England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice
		7th October 2010

MR. JUSTICE AKENHEAD:

1. This claim relates to an adjudication and an adjudication decision obtained by the claimant, All Metal Roofing Limited ("All Metal"), a roofing subcontractor who had been retained by Kamm Properties Limited, the main contractor in respect of a development at 353-367 Kilburn High Road, London NW6. The main building project was for the erection of office units and residential accommodation. There is no challenge to the adjudicator's decision other than that the adjudicator may not have had jurisdiction to decide what he did. It is suggested there was no construction contract in writing or fully in writing because there was, it is asserted, oral agreement only about the time for completion.
2. I am first going to look at the facts and, in doing so, I am not to be taken as making any final findings of fact. If there are any further legal proceedings between the parties, this judgement is based only on the information/evidence put before the court. All Metal has put forward two witness statements of Mr. Ryan, the solicitor employed by them, - who put before the court all material documents, including the subcontract documents. That evidence is not formally challenged in the sense that there are no written witness statements from Kamm.
3. I should say that Kamm was initially represented by solicitors who have recently come off the record. Mr. Kerai, the senior director, has appeared before me today. He has put forward his company's position with great courtesy and making the best points that he can.
4. Initially what happened was that on or about 3^rd December 2008, Kamm sent to All Metal plans, details and specification sheets for render and zinc work for All Metal to provide its best quote. That was under cover of an email dated 3^rd December 2008. The email was responded to by a written quotation dated 19^th January 2009 from All Metal. It says:

"Further to your valued enquiry, we have pleasure in submitting our quotation in accordance with the Schedule of Rates.

To supply and fix 1.0mm Rheinzink Graphite Grey finish zinc reveal panel cladding, together with flashings, trims, insulation and support system, etc, in the sum of £45,519.63 exc. VAT.

Our offer excludes design, but we would be pleased to advise on details for incorporation in the Architects design; should full design service be required, we would be pleased to advise additional costs.

The prices are based on current metal and currency values, to be reviewed on receipt of order.

All works to be re-measured on completion.

We enclose an Attendance Schedule for your perusal and this should be read in conjunction with this offer.

Prices nett and do not include MCD [Main Contractor's Discount], Monthly Valuations. Payment due 30 days from our invoice date. We do not accept pay when paid Terms. Dayworks: £30 per hour. Materials: Cost + 25% Plant: Cost + 25%.

We trust our quotation is of interest and look forward to your further instructions."

Attached to that in writing was a detailed breakdown in terms of prices and rates and totals for the work that was being quoted for. The total sum was £45,519.63. There was also the schedule of attendances, which indicated who was to do what for whom on the site.

5. It emerged several months later, before that quotation was accepted , that there were new and revised drawings which were sent to All Metal by Kamm. They are listed in emails dated 11^th March 2009 and, by an email of that date, Kamm sent to All Metal an email which recorded that the amended drawings were attached together with what were called the "rational details of the panels" required in certain windows. Various other matters were raised and it was clearly intended that there should be a further quotation. Indeed that further quotation was provided on 19^th March 2009 by All Metal , where it says this:

"Further to our previous quotation and subsequent meetings on site, we have pleasure in submitting our revised quotation in accordance with the Schedule of Rates.

The quotation has been prepared in accordance with [and there were then set out the revised drawings].

To supply and fix 1.0mm Rheinzink Graphite Grey finish zinc reveal panel cladding, together with flashings, trims, insulation and support system, etc in the sum of £51,308.64 exc. VAT.

Our offer excludes design, but we would be pleased to advise on details in the Architects design; should full design service be required, we would be pleased to advise additional costs.

All terms and conditions as original quotation.

We trust our quotation is of interest and look forward to your further instructions."

It is clear on the face of that letter that there had been at least one meeting between the parties before that letter was sent.

6. Following the sending of that letter a purchase order was sent. There are two versions of the purchase order which are in identical terms, save that one is dated 20^th March and the other is dated about a month later 17^th April 2009. I do not have to decide whether the order was sent in March or April because it is immaterial. But it is a relatively typical purchase order. Kamm is identified as the sender of the order; the vendor is described as All Metal; delivery is required to the Kilburn High Road site; there is a supplier contact given, Mr. Shanahan; there is a reference number for the order; and the delivery date is "ASAP"; that means as soon as possible. There is then set out below a description of the work which is being ordered:

"To supply and fix 1.0mm Rheinzink Graphite Grey finish zinc reveal panel cladding, together with flashings, trims, insulation and support system, etc. All as per your quote dated 19^th March 2009."

The sum quoted is there set out: "£51,308.64" and then these words:

"Please liaise with Max on site for programme and details. I will attach details of windows, etc."

One of the standard form terms on the face of the order is this:

(1) "Any amendments/alterations to this purchase order must be agreed prior to delivery."

The total sum including VAT is given as £59,004.94. It seems clear that that order was acted upon by All Metal who sooner or later began their work on the order, necessarily, initially, involving procurement and began to deliver materials to site and to start work.

7. It is clear that, as Mr. Kerai has told me, there were some delays which were not necessarily the responsibility of All Metal and some extension of time was agreed or at least put forward by the defendants. It is clear on the evidence that the parties fell into dispute, at least in July, 2009 if not before, in relation to delivery. There were assertions and counter-assertions as to whose fault or responsibility it all was. It is clear that Kamm took the view that the delay was attributable to All Metal, although not necessarily absolutely all of it, and that seems to have been challenged by All Metal. Invoices were submitted; the first of which was paid in the sum of approximately £13,000, but the later invoice for over £30,000 was not paid. So it was that the matters in dispute about the unpaid invoice were referred to adjudication.
8. Mr. Phillip Fiddler was appointed as adjudicator. There are no challenges put before the court as to whether the appointment was valid or invalid or whether there was any other jurisdictional challenge other than that all or part of the agreement was agreed orally. There was a Notice of Adjudication served and followed after the adjudicator's appointment by a referral notice to adjudication. The referral notice was dated 7^th April 2010.
9. A document headed "Defence" was drafted by lawyers on behalf of Kamm and submitted on 19^th April 2010. At para.6, it was pleaded that:

"The parties met on site in about March 2009. At that time the Responding party had received the Referring party's quotation, but had not accepted it. The Responding party was Mr. Kerai together with his site agent, Mr. Vaghji met Mr. Shanahan for the referring party. Mr. Shanahan was told expressly that the contract between the Responding party and its main contractor - Globeplan Developments Ltd - required the Responding party to hand over the site to Globeplan at the end of June 2009. It was explained that the last works to be undertaken on the site will be the connection of utilities such as gas, water and electricity. For that purpose all scaffolding on the site would have to be dismantled by the end of May 2009. Accordingly, the installation of cladding had to be completed by that date."

The pleading went on to say that:

Mr. Shanahan [of the claimant] assured Mr. Kerai and Mr. Vaghji that the Referring party could work to that timetable and complete the works by the end of June 2009."

The remainder of that pleading went on, in effect, to say that there was a valid complaint about delay which justified the defendant in not paying any sum otherwise due to the claimant.

10. Now, because it appears that the defence had been related to the Notice of Adjudication as opposed to the referral, the defendant was permitted to put in a further defence which it did several days later on 21^st April 2010. It is accepted that in this document a reservation as to jurisdiction was properly made, subject to an argument that it was too late to make a reservation of jurisdiction. Paragraph 1 said:

"This defence is served in response to the Referral Notice to Adjudication raised by the Referring party - All Metal Roofing Limited. It is served without prejudice to the Responding party's contention that the contract between it and the referring party was not a contract in writing within the meaning of Section 107 of the Act and that the Adjudicator has no jurisdiction to make an adjudication thereon."

It went on in para.7 that the purchase order was sent out in April 2009 and there was a repeated assertion that agreement was reached to the effect that All Metal would complete its work, so that the works would be completed by the end of June 2009. Paragraph 12 says this:

"Materially, it is averred that the parties entered into a contract in or about April 2009 based upon the Referring party's quotation and the purchase order raised by the Responding party on 17^th April. However the contract was varied orally or contained express oral terms, namely that time was of the essence and that the time for completion of the Referring party's works was to be no later than the end of June 2009. In the premises the contract was not a contract in writing within the meaning of Section 107 of the Act in that all the terms have not been evidenced in writing and the Adjudicator has no jurisdiction to adjudicate upon any dispute arising under it."

Kamm went on to deal with the delays that were said to have happened and to justify the withholding of any sums otherwise due to All Metal.

11. I should point out there is no suggestion that any Withholding Notice within the meaning of Part 2 of the 1996 Act had ever been served by Kamm.
12. The further defence was responded to in a reply submitted in the adjudication on 27^th April 2010. The adjudicator issued his decision in two parts: the first part dated 30^th April 2010; and the second part, in effect, by way of a letter dated 13^th May 2010. No issues arise, so far as the enforceability of this adjudication decision is concerned, in relation to the timing of those two parts of the decision. It is clear that, in the first part of the decision, he reviewed all the issues between the parties. So far as the oral contract point was concerned, he reviewed the arguments. In para.34, he says this:

"It follows that all the express terms to the Agreement were either in writing or subsequently confirmed in writing such as to satisfy Section 107(2) of the Act. Therefore I conclude that the Agreement was a written construction contract to which the Act applies. That is contrary to Kamm's submission."

The adjudicator then reviewed the remainder of the dispute and formed the view that Kamm was to pay the invoice sum plus VAT and interest which had accrued to date; that Kamm should pay All Metal's costs of adjudication and his fees. It was really in the second part of the adjudication decision that that was quantified.

13. The adjudication decision was not honoured by Kamm and part of the reason for that was that Kamm was having to address winding-up proceedings by HMRC. Again, to be fair to All Metal, they did not seek to enforce the decision immediately until it was clear that those winding-up proceedings were withdrawn or dismissed.
14. So far as the law is concerned, it is uncontroversial that I will just summarise the position. For there to be a valid construction contract all the terms of the contract must be in, or evidenced by, writing. The decision of the Court of Appeal in RJT Consulting Engineers Limited v. DM Engineering (Northern Ireland) Limited [2002] BLR 217 makes that absolutely clear. It is clear that it is not only the material terms but all terms which must be in, or evidenced in, writing. It follows that, if particular terms are agreed only orally and are not evidenced in writing, an adjudicator will not have jurisdiction to deal with a decision arising under the contract.
15. Issues are taken in relation to whether or not there was an objection to the jurisdiction by Kamm in this case, and reference has been made to a number of cases: Aedifice Partnership Limited v. Mr. Ashwin Shah [2010] EWHC 2106 TCC in which the court summarised the various strands of authority at para.21, which I will not set out but do otherwise have regard to. There are other cases such as the Project Consultancy Group v. The Trustees of the Grey Trust [1999] BLR 399 (TCC); Ale Heavylift v. MSD (Darlington) Limited[2006] EWHC 2080 (TCC); and Total M & E Services v. ABB Building Technologies Limited[2002] EWHC 248 (TCC).
16. I now move on to discuss the issues between the parties. The only issue with which I can be concerned here is whether or not the adjudicator had jurisdiction. The only ground on which I can consider that, on the basis of the arguments put before me, is whether or not there was an oral term about completion obligations which was not recorded in writing. Mr. Kerai has fairly sought to make the point that his company was seriously let down by All Metal, and what he regards as it's failure to comply with its time obligations, with the result that substantial sums of money in relative terms have been held back by Kamm's employer and, consequently, his company is in some real financial difficulties. Unfortunately, the reason that I cannot deal with that issueor the merits of this complaint is that I am only concerned with the enforceability of an adjudication decision. It was not (certainly not obviously) wrong for the adjudicator to disregard the cross-claim for delay because of the absence of any Withholding Notice under the Act.
17. So I must then turn to the position in relation to the Agreement. It seems to me that all terms of the contract, subject arguably to the time for completion, were recorded in writing. Again, to be fair to Mr. Kerai, I do not think that he suggests otherwise. It is unfortunate that Kamm, for, perhaps, understandable reasons, has not submitted any evidence in writing in the terms of a written witness statement. But I proceed on the basis that, at the very least for argument purposes, what Mr. Kerai told me, albeit not under oath, clearly was, at least, arguably right. What he told me was that before the order was sent out he had had discussions with All Metal's representative (probably Mr. Shanahan) about time for completion. He says that oral agreement was reached that completion would take place on or by the end of May, 2009, at least in sufficient time to enable Kamm to complete in accordance with its agreed programme.
18. Mr. Kerai also says that, following the sending of the purchase order, there were meetings, attended by him, All Metal's representative and representatives of the architect and the employer, in which there were agreements reached about completion at different times to reflect the changing circumstances. He says very frankly and candidly that those meetings were minuted in writing, but he has been unable to produce those today.
19. So far as the post-order meetings are concerned, I do not need to be troubled with them. If they impacted at all on this jurisdictional issue, matters agreed were recorded in writing, albeit that the written documents have not been put before the court.
20. The only real issue, therefore, is whether an oral agreement reached prior to the purchase order being sent is one which impacts upon the jurisdiction of the adjudicator. I form the view that it does not. Whatever was orally agreed in terms of time, the order that was actually sent out was one which called for delivery "ASAP",that is as soon as possible. I do not have to determine today what "as soon as possible" actually meant in terms of completion on the ground, but it may be that that the meaning of this expression would have been informed as a matter of evidence by what had been said beforehand. The order went out and there was no contract at the very least until the purchase order went out. If the purchase order called for completion "ASAP" then that was something conceptually different from completion by a specific date, although it might come to the same thing as a matter of fact. The order was accepted, it seems to me, by the conduct of All Metal in continuing with or commencing and starting work. So All Metal's obligation was to complete as soon as possible and that is recorded in writing. It therefore follows, irrespective of what was argued in front of the adjudicator, that the adjudicator did have jurisdiction. It would therefore follow that his decision was one that was reached within his jurisdiction and is enforceable.
21. As to the arguments, however, relating to whether or not the adjudicator was in effect given jurisdiction or whether jurisdiction was waived, I will at least say that the original defence did not reserve the position on jurisdiction. Whilst it made the point about there being what was in effect an oral agreement, it did not seek to make a jurisdictional point about it. But it was only two days later that the further written Defence was submitted, which, undoubtedly, did make an effective reservation of jurisdiction. In the light of, rather than in spite of, the authorities, it may well be the case (and I do not need to make any final finding on this) that the defendant in the adjudication did make an adequate reservation of jurisdiction within a very short period of time of putting in the first Defence and, before it was suggested anyone acted on the defence to its detriment, the further defence was submitted, which did make an adequate reservation of jurisdiction. I would very much doubt whether a two day period in those circumstances, in the context of the initial defence, can be said to amount to an effective waiver of the right to raise a jurisdiction objection. So, on that argument, if it had been the only point, I would probably have decided against All Metal, but fortunately for All Metal that point is a point that is not the main one to be relied upon. In those circumstances, there would be judgment for All Metal.