Case Law Updates - September 2021

Payment dispute

CC Construction Limited v Raffaele Mincione [2021] EWHC 2502 (TCC)

The Contractor was Engaged by the employer to design and build the core of a new house for the sum of £2,587,250. The Contract was dated 21 April 2016 and used the JCT D&B 2011 with amendments.

In September 2017 the Contract was varied, and as such, the Contract Sum was increased to £3,130,602 and completion date postponed.

On 5th October 2020 the Contractor sent the Employer a letter attaching a Final Statement, containing the remaining balance of £479,957.80. The Employer claims not to have received this letter and on 1 December 2020, the Contractor sent a further letter containing the original letter of 5th October 2020.

On 18th December 2020, the employer disputed the contents of the Final Statement, arguing that as a result of the delay, liquidated damages were due and the final payment was owed by the contractor to the employer.

On 13th January 2021, the employer issued a Notice of Completion of Making Good.

On 19th January 2021 the Contractor sent an invoice for the £479,957.80 sum detailing the final date for payment being 14th January 2021. The due date was disputed by the Employer, on the basis that as the Notice of Completion of Making Good was 13 January 2021, final payment was due 28 days after this date.

The employer then served a payment notice on 10 February 2021, and argued that as this was served before the due date this prevented the Final Statement sum being conclusive.

The matter was taken to adjudication, which found in favour of the Contractor that the Final Statement was conclusive and no Payment Notice had been served before the due date.

The Employer argued that this decision was not enforceable and that there was a breach of natural justice as the adjudicator failed to address the issue of liquidated damages.

Decision

The court found that the Employer’s letter of 18th December effectively prevented the Final Statement becoming conclusive however the impact of this declaration was limited as the due date was found to be 5th January 2021, meaning that Employer’s Payment Notice was served 5 days too late.

The adjudicator’s decision was found to be enforceable, however there was a material breach of the rules of natural justice with the failure to consider the Employer’s entitlement to liquidated damages, therefore the decision is only enforceable to the extent of the balance over the amount of that claim.

Read the full judgement here

Privileged documentation

Axnoller Events Ltd v Brake & Anor (cross-examination on a draft witness statement) [2021] EWHC 2539 (Ch)

Facts

The dispute related to the disclosure of one of the Defendant’s draft witness statements. The Claimant claimed that the Defendant’s counsel (Ms Brown) had voluntarily disclosed the draft witness statement and as such, the Claimant could cross-examine the Defendant on the contents of the document.

The witness statement was not signed by the Defendant and the Ms Brown denied having disclosed this document to the Claimant.

The Claimant’s Counsel, Mr Modha, alleged that Ms Brown had informed him that she intended to hand the draft witness statement to the judge who would be hearing the claim. He asked to see this document, which she provided to him and he read it in the waiting area.

After Mr Modha had read the statement he took photographs on his phone, which he alleges he did whilst sitting opposite Ms Brown who was aware of this.

The Defendant disputed these facts, and one of the Defendants Mr Brake, gave a witness statement arguing that he had sat next to Ms Brown’s bag which presumably contained the statement and he left that bag unattended a for a couple of minutes whilst he went to the toilet. Mr Modha was present in the waiting area at this time.

Decision

Judge Paul Matthews concluded that Ms Brown did lend Mr Modha her copy of this witness statement so that he could find out the nature of the defence and having read it, he photographed it.

He accepted that Ms Brown had said that she did not authorise him to photograph it, but this was irrelevant because the act of deliberately showing the draft witness statement to opposing counsel was enough to waive privilege.

Accordingly, the witness statement was found to be admissible in evidence under CPR Practice Direction 32, paragraph 27.2.

Read the full judgement here

Covid-19 as force majeure

Dwyer (UK) Franchising Ltd v Fredbar Ltd & Bartlett [2021] EWHC 1218 (Ch).

Facts

The Claimant entered into a franchise agreement with Fredbar (the First Defendant) and Mr Bartlett (the Second Defendant).

In March 2020, Mr Bartlett was notified by the NHS that his son was deemed vulnerable and as such he should self-isolate for the next 12 weeks in order to avoid contracting Covid-19.

Clause 30 of the agreement contained the following force majeure clause:

“This Agreement will be suspended during any period that either of the parties is prevented or hindered

from complying with their respective obligations under any part of this Agreement by any cause which

the Franchisor designates as force majeure including strikes, disruption to the supply chain, political

unrest, financial distress, terrorism, fuel shortages, war, civil disorder, and natural disasters.”

Mr Bartlett approached the Claimant about terminating the agreement under Clause 30 and on the basis that there was a drop in the demand for his profession (plumbing).

The Claimant refused this request and stated that plumbers were key workers and that the drop in demand did not constitute a force majeure (“FM”) event.

The First Defendant purported to terminate the agreement by letter dated 16 July 2020 as the Claimant had failed to comply with Clause 30 by refusing to designate the circumstances as FM.

The Claimant alleged that the Defendants had repudiated the contract and claimed damages.

Decision

ICC Judge Jones held that “a critical factor had been ignored for the purpose of the discretion” of the Claimant in focussing purely on business concerns and failing to consider the safety of Mr Bartlett’s son.

This was a repudiatory breach of agreement, however, on 2 April 2020 the Claimant had offered Mr Bartlett furlough, which Mr Bartlett had accepted. By accepting this offer and not attempting to terminate at this point, he affirmed the agreement.

Therefore, when purporting to terminate the contract in July 2020, Mr Bartlett had committed a repudiatory breach himself.

Read the full judgement here

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.