Thameside Construction Company Ltd v Stevens
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 17 July 2013 |
| Neutral Citation | [2013] EWHC 2071 (TCC) |
| Date | 17 July 2013 |
| Docket Number | Case No: HT-13-200 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2013] EWHC 2071 (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 Akenhead
Case No: HT-13-200
Charles Pimlott (instructed by Silver Shemmings LLP) for the Claimant
James Bowling (instructed by Charles Russell LLP) for the Defendants
Hearing date: 9 July 2013
Introduction
This adjudication enforcement case raises again the sometimes vexed question of whether and when a party against whom an adjudicator has decided may seek to set off against the sum said by the adjudicator to be due and avoid or defer payment.
The Background
By a contract made in July 2010, Mr and Mrs Stevens employed Thameside Construction Company Ltd ("Thameside") to carry out extensive extension, construction and conversion works at their home Roughwood Croft, Nightingales Lane, Chalfont St Giles, Bucks. The contract incorporated the JCT Intermediate Form of Building Contract with Contractor's Design (Revision 2 2009). The possession date was 2 August 2010 with a completion date of 14 March 2011 and the original Contract Sum totalled just over £600,000. Relevant terms included extension of time provisions, a liquidated damages clause for late completion and provision for interim and final payments certificates. There was an adjudication clause which incorporated the Scheme, which broadly requires the parties to comply with and put into effect the decision of an adjudicator. Somewhat unusually, Mrs Stevens or her firm was the Contract Administrator as well as the Quantity Surveyor.
It is common ground that there were substantial variations and on any count the sum due to Thameside went up to over £1 million. There were delays and extensions of time were granted up until 8 August 2011. There was and remains an issue between the parties as to when practical completion took place but Mr and Mrs Stevens apparently took possession of at least part of the property in October 2011, another part in December 2011 and possibly a further part in January or possibly March 2012. On 23 March 2012, the Contract Administrator issued a Certificate of Non-Completion stating that Thameside had not achieved Practical completion on 8 August 2011.
On 21 June 2012, Thameside submitted to Mr and Mrs Stevens its Interim Application No 16 in the gross sum of £1,310,998.39. It seems that both parties treated this as a final account. Mrs Stevens issued her assessment on 2 November 2012 valuing the work in the gross sum of £1,185,535.01 from which contra charges of £58,105.44 were to be deducted. By the time of the adjudication, Mr and Mrs Stevens had paid a little over £1.1 million.
On 1 March 2013, Thameside through consultants served a Notice of Adjudication on Mr and Mrs Stevens which identified that a dispute had arisen "following the Employer's failure to pay amounts due" and seeking "a peremptory Decision from the Adjudicator". The Notice identified that the adjudicator was asked to determine and decide that the amount due to Thameside was £190,102.89 or such other sum and that Mr and Mrs Stevens should pay such sum "without set off".
The Adjudication
A well-known construction lawyer, Mr Rowan Planterose, was appointed as the adjudicator. Thameside served its Referral Notice on 7 March 2013 which provided more details. It referred to the various interim and final payment provisions of the contract. The relief claimed was the same as in the Notice of Adjudication.
Mr and Mrs Stevens submitted their Response shortly thereafter. Paragraph 6.1 stated
"…it is agreed that [Thameside] issued Interim Application No 16 on 21 June 2012. For all intents and purposes, this was submitted for the purposes of agreeing the final account. As at that date, it is accepted that [the Stevens] had paid…£1,101,597.02…However, this does not address the question of whether practical completion was achieved. [The Stevens aver] that the adjudicator has not been asked in the Notice of Adjudication to determine the question of practical completion and is therefore falls outside the jurisdiction of this adjudication."
The Response went on to assert that a final certificate could not be issued because the quality and standard of the goods, materials and workmanship was not to the reasonable satisfaction of the Contract Administrator (Paragraph 9.3). It specifically raised a Counterclaim which comprised essentially two elements, deductions and damages for defects and outstanding snagging and remedial works and also a claim for liquidated damages. £88,891.40 was counter-claimed for defects and £60,000 for liquidated damages. This latter figure was predicated upon there being £48,000 due for delay between 8 August 2011 and 27 January 2012 and a further £12,000 thereafter up to 14 March 2012 when Mr and Mrs Stevens asserted that they had taken possession of the final part of the Works, namely the "Leisure Complex". In Paragraph 13.2.2 they sought a declaration that they were entitled to set off their counterclaim against any sum decided to be due to Thameside and that they were entitled to £148,891.40 for their counterclaims. In Paragraph 13.2.3, they sought a declaration that they were entitled to succeed in the sum of £148,891.40 in relation to the defects and liquidated damages counterclaims.
Thameside served a Reply on 5 April 2013. It asserted (at Paragraph 11.3) that no counterclaim could be advanced as Mr and Mrs Stevens had not issued any notice of withholding. It challenged the assertions that there were defects putting in written evidence on the topic. So far as the liquidated damages claim was concerned, it was denied. It denied that the Works were completed late and asserted an entitlement to extension of time up to 23 December 2011 when, it said, Mr and Mrs Stevens took full possession of the site, having taken partial possession on 24 October 2011.
There were further written exchanges on 10 April 2013 (Thameside to the adjudicator) and on 15 April 2013 (Mr and Mrs Stevens' solicitors to the adjudicator); this was mostly related to whether or not the absence of withholding notices was fatal to the counterclaims. There were some final written representations by e-mail on 23 April 2013 from Thameside to the adjudicator (although nothing turns on that).
The Adjudicator issued his decision on 24 April 2013. The prose part of the decision runs to only eight pages but much of the work was done in attached schedules which reviewed the 220 items in dispute. At Paragraph 7, he found that Application No 16 "was clearly regarded as the Final Account" going on to say that by October 2012 "the contractual mechanisms of payments had evidently fallen apart". He went on:
"10. Accordingly the contractual context of this adjudication is something of a muddle, there being no Practical Completion Certificate to trigger subsequent events under the Contract, but at the same time much of the contractual regime as to matters such as defects having been broadly followed.
11. In the Referral I am asked to award [Thameside] the sum of £190,102.89 plus interest, paragraph 7.4 thereof noting that the 'value of the adjusted Contract Sum is in dispute and, therefore, the Adjudicator is respectfully to decide the same.' At the same time I am not asked to determine when and whether practical completion has taken place. The Stevens specifically say I have no jurisdiction to determine the same, yet they make a claim to £60,000 liquidated damages, the parameters of which would be set by a completion certificate. In turn [Thameside] make no extension of time claim in their Referral, but in defence of the liquidated damages claim seek to demonstrate they would be entitled to such an extension in Mr Gradwell's evidence in the Response.
12. It seems to me that the only practical way to deal with this is to approach it on the basis that this is an application for a further interim certificate, leaving over any issues as to precisely when practical completion occurred, as to extension of time and therefore liquidated damages to another day. At the same time I shall bear in mind that the parties do in fact mutually intend (or indeed wish) this to act as a Final Account and have themselves approached it on this basis following in broad terms the 6 month for submission of full information by the contractor and 3 months for response envisaged by the contract. Equally it seems to me that I should acknowledge that practical completion has occurred, occupation itself now being a matter of history. As the Stevens write in the Response of Application 16: 'For all intents and purposes, this was submitted for the purpose of agreeing the final account.'
[The footnote to Paragraph 12 stated:
"(I would, in any event, be doubtful of any, or any substantial, entitlement to Liquidated Damages. Against an August 2011 completion date, part possession occurred in October 2011 and full possession in December 2011/March 2012. In the course of the Works there were regular instructions and changes which have disrupted progress, albeit I accept [Thameside] no doubt suffered some of their own difficulties with sub-contractors etc. Nonetheless I think it likely that on a full analysis [Thameside] would be entitled to some, if not a full extension, at least to the 23 rd December and later, if in fact practical completion occurred at a later date.)
[17. He accepted the argument of Mr and Mrs Stevens that no withholding notices were required on their part]
[18 – 29. He reviewed the parties' positions on the final account and variation account figures.]
30. As the Final Account summary shows, this results in a balance due to Thameside of £88,606.22 for which I shall make an order...
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