Savoye and Savoye Ltd v Spicers Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 15 December 2014 |
| Neutral Citation | [2014] EWHC 4195 (TCC) |
| Docket Number | Case No: HT-14-311 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2014] EWHC 4195 (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-14-311
Anneliese Day QC (instructed by Reed Smith LLP) for the Claimant
Jonathan Acton Davis QC (instructed by Olswang LLP) for the Defendant
Hearing date: 3 December 2014
The Claimants, Savoye (a French company) and Savoye Ltd (a related British company) (together "Savoye") seek to enforce an adjudicator's decision in its favour against Spicers Ltd ("Spicers"). The only issue is whether the underlying contract between the parties was a construction contract involving "construction operations". This issue revolves around the application of the proper meaning of the term "construction operations" in Section 105 of the Housing Grants, Construction and Regeneration Act 1996 (" HGCRA") in the context of the facts and the contract between the parties.
Factual Background
Spicers is, in a substantial way, in the business of distributing office supplies and equipment. It has a number of warehouses, including one at Smethwick, West Midlands. At Smethwick, its business is mainly storing a very large number and range of products which have come from wholesalers, manufacturers and importers for distribution to other wholesalers, albeit that some of the products are provided direct by Spicers to clients.
By a written contract dated 3 January 2013 ("the Agreement"), Spicers engaged Savoye to design, supply, supervise and commission a new conveyor system at its existing factory site in Dartmouth Road, Smethwick, West Midlands. Spicers had invited Savoye amongst others to tender on 11 July 2012 and, by its Proposal (12-P-049 Rev 7), Savoye submitted its tender which was accepted. Clause 2.9 contained an express agreement "that the Equipment and Services to be provided by [Savoye] hereunder are exhaustively defined in the Agreement and Proposal, the provision of any other item necessary for the performance of the Agreement being under Spicers' responsibility". Clause 2.1 required Savoye to "supply the Equipment and the Services in accordance with the Agreement". The Contract Price was identified in Clause 5.1 (a) as £2,370,801. It is, rightly, common ground that Savoye was required to install the Equipment, Clause 6.5 identifying that when "the Equipment has been delivered and installed in accordance with the Agreement, and has passed all required inspection and testing, it will be accepted by Spicers". There were provisions requiring Savoye to rectify defects in or damage to the Equipment and Services. Clause 21 provided for dispute resolution with senior management first to discuss the matter to resolve disputes, Clause 21.2 then providing as follows:
"In the event that no settlement is reached under clause 21.1 and if the Agreement is a "construction contract" as defined in Section 104 of the [HGCRA] either party may refer any dispute or difference arising in relation to any matter under the Contract for adjudication, in which case the adjudication provisions of the TeCSA Adjudication Rules…shall apply…"
Otherwise, the Agreement was by Clause 22.1 "subject to the non-exclusive jurisdiction of the English courts".
The tender Proposal, incorporated into the Agreement, was a 50 page document which contained layouts both of the ground floor and a smaller mezzanine floor at the factory. It is clear that the mutual anticipation was that the Equipment to be installed would cover a very substantial part of both floors. What was intended to be provided was "an automated conveyor system for the order fulfilment of office products" (Page 3/50 of the Proposal). The same page identified that as part of a programme of improvements to its operations network:
"Spicers is developing its site at Smethwick in two ways:
Firstly through increasing the storage capacity of the site by building a warehouse extension at the back of the existing building.
Secondly, by increasing the speed and throughput capability of the site's conveyor systems through modernisation & replacement. This development is essential to facilitate the Smethwick site taking on additional activity."
The extension to be attached to the existing warehouse was to be built by others before Savoye started its installation and the installation to be provided by Savoye was in the existing warehouse building. To some extent, existing shelving remained to be used by Spicers. Once the new extension was built, much of the product that was in the existing building was to be taken out and stored in new high racking in the new extension.
The existing warehouse into which Savoye was to put its installation was a large rectangular open space warehouse (albeit with some offices and reception areas); the open space was (judged by eye) approximately 125m by 175m and there was, broadly over the middle area, a substantial mezzanine floor. That mezzanine floor comprised steelwork with substantial chipboard floor decking and there was extensive racking on that floor. The ground floor was concrete. A reasonable description of the installation to be provided by Savoye is as follows:
(a) The conveyor system was to be automated and computer-controlled so that an order from a customer could be relayed into the system, creating initially a cardboard carton to be forwarded on to the conveyor system, marked with a specific bar code which would then be read at a number of points along the conveyor line, directing it to those parts of the conveyor system where the particular goods which were to go into the carton were located. Once the goods had been placed, manually by workers, into the carton, the carton would be automatically directed towards the end of the conveyor system where a lid would be put on it and labels attached, whence it would be directed out to loading bays and onto lorries.
(b) The conveyor system itself was, on the ground floor, to run in three very long loops; on each loop, one side is referred to as the "picking" side and the other the "replenishment" side. This is explicable because the workforce fulfilling the orders would be on the picking side, placing the required items into the passing cartons, having taken them from racks above the conveyor line; the overhead horizontal part of the racking passed over the conveyor line to the other side where the goods could be replenished by other workers on the replenishment aside. The three loops, although long and extensive, simply housed a wide variety of different items of merchandise.
(c) The three ground floor conveyor loops at one end were located about 1m from the ground but at the end adjacent to the new extension warehouse the metal framework on which they were located was raised up to 2m or possibly a little more as each loop came around from the picking side to the replenishment side.
(d) The conveyor system on the ground floor was also connected by conveyors which went up to the mezzanine floor through an aperture created for the purpose and it then ran virtually the full length of the mezzanine floor. At this level, the cartons could be loaded with, what I understood to be, more "high end" or valuable items. Once the carton had been loaded on that level, the conveyor system took it down to the ground floor.
(e) In addition to the actual conveyor lines, there were substantial and/or important other pieces of equipment. These were, principally:
(i) The PAC 600 and ID Pac which are large and small carton erectors, located at the beginning of the conveyor lines. They rest on the floor under their own weight. The PAC 600 belonged to Spicers but it had to be removed by Savoye and substantially refurbished before being returned to the site; it needed either one 5 ton or two 2.5 ton capacity machines to move it and, I assume therefore that its weight was approaching 5 tons. It was about 8m long, 2m wide and 3m high. The ID Pac was some 4–6m long, 2m wide and 2m high and, I infer, weighed about 3–4 tons. Both were connected to the overall system by compressed air, electrical power and IT connections.
(ii) The routing label printer and applicator was located near the start of the conveyor system and is connected by compressed air, electrical and data feed lines. It rests under its own weight, its structure being broadly in the form of a tripod, which was not bolted down to the floor.
(iii) There are two weight scales. They are part of the conveyor line, having conveyor rollers on them and weigh the empty and later fuller cartons as they pass towards and from the picking lanes. They are connected by electrical and data lines to the overall system. The weighing provides a cross check as to whether all or all the right items have been put into a given carton.
(iv) The "Jivaro" machines are located towards the end of the conveyor lines and places lids automatically onto the now filled cartons. These are not, as such, fixed to the ground, resting on the ground under their own weight, but they are connected with electrical, and data lines into the overall system. They are about 6 to 7m long, 2 m high and, at their widest, about 3m wide. They are likely to weigh several tons each and, as the evidence indicated, they could not readily be moved without a significant amount of dismantling first.
(v) There are logo printers in the line after the Jivaro machines which are connected by power and data lines into the overall system. They are not, as such, bolted to the floor, although they have to be located right beside the conveyor lines because, as their description suggests, they have a facility to print (with quick drying ink) onto the cartons.
(vi) Finally, there is a shipping label printer which prints and attaches despatching information on to the...
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