled by Clause 4.1 to be paid the Prime Cost (defined as "the cost of the Works ascertained in accordance with Schedule 1"), the Contract Fee (defined as "the fee referred to in Article 2, being either the Fixed Sum or Percentage Fee specified in the Contract Particulars") and any direct loss and/or expense ascertained under Clause 4.16. The Prime Cost in Schedule 1 included a large number of cost items such as staff on site, materials, plant and subcontractor costs. The Contract Particulars identified the Contract Fee as £3,500 per week. They also identified that the "Estimated Prime Cost" was £723,334.64, a breakdown of which was given in Appendix C; within that estimate was the sum of £98,000 for the Contract Fee. Possession of the Site was to be on 14 July 2008 with the Date for Completion to be 12 December 2008. The Date for Completion was subject to the usual extension of time provision.
A number of variations were ordered. Redwing did not complete the Works by the original Date for Completion. An extension of time was awarded until 31 January 2009. In late March or early April 2009, Mr Wishart took possession of the ground floor. Practical Completion was achieved on 31 July 2009. Redwing submitted applications for extensions of time up to 1 May 2009. These were disputed.
The First Adjudication
By letter dated 20 July 2009, Redwing gave Mr Wishart Notice of Adjudication. Redwing referred to its applications for extension of time and then stated:
"Under Paragraph 1 (3) of the Scheme we are required to give you the following information:
(a) The dispute involves the extension of time awarded by the Contract Administrator in respect of the delays for which the Employer is liable under the Contract. Whilst we have demonstrated entitlement until 1 May 2009 the Contract Administrator has only awarded an extension of time until 31 January 2009 and has only certified part payment of the Contract Fee against this award…
(b) The dispute has arisen in the period between February and June 2009. We do not consider that the Contract Administrator has evaluated our entitlement correctly…
(c) We are seeking the following decisions and/or declarations and/or directions from the Adjudicator:
(i) the award of an extension of time to 1 May 2009, or such other date (s) as the Adjudicator shall determine; and
(ii) that [Mr Wishart] shall pay [Redwing's] Contract Fee in the sum of £3,500.00 per week and/or loss and expense (or such other sum as the Adjudicator shall determine) for the period of the extension of time determined by the Adjudicator within seven days of the Adjudicator's decision (or such other period of the Adjudicator shall determine) without any withholding, set-off or deduction whatsoever…"
Mr Sutcliffe was appointed as adjudicator ("the First Adjudicator").
The Referral which followed was entitled "Application for Extension of Time and Payment of Contract Fee"; it ran to 36 pages. In the "Summary of dispute", at Paragraph 2.1.2 Redwing stated that it had:
"made applications in respect of payment of the Contract Fee £3,500.00 per week for the period of extension claims…Despite the award of an extension of time of seven weeks to 31 st January 2010, the Contract Administrator has only thus far certified payment of Contract Fee for 3 of these 7 weeks."
Much of the Referral is then taken up with the representations as to why Redwing believed that it was entitled to extension of time.
Paragraph 6 which only comprised one page dealt with "Financial Entitlement" and expressly identifies that the financial claim was simply expressed as the number of weeks' extension sought multiplied by the Contract Fee identified in the Contract as £3,500 per week. There was said to be an entitlement to an extension of time of 20 weeks; that multiplied by £3,500 produces a total of £70,000 from which three weeks' worth at £3,500 is deducted because it had been paid. There was no hint or suggestion that Redwing were seeking any adjustment of the rate per week in relation to the Contract Fee. The "Redress" sought was in the same terms as in the Notice of Adjudication.
Mr Wishart's written Response dated 6 August 2009 was essentially a legal one in relation to the alleged financial entitlement (Paragraphs 49 to 55). He argued simply that as a matter of legal interpretation, the Contract Fee was fixed at £77,000 calculated by reference to the original contract period of 22 weeks multiplied by the rate of £3,500; as £10,500 more than this had been paid, he asked for it to be returned or credited to him. He made it clear that if there was entitlement over and above the fixed fee it would be by way of loss and expense contractually recoverable under the contract, but, as no claim had been made for the loss and expense, the adjudicator had no jurisdiction to consider any such entitlement (see Paragraphs 52 and 53).
On the 20 August 2009, the First Adjudicator faxed a note to the parties in the following terms:
"1. I have been reading the conditions of contract concerning the Fixed Fee closely. I note that the percentage threshold (Contract Particulars, 4.3) is 0%. At first sight I took this to mean that there would be no adjustment to the Fixed Fee whatever the rise or fall and I suspect that this is what the parties intended and have operated to date. However, if I am reading the conditions of contract correctly it means that any difference between the estimated prime cost and the actual prime cost will generate a pro rata adjustment to the Fixed Fee.
2. In interpreting the Contract Fee entry in the contract particulars I am reading it in the context of the whole of the conditions.
3. I have some difficulty with the concept that the Fixed Fee would be adjustable twice, once for additional time and once additional cost.
4. Contrary to my direction this morning, may I have a brief submission from each side on:
a. My reading of the conditions of contract and
b. If I am right, was this the intention of the parties?"
This provoked a very firm response from Mr Wishart's solicitors on 21 August 2009 (a Friday):
"Mr Wishart's submissions are as follows:
1. Redwing have not advanced an argument that they are entitled to an adjustment of the Contract Fee by reference to the Scope of Works in any correspondence, in the Notice of Adjudication, in the Referral or in any subsequent submissions including oral submissions in the meeting on 14 th when their claim in respect of the Contract Fee was discussed at length.
2. In the circumstances, consideration of an adjustment to the Contract Fee on this basis does not fall within your jurisdiction in this adjudication and Mr Wishart does not agree to extend your jurisdiction in this respect. The absence of reference to this argument in the Notice of Adjudication places this point clearly outside your jurisdiction.
3. Further and in the alternative, the failure to raise this matter in correspondence prior to the commencement of the adjudication means that no dispute on this issue has crystallised and the matter cannot be the subject of adjudication at this time.
4. Further and in the further alternative, the absence of any submission by Redwing on this point makes it clear that Redwing do not consider that the contract has the effect of entitling them to an adjustment of the Contract Fee in respect of any increase in the Scope of Works. Furthermore, their silence on this point is clear evidence that they accept that neither party intended that the Contract Fee should be adjusted on this basis…"
They went on to make relatively brief points about the merits of the point but repeated their primary submission contained in Mr Wishart's Response.
There was no response by Redwing either to the First Adjudicator's faxed note and no challenge as such to the jurisdictional objections made by Mr Wishart's solicitors.
The First Adjudicator then issued his 12 page decision on the following Monday, 24 August 2009. In essence he decided that Redwing was entitled to an extension of time but only to 6 March 2009 and, with regard to the Contract Fee, Redwing was entitled to payment of the Contract Fee on the basis of the number of weeks to the Date of Completion as extended. Thus the total extended contract period was 34 weeks which produced a total Contract Fee of £119,000, 34 weeks at £3,500. From that figure, £87,500 (representing 25 weeks @ 3,500) was deducted because it had been previously paid. The net figure plus...
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