Delta Fabrication & Glazing Ltd v Watkin Jones & Son Ltd

[2020] EWHC 1034 (TCC) 

Delta sought summary enforcement of an adjudicator’s decision. Watkin said that the adjudicator did not have jurisdiction because Delta had referred disputes under two separate contracts to the adjudicator in the same adjudication. It was agreed that if the referral did concern disputes under two separate contracts, the adjudicator did not have jurisdiction and the award should not be enforced. Delta also agreed that they entered into two separate contracts. Watkin subcontracted both brick slip cladding work (order 3197/S7200) and roofing works (order 3197/S7218) to Delta.

Delta said that the award was valid because the parties later agreed, by their conduct, to vary the contracts so that they were amalgamated and so that there was only one contract with effect from 21 February 2020 and that if that conduct did not amount to a variation so that there was only one contract for all purposes, it had the effect of amalgamating the contracts into one contract for the purposes of the HGCRA. 

Finally, Delta said that Watkin was estopped from denying that there was a single contract within the meaning of the HGCRA.

Delta argued that the parties reached agreement by their conduct in the way they dealt with payment applications. One of Watkin’s assistant quantity surveyors issued a payment notice, which related to both contracts. Delta said that it accepted that offer to amalgamate the contracts by issuing its request for payment of 21 February 2020 as one payment application relating to both the contracts.

HHJ Watson said that to find for Delta she had to be satisfied that the parties’ conduct was unequivocal and consistent only with the parties having agreed to vary the contracts so that a single contract came into existence. Here, where the contracts were originally separate written documents, the Judge would need to be satisfied that, despite the existence of the separate written contracts, the parties had agreed that the contracts be amalgamated. 

In fact, here the evidence suggested that Delta wanted the payment applications to be combined, not that they wanted the contracts themselves to be combined. The payment notice too contained references to both subcontract orders. Therefore, although the payment notice was for one figure for both contracts, the supporting documentation did not confuse or amalgamate the contracts but dealt with the calculations separately. 

Further, when the parties agreed variations to the contracts, they numbered them consecutively under each of the separate contracts or works packages. Variations for the cladding work were prefaced “VO” and those for the roofing work were prefaced “RVO”. In each case, the variations were numbered consecutively. That was indicative of the fact that the parties viewed the contracts as distinct.

The referral stated that all payment notices had been issued under one payment notice, and that the final account had been agreed as a single agreement “making it difficult to differentiate between the ‘sub’ contract agreements and the figures in relation to each element and as such, we consider the monies deducted in relation to all elements and agreed under the 1 nr agreement, can be administered under the 1 nr adjudication procedure as it is our consideration that it was WJSL intention of all elements to be treated and administered as one nr contract”. Again, this submission did not include any statement that the parties agreed by their conduct to vary the contracts so as to amalgamate them. The position was that Delta considered, as a result of the way the final account statement was prepared, that Delta intended the subcontracts to be “treated and administered” as one contract.

The Judge concluded that if the parties had intended that the contracts be amalgamated or understood that they had been, then it was surprising that there was not a single document expressly referring to the fact that the contracts had been amalgamated or giving the new contract a new purchase order number or reference number.

Further, it was far from clear that, by adding together the two individually calculated amounts claimed in respect of the contracts and claiming the total in a single payment application supported by detailed breakdowns by reference to the separate contracts or work packages, the parties had “unequivocally operated and administered two purchase orders as one” so that they should “qualify as a single contract for the purposes of the Construction Act”.

In terms of the estoppel argument, Delta tried to argue that Watkin’s representation, by its payment notices, amounted to a representation that the contracts were to be treated as one contract; Delta relied on the representation and that Delta had suffered detriment. Perhaps unsurprisingly in light of the comments above, this argument failed. As a consequence, the Judge dismissed the application for summary enforcement.  

Delta also asked that Watkin should be required to make a payment into court of the adjudication award as a condition of defending the claim. The basis for this was that if the adjudicator was right, Watkin was in breach of its lawful obligation to pay the amount awarded, because the adjudicator’s decision is “right until it is proved otherwise” and the only challenge is jurisdiction.

The Judge considered that, based on the evidence before her, Watkin’s prospects of defending the claim on the grounds of jurisdiction were strong. Watkin also disputed the adjudicator’s substantive decision as to repudiatory breach and the financial awards that followed, and the Judge was not persuaded that it was appropriate to make leave to defend conditional on a payment into court.

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