The Sky’s The Limit Transformations Ltd v Dr Mohamed Mirza [2022] EWHC 29 (TCC)
Facts
The Defendant (Dr Mirza) entered into a building contract with the Claimant (The Sky’s The Limit Transformations Ltd), to carry out alterations at the Defendant’s residential property.
During the works, issues arose between the parties, leading to a termination of the contract in April 2017. Two years later, the Claimant issued proceedings against the Defendant for payment of outstanding invoices and loss of profit. The Defendant denied any further payments were due.
Issues
The parties were given numerous opportunities to resolve the dispute prior to the trial, including via mediation. However, both failed to agree a settlement, causing delays to the dispute resolution procedure.
The trial occurred over five days and the court had to address whether or not the Claimant was entitled to further sums due post termination.
Judgment
The court held that no further payments were due to either the Claimant or Defendant, on the basis that:
1. The Defendant overpaid the Claimant for the works carried out pre-termination; and
2. The Defendant did not issue a counter-claim against the Claimant.
In order to resolve domestic building disputes quicker and to reduce the parties’ costs going forwards, the court proposed applying a new procedure, as follows:
a) limiting the disclosure of documents to only those relevant to the dispute;
b) preventing parties costs from exceeding a set limit;
c) appointing and relying on a single joint expert; and
d) declaring mediation as compulsory.
Bilton & Johnson (Building) Co Limited v Three Rivers Property Investments Limited [2022] EWHC 53 (TCC)
Facts
The Claimant (Bilton & Johnson) submitted a tender for a specific sum to carry out refurbishment works at the estate owned by the Defendant (Three Rivers).
Works had commenced in September 2018, and it was anticipated completion of the works would occur in sections.
Both parties entered into a JCT Design and Build Contract 2016 (“Contract”) dated August 2018, but it was executed and returned by the Claimant in January 2019.
During the works, the Defendant’s agent (Brown & Lee surveyors) noticed a discrepancy between:
1. The completion dates in the signed Contract and the initial contract issued to the Claimant – the signed Contract set out there is a single completion date, whereas the initial contract set out there would be sectional completion; and
2. Liquidated Damages (LADs) – the signed Contract set out LADs would be charged at £2,500 per week, whereas the initial contract set out they would be charged at £2,500 per section per week.
The Defendant’s agent issued an amended contract to the Claimant, to reflect the completion dates and LADs specified in the initial contract, but the Claimant failed to sign it.
Issues
The Claimant requested an extension of time for the entire works as specified by the Contract, and the Defendant deducted LADs. Neither party agreed to the amount of extension of time awarded, nor the amount of LADs deducted and an adjudicator was appointed to determine this. The adjudicator found in favour of the Claimant, who was entitled to an extension of time to 14 November 2019 and ordered the Defendant to reimburse the Claimant for the incorrect deduction of LADs.
The Claimant sought to enforce the adjudicator’s decision, which the Defendant resisted on the basis that the adjudicator’s decision was a breach of natural justice, and the adjudicator took a restrictive view of this jurisdiction, by failing to accept the defence of rectification for the LADs.
Judgment
The court upheld the adjudicator’s decision and granted a summary judgment on the basis that:
1. There was no breach of natural justice – the signed Contract superseded the original contract, therefore the contractual provisions relating to the completion date and LADs under the signed Contract applied; and
2. The adjudicator fully considered the defence of rectification raised by the Defendant, but found the Defendant was not entitled to withhold LADs at the initial rate ahead of the rectification of the signed Contract, nor where the initial rate was an unenforceable penalty.
Sweatfield Limited (formerly JT Design Build Limited) v Hathaway Roofing Limited; [1997] 1 WLUK 475.
Facts
Hathaway were subcontracted by JT to carry out roofing and cladding works.
Hathaway were delayed in their commencement of the works and further delays were caused by extreme weather. JT asked Hathaway to provide additional subcontractors on site in order to speed up progression, Hathaway said that they were able to do this but it would entail further costs.
The next day, Hathaway attended site to find that JT had instructed alternative subcontractors to carry out Hathaway’s works. Hathaway withdrew its labour and alleged that by replacing their labour, JT had breached the contract.
Decision
The judge found this to be a repudiatory breach of contract. The performance of these works went to the root of the contract and Hathaway were therefore entitled to perform their scope of works for the agreed price, per the contractual terms, unless it had itself breached the contract.
NB: If an employer brings in alternative labour to carry out a subcontractor’s contracted work without that subcontractor’s consent, this will amount to a repudiatory breach of contract.
Rice v Great Yarmouth BC (2001) 3 LGLR 41
The claimant entered into a four-year contract with the defendant to maintain the defendant’s sports facilities and parks.
The defendant issued a number of default notices against the claimant.
The contract contained an express termination clause, affording the defendant the right to terminate for “breach of any of [Rice’s] obligations under the Contract”.
The questions for the court were:
(1) whether the defendant was entitled to terminate under the wording of the termination clause; and/or
(2) whether the breaches, individually or cumulatively, were repudiatory breaches, entitling the defendant to terminate the contract.
Decision
- The court considered that the term “any” could not mean “any at all” as this would “fly in the face of commercial sense” and allow the defendant to terminate over the most minor breaches without any genuine reason.
- The question of whether multiple breaches entitled the defendant to terminate depended on whether the defendant was deprived of the substantial benefit of the contract. In this case, it was found that the cumulative breaches did not deprive the defendant of the totality of the four-year contract so it was not repudiatory.
NB: multiple breaches can act to accumulate to amount to a repudiation of the contract, if they deprive the innocent part of the substantial benefit of the contract.
Greater Glasgow Health Board v Multiplex Construction Europe Limited, BPY Holdings LP and BPY Holdings GP Limited (previously known as Brookfield Europe GP Limited), Currie & Brown UK Limited; and Capita Property and Infrastructure Limited [2021] CSOH 115, 2021 WL 05167451
Facts
The claimant sought damages from the Defendants joint and severally for losses incurred as a result of defective workmanship in constructing Queen Elizabeth University Hospital in Glasgow.
The contract incorporated NEC3 ECC, Option C and the contract between the Claimant and Fourth Defendant provided that the project supervisor was to perform their role in accordance with NEC3 Professional Services Contract, Option A.
The contracts also contained reference to NEC Clause W2 for dispute resolution.
Summons were provided after the expiry of the 5-year prescriptive period, however they contained no particulars of the claims and no adjudication had taken place.
Issues:
The following issues arose:
- Whether the dispute falls outside the scope of clause W2
- If not, is the present action incompetent?
- Should the action be sisted or dismissed?
- Is the Claimant entitled to a declaration that the present action is a relevant claim for prescription purposes?
Judgment:
In relation to ground 1, the judge referred to the case of Peterborough City Council v Enterprise Managed Services Ltd [2014] 2 CLC 684, where Edwards-Stuart J found that there was a “presumption in favour of adopting the method of dispute resolution chosen by the parties in their contract”.
For ground 2, the judge was not persuaded that any issue of incompetency arose but found that as a result of the terms of clause W2, there was a contractual requirement to refer the dispute to an adjudicator and this could not be entertained by a court until this had been done.
On ground 3, the Claimant argued that if the action could not proceed it should be sisted to await the outcome of the adjudication and not dismissed, as is usually the case in Scotland and England. The judge found this to be the appropriate course of action and that there was no reason to depart from this.
On ground 4, the judge found that as a result of the other grounds, a declaration was unnecessary and that the matter should be left standing, awaiting the outcome of the adjudication.
As there were multiple issues here it needs to be borne in mind that only one dispute can be referred for adjudication at a time. It was foreseeable at the time of contracting that this could lead to multiple disputes where adjudication could not be used. The parties should not have agreed to this method of dispute resolution.
The judge referred to paragraph 13.28 of Coulson on Construction Adjudication (4th ed, 2018), which states “Finally there is a case that concludes that, sometimes, a claim will be too large and/or too complicated and/or raised too long after completion to be suitable for adjudication”.
Cubex (UK) Ltd v Balfour Beatty Group Ltd
Facts
The Defendant, Balfour Beatty, was contracted by Crossrail to design and fit-out Woolwich Station in London. The Defendant sub-contracted the design and creation of the doors which were to be installed at the station to Cubex, the Claimant. The Defendant then contracted with another company to carry out Cubex’s works
Cubex referred an adjudication against the Defendant, alleging that the Defendant had committed a repudiatory breach of Contract and the Adjudicator found in favour of the Claimant and made an award of £408,216.04.
The Claimant applied to the Court to enforce the claim. The Defendant resisted enforcement on the following grounds:
- The Defendant can show that the contract was either a wholly ‘excluded operation’ or at least part of the contract was an ‘excluded operation’ (and, therefore, the adjudicator had no jurisdiction);
- The Defendant can show that more than one dispute was referred and/or the Contract Cubex referred the dispute under did not exist;
- The Adjudicator breached the laws of natural justice in his conduct of the Adjudication by concluding on the contract formation by referring to something which was not stipulated by either party;
- There is too long a gap between the adjudicator’s decision (May 2018) and the commencement of the enforcement proceedings (September 2021).
Judgment
The Judge held the following:
- ‘Excluded operations’ under Section 105(2)(d) should be defined narrowly;
- The manufacture and delivery of the doors on this project was an Excluded Operation and, therefore, there was no construction contract;
- In this case, there was no ‘concluded contract’ and there was no contract which a dispute could be referred under;
- The Judge indicated that he would not have declined to allow the enforcement purely on the grounds of the delay between the award being issued and the application to the court; and
- As a result of the above, the Judge declined to enforce the adjudication.
Stephen Hirst, Mountain Development Company Limited v Michael Paul Dunbar, MD Construction (Leeds) Limited, MD Construction (Bradford) Limited [2022] EWHC 41 (TCC)
Facts
- The Defendant and the Claimant were friends from School;
- The Claimant constructed dwellings on a site in Bradford;
- The Claimant claimed the Contract was based on Oral discussions, with a sum of £487,181.86 due on a quantum meruit basis;
- Work began on the Site in 2006. However, as work had stalled, the site was transferred to a company called Anlysse, which the Claimants allege was the Defendant’s nominee company;
- The Claimants started their Works in October 2011 (picking up where the previous Works had left off);
- The Claimant, Mr Hirst, and Defendant, Mr Dunbar, had discussed the possibility of Mr Hirst buying the Site and, therefore, The Claimant would not need to be paid by the Defendant;
- The Claimant, Hirst, had also not pushed the Defendant to pay for the Works during the project (indicating Mr Hirst had not expected to be paid).
Judgment
- The Judge held that Anlysse was not a vehicle of the Defendants and it was clear the Defendants did not own the site until Anlysse transferred it to them;
- The Judge observed that there was a lack of conclusive evidence, the facts of the case were from 10 years ago and he did not find either Mr Hirst or Mr Dunbar very reliable as witnesses;
- The Judge found that the lack of a formal contract, the lack of chasing for payment (which the Judge would have expected if there was a contract to perform construction Works only) and that there was no contract agreement but instead was an agreement that Mr Hirst’s benefit would be to take over the site (a land payment in lieu of monetary payment);
- The Judge therefore found that the Claimant was performing the Works at their own risk (i.e. at the risk of taking on the development) and not at the request of the Defendant (with appropriate contractual arrangements).
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