WRB (N.I.) Ltd v Henry Construction Projects Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Pepperall |
| Judgment Date | 10 February 2023 |
| Neutral Citation | [2023] EWHC 278 (TCC) |
| Docket Number | Case No: HT-2022-000230 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2023] EWHC 278 (TCC)
THE HONOURABLE Mr Justice Pepperall
Case No: HT-2022-000230
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Rolls Building
Fetter Lane, London EC4A 1NL
James Frampton (instructed by Quigg Golden Solicitors LLP) for the Claimant
Joshua Brown (instructed by Archor LLP) for the Defendant
Hearing date: 15 September 2022
Approved Judgment
This judgment was handed down remotely on 10 February 2023 by circulation to the parties and by release to the National Archives.
By this action, WRB (NI) Limited (“WRB”) seeks to enforce an adjudicator's decision in its favour against Henry Construction Projects Limited. The claim arises out of a development at The Fox, 413 Green Lanes, Palmers Green, London, N13. Henry Construction was the main contractor for the development. By a sub-contract, Henry Construction engaged “WRB Limited” to design, supply, install, test and commission the mechanical, electrical and public health systems for the development for a total sum of £2,180,000 plus VAT.
The oddity of this case is that WRB is and always has been a dormant company and disputes that it was party to the sub-contract. It argues that the true employer under the sub-contract was WRB Energy Limited while Henry Construction contends that it contracted with the claimant. The parties might yet litigate that question, but the issue was resolved for present purposes by an earlier adjudication in favour of Henry Construction's argument.
Henry Construction does not resist judgment to enforce the adjudicator's decision although the parties are in dispute as to sum for which judgment should be entered. The principal issue is that Henry Construction seeks a stay of execution of any judgment.
THE ADJUDICATION
On 30 March 2022, WRB served a notice of adjudication in respect of the value of its interim application for payment number 15. Henry Construction had already paid the sum of £1,757,483.36 but WRB claimed that it was entitled to a further payment of £815,618.37. By its response, Henry Construction argued that it had overpaid WRB and sought a repayment of £563,395.65.
By a corrected decision dated 18 May 2022, the adjudicator, John Riches, decided that the true balance owed to WRB was £120,655.35 plus interest of £96.79 to 13 May 2022. He then directed that Henry Construction should pay the sum of £120,752.14 including the interest payable to 13 May 2022. He directed that thereafter Henry Construction should pay interest until payment at the daily rate of 99p.
In addition, the adjudicator directed that Henry Construction should pay any VAT payable upon the capital sum. He stated that his total fees and expenses were £18,775.80, being £15,646.50 plus VAT. He then directed as follows:
“189. In the first instance WRB shall pay my fees and expenses. Both parties shall remain jointly and severally liable for those fees and expenses.
190. Although their recovery is much less than the claim WRB are a net winner therefore HCP shall be liable for the whole of my fees and expenses.
191. HCP shall reimburse the whole of those fees and expenses to WRB at the same time as making payment of this Award.”
Henry Construction made no payments pursuant to the adjudicator's decision.
THE JUDGMENT SUM
On 19 May 2022, WRB's solicitors sought payment of the sum of £139,434.90 alleged to comprise the sum due (£120,655.35), the interest awarded to 13 May (£96.79), modest further interest then due (£6.93), and the adjudicator's fees and expenses (£18,775.80). The maths was wrong and it will be noted that WRB did not then seek any VAT on the adjudicator's valuation.
Henry Construction did not make payment and asked for an invoice. An invoice was then issued on WRB Group paper. Hedging its bets, the invoice was simply raised in the name “WRB” and removed all other details of the business that was raising the invoice. It now corrected the maths and sought payment of £139,534.87 into the solicitor's bank account. Again, no VAT was sought on the works.
Henry Construction raised its concerns that the invoice was not properly drawn and did not include the necessary statutory information as to the company raising the invoice. Accordingly, on 24 May 2022, WRB raised a revised invoice including its full name, WRB (N.I.) Limited, and details of its registered office and company number. The solicitors explained that their client did so expressly without prejudice to its primary case that it was not the true sub-contractor. They expressly added that WRB did not seek VAT on this payment “at this time.”
This adjudication claim was issued on 8 July 2022. The claim was pleaded in the sum of £136,398.64, being £120,752.14 inclusive of interest to 13 May 2022 and the adjudicator's net fees & expenses of £15,646.50. It recited the adjudicator's decision that Henry Construction was also liable to pay any VAT and sought payment of the “applicable VAT.” On the same day, WRB applied for summary judgment. The draft order again fudged the tax issue and sought payment of the “applicable VAT.”
In his skeleton argument, James Frampton, clarified that WRB seeks VAT on the adjudicator's valuation of the works. It therefore sought the new total sum of £173,026.32 comprising:
12.1 £144,902.57 (being £120,752.14 plus VAT) for the substantive sum and interest to 13 May 2022;
12.2 £123.75 for further interest to 15 September 2022;
12.3 £18,775.80 (being £15,646.50 plus VAT) for the adjudicator's fees and expenses; and
12.4 the further sum of £9,224.20 (£7,686.83 plus VAT) for the adjudicator's additional fees and expenses.
There are some immediate problems with that formulation. First, I note that WRB never directly asserted an entitlement to VAT. Indeed, the solicitors were astute pre-issue to make clear in their letter of 24 May 2022 that the company did not then seek VAT. Consistently, I have not been shown any VAT invoice, or indeed anything to indicate that the claimant was even VAT registered. Given WRB's dormant status that I will return to later in this judgment, it seems to me most unlikely that it is entitled to charge VAT on the work done. In any event, there is simply no evidence before the court to establish WRB's entitlement to charge VAT. In oral argument, Mr Frampton sensibly recognises the force of these points and concedes that he cannot pursue summary judgment for VAT on the sum payable under the sub-contract.
Secondly, the claim for the additional fees and expenses was not included in this application for summary judgment. Such additional claim is, however, pleaded in the Amended Particulars of Claim which were amended by consent pursuant to r.17.1(2)(a) of the Civil Procedure Rules 1998 on 2 September 2022. The amended statement of case pleads that the adjudicator issued a claim on 25 July 2022 against both parties to these enforcement proceedings to recover his unpaid fees. Those proceedings were said to have been settled on 18 August by a Tomlin order under which WRB agreed to pay the additional sum of £7,686.84 comprising an administration fee; additional fees; interest; the court fee; and legal costs. WRB argues that the additional liability arose from Henry Construction's failure to comply with the adjudicator's decision. While the claim was amended, there was, however, no amended application for summary judgment or fresh evidence. Instead the claimant simply seeks to place material before the court in respect of the amended case. That approach is, in my judgment, hopeless:
14.1 The only application for judgment before the court is that contained in the application of 8 July.
14.2 Rule 24.4(3) is clear in requiring the respondent to have at least 14 days' notice of the issues which it is proposed that...
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