ABB AB HVDC v McLaren Construction (Midlands and North) Ltd

Hearing dates: 15th May 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

THE HONOURABLE Mr Justice Stuart-Smith

The background to this ruling on costs is well known to the parties and, for present purposes, may be shortly stated. I shall refer to the sub-contract between ABB and McLaren as “the Contract”. It concerns a major project that appears to be seriously in delay.

On 3 May 2019 ABB purported to terminate the Contract, relying on various provisions, including clauses 18.1.1, 18.1.2 and 18.1.3. It requested assignment of all sub-contracts “forthwith”. On 7 May 2019 McLaren rejected ABB's purported termination and asserted that it constituted a repudiatory breach of the Contract which McLaren accepted. It is therefore common ground that the Contract came to an end either on 3 or 7 May. Also on 7 May, ABB wrote to McLaren's subcontractors assuring them that they would be paid for work that they did after the termination of McLaren's contract. These assurances did not (and did not purport to) enable ABB to proceed directly with McLaren's subcontractors.

Two contract provisions have been identified that are important:

i) If ABB's reliance on Clause 18.1 was well founded, Clause 18.5 required McLaren to assign all of its agreements with its sub-suppliers, which would include McLaren's sub-contracts with its sub-contractors;

ii) In any event, Clause 18.9 (18.10 in the conformed version) provided that, on termination of the Contract, McLaren “shall immediately deliver to [ABB] all specifications, programs and other information, data and [McLaren] documentation regarding the Works which exist in any form whatsoever at the date of such termination, whether or not then complete”. On its face this provision survived termination for whatever reason and is at least arguably broad enough to include McLaren's sub-contracts with its sub-contractors, though this is not accepted by McLaren.

There followed a sequence of events during which ABB repeatedly pressed for assignment of McLaren's subcontracts and provision of sub-contract documentation and McLaren either equivocated or simply failed to assign or provide the subcontracts and sub-contract documentation. Specifically:

i) McLaren did not assign the sub-contracts until after ABB had issued these proceedings with its application for interim relief;

ii) In correspondence McLaren adopted the position that it was not obliged to assist ABB by the provision of assignments or documentation. Whether because of confusion on its part or for some other reason, McLaren appeared to offer to novate subcontract agreements, which is materially different because it would require all McLaren's pre-novation obligations and liabilities to be assumed by or imposed on ABB.

In circumstances which (on the information available to the Court) justify the view that McLaren was dragging its heels and not cooperating, ABB issued these proceedings on 10 May 2019. It need hardly be emphasised that the collapse of the Contract was a critical event which was capable of doing enormous damage to the continuation of the project by ABB, particularly if McLaren's subcontractors did not cooperate with ABB going forward or, worse still, went off site. It is therefore not surprising that, in the circumstances prevailing on and by 10 May 2019, ABB issued its proceedings and its application for interim relief including (a) that McLaren should be restrained from amending or terminating its sub-contracts with its sub-contractors and (b) that McLaren should be compelled to assign its sub-contracts with its subcontractors.

Very shortly before ABB began lodging its proceedings with the Court, McLaren indicated that it was prepared to assign its sub-contracts. Shortly after ABB started lodging its proceedings, McLaren provided a copy letter of assignment accompanied by a list of subcontractors whose sub-contracts were said to be assigned.

The application for interim relief was listed for 15 May. As that date approached, McLaren protested that it was cooperating with ABB though not obliged to do so. At 16.58 on Monday 13 May 2019 McLaren provided electronic copies of 33 agreements. As has subsequently become clear, this disclosure had the following features that rendered it materially incomplete:

i) About 50% of the agreements, as provided, were unsigned and others had only one signature; and

ii) It was immediately apparent that not all sub-contractors were covered by the disclosure.

ABB therefore requested confirmation that what had been provided was comprehensive and requested final (executed) copies of sub-contracts. It also requested confirmation that McLaren had told its sub-contractors to take instructions from ABB from now on. Late on 14 May McLaren wrote such a letter, but did not provide it until during the hearing on 15 May.

In the light of these developments, at the hearing on 15 May ABB sought an order:

i) Compelling McLaren to provide the final signed and executed versions of all of its sub-contracts for the project and, in the case of any sub-contracts that were not signed, an assurance that those sub-contracts were in fact agreed in the form already provided to ABB; and

ii) Compelling McLaren to inform all its sub-contractors that ABB and not McLaren now had the right to require performance of their sub-contract works.

At the hearing on 15 May I made the order that is a matter of record. In substance, it gave ABB what they required as summarised at [9(i)] above. I took the view that no...