Walter Lilly & Company Ltd v Giles Patrick Cyril MacKay and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 17 July 2012 |
| Neutral Citation | [2012] EWHC 1972 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No:2010-TCC17747 |
| Date | 17 July 2012 |
[2012] EWHC 1972 (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:2010-TCC17747
Sean Brannigan QC and Anneliese Day QC (instructed by Reynolds Porter Chamberlain LLP) for the Claimant
David Sears QC, Serena Cheng and David Johnson (instructed by Nabarros LLP) for the Defendants
Hearing date: 11 July 2012
This judgment follows the handing down of the substantive judgement in this case on 11 July 2012. There remained outstanding a number of issues:
(a) Interest due under the contract in effect for non-certification (and thus payment) of sums due.
(b) Interest due as discretionary interest.
(c) Costs, including whether all or part of the costs should be on an indemnity basis.
(d) Interim payment and time for payment.
I will deal with the interest issues together and the others each in turn.
Contractual and Discretionary Interest
At Paragraphs 650 to 657 of the main judgement, I decided that there was no claim for interest under the Late Payment of Commercial Debts (Interest) Act 1998 in the light of the fact that there was a substantive remedy under the Contract between the parties, namely 5 per cent over the Base Rate of the Bank of England. I decided:
"655. This claim is essentially in two halves. The first relates to wrongful deductions totalling £854,596 from between February 2007 onwards. These deductions were for liquidated damages for delay (for which WLC was, as I have held, not liable) and for defective works such as the lift, plastering, ABW and the like (a very large part of which WLC was not liable for). WLC and Mr Hunter have put forward doubtless what they consider is a simplified calculation which is all based on Base Rate plus 8%. They have taken a mid point between the start of the deductions (late February 2007) and late August 2008 when the full deduction was being maintained. Although I will hear the parties if they can not agree, the calculation can be on a mid-point basis, depending on what was deducted and when, but the interest should be Base Rate plus 5%. There should also be some allowance (in favour of DMW) to allow for the fact that some of the deductions for defective work were from time to time justifiable, although, unless persuaded otherwise, I can not see that this would exceed £60,000 for any period in 2007.
656. The second half of the claim is more complex and relates to the various delay and disruption claims; thus for the preliminary thickening claim between March 2006 and February 2007, the net claimed figures are taken from a midpoint and, as they all gradually accumulate in time, they are taken from June 2005 through to March 2010. In relation to sub-contractor claims, nothing is claimed for Adams Joinery and Andrews whose claims have not yet been paid and interest is claimed on what was paid to Norstead in January 2009. Interest is claimed on additional overheads and profit recovery from a midpoint (16 March 2007 to March 2010). Other claims including additional static security guarding costs and disputed valuation are also claimed. I have to say that I have not been assisted by the evidence or the argument how this half of the claim should be addressed. DMW's Counsel make the general point that there can be no entitlement to interest unless the debt has accrued and the debt can not accrue until either it is claimed or in the case of loss and expense adequate particulars and supporting information had been provided. Whilst I am satisfied that the conditions precedent in Clause 26 have been complied with, what I can not yet ascertain on the available evidence and argument is whether and when each and every one of these specific and claims and sub-claims in the final form in which they were presented in these proceedings (a) was first intimated and (b) was first adequately particularised. I am confident however that substantial further sums would, should and could have been certified over and above those which were certified or included in valuations; a good example of this is the loss and expense attributable to the delays beyond the date up to which BLDA granted extensions. I am also confident that other sums such as the static security guard costs could, should and would have been certified as 2007 and 2008 went along.
It is accepted that at least in relation to the first half of this claim it is appropriate to take a mid-point and calculate accordingly up to 26 March 2010 when proceedings were issued. The rate is not in issue any more in the light of my judgment. It is also accepted that the same rate is an appropriate one for discretionary interest.
In relation to the first half, it was accepted in oral argument that the only issue is on interest in relation to the Static Security, the point raised by the Defendants' Counsel being essentially a pleading one. It is abundantly clear, and must always have been, that the Static Security claim related to the period from February 2007 until August 2008; indeed the quantum was not in issue. However, the pleaded claim for contractual interest set out in Annex 7 Schedule 1 to the Re-Amended Particulars of Claim (in Paragraph 5(a) thereof) mistakenly (and obviously so) states that the Static Security costs "are claimed from February '08 until 14 August '08" and the draft has then gone on to claim interest from the midpoint (May 2008) onwards. There has been no application to amend. On the basis that a party, absent amendment, should not recover what it does not claim, interest from February 2007 can not be claimed as contractual interest. However, it was and must have been obvious to the Defendants that this was a mistake; it is also clear from my main judgment that the Claimant was entitled to the full sum claimed for Static Security and has been wrongly kept out of its money for the longer period. On that basis and given that the Court has discretion to award interest, I have no doubt that it should be awarded on a discretionary basis. As has been accepted, it follows that interest at Bank of England Base rate plus 5% should be awarded from the midpoint put forward by the Claimant's Counsel until 26 March 2010 and thereafter until judgment.
It is accepted that, subject to any final arithmetical check by the Defendants of interest in relation to the first half of this claim, this contractual interest (now including a small element of discretionary interest in relation to Static Security), amounts to £216,046.33.
I now move on to consider the contractual interest claim in relation to the prolongation and thickening costs claimed. The arguments deployed on behalf of the Defendants relate both to the contractual and discretionary claims for interest. The primary argument is that there should be no interest until at the earliest February 2011 when WLC produced its Detailed Analysis of Loss and Expense as a pleading; 20 May 2011 is pressed as more appropriate being after the hearing at which permission to amend was granted to WLC to file and serve its Re-Amended Particulars of Claim subject to the removal of errors and the provision of clarifications in the Detailed Analysis of Loss and Expense. Perhaps, more optimistically, it is argued that interest should only run on the loss and expense from late 2011 or possibly even early 2012 because information about the loss and expense claim was provided, it is said, piecemeal by WLC into early 2012.
There is a distinction to be drawn between the contractual interest which is essentially due as a debt and discretionary interest which only becomes a debt on judgment. I have made it clear in the main judgment that I was satisfied that the Clause 26 conditions precedent had been satisfied. It follows that it was the Architect's or the Quantity Surveyor's job to ascertain the loss and expense. In this case, as I have found (Paragraph 472 of the main judgment), £480,000 had been certified for delay related loss and expense by November 2006 and £600,000 by the end of March 2007. I have found (see Summary at Paragraph 539 of the main judgment) that only £472,098 was due in relation to prolongation and thickening costs for the period up to 16 February 2007. It therefore follows that appropriate ascertainments were made (as it turned out slightly generously) at the time. What happened however as time went on was that G&T later revised downwards the ascertainments previously made down to £407,727 in relation to this period (see Paragraph 473 of the main judgement). Indeed, in the proceedings, the Defendants sought to reduce this down to a five-figure sum.
Taking all this into account, the best assessment which I can make is as follows:
(a) In relation to Items 4, 5 and 6 of the prolongation and thickening claims from 16 February 2007 onwards, contractual interest should be allowed for the sums which I have awarded (£232,929, £98,837 and £56,850 – see Paragraph 539 of the main judgement), from the mid-point of the relevant periods up until 26 March 2010, the date when proceedings were issued. This is justifiable on the basis that there was available enough detail for the ascertainments to have been made on an interim basis which would have led at least to these sums being certified and paid to WLC.
(b) In relation to Items 1, 2 and 3, contractual interest should run from September 2008 until 26 March 2010. This reflects the fact that ascertainments had been made and certified for payment in respect of the earlier periods to which these Items related but that G&T began in 2008 a process of reducing the previous ascertainments. The fact that there were other deductions such as liquidated damages or withholdings for alleged defects has...
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