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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Edmund Nuttall Ltd v R G Carter Ltd. [2002] EWHC 400 (TCC) (21 March 2002) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2002/400.html Cite as: [2002] BLR 359, [2002] TCLR 27, 82 Con LR 24, [2002] BLR 312, [2002] EWHC 400 (TCC) |
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QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
133-137, Fetter Lane, London, EC4A 1HD | ||
B e f o r e :
____________________
| EDMUND NUTTALL LIMITED | Claimant | |
| - and - | ||
| R. G. CARTER LIMITED | Defendant |
____________________
Martin Bowdery Q.C. (instructed by Greenwoods for the Defendant)
____________________
Crown Copyright ©
H.H. Judge Richard Seymour Q. C. :
Introduction
The events leading up to the Decision
The claim in question (“the May Claim”) had been sent by Nuttall to Carter under cover of a letter dated 18 May 2001. The amount of the May Claim was £1,979,752. That sum was made up as follows:-“Claim for the recovery of costs incurred as a result of the prolongation of the Works from 29th May 00 to 19 January 01. Claim for the recovery of additional costs incurred as a result of delay and disruption suffered to the progress of the Works.”
(i) Prolongation £474,018
(ii) Off Site Cost £108,938
(iii) Staff Thickening £242,070
(iv) Overtime £213,175
(v) Disruption £626,866
(vi) Increased Costs £ 4,043
(vii) Attendances £ 22,627
(viii) Overheads £212,227
(ix) Financing £ 75,788.The way in which the claim for extension of time had been formulated in the May Claim was to list in an appendix to the claim document a considerable number of occurrences during the course of the execution of the Sub-Contract Works and to indicate which of those occurrences was said to have caused delay, and how much delay was said to have been caused.
“On the basis of the information contained within the “Claim” document, we can only conclude that ENL [that is, Nuttall] have failed to demonstrate an entitlement to any additional extension of time to the periods for completion of the Subcontract Works beyond those previously fixed.”
“Now that the position regarding extensions of time to your subcontract has been clarified (with confirmation that your subcontract period for completion remains 16th June 2000) it is our intention to finalise and agree with you, the value of any additional expense so incurred in connection with the extension of time granted (i.e. the 18 calendar days arising from delayed possession).”
“In respect of you [sic] second paragraph and for the avoidance of any doubt we record that your confirmation that no further extension to the sub-contract period as stated in your letter MR/7333/24/1010 dated 23rd August 2001 is rejected.
Your consideration of our claim document is fundamentally flawed on a number of items and your transparent attempt to deny us our clear contractual entitlement is a cause of great concern. We therefore formally record that a dispute exists between us regarding the date for Completion of the Sub-Contract Works.”
“We have for a considerable time evaluated and included monies in your account for loss and expense arising from the extension of the subcontract period which has been awarded. Until recently, this has had to be carried out in the absence of any detailed information from yourselves. The values now included in our payment certification No. 25 are assessed from the information contained in your claim document dated 18th May 2001. Therefore, at no time, have we not complied with our contractual obligations towards you, as your letter seeks to suggest.
We have not however, made any payment for alleged “loss and expense” for the period of time after the date that has been set for subcontract completion. You have failed to demonstrate any entitlement under the subcontract, to an extension of time for this period, nor has your claim demonstrated, that the long delay in completing the subcontract works, was any thing other than as a result of your own failures, consequently you are in default and have no entitlement to further costs.
Your letter gives no explanation of why you conclude that our recent assessment of your claim document is “flawed”. Before we can respond to this allegation, you will need to explain the reasons why you believe our assessment is incorrect. Our response (to your claim) was both detailed and reasoned, and the conclusions reached therefore considered and justified. There is nothing we have received from you to date, that would lead us to change this conclusion.
That you have constructed from spurious premises, a large voluminous claim document, does not in its self, lead to the conclusion that you have any entitlement to further monies for loss and expense. You do not. Your claim document is both incorrect in its extent and its detail. ”
“Having thoroughly considered the contentions raised in your claim document and the circumstances under which the works were carried out, we are satisfied that our decision then not to grant any further extension of time, is correct. This being the case, we feel that your sweeping rejection of this decision is unreasonable and premature, especially as there has been no opportunity afforded to date, to investigate whether any common ground exists between our two parties.
We are willing therefore to meet with you to discuss the issues surrounding this decision. Please contact either the undersigned or Chris Snowling to arrange a convenient time.”
“We are surprised by your enquiry regarding a meeting to discuss these matters. In view of the contents of your letters dated 23rd August 2001, 4th September 2001 and 3rd October 2001, please advise what has now changed to warrant further discussions.”
“We can only conclude from the response your letter makes, that you have no intention of taking part in a meeting to pursue further agreement of this account.”
“We act on behalf of Edmund Nuttall Limited (“Nuttall”) and refer to Nuttall’s agreement with RG Carter Limited (“Carter”) for the carrying out of the sub-structure and super-structure works on the above project [that is, the Project].
As you know, the Agreement between Carter and Nuttall incorporates the Standard Form of Sub-Contract for Domestic Sub-Contractors 1980 Edition (May 1998 Edition incorporating Amendments 1) 1986; and 2 and 3 (1988); 5, 6, 7 and 8 (1989); and 10 (1998) (“DOM/1 1998 Edition).
A dispute has arisen between Nuttall and Carter as a result of Carter’s failure to grant Nuttall a proper extension of time pursuant to clause 11 of the DOM/1 1998 Edition. Not only has Carter failed to grant Nuttall a proper extension of time but it has also failed properly to ascertain the time-related prolongation costs to which Nuttall is entitled. It has also resulted in Carter withholding from Nuttall substantial amounts in respect of set-offs and contra-charges for delays which Carter alleges Nuttall has caused to completion of the Project and to hand-over dates of Nuttall’s works to following trades.
Carter’s failures, as set out above, have led to a substantial under-valuation of Nuttall’s work, most recently reflected in Carter’s valuation statement number 27 dated 6 December 2001. Nuttall therefore dispute that valuation statement number 27 is a proper valuation of the works. In this Adjudication Nuttall seeks a re-valuation of Carter’s valuation number 27 in respect of items related to prolongation, notably prolongation costs and prolongation related set-offs. Nuttall reserves its rights in respect of all other items in the valuation.
The letter went on to set out the relief claimed on behalf of Nuttall. This included:-We hereby give you notice, on behalf of Nuttall, of its intention to refer the above dispute to Adjudication under clause 38a of the DOM/1 1998 Edition, which forms part of the Agreement between Nuttall and Carter.”
“(i) (a) A declaration that, pursuant to clause 11.3 of the DOM/1 1998 Nuttall is entitled to an extension of time of 235 days to the revised Completion Date for the works (making the new Completion Date 19 January 2001) or, alternatively, for such other period as the Adjudicator considers appropriate.
(b) Alternatively, a declaration that, pursuant to clause 11.7 of the DOM/1 1998 Edition, Nuttall is entitled to an extension of time of 235 days to the revised Completion Date for the works (making the new Completion Date 19 January 2001), or, alternatively, for such other period as the Adjudicator considers appropriate…
(iii) (a) An order that Carter should pay to Nuttall the sum of £1,476,212.87 (or such other sum as the Adjudicator may consider appropriate) in respect of Carter’s valuation number 27 corrected to take into account Nuttall’s prolongation and associated costs and time-related set-offs, plus VAT, plus interest pursuant to clause 21.3.4 of the DOM/1 1998 Edition (or such other clause as may be relevant) within 7 days of the date of the Adjudicator’s Decision.
(b) Alternatively, an order that Carter should pay to Nuttall the sum of £1,286,385 (or such other amount as the Adjudicator may consider appropriate) in respect of damages for breach by Carter of the express and/or implied terms of the Contract.”
Item May Claim Caletka Report
Prolongation £474,018.00 £531,284.68
Off Site Cost £108,938.00 £113,722.79
Staff Thickening £242,070.00 Nil
Overtime £213,175.00 £213,175.00
Disruption £626,866.00 Nil
Increased Costs £ 4,043.00 £41,946.89
Attendances £ 22,627.00 Nil
Overheads £212,227.00 £277,528.00
Financing £ 75,788.00 £ 75,788.00
The basis of the Decision
The submissions of the parties
“(ii)…different periods were claimed in relation to sections of the works but the overall period claimed remained identical.
In relation to the financial claims, Mr. Pennicott accepted at paragraph 13 of his skeleton argument that:-(iii) ….the delay analysis evidence submitted to the Adjudicator (in the form of Mr. Caletka’s report) adopted a different methodology from that previously presented albeit that the same overall conclusion was arrived at.”
However, Mr. Pennicott submitted that these matters did not affect the nature of the dispute referred to adjudication. He relied on the decision of H.H. Judge Anthony Thornton Q.C. in Fastrack Contractors Ltd. v. Morrison Construction Ltd. [2000] BLR 168, and in particular paragraphs 23 and 30 of that judgment.“…in the Adjudication claim three heads of claim previously advanced were not pursued; the quantum of three heads of claim was subject to a small increase and one head of claim (for which the Adjudicator, in the event, did not award Nuttall anything) was increased substantially.”
“At the date of the Notice of Adjudication being the 14th December 2001 and/or at the date of service of the Referral Notice being the 4th January 2002 the matters detailed within the Notice of Adjudication and/or the Referral Notice had not been brought to the attention of R G Carter and R G Carter had not been given the opportunity of considering and then either admitting, rejecting or seeking clarification of these substantially new claims and as such there was no dispute at the date of the Referral Notice.”
“The principles may be summarised as follows.
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the “matrix of fact”, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars: the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749.
(5) The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v. Salen Rederierna AB [1985] AC 191,201:
“if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”
“The first point is this: was there any dispute or difference arising between the contractors and the engineer? It is accepted that, in order that a dispute or difference can arise on this contract, there must in the first place be a claim by the contractors. Until that claim is rejected you cannot say that there is a dispute or difference. There must be a claim and a rejection in order to constitute a dispute or difference.”
“The words “dispute or difference” are ordinary English words and unless some binding rule of construction has been established in relation to the construction of those words in cl. 35 of the JCT contract I am of opinion that the words should be given their ordinary every day meaning. ”
“23. In some cases, a referring party might decide to cut out of the reference some of the pre-existing matters in dispute and to confine the referred dispute to something less than the totality of the matters then in dispute. So long as that exercise does not transform the pre-existing dispute into a different dispute, such a pruning exercise is clearly permissible. However, a party cannot unilaterally tag onto the existing range of matters in dispute a further list of matters not yet in dispute and then seek to argue that the resulting “dispute” is substantially the same as the pre-existing dispute…
27. A “dispute” can only arise once the subject-matter of the claim, issue or other matter has been brought to the attention of the opposing party and that party has had an opportunity of considering and admitting, modifying or rejecting the claim or assertion. This is clear from a consideration of two decisions, one concerned with arbitration and the other with the dispute resolution procedure that is required to have been gone through in many civil engineering contracts before arbitration can be commenced. In the arbitration field, the Court of Appeal confirmed in Halki Shipping Corporation v. Sopex Oils Ltd. [1998] 1 WLR 726 that a “dispute”, the existence of which is the statutory pre-condition of a party being entitled to enforce an arbitration clause and to have legal proceedings stayed for arbitration under the Arbitration Act 1996, has a wide meaning. The term includes any claim which the opposing party has been notified of which that party has refused to admit or has not paid, whether or not there is any answer to that claim in fact or in law. In the civil engineering field, the Court of Appeal in Monmouthshire County Council v. Costelloe & Kemple Ltd. (1965) 5 BLR 83 held that clause 66 of the fourth edition of the ICE Conditions of Contract, which only allowed for arbitration where there was a dispute or difference that had already been referred to and decided by the engineer, required there to have been a claim by one party and its rejection by the other before a dispute or difference could be referred to the engineer. The Court of Appeal held that a rejection of a claim does not necessarily occur when the claim is submitted to the engineer or during subsequent exchanges of views in relation to that claim. A dispute only arises when the claim is rejected in clear language. An obvious refusal to consider the claim or to answer it can, however, constitute such a rejection…
30. It is first necessary to consider the nature of the jurisdictional dispute that arises when a party contends that there is no underlying dispute that can be referred to an adjudicator. If it is contended that there is no dispute at all since, for example, the whole of the subject-matter of the proposed adjudication has not been claimed, notified or rejected, the dispute raises a genuine jurisdictional dispute since, if that challenge is made out, there is no statutory power to appoint the adjudicator. If, on the other hand, the essence of the complaint is that what has been referred is broadly the same dispute as pre-existed the challenge but that there have been amendments of detail and degree, the challenge is not to jurisdiction since within the matters referred is a common core of disputed material which can legitimately form the subject-matter of a potentially valid adjudication. It would then be for the adjudicator, assisted by the referral notice, to identify that common core and adjudicate upon it whilst deciding that the residue should be dismissed or should not be determined at all. The second alternative is possible since the Scheme only requires the adjudicator to decide “the matters in dispute” (paragraph 20) and this residue would not consist of matters “in dispute”.”
“For there to be a dispute for the purposes of exercising the statutory right to adjudication it must be clear that a point has emerged from the process of discussion or negotiation has ended and that there is something which needs to be decided..
…Instead Sindall asked MEA to look at a mass of information to which MEA had not been previously referred or specifically referred. Even if MEA had not said that it needed more time it would not have been required to provide an answer within seven days. A person in the position of the Contract Administrator must be given sufficient time to make up its mind before one can fairly draw the inference that the absence of a useful reply means that there is a dispute.”
Consideration and Conclusions
“I think that the primary meaning of the word “claim” – whether used in a popular sense or in a strict legal sense - is such as to attach to it the object that is claimed; and is not the same thing as the cause of action by which the claim may be supported or as the grounds on which it may be based. In the OXFORD DICTIONARY “claim” is defined as first, “ A demand for something as due; an assertion of a right to something”; secondly
Thus it seems to me that, while a “dispute” can be about a “claim”, there is rather more to a “dispute” than simply a “claim” which has not been accepted.“Right of claiming; right or title (to something or to have, be, or do something; also on, upon the person, etc., that the thing is claimed from). ”
“An oral or written discussion of a subject in which arguments for and against are put forward and examined.
An instance of disputing or arguing against something or someone, an argument; a controversy; esp. a heated contention, a disagreement in which opposing views are strongly held.
The act of disputing or arguing against something or someone; controversy, debate ”