Kingsmead Homes Limited v Laycock Mechanical Services Limited

1. On 10 September 2024 Wayne Lord made a construction adjudication decision arising out of a dispute referred to him by Laycock wherein he ordered Kingsmead to pay Laycock £27,895.26 plus VAT plus his fees in the inclusive sum of £4,000. The dispute arose in a subcontract between Kingsmead as contractor and Laycock as subcontractor wherein Laycock agreed to do works of plumbing and electrics at a construction site at Seacombe on the Wirral, as a result of which Kingsmead had deducted liquidated damages from the contract sum on the basis of an alleged entitlement to do so on account of onsite delays by Laycock in performing the works.

2. Kingsmead did not pay the sum as ordered by the adjudicator or any part of it and in consequence Laycock issued Part 7 proceedings for enforcement purposes, accompanied by an application for summary judgment invoking the procedure approved of by the TCC as supportive of the policy underlying the adjudication process, namely “pay now, argue later”.

3. The application for summary judgment was given the usual directions and was listed before me to be heard on 20 January 2025 in the normal way. Although Kingsmead did not attempt to defend that application on the limited but normally available grounds of serious breach of natural justice or that the adjudicator acted outside his jurisdiction, Kingsmead does seek to oppose judgment being entered by way of a third method, namely, the summary disposal of a Part 8 claim for a declaration, made in opposition.

4. Following a directions hearing on 13 January 2025 I directed that the Part 8 claim should be heard on 20 January 2025 as being suitable for such disposal by reference to the restrictive test for the same as identified in the latest TCC guide at section 9.4.5. Should the Part 8 claim fail, there is no argument but that summary judgment should be entered on the Part 7 claim.

5. I have been assisted by skeleton arguments from both parties and the bundles uploaded to the CE file and I thank the advocates for their assistance by way of oral submissions in addition. The pertinent witness statements in the Part 8 claim are those of Craig McKibbin, managing director of Kingsmead, dated 2 December 2024 and David Rowson, director of Laycock, dated 17 December 2024.

6. Reference to the guide makes it clear that the following gateway to a successful part 8 claim applies: (i) the adjudicator must have made a clear error whilst acting within his jurisdiction, (ii) there must a short self-contained issue within the adjudication which continues to be contested by the defendant to the Part 7 proceedings, that is Kingsmead in this instance, (iii) the issue must require no oral evidence or other elaboration beyond that normally encountered during a summary enforcement hearing, and (iv) the issue must be one which on a summary judgment application it would be unconscionable to ignore.

7. Mr East for Kingsmead submits that all these elements are satisfied here. In essence he combines the first two in this way, that the material issue is whether the adjudicator made a clear error in deciding the first issue in the adjudication, namely, was there a completion date in the subcontract, the adjudicator having decided that there was none. This was an important step on the way to his then proceeding to decide that no extension of time was accordingly required, the second issue on adjudication, and thereafter he reached a conclusion as to a reasonable period of time for completion in substitution.

8. The adjudicator, argues Mr East, clearly fell into error in reaching the conclusion that there was no contractually agreed completion date by fixing on the significant dispute between the parties as to whether a programme of works providing a completion date, itself dated 22 August 2023, was incorporated into the contract, see paragraph 50 of the decision.

9. Kingsmead had argued that the August programme was incorporated into documentation sent to Laycock prior to the signing of the contract by Laycock on 1 September 2023, it featuring in their own bound copy of the executed documentation. The adjudicator found that it was not so incorporated as it did not feature in the list of documentation set out in a letter of 24 July 2023 sent by way of one of 11 documents attached to an email from John Leslie of Kingsmead to Mr Rowson on the same date. That email concluded in this way, “Trust all in order. If you can check the attached and get back to me we can move forward”. I have not been referred to any documentation by way of response on the subject of completion dates. The contract itself was signed on 1 September 2023 by Laycock and returned to Kingsmead for Kingsmead’s signature, so appended on 5 September 2023.

10. The adjudicator’s clear error in these circumstances it is said was this: (i) the email of 24 July 2023 included as attachment number 10 a PDF file of a spreadsheet entitled, “10 Seacombe Site 23 June ‘23’; (ii) it is not in dispute that the actual file was as is to be found at page 24 exhibited to Mr McKibbin’s witness statement entitled, “Site Programme Seacombe Ferry” and dated in the bottom left-hand corner 24 July 2023; (iii) that programme insofar as Laycock is concerned set out their aspects of the works numbered 20, 21, 28, 29 and 31 being those works referable to the electrics and the plumbing; (iv) if the works had been performed precisely in accordance with that programme Laycock’s last involvement would have been no later than 24 November 2023 being the last working day of week commencing 20 November 2023 reference item 31; (v) those works would, however, have been programmed to commence week commencing 24 July 2023 when item 20 first features and the contract as indicated did not commence until after the contract was signed in September; (vi) this contingency is apparently catered for on the face of the programme which states, “Programme may be subject to change on start dates. Cool off procedure and duration of each activity to remain as per contract once started”.

11. Thus says Mr East by reference to the signed subcontract itself it can be seen that clause 6.8 provides, “Commencement and completion:- see attached programme” and then further at 6.8.3, “Provisional commencement date July 2023 NOTE the above dates are subject to change by mutual agreement”.

12. As noted in paragraph 11 of Laycock’s reply in the adjudication, the programme with a July commencement date had a duration of 105 days whereas the August programme had an accelerated duration of 85 days, see paragraph 12. At paragraph 52 of the adjudication the adjudicator found that Laycock had accepted that they had been given a version of a programme showing a July commencement date with a duration of 105 days based upon Laycock’s evidence in the adjudication.

13. Further, Mr Rowson in his statement for these proceedings confirms at paragraph 16 that the email of 24 July 2023 did attach “the programme” albeit that it was not listed in the covering letter also attached, clarified by him even further in paragraph 35 of his statement, “Laycock are not disputing that the programme of 23.7.23 was attached to the email referred to of that date”. His stance is rather that attaching it to the email without more is not sufficient to cause it to become a contractual document which he contends is not a matter of law but rather a matter that the adjudicator was otherwise entitled to decide.

14. On the contrary, argues Mr East, having ruled out the August programme the adjudicator should have gone on to consider the July programme and indeed to decide that the July programme was incorporated into the contract by the operation of clause 6.8, thus providing a completion date either of 24 November 2023 or alternatively by way of defined duration of 105 days subject to any subsequent arguments as to an entitlement to an extension.

15. His failure to do so, it is said, is not a matter dependent upon any dispute of fact or otherwise amenable to a non-impugnable decision of the adjudicator but rather gives rise to a question of law in terms of the correct legal analysis emerging had he in fact specifically considered this issue and therefore that it would be unconscionable to ignore this failure as there are sufficient prospects of a materially different outcome given the adjudicator’s broad brush style, or broad brush style conclusions, as to reasonable periods of time for completion compared with the required logical and methodical analysis actually required in such circumstances, see Keating at section 8-012.

16. As such the only relevant question of lack of unconscionability is thereby ruled out, namely, if it would not have made any difference to the result. It clearly would have made a difference or has sufficient prospects of doing so says Mr East.

17. A reasonable observer in the position of the adjudicator, in summary, acting without error ought to have found that the list of documents in the 24 July 2023 letter did as a matter of law include, by way of contractual incorporation, the programme, it being internally referred to within item C, the subcontractor agreement, and being attached as a material document to the email of the same date. This is, it is said, envisaged in any event by Laycock as encapsulated in paragraph 13 of Laycock’s reply in the adjudication, “If the adjudicator decides that the aforesaid programme was included in the subcontract then it could only be the one in the possession of Laycock at the time of commencement of the works”, ie, says Mr East incontrovertibly the one sent by email on 24 July 2023. Had he so found he would have reached a materially different outcome in terms of deciding upon an agreed completion date and then moving to the question of any extension. As such Mr East seeks the declaration sought accordingly.

18. Mr Philpott maintains that the Part 8 claim should be dismissed thus clearing the way for the entry of summary judgment upon the enforcement claim. Insofar as Mr Philpott argues at paragraph 25 of his skeleton that the Part 8 claim is an impermissible attempt to rerun the adjudication and override a finding of fact on the part of the adjudicator, I reject the same. The adjudicator did not, by way of example, find as a fact that the July programme had not been sent to Laycock at all, even though Mr Philpott argues that it was not given sufficient prominence. It follows that the question of what the contractual effect of sending that document ought to be is a legal and not a factual issue, in my judgment.

19. Insofar as it might be further suggested by way of paragraphs 29 to 36 of Mr Philpott’s skeleton that the adjudicator’s finding that the programme bound into the contract was not part of the contract, as such binding in was subsequent to the signing of the contract itself, is a finding capable of referring to the July programme or indeed any or all programmes, I am entirely satisfied from the context of the adjudicator’s analysis, not least paragraph 50 of his decision, that he was solely referring there to the August programme. Beyond that I am not satisfied that Laycock has identified any material issues of fact which ought to prevent the Part 8 claim being entertained at this stage.

20. During the early part of his submissions Mr Philpott was reassured that the July programme was contained within the hearing bundle at page 24 and he was unable to identify to me what prejudice might emerge from Laycock’s terms and conditions being omitted from the bundle. On the contrary the quotation from these at paragraph 43 of Mr Philpott’s skeleton seems to suggest that the normal course of business for Laycock would be to contract on the basis of an agreed period, “Subject to the contractor giving notice to commence, the subcontractor shall carry out and complete the subcontract works on site within the agreed period and in accordance with the progress of the main contract works”.

21. I agree with Mr Philpott that the objective reasonable observer test should be applied, that observer having the knowledge to be expected of someone in the position of the contracting parties. Mr Philpott suggests, as I understand it, that for the programme to be treated as incorporated in these circumstances it must physically have been attached to the contract at the time of signing, see paragraph 40 of his skeleton.

22. Mr Philpott notes that the letter of 24 July 2023 requested Laycock to sign and return certain documents not including the programme. It is noteworthy however that the subcontractor agreement itself was so required to be signed. Additionally, I note the wording on the email of the same date which included the programme as an attachment, “Trust all in order. If you can check the attached and get back to me we can move forward”. I am not referred to anything of relevance in terms of getting back to Kingsmead with any queries arising out of the contents of the July programme.

23. Mr Philpott relied heavily on the extract from Chitty cited at paragraph 48 of his skeleton, “A programme setting out a contractor’s intended sequence of work even though the contract may require its provision will generally not constitute a contract document”. Whilst I note the qualification in any event provided by the word “generally”, Mr East also submitted in response that we are not talking here about issues of sequencing but rather issues of timings and thus the extract should be of limited assistance.

24. In that I do not understand there is or indeed can be any tenable argument that there was no contract entered into, described by Mr Philpott as an agreement to agree, the arguments on the law at paragraphs 51 to 55 of his skeleton I find to be of limited assistance also.

25. I note at this point that the numbering in Mr Philpott’s skeleton restarts at 28 on page 15. He refers at paragraph 32 to correspondence referred to in Mr Rowson’s witness statement showing that the programme was not agreed. I have reviewed the witness statement and have not found anything to that effect, as opposed to the clear position being that the works could not start in July 2023, which is unarguable but not the point under consideration. Neither was any such correspondence referred to me when I invited Mr Philpott to draw my attention to anything to that effect.

26. Mr Philpott spent a considerable amount of time during his submissions arguing that in any event it would not be unconscionable to ignore any error found to be attributable to the adjudicator because the argument as to the incorporation of the July programme was a new argument not put before the adjudicator. Upon further analysis it became clear that Kingsmead had certainly argued in its response at paragraph 16 that, “The attached programme” would be sufficient to give rise to a completion date albeit that at that stage they were relying upon the August programme as the attached programme.

27. In any event Mr East submitted in response that unconscionability was not applicable in this fashion, unconscionability being applicable to the unaddressed asserted error and its effects, not to the mechanics of identifying the error for consideration.

28. Overall I am persuaded by Mr East’s arguments that having rejected the August programme as not having been provided at the material time to Laycock the adjudicator fell into clear error in not then going on to consider the legal effect of the July programme in relation to which there was no dispute but that it had been provided as at 24 July 2023. Had he done so and applied the correct objective test to decide what documents formed part of the contract as signed on 1 September by Laycock, in my judgment, despite it not being specifically referred to as a separate document in the July letter business, commercial sense ought to have led him to conclude that it was sufficiently referred to in the subcontract itself at paragraph 6.8 to cause it to have become part of the contract on the basis upon which it was proffered.

29. In other words, whilst it was clear that the start and end dates were no longer specifically applicable in the context of a July start for a contract not signed until September, nevertheless the start date was agreed in any event to be provisional and the duration of each activity would in any event be unchanged once the actual start date was agreed.

30. An objective observer with the appropriate knowledge, in my judgment, reading clause 6.8 and the email of 24 July 2024 would have understood thereafter that the basic timescale for the works was set out in the programme subject to alteration solely as to start date. As a result the contract would make business and economic sense in both parties knowing relative to each other when each task was expected to commence and finish, namely, the 105 day period previously referred to, the 85 day period having been rightly rejected by the adjudicator.

31. To find otherwise would, in my judgment, make no commercial sense and leave busy parties with no overall framework for the completion of the agreed tasks particularly when seen against the need properly to schedule such works alongside other business commitments and similar contracts no doubt also requiring to be fulfilled.

32. Laycock’s argument as to lack of physical attachment I find to be a tenuous one in the world of digital communications as email attachments. It was no great leap to move from the words “see attached programme” to the other email attachments including a programme and to alight on the wording of the 24 July 2023 letter for guidance.

33. The correct interpretation of the relevance of the letter, in my judgment, would be that it did in fact make indirect and sufficient reference to the programme by its inclusion of the subcontract itself in the lists for consideration and signature and through clause 6.8 of the subcontract specifically. This analysis in my view is bolstered by the language in the email itself inviting the reader to check “the attached” including the programme and then revert in order to make progress.

34. As such I find that the correct legal analysis is that there was a completion date contractually agreed upon as at the date of entering into the contract, namely, 105 days from any determined starting date and as such the correct approach thereafter would have been to move to a methodical consideration of the issue as to extension of time which, for obvious reasons, was not engaged with by the adjudicator.

35. I am also satisfied from Mr East’s arguments that it would be unconscionable not to allow this material error to be taken into account at this stage as the methodical approach has real prospects of producing a different result from the reasonable period broad brush approach of the adjudicator. As such we now move to the form of declaratory relief which flows from this decision. ---------------