DAC Beachcroft LLP
DAC Beachcroft LLP
09/28/2023 | News release | Distributed by Public on 09/28/2023 08:37
Lessons from Sleaford Building Services Ltd v Isoplus Piping Systems Ltd [2023] EWHC 1643 (TCC)
Lessons from Sleaford Building Services Ltd v Isoplus Piping Systems Ltd [2023] EWHC 1643 (TCC)
Published 28 September 2023
This case concerned the application of Isoplus Piping Systems Ltd ("Isoplus") against Sleaford Building Services Ltd ("Sleaford") for i) an uplift to the amount in the adjudicator's decision dated 23 December 2022 ("the Decision") pursuant to CPR 36.17(4) following rejection of a Part 36 offer; and ii) indemnity costs for enforcing the Decision.
As set out below, the Court: i) refused to grant any uplift on the amount in the Decision; but ii) held Isoplus was entitled to indemnity costs.
Background
In an adjudication Sleaford and Isoplus both claimed amounts were owed to them under their subcontract for maintenance and construction works for the Ministry of Defence ("the Subcontract"). On 23 December 2022, the adjudicator held that Sleaford owed £323,502.32 to Isoplus ("the Sum Due").
Isoplus demanded payment in accordance with the Decision. However, since Sleaford indicated it would contest the enforcement of the Decision, Isoplus further made a Part 36 offer to waive its right to interest in exchange for full payment of the Sum Due plus costs ("the Part 36 Offer").
Rejecting the Part 36 Offer, and in anticipation of enforcement proceedings, Sleaford issued Part 8 proceedings on 27 February 2023 for a declaration that no further payment was due to Isoplus given it did not comply with the pre-requisites to payment under the Subcontract. On 15 March 2023, Isoplus issued proceedings to enforce the Decision. The proceedings were consolidated and , the Court dismissed Sleaford's claim, holding that Isoplus was entitled to the Sum Due plus interest and costs ("the Order")1. This meant the Order was "more advantageous" than the Part 36 Offer. Isoplus therefore sought an uplift on the Sum Due pursuant under CPR 36.17(4) as well as indemnity costs.
Judgment
The Court refused to apply an uplift the Sum Due pursuant to CPR 36.17(5)(e) because it would be unjust to do so given the Offer was not a "genuine attempt to settle". Accepting the Offer would have still entitled Isoplus to the full principal amount while only foregoing £350 of interest (0.01% of the claim). This was not a genuine concession since adjudication enforcements tend to have an "all or nothing" outcome. Had an uplift been awarded, Isoplus would have been entitled to an additional £32,250.23 plus interest and indemnity costs.
However, the Court did award Isoplus indemnity costs since this was a "classic case" where it should be awarded. It held that Sleaford never had a defence to enforcement and merely wanted to delay payment whilst its Part 8 proceedings were being determined.
Takeaways
This case is yet another reminder that a Part 36 offer is not a "tick box exercise" that will automatically entitle a party to an uplift. In adjudication enforcement proceedings that tend to have "all or nothing" outcomes, more generous concessions will likely need to be made to constitute a "genuine attempt to settle". A negligible waiver of interest will not suffice.
Additionally, while there is typically a high bar to indemnity costs, Courts are more inclined to award them in adjudication enforcement proceedings where any valid defences are typically (and should be) dealt with in substantive argument. To avoid being seen as wasting expenditure and court time, parties are reminded to raise all available substantive arguments while the adjudication is running its course.