Mi-Space (UK) Ltd "Mi-SPACE" v Bridgwater Civil Engineering Limted "BCE"
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwards-Stuart |
| Judgment Date | 20 November 2015 |
| Neutral Citation | [2015] EWHC 3360 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2015-000216 |
| Date | 20 November 2015 |
[2015] EWHC 3360 (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 Edwards-Stuart
Case No: HT-2015-000216
Mr. Rupert Choat (instructed by TLT LLP) for the Claimant
Ms. Chantal-Aimee Doerries QC (instructed by Foot Anstey LLP) for the Defendant
Hearing dates: 1 st & and 2 nd October, and 6 th November 2015
Introduction
This is a judgment in two sets of proceedings. The claimant in the first action is Bridgwater Civil Engineering Ltd ("BCE") and the defendant is Mi-Space (UK) Ltd ("Mi-Space"), a company in the Midas group. BCE's claim in the first action is to enforce the decision of an adjudicator dated 8 May 2015 by which he ordered Mi-Space to pay BCE the sum of £346,177.54 (plus VAT) by 15 May 2015. That sum was not paid.
The claimant in the second action is Mi-Space. In that action it seeks a declaration that BCE's claim for payment that gave rise to the referral to adjudication was settled by an exchange of e-mails between the parties on 3 March 2015 or, alternatively, by that exchange and the conduct of the parties during the remainder of that week consisting of, on the part of BCE, returning to site following a suspension of work and, on the part of Mi-Space, paying the sum that was agreed in the exchange of e-mails.
In effect, therefore, the principal issue before the court is whether or not the dispute in relation to BCE's claim for payment was settled during the week of 3 March 2015 as Mi-Space contends. Subsequently, both parties purported to terminate the sub-contract, but the court is not presently concerned with the financial consequences of that termination.
If Mi-Space is right about this, a further issue is whether, as BCE contends, the parties subsequently agreed to proceed on the basis of the original unamended sub-contract or in some way released each other from the 3 March agreement.
The hearing took place on 1 and 2 October 2015 and three witnesses were called. Subsequently each party put in written closing submissions and there was short oral argument on 6 November 2015.
Mi-Space was represented by Mr Rupert Choat, instructed by TLT LLP, and BCE was represented by Ms Chantal-Aimée Doerries QC, instructed by Foot Anstey LLP. I am grateful to both of them for their helpful submissions.
The background
On 24 February 2014 a sub-contract was entered into under seal between Mi-Space, as the contractor, and BCE, as the sub-contractor, for the carrying out of certain groundworks for a residential development known as Mount Wise at Plymouth. The start date for the sub-contract works was 2 January 2014 and the date for completion was March 2015. It was a lump sum fixed price sub-contract for £1,828,000 plus VAT.
The sub-contract was in the form of the JCT Design and Build Sub-Contract 2011. Appendix 2 provided a timetable for payment applications and dates of payment. For example, in the case of Valuation No. 15, BCE's payment application was to be received on 27 December 2014, the payment due date was 17 January 2015 and the final date for payment was 13 February 2015. There was a small problem with Appendix 2 because it envisaged a start date of October 2013 and so the valuation numbers had to be changed: thus Valuation No. 15 became Valuation No. 12.
The dispute in this case centres on the application that was to be made in December 2014, which has been referred to for convenience as the December 2014 application. That application was in the net sum of £346,177.54 (plus VAT as applicable). However, Mi-Space failed to serve a payment notice in time and so, as the adjudicator held, BCE was entitled to be paid the amount claimed.
Mi-Space did not pay the sum claimed in the application and in due course, following service of the relevant notices by its solicitors, BCE suspended work as it was entitled to do under the sub-contract.
The settlement defence was advanced and relied on by Mi-Space during the adjudication but the adjudicator rejected it. However, he did conclude that if it was a good defence, then it would have overridden BCE's entitlement to payment. That conclusion is not challenged.
Mi-Space did not make the payment ordered by the adjudicator and so BCE started proceedings to enforce the adjudicator's decision in the usual way. Mi-Space indicated that it proposed to defend the application for summary judgment by relying on the alleged settlement agreement. It was therefore directed that the court should decide whether or not there had been a settlement as Mi-Space contended.
The primary case advanced by Mi-Space was that a settlement was concluded by an exchange of e-mails on 3 March 2015. Its case was that it made an offer in an e-mail timed at 16:21 which was accepted by an e-mail from BCE timed at 18:54. By its offer Mi-Space proposed, amongst other things, to make an interim payment on 6 March 2015 in the sum of £79,862.62 plus VAT. In return, it was proposed that BCE would immediately withdraw its claim in respect of the December 2014 application and return to site. Both these things happened.
The meeting of 27 February 2015
A Mr Nicholas Acheson, who had just taken over as the project surveyor for Mi-Space, arranged a without prejudice meeting with Mr David Caddick, a director and the principal shareholder of BCE, to be held on 27 February 2015. In order that there should be a neutral venue, it was agreed that they would meet at a Sainsbury's cafe outside Plymouth. Mr Caddick was in fact on holiday at the time and therefore came to the meeting without having read a spreadsheet which had been sent to him by a Mr Kightley who, until then, had been the project surveyor for Mi-Space. The meeting was attended by Mr Kightley also.
It is common ground that no agreement was reached at the meeting, which really took the form of an exploratory discussion, although it was Mi-Space's case that it centred around a schedule of key differences in relation to 11 items of work. Mr Acheson and Mr Caddick attempted to agree the value of BCE's final account as at the date of the meeting assuming that all outstanding work that had been instructed to date was subsequently completed. After some negotiation Mr Caddick indicated the lowest figure that he was prepared to accept but Mr Acheson told him that he did not have authority to agree that figure. There was some discussion about the cost of completing the outstanding work, which Mr Kightley estimated at about £89,000. It seems that Mr Caddick did not accept this figure although the parties are at issue as to what exactly was said about it.
A point which has given rise to acute disagreement is whether or not Mr Acheson stated at the meeting that, should proposals be agreed in principle, there would have to be a formal agreement to that effect signed by both parties. This, as Mr Caddick said in his witness statement prepared for this hearing, would involve Mi-Space (or its lawyers) drawing up a new sub-contract which would be forwarded for scrutiny and possible amendment by BCE before taking effect. On the basis of this, it is BCE's case that the agreement said to have been reached in the exchange of e-mails on 3 March 2015 was always "subject to contract" and therefore not binding. Whether or not that is correct is the central issue before the court.
A further point raised by BCE was that no agreement would take effect unless and until Mi-Space provided substantiation of Mr Kightley's estimate of the cost of the works to complete.
The subsequent exchanges between the parties
Following the meeting on Friday, 27 February 2015, Mr Acheson sent an e-mail to Mr Caddick at 16:56 that afternoon, headed "without prejudice", in which he said that he was able to make the following proposal:
"We will commit to aiming to agree to an anticipated forecast final account value, based on all the instructions received to date and valued in accordance with the contract, of £2,350,000.
Furthermore we will reduce the retention percentage from 5% to 4%
This would result in the following payment being made by CHAPS on the 06/03/14.
Anticipated final account £2,350,000.00
[Further figures were then set out]
The above offer is made on the understanding that acceptance of this will result in the immediate withdrawal of the notice to suspend works on site on the 03/03/15 and the withdrawal of the claim made on your behalf by Messer's (sic) Foot Anstey in respect of the December 2014 valuation payment.
If we do not hear from you by close of business on Monday 02/03/15 we will assume that you find the above acceptable and will continue with your contractual obligations."
The reply from Mr Caddick, at 18:42 on the same day, which was also headed "without prejudice", said this:
"Thanks for your proposals as set out below.
My concern is that you state "we commit to aiming to agree" that is not the same thing as stating that you WILL commit to the agreement.
We believe that in principle and subject to the foregoing substantiation, the terms as set out could form the basis of an agreement with the following proviso:
That any further works other than as set out within and forming part of the original Sub-Contract will be subject to a variation. Such variations will be subject to a Mi.Space Variation/CDI and that all such works will be accurately defined as to requirement and agreed prior to carrying out the works.
Furthermore, the sum of £2,350,000.00 must be agreed as the definite Final Account Sum, subject to any further extra works. All other proposals as set out below would be acceptable.
On receipt of your signed agreement to these proposals we will instruct...
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