Laycock Mechanical Services Limited v Kingsmead Homes Limited

1. This matter comes before the court today for a determination as to whether the Part 8 claim which the Defendant in claim ending 23 and the Claimant in claim ending 25, Kingsmead, should be permitted to argue that it is entitled to a declaration within Part 8 proceedings which has the potential of defeating the Claimant’s Part 7 claim and within that the application for summary judgment for the sums awarded by the adjudicator, Mr Lloyd, arising out of a subcontractual relationship between the Claimant as subcontractor and the Defendant as employer for building works in Rock Ferry.

2. There is no traditional opposition to summary judgment from the Defendant, Kingsmead, in that there is no argument that the adjudicator has acted outside his jurisdiction, nor is there any argument that the decision reached was in breach of natural justice, which are ordinarily the two limited ways in which a Defendant can oppose a summary judgment application of this sort.

3. However, the TCC also recognises, as set out in section 9.4 of the latest TCC guide, that there may be circumstances in which a Part 8 claim of this sort can be entertained by the court where a party the subject of an adjudication is particularly aggrieved by what it perceives as a significant error on the part of the adjudicator which can swiftly be dealt with within the confines of Part 8 and therefore which it would be unfair to require, as is normally the case, a Defendant to “pay now and argue later”, by means of a Part 7 claim somewhere down the road.

4. This is the position here and what the Defendants’ stated case is, through Mr East, is that the adjudicator in this case was asked to determine what the contractual completion date was for the works which the Claimant performed pursuant to the subcontract as the first issue for determination set out at paragraph 65 of the adjudicator’s actual decision. To put it more precisely, was there a completion date in the subcontract? What Mr East says is that the adjudicator, in determining that, as at paragraph 50, the only dispute in respect of the subcontract document was whether the programme dated 22 August 2023 was incorporated or included and coming to the conclusion that it was not so incorporated such that there was no completion date, clearly erred in terms of deciding that there was no evidence before him that any other completion date should be applicable, in particular in relation to what the adjudicator at paragraph 52 describes as “a version of the programme dated 23 June 2023”, in determining that that was not a contractual document. The adjudicator decided that everything that was set out in the covering letter of 24 July 2023 would be a contractual document but in that the August programme was not directly referred to therein, it was not incorporated. What, says Mr East, he failed to address was the incorporation of the earlier July programme which, in itself, provided for a completion date and insofar as the Claimant accepts, as again the adjudicator acknowledges at paragraph 52, that it had seen the July 2023 programme, he was wrong not to adjudicate upon interpreting the contract in the context of the existence of that programme of works and, as Mr East would say, to interpret it as having been incorporated within the contract and thus producing or resulting in a fixed completion date at some time, as I understand it, in or around November of 2023. He argues, by means of reference to an email dated 24 July 2023 showing, on its face, the attachments sent by the Defendant to the Claimant for the purposes of providing relevant contractual documentation, that the adjudicator either ignored or should have been aware of the programme having been sent at that time and that the adjudicator was therefore wrong simply to confine himself to documentation referred to in the covering letter of the same date as set out at paragraph 53 of the decision.

5. Therefore, says Mr East, in that (1) the Claimant, Laycock, accepts that they had and had seen the July 2023 programme and in that (2) the email clearly demonstrates, in the absence of any evidence from Laycock that the email has been in some way tampered with or does not represent what he says it represents, that they had notification of that programme at or before they entered into the contract itself and therefore as at September of 2023 when the contract was signed, they were and ought to have been bound by the timescales set out in that programme of works, irrespective of the jettisoning by the adjudicator of the August 2023 programme of works.

6. Insofar as that ought to have resulted in a decision that there was a completion date, it then follows, says Mr East in response to rather intense questioning from me, that the adjudicator ought then properly to have turned his mind to whether the Claimant was entitled to any extension of time to complete the contractual works in order to avoid having to pay the damages which they had been charged by the Defendant and which they were seeking to recoup by the vehicle of the adjudication. Because he had not found a completion date it follows, says Mr East, that he was looking or turning his mind solely to a reasonable period of time for completing the works as opposed to any proper or different test to be applied for the purposes of an extension of time in the context of a completion date having contractually been set.

7. In those circumstances, when then applying that analysed background to the procedure approved of by the TCC and in particular at 9.4.5, Mr East submits that the criteria insofar as they have to be met at this stage are met and that the Part 8 claim should be directed to be heard, utilising the two hours that have been set aside on 20 January for the purposes of the summary judgment application, which application requires no further adjudication beyond deciding whether it is defeated by the Part 8 claim.

8. Mr Hurst points out that there is a clear structure to be adopted for the purposes of deciding whether there should be permission to oppose a summary judgment application in this way and firstly at paragraph 9.4.5 of the TCC guide the court has to be satisfied that the adjudicator has made a clear error whilst acting within his jurisdiction and Mr Hurst urges upon the court that there has been no clear error here and that indeed the Defendant has not succeeded in persuading the court that there has been a clear error.

9. I am persuaded by Mr East that there is sufficient evidence, for these purposes, of a clear error in relation to the substantive point, that is in considering the August 2023 programme and in failing to give any substantial consideration to the July 2023 programme and whether beyond the covering letter of 24 July 2023 there was any other evidence that the July programme had, in fact, been provided at a pre-contractual stage by the Defendant to the Claimant and that the adjudicator either ignored the contents of the 24 July email from the Defendant to the Claimant or simply was not aware of its contents when he ought to have been so aware and as such that he fell into error in reaching his determination the contractual documents could only be confined to those listed in that covering letter and not including any programme appended to the subcontractor agreement.

10. Moving on to the residue of the test then. That is divided into three parts, labelled (a), (b) and (c). (a) is that there is a short or needs to be a short and self-contained issue which arose in the adjudication and which the Defendant continues to contest. I have struggled, to an extent, with being able to determine this in as full a way as I would have hoped due to the absence of documentation in any bundle put before me, arising out of the adjudication process, setting out what the Defendant’s point was or what the Defendant’s arguments were and in particular what has vexed me in the lead up to this as to whether the Defendant, after the horse has bolted, is seeking to add in an additional argument in relation to the July 2023 programme which was not properly ventilated in front of the adjudicator. My concerns were founded not least because of the adjudicator’s consideration that the time when damages were claimed by the Defendant from the Claimant prior to the adjudication, seemed to run from December 2023 which would seem to coincide with the culmination of the August programme as opposed to an attempt to claim damages reliant upon a failure to adhere to the July 2023 programme.

11. However, having listened carefully to the submissions on both sides and not having been supplied with any evidence by the Claimant that this is an entirely new issue as opposed to an issue which was there all the time but because of the adjudicator focusing on August 2023 seemed to get lost in the process because of his conclusion as to the extent of the contractual documentation, I am just persuaded that little (a) is made out and that there is a sufficiently short and self-contained issue which arose in the adjudication, to put it this way, namely the issue as to whether or not there was a completion date agreed to between the parties and no more specific than that, as Mr East essentially put it, the adjudicator was not asked whether the August programme provided a completion date which was contractually binding but was asked whether there was a completion date at all and that, it seems to me, does give rise to this issue which is founded upon the error into which I have found the adjudicator fell.

12. Secondly then that the issue requires no oral evidence. The Claimant’s position, certainly initially as I understood from Mr Hurst’s skeleton argument, was that this was a case which should not be permitted to proceed because there was a fundamental factual dispute between the parties, namely whether the August programme was or was not included within the contractual documentation; and if that had been the issue there is no doubt in my mind that the Claimant would have prevailed today. However, the issue has turned out to be whether or not the adjudicator properly considered the potential contractual effect of the July programme when reaching his decision and I have heard nothing from the Claimant to persuade me that there is anything of a factual nature integrally bound up with that issue to render the Part 8 proceedings inappropriate.

13. Thirdly, that the issue is one which, on a summary judgment application, it would be unconscionable for the court to ignore. I did take Mr East down a rather long and bumpy path in taking him to task as to whether, in fact, the unconscionability test was satisfied in this case because of my concern that on the one hand these might be new arguments rather than old arguments and secondly that the outcome, ultimately, might be no different than the decision reached the adjudicator, in other words, if a reasonable period of time which the adjudicator found is likely to coincide with what, if any, extension of time should have been granted upon a contractual completion date, there seems to be little purpose to be served with going through a Part 8 claim and a substantial difficulty in determining that it would be unconscionable for the court to ignore the adjudicator’s error. But Mr East has argued, persuasively, that those are issues bound up with the Part 8 decision making process and not issues which should prevent, perhaps other than in the clearest possible case, the court being persuaded to direct that the Part 8 claim should proceed as part of the summary judgment application hearing and although Mr Hurst, in support of the Claimant’s position says, well, the court should not be persuaded on what it has heard, that any different outcome is likely in this case and therefore it would not, in any way, shape or form, be unconscionable for the court to ignore the part 8 claim, I am satisfied that there is sufficient merit to this claim as a whole for those matters properly to be ventilated as part of a full Part 8 hearing.

14. Therefore, I am not persuaded to grant summary judgment today. I am not persuaded to dismiss the part 8 claim. I will give whatever other directions are felt to be required for the purposes of the court utilising the hearing on 20 January for the hearing of the Part 8 claim. ---------------