Buckingham Group Contracting Ltd v Peel L&P Investments and Property Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Alexander Nissen |
| Judgment Date | 15 July 2022 |
| Neutral Citation | [2022] EWHC 1842 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2022-000122 |
[2022] EWHC 1842 (TCC)
Mr Alexander Nissen QC
(sitting as a Deputy High Court Judge)
Case No: HT-2022-000122
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
Rolls Building, London, EC4A 1NL
Ronan Hanna (instructed by Fenwick Elliott LLP) for the Claimant
Justin Mort QC (instructed by Hill Dickinson LLP) for the Defendant
Hearing dates: 5 July 2022
Mr Alexander Nissen QC:
Introduction
The Claimant, Buckingham Group Contracting Ltd (“Buckingham”), is a contractor. The Defendant, Peel L&P Investments and Property Ltd (“Peel”) is a property development company. Peel was engaged by Prowell Ltd to develop a project for the construction of a new plant for the manufacture of corrugated cardboard at Ellesmere Port in Merseyside. Peel engaged Buckingham as its contractor to design and construct the production building and certain external works pursuant to a written agreement dated 29 January 2018 (“the Contract”).
In these Part 8 proceedings, Buckingham seeks declarations from the Court in respect of provisions relating to liquidated damages. The wider context in which the declarations are sought is that the works were significantly delayed and the parties are in dispute as to responsibility for those delays. On 14 November 2018, a Pay Less Notice was issued by RPS, on behalf of Peel, notifying Buckingham of its intention to deduct from a sum that would otherwise have been due to it an amount of £1,928,253.77 by way of capped liquidated damages pursuant to clause 2.29A.1.2 of the Contract. For the reasons elaborated upon below, Buckingham contends that the provisions in respect of liquidated damages are void and unenforceable and that any remedy in respect of general damages is capped in the amount of £1,928,253.77.
According to the Contract Particulars, the Date for Completion was 1 October 2018. The facts before the Court in respect of actual completion are very limited. Whilst they may be contentious in other proceedings, it is agreed for present purposes that Peel took over possession of the building on 2 July 2019. Thereafter, remaining works (essentially comprising external works) were completed in late 2019. The deemed date for taking those elements over was 24 December 2019.
The case in support of the declarations was advanced by Mr Hanna for Buckingham and was resisted by Mr Mort QC for Peel. I am grateful to both counsel for their helpful skeleton arguments and oral submissions.
In his skeleton argument, Mr Mort identified three “modest” procedural points arising in this case but he did not develop them in oral argument and, for that reason, Mr Hanna did not address them either. I do not propose to deal with them in those circumstances.
The Contract
The basic structure of the Contract was the JCT Design and Build Contract 2016 but it was subject to a schedule of bespoke amendments (described as a Schedule of Amendments). There were various Annexes to the Contract including the Employer's Requirements, Contractor's Proposals and the Contract Sum Analysis.
Helpfully, the Court was provided with a conformed copy of the Contract which incorporates all the amendments into a single document, identifying where the changes may be found. This was of great assistance and meant that it was largely unnecessary to refer and cross refer to the original documents.
The Works are defined as “Design and build of a new manufacturing facility and associated external works at South Road, Ellesmere Port, Merseyside” (First Recital).
The Contract Sum is £26,164,049.28 (Article 2).
There are several terms that concern how the Contract should be read / interpreted:
(a) Clause 1.3 of the Agreement provides that the schedules form part of the agreement and shall have effect as if set out in full in the body of the agreement.
(b) In the case of any difference, discrepancy or conflict between the Schedule of Amendments and the JCT standard form contract terms, the former is to prevail: Clause 1.9 of the Agreement.
(c) Clause 1.3 of the Conditions provided that, “The Agreement and these Conditions are to be read as a whole. Nothing contained in any other Contract Document, irrespective of its terms, shall override or modify the Schedule of Amendments, the Agreement or these Conditions.”. As to this:
(d) The Agreement was defined as “the Agreement to which these Conditions are annexed, including its Recitals, Articles and Contract Particulars, each as amended by the Schedule of Amendments.”
(e) The Conditions are defined as “the clauses set out in sections 1 to 9 of these Conditions, together with and including the Schedules hereto, each as amended by Part 4 of the Schedule of Amendments.”
(f) Contract Documents is defined as “the Agreement and these Conditions, together with the Employer's Requirements, the Contractor's Proposals, the Contract Sum Analysis and (where applicable) the BIM Protocol.”
Schedule 10, on which these proceedings turn, states:
“If there is any conflict or inconsistency between the wording of this schedule and clause 2.29 the wording of this schedule shall take precedence.”
Clause 2.3 of the Conditions provides that the Contractor shall be given possession of the Site on the Date of Possession and that the Contractor shall “thereupon begin the construction of the Works or Section and regularly and diligently proceed with and complete the same on or before the relevant Completion Date.”.
Completion Date is defined as “the Date for Completion of the Works or of a Section or of a Milestone Date as stated in the Contract Particulars or the Employer's Requirements or such other date as is fixed either under clause 2.25 or by a Pre-agreed Adjustment.”
The “Date for Completion” is defined as “the date stated as such date in the Contract Particulars (against the reference to clause 1.1) or Employer's Requirements in relation to the Works or a Section or a Milestone Date.” As to this, the Contract Particulars provided as follows:
(a) The Date for Completion of the Works was 1 October 2018: Contract Particulars at item 1.1.
(b) The Contract Particulars state that the Works are not divided into Sections and completion by Sections does not apply. See:
— The Fifth Recital (“Description of Sections”), which is left blank;
— Item 1.1 (“Date for Completion of the Works”), which as set out above is 1 October 2018 and which is said to apply “ where completion by Sections does not apply”
— Items 2.3 (“Dates of Possession of Sections”), 2.4 (“Deferment of Possession of Sections”), 2.29.2 (“Rates of liquidated damages for each Section”) and 2.34 (“Sections: section sums”), where for each of these it is stated that “Sections do not apply”.
Clause 2.27 is concerned with the achievement of practical completion. Bespoke provisions were agreed in respect of other associated matters. Thus, clause 2.27A sets out criteria by which the state of practical completion of the Works would be assessed and clause 2.27B.1 makes provision for notice to be given of imminent achievement of practical completion. Clause 2.27B.2 provides for similar notice to be given in respect of the achievement of a Milestone Date. Clause 2.27C.3 provides for a written statement that a relevant part of the Works have reached a Milestone Date.
Clause 2. 27D.1 contains a regime for early access, based on an Early Access Area plan and a series of Early Access Dates. The concept of early access is to be distinguished from that of partial possession which is separately provided for. Clause 2. 27D.1 provides for the Contractor to give notice when an Early Access Area is available for the Employer to commence the relevant fitting out works.
Clauses 2.28 and 2.29 of the Conditions concern liquidated damages for delay in completing the Works. These clauses were not amended from the JCT form and accordingly are as follows:
“Non-Completion Notice
2.28 If the Contractor fails to complete the Works or a Section by the relevant Completion Date, the Employer shall issue a notice to that effect (a ‘Non-Completion Notice’). If a new Completion Date is fixed after the issue of such a notice, such fixing shall cancel that notice and the Employer shall where necessary issue a further notice.
Payment or allowance of liquidated damages
2.29 .1 Provided:
.1 the Employer has issued a Non-Completion Notice for the Works or a Section; and
.2 the Employer has notified the Contractor before the due date for the final payment under clause 4.24.5 that he may required payment of, or may withhold or deduct, liquidated damages,
the Employer may, not later than 5 days before the final date for payment of the amount payable under clause 4.24, give notice to the Contractor in the terms set out in clause 2.29.2.
.2 A notice from the Employer under clause 2.29.1 shall state that for the period between the Completion Date and the date of practical completion of the Works or that Section:
.1 he requires the Contractor to pay liquidated damages at the rate stated in the Contract Particulars, or lesser rate stated in the notice, in which event the Employer may recover the same as a debt; and/or
.2 that he will withhold or deduct liquidated damages at the rate stated in the Contract Particulars, or at such lesser stated rate, from sums due to the Contractor.
.3 If the Employer fixes a later Completion date for the Works or a Section, the Employer shall pay or repay to the Contractor any amounts recovered, allowed or paid under clause 2.29 for the period up to that later Completion Date.
.4 If the Employer in relation to the Works or a Section has notified the Contractor in accordance with clause 2.29.1.2 that he may require...
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