Severfield (UK) Ltd v Duro Felguera UK Ltd

JurisdictionEngland & Wales
JudgeThe Hon. Mr Justice Coulson
Judgment Date24 November 2015
Neutral Citation[2015] EWHC 3352 (TCC)
Docket NumberCase No: HT-2015-000303
CourtQueen's Bench Division (Technology and Construction Court)
Date24 November 2015

[2015] EWHC 3352 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Rolls Building, London, EC4A 1NL

Before:

The Hon Mr Justice Coulson

Case No: HT-2015-000303

Between:
Severfield (UK) Limited
Claimant
and
Duro Felguera UK Limited
Defendant

Mr Alexander Hickey (instructed by Hawkswell Kilvington LLP) for the Claimant

Mr Adrian Williamson QC (instructed by Freeths LLP) for the Defendant

Hearing date: 10 November 2015

The Hon. Mr Justice Coulson
1

INTRODUCTION

1

Although this is not an adjudication enforcement case, it raises a number of issues, some of them novel, concerning the Housing Grants (Construction and Regeneration) Act 1996 ("the 1996 Act"). In particular, it highlights the potential difficulty of payment provisions under a contract concerned with both construction operations and operations which are excluded by the 1996 Act (sometimes referred to as a hybrid contract), and the particular consequences for such a contract of the notice provisions in sections 110, 110A, 110B and 111 of the Act, and the recent line of authority spelling out the consequences for an employer of failing to serve the notices required by those provisions.

2

In these proceedings, the claimant seeks around £1.4 million by way of summary judgment. They deny that it is of any relevance that, in June 2015, their claim for around £3 million, also pursued by way of summary judgment, and which included the £1.4 million, was refused by Stuart-Smith J. The claimant maintains that the first application failed because it sought to enforce an adjudicator's decision which may have included sums in respect of operations which were excluded by the 1996 Act. The claimant says that it was entitled to discontinue those original proceedings because they were, in effect, adjudication enforcement proceedings which could have led only to a finding that the award was valid or invalid, and would not have led to a detailed valuation of the claim itself. They say that they have now stripped out of their claim for payment any claims for excluded operations, such that, in these new proceedings, they are unarguably entitled to the sum of £1.4 million pursuant to the contract.

3

The defendant argues that the claimant is playing fast and loose with the court's procedures and that these new proceedings are an abuse of process. The defendant also maintains that the new claim has deliberately not been made pursuant to the contract because, if it had been, it would have been met with the necessary employer's notices which would have ensured that no sums were immediately due. The defendant submits that the claimant is not entitled now to substitute the new claim for the old. There are also issues of fact, and the defendant has an additional argument in respect of its counterclaim which suggests that the claimant has already been overpaid.

4

Although I am no doubt as to the answer to this summary judgment application, I have not found all of the points easy. Without the considerable assistance of counsel, the debate would have taken considerably longer. I am very grateful to both of them.

2

FACTUAL BACKGROUND

5

By a contract in writing dated 13 August 2013, the defendant engaged the claimant to carry out the design, supply and erection of steel structures on a site in Carrington, Manchester. The project involved the construction of two power generation plants, each comprising several different structures. It is common ground now that some of this work comprised construction operations pursuant to s.105(1) of the 1996 Act, but that some of the works were not construction operations, because they related to power generation, and were therefore excluded from the provisions of the 1996 Act, pursuant to s.105(2).

6

It is plain that the parties were unaware of this distinction at the time that they entered into the contract. Accordingly, they agreed a payment regime which, although entirely understandable, was not in accordance with Part II of the 1996 Act. The express payment provisions in the contract were as follows:

" 9. PRICE

9.1 The Initial Price of this Contract Is 5,221,145.00 GBP (FIVE MILLION TWO HUNDRED TWENTYONE THOUSAND ONE HUNDRED FORTY FIVE GBP). The final Price of this Contract will be the result of applying the measurements executed by BUYER to the unitary prices indicated In Appendix II. However once the ceiling limit represented by the initial price is reached, a change order will be needed for CONTRACTOR to continue with the performance of the Works and submit further Invoices.

NOTES:

• The final Price is based on the result of the measurements executed about constructive drawing including the weights of connections and bolts.

• The previous unitary Prices should he applicable to the extensions of the Scope of this Contract and they will be based on toe measurements about drawing of Works really executed and agreed with the BUYER. Including the weights of connections and bolts.

9.2 Unless otherwise expressly stated In this Contract, the 'unitary prices are fixed and not subject to modification and include, among others, all the services, direct and indirect costs, industrial benefit, supplies of material, transport to the delivery she indicated in the Contract, packing, travel of the CONTRACTOR's own personnel, use of any equipment necessary for the completion of the Works in accordance with this Contract, including, without limitation, manufacturing and construction equipment both in the workshop and on Site, all the necessary insurances, rights and expenses, as well as all the taxes, duties, tariffs, charges and levies of any kind, or the timely and satisfactory execution of the Scope by the CONTRACTOR, with the sole exception of VAT. Consequently, the CONTRACTOR assumes the whole economic risk with regard to, but not limited to, any modification to the cost of the services and materials, construction equipment and goods, transport, duties, taxes, charges, social insurance, salary reviews or to any other aspect that affects the Scope and that may occur for any reason, unless expressly stipulated otherwise in the Contract.

If in the execution of the Works CONTRACTOR incurs direct loss and/or expenses for which he would not be reimbursed by a payment under any other provision of this Contract because the regular progress of the Works or any part of them has been materially affected by any act of default by the BUYER, the CONTRACTOR may submit a claim to the BUYER. If the CONTRACTOR makes such claim, save where this Contract excludes the operation of this clause, any amounts agreed by the parties of (the direct loss and/or expense thereby caused to the CONTRACTOR shall be taken into account in the calculation of the final Price or shall be recoverable from the BUYER as a debt; provided always that the CONTRACTOR shall:

• Make the claim in accordance to clause 31,

• In support of its claim submit to the BUYER upon request such information as is reasonably necessary to show that the regular progress has been affected.

• Submit to the BUYER such details of the loss and/or expense as the BUYER reasonably requests to enable that direct toss and/or expense to be ascertained and agreed.

11. FORM OF PAYMENT AND INVOICING

11.1 The Scope performed by the CONTRACTOR shall be invoiced in the following way:

Milestone

% of Price

Description

1

100%

By monthly certifications approved by BUYER. With the first invoice CONTRACTOR shall provide BUYER with the retention bond stated in clause 10, and where a certification includes supply of materials held off site the corresponding invoice shall be submitted along with a transfer of ownership as per Appendix VIII

11.2 One (1) original of all the invoices shall be sent to the BUYER's domicile indicated in this Contract, the invoices shall indicate the origin of the supply and the operation carried out to complete the same. The CONTRACTOR shall invoice independently the services performed as part of the Scope described in the present Contract. Payment shall be made on days 5, 15 and 25 of each month by Bank Transfer at 30 days from the reception of the invoice. No payment will be made in case of any nonconformity of the invoice.

11.3 Payments to be made by the BUYER to the CONTRACTOR in accordance with this Contract shall be subject to the CONTRACTOR complying with all its obligations according to the Contract. Furthermore, such payments shall in no case be deemed as the approval and acceptance of the Scope. Therefore, any payments to the CONTRACTOR of the invoices submitted merely constitute advanced payments of the Contract Price, the payment of which is conditional upon the final demonstration of the fitness of the Scope for the purpose foreseen in the Contract.

11.4 The BUYER is entitled to set off any payments owed to the CONTRACTOR with any amount owed by the CONTRACTOR to the BUYER under this Contract.

11.5 All Invoices must compulsorily make express mention of the Contract number, otherwise they will be returned to the CONTRACTOR.

Contract Nr. 8370100105

Internal Cost Code: 8370001-001/5010

The invoices shall be made out and sent to:

DURO FELGUERA UK Ltd

Carrington CCGT Construction Site

Manchester Road 132 – M31 4AY Manchester – UK

England company number: 7889106

VAT No. GB-137233135

For the attention of Ms. Gema Santos

11.6 With the issuance of the first invoice CONTRACTOR shall submit the following information:

• Their names or the name of their business or company.

• Their UTR,

• The partner's name if they're a partnership.

• Their National Insurance number (if you know it) if they're a sole trader.

• The...

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1 firm's commentaries
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3 books & journal articles
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    • Construction Law. Volume II - Third Edition
    • 13 April 2020
    ...North Midland Construction plc v AE&E Lentjes UK Ltd [2009] BLr 574 at [25], per ramsey J; Severield UK Ltd v Duro Felguera UK Ltd [2015] EWhC 3352 (TCC) at [62]– [63], per Coulson J. 281 See also Universal Sealants (UK) Ltd v Sanders Plant & Waste Management Ltd [2019] EWhC 2360 (TCC). 282......
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    • Construction Law. Volume I - Third Edition
    • 13 April 2020
    ...NSWSC 1081 II.9.116 Severield UK Ltd v Duro Felguera UK Ltd [2015] EWHC 2975 (TCC) II.6.80 Severield UK Ltd v Duro Felguera UK Ltd [2015] EWHC 3352 (TCC) II.6.80, II.6.83, II.6.90, II.6.233, II.6.235, III.24.140 Severield UK Ltd v Duro Felguera UK Ltd [2017] EWHC 3066 (TCC) II.7.27, II.7.28......

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