Taylor Woodrow Construction v RMD Kwikform Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Ramsey |
| Judgment Date | 17 April 2008 |
| Neutral Citation | [2008] EWHC 825 (TCC) |
| Date | 17 April 2008 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-0859 |
[2008] EWHC 825 (TCC)
IN THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Ramsey
Case No: HT-0859
Mr Andrew Bartlett QC (instructed by Kennedys) for the Claimant
Mr David Thomas QC (instructed by Interserve PLC) for the Defendant
Hearing date: 11 th April 2008
This is an application under Sections 32 and 45 of the Arbitration Act 1996 to determine a preliminary point of law and jurisdiction in relation to arbitral proceedings between the Claimant, Taylor Woodrow Construction Limited (“TWC”) and the Defendant, RMD Kwikform Limited (“RMD”).
The underlying sub-contract between TWC and RMD was entered into in October 2000 and related to the design, supply and erection of scaffolding works at Fanum House, 140 Queen Street, Cardiff. On 13 December 2000 there was a collapse of scaffolding into adjoining roads and onto a railway line.
This led to a claim by TWC against RMD for some £600,000 and to the conviction of RMD at Cardiff Crown Court in relation to offences concerning the state of the scaffolding. In turn, RMD claims from TWC about £180,000 as sums due under the sub-contract.
In 2002 there was correspondence between Kennedys (solicitors for TWC), the group insurance manager of Interserve PLC acting on behalf of RMD and loss adjusters, concerning the claim and potential claims from third parties such as Railtrack and local businesses who had been affected by the closure of the railway line and local roads as a result of the collapse.
On 17 January 2003 Kennedys wrote a letter to the Finance Director of RMD. That letter is now relied up by TWC as being a notice which commenced arbitration proceedings. It reads as follows:
“We write further to your letter of the 21st February 2002, and subsequent correspondence with Mr O'Donnell of Interserve and Mr Damsell of loss adjusters PCS. A copy of our latest letter to Mr O'Donnell is attached.
We have tried to avoid the need to litigate, but our approaches have been rebuffed. We therefore enclose a draft Particulars of Claim, which will be served in due course. Kindly advise us as to whether you want us to continue to communicate with Interserve, otherwise communications will henceforth be directed just to RMD's registered office. If it is intended that Solicitors be instructed, kindly advise us as to contact details.
Taylor Woodrow's Standard Conditions of Sub-Contract were incorporated into the contract and Paragraph 26 provides that disputes should be referred to Arbitration. Please confirm whether you wish to rely on Paragraph 26 and insist on proceedings by way of arbitration, or would be agreeable to the matter being litigated.
Kindly note that we are advising our client as to the prospects for including the cost of the fine and our costs of the HSE prosecution as a head of loss.”
As indicated, a letter was also sent on the same day to Mr O'Donnell, the Group Insurance Manager at Interserve PLC who acknowledged receipt on 26 February 2003. There then followed without prejudice discussions between the relevant parties.
On 12 December 2006 TWC commenced High Court proceedings against RMD which were then served on RMD under cover of Kennedys' letter of 5 April 200It is to be noted that the claim form was issued just within the 6 year limitation period from the date of the collapse.
On 25 April 2007, following service of the High Court proceedings, RMD applied to stay those proceedings to arbitration under Section 9 of the Arbitration Act 1996.This led to correspondence between the legal department of Interserve PLC and Kennedys in which Kennedys initially opposed the stay.
In Kennedys' letter of 8 May 2007 they said:
“If you generally prefer that we should arbitrate, and agree not to take any point on limitation but accept your service of proceedings as an affective Notice of Commencement of Arbitration, we could take instructions.”
On 18 May 2007 Kennedys applied to the Chartered Institute of Arbitrators for the unilateral appointment of an arbitrator by the President. RMD became aware of this on 24 May 2007 when IDRS Limited, acting on behalf of the Chartered Institute of Arbitrators acknowledged receipt of the application to RMD. On 29 May 2007 the legal department of Interserve PLC wrote to Kennedys to say:
“Your client has not served upon us a Notice of Arbitration in accordance with clause 26.1 of the contract. Nor has your client asked us to agree to the appointment of an Arbitrator as required by Clause 26.1.”
Kennedys responded on 31 May 2007 and relied on the letter of 17 January 2003 as fulfilling the purposes of a notice to commence a claim under Clause 26.1 of the sub-contract.
On 19 June 2007 IDRS Limited advised the parties that Dr M.L. Standinger had been appointed as Arbitrator. There then followed correspondence between the parties and Dr Standinger which culminated in an agreement between the parties that the Court should determine the following questions pursuant to sections 32 and 45 of the Arbitration Act 1996:
(1) Whether Mr. Standinger has been properly appointed in accordance with the arbitration agreement.
(2) For the purposes of Section 14 of the Act, the date at which arbitral proceedings are regarded as having been commenced (if at all)
On 26 November 2007 TWC commenced this arbitration claim in the Commercial Court. By Order dated 5 March 2008 it was transferred to the Technology and Construction Court and directions were given leading to this hearing.
The Issues
On the hearing of this application there were essentially two issues which have to be determined to answer the questions posed. First, there is an issue whether Section 14(1) or Section 14(4) of the Arbitration Act 1996 applies to this case. Section 14 deals with the commencement of arbitral proceedings. Section 14(1) provides: “The parties are free to agree when arbitral proceedings are to be regarded as commenced for the purposes of this Part and for the purposes of the Limitation Acts.”
Then Section 14(2) provides that: “If there is no such agreement the following provisions apply”, referring to Sections 14(3) to (5). Section 14(4) provides:
“Where the arbitrator or arbitrators are to be appointed by the parties, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties notice in writing requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator in respect of that matter.”
The issue in this case is whether by the terms of Clause 26 the parties agreed when arbitral proceedings were to be regarded as commenced for the purposes of the Arbitration and Limitation Acts. If they did then Section 14(1) applies. If they did not then Section 14(4) applies.
The second issue is whether the letter of 17 January 2003 is a sufficient notice to commence arbitration under either Section 14(1) or Section 14(4) of the 1996 Act.
I now turn to consider those two issues.
Clause 26 and Section 14 of the Arbitration Act 1996
Clause 26.1 provides:
“If any dispute question or difference arises between the Contractor and Sub-Contractor in connection with or arising out of the Sub-Contract or the Sub-Contract Works, it shall, subject to the provisions of this clause, be referred to the arbitration and final decision of a person to be agreed between the parties or failing such agreement within a period of 14 days of one party giving to the other notice in writing of such dispute question or difference, a person appointed upon the application of either of the parties by the President for the time being of the Chartered Institute of Arbitrators.”
Mr Andrew Bartlett QC, on behalf of TWC, submits that Clause 26.1 contains an agreement of when arbitral proceedings are deemed to be commenced. He submits that Clause 26.1 provides that disputes shall be referred to arbitration and prescribes the three steps which apply in order to commence and progress the arbitration. The steps are:
(1) That one party must give notice in writing of the dispute to the other party;
(2) That after such notice the parties may agree on the person to act as arbitrator;
(3) That, if there is no such agreement within 14 days after the notice, then either party may apply to the President of the Chartered Institute of Arbitration for the appointment of an arbitrator.
Mr Bartlett submits that clause 26.1 amounts to an agreement under section 14(1) of the Arbitration Act 1996 as to when arbitral proceedings are to be regarded as commenced for the purposes of the Arbitration and Limitation Acts. He submits that under clause 26.1 it is agreed that an arbitration commences when one party gives the other party “notice in writing of such dispute question or difference”. That, he submits is a sufficient agreement for the purposes of section 14(1).
He relies upon the judgment of Thomas J (as he then was) in Seabridge Shipping AB v AC Orssleff's Eftf's S/A [1999] 2 Lloyd's Rep. 685 at 689 to 690 as showing that Section 14 is to interpreted broadly and flexibly.
Mr Bartlett also refers to Section 13(1) of the Arbitration Act which provides that the Limitation Acts apply to arbitral proceedings as they apply to legal proceedings. He points out that under the Limitation Acts the relevant provisions for claims in contract and tort provide time limits for bringing actions and state that actions “shall not be brought” outside those limitation periods. He submits that the equivalent step of bringing actions in the case of arbitrations is the commencement of the arbitration proceedings.
For there to be an agreement for the purposes of the...
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