Case Law Updates - March 2022

Struthers & Anor v Davies & Anor [2022] EWHC 333 (TCC)

Facts

Alastair Davies Building (the First Defendant) were appointed as the main building contractor by Mr and Mrs Struthers (the Claimants), to carry out extension works at the Claimants’ home in Surrey. Design-Cubed Limited (the Second Defendant) were appointed as the architect/contract administrator.

A building contract was entered into by the Claimants and First Defendant in March 2015, with the aim for completion of the works by August 2015.

However, the First Defendant failed to complete by this date and did not request any extensions of time. The works remained incomplete by December 2015 and the Claimants served a notice of their intention to terminate the contract at the First Defendant’s residential address. Subsequently, the Claimants served a termination notice in January 2016 by post and email.

The Claimants issued a claim against the First Defendant for defective works, and for the costs for completing the outstanding works. A dispute was also brought against the Second Defendant, but this was settled in 2021.

Issues

The court had to determine whether:

  1. The works carried out by the First Defendant were defective, and if so, what costs have been incurred by the Claimants;
  2. The building contract was validly terminated by the Claimants; and
  3. The Claimants’ entitlement to costs for completing the works.

Judgment

To determine the quality of the works and remedial costs, the court considered whether it was necessary to demolish the extension constructed by the First Defendant, and reconstruct the foundations. The court relied on an independent expert’s evidence, which showed the works were defective and demolishing the initial extension constructed by the First Defendant was necessary.

As for termination, the court held the contractual termination was invalid on the basis the notices were served by the Claimants and not the Second Defendant; the First Defendant did not acknowledge receipt of the notice of intention; and, the timescales for contractual termination were not complied with (the notice to terminate was served before the expiry of the 14 days after service of the notice of intention).

However, although not a valid contractual notice, the court held the notice of termination was clear acceptance of the First Defendant’s repudiatory breach of the contract (failure to comply with the contract and failure to complete the works), and the costs incurred by the Claimants for completing the works were objectively reasonable.

Therefore, the court awarded the Claimants damages for the defective works and for the incomplete works.


Provimi France SAS and others v Stour Bay Company Ltd [2022] EWHC 218 (Comm)

Facts

The Claimant, Provimi entered into a trade agreement in 2015 with the Defendant, Stour Bay (a supplier) to purchase vitamins. The Defendant supplied vitamins to the Claimant, who argued these were not in accordance with their initial specification requirements and were not fit for purpose.

Proceedings were issued by the Claimant in October 2019, on the basis the vitamins were defective and therefore, there was a breach of the sale contract.

Both parties were required to comply with the disclosure process, under the Civil Procedure Rules (Practice Direction 51U). More specifically, parties were required to comply with paragraph 3, ordering them to preserve documents in their possession.

However, prior to the date of disclosure, the legal representative for one of the claimant’s notified the defendant that some of the documents had been deleted, as a result of the claimant’s documents retention policy (deletion of documents after three years).

Issues

The court had to determine whether there was a breach of contract and the Claimant is entitled to loss and damages.

Judgment

The court held that the previous course of dealings, do not show any issues with the vitamins. It was only in 2015, the Claimants encountered issues with the vitamins. Therefore, the issue is not the product itself but external factors (transportation).

The deletion of documentation did not assist this claim, and emphasised the important of ensuring all parties are aware of their disclosure obligations. To simply state documents must be retained is insufficient.

On this basis, the court held there was no breach of the sale contract and dismissed the Claimants claim.

Practice makes perfect…at least with NEC

NEC (New Engineering Contract) have released a new practice note to encourage and provide guidance on Early Contractor Involvement (ECI), where NEC4 ECC Options C or E are used.

So how does this benefit parties?

One of the fundamental principles of NEC is mutual trust and cooperation. By encouraging ECI, the developer (or Client as referred to under NEC) has more control over the project at the outset, including cost-effectiveness and faster turn-around times.

Additionally, the Contractor has more time to prepare for and satisfy the Client’s requirements, by allowing the programme and construction methodology to be reviewed and tested prior to construction, and identifying and managing construction risks earlier on.


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.


Please note, these updates are for educational purposes only and should not be relied on as legal advice.  Barton Legal do not make any representations as to the legal validity of them and any claims that this is legal advice will be unsubstantiated.