Case Law Updates – February 2024

Table of Content

CLS Civil Engineering Ltd v WJG Evans and Sons [2024] EWHC 194 (TCC)

Background

In CLS Civil Engineering Ltd v WJG Evans and Sons [2024] EWHC 194 (TCC) the parties were proceeding with development works, the works commenced under a Letter of Intent (“the LoI”), whilst the contract terms were being negotiated between the parties.

The contract would be based on the JCT Intermediate Building Contract, but the parties could not agree key terms. A clause in the LoI stated, “Under no circumstances will be will we [sic] be liable under this Letter of Intent to pay you more than £150,000”.

It was agreed to increase the cap in the LoI to £1,100,000, as terms of the Contract were still not agreed. Eventually, the Contract was terminated by CLS, which WJGE claim was a repudiatory breach. WJGE sought £1,413,669.24.

CLS claimed that the relationship was governed by the LOI and its revisions, meaning their liability was capped. WJGE argued that the construction contract was governed by JCT terms and that CLS’s liability was not capped at £1.1 million, despite the terms of the Contract not being agreed.

Proceedings

CLS issued a Part 8 Claim against WJGE.

The claim sought two declarations from the Court:

“a. That there is no construction contract between the parties and that any legal relationship between the parties is solely governed by the agreed terms set out in the LoI dated 14th August 2021 and its revisions thereafter;

  1. That the Claimant’s maximum liability under the LoI and its revisions is £1,100,000.”

WJGE argued that the case was unsuitable for Part 8 proceedings and proposed the claim should be made under Part 7 of the CPR. As an alternative argument, WJGE submitted that the terms of the cap did not apply and that the terms of the JCT Intermediate Contract should be applied.

Decision

The judge determined that the matter was suitable for Part 8 proceedings on the basis that:

  1. the facts relating to the matters before the Court were not disputed in any material way. It was held that the parties’ relationship was governed by the LOI and its revisions, which included a liability cap of £1.1 million. The court found that the parties did not reach an agreement on JCT terms and that WJGE was bound by the cap, as evidenced by their conduct and communications throughout the project; and
  2. the estoppel argument had no real prospect of success.

The judge decided that the terms of the LoI were binding and that the cap of £1.1m applied and that the JCT terms had never been agreed.

 

Jenni Glover & Littleton Glover v Fluid Structural Engineers & Technical Designers Limited [2023] EWHC 3219 (TCC)

Facts

  • The Claimants engaged the Defendant (a structural engineering firm) to provide structural and civil engineering services in relation to a project to extend the Claimants’ residential property.
  • Construction works at the Claimants’ property led to cracking and damage to properties which neighboured the property.
  • The Defendant carried out a series of inspections and reports into the work carried out by the principal contractor, Chase. This included a report produced in June 2019 which, as admitted by the Defendant, contained an incorrect statement in relation to the way the works were carried out by Chase.  Chase was terminated as the contractor in July 2019.
  • The Claimant’s issued a claim against the Defendant and other parties. The Claimants claim against the Defendant was for a breach of duty by failing to:
    • Visit the site on a fortnightly basis;
    • Provide a satisfactory report to the Claimants about the carrying out of the structural works; and
    • Document its inspections of the site.
  • The Claimants alleged that these breaches resulted in a lack of understanding by the Claimants of how well the works were progressing. As a result, the Claimants alleged that they had incurred considerable costs to carry out a proper investigation into the works, which could have been avoided had the Defendant carried out its duties correctly.
  • The Claimants claimed against the Defendant for repayment of part of the Defendant’s fee, solicitor fees incurred for a claim against the defendant, expert fees for the claim, the costs of opening up works and the claimants’ costs liability to its insurance company.
  • The Defendant made an application to strike out the Claimants’ statement of case or to order summary judgment in favour of the Defendant. The Defendant argued that the Claimants’ claims could not succeed.  The Defendant argued that the claim by the Claimants were for losses which were not within the scope of the Defendant’s engagement.  The Defendant also argued that the claims made by the Claimants cannot be claimed by way of abatement.

Judgment

  • The Judge held that the nature of the Defendant’s appointment was one that made it arguable that, on an objective viewpoint, its engagement extended to protecting the claimants’ interests against allowing damage to occur to the neighbouring properties. This included the need to inspect any allegations of damage to the neighbouring properties, and investigation of any claims against the contractors, professional team and any insurers connected to the claims.
  • The Judge also held that if the Claimants were liable for a claim by the adjoining owners which was caused, at least in part, by the Defendant’s inability to properly review the works carried out by Chase, then this claim is ‘sufficiently connected’ to the Defendant’s scope of work.
  • The Judge found that, in order to successfully claim for repayment of the fees paid to the Defendant, the Claimants had to demonstrate that the services were either not performed at all or were performed so poorly that they were worthless.
  • The Judge believed that this entitled the Claimants’ to claim all of the costs they were claiming in the current proceedings. The Judge’s analysis of the authorities confirmed that there is no authority which disentitled a claimant to claim the sums being claimed by the Claimants in this case.
  • The Judge was sceptical in relation to the repayment claim. Namely, the Judge was unsure about the Claimants argument that they did not need to show that the services as a whole were worthless or had not been performed but only the specific parts which caused the Claimants to suffer loss.  However, the Judge agreed that the legal authorities had not specifically stated that a claimant has to show that the defending party has failed to provide the whole of its services when making a claim for repayment.

 

As a result, the Judge dismissed the application by the Defendant the strike out the Claimants statement of case and to order a summary judgment in the Defendant’s favour.  The Judge held that this matter should proceed to Trial

 

Thomas Barnes & Sons Plc (In Administration) v Blackburn with Darwen Borough Council [2022] EWHC 2598 (TCC)

Facts

  • The dispute related to the construction of a new bus station in Blackburn in which both parties entered into a contract in the form of a JCT standard form of building contract with quantities 2011.

 

  • The construction of the bus station resulted in a series of delay to completion of the bus station and a lot of addition costs being incurred.

 

  • The defendant terminated the contract with the claimant in June 2015, before the work was complete as a result of apparent default(s) by the defendant.
  • The defendant claimed for money it was allegedly owed under the contract and for damages as a result of the defendant allegedly wrongfully terminating the contract. The claim made by the claimant was £1,788,953.76 (excluding VAT).

 

  • The Defendant alleged that the Claimant in fact owed the Defendant £1,865,975 as a result of the Claimant having to engage a replacement contractor. Albeit, the Defendant did not make a counterclaim.

 

  • The Claimant claimed that the Defendant’s designer and project administrator, Capita PLC, were largely responsible for the issues the project experienced. Issues relating to delay also arose from the performance by the Claimant’s sub-contractors Millfield (its GRP cladding sub-contractor) and Saint-Gobain Glass (its specialist structural glazing sub-contractor).

 

  • The claimant claimed it was entitled to an extension of time to 8 November 2015.

 

  • The claimant claimed that the delays to the project were caused by issues with the deflection of steelwork, which required remedial work and which then caused delay to the concrete topping and, secondly, as a result of setting out changes instructed by Capital to the Steel Framing System.

 

  • The Claimant’s expert maintained that, because of the hub steel deflection issue, the concrete topping could not start.

 

  • The Defendant admitted that a delay was caused by the steel deflection issue. However, this delay was already dealt with by an extension of time awarded by Capita (extending the completion date to 13 April 2015).  The main delay caused to the critical path was a delay to the installation of the roof covers at the bus station, this caused a 57-day delay.  Once the roofing cover issue was resolved, then the hub steel deflection started to cause delay.  Therefore, the steel deflection did not cause a critical delay until the roofing covers were installed and remediated as needed.  The defendant admitted it was responsible for the steel deflection and, as a result, agreed that the Defendant was entitled to claim an extension of time to 9 May 2015.  A further delay to complete the hub internal finishes, which were the Defendant’s responsibility, meant they agreed the Claimant was entitled to an extension of time to 2 June 2015.

Judgment

  • The Judge agreed that, if two causes of delay (one by the contractor and one by the employer) can be shown to be concurrent, then the approach is, generally, that the contractor should be entitled to an extension of time. However, the contractor should not be allowed to claim loss and expense unless it can be shown that the delay which was caused by the employer was the dominant cause of the delay (and the contractor’s delay was relatively inconsequential in this regard).

 

  • The Judge held that the issue with the delay caused by the hub steel deflection and the delay caused by the roof coverings was a case of concurrent delay. This is because the steel deflection issue had to be resolved before the concrete topping could be poured (which meant the internal hub finishes could start) but the roof coverings were also needed in order to start the hub finishes as well.

 

  • The Judge held that the Claimant was entitled to an extension of time of 119 days. This was 133 days in relation to the steel deflection issue, less 2 days as a result of completing the concrete topping early and less another 12 days as a result of the delays to start the remedial works to the steel deflection.  However, the Judge held that the claimant was only allowed for claim for 27 days’ worth of loss and expense due to the concurrent delay.  The Judge decided that the claimant was entitled to an extension of time to 10 August 2015 in respect of the project as a whole.

 

  • The Judge held that there were many different causes of delay to the project. The Claimant wanted to use the issue with the steel deflection as the root cause of the delay to the construction works.  However, issues relating to the claimant’s own failure to pay some of its sub-contractors and the general lack of progress of the works in the lead up to 4 June 2015 termination notice entitled the defendant to terminate the contract with the defendant.

 

  • The Judge held that the delays from February 2015 were largely the fault of the claimant.

 

  • In spite of the Judge allowing an extension of time to 10 August 2015, the Judge found that the attitude and lack of work carried out by the claimant in the lead up to the 4 June 2015 termination notice entitled the defendant to terminate the claimant. The Judge found that the defendant’s termination was therefore entitled to terminate the contract.

 

  • However, the Judge found that, because the defendant had not served a notice in accordance with clause 1.7.4 of the contract, the defendant did not properly terminate the contract as required by that contract.

 

  • The Judge did not believe that this lack of providing a termination notice under the contract constituted a repudiatory breach. The reasons being the claimant had stopped carrying out the work, the claimant should have known that the defendant was entitled to terminate, the claimant knew the defendant wanted to terminate the contract when it received the notice and the defendant will have known that the claimant wanted to exclude it from the site after it terminated the contract.