St Austell Printing Company Ltd v Dawnus Construction Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr. Justice Coulson,The Hon. Mr Justice Coulson |
| Judgment Date | 21 January 2015 |
| Neutral Citation | [2015] EWHC 96 (TCC) |
| Date | 21 January 2015 |
| Docket Number | Case Nos: (1) HT-2014-000109 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2015] EWHC 96 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Coulson
Case Nos: (1) HT-2014-000109
(2) HT-2014-000130
Mr Abdul Jinadu (instructed by Bertram Law) for the Claimant
Ms Krista Lee (instructed by Michelmores LLP) for the Defendant
Hearing date: 21 January 2015
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This is essentially an adjudication enforcement dispute, although the procedural position has been complicated by the fact that St Austell Printing Company Limited ("St A"), the party who lost the adjudication, have issued pre-emptive Part 8 proceedings seeking a declaration that the adjudicator did not have the jurisdiction to decide that £417,919.66 was due to Dawnus Construction Holdings Limited ("Dawnus"). There is a separate Part 7 claim in which Dawnus seek enforcement of the sums found due by the adjudicator.
In the documents produced in connection with these two sets of proceedings, St A rely on two grounds in support of their case that the adjudicator did not have the necessary jurisdiction. The first is the well-worn suggestion that the dispute had not crystallised between the parties at the time of the notice of adjudication. The second is the rather more novel submission that, because the claim that was referred to adjudication related only to a part of Dawnus' original interim application, and expressly excluded other elements of that application, the adjudicator was not empowered to order the payment of any sums which he found due.
I propose to set out the factual background and then go on and deal with each of those objections in turn. I am grateful to both counsel for their assistance and, in particular, their very clear written skeleton arguments which were provided promptly and led to a significant saving in time at the hearing.
FACTUAL BACKGROUND
By a contract dated 20 November 2011, St A engaged Dawnus to carry out and complete the design and construction of two warehouse/industrial units in St Austell, Cornwall. The contract incorporated the JCT design and build contract form, 2005 edition. The contract sum was in excess of £5.5 million. The contract administrator was David Langdon, now known as AECOM, whose primary point of reference was Mr Jones.
Practical completion of the works was achieved on 6 February 2013. On 26 April 2013 AECOM issued interim valuation 17 in the gross sum of just over £6 million. Thereafter there were discussions between Dawnus and AECOM about the final account. It appears that these did not progress very smoothly. They certainly did not progress promptly. The difficulties were exacerbated by Mr Jones' redundancy in August 2013. Whether rightly or wrongly, Dawnus were unimpressed with his replacement.
On 10 December 2103 Dawnus issued interim application for payment No.19, together with a mass of supporting documentation. Although this was not a final account application, it was a comprehensive application for interim payment which took account of the fact that the works had been completed for some time. The application was in the gross sum of almost £8 million, and the net sum claimed was £2.3 million. This included a claim in respect of changes and variations of about £1.9 million, of which around £900,000 reflected the measured work element of those changes and variations. The due date for payment of the interim application was 4 January 2014.
On 17 December 2013 Dawnus enclosed a sales invoice in the sum of £2.3 million, again seeking payment by 4 January 2014. It appears that this was intended to be a payee's notice because Dawnus mistakenly believed that AECOM had failed to serve a payment notice in due time. In fact they had not.
Thus, on 19 December 2013 AECOM delivered to Dawnus payment notice No.18. This said that the sum so far paid to Dawnus (just over £6 million, by way of the valuation and payment made in April, noted in paragraph 5 above) remained the correct valuation and that no further sum was due to Dawnus. Thus the figure of "£0.00" was entered into the "amount due" column. The payment notice was accompanied by what was called 'a letter of clarification'. That included these passages:
"We are currently reviewing your revised final account dated 10 December 2013. We understand that this revised account addresses out initial queries raised from your original submission and hence will require further assessment. We recently visited site on 11 December 2013 to meet with the client and his recently appointed advisors to discuss and further substantiate our version of the final account. During this visit to site it was clear a number of defects had not been addressed at this stage. With this in mind we will be writing to Dawnus formally detailing these outstanding defects. This document will include dates we see reasonable to address and rectify the defects highlighted and failure to do so will result in the possibility of corrective adjustments being taken by our client and the cost being incurred offset to your account.
We will endeavour to send you our final version of the account early in the New Year. We would consider this reasonable following your recent response to our measured accounts. In regards to Dawnus' loss and expense claim we have been able to meet with the client and his advisors to establish an accurate understanding of the events you have detailed within the claim document. We have another meeting to progress with these discussions scheduled for the week commencing 6 January 2014 following which we will respond to your loss and expense claim separately early in the New Year."
Neither AECOM nor St A (nor their "advisors") reverted to Dawnus in the New Year, or at all. Thus no defects were identified; there was no version of the final account provided to Dawnus; and no response to the loss and expense claim. On the papers before me, nothing of any substance happened at all until 26 August 2014, when Dawnus grew exasperated and commenced adjudication proceedings. These proceedings were limited by Dawnus to the measured value of 115 specific changes and variations. Because points now arise as to the scope of the adjudication, it is necessary to identify the relevant documents and what they said.
The notice of adjudication said this at paragraph 5.4:
"There are a number of Changes within Interim Certificate 18, these are the 115 Changes which make up the bulk of the difference between the parties. The Referring Party limits submissions in this adjudication to these 115 Changes as identified in the attached schedule, and reserves its right to deal with other matters in Interim Certificate 18, and later certificates, in the future."
In Section 6 of the notice, at paragraph 6.1b), Dawnus expressly sought payment by St A of the sums claimed in respect of the 115 changes. Thus this is not a case in which, by reference to the relief claimed in the notice of adjudication, Dawnus limited their claim to a declaration as to their entitlement. They expressly sought an order for payment.
In the referral notice, at paragraph 3.2, Dawnus emphasised the limitations of the dispute which they were referring to adjudication. They said:
"For the avoidance of doubt, the dispute referred to in adjudication through this Referral relates only to the proper valuation of 115 Changes contained within the Schedule…for the purposes of this Adjudication, the Referring Party accepts the Responding Party's valuation in all other respects which for the avoidance of doubt includes all contract works, or deductions in respect of provisional sums and all valuations of changes not listed in the schedule. The Referring Party does however reserve its future position in respect of these matters."
St A took both their jurisdictional points (no crystallisation and no power to order payment of part only of interim application 19) in the adjudication. They said that no dispute about the changes had crystallised at the time of the notice in August. As to the second point, the issue was summarised at paragraph 13 of their Rejoinder, in these terms:
"What DCL cannot do is to refer a dispute in respect of an element of the application (and strictly limit the jurisdiction of the Adjudicator to just this element) and then to seek payment in respect of just this element referred without consideration of DCL's or SAPC's entitlement in respect of the other elements of the application. The Contract does not envisage or give DCL an entitlement to payment in respect of an element of interim application as opposed to its entitlement, which is not contested, to payment in respect of the entire application."
The adjudicator concluded that St A's jurisdictional challenge was "entirely without merit" and went on to deal with the detail of the claim by way of a detailed decision dated 31 October 2014, which ran to 127 pages and 471 paragraphs. It is that decision which ordered St A to make payment to Dawnus, by 7 November 2014, of the sum of £417,919.66 together with his fees. It is that decision which Dawnus now seek to enforce.
OBJECTION 1: HAD THE DISPUTE CRYSTALLISED IN AUGUST 2014?
The Law
I take as my starting point the judgment of Jackson J (as he then was) in AMEC Civil Engineering Limited v Secretary of State for Transport [2004] EWHC 2339...
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