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England and Wales High Court (Technology and Construction Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Shaw & Anor v MFP Foundations and Pilings Ltd [2010] EWHC 1839 (TCC) (23 July 2010) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2010/1839.html Cite as: [2010] EWHC 1839 (TCC) |
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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 :
____________________
Mr Christopher Shaw and Mrs Gabriele Shaw |
Claimant |
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- and - |
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MFP Foundations and Pilings Ltd |
Defendant |
____________________
Mr Richard Bradley (instructed by C. E. Law) for the Defendant
Hearing date: 14 July 2010
____________________
Crown Copyright ©
The Hon Mr Justice Edwards-Stuart :
Introduction
(1) The arbitrator failed to consider whether the liquidated damages provision in the contract (which provided for liquidated damages of £Nil) survived the repudiation of the contract by MFP and whether, in consequence, Mr and Mrs Shaw were entitled to recover the costs of the delay in carrying out the works.(2) The arbitrator failed to consider whether or not there should be a substantial deduction in the preliminaries claimed by MFP in respect of services that were not provided, such as the requirement to have a competent foreman on site at all times.
(3) The arbitrator failed to consider the defects in the new external oak patio French windows supplied by MFP (but ultimately not installed by them). The defects consisted of splits in the oak uprights of the doors.
(4) When considering the claim for prolongation by MFP the arbitrator failed to make a deduction in the sum claimed for preliminaries to reflect the fact that certain services were not provided, ought to have taken into account the absence of any extensions of time granted by the architect and, finally, failed to address the question of whether it was fair, when considering MFP's claim for prolongation, to allow MFP to recover prolongation costs whilst denying Mr and Mrs Shaw any entitlement to liquidated damages.
(5) The arbitrator failed to take into account certain items claimed in respect of the costs of completing the work incurred by Mr and Mrs Shaw. Further, it is alleged that the arbitrator's approach to valuation was wrong in that he should have allowed Mr and Mrs Shaw to recover any costs reasonably incurred in order to complete the works, rather than the reasonable cost of completing the work that was not fully carried out.
Sections 68 and 69 of the Arbitration Act 1996
"1. A party to arbitral proceedings may...apply to the Court challenging an award in the proceedings on the grounds of serious irregularity affecting the tribunal, the proceedings or the award...
2. Serious irregularity means an irregularity of one or more of the following kinds which the Court considers has caused or will cause substantial injustice to the applicant
(a) Failure by the tribunal to comply with Section 33 (general duty of the tribunal)...
(d) Failure by the tribunal to deal with all the issues that
are put to it."
"(1) ...a party to arbitral proceedings may...appeal to the Court on a question of law arising out of an award made in proceedings...
(2) An appeal should not be brought under this action except...
(b) With leave of the Court;
The right to appeal is also subject to the restrictions in Section 70(2) and (3).
(3) Leave to appeal shall be given only if the Court is satisfied
(a) That the determination of the question will substantially affect the rights of one or more of the parties;
(b) That the question is one which the Tribunal was asked to determine;
(c) That on the basis of the findings of fact in the award
(i) The decision of the tribunal on the question is obviously wrong or
(ii) The question is one of general public importance and the decision of the tribunal is at least open to serious doubt and
(d) That, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question...
(5) The Court shall determine an application for leave to appeal under this section without a hearing unless it appears to the Court that a hearing is required."
The cost of completing the work
Item Sum claimed Sum awarded
57 | £2700 | Nil |
58(a) | -£750 | |
59, 60, 67-70 | £2862 | £995 |
Miscellaneous | £993.75 | Nil |
64, 77 | £2815 | Nil |
61 | £1860 | £183.30 |
62 | £580 | £60 |
65, 75 | £450 | Nil |
73 | £420 | £420 |
74 | £5780 | £2000 |
77(a) | £80 | Nil |
78 | £2625 | £1000 |
79 | £550 | Nil |
TOTALS | £21,655.75 | £3,908.30 |
Award No 2 £44,190.37
Award No 3 £43,190.73
(The difference in the pence appears to be a typing error. The arbitrator also made a small adjustment to the interest calculation and some other figures, resulting in an overall reduction of the sum awarded, plus interest, of about £600, instead of the £1,000 attributable to item 78.)
The liquidated damages provision
Prolongation
"[Mr and Mrs Shaw] claim in Reply to Rejoinder 22/09/09 [paragraph 49] a reduction (or credit) for Preliminaries of £18,798.00. The Arbitrator rejects this head of reduction for the reason that the Contractor expended that sum. At in any event, it also fails because of the consequences of the repudiatory breach are taken elsewhere, i.e. Cost of completing the Works via Contractors."
Latent defects
The application for permission to appeal under section 69 of the Act
"If the Claimants are wrong on the first points of appeal under section 68 of the Arbitration Act 1996 set out above, and the Court finds that the arbitrator has in fact addressed the question of the proper measure of damages for repudiatory breach under the express terms of the contract, the Claimants submit that the Arbitrator's approach was obviously wrong as he addressed himself to the reasonableness of the costs incurred and not to whether these costs were reasonably incurred in all the circumstances."
The application for an extension of time for appealing
Conclusions
APPENDIX
CHRONOLOGY (based on chronology prepared by MFP)
Date |
Event |
27/4/07 | Minor Works Contract for MFP to perform works of extension and repair and conservation to the East Lodge of Great Morton Hall, Cheshire, for £168,253 in accordance with specifications, schedules of works and drawings prepared by an architect John Carter employed by and on behalf of Mr and Mrs Shaw ("CGS"). Mr Carter is described in the contract as the Adviser. His role is set out as at paragraph 2 of the terms and conditions as issuing further information and instructions, inspecting the work in progress and having the power to reject work not in accordance with the contract. In fact, the work had commenced 4 days before the contract was signed on the 23rd April 2007. |
10/10/07 | Original date for completion. |
8/2/08 | CGS order MFP to leave the site. |
7/8/08 | Notice of Adjudication served by MFP. |
25/9/08 | Adjudication award in favour of MFP in the sum of £80,954.55 plus interest of £547.85 to the date of the award accruing at £23.83 a day. Order MFP pay adjudicator's fee on an interim basis and that they are entitled to recover that fee from CGS. The award was not paid. CGS employed an advisor to act on their behalf in the adjudication a Mr Wilson. Mr Wilson maintained as a preliminary point that the adjudicator had no jurisdiction. This was a contested issue and the adjudicator decided that he did have jurisdiction. Thereafter CGS decided to refuse to participate in the adjudication further. |
29/9/08 | CGS serve an Evaluation by Mr Wilson (the Wilson Evaluation) which values the works performed by the Defendant pursuant to the Minor Works Contract in the sum of £113,619.45 and states that CGS have paid a total of £102,419.98 making a balance due from the Claimants to the Defendants of £11,199.47. |
10/10/08 | Claim Form issued by MFP averring that CGS had failed to pay the adjudication award and the adjudicator's fees in the further sum of £4,852.16. |
20/11/08 | HHJ McKay sitting as a Judge of the TCC dismisses CGS's application for a stay pursuant to Section 9 of the 1996 Act and gives MFP Judgment in the sum of £88,199.66 with costs assessed at £2,959.50. The costs order has been paid. No other part of the Judgment sum was paid until partial payment on 25/6/09, 26/6/09 and 29/6/09 as noted below. |
16/12/08 | HHJ Platts sitting as a Judge of the Technology & Construction Court dismisses CGS's application to set aside Judgment and summarily assesses the Defendant's costs in the sum of £3,079.50. |
13/1/09 | No part of the Judgment sum having been paid and the costs order of HHJ Platts not having been paid, MFP issue Statutory Demands addressed to both of CGS. |
17/2/09 | CGS make applications to set aside the Statutory Demands. Those applications were not served on MFP either by the Court or CGS. |
10/3/09 | No applications to set aside the Statutory Demands having been served bankruptcy petitions were issued. |
12/3/09 | Appeals against the orders of HHJ McKay and HHJ Platts dismissed by Coulson J. The Judgment is reported at [2009] EWHC 493. |
14/4/09 | Consent Order whereby it is agreed that in the event that the Statutory Demands are set aside the bankruptcy petition shall be dismissed, the hearing of the applications to set aside Statutory Demands being transferred to the Manchester County Court. |
19/6/09 | Statement of Maria Magdalene Smith CGS's Solicitor in support of an application to set aside statutory demands states at paragraph 37 that CGS accepted that £11.199.47 was due. |
19/6/09 | Notice of Arbitration. The dispute is clearly delineated in the Notice of Arbitration as follows:- "The Claimants contend that taking into account all matters between them a gross sum is due to the Respondent of no more than £113,619.45. That gross sum will be paid in full on or before 29th June 2009. The Respondent contends that approximately £190,000 is properly due to them". |
25/6/09 | £14,560.07 paid. |
25/6/09 | Mr Bingham appointed Arbitrator. CGS agreed to pay the Arbitrator's fees and recover from MFP whatever was due inter parties. |
26/6/09 | £400 paid. |
29/6/09 | £5,841.79 paid. |
3/7/09 | CGS amends its valuation of the claim and the Wilson Evaluation so as to aver that the gross sum due to MFP was £11,555.72. |
5/7/09 | Mr Bingham identifies 10 issues for consideration. He invites the parties to identify any further issues. No further issues were identified by the parties at that time. |
27/7/09 | MFP provided submissions on the Wilson Evaluation. |
28/7/09 | Meeting on site. Mr Bingham states he will decide issue 8 identified as whether MFP or CGS were entitled to treat the contract as terminated wrongly by the other. |
31/7/09 | Award No. 1: CGS entitled to treat the contract as terminated wrongly by MFP (sic). |
3/8/09 | Mr Bingham issues further directions. |
13/8/09 | CGS provide an undated Reply to the Defendant's submissions on the Wilson Evaluation. CGS now assert that rather than £11,555.72 being due to MFP a balance of £31,843.75 is due to them. |
14/8/09 | MFP provides submissions on the issue of prolongation (issue number 8). |
24/8/09 | MFP make sealed offer to accept £40,000. |
2/9/09 | Mr Bingham issues further directions. |
11/9/09 | MFP serves a Rejoinder. |
15/9/09 | Mr Bingham issues direction number 4. |
21/9/09 | CGS provides a Reply to Rejoinder. This asserts that a balance of £22,869.81 is due to them. |
28/9/09 | Mr Bingham gives MFP leave to make further comments on specific items. |
2/10/09 | MFP provides further representations. |
12/10/09 | CGS provides an updated final Reply. |
11/11/09 | Both parties make further representation on the issue of Stone and Stone supply. |
27/11/09 | Arbitrator writes: "Pursuant to the Arbitrator's Terms of Appointment here is a detailed fee note bringing the account up to date. Would the Claimant please arrange settlement by CHAPS. The award on the substantive issues (costs reserved) will be signed on Monday 30th November 2009. It may be taken up on settlement of fees pursuant to s56 Arbitration Act 1996". |
30/11/09 | Award No. 2 signed. Awards MFP £44,190.73 plus £3,519.26 interest a total of £47,509.97. |
4/12/09 | CGS email taking all steps to pay fee note promptly. |
10/12/09 | Hearing before HHJ Davies of CGS's appeal against dismissal of application to set aside summary judgment. Judgment reserved to 6/1/10. |
14/12/09 | CGS email part payment to be made tomorrow balance end of December. CGS request MFP to pay - rejected. In fact, while CGS made a part payment of £10,000 they did not pay the balance. |
6/1/10 | HHJ Davies' judgment setting aside Statutory Demand on grounds that there was a cross claim equally the claim. The judgment is reported at [2010] EWCH 9 (Ch). |
21/1/10 | MFP pay balance of Mr Bingham's fees. |
21/1/10 | Award sent by email to the parties. Hard copy received by CGS on 22/1/10. |
27/1/10 | CGS make s 57 application to correct award. |
6/2/11 | Award No. 3 as follows: CGS's application to correct award pursuant to section 57 dismissed as out of time. If the application had been made in time Mr Bingham would have corrected the award to £43,190.73 plus interest of £3,743.20 – total £46,933.93. |
5/3/10 | Arbitration claim form issued. |
First Witness Statement David Jackson |
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25/3/10 | Order Edwards-Stuart J |
28/4/10 | Award No. 4 – award as to costs. MFP pay CGS's costs of £612.60 and arbitrator's fees of £2,596.25 in respect of a failed application for security for costs. CGS to pay their own costs and reasonable costs of MFP of the arbitration on a standard basis up to 9/9/09 and thereafter on an indemnity basis save that in respect of the costs of the repudiation issue. MFP is to pay its own costs and pay the reasonable costs of CGS on the standard basis. MFP to bear the arbitrator's fees and expenses of the repudiation issue. CGS to bear the remaining fees and expenses of the arbitrator. The assessment of the quantum of costs other than as set out above is to be determined by Mr. Bingham who has given directions for determination. |
2/6/10 | MFP's contingent application for leave to appeal if CGS granted leave to appeal |
3/6/10 | Defence and Counterclaim |
3/6/10 | Second Witness Statement of David Jackson |
21/6/10 | Reply and Defence to Counterclaim |