BUSINESS AND PROPERTY COURT OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QB)
7 Rolls Building, Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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(1) STEPHEN HIRST (2) MOUNTAIN DEVELOPMENT COMPANY LIMITED |
Claimant |
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(1) MICHAEL PAUL DUNBAR (2) MD CONSTRUCTION (LEEDS) LIMITED (3) MD CONSTRUCTION (BRADFORD) LIMITED |
Defendants |
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Martin Bowdery QC (instructed by Milners Solicitors) for the Defendants
Hearing dates: 22nd , 23rd, 24th, 25th, and 29th November 2021
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Crown Copyright ©
Mr Justice Eyre:
Introduction.
i) In performing the Works were the Claimants acting on their own behalf or pursuant to a contract with the Defendants or any of them?
ii) Is the claim statute-barred?
iii) If the Claimants have a potential entitlement to payment what, if any, sum is due?
Assessment of the Evidence of the First Claimant and of the First Defendant.
The History of the Parties' Dealings.
"My client had no direct legal involvement in the Belize company. My client had a business relationship with a Mr Ricky Ryder with respect to the purchase of this property and continues to have so with respect to several other projects and has done so for many many years. That gentleman acquired the property through the vehicle of the Belize company. My client (Mick Dunbar) had an informal agreement with Mr Ryder with respect to the purchase and how profits/losses/costs/income should be split etc and the purchase from the administrator was as far as they were concerned a joint enterprise by them. As you might appreciate it was Reward Capital who insisted the property be transferred to my client from the Belize company before they agreed to lend against it. My client agreed with Mr Ryder on completion of that transfer to MD Construction (Leeds) Limited that he (Mr Ryder) would have no further involvement."
"1. I have visited the site at appropriate periods from the commencement of construction to the current stage to check:
(a) Progress
(b) Use of materials, and
(c) Conformity with structural drawings, specifications and Building Regulations.
2. At the time of my last visit on, the property had reached the stage of completion.
3. So far as could be determined by each periodic visual inspection, the property has been constructed:
(a) to a satisfactory standard, and
(b) in general compliance with the approved structural drawings and specifications and/or Building Regulations.
4. I was originally retained by MD Construction Ltd, who are the developers in this case."
"Please find enclosed a breakdown of net costs which I have incurred in the sum of £476,886.29 less monies owed to you.
Please can we meet up and to discuss and finalise this, however I would like this to be paid as opposed to having a piece of land in lieu of the debt as you previously offered.
I have on numerous occasions tried to contact you by phone and text.
Can you please ring me at your earliest convenience."
The First Issue: Did the Defendants or one of them engage the Claimants or one of them to perform the Works?
Is the Claim statute-barred?
The Applicable Law.
"(1) Every construction contract shall
(a) provide an adequate mechanism for determining what payment becomes due under the contract, and when, and
(b) provide for a final date for payment in relation to any sum which becomes due.
The parties are free to agree how long the period is to be between the date on which a sum becomes due and the final date for payment.
(1A) The requirement in subsection (1)(a) to provide an adequate mechanism for determining what payments become due under the contract, or when, is not satisfied where a construction contract makes payment conditional on
(a) the performance of obligations under another contract, or
(b) a decision by any person as to whether obligations under another contract had been from performed.
(3) if or to the extent that a contract does not provide such provision as is mentioned in subsection (1) the relevant provisions of the Scheme for Construction Contracts apply."
"(1) a construction contract shall, in relation to every payment provided for by the contract
(a) require the payer or a specified person to give a notice complying with subsection (2) to the payee not later than five days after the payment due date, or
(b) require the payee to give a notice complying with subsection (3) to the payer or a specified person not less than five days of the payment due date.
(5) If or to the extent that a contract does not comply with subsection (1), the relevant provisions of the Scheme for Construction Contracts apply."
"Where the parties to a construction contract fail to provide an adequate mechanism for determining either what payments become due under the contract, or when they become due for payment, or both, the relevant provisions of paragraphs 4 to 7 shall apply. "
"Payment of the contract price under a construction contract (not being a relevant construction contract) shall become due on
(a) the expiry of 30 days following the completion of the work, or
(b) the making of a claim by the payee,
whichever is the later"
"(1) where the parties to a construction contract fail, in relation to a payment provided for by the contract, to provide for the issue of a payment notice pursuant to section 110A (1) of the Act, the provisions of this paragraph apply.
(2) the payer must, not later than five days after the payment due date, give a notice of the payee complying with sub-paragraph (3).
(3) a notice complies with this sub-paragraph if it specifies the sum that the payer considers to be due or to have been due at the payment due date on the basis on which that sum is calculated.
..."
"the date of the accrual of a cause of action for sums due under a contract for work or services will usually depend on the terms of the contract itself. However, it is important to note that starting point for any consideration of this question is the established principle that, in the absence of any contractual provision to the contrary, a cause of action for payment for work performed or services provided will accrue when that work or those services have been performed or provided. In such circumstances, the right to payment does not depend on the making of a claim for payment by the party has provided the work or services. "
"in the case of a person who is not a solicitor, and who does work for another person at his request on the terms that he is to be paid for it, unless there is some special term of the agreement to the contrary, his right to payment arises as soon as the work is done; and thereupon he can at once bring his action."
"save where it is the essence of the arrangement between the parties that a sum is not payable until demanded (e.g. a loan expressly or impliedly repayable on demand), it appears to me that clear words would normally be required before a contract should be held to give a potential or actual creditor complete control over when time starts running against him, as it is such an unlikely arrangement for an actual or potential debtor to have agreed."
"In these circumstances, it seems to me that clear words are needed if the Court is to construe an agreement between the parties in such a way as to give the creditor control over the start of the limitation period and/or to avoid the Courts becoming engaged in determining satellite issues which deprive the limitation provisions of their central purpose: certainty and the avoidance of stale claims."
Did the Scheme apply to the Contract?
The Limitation Position if the Scheme does not apply.
The Limitation Position if the Scheme does apply.
If the Claimants have an Entitlement to Payment what Sum is due?
"In my opinion I do not consider it possible to provide any alternative assessment based on a notional reasonable value for the following reasons:
a. It is clear that Hirst was not the only contractor working on the site and there is no clear distinction as to the works performed by Hirst and the works performed by others. It is, therefore, practically impossible to differentiate the Hirst works.
b. The scope of works performed is at best loosely defined and evidenced.
c. There is almost no factual evidence of the works that were required to the houses. In any event in my opinion pricing the schedule is problematic as there is no evidence of the state and/or condition of the properties prior to Hirst's commencement and the schedule is so bland in its descriptions that it is simply not possible to determine the works that are actually required in order to price the described items.
d. There are no doubt other examples which effectively make it impossible to ascertain the scope of the works that was actually undertaken, or the order in which the works were undertaken. In my opinion this means that it is impossible to quantify and rate the works performed.
f. Invariably on completion projects like this there will be an element of reworking of works performed by others either because those works were incorrectly performed, or because the works were performed in the wrong sequence and need to be removed to allow something else to take place. There is limited evidence of the works actually performed and hence identifying the extent of these reworks is practically impossible."
"there are no construction drawings, specifications meeting minutes or reports in sufficient detail to provide clarification of the extent, or programming, of the Project Work. The Claimant's Disclosure Documents are a mix of invoices, delivery notes, timesheets and expense claims."
"4.2.10 it would have been preferable for the Claimant to have evidenced its payments by way of accounting records linking the payment to a specific invoice/application. Unfortunately, this information either is not available or has not been provided and hence it is impossible precisely to link a particular payment to a particular invoice and hence a particular claim within the Final Account. A particular issue with the way the information has been presented is there is no evidence of the tax status of each subcontractor so it is not known which would be the subject of tax deductions. It is therefore not possible to know what amount should have been paid to each subcontractor to pay the provided invoices in full.
4.2.17 in my opinion there is simply insufficient evidence available to enable me to untangle the payments and/or set off amounts in order to provide an opinion upon the reasonable value which should be associated with this Project."
Conclusion.