HT-2023-000338 - [2024] EWHC 992 (TCC)

BACKGROUND

TClarke Contracting Ltd seeks declaratory relief against Bell Build Ltd as to the validity of a purported Pay Less notice and as to an adjudicator’s decision that it should pay Bell the sum of £2,129,672.69 plus any applicable VAT.

The claim arises in respect of works for the construction of a data centre at Greenwich Point in London. TClarke is the main contractor and, by an agreement entered into on 4 November 2021, subcontracted the supply and installation of the new sub and superstructures to Bell for a total contract price of £20,013,088. The subcontract incorporated the 2016 JCT Design & Build Subcontract Conditions. The parties are in dispute as to whether such contract was varied by a subsequent agreement in March 2023.

The disputed Pay Less Notice was issued by TClarke on 6 June 2023. By the details of its claim, TClarke seeks a declaration that such notice was valid and that accordingly no sums were due under Bell’s payment application 18. Such formulation is flawed since in fact the purported Pay Less notice accepted a liability to pay £710,120.61. That sum has, however, since been paid and TClarke clearly means to assert that no further sum is now due under payment application 18.

Secondly, TClarke pleads that the adjudicator was wrong in law to find that, upon the proper construction of the alleged variation, its notice was not a valid Pay Less notice. At paragraph 25 of its claim, TClarke pleads:

“Irrespective of whether that agreement was reached between the parties ([TClarke] denies that the same was ever reached), in any event, the Adjudicator’s Decision is wrong as a matter of law.”

Further, TClarke argues that the adjudicator wrongly relied on the alleged March agreement as a variation.

TClarke therefore seeks a declaration that the adjudicator’s decision should be set aside. It pleaded, at paragraph 5 of its details of claim, that there were wider disputes and that it raised the issues in its Part 8 claim without prejudice to its right to rely on further matters by way of defence to any enforcement claim brought by Bell.

Bell objected to use of the Part 8 procedure when acknowledging service. Although not required under Part 8, it pleaded a Defence. It pleaded that the issues were to be determined by the court afresh and that the adjudicator’s reasoning was not therefore relevant to this claim. Nevertheless, it asserted that the adjudicator had been right to find that the subcontract had varied the procedure for assessment of interim payments. Accordingly the question of the validity of the Pay Less notice would depend, among other matters, on the court’s findings as to whether, and if so how, the payment procedure had been amended and whether TClarke’s conduct in relation to payment applications 16 and 17 and its failure to respond to Bell’s queries as to the status of the purported notice estopped TClarke from now asserting that it was valid.

ARGUMENT

Krista Lee KC, who appears for Bell, argued that this is not a case which is unlikely to involve a substantial dispute of fact. She resisted TClarke’s argument that the case could be tried on assumed facts. She argued that the suggested assumed facts are simply not clear. Further, she argued that the assumed-facts approach is predicated on the flawed proposition that the court should review the adjudicator’s reasoning.

Andrew Singer KC, who appears for TClarke, responded that the claim does not seek to challenge the factual basis on which the adjudicator reached his decision. Rather, it seeks to challenge the proper construction of the Pay Less notice set against the facts asserted by Bell and found by the adjudicator. TClarke simply argues that, on that factual premise, a reasonable and objective interpretation of the notice should have been that it was intended to be a Pay Less notice. He added that the factual background “is agreed as found by the adjudicator” and that, accordingly, the issues of whether there was a contractual variation and the “contents of that agreement” are not challenged in these proceedings.