Rmc Building & Civil Engineering Ltd v UK Construction Ltd

JurisdictionEngland & Wales
JudgeMr Justice Edwards-Stuart
Judgment Date15 February 2016
Neutral Citation[2016] EWHC 241 (TCC)
CourtQueen's Bench Division (Technology and Construction Court)
Date15 February 2016
Docket NumberCase No: HT-2015000433

[2016] EWHC 241 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Edwards-Stuart

Case No: HT-2015000433

Between:
Rmc Building & Civil Engineering Limited
Claimant
and
UK Construction Limited
Defendant

Mr James Bowling (instructed by Fenwick Elliott) for the Claimant

Mr David Fearon (instructed on a direct access basis) for the Defendant

Hearing dates: 3 rd February 2016

1

RMC Building and Civil Engineering Ltd ("RMC") is a ground works contractor. UK Construction Ltd ("UKC") is a main contractor. By a sub-contract, the terms of which are in issue, UKC engaged RMC to supply labour, plant and materials for the installation of ground works and drainage for a housing project at Hitchin Road, Arlesley, Bedforshire. This is an application by RMC for summary judgment to enforce the decision of an adjudicator made on 18 November 2015.

2

On 6 May 2015 RMC submitted an application for payment (Application No 8) in which it claimed £248,053. No pay less or other notice was served by UKC and so RMC claimed that it was entitled to payment of this sum under the provisions of the Housing Grants, Construction and Regeneration Act 1996 (as amended) ("the Act") and the Scheme for Construction Contracts (as amended) ("the Scheme") which became terms of the sub-contract. Apart from a small payment on account, the sum stated in the application was not paid. After four or five months of fruitless negotiation RMC issued the Notice of Adjudication. As a result of the payment on account the sum claimed in the adjudication was reduced to £216,129.

3

UKC raised various challenges to the adjudicator's jurisdiction but he rejected them and continued with the referral. By a Decision dated 18 November 2015 the adjudicator ordered UKC to pay the sum claimed, together with further sums by way of costs and expenses and interest.

4

Mr James Bowling, instructed by Fenwick Elliott, appeared for RMC and Mr David Fearon, instructed on a direct access basis, appeared for UKC.

The facts in outline

5

In August 2014 RMC was invited by UKC to tender for the groundworks package. On 11 September 2014 RMC submitted a tender, which was subsequently revised during the following month. On 14 October 2014 UKC issued an order by e-mail to RMC for the groundworks package on the basis of the revised tender. The sum stated in the e-mail was £383,119 for the works stated in the revised tender, but certain other work in respect of roads and external works (such as foundations, storm drainage and foul water) were to be paid for on the basis of rates which had yet to be agreed. On the face of it, therefore, this appeared to be an order to carry out certain works for a lump sum together with other works that were to be measured and priced at rates that were yet to be agreed.

6

On the following day it appears that there came into existence a document that was described as a Letter of Appointment. It was expressly stated to be "Subject to Contract". UKC asserted that this document formed the basis of the contract between the parties, but neither during the adjudication nor since has it provided any evidence that the document was actually sent to RMC. RMC denies categorically that it ever received it.

7

In addition, UKC faced a further difficulty presented by the fact that this document, if sent, was stated to be subject to contract and appeared to be incomplete. In the context of this application the relevance of the Letter of Appointment was that it prescribed TecSA as the adjudicator nominating body. Since the adjudicator was not nominated by TecSA, UKC submitted that the adjudicator had not been properly appointed and therefore had no jurisdiction.

8

Following the issue of the order of 14 October 2014, RMC carried out the work —most of which, it contends, was completed in February 2015, or at least completed so far as RMC had been able to in the absence of further instructions or information. UKC has alleged that RMC wrongly left site on 22 April 2015 and thereby repudiated the contract.

9

As I have already said, on 6 May 2015 RMC issued what has become known as Application No 8. In June 2015 Mr Andrew Brazier replaced Mr Abbott, who had until then been responsible for the management of the sub-contract on behalf of RMC. The person acting on behalf of UKC was a Mr John Hallam, who is a Quantity Surveyor engaged by UKC (as I understand it, he is not an employee of the company).

10

It seems that Mr Brazier found Mr Hallam a difficult person with whom to deal. Mr Brazier was naturally anxious to secure payment of at least some of the sum claimed in Application No 8, but he had difficulty in tying Mr Hallam down to a figure. Mr Hallam, for his part, appears to have taken the view that the sum claimed by RMC had been grossly overstated and he was concerned to establish a correct figure for the value of RMC's work up to 30 April 2015. One particular bone of contention was the quantity of spoil that had been removed by RMC. It was taken away in lorries and Mr Hallam's consistent position was that the quantities claimed by RMC were not supported by appropriate tickets for the lorries. An aggravating feature of this dispute may have been the fact that Mr Hallam took the view that the average load for a lorry was 8.5 m 3, whereas Mr Brazier contended that the capacity of the lorries was 15 m 3 and that the average load taken by Mr Hallam was too low. It seems that the tickets simply evidenced the movement of a vehicle and did not provide any information as to the extent to which it was loaded. For present purposes nothing turns on this aspect of the dispute, but it may go some way to explaining why the negotiations in respect of RMC's account were so fraught.

11

A point which lies at the heart of the present dispute arises out of the fact that UKC put before the adjudicator some of the e-mail exchanges between the parties during the subsequent negotiations over Application No 8 that took place between June and September 2015. RMC contends that it should not have done so because these documents were all without prejudice, being evidence of negotiations to resolve a dispute. Since the dispute was not resolved, RMC submits that none of the documents, and certainly not those which are said to contain admissions against interest by RMC, should have been put before the adjudicator. Further, RMC submits for the same reason that they cannot be relied on for the purposes of this application. I will revert to this issue later.

12

As I have already indicated, by the end of September RMC's patience had run out and it issued a Notice of Adjudication on 30 September 2015.

13

By an order dated 5 January 2016 the hearing of RMC's application was fixed for 3 February 2016. On 29 January 2016, a Friday, UKC issued a claim form under Part 8 for declarations that:

(1) RMC's claim cannot exceed £85,450.26 (being the sum that Mr Brazier agreed to accept by an e-mail of 1 September 2015); and/or

(2) that the true value of RMC's account leads to a net payment due of £39,752.29 (being Mr Hallam's valuation of 28 August 2015).

14

As I understand it, an unsealed and undated copy of this claim form was sent by e-mail to RMC late on the afternoon of Friday, 29 January 2016. Mr Fearon indicated in his skeleton argument (dated 2 February 2016) that he would be applying to have this hearing adjourned so that the issues raised by this application could be heard and determined at the same time as UKC's Part 8 claim. For the reasons given later in this judgment, I refused that application.

The issues

15

Mr Bowling summarised the issues that arose on this application as the following:

(1) Whether or not the adjudicator had been appointed by the wrong nominating body.

(2) Was there a dispute at the time when RMC issued its Notice of Adjudication, and was Application No 8 withdrawn?

(3) Whether the adjudicator exceeded his jurisdiction by awarding a sum that was in excess of the "cap" imposed by paragraph 2(4) of Part II of the Scheme?

(4) Whether RMC's application for summary judgment should be adjourned in order to be heard at the same time as UKC's Part 8 claim? If not, whether there should be a total or partial stay of enforcement of any judgment?

(5) Whether or not there had been a repudiation of the contract by RMC which was accepted by UKC, thereby discharging it from performance of any further obligations under the contract?

16

So, as far as issue (1) is concerned, Mr Fearon very realistically accepted that if RMC's application for summary judgment was to be heard today, this was not a point upon which he could rely because there was no evidence before the court to show that the Letter of Appointment had ever been sent to RMC. Accordingly, I find that TecSA was not the adjudicator nominating body and so the adjudicator was properly appointed. Accordingly, this ground of challenge to his jurisdiction falls away.

17

I will take the remaining issues in turn.

Was there a dispute and was application No 8 withdrawn?

18

Before I consider this issue I need to deal with the important preliminary point raised by Mr Bowling, which is this: were the communications upon which UKC relies made without prejudice and therefore not admissible in evidence?

19

Mr Fearon's submission was that, whilst Mr Brazier, of RMC, may have been attempting to negotiate a figure for the value of the work done to 30 April 2015 (which I understood him to accept would attract without prejudice privilege), Mr Hallam, of UKC, was not in the business of negotiating anything but instead was seeking to...

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