Shaw & Anor v MFP Foundations and Pilings Ltd [2010] EWHC 1839 (TCC)

Case No HT-10-74

[2010] EWHC 1839 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 23/07/2010

Before

THE HONOURABLE MR JUSTICE EDWARDS-STUART

Between

Mr Christopher Shaw and Mrs Gabriele ShawClaimant

MFP Foundations and Pilings LtdDefendant

Mrs Gabriele Shaw (instructed by Knights Solicitors) for Claimant

Mr Richard Bradley (instructed by C. E. Law) for Defendant

Hearing Hearing date: 14 July 2010

Judgment

The Hon Mr Justice Edwards-Stuart :

Introduction

[1]This is an arbitration claim. By a Claim Form issued on 5 March 2010 the Claimants ("Mr and Mrs Shaw") seek permission to appeal an award of an arbitrator, Mr Anthony Bingham, made on 30 November 2009 (Award No 2) under section 69 of the Arbitration Act 1996, and to challenge the award under section 68 of the Act. Mr and Mrs Shaw also seek an extension of time for lodging the claim form.

[2]Since the appeals are made under both sections 68 and 69 of the Act, by an order made on 25 March 2010, I directed that the matter should be listed for hearing on 14 July 2010 for a full day in order to determine the application for the extension of time, the application for permission to appeal and the appeal under section 68 unless there was an application by the Defendant (“MFP”) for the question of the extension of time to be dealt with separately. There was no such application. In the circumstances I decided to order, without objection from either of the parties, that this arbitration claim should be heard in public pursuant to CPR 62.10.

[3]I should mention that in the event that the applications by Mr and Mrs Shaw are successful MFP indicated that it would seek permission to appeal Award No 1 and an extension of time within which to do so.

[4]This dispute arises out of a Minor Works Contract dated 27 April 2007 by which MFP agreed with Mr and Mrs Shaw to perform works of extension, repair and conservation to the East Lodge of Great Moreton Hall, Cheshire, for £168,253 in accordance with specifications, schedules of works and drawings prepared by an architect, Mr John Carter, employed by Mr and Mrs Shaw (Mr Carter is described in the contract as the Adviser). His role was similar to that of the typical architect in that he was responsible for issuing further information and instructions, inspecting the work in progress and had the power to reject work not in accordance with the contract.

[5]At the hearing before me Mr and Mrs Shaw were represented by Mrs Shaw, who is a qualified but non-practising barrister, and MFP was represented by Mr Richard Bradley. The cases on both sides were argued succinctly, given the amount of detail involved, and with realism. Both sides provided very helpful skeleton arguments.

[6]The application by Mr and Mrs Shaw under section 68 of the Act was made under section 68(2)(d) on the ground that the arbitrator failed to deal with all the issues that were put to him. The issues that Mr and Mrs Shaw say were not dealt with can be summarised as follows:(1) The arbitrator failed to consider whether the liquidated damages provision in the contract (which provided for liquidated damages of £Nil) survived the repudiation of the contract by MFP and whether, in consequence, Mr and Mrs Shaw were entitled to recover the costs of the delay in carrying out the works.

(2) The arbitrator failed to consider whether or not there should be a substantial deduction in the preliminaries claimed by MFP in respect of services that were not provided, such as the requirement to have a competent foreman on site at all times.

(3) The arbitrator failed to consider the defects in the new external oak patio French windows supplied by MFP (but ultimately not installed by them). The defects consisted of splits in the oak uprights of the doors.

(4) When considering the claim for prolongation by MFP the arbitrator failed to make a deduction in the sum claimed for preliminaries to reflect the fact that certain services were not provided, ought to have taken into account the absence of any extensions of time granted by the architect and, finally, failed to address the question of whether it was fair, when considering MFP's claim for prolongation, to allow MFP to recover prolongation costs whilst denying Mr and Mrs Shaw any entitlement to liquidated damages.

(5) The arbitrator failed to take into account certain items claimed in respect of the costs of completing the work incurred by Mr and Mrs Shaw. Further, it is alleged that the arbitrator’s approach to valuation was wrong in that he should have allowed Mr and Mrs Shaw to recover any costs reasonably incurred in order to complete the works, rather than the reasonable cost of completing the work that was not fully carried out.

[7]In the alternative to the last point set out above, Mr and Mrs Shaw submit that the arbitrator’s approach to the question of the proper measure of damage for MFP's failure to complete was obviously wrong so that his Award No 2 should be set aside on an appeal under section 69 of the Act.

[8]It will be apparent at once from this brief introduction that on analysis some of the points raised under section 68 may amount to errors of law so that any appeal should have been made under section 69, rather than section 68.

[9]The work started in late April 2007 and the contractual completion date was 10 October 2007. For various reasons, most of them in issue before the arbitrator, the work was delayed and in early February 2008 Mr and Mrs Shaw terminated the contract. Their reason for doing so was MFP's refusal to replace some defective stone windows, which had become damaged in the course of transport or installation, instead of repairing them as MFP proposed. By his Award No 1 the arbitrator decided that MFP's failure or refusal to replace the defective stone windows amounted to a repudiatory breach of contract which was accepted by Mr and Mrs Shaw on 8 February 2008.

[10]In addition to the problems with the stone windows, Mr and Mrs Shaw complained of the fact that MFP did not keep a competent foreman on site at all times as the contract required, of delays in carrying out the work and of numerous defects in the works. In addition, they claimed the cost of completing the work that was not carried out or of rectifying defects in the work that was carried out.

[11]By his Award No 2, the arbitrator decided that a balance of £44,190.37 was due to MFP, to which he added £3,519.26 by way of interest, making a total sum payable within 14 days of the Award of £47,509.97. In addition, he held that MFP should have completed the work by Christmas 2007, and that they were entitled to an extension of time up to then from 10 October 2007 with loss and expense.

[12]I attach as an appendix to this judgment a chronology of the relevant events which tells the story of this unhappy project. It is based substantially on the chronology contained in Mr Bradley's skeleton argument, but I have removed those parts which are contentious or might be thought to be tendentious.

Sections 68 and 69 of the Arbitration Act 1996

[13]At this point I should summarise the relevant provisions of the Act. Section 68 provides as follows:

“1. A party to arbitral proceedings may...apply to the Court challenging an award in the proceedings on the grounds of serious irregularity affecting the tribunal, the proceedings or the award... 2. Serious irregularity means an irregularity of one or more of the following kinds which the Court considers has caused or will cause substantial injustice to the applicant (a) Failure by the tribunal to comply with Section 33 (general duty of the tribunal)... (d) Failure by the tribunal to deal with all the issues that are put to it.”

[14]Section 69 provides: “(1) ...a party to arbitral proceedings may...appeal to the Court on a question of law arising out of an award made in proceedings... (2) An appeal should not be brought under this action except... (b) With leave of the Court; The right to appeal is also subject to the restrictions in Section 70(2) and (3). (3) Leave to appeal shall be given only if the Court is satisfied(a) That the determination of the question will substantially affect the rights of one or more of the parties;

(b) That the question is one which the Tribunal was asked to determine;

(c) That on the basis of the findings of fact in the award (i) The decision of the tribunal on the question is obviously wrong or (ii) The question is one of general public importance and the decision of the tribunal is at least open to serious doubt and

(d) That, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question... (5) The Court shall determine an application for leave to appeal under this section without a hearing unless it appears to the Court that a hearing is required.” (i) The decision of the tribunal on the question is obviously wrong or (ii) The question is one of general public importance and the decision of the tribunal is at least open to serious doubt and

[15]So under section 68(2)(d) the court must be satisfied that there has been a failure by the tribunal to deal with all the issues that were put to it and that this failure has caused or will cause substantial injustice to the applicant.

[16]Under section 69 an appeal can only be brought either with the agreement of all of the other parties to the proceedings or with the leave of the court. In this case Mr and Mrs Shaw seek the permission of the court. It will be apparent that, so far as material to this case, the section provides that leave to appeal shall be given only if the court is satisfied(a) that the determination of the question will substantially affect the rights of one or more of the parties,

(b) that the question is one which the tribunal was asked to determine and

(c) that, on the basis of the findings of fact in the award, ... the decision of the tribunal on the question is obviously wrong. Finally, by section 69(1)(3)(d) there is a further requirement that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question of law.

[17]At the outset of his submissions Mr Richard Bradley said that underlining all his points was the theme that this was a classic case of a dispute that should be decided by arbitration once and for all. Having regard to the sums at stake he submitted that to permit further argument by means of an appeal would defeat the objectives of finality and proportionality required by the 1996 Act. The principles that underpin the Act are well established by the authorities: see for example Keydon Estates Limited v Western Power Distribution (South Wales) Limited

[2004] EWHC 996 (Ch)

, per Lloyd J at paragraphs 5, 6, 17, 21 and 23-25; Alphapoint Shipping Limited v Rotem Amfert Negev Ltd.

[2004] EWHC 2232 (Comm)

, per Colman J at paragraphs 5–7. In the context of this dispute I regard this as a submission that was well made and I shall therefore bear the point in mind when considering the various issues raised by Mr and Mrs Shaw.

The cost of completing the work

[18]Mrs Shaw submits that the arbitrator, following submissions made on behalf of MFP, determined whether the costs of completion claimed by Mr and Mrs Shaw were reasonable and that, in a number of cases, made deductions on the basis that the cost incurred was too high. The items in respect of which this happened were conveniently set out in a table by Mrs Shaw as follows: Item Sum claimed Sum awarded 57 £2700 Nil 58(a) -£750 59, 60, 67-70 £2862 £995 Miscellaneous £993.75 Nil 64, 77 £2815 Nil 61 £1860 £183.30 62 £580 £60 65, 75 £450 Nil 73 £420 £420 74 £5780 £2000 77(a) £80 Nil 78 £2625 £1000 79 £550 Nil TOTALS £21,655.75

£3,908.30

[19]The sums claimed by Mr and Mrs Shaw were, in general, taken from an analysis prepared by a Mr Wilson in October 2008 on behalf of Mr and Mrs Shaw, but in some cases these were supplemented by figures introduced in later submissions.

[20]Item 57. This is a claim for £2,700 for cleaning the dining room wall. Mrs Shaw spent some time trying to persuade me that this was a proper cost arising out of bad workmanship by MFP which had been wrongly rejected by the arbitrator. However, the arbitrator reached a clear conclusion (at paragraph 18.2 of Award No 2) that “all of this work in the Dining area, by others is an extra to the Contract". He went on to say that there was insufficient evidence to show that a price had been agreed for the work to these areas as a whole and, further, that there was insufficient evidence to show that the work by MFP was done badly. In my view, it is quite clear that the arbitrator dealt with the issue that was put to him. For the purposes of a challenge under section 68(2)(d) of the Act whether or not his conclusion was correct is irrelevant.

[21]Item 58a. Here, I think, Mrs Shaw had misunderstood what the arbitrator had done. Mr Wilson included a sum of £6,380 in respect of materials and labour in respect of the fitting of a kitchen. He then allowed a deduction of £886.25. The arbitrator reduced the amount of the deduction to £750 and disallowed the sum in respect of the installation of the kitchen. This was because the installation of the kitchen was a provisional sum that was never in fact spent by MFP. However, he allowed the sum of £750 taking into account some attendance by MFP. In the end, I think that Mrs Shaw accepted that the arbitrator had dealt with the issue properly, but on any view it cannot be said that he did not deal with it.

[22]Items 59, 60, 67, 69 and 70. These items related to the supply and fitting of various doors and door furniture. In respect of items 59 and 60, the sum claimed was £1,590. Item 59 was for the supply and fitting of various internal doors, and item 60 was the cost of fitting the French windows and other external doors and frames. The arbitrator accepted that certain doors were not fitted and concluded that MFP's allowance of £995 was fair. It is not clear precisely why he accepted this figure, but it is clear that he dealt with the issue. Item 67 concerned ironmongery for the internal doors but the arbitrator accepted MFP's submission that this had been allowed for by a provisional sum that had not been spent, so that no adjustment was appropriate. Item 69 was in respect of the replacement of the new oak frame for the front door because the door had been hung so that it opened outwards and not inwards. Item 70 was the cost of replacing internal clear glass pine doors. The arbitrator said that these items "do not run to the builder’s liability since they are more likely to be a change introduced that would have been payable in any event". In other words, he found that they were variations. Whilst I have to confess that I am slightly puzzled by this finding, at least so far as the front door that was hung incorrectly is concerned, the fact remains that the arbitrator dealt with all the matters that were put to him.

[23]Items 64 and 77. These items concerned part of the electrical works. The arbitrator found that they formed part of a provisional sum but that the actual expenditure was higher. In those circumstances he concluded that Mr and Mrs Shaw were not entitled to anything for these two items. There can be no suggestion that he did not deal with the issue, even though Mr and Mrs Shaw may disagree with his answer.

[24]Item 61. This has to be taken with item 68, for both of which Mr and Mrs Shaw said they had spent £1,860 on completing work to the roof. MFP asserted that only a very small amount of the work remained incomplete and valued this at £183.30 and put Mr and Mrs Shaw to proof of any greater amount and demanded a breakdown of the works claimed to be necessary. The arbitrator simply commented that there was just a "one-liner" by Ratcliffe (the builder who was engaged to complete the works) and that in the circumstances only the credit given by MFP could be admitted. The arbitrator’s reference to a "one-liner" was to an e-mail from Ratcliffe to Mr and Mrs Shaw dated 13 August 2009 in which they said that they had spent £1,860 on "Finish roof off with all materials". Whether or not the arbitrator's conclusion was justified on the evidence is not a matter that I have to consider: what is quite clear is that he addressed the issue.

[25]Item 62. This was in respect of incomplete skirting. The same e-mail from Ratcliffe included an item which read "Finish skirting boards and architrave supplied by you - £580". MFP accepted that there should be a deduction from their account of £60 but no more. For effectively the same reason as he gave in relation to item 61, the arbitrator accepted the figure put forward by MFP. Again, it is clear that he dealt with the issue even if not to the liking of Mr and Mrs Shaw.

[26]Items 65 and 75. This concerned what was said by Mr and Mrs Shaw to be a failure to install a small boiler in the kitchen. Mrs Shaw said that MFP failed to check the dimensions of the kitchen units and supplied a boiler that could not be fitted inside them. As a result there had to be a small extension to the kitchen to accommodate the boiler. I was told that MFP's case was that the kitchen units were purchased by Mr and Mrs Shaw without any reference to MFP. The arbitrator concluded that the installation of the boiler outside the kitchen was a variation and so valued the item at nil. Mrs Shaw obviously felt very strongly that the arbitrator had got this completely wrong and that the fault was entirely MFP's. However, once again, I have to make it clear that I am not concerned with whether or not the arbitrator's conclusion was correct, but only whether he addressed the issue that was put to him. This he did.

[27]Item 74. This was a claim for £5,880 to complete outstanding plumbing and tiling. MFP contended that the correct figure was £1,820 on the basis that most of the work being claimed for was additional work that MFP was not obliged to carry out under the contract. In relation to tiling, items(1) and (3), the arbitrator preferred the figures put forward by MFP, partly because he found that the work that was the subject of the figures put forward by Ratcliffe was described in "unhelpfully vague" terms and, in one case at least, appeared to be for work that was in excess of that originally contracted for. These are conclusions of fact. In relation to items

(2) and (4), which concerned plumbing, the arbitrator awarded nothing because he was not satisfied about the nature of the work done because the information provided was either non-existent or too vague. In relation to items (5) and (9), fitting a towel rail and filling and checking the system, he concluded that the sums claimed were too high. Here he appears to have substituted a view based on what he considered was reasonable rather than considering whether or not Mr and Mrs Shaw acted reasonably in incurring the expense claimed. In relation to item (6), fitting radiators, the arbitrator accepted MFP’s submission that the radiators were already fitted and that, if there were any subsequent changes to the pipework, they were the result of changes made by Mr and Mrs Shaw. Accordingly, he disallowed this item. Item (7) concerned fitting and commissioning the boiler which was also the subject of items 65 and 75. For the reasons given in relation to those items the arbitrator concluded that this cost was additional to the contract. Item (8) was for the alteration of pipework and the arbitrator concluded that the work was a variation and awarded nothing. Taking item 74 as a whole the arbitrator allowed a sum of £2,000, seemingly as a broad brush valuation. Although it is clear that he dealt with all the matters that were put to him, it is arguable that in the case of items (5) and (9) he may have adopted the wrong approach to valuation. I will revert to this later.

[28]Item 77(a). This is for £80. This item was not referred to in the Amended Particulars of Claim or in Mrs Shaw’s skeleton argument, presumably because it was for such a small amount. I shall therefore say nothing about it.

[29]Item 78. It is accepted that the arbitrator overlooked this item in Award No 2. However, he addressed it in Award No 3 where he rejected the claim for £2,625 but instead allowed some of £1,000 for the additional works of external redecoration.

[30]Item 79. Although this was not dealt with as a separate item in this part of the award, the arbitrator took this item of expenditure (testing and inspecting stonework) into account when he dealt with the claim for replacing the stonework (at paragraph 18.3). This became apparent during the course of argument when we looked at the underlying documents in some detail, although it transpired that the sum allowed by the arbitrator was £400 and not £550. It was unclear how the £550 claimed by Mr and Mrs Shaw was derived because the £400 was explicable by reference to the documents, whereas the £550 was not. By the end of the exercise I think that Mrs Shaw accepted that there was nothing in this point.

[31]It is apparent from the previous paragraphs that in Award No 2 the arbitrator did in fact address all the claims that were put to him except for item 78, an omission which he would have been prepared to correct if an application had been made in time. Accordingly, there was no irregularity in relation to all the other items.

[32]In relation the omission to deal with item 78, the prejudice to Mr and Mrs Shaw is the loss of a head of claim which the arbitrator would have valued at £1,000. Section 68 provides that the right of a party to apply to the court to challenge an award on the ground of serious irregularity is subject to the restrictions in section 70 of the Act. This requires an application to the court to be made within 28 days of the award. Award No 2 was made on 30 November 2009.

[33]Further, section 57 of the Act allows the tribunal to make an additional award in respect of any claim which was presented to the tribunal that was not dealt with in the award. This may be done either on the tribunal's own initiative or on the application of a party. Any application for the correction of an award must be made within 28 days of the date of the award (or such longer period as the parties may agree). Mr and Mrs Shaw's application to correct the award was made on 27 January 2010, well after the 28 day time limit.

[34]However, the failure to make an application within time to correct the award has caused no prejudice to Mr and Mrs Shaw because MFP has said that it is prepared to accept the corrected figures in Award No 3. The figures, before interest, awarded by the arbitrator were as follows: Award No 2 £44,190.37 Award No 3 £43,190.73 (The difference in the pence appears to be a typing error. The arbitrator also made a small adjustment to the interest calculation and some other figures, resulting in an overall reduction of the sum awarded, plus interest, of about £600, instead of the £1,000 attributable to item 78.)

The liquidated damages provision

[35]Before the arbitrator Mr and Mrs Shaw contended that the provision for liquidated damages at the rate of £Nil per week was an unfair term, but the arbitrator rejected this submission and there is no appeal against it.

[36]However, in their Amended Particulars of Claim Mr and Mrs Shaw contend that the arbitrator failed to address the question of whether the £Nil provision in the contract for liquidated damages survived the repudiation of the contract by MFP. The recital by the arbitrator of the argument of Mr and Mrs Shaw at paragraph 21 of the Second Award does not mention any argument about whether the liquidated damages provision could survive an accepted repudiation of the contract. The argument concentrated on whether the £Nil provision for liquidated damages was an unfair term and, if it was, what figure should be substituted for it.

[37]However, the arbitrator held that the effect of the provision of £Nil as the rate for damages meant that Mr and Mrs Shaw were not entitled to recover any damages for delay, whether occurring prior to or after the termination of the contract. He therefore held, by necessary implication, that the liquidated damages provision survived the termination. So he dealt with the point, even if he gave no reasons for that particular aspect of his decision.

[38]The arbitrator then went on to consider the position if he was wrong about this since Mr and Mrs Shaw had asked him to indicate what the damages would be if the liquidated damages clause did not apply. The arbitrator said that, “based on the well-known principles of foreseeability”, a figure of £500 per month would be the foreseeable loss. He held that the reasonable period in which to complete the works was three months after the termination. In addition, he had already found that there was one month’s worth of culpable delay prior to the termination so that on this hypothetical basis Mr and Mrs Shaw would have a right to damages for delay of £2,000 in all (4 months at £500 per month).

[39]Interestingly, in her skeleton argument Mrs Shaw submitted that the arbitrator "was wrong in law to apply the £nil liquidated damages provision in circumstances where [he] found that the Claimants rightly terminated the contract ..." (paragraph 42). To my mind, this submission reflects the true position. If anything, the arbitrator made an error of law: he did not overlook the issue.

[40]In any event, and since Mrs Shaw indicated that she might wish to make an amendment to her application under section 69, I should say that I consider that Mrs Shaw’s argument is not entirely correct. It is well settled that when a repudiatory breach of contract is accepted by the other party both parties are discharged from any further performance of the primary obligations under the contract. In their place there is substituted, by implication of law, for the primary obligations (of the party in default) which remain unperformed a secondary obligation to pay monetary compensation to the other party for the loss sustained by him in consequence of their non-performance in the future: per Lord Diplock in Photo Production Ltd v Securicor Transport Ltd

[1980] AC 827

[41]So far as liquidated damages are concerned, in respect of any period of culpable delay up to the date when the contract is terminated the employer is entitled to recover liquidated damages at the contractual rate (or nothing, if that is what the contract provides). However, after the date of termination the parties are no longer required to perform their primary obligations under the contract and so the contractor’s obligation to complete by the completion date no longer remains and the provision for liquidated damages therefore becomes irrelevant. In its place arises an obligation to pay damages for the employer’s losses resulting from the breach of contract, including damages for any loss resulting from any further delay caused by the need to have the works completed by a different contractor. Accordingly, whilst the arbitrator was correct to conclude that the liquidated damages provision prevailed up to the date of termination, he was wrong to conclude (if he did) that Mr and Mrs Shaw were not entitled to damages for any delay occurring thereafter.

[42]Unfortunately, neither party submitted to the arbitrator that, in respect of the delay period post termination, Mr and Mrs Shaw could only recover such loss as they could actually prove. For example, Mrs Shaw told me during argument that the intention was that Mrs Shaw’s mother would move into East Lodge once the works were complete and that she would pay a rent. In this situation, if proved, the loss of rent for any period of delay might be the appropriate measure of damages for the post termination delay caused by MFP's breach of contract. However, since this argument was never raised the arbitrator did not consider it and so it cannot be said that in this respect the arbitrator failed to deal with an issue that was put to him.

[43]In short, my conclusion is that on this aspect the arbitrator did address the issues that were put to him even if his conclusions may have been wrong as a matter of law. There was no irregularity, let alone a serious irregularity. Accordingly there is nothing in this proposed ground of appeal.

Prolongation

[44]The complaint made by Mr and Mrs Shaw here has two limbs. First, since the arbitrator found that MFP was entitled to an extension of time up to Christmas 2007 he held that MFP was entitled to loss and expense during the period of the delay (10 weeks). The arbitrator considered MFP's submissions, in which it claimed prolongation costs of a little over £10,000, Mr and Mrs Shaw's Reply to Rejoinder and the submission by Mr Wilson - which was to the effect that the weekly cost of prolongation was £200, making £2,000 in all. It appears that the arbitrator broadly preferred the submissions of MFP and he awarded prolongation costs of £7,000, or £700 per week.

[45]One of the complaints made by Mr and Mrs Shaw is that MFP did not keep on site, as the contract required, a competent foreman at all times. Accordingly, they submitted, MFP should not be permitted to recover prolongation costs based on its contract preliminaries because MFP did not provide all the services set out in the preliminaries. The force of this argument is obvious. However, it is not clear from the brief conclusions of the arbitrator that he did not take the point into account. It appears that he took a figure for the weekly prolongation cost that was between that being advanced by Mr and Mrs Shaw and that being advanced by MFP, albeit one rather closer to MFP's figure, and so he may have taken Mr and Mrs Shaw's points into account (if not to the extent that they hoped). In these circumstances I do not see how it can be said that the arbitrator did not deal with the issue.

[46]The other way in which the same point arises is that Mr and Mrs Shaw contended that there should be a general deduction from MFP's final account to reflect the fact that they did not comply with the contract in terms of matters such as the presence on site at all times of a competent foreman. The arbitrator dealt with this point at paragraph 18.5 of Award No 2. He said this:

“[Mr and Mrs Shaw] claim in Reply to Rejoinder 22/09/09 [paragraph 49] a reduction (or credit) for Preliminaries of £18,798.00. The Arbitrator rejects this head of reduction for the reason that the Contractor expended that sum. At in any event, it also fails because of the consequences of the repudiatory breach are taken elsewhere, i.e. Cost of completing the Works via Contractors.”

[47]So the arbitrator gave two distinct reasons for rejecting Mr and Mrs Shaw's argument. Whether they are right or wrong does not matter for the purpose of section 68 of the Act because the arbitrator plainly dealt with the point. The complaint here really boils down to the fact that Mr and Mrs Shaw do not agree or accept the arbitrator's conclusion.

[48]There was a further point. Mr and Mrs Shaw submitted that MFP was not entitled to an extension of time because no extension of time had been granted by the Adviser. This is not a good point. It is no answer to a claim by a contractor for an extension of time that the architect has not granted an extension of time: a failure to grant an extension of time when one is due amounts to a breach of contract by the employer. Depending on his powers, the arbitrator can either grant the appropriate extension of time together with the associated loss and expense or give damages in lieu.

Latent defects

[49]The allegation by Mr and Mrs Shaw is that the arbitrator failed to consider the complaint about the new front door and the split wood of the new French windows. In relation to the front door, this was dealt with under item 60.

[50]However, the split in the wood of the French windows was not addressed by the arbitrator in Award No 2. The complaint was certainly raised, because it is mentioned on page 24 of the Claimants’ Reply to MFP's Submission Regarding the Evaluation which was served in August 2009. However, it is not possible to see what sum, if any, was claimed in respect of it. The sum claimed for works to complete and remedial work in the August 2009 submission was £41,146.98, as against a sum claimed of £42,203.92 in Mr Wilson's earlier October 2008 evaluation.

[51]Whilst Mr and Mrs Shaw obviously did raise the question of splits in the oak of the French windows, it rather looks as if no figure was ever put forward in respect of it. Mrs Shaw told me at the hearing that the French windows had not been replaced but the splits had been filled and made good. She thought that this was at a cost of about £2,000, but I have to say that this strikes me as an extraordinarily large sum for what were in effect relatively minor repairs to a door. But the real point is that she was unable to show me where any such sum had actually been claimed during the arbitration. My conclusion is that no such sum was claimed, and accordingly that the arbitrator cannot be criticised for failing to deal with the cost of this item.

The application for permission to appeal under section 69 of the Act

[52]In the Amended Particulars of Claim, this is put in the following way: “If the Claimants are wrong on the first points of appeal under section 68 of the Arbitration Act 1996 set out above, and the Court finds that the arbitrator has in fact addressed the question of the proper measure of damages for repudiatory breach under the express terms of the contract, the Claimants submit that the Arbitrator's approach was obviously wrong as he addressed himself to the reasonableness of the costs incurred and not to whether these costs were reasonably incurred in all the circumstances."

[53]As I have already mentioned, it seems likely that in relation to two small items under item 74 (with values claimed of £180 and £230, respectively) the arbitrator rejected Mr and Mrs Shaw's figures on the ground that they appeared too high or, putting it another way, that they were not reasonable. It is certainly arguable that Mrs Shaw's submission is correct, namely that the arbitrator should have considered whether the sums in question had been spent on completing unfinished work and, if so, whether they had been reasonably incurred. Mrs Shaw submitted that whether the sum claimed was in fact a reasonable sum to spend on relevant item of work is not the correct question. For example, suppose that the type of radiator contracted for was not currently available from the local plumber so that it had to be ordered at significantly greater expense from a major stockist in London; in those circumstances it might not be unreasonable for Mr and Mrs Shaw to incur the additional expense in order to complete the works. The fact that the same radiator is usually available locally at a significantly lower price would be neither here nor there.

[54]Apart from the two items that I have mentioned, Mrs Shaw was unable to identify clearly any other item in respect of which the arbitrator had adopted an approach that was obviously wrong. In those cases where he had taken a single figure to represent a number of items, as he did in relation to item 74, for example, it is not possible to know what approach he adopted, still less whether or not it was a correct approach.

[55]Since the two items that I have mentioned total in aggregate £410, from which the arbitrator made some unidentified deduction, it is most unlikely that any error of law in his approach in relation to these two items will be one that can be said to affect substantially the rights of either Mr and Mrs Shaw or MFP. Accordingly, subject to one point, the requirement of section 69(3)(a) of the Act "that the determination of the question will substantially affect the rights of one or more of the parties" is clearly not satisfied in this case.

[56]The caveat is this. On 26 August 2009 MFP's solicitors wrote to those acting for Mr and Mrs Shaw with an offer to settle the arbitration. The offer was that Mr and Mrs Shaw should pay MFP the sum of £40,000 together with the costs of the arbitration, save that MFP agreed to pay Mr and Mrs Shaw's costs of dealing with the repudiation issue and the associated fees of the arbitrator. As it turned out, this was a very well pitched offer. If Mr and Mrs Shaw had kept Award No 2 below £40,000, then there may have been some room for argument about the costs of the arbitration. In the event, there was none. Even if Mr and Mrs Shaw were given permission to appeal under section 69 and even if that appeal were to succeed, the amount by which they would reduce the award would be no more then a few hundred pounds, if that, and consequently the recovery by MFP would still be greater than the sum that it had offered to accept. Accordingly, since I have rejected the points advanced by Mrs Shaw on the challenge under section 68 of the Act, success on an appeal under section 69 would make very little difference to the final outcome.

[57]There is therefore no arguable case that the determination of the question of law raised by Mr and Mrs Shaw on an appeal would substantially affect the rights of either of the parties to the arbitration. Accordingly, there is no justification for giving permission to appeal under section 69 of the Act.

The application for an extension of time for appealing

[58]The Act provides that any appeal must be made within 28 days of the date of the Award. Award No 2 was made on 30 November 2009, although it was not taken up until about 21 January 2010 when the final balance of the arbitrator's fees were paid by MFP.

[59]The Court has a broad discretion to extend the time limit: see Kalmneft v Glencore International

[2002] 1 All ER 76

, per Colman J at [48]. In that case Coman J said also, at [51], that the twin principles of party autonomy and finality of awards tend to restrict the supervisory role of the court and to minimise the occasion for the courts intervention in the conduct of arbitration. He went on to list a number of considerations which are likely to be material to the question of whether or not to grant an extension of time. One is the strength of the application.

[60]Mr and Mrs Shaw have explained that they were unable to pay the entirety of the balance of the arbitrator’s fees at the time when the award was made, and MFP was, it seems, not in a much better position to do so. This is why Award No 2 was not taken up for nearly 2 months. Mr and Mrs Shaw submit that a major reason for their inability to find the money was the fact that MFP was, they say, unreasonably pursuing bankruptcy proceedings against them arising out of non-payment of the earlier award of the adjudicator.

[61]I do not see that any useful purpose would be served by lengthening this judgment in order to consider whether or not the non-payment of the full amount of the arbitrator’s fees by Mr and Mrs Shaw in the circumstances that prevailed is a good reason for granting an extension of time because I have reached the clear conclusions, for the reasons already given, that the challenge under section 68 of the Act is misconceived and that there is no good reason to give permission to appeal under section 69.

[62]In these circumstances, the grant of an extension of time would be pointless and I therefore refuse it.

Conclusions

[63]The challenge under section 68 of the Act fails. I refuse permission to appeal under section 69 of the Act on the ground that, even if the arbitrator was obviously wrong in his approach to the question of valuation, the sum at stake is so modest that the outcome cannot possibly have a substantial affect on the rights of either of the parties.

[64]In the circumstances there is no purpose in granting an extension of time and I decline to do so.

[65]Accordingly, this claim and the applications fail in their entirety and so the claim must be dismissed with costs. If there are any matters arising out of this judgment on which the parties wish to address me, including costs, they should do so in writing within 7 days of the issue of this judgment in draft form. I will deal with any such matters on paper unless either party specifically asks me to do otherwise, in which case I will decide whether to hold a further hearing.

[66]Finally, I cannot leave this judgment without thanking the advocates: Mrs Shaw for putting her case clearly and as well as it could be put and Mr Bradley for the clarity and brevity of his oral submissions. In addition, I would like to thank Mr and Mrs Shaw's solicitors for the very well presented documentation.