Ann Wright: Questions of probability

Case: Speymill Contracts v Eric Baskind

Court of Appeal February 2010

Raby House in Cheshire used to be a hotel. Sometime before 2005, it was bought by a Mr Baskind to convert into his home. Speymill was selected as the contractor and work began in August 2005.

The contract was in writing and confirmed that the JCT Standard Form 1998 Private Without Quantities would apply. However, no formal contract document was signed.

As the job progressed, architect JSD issued 15 interim payment certificates, amounting to £753,490.44.

The last of these was issued on 12 October 2006. JSD also issued the practical completion certificate on 27 June 2006 and asked for an extension of time.

Mr Baskind paid certificates one to 11 in full. But on 12 April 2006 he only paid part of certificate 12 and did not pay the remaining certificates. In total, he paid Speymill £652,786.20.

Following months of negotiation over the bill, Speymill went to adjudication on 28 November 2008. Mr Baskind said he had issued several withholding notices against certificates 12 to 15. Speymill said it had not received any of these notices.

When Mr Baskind was asked to produce copies of his withholding notices, he could not, and claimed that in September 2006 two of Speymill’s employees had stolen some of his files, which had included his copy notices.

Mr Baskind then said he could not produce any electronic records as a lightning strike and power surge in October 2006 had destroyed his computer records.

Speymill denied that it had taken any of Mr Baskind’s documents or that it had received any withholding notices from Mr Baskind directly or from his professional team.

The adjudicator decided that allegations of theft were a criminal matter and outside his jurisdiction. However, he noted that Mr Baskind had failed to prove, on the balance of probabilities, that he had issued effective withholding notices.

The adjudicator decided that Mr Baskind should pay Speymill £427,737. When he did not pay, Speymill tried to get the adjudicator’s decision enforced by summary judgment (a quick procedure where the court only has to decide whether or not the defendant has an arguable defence to the action).

Although the judge had reservations about the strength of Mr Baskind’s defence, he conceded that it was at least arguable and refused summary judgment.

Speymill appealed. The Court of Appeal noted that it was unusual for the professional team not to have copies of the withholding notices and that Mr Baskind could produce nothing. The court allowed the appeal.

Analysis

Normally, there is no statutory right to adjudication for projects on owner-occupied homes. The inclusion of the JCT contract in this case, however, introduced adjudication as a contractual right.

In all civil legal forums, assertions have to be backed with proof “on the balance of probabilities”.

This is harder than it seems. For example, many discussions and phone calls are not witnessed by others. If disputed at a later date, proving what was actually said can be problematic.

Mr Baskind’s chain of circumstances meant that he could not prove he had sent withholding notices. As a result, he failed to prove he had a case for withholding payment, although the adjudicator and courts were careful to not comment on the alleged theft. That was for the criminal courts.

However, the judgment was stayed – ie put on hold – pending the resolution of other financial matters in dispute, so no payment was actually made to Speymill.

Ann Wright FCIOB is an adjudicator and quantity surveyor. 

T: 01675 466009

 
Ann Wright is planning to retire shortly. Would you be interested in contributing to Case notes? Please email elaine@atompublishing.co.uk