Robin Ellis Ltd v Vinexsa International Ltd
| Jurisdiction | England & Wales |
| Judge | HH Judge Thornton QC |
| Judgment Date | 13 June 2003 |
| Neutral Citation | [2003] EWHC 1352 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 13 June 2003 |
| Docket Number | Case Number: HT 03/19 |
[2003] EWHC 1352 (TCC)
In The High Court Of Justice
Queen's Bench Division
Technology and Construction Court
His Honour Judge Thornton Qc.
Case Number: HT 03/19
In The Matter Of The Arbitration Act 1996 and In The Matter Of An Arbitration
Representation
Mr William Godwin appeared for the claimants instructed by Clarks, Great Western House, Station Road, Reading, Berkshire, RG 1 1JZ (Ref: DAR/JRC).
Mr Timothy Higginson Appeared for the defendant instructed by Mischon de Reya, 12 Red Lion Square, London, WC1R 4QD (Ref: 48/KJS/9566??/cam).
Subject Matter
Determination clause 7 of the JCT IFC 84 form of contract.
Decision
The appeal is dismissed. The architect has no power to issue a second clause 7.2.1. default notice following a repeat of a specified default. The employer's determination notice under clause 7.2.3. was consequently valid.
This judgment was made in writing and was handed down by the court. For the purposes of paragraph 5.12 of 52PD-19 (Practice Direction —Appeals), this written judgment is to be taken as replacing an official recording and approved transcript of the judgment.
Introduction
This is an appeal brought under section 69(1) of the Arbitration Act 1996 from the award of an Arbitrator, Mr Peter Aeberli, a barrister, in a dispute arising out of a construction arbitration. The arbitrator published his award on two issues of law on 18 December 2002 and a corrected award, correcting matters of inconsequential detail, on 29 January 2003.
The appeal has been subject to an unfortunate procedural history. The appellant, the contractor under the contract and the respondent in the arbitration, wished to appeal a question of law arising out of the award. It issued and served on 15 January 2003 an arbitration claim form. This was placed before me and, without allowing the respondent, the employer under the contract and the claimant in the arbitration, the 21 days from the service of the arbitration claim form provided for by PDCPR Part 62 to file evidence in opposition, I granted the appellant permission to appeal pursuant to section 69(2)(c)(ii) of the Arbitration Act 1996. In other words, I concluded that the question of law raised by the appeal was of general public importance and the decision of the arbitrator raised a serious doubt as to its correctness. No objection was taken by the respondent that it had had no opportunity to serve evidence before that paper determination had been made.
The appeal was then heard on 7 March 2003 at which it became clear that the respondent wished to mount a significant challenge to the granting to the appellant of permission to appeal, in part based on evidence that it had filed before the hearing but long after my granting of permission had been communicated to the respondent. At my suggestion, given the denial of an opportunity to file that evidence and mount those objections before permission to appeal had been granted, I adjourned the hearing to allow the respondent to apply: (1) out of time, to set aside the permission to appeal granted to the appellant; (2) to set aside the permission to appeal granted to the appellant and, (3) if I set that permission aside, for the permission to appeal application to be reconsidered and dismissed.
The parties were ordered to exchange further submissions directed to these procedural questions after which I directed that I would hand down a written judgment dealing both with the procedural questions and, if the appeal survived these attacks on its being mounted, with the question of law. In addition to the service of the further submissions, I was provided for the first time with a complete set of the contract documents which included the JCT Intermediate Form of Contract, IFC 84, which had been incorporated into the contract. This contains within the arbitration clause a provision, clause 9.5, which reads as follows:
"The parties hereby agree and consent pursuant to sections 1(3)(a) and 2(1)(b) of the Arbitration Act 1979 that either party (a) may appeal to the High Court on any question of law arising out of an award made in an arbitration under this Arbitration Agreement ?.
Although the clause refers to the repealed Arbitration Act 1979, the replacement Arbitration Act 1996, in section 69(1), provides an equivalent section to the effect that permission to appeal any question of law arising out of an award is required "unless otherwise agreed by the parties", it has been held in a number of cases that this form of words, which is common to the JCT family of standard contracts, fulfils the necessary agreement referred to in section 69(1) even in cases where the contract refers to the Arbitration Act 1979 and the arbitration and subsequent appeal are subject to the replacement 1996 Act (see How Engineering & Services Ltd v Lindner Ceiling and Floors Plc, unreported, 17 May 1995, Judge Thornton QC; Panatown Ltd v Alfred McAlpine Ltd 58 Con LR 46, Judge Thornton QC; Vatcroft (Contractors) Ltd v Seeboard Plc, 78 BLR 138, Judge LLoyd QC; Taylor Woodrow Civil Engineering Ltd v Hutchinson Development Ltd (1999) ADRLJ 83, Clarke J. and Fence Gate Limited v NEL Construction Limited, 82 Con LR 41, Judge Thornton QC). The Fence Gate case involved the same JCT contract conditions as apply to this case.
It follows that permission to appeal is not required although both parties believed that permission was required and have sought to follow the procedure for obtaining, or resisting an application for, permission to appeal. Since there is such clear authority supporting my conclusion that permission to appeal is not required, I have decided to proceed to determine the appeal on the basis of the full submissions that I heard without adjourning the appeal for further procedural submissions and without affording an opportunity to the parties to consider whether permission to appeal was in fact required. However, I will formally set aside the permission that I granted since this was a nullity and had been granted in error in the light of clause 9.5 of the contract conditions.
Question of Law
The question of law arises out of the determination of the employment of the appellant in disputed circumstances. The construction contract in question involved the refurbishment of two flats in Mayfair, London, W1. The arbitrator, in the second of the issues he decided, concluded that the contract between the parties crystallised in the copy of IFC 84 that the architects, JBA, had sent to the appellant on 11 July 1998. That contract required refurbishment work to be carried out in the Contract Sum of ?81,580 between 5 May and 24 August 1998. The respondent determined that employment by a notice dated 2 September 1998 pursuant to clause 7.2.3. and the question of law that arises, being part of the third of the three issues determined by the arbitrator, is whether that determination was validly carried through in accordance with the terms of the contract.
The question of law being appealed, as formulated by the appellant, is:
"Whether, the respondent's architect having on 25 August 1998 given the appellant notice of default pursuant to clause 7.2.1. of the IFC 84 form of contract, the respondent was nevertheless able to determine the appellant's employment under the contract pursuant to clause 7.2.3 by a notice thereunder dated 2 September 1998?".
The same question was raised and answered by the arbitrator. His answer was that the respondent was able to determine the appellant's employment as and when it did but to understand his reasoning, it is first necessary to summarise the relevant factual background and consider the relevant contractual terms.
Factual and Contractual Background
The relevant factual background can be shortly summarised and is helpfully and clearly set out in the arbitrator's reasons. The parties had not succeeded in entering into a signed contract and the lengthy history of the pre-contract exchanges between the parties and their representatives had to be examined in detail by the arbitrator who, in the light of his findings about these exchanges, concluded, as I have already stated, that a contract had come into being by 11 June incorporating the JCT IFC 84 form of contract. These exchanges and their aftermath led to a difficult and strained relationship between the parties and, on 22 July 1998, the appellant removed its labour from the site.
The response from the architect was to issue a default notice under clause 7.2.1. on 24 July 1998 informing the appellant that it had without reasonable cause wholly suspended the carrying out of, and had failed to proceed regularly and diligently with, the Works in that it had insufficient operatives on site at the relevant times.
This notice was the first of two notices envisaged by the default and determination clause 7 of JCT IFC 84 the relevant part of which reads as follows:
"DETERMINATION BY THE EMPLOYER
Default by Contractor
7.2.1. If, before the date of Practical Completion, the Contractor shall make a default in any one or more of the following respects:
(a) without reasonable cause he wholly or substantially suspends the carrying out of the Works, or
(b) he fails to proceed regularly and diligently with the Works, or ?.
the Architect/the Contract Administrator may give to the Contractor a notice specifying the default or defaults (the 'specified default or defaults').
7.2.2. If the Contractor continues a specified default for 14 days from the receipt of the notice under clause 7.2.1 then the Employer may on, or within 10 days from, the expiry of that 14 days by a further notice. to the Contractor determine the employment of the Contractor under this Contract. Such determination shall take effect on the day of receipt of such further notice.
7.2.3. If
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...J, Fence Gate Limited v NEL Construction Limited, 82 Con LR 41, Judge Thornton QC and Robin Ellis Ltd v Vinexsa International Ltd [2003] EWHC 1352 TCC, unreported, 13 June 2003, Judge Thornton QC. 2 The appeal arises out of a contract between the claimants, as employers, and the respondent,......