Adjudication
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KEYWORDS: |
Housing Grants Construction and Regeneration Act 1996, CPA Standard Form, Section 105(1)(e), Section 105(2)(d)(ii), Judge Kirkham. |
The decision in Baldwins Industrial Services plc v Barr Limited [2002] by Her Honour Judge Francis Kirkham on 6th December 2002 deals with the standard form of Contract CPA. The main issue of interest was whether that contract, when for the hire of a crane and driver, was subject to the Housing Grants Construction and Regeneration Act 1996. Subsequent revisions now provide for the adjudication provisions of the Act to apply. The case is still of interest in the case of earlier versions of the contract.
The facts are as follows. In November 2000, Barr hired from Baldwins a 50 tonne crane together with driver, to be used by Barr at the building of the new football stadium at Britannia Way in Southampton.
A dispute arose in relation to an incident on 19th December 2000 in which the crane was said to have been damaged. Baldwins sought from Barr the cost of repairs and lost hire charges. The dispute was referred to adjudication by notice dated 25 July 2002. By a decision dated 24 August 2002, the adjudicator ordered Barr to pay for the cost of repairs to the crane, in the sum of £149,212.52, transport costs of £470 plus interest, and £35,702.87 in respect of lost hire charges.
On 28th October 2002 Joint Administrative Receivers were appointed of Baldwins.
Baldwin applied to the Court to enforce the adjudicator's decision and to require Barr to reimburse the adjudicator's fees which Baldwins had paid.
Her Honour Judge Kirkham was required to deal with two issues. The first issue was whether or not the adjudicator lacked jurisdiction and required examination of the contract and Sections 104 and 105 of the Housing Grants Act 1996. The second issue arose if the adjudicator did have jurisdiction, and was whether a stay of execution should be granted.
Judge Kirkham found that from Baldwins' booking form and Barr's purchase order that it was intended that the crane plus driver was to be hired for use at the stadium site for construction of the new stand. The crane and driver were to be used by Barr to lift pre-cast concrete members into place.
In the adjudication, Barr contended that there was no contract. In the enforcement proceedings only, Barr accepted that there was a contract and that the contract incorporated the Construction Plant-hire Association ("CPA") model conditions for the hiring of plant.
It was common ground that a contract for mere plant hire was not a construction contract within HGCRA.
Barr had two arguments, one under Section 105(1)(e) of the 1996 Act and the other under Section 105(2)(d)(ii).
Barr’s first argument was that the contract was for hire only and was not a contract for labour and therefore outside the scope of the 1996 Act because it was not a contract for the carrying out of construction operations within the definition in section 105(1)(e). Barr submitted that a contract for the hire of a crane did not come within those items contained in the list in subsection 105(1)(e) of the 1996 Act.
Barr also relied on Clause 8 of the CPA conditions which provided that if a driver was supplied with the plant then he was to be under the control of the Hirer, in this case Barr, and for all purposes in connection with their employment was to be regarded as servants or agents of the Hirer. Barr submitted that, because clause 8 placed the crane under Barr's control, this indicated that the contract was for the mere hire of plant and thus outside the scope of the 1996 Act.
Barr’s second argument was that the contract came within the exceptions in subsections 105(2) (d)(i) and (ii) of the 1996 Act because it was for delivery of plant or machinery to site without provision for installation and thus fell within the exception in Section 105(2)(d)(ii).
Judge Kirkham was referred to four separate cases:
Conclusion Judge Kirkham stated that Williams was of assistance in making a distinction between hire of a crane alone and hire of crane plus driver. She held that if there was any real distinction between a contract for the supply of plant and labour and a contract for the hire of a crane and driver, the true position in this case was that the contract was for the supply of plant and labour. The contract was for an operation which formed an integral part of or was preparatory to or was for the rendering complete of work of construction, namely Barr's work in the stadium. The fact that the crane came with a driver was not "incidental". Barr needed a driver and agreed to pay for a driver. Indeed, Barr's case was that the driver was incompetent. It was inconsistent to say, for the purpose of the contract, that the driver was incidental yet, for the purposes of the substantive dispute, that the driver was a critical element.
Judge Kirkham rejected Baldwin’s submission that the word "erection" in Section 105(1)(e) could be construed as referring to erection generally. The word could only be read within the phrase "erection, maintenance or dismantling of scaffolding". Judge Kirkham held that it was not necessary to adopt Baldwins’ reading of "erection" to bring the contract within the scope of Section 105(1)(e). The contract was for construction operations which formed an integral part of or were preparatory to or were for rendering complete construction operations as described in subSection (a). The later words in (e) do not limit that plain meaning.
Judge Kirkham held the contract did not fall within the excepted categories described within Section 105(2). The contract was not one for the mere delivery of plant to site. It was for the supply of plant and labour for use in construction operations on a building site.
Accordingly Judge Kirkham held that the contract was a construction contract within the meaning of Section 104, the adjudicator had jurisdiction and his decision was therefore apt for summary judgment.
Judge Kirkham referred to Order 47 rule 1 which provided that where a judgment was given for the payment of money, and the Court was satisfied that there were special circumstances which rendered it inexpedient to enforce the judgment, then the Court may stay the execution of judgment absolutely or for such period and on such conditions as the Court thought fit. She observed that the Court had a wide discretion to stay execution of judgment. The exercise of that discretion was governed by compliance with the overriding objective set out in CPR Part 1 which required that every case must be dealt with justly.
Judge Kirkham was referred to Herschell Engineering Ltd v Breen Property Ltd [2000] and to Rainford House Ltd v Cadogan Ltd [2001] BLR 416.
Judge Kirkham held that given Baldwins' current financial position, there was a risk that what would, in other circumstances, be a temporary decision would become binding by reason of Baldwins' financial misfortune. It would work injustice to Barr if it could not recover money if it turned out that the adjudicator had been in error. On the other hand, in circumstances where the Receivers have cast some doubt on Barr's financial position, it would work injustice to Baldwins if a stay were granted without any requirement on Barr to secure the money. Judge Kirkham observed that the grant of a stay risked defeating one of the purposes of the 1996 Act.
Judge Kirkham held that Baldwins' financial position and the consequent potential injustice to Barr, together with Barr's stated intention to begin proceedings within a month, constituted special circumstances so that Barr was entitled to a stay, on terms She ordered that there should be a stay of execution of the principal sum awarded by the adjudicator for a period of one month from the date of judgment on the conditions that:
Judge Kirkham held that there should be no stay in respect of the costs and fees element of the sums claimed. Baldwins had paid all of the adjudicator's fees, including the portion which Barr would be expected to have paid. She held that Baldwins should not be kept out of that part of their claim for any longer. She ordered Barr to pay Baldwins costs incurred in the adjudication, for which the adjudicator awarded the sum of £18,192 excluding VAT. The stay of execution did not apply to those fees and costs.