Sprunt Ltd v Camden London Borough Council

JurisdictionEngland & Wales
JudgeMr Justice Akenhead
Judgment Date06 December 2011
Neutral Citation[2011] EWHC 3191 (TCC)
Docket NumberCase No: HT-11-422
CourtQueen's Bench Division (Technology and Construction Court)
Date06 December 2011
Between:
Sprunt Limited
Claimant
and
London Borough Of Camden
Defendant
Before:

Mr Justice Akenhead

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Rolls Building, 7, Fetter Lane

London EC4A 1NL

James Davison (instructed by Blake Lapthorn) for the Claimant

Justin Mort (instructed by London Borough of Camden) for the Defendant

Hearing date: 24 November 2011

Mr Justice Akenhead
1

These are adjudication enforcement proceedings between consultants and their employer, issues being raised about the extent to which the construction contract between the parties was in writing for the purposes of Section 107 of the Housing Grants, Construction and Regeneration Act 1996 (" HGCRA") and in relation to the extent and scope of the incorporation of the Scheme for Construction Contracts in circumstances in which the underlying contract does not comply with Section 108 of the HGCRA. This latter issue encompasses another issue which is whether the adjudicator was appointed by the correct nominating body

Background

2

Sprunt Ltd ("Sprunt") provides building consultancy services, primarily as architects. In 2001, the London Borough of Camden ("Camden"), invited Sprunt, amongst others, to tender for the provision of building consultancy services pursuant to a Framework Agreement. It is common ground that Sprunt was successful in this context (amongst others) and that there was a written contract made in July 2001 ("the Framework Agreement"). This contract was contained in or evidenced by Camden's "Tender Document for Building Consultancy Services 2001–2004/6". The returned tender dated 24 May 2001 from Sprunt provided time charge rates and percentage fees for projects ranging from values of less than £10,000 to over £1.25 million, such percentage fees extending from 15% down to 5.5%.

3

There were extensive Conditions of Contract within the Framework Agreement. Clause 4.1 envisaged that Camden would issue "instructions in the form of Commissions" to Sprunt. Sprunt would then be required to produce a "Proposal" in respect of the proposed Commission which would include timescale, method and fee required. If Camden decided to proceed with the Commission, its representative would issue a written "Order" accepting the Proposal. Clause 2.1 made it clear that the terms of the Framework Agreement were to apply to any Commission commenced before the end of the Contract Period.

4

Clause 25 addressed dispute resolution and provision was made for adjudication:

"25.2…if any dispute shall arise between the parties at any time out of or in connection with this Contract or a Service, either party may refer such dispute for adjudication in accordance with the Scheme for Construction Contracts SI 1998 No. 649, Part 1—Adjudication(Part III) as amended by this Condition and;

25.4 The Council shall be the specified nominating body for the purposes of paragraphs 2(1)(b) and 6(1)(b) of Part 1;

25.11 Where any decision [of] the adjudicator requires either party to make payment(s) to the other, such decision shall be suspended in relation to the requirement to make payment(s) until the earlier of any of the following:

a) after thirty…days of delivery of the adjudicator's decision if neither party has served notice on the other party in accordance with Condition [25.9].

b) receipt of a true copy of the Court judgement following the final determination by legal proceedings following a referral of the matters in dispute under Condition 25.9;

c) the matters of the dispute having been referred under Condition 25.9 to legal proceedings by either the parties, the referring party's formal withdrawal from such action;

d) Contract in writing between the parties following the expiry of the period referred to in Condition 24.2.6 as to the agreed allocation and/or award of such sums in full and final settlement of matters in dispute."

The English Court had jurisdiction for final dispute resolution.

5

Clause 34 provided:

"If any provision of the Contract shall become or shall be declared by any court of competent jurisdiction to be invalid or unenforceable in any way such invalidity or unenforceability shall in no way impair or affect any other provision of the Contract all of which shall remain in full force and effect."

6

There is unchallenged evidence that Camden placed some 37 Commissions with Sprunt over the following few years.

7

In the first half of 2003, Camden invited Sprunt to tender for the provision of building consultancy services in a number of disciplines for two projects, the Ampthill Square Estate and the Godwin & Crowndale Estate. This was to become known as the "Ampthill Square Estate" project. Sprunt submitted its tender dated 8 May 2003, offering to carry out the work at the Ampthill Square Estate for 6.9% of construction cost (or "Total Works Costs") and at the Godwin and Crowndale Estate for 8.2%. Hourly rates for services not covered were also quoted for individual grades of staff. By letter dated 15 July 2003, Camden wrote to Sprunt accepting that tender "at the rates and prices contained therein". "For clarification", the letter went on to say that Sprunt was appointed for both projects. It is common ground that this contract, to cover both projects, was not procured or ordered through the Framework Agreement; that is at least partly evident from the fact that the percentage fees were significantly above those quoted for the purposes of the Framework Agreement. However, the conditions of contract were virtually identical to those set out in the Framework Agreement referring amongst other things to the placing of Commissions and Orders. Although the numbering of the sub-clauses is somewhat different, the dispute resolution clause is effectively the same.

8

There is no dispute that the Ampthill Square Estate project was later split into two separate phases, A and B. It is not absolutely clear from the evidence precisely how this happened. However, by about June 2006, Phase A had largely been completed. The documentation disclosed by the parties in these proceedings suggests that prior to this date there had been issues between the parties about the payment of fees. An e-mailed letter dated 17 November 2005 from Camden to Sprunt suggests that Phase A related to the Godwin and Crowndale Estate and that works were being incorrectly certified and possibly that there were defects in the design and the works. The letter goes on to state:

"We agreed that Sprunt consequentially acknowledge and agree our contention that the contractual relationship in respect of phases 2, 3, 4 (now phase B) is Sprunt's general consultancy agreement is and that the Godwin, Crowndale Ampthill agreement is specific to phases 1 and 1A"

Further correspondence ensued and there were meetings between the parties on 23 May and 7 June 2006, in respect of which no minutes or even notes about what was discussed were put before the Court.

9

On 12 June 2006, Sprunt wrote to Camden in the following terms:

"Further to my letter dated 22 February 2006 and our meetings on 23 May and 7 June 2006 regarding various fee issues relating to Ampthill Square Estate I confirm the current position on both Contracts which incorporates the additional fees as discussed, as follows:

1. Phase A

Our fee percentage is 6.659% in accordance with our tender dated 8 May 2003 and your acceptance dated 15 July 200[3].

Currently, based on our anticipated Final Account figure of £7,575,878…the basic fee commitment for the Contract is £522,660.07

We have undertaken additional works at your request and the fees associated therewith, calculated in accordance with our Agreement, are as follows…

Based on the forgoing the current total fee commitment for the Phase A contract is £540,889.82.

2. Phase B

Based on our fee percentage of 6.659% in accordance with our Agreement for the Phase A contract and the current works budget of £9,035,783 for Phase B, plus the previously agreed community safety works designed statement and alternative scheme proposal of £6971.26, the basic fee commitment for the Contract is £608,664.04

We have undertaken additional work to your request and calculate the fees associated there with as follows:

Pre-Contract fee adjustment to reflect completion of the design of the scheme is up to and including Stage E on Phases 2, 3 and 4, now designated Phases B details of which had been agreed by Camden and residents… £61,163.90

Design of the landscaping scheme…all as detailed in my letter dated 22 February 2006 £126,536.33

The production of Option Appraisals…all as detailed in my letter dated 22 February 2006 £3750.00

Based on the forgoing the current total fee commitment for the Phase B contract would be £800,114.

However based on our discussions and agreement, subject to your written confirmation, I am prepared to abate our fee for the Phase B Contract only to that contained in the Kentish Town Fee Agreement, i.e. a fee of 5.5% in lieu of 6.659%.

This therefore reduces the above fee for the Phase B Contract as follows…

Current Revised Total Fee Commitment for Phase B £695,389.55

…The fee for Phase B will, of course, be adjusted in accordance with any agreed changes to the overall cost of the works….

I trust that the forgoing is in order and a true reflection of our discussions. I would welcome your early agreement in writing to the forgoing in order for us to be able to invoice in accordance with the attached Invoicing Schedule No 21 dated 12 June 2006 and move positively forward with the Phase B Contract."

10

There is no dispute that the parties proceeded thereafter on the basis that Phase B was to be dealt with separately, at the reduced fee of 5.5% and on the basis of the terms of the Framework Agreement. That this is so is clear from the fact that Mr Sutherland, Camden's in-house solicitor who has provided a...

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