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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Cubitt Building & Interiors Ltd v Richardson Roofing (Industrial) Ltd [2008] EWHC 1020 (TCC) (09 May 2008) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2008/1020.html Cite as: [2008] EWHC 1020 (TCC), [2008] BLR 354, [2008] CILL 2588, 119 Con LR 137 |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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CUBITT BUILDING AND INTERIORS LIMITED |
Claimant |
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- and - |
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RICHARDSON ROOFING (INDUSTRIAL) LIMITED |
Defendant |
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12-14 New Fetter Lane, London, EC4A 1AG.
Telephone No: 020 7936 6000Fax No: 020 7427 0093
Gaynor Chambers (instructed by CJ Hough & Co Ltd) appeared for the Defendant
____________________
Crown Copyright ©
MR. JUSTICE AKENHEAD :
Introduction
History
"2. The contract period will be 50 weeks commencing March 2003.
3. Firm contract.
4. Liquidated & ascertained damages will apply at the rate of £30000.00 per week or part thereof.
5. Payment terms will be 4 weeks from the end of the month.
6. Your tender will be deemed to include 2.5% Main Contractors Discount.
7. The defects liability period will be 12 months from the date of practical completion of the main contract.
8. Insurances: clause 21.1.1. £5,000,000.00
10. Retention 5%
13. The Supporting Documents for the purpose of your tender include extracts from the Preliminaries, relevant Preamble pages, Specification pages, and relevant pages from the Pricing Schedule upon which you should base your tender."
There was no hint or suggestion in this invitation that any specific standard terms or Cubitt's own terms would apply.
"In response to your enquiry we have pleasure in submitting our present prices as follows, subject to our standard terms and conditions overleaf and the particular conditions set out below.
Supply and Fix Rigidal standing seam roof system all as specification H31. ...
We return herewith one copy of your Bill of Quantities duly priced.
The total amount of our priced items is £445,528.22 net plus VAT.
All contract and subcontract orders or agreements placed with us on or after the 1st May 1998 shall incorporate the provisions of the Housing Grants, Construction and Regeneration Act 1996.
Our tender will be held open for 3 months from the date of submission thereafter it will be subject to review and adjustment with respect to fluctuations in the price of labour, materials and plant. ...
Day work rates Labour RICS + 250%
Materials and Plant Costs + 25% ..."
Mr. Hanwell was the estimator for Richardson who signed that quotation and was personally involved in the pricing.
"1.2 The Subcontractor agrees to waive his standard terms and conditions in favour of the DOM/1. Agreed.
1.3 Valuations will be monthly with payment being due for payment within 28 days of Architects Certificate. Agreed.
1.4 The sub-contract order will be placed in the sum of £404,628.22 and is fully fixed until September 2004 and including 2.5% MCD. Agreed.
1.5 Retention of 5% to be held until practical completion of the project, when 2.5% will be released and the remaining 2.5% within 28 days of receipt of the making good defects certificate. Agreed. …
3.0 PROGRAMME AND METHOD STATEMENT.
3.1 Period required for production of working/design drawings A/B 4wks
3.2 Period to be allowed for approval of working/design drawings. ½ wks.
3.3 Period required for manufacture from approval of drawings. 3/4wks.
3.4 Total period required for design 8-10 wks from placement of order.
3.5 Total period required for works on site.
3.6 RR agreed to work to programme as detailed below.
Area of Works | Earliest Start Date | Latest Start Date | Duration |
Block A (Roof) | 07.07.03 | 28.07.03 | 9-10 wks |
Block B (Roof) | 21.07.03 | 9-10 wks | |
Block D (Roof) | 3 wks | ||
Block C (Roof) | 6 wks | ||
Cladding | 6 wks |
3.8 Total number of visits required Roof - six visits Cladding 3 visits ...
9.0ADMINISTRATION
9.1 Subcontractor's Insurance Cover:
Employers Liability
Public Liability
9.4 Day works [all rates described as "Given in Tender"]
9.5 Liquidated and Ascertained Damages - the L & A damages and the Sub-Contract are £20,000.00 per week or part thereof. Agreed. ...
10.0 SITE DISCIPLINES.
10.1 Access to Site.
Old Bridge Street off of the High Street.
Deliveries to be booked into CBI booking system using forms, two hour time slot available ..."
There was attached to the completed subcontract meeting minutes a Schedule of Attendances which the parties representatives put crosses against all those attendances which were by agreement to be provided by Cubitt and by Richardson.
"Please accept this letter as notification of our instructions to proceed with the manufacture, supply and installation Roofing, Lead and Aluminium Flashings, Rainscreen, Cladding, Rainwater Pipework and Gutters, and Drawings at the above project, in accordance with the contract documentation listed on attached documents, for the sum of £401,666.58 less 2.5% Discount.
It is the intention that a formal sub-Contract will be entered into between us in accordance with the contract documentation listed on attached document. On a formal sub-Contract being entered into, the provisions of this letter shall cease to have effect and the works carried out and payments made pursuant to this letter shall be treated as having been carried out and made under the formal sub-Contract.
If at any time subsequent to the issue of this letter we give you written notice by fax or post, either that the project will not proceed for whatever reason or otherwise requiring you to cease work or part thereof, you shall immediately cease all services hereunder, in which case your entitlement would payment [sic] in accordance the provisions of DOM/1, save for loss of profit.
Pending the conclusion of a binding formal sub-Contract, payment for all work properly carried out will be fully in accordance with the terms and conditions of the sub-Contract.
Please acknowledge your acceptance of the above and your undertaking to commence now and proceed diligently with the execution of this instruction by signing and returning a copy of the letter only."
"We confirm acceptance of the contents of your letter dated 29 May 2003 and confirm that we are now proceeding with all necessary resources to meet your programme requirements."
Room was left for the signing and dating of this acceptance. There were no documents or list of documents attached.
"WE HEARBY [sic]place the subcontract, as defined by our standard terms and conditions ref Cubitt/SC1 (copy attached) and as set out below.
To carry out all works as detailed in our Letter of Intent to you dated 29/May 2003 ref DC/HWR/104 and as detailed in the attached schedule of numbered documents."
The "Gross Value of Order" was identified as £401,666.58 with a "discount" of 2.5% and a "retention" of 5%. The words quoted above "WE HEARBY ...AS SET OUT BELOW" are standard wording on the form whilst the other words quoted were written in ink. Further down on the face of the order the following appeared:
"As part of Cubitt ... Quality System Procedures it is required that you sign and return the yellow copy of this order as acknowledgment of acceptance, prior to payment being made to you".
Discussion on the Sub-Contract
(a) The DOM/1 contract envisages in Section C that 16 "parts" need to be filled in.
(b) It is clear in any event that a number of them contain default provisions, such as Parts 8 and 14 relating to the relevant body to nominate an adjudicator or arbitrator. Default provisions are provided that if no nominator is selected the RICS should be the appointer.
(c) All the other parts are capable of determination from that which was agreed at 12 May 2003. For instance, it is clearly possible to define the Sub-Contract Works (Part 2). It is possible to ascertain what day work rates were agreed from the tender (Part 5). The retention percentage was identifiable (Part 7). Attendances were wholly agreed (Part 9).
(d) Ultimately, Miss Franklin for Cubitt identified only three matters in DOM/1 which she relied upon as needing to have been agreed which were not. First, she said that Article 2 of the DOM/1 Articles of Agreement requires the parties to identify whether the price for the subcontract works was in effect a lump sum price or a sum to be determined upon re-measurement of the works. There is an issue between the parties as to whether or not the subcontract was on one basis or the other. It is however not necessary for me to determine that because it must be one or the other. It remains a matter of argument and, possibly, evidence as to the price basis which the parties agreed. The parties appear to have been "agreed" as to a price of £404,628.22 subject to discount and fixed until September 2004. It was not as if the minutes for the parties at the meeting were not agreed. The issue is as to the interpretation to be put on those words in the context of what was said at or before that meeting. That is readily capable of ascertainment. However, because I did not hear evidence or, indeed, much argument as to whether it was lump sum or re-measurable basis for payment, it would be inappropriate for me to make a final decision on that point.
(e) Next Miss Franklin said that, because the parties had not agreed an overall completion date the subcontract if it incorporated DOM/1 could not effectively operate because a completion date was necessary to enable the extension of time and liquidated damages provisions to operate. I have formed the view, however, that the parties were agreed as to the time and progress obligations. They agreed a commencement date, albeit that there were alternative dates. They agreed periods for the production of drawings. It is clear, from Mr. Hanwell's evidence which I found convincing, that an overall completion period was agreed. Thus it is possible to ascertain what the completion date or dates would be, depending on which of the optional dates for commencement was taken.
(f) Finally, Miss Franklin says that because the parties had not agreed the basis upon which VAT would be charged, the DOM/1 Conditions cannot work. There was however fundamental agreement, if one refers back to the tender, that VAT was to be charged. There appear to be no issues between the parties as to that. The options in DOM/1 effectively involve the mechanics of how and when VAT is payable. If the parties have not agreed the mechanics of how and when (as opposed to if) VAT is payable, then as a matter of statute there will be a default provision which is, in essence, that a VAT registered service provider (such as Richardson) may charge for VAT in effect by way of invoice. Since the mechanics were in any event never agreed as such, I cannot believe that the absence of agreement is of any ultimate significance in contractual terms.
"Please accept this letter as notification of our instructions to proceed with the manufacture, supply and installation ... for the sum of £401,666.58, less the 2.5% Discount."
"The Sub-Contract Order and the Terms and Conditions should be read and construed as a single document. In the event of any conflict between:
1.7.1 The Sub-Contract Order and the [standard Cubitt] Terms and Conditions, the Sub-Contract Order shall prevail"
Thus, as there clearly is a clash between the DOM/1 Conditions incorporated expressly by the order and Cubitt's standard terms, it is clear that the DOM/1 conditions prevail as they are specifically incorporated by the order.
"The written words are entitled to have a greater effect attributed to them than the printed words, in as much as the written words were the immediate language and terms selected by the parties themselves for the expression of their meaning" (see Robertson v French (1803) 4 East, 130 per Lord Ellenborough).
"Reasonable sufficiency of notice. It is the third of these rules which has most often been to be considered by the Court. The question whether the party tendering the document has done all that was reasonably sufficient to give the other notice of the conditions is a question of fact in each case, in answering which the tribunal must look at all the circumstances and the situation of the parties. Cases where the notice has been held to be insufficient have been those where ... on documents sent by fax, reference is made to conditions stated on the back but those conditions were not in fact stated on the back or otherwise communicated ... It is not necessary that the conditions themselves shall be set out in the document tendered. They may be incorporated by reference, provided that reasonable notice of them has been given.
Onerous or unusual terms. Although the party receiving the document knows it contains terms and conditions, if a particular conditions relied upon is one which is a particularly onerous or unusual term, or is one which involves the abrogation of a right given by statute, the party tendering the document must show that it has been brought fairly and reasonably to the other's attention …".
There was at least one onerous term, in Cubitt's terms, which is not in the standard contracts, namely the conditions precedent in Clause 12 (see above).
"This is not a case where a party declares that the terms are available for inspection. It is a case where, on documents sent by fax, reference is made to terms stated on the back, which are, however, not stated or otherwise communicated. Since what was described as being on the back was not sent, it was a more cogent inference that the terms were not intended to apply."
The Adjudication Issue
"Alternatively if, which is denied, the Subcontract contained an arbitration clause, Cubitt is nevertheless first entitled to an adjudication of the dispute pursuant to Section 108 of the Housing Grants, Construction and Regeneration Act 1996 and the Court has an inherent discretion to stay arbitral proceedings whilst such an adjudication takes place."
"Article 3.1. If any dispute or difference arises under the sub-contract either party may refer it to adjudication in accordance with Clause 38A."
Clause 38A sets out in effect what is to happen when there is a reference to adjudication. There is no wording which suggests that the parties or the party seeking adjudication is compelled to proceed to adjudication. Clause 38A.4.1 states:
"When pursuant to Article 3 a party requires a dispute or difference to be referred to adjudication then that party shall give notice to the other party of its intention to refer the dispute or difference, briefly identified in the notice, to adjudication ..."
"Subject to Article 3, if any dispute or difference ... shall arise between the Contractor and the Sub-Contractor ... then it shall be and is hereby referred to arbitration ..." (emphasis added)
"A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section."
Simply as matter of construction, that does not impose an obligation on the part of a party to a construction contract to refer disputes to adjudication: a right is not an obligation.
"I derive from the authorities noted above the following three principles which seem to me to be relevant and applicable to contracts containing a binding adjudication agreement:
(a) the court will not grant an injunction to prevent one party from commencing and pursuing adjudication proceedings, even if there is already court or arbitration proceedings in respect of the same disputes ...
(b) the court has an inherent jurisdiction to stay court proceedings issued in breach of an agreement to adjudicate ... just as it has with any other enforceable agreement for ADR ...
(c) the court's discretion as to whether or not to grant a stay should be exercised in accordance with the principles noted above. If a binding adjudication agreement has been identified then the persuasive burden is on the parties seeking to resist the stay to justify that stance ..."
"Accordingly, even if I was wrong in my construction of clause 19, and it was not a mandatory adjudication provision Cubitt would still be entitled to assert their right to have any dispute referred, in the first instance, to adjudication. Because there was a binding adjudication agreement, they would still be entitled at least to ask the court for a temporary stay of the court proceedings. It would then be a matter of discretion as to whether or not the stay was granted. Therefore, after all this, it seems to me that perhaps the only substantive difference between the two potential situations (a mandatory agreement to adjudicate or one that is merely optional) is that if, as I have found, the adjudication provisions were mandatory, the court is likely to be even more willing to exercise its discretion in favour of the stay than will be the case if there was a simple right to adjudication."
I have added the emphasis to Cubitt above to underline the fact that the learned judge was addressing what might happen if Cubitt wanted to exercise a right to adjudicate
"In DGT Steel, there was considerable debate about whether the adjudication agreement in that case was compulsory, with the parties obliged to submit any dispute to adjudication, or simply optional, with the parties having the right (but not the obligation) to submit disputes to adjudication. The judge concluded that, ultimately, it made little difference since, even if the agreement was not compulsory, the type of adjudication agreement envisaged by the 1996 Act which gave each party the right to adjudicate a dispute (no matter which side of the dispute they might be on), constituted a binding agreement which gave each party the right, in appropriate circumstances, to seek to enforce their entitlement by way of an application for a stay".
Decision