Rmp Construction Services Ltd v Chalcroft Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeMr Justice Stuart-Smith
Judgment Date21 December 2015
Neutral Citation[2015] EWHC 3737 (TCC)
Date21 December 2015
Docket NumberCase No: HT-2015-000387

[2015] EWHC 3737 (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 Stuart-Smith

Case No: HT-2015-000387

Between:
Rmp Construction Services Limited
Claimant
and
Chalcroft Limited
Defendant

Mr William Webb (instructed by Birketts LLP) for the Claimant

Mr Ben Pilling QC and Mr Alexander Wright (instructed by DAC Beachcroft) for the Defendant

Hearing dates: 14 December 2015

Mr Justice Stuart-Smith

Introduction

1

The Claimant ["RMP"] is a groundworks subcontractor which carried out works for the Defendant ["Chalcroft"] in late 2014 and 2015. A dispute arose about payment, which RMP referred to adjudication. By a decision made on 10 November 2015 the Adjudicator found in favour of RMP, declaring that RMP was entitled to be paid £258,760.67 plus VAT and the Adjudicator's fee. When Chalcroft did not pay the awarded sums, RMP issued these proceedings on 17 November 2015 and now brings an application for summary judgment to enforce the award.

The Factual Background

Preliminary

2

The parties are agreed that RMP carried out its works pursuant to a construction contract, within the meaning of s. 108 of the Housing Grants, Construction and Regeneration Act 1996 ["the Act"]. They are not agreed about how that contract was formed. RMP says it was formed by an email sent to RMP by Chalcroft on 5 December 2014 at 16:45, which accepted an offer made by RMP. Chalcroft says it was formed either (a) by a Letter of Intent on 8 December 2014, or (b) by the Letter of Intent taken together with a subsequent exchange of emails on 18 December 2014, or (c) by the placing and subsequent acceptance of a sub-contract order on 13 April 2015. It is Chalcroft's case that, if the contract was formed by (or including) the Letter of Intent or by (or including) the sub-contract order, the contract incorporated a standard form of JCT contract wording.

3

Although it will be necessary to describe the various suggested routes by which the construction contract was formed, there are two features of the contractual case that are central to the arguments on this application. First, whatever route applies, the Scheme for Construction Contracts as laid down in the Scheme for Construction Contracts (England and Wales) Regulations 1998 ["the Scheme"] applies and no adjudicator nominating body was specified by the parties. Thus, whichever is the correct contractual analysis of the construction contract, the procedure for appointing the adjudicator was the same, being that laid down by the Scheme. The Adjudicator was appointed in accordance with the Scheme.

4

The second feature of the contractual case is that, if RMP's interpretation is correct, it is common ground that Chalcroft did not serve a pay less notice in time, with the result that the Adjudicator's conclusion on RMP's entitlement would have been correct. However, it is also agreed that if one of Chalcroft's interpretations of the substantive obligations imposed by the applicable contractual arrangements were right, it is at least reasonably arguable that a pay less notice sent on 26 August 2015 was valid and in time, and the Adjudicator's conclusion on RMP's entitlement would have been wrong.

5

These two features give rise to RMP's primary argument in the application. RMP submits that, once it is acknowledged that the Adjudicator would have had jurisdiction and would have acquired jurisdiction by the same procedural route whichever contractual interpretation is correct, the fact that different contractual interpretations may have led to different substantive outcomes is irrelevant. RMP submits that, in such circumstances, the Adjudicator was validly appointed and if, which is disputed, he misinterpreted the substantive contractual provisions so as to come to an incorrect answer, that is no bar to enforcement of his decision. This raises an important point on which no directly applicable authority has been identified.

6

The parties raise subsidiary arguments, as a result of which it is necessary to outline the various contractual interpretations in more detail. In particular, RMP submits that Chalcroft's proposed routes are not reasonably arguable.

The 5 December 2014 Emails

7

The contracting process was generally fairly informal, which is a reflection of the size of the two businesses and the fact that the individuals concerned knew each other: Mr Saggers, the commercial manager at RMP, had worked for Chalcroft in the past and RMP had previously done a very good job for Chalcroft on a smaller project. During November and into early December 2014 negotiations were conducted for the groundworks package for the construction of a Shell service station, which formed the main works package, and for other smaller items of work which are not relevant here. In the course of negotiations, as would be expected, the parties discussed price, time for payment and retention percentages. On 21 November 2014 RMP provided a priced bill of quantities for the main package in the sum of £935,671.01. On 3 December 2014 Mr Saggers sent Chalcroft a revised bill of quantities/ price breakdown, now in the sum of £720,121.52, and held out the prospect of offering a discount for improved payment terms.

8

At 12:26 on 5 December 2014 Mr Saggers asked for an update, to which Mr Campbell of Chalcroft replied by asking "what level of LOI would you require to start up, whilst we are agreeing the overall full value LOI?" Mr Saggers replied at 13:10 that "… [r]egarding LOI its not my preferred route … ." In reply to Mr Saggers' 13:10 email, Mr Campbell explained at 13:31 that Chalcroft was subject to a full value Letter of Intent from its employer and had placed most of the packages on that basis. At 15:06 Mr Campbell sent Mr Saggers an adjusted price breakdown (omitting some items that had previously been included) in the sum of £524,910.01 and wrote "Trying to keep the same payment terms as agreed at 28 days from main valuation date, can you see what percentage you could do to secure the works based on the attached."

9

It is evident that Mr Campbell and Mr Saggers then spoke and agreed a 3% discount because Mr Campbell then sent the email, which is relied upon as a contractual document by RMP, at 16:45 in which he said:

"It is my intention to place the order for the agreed value as attached £509,162.71 (which includes 3% discount as agreed), I will raise the LOI for this value on Monday, as it shall take me some time to pull together, I would like to see some meaningful works happen next week if possible.

Can you advise on a short term programme to attach the works hard prior to Christmas, can you liaise … to make sure we get some good work in prior to the Christmas break."

10

The email attached a further copy of the bill of quantities/breakdown in the sum of £524,910.01 with an additional page effecting the 3% discount to bring the total down to £509,162.71. In its Referral Notice in the adjudication, RMP described the contractual effect of this email as follows:

"RMP provided its tender on 21 November 2014(15:19). Negotiations then took place between the parties and on 5 December 2014, Chalcroft accepted RMP's offer by way of email at 16:45. This confirms the agreed value for the Works at £509,162.71. No terms were agreed between the parties, save for the scope of the Works and the contract sum."

11

At this stage it is sufficient to note that the Adjudicator accepted this analysis in a non-binding ruling on jurisdiction, which he attached as an Appendix to his adjudication award. He concluded that the email confirms that the parties had reached agreement on the scope, price and discount for the works and that it represented an instruction to get on with the works. The Adjudicator rejected Chalcroft's submission, repeated in these proceedings, that the 5 December 2014 email merely states the writer's intention to issue a Letter of Intent on the following Monday (8 December) and, at some point thereafter, to issue a formal order. It is Chalcroft's submission (as it was before the Adjudicator) that the email cannot reasonably be construed as an acceptance of any pre-existing offer, or as an offer to contract in itself.

The Letter of Intent

12

Chalcroft relies upon a Letter of Intent dated 8 December 2014 as its first alternative source of contractual obligations. Mr Saggers, in a witness statement for these proceedings, says that RMP did not receive the letter of intent; and RMP draws attention to the fact that, where all other relevant documents were sent by email (whether or not they were also sent by post), it is Chalcroft's case that the Letter of Intent was sent by post only. Chalcroft's evidence on the point for this hearing is extremely thin. There is no direct evidence from Mr Campbell. Ms Stratton, who is Chalcroft's contracts manager, says in her witness statement that "the letter of intent was then firmed up by Stuart and was sent out by Stuart on the morning of Monday 8 December 2014 to RMP's Norwich office for the attention of Ben Saggers." Her source of information or knowledge is not stated and is not self-evident. The reference to sending it out on the morning of Monday 8 December does not obviously fit with the assertion that it was sent by post, though it could carry that meaning.

13

The Court cannot on this application conduct a mini-trial or reach a concluded view on whether the Letter of Intent was sent by Chalcroft or received by RMP; but these evidential considerations are important because Chalcroft necessarily starts its submissions on the Letter of Intent by...

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