Twintec Ltd v Volkerfitzpatrick Ltd, Court of Appeal - Technology and Construction Court, January 24, 2014,  EWHC 10 (TCC)
Case No: HT-13-201/HT-13-139Neutral Citation Number:  EWHC 10 (TCC)IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONTECHNOLOGY AND CONSTRUCTION COURT Royal Courts of JusticeRolls Building, 7 Rolls BuildingsLondon EC4A 1NL Date: 24th January 2014 Before : MR. JUSTICE EDWARDS-STUART- - - - - - - - - - - - - - - - - - - - -Between : - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - Ms. Joanna Smith QC and Jonathan Chew Esq(instructed by Nelsons Solicitors Ltd) for the ApplicantPaul Reed Esq, QC and David Pliener Esq(instructed by Reynolds Porter Chamberlain LLP) for the Respondent Hearing dates: 9th December 2013; 18th December 2013- - - - - - - - - - - - - - - - - - - - -JudgmentMr. Justice Edwards-Stuart:Introduction1. This is an application by Twintec Industrial Flooring (``Twintec'') to restrain Volkerfitzpatrick Ltd (``VFL'') from pursuing an adjudication which was commenced by a Notice of Adjudication dated 3 December 2013. Twintec was a sub-contractor engaged by VFL to construct the floor slabs for a substantial warehouse at Avonmouth, near Bristol.2. Twintec's primary contention is that the VFL has obtained the appointment of the adjudicator under a contractual provision that does not exist, and accordingly that the purported appointment of the adjudicator by the President of the RICS is a nullity.3. However, Twintec also contends that VFL should be restrained from pursuing the adjudication on other grounds. These are:i) That the adjudication seeks to undermine and circumvent the case management in the Main Claim by: (a) disrupting Twintec's ability to abide by the Court's timetable in that Main Claim; and (b) by seeking to obtain a result which was refused in the Main Claim.ii) That the adjudication fragments the existing proceedings by pursuing Twintec alone when the issue referred to adjudication is, in fact, a multi-party dispute.iii) That the adjudication is oppressive in that it imposes an unconscionable burden on Twintec.iv) That the adjudication has no real prospect of success.4. The application first came before the court on 9 December 2013 as an urgent application made on notice to VFL. Although there was insufficient time for a full hearing of the application on that occasion, I was satisfied on the basis of the submissions that I heard that I should grant interim relief until a further hearing could be arranged. A further hearing took place on 18 December 2013 at which the parties elaborated on and concluded the submissions made at the first hearing.5. Following that hearing I extended the grant of interim relief and reserved judgment. I should mention that the nominated adjudicator had indicated to the parties that he would be away from 20 December 2013 to 5 January 2014, and so the grant of interim relief until early January 2014 was in practice unlikely to have much effect on the progress of the adjudication were it to be permitted to continue.6. For the reasons given in this judgment I have concluded that this is a proper case for the grant of an injunction to restrain the further pursuit of this referral to adjudication.The background 7. As will be apparent from the brief summary of Twintec's grounds for seeking relief, the dispute that is the subject of this referral forms part of litigation that is already on foot in this court. Accordingly, this application has not been brought by way of a separate action, but under a provision in directions already given giving the parties general permission to apply to the court.8. The subject of the litigation is a very large warehouse and wine bottling plant near Bristol which was purpose-built for Accolade Wines (``Accolade''). Accolade contends that the floor of the warehouse is unfit for its purpose. Two of the grounds of complaint are that the piles supporting the floor slab are not properly founded and that the concrete floor slabs themselves have been defectively constructed by Twintec. The piling work was carried out by another sub-contractor, Keller Limited (``Keller'').9. Twintec denies the allegations in relation to the construction of the floor slabs. Keller, for its part, denies that there is anything wrong with the piles; alternatively, it submits that the problems with the floor, such as they are, can be readily cured at fairly modest expense by a system of resin jacking. The other parties to the litigation, in which Accolade is the claimant, are the landlord of the building and its guarantor (``GJ 3'' and ``GJ 4''), VFL, as the main contractor, and Twintec and Keller as sub-contractors to VFL. There are also claims against Twintec and Keller by parties other than VFL based on direct warranties allegedly given by Twintec and Keller.10. Before the litigation began extensive testing of the warehouse floor and the subsoil beneath it had been carried out. This testing included full scale static load tests which were carried out and paid for by VFL. The cost of these tests was about £850,000.11. The dispute that VFL has referred to adjudication is the liability for the cost of these load tests. VFL contends that Twintec's poor workmanship in relation to the floor slabs is an effective (although not necessarily the sole) cause of the need to carry out the tests. VFL seeks to recover the costs of the tests either as damages for breach of contract or pursuant to an indemnity that it says was a term of the sub-contract with Twintec.12. Whilst the sum claimed in the Notice of Adjudication is not insubstantial, it is dwarfed by the sums claimed by Accolade in the litigation - some £170 million. A very substantial part of this claim is the cost of relocating Accolade's business to other premises whilst the remedial work is carried out to the warehouse floor.13. GJ 3 and GJ 4 also make their own claims against the other parties in respect of their liability to Accolade. This is therefore substantial and complex litigation. Although the trial is currently fixed to take place on 27 October 2014, it is possible that this may not be achieved. But in any event, as VFL's Commercial Manager, Mr. Nash, has pointed out, there will be no prospect of the court giving judgment before early 2015. Twintec was joined in the litigation fairly recently - in August 2013 - and was given an extension of time to 5 November 2013 in which to serve its defence, which it did.14. In November 2013 I gave directions, following a lengthy contested hearing, for further testing of the piles, the warehouse floor and the soil below it. Twintec's expert engineers have only recently visited the site for the first time, on 5 December 2013, and there was an all day meeting of the experts on 9 December 2013. I accept the assertion by Mr. Trees, Twintec's solicitor, in his witness statement that Twintec's experts will have to carry out a substantial amount of work in a very short period of time if they are to be in a position to comply with the timetable relating to expert evidence that has been set by the court.15. Although it was submitted by Mr. Trees that the timing of VFL's referral appeared to have been chosen for the collateral purpose of causing maximum disruption and pressure on Twintec's experts, Ms Joanna Smith QC, who appeared for Twintec, together with Mr. Jonathan Chew, did not pursue the point that the adjudication has been brought for the collateral purpose of applying improper pressure on Twintec in the context of the litigation. In my view, she was right not to do so.16. Since the principal ground advanced by Twintec for the grant of relief is the lack of jurisdiction of the adjudicator, I propose to address that issue first.The letter of intent (``LOI'')17. On 5 October 2007 VFL issued a letter of intent to Twintec authorising it to proceed with the work, in accordance with the documents identified in the letter, with a view to the parties entering into a formal sub-contract thereafter.18. It has been well established for some fifty years that, all other things being equal, where two parties enter into an agreement to carry out work in the anticipation that they will in future enter into a formal contract in respect of the work, if that formal contract is subsequently entered into it there may well be an implied term that the contract will govern the parties' relationship retrospectively: see Trollope & Colls Ltd v Atomic Power Constructions Ltd  1 WLR 333.19. In that case Megaw J (as he then was) summarised the argument against this proposition in the following terms: ``None of the terms of an offer is binding on the offeror until the offer is accepted. When the offer is accepted it does not apply retrospectively so as to govern relations between the parties during the period between offer and acceptance. In the present case the defendants could not vary the work to be done, so as to have any contractual effect, until the offer had been accepted. Therefore, if the offer had been accepted by the defendants on April 11, 1960, what would have been accepted would and could only have been the original offer, as set out in the tender, for certain specified works, coupled with the right of the defendants to vary the works after, but only after, they had accepted the offer and made the contract. Any purported variations possible by the defendants before April 11, 1960, would be ineffective, because it could not be made contractually until there was a contract which conferred the right to vary.''20. Megaw J commented that logically this position was unassailable if, but only if, one were to assume that the acceptance of an offer cannot have retrospective effect so as to make the contract applicable to things done earlier in anticipation of the contract. He said that there was no principle of English law which provides that a contract cannot in any circumstances have retrospective effect or that, if it purports to have retrospective effect, it is in law a nullity. He concluded that in that case there was an implied term that contract...
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