Witney Town Council v Beam Construction (Cheltenham) Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeMr Justice Akenhead
Judgment Date12 September 2011
Neutral Citation[2011] EWHC 2332 (TCC)
Date12 September 2011
Docket NumberCase No: HT-11-254

[2011] EWHC 2332 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Akenhead

Case No: HT-11-254

Between:
Witney Town Council
Claimant
and
Beam Construction (Cheltenham) Limited
Defendant

Mark Raeside QC and Omar Eljadi (instructed by Dutton Gregory LLP) for the Claimant

Ian Wright (instructed by Harrison Clark LLP) for the Defendant

Hearing date: 11 August 2011

Mr Justice Akenhead
1

By these Part 8 proceedings, Witney Town Council ("the Council") seek declarations that an adjudicator, Mr Anthony Bingham, had no jurisdiction to adjudicate upon what is said to be a number of disputes referred to him for decision. These proceedings are being heard together with proceedings issued in Birmingham by the Contractor, Beam Construction (Cheltenham) Ltd ("Beam"), to enforce the decision reached by Mr Bingham.

The Background

2

By a building contract made in early 2010, the Council employed Beam to design and construct the new Madley Park Community Hall, Witney in Oxfordshire. The contract was in the JCT Design and Build form 2005, Revision 2, 2009 and the Contract Sum was £749,726. A Mr Treloar was named as the Employer's Agent. The contract contained an adjudication clause:

"9.2 If a dispute or difference arises under this Contract which either Party wishes to refer to adjudication, the Scheme shall apply, subject to the following:

.1 for the purposes of the Scheme the Adjudicator shall be the person (if any) and the nominating body shall be that stated in the Contract Particulars…"

The reference to the Scheme is to the Scheme for Construction Contracts issued pursuant to the Housing Grants Construction and Regeneration Act 1996 (" HGCRA").

3

The contract required the works, subject to extensions of time, to be completed by 7 November 2010. Provision was made for extensions of time and in certain circumstances "loss and/or expense" in relation to delay and disruption. The contract provided for interim payments followed by a final accounting process after Practical Completion of the works. Mr Treloar issued ten certificates for payment during the course of the project. On any count the works were late and eventually Mr Treloar awarded a three-week extension to take the new completion date up to 26 November 2010.

4

Some controversy surrounds what happened on 6 January 2011 when it is said that the Council took full possession of and access to the works opening the building for use in a public election. Beam says that Practical Completion of the works occurred then but the Council says that, whilst it did use the building for a short period of time, that was by arrangement and in effect the building and the works were given back to Beam to finish the works. I can not resolve that issue, nor is it necessary for me to do so.

5

So far as is material to this case, the story begins on 21 January 2011 when Beam submitted by e-mail its "draft final account" for the works. The relevant parts of this account are as follows:

"1. Main Works Stages

Contract Sum

£749,726.00

Less [various items]

Less Client's Prov Sum

£20,000.00

£686,226.00

5. Variations/Instructions

Add [various items]

Kitchen as Martin Luck

£37,752.00

[3 more items]

Prolongation costs from 7th Nov 2010 to 21st Jan 2011

11 weeks @ £1,500 per week

£16,500.00

Total

£802,032.13

Less 2.5% Retention

£20,050.80

£781,981.33

Less Previously Certified

£678,497.17

Nett Application

£103,484.16 excl VAT"

6

Mr Treloar issued Certificate No 10 on 2 February 2011 which identified a gross valuation of £703,874.79 less 5% retention of £35,193.74, leaving a net sum certified of £668,681.05. The amount of this certificate was said to be nil because the amount previously certified was greater. The contract suggests that retention was agreed to be 3% and that on Practical Completion half of that was to be released to Beam but, for reasons best known to him, Mr Treloar certified a 5% retention and Beam does not seem to have objected, possibly because its application for payment identified a 5% retention. The maintenance of the 5% retention within Certificate No 10 suggest that Mr Treloar believed that Practical Completion had not occurred, whilst Beam's assertion that only 2.5% retention was allowable was consistent with its position on this topic.

7

It seems to be the case that Beam did return to the site after 6 January 2011 although it is not clear whether its workmen were there every day. There was some communication between Mr Treloar and Beam which highlighted what was in issue. In an e-mail dated 7 February 2011, Mr Treloar made a number of points including that a contingency sum of £35,000 should have been deducted and that nothing was allowable for prolongation together with a number of other points. Issues began to emerge between the parties in relation to various outstanding items of work, some of which were associated with health and safety matters, the maple flooring and a gantry. The parties were at odds as to the extent to which Beam was entitled to an extension of time.

8

On 22 February 2011, Beam's claims consultant Mr Lee wrote to the Council identifying the issues relating to extension of time and also the issues relating to the draft final account (in the gross sum of £802,032.13 compared with the gross sum of £703,874.79 certified in Certificate No. 10).

9

On 2 March 2011, again by e-mail to Mr Treloar, Beam sent in what it called its "final account". The form of it was similar to the "draft final account" but there were some changes (identified with an *):

"1. Main Works Stages

Contract Sum

£749,726.00

Less [various items

]

Less Client's Prov Sum

£20,000.00

* Less Contingency 5%

£35,701.00

£650,525.00

5. Variations/Instructions

Add [as before]

*Lettering to external gable

£753.00

*Change ceiling from suspended grid to mf ceiling

£4,470.00

*Prolongation costs from 7th Nov 2010 to 26th Nov 2010

3 weeks @ £1,500 per week

£4,500.00

*Interest for amounts not certified

and incorrect retention

£3,454.53

*Interest for unfixed materials on-site not valued or included in Arch Certificates

£340.89

*Insurance of completed buildings from 6th Jan 11

£1,450.00

* Prolongation costs from 26th Nov 2010 to 2nd March 2011

14 weeks @ say £1,200 per week

£16,800.00

*Legal costs to conclude settlement of final accounts say

£12,000.00

Total

£776,108.15

* Less 1.5% Retention

£11,641.62

£764,466.53

* Less Previously Certified

£668,681.05

Nett Application

£95,785.48 excl VAT"

10

On 11 March 2011, the Council purported to terminate the employment of Beam under the contract pursuant to the termination clause on the basis, as asserted, that Beam was not proceeding regularly and diligently and had failed to do so notwithstanding what was said to be a contractual warning notice on 21 February 2011 from Mr Treloar.

11

Mr Lee wrote again at this stage to the Council's own claims consultant, Knowles, on 14 March 2011 reiterating his client's position about when completion took place and rehearsing his client's arguments about the maple floor and the lighting gantry. He referred to the final account application for payment and he highlighted that Mr Treloar had acted wrongly in deducting 5% as opposed to 3% retention. He said that the essence of his client's position was:

"1. The Works were practically complete by 6 January 2011, or in the alternative 28 January 2011. The continued with-holding of the certificate of practical completion is a breach of contract for which damages are claimed.

2. No proper extension of time has been granted. Damages are claimed as a result.

3. No proper ascertainment, certification or payment of loss and expense has been received. Damages and interest are claimed as a result.

4. Our Client's draft final accounts submitted on 21 January 2011 has not been properly valued and certified in accordance with the Contract and interest and damages are claimed as a result.

5. Retention has been incorrectly deducted throughout, and is being with-held now beyond practical completion, in further breach of contract. Again, interest and damages are claimed as a result."

12

On 21 March 2011, Mr Lee wrote to the Council saying that his client was:

"…proceeding to compile its case for a referral to an Adjudicator. As we have noted to you previously, this will necessarily involve the Council in unnecessary expenditure of approximately £35,000 on top of the debt due to our client, which is a further £107,427.10 plus VAT."

This figure represented the retention free sum claimed in the "final account".

13

However, on 23 March 2011, as recorded by Mr Lee in a further letter on that day to the Council, Beam's staff arrived at the site to find that the locks had been changed so that they could not get access. In the letter, Mr Lee on behalf of his client said that this was a fundamental breach of contract and as a result the Council's "right to withhold any retention has been lost". The letter demonstrates that no love was lost between the parties

14

Knowles replied on the same day saying that its client denied that it was "indebted to your client in the amount £107,427.10".

The Adjudication

15

Beam served its Notice of Adjudication on 5 April 2011. Paragraphs 3 and 6 identify that "Practical Completion was achieved on Thursday, 6 January 2011" and that Beam had...

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3 firm's commentaries
  • 2011 Construction Case Law Summary
    • United Kingdom
    • Mondaq United Kingdom
    • 20 Enero 2012
    ...which intended to outlaw such provisions but arguably has done the opposite! Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2332 (TCC) Dispute or disputes?: The Council in this case argued that more than one dispute had been referred to adjudication (including disputes......
  • Case Law Update December 2011
    • United Kingdom
    • Mondaq United Kingdom
    • 14 Diciembre 2011
    ...like declaratory relief and adjudicators' decisions. More than one dispute? Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] TCLR 8 The Council, as employer, sought to resist enforcement of the adjudicator's decision on the ground that Beam, the contractor, had referred 4 dis......
  • Adjudication: Was There More Than One Dispute?
    • United Kingdom
    • Mondaq United Kingdom
    • 4 Octubre 2011
    ...the case of Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2332 (TCC), Mr Justice Akenhead had to consider whether more than one dispute had been referred to adjudication. If that was the position, then the adjudicator's decision could not be The Facts: In early 2010, ......

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