Zvi Construction Company LLC v The University of Notre Dame (USA) in England
| Jurisdiction | England & Wales |
| Judge | Mr Stephen Furst |
| Judgment Date | 02 August 2016 |
| Neutral Citation | [2016] EWHC 1924 (TCC) |
| Docket Number | Case No: HT-2016-000094 |
| Court | Queen's Bench Division (Technology and Construction Court) |
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Stephen Furst QC
(Sitting as Deputy High Court Judge)
Case No: HT-2016-000094
Mr Alexander Nissen QC (instructed by Sheridan Gold LLC) for the Claimant
Mr Laurence Harris of Cooley (UK) LLP for the Defendant
Hearing dates: 17 th & 20 th June 2016
Judgment Approved
Mr Stephen Furst QC:
Introduction
This judgment concerns Part 8 Proceedings brought by the Claimant ("ZVI"), in essence, to prevent the Defendant ("UND") from enforcing the decision of an expert and to obtain declarations as to the meaning of the Development Agreement.
The Facts
TJAC Waterloo LLC (a company registered in the Commonwealth of Massachusetts) ("TJAC"), agreed to sell a property known as Conway Hall, 51–55 Waterloo Road, London SE1 8TX to UND pursuant to a Development Agreement dated 25 th October 2010. Completion of the sale was conditional upon certain building works being carried out to the property. It was agreed that ZVI would carry out the building works and it was also a party to the Development Agreement. One of the issues raised in this action is what obligations ZVI owe to UND under the Development Agreement.
Clause 17 of the Development Agreement states:
"17. Disputes
17.1 Save as otherwise provided in this agreement any dispute arising between the parties hereto as to their respective rights duties and obligations hereunder or as to any matter arising out of or in connection with the subject matter of this agreement (other than any with regard to the meaning or construction of this agreement) shall be determined by an independent duly experienced surveyor appointed (in default of agreement between the Buyer and the Seller within ten Working Days from the dispute arising) by the President or other proper officer of the Royal Institution of Chartered Surveyors on the application of either the Buyer or the Seller and:-
17.1.1 such person shall act as an expert and his decision shall be final and binding on the parties hereto
17.1.2 he shall consider all written representations made on behalf of the Buyer and the Seller which shall be delivered to him within 10 Working Days of notice of his appointment and he shall use all reasonable endeavours to give his decision as speedily as possible
17.1.3 if he dies or refuses or is unable to act the procedure for appointment shall be repeated as often as necessary and
17.1.4 his fees and the costs and expenses of his appointment shall be payable by the parties hereto in such proportions as he shall determine or in default of such determination equally between them.
17.2 Any dispute or difference arising between the parties hereto as to the meaning or construction of this agreement shall be referred to and determined by an independent solicitor or barrister of at least ten years' standing who is experienced in drafting negotiating and advising upon agreements similar to this agreement such independent person to be agreed between the parties hereto or (failing such agreement within ten Working Days from the dispute arising) to be nominated by the President or other proper office of the Law Society on the application of either the Buyer or the Seller at their joint expense and such person shall act as an arbitrator in accordance with the Arbitration Act 1996."
There is a close connection between TJAC and ZVI. The Development Agreement was signed by Mr Zvi Schwarzmann as "Manager" for both entities which appear to be part of a larger linked corporation known as The Triad Group.
On 12 th May 2011 ZVI entered into a Duty of Care Agreement with UND whereby ZVI agreed that it had and would continue to carry out "the completion of the design, construction and completion of the Project in a good and workmanlike manner and in compliance with the terms of the Building Contract and all associated drawings and specifications…" The Building Contract referred to was entered into between TJAC, as employer, and ZVI, as contractor, whereby it agreed to carry out the works as referred to under the Development Agreement. The Building Contract was in the JCT Design and Build Standard Form, Revision 2, 2009.
The building works were carried out between November 2010 and 12 th August 2011, when Practical Completion was certified, and the sale was completed and the property transferred to UND on 15 th November 2011 (according to submissions made to the expert on 30 th December 2014) or on 15 th December 2011 (according to the chronology provided by UND for this action).
UND alleged the work carried out by ZVI was defective. By a letter dated 12 th May 2014, solicitors for UND wrote a letter of claim to solicitors, who at that stage represented both TJAC and ZVI. The letter alleged that the Development Agreement provided that "TJAC/ZVI would renovate the building now know as Conway Hall, so it could be used by UND for student accommodation." It enclosed a Schedule of Defects and contended that they resulted from "contractual breaches under the Agreement; (ii) breaches of the specifications under the Agreement; and (iii) breaches of industry regulations and codes, which are also contractual breaches under the Agreement". It then went on to identify various clauses of the Development Agreement which it alleged had been breached as "a result of the defects in the works carried out by TJAC/ZVI". However it maintained that this was not a comprehensive list of all the contractual provisions upon which its clients would rely; "indeed they will rely on the whole of the Agreement and also on your client ZVI Construction LLC's Duty of Care Agreement with UND dated 12 May 2011." Under the Heading "Dispute Resolution Procedure", the letter referred to Clause 17.1 as providing for disputes to be determined by an experienced surveyor and suggested an adjustment in the timetable for the provision of written representations to the surveyor.
It is apparent that this letter was alleging that both TJAC and ZVI were liable under the Development Agreement for the defects and that UND intended to use the expert determination procedure set out in Clause 17.1 to resolve any disputes.
On 2 nd December 2014 UND requested the R.I.C.S to appoint an independent duly experienced surveyor to resolve the dispute. It is apparent that this request was made pursuant to Clause 17.1 of the Development Agreement. I have not been provided with this request for appointment but it is set out in the surveyor's ("the expert") determination on liability:
"The dispute arises from the purchase after renovation. The University of Notre Dame (UND) purchased Conway Hall from TJAC Waterloo LLC ("TJAC") on 15 December 2011. The contract for the purchase of the building required TJAC and ZVI Construction LLC ("ZVI") to refurbish the building prior to its sale to UND for use as student accommodation, and to ensure that the works undertaken complied with all necessary legislation, regulations and codes, and were free from defects.
A number of defects were reported by UND to TJAC following the purchase of Conway Hall. Several of these were very serious safety critical defects. A dispute subsequently arose between the parties regarding liability for the defects. The defects are extensive and cover issues of workmanship and compliance with regulations, including fire safety issues, plumbing, electrical and other Works.
A Letter of Claim was sent on behalf of UND to TJAC and ZVI on 12 May 2014. Correspondence between the parties has been exchanged in the intervening period and UNO has provided comprehensive detailed listings of the defects, together with its reasons for believing TJAC and ZVI to be responsible for the losses subsequently suffered.
Nevertheless it has not been possible to reach agreement in respect of any of the defects. UND is therefore invoking the dispute resolution clause contained at paragraph 17 of the Agreement dated 25 October 2010 between the parties (the Agreement). That clause requires such disputes to be resolved by expert determination. Once the expert has been appointed, the parties will have ten working days to submit written representations and the expert's decision shall be final and binding on the parties."
The solicitors then representing both TJAC and ZVI responded by letter dated 22 nd October 2014. Whilst the letter refers throughout to its "client", in the singular, there is nothing to suggest that the letter was not written on behalf of both ZVI as well as TJAC. Indeed one paragraph of the letter stated that "ZVI satisfied all of its fire and life safety requirements under the Development Agreement…", indicating that, at least, it represented ZVI. The letter went through the Schedule of Defects setting out why it contended that its "client", i.e. TJAC and ZVI, were not in breach of the Development Agreement. This letter did not assert that ZVI owed no relevant duties to UND under the Development Agreement nor did it take issue with the dispute being referred to the expert.
On 12 th December 2014 the R.I.C.S nominated Mr Anthony Bingham as the expert and on 17 th December 2014 he issued initial directions under "Notice No.1". That Notice named UND as the Claiming Party and TJAC and ZVI as the Respondents. The Notice stated that he, as the expert, was "not appointed to decide those matters embraced by the Contract at Clause 17.2". That clause, as set out above, concerned disputes about the meaning or construction of the Development Agreement which were to be referred to arbitration.
The parties cross-served submissions or representations on 30 th December 2014.
UND's Statement of Case largely repeated the allegations set out in...
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