Carillion Construction Ltd v Woods Bagot Europe Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Miss Nerys Jefford QC,or |
| Judgment Date | 28 April 2016 |
| Neutral Citation | [2016] EWHC 905 (TCC) |
| Docket Number | Case No: HT-2014000117 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 28 April 2016 |
[2016] EWHC 905 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Miss Recorder Nerys Jefford QC
(Sitting as a Judge of the Technology and Construction Court)
Case No: HT-2014000117
Rachel Ansell QC and Edmund Neuberger (instructed by Reynolds Porter Chamberlain) for the Claimant
Ben Quiney QC and Michele De Gregorio (instructed by BLM LLP) for the Second Defendant
Paul Cowan and Simon Hale (instructed by White & Case LLP) for the Third and Fourth Defendants
Hearing date: 6 th April 2016
Judgment Approved by the court for handing down (subject to editorial corrections)
The background
This dispute arises out of the design and construction of the Rolls Building which is now home to this Court.
The developer was Rolls Development UK Ltd. ("Rolls") who are not involved in this litigation. Carillion Construction Ltd. ("Carillion") were the main contractor; the Second Defendant ("AECOM") was the sub-contractor for the provision of various Mechanical and Electrical ("M+E") services; the Third Defendant another M+E sub-contractor for certain other services and the Fourth Defendant provided a parent company guarantee in respect of the Third Defendant. For the purposes of this judgment, I shall refer to the Third and Fourth Defendants, without distinction between them, as "EMCOR".
In these proceedings Carillion claim amongst other things damages caused by delay to the carrying out and completion of both EMCOR and AECOM's sub-contract works. The damages that they claim include their own costs and sums they plead were levied under the Main Contract in respect of liquidated and ascertained damages. These claims are set out in Appendix 2 to the Particulars of Claim.
Both EMCOR and AECOM defend these claims. In EMCOR's case, it says that it is not liable for damages for delay to completion of its sub-contract works because it was entitled to an extension of time to complete. Both EMCOR and AECOM also contend that Carillion did not have any liability to Rolls for liquidated and ascertained damages and/or have not paid such sums to Rolls and/or such sums have not been deducted from sums otherwise payable to Carillion.
The matter came before Carr J on 8 March 2016 for a case management conference. By this stage, pleadings had closed and the parties were, therefore, able to identify the issues arising between them. On the application of EMCOR, Carr J ordered the trial of preliminary issues and that the parties liaise to agree the wording of the preliminary issues, which they did.
The preliminary issues
The preliminary issues so agreed were framed as follows (referring to Carillion as "CCL"):
"1. On the assumption that EMCOR is entitled to an extension of time pursuant to clause 11.3 of the EMCOR Sub-Contract (as amended) by fixing such revised or further revised period or periods for the completion of its Sub-Contract Works, does the EMCOR Sub-Contract (as amended) require:
(a) that such revised or further revised periods are added contiguously to the end of the current period, so as to provide an aggregate period within which EMCOR's Sub-Contract Works should be completed (as contended for by EMCOR); or
(b) that such revised or further period or periods are fixed in which EMCOR can undertake its Sub-Contract Works, which are not necessarily contiguous but which reflect the period for which EMCOR has in fact been delayed and is entitled to an extension of time (as contended for by CCL).
2. At paragraphs 3 and 5 of Appendix 2 to CCL's Particulars of Claim, CCL claims loss and damage from EMCOR and AECOM for delay which includes a claim for the "Liquidated and Ascertained Damages levied by the Employer against CCL" for the period between 29 January 2011 and 22 July 2011 ("the LADs"). On a proper construction of: (i) the Building Contract (as amended); (ii) the Supplemental Agreement; (iii) the Further Supplemental Agreement:
(a) was CCL's liability to Rolls for liquidated and ascertained damages for the period between 29 January 2011 to 22 July 2011 extinguished by the Further Supplemental Agreement (as alleged by EMCOR and AECOM but denied by CCL); and
(b) if so, does that mean that:
(i) EMCOR has no liability to CCL in respect of any sums which it paid to Rolls under the Further Supplemental Agreement in respect of the period 29 January to 11 March 2011; or alternatively has no liability to CCL for sums purportedly paid to Rolls as LADs under the Building Contract (as alleged by EMCOR but denied by CCL);
(ii) AECOM has no liability to CCL for sums purportedly paid to Rolls as LADs under the Building Contract (as alleged by AECOM but denied by CCL)."
Preliminary issue no. 1 concerns Carillion and EMCOR only. Preliminary issue no. 2 concerns Carillion, EMCOR and AECOM. I shall explain below how these preliminary issues arise and the nature of the parties' cases.
The contractual background
The main contract
The main contract between Rolls and Carillion was entered into on 14 June 2007 and was made on the JCT Standard Form of Building Contract with Contractor's Design 1998 edition (incorporating Amendments 1:1999, 2:2001 and 4:2002) with bespoke amendments. I shall refer to this contract either as "the main contract" or, as the parties have done, "the Building Contract".
That standard form contract contains provisions that deal with completion, extensions of time and liquidated damages.
(i) By clause 1.3, the Completion Date is defined as "the Date for Completion for each section as fixed and stated in Appendix 1 (sectional completion) or any date fixed under clause 25." In turn, the Date for Completion is defined as "the date fixed and stated for each section in Appendix 1 (sectional completion)."
(ii) Clause 23.1.1 sets out the Contractor's obligation to complete the Sections of the Works on or before the Completion Date for such Section.
(iii) Clause 24 deals with the Contractor's obligation to pay or allow liquidated and ascertained damages for non-completion. Parts of this clause are material to the issues arising and I set it out in almost its entirety:
" 24 Damages for non-completion
24.1 If the Contractor fails to complete the construction of a Section by the Completion Date for such Section the Employer shall issue a notice in writing to the Contractor to that effect. In the event of a new Completion Date for a Section being fixed after the issue of such a notice in writing such fixing shall cancel that notice and the Employer shall issue such further notice in writing under clause 24.1 as may be necessary.
24.2.1 Provided:
— the Employer has issued a notice under clause 24.1; and
— the Employer before the date when the Final account and Final Statement ….. become conclusive as to the balance due between the Parties by agreement or by the operation of clause 30.5.5 or clause 30.5.8, has informed the Contractor in writing that he may require payment of, or may withhold or deduct, liquidated and ascertained damages
then the Employer may not later than 5 days before the final date for payment of the debt due under clause 30.6:
either
.1.1 require in writing the Contractor to pay to the Employer liquidated and ascertained damages at the rate stated in the Appendix 1 ….. for the period between the Completion Date of a Section and the date of practical completion of such Section and the Employer may recover the same as a debt
or.1.2 give a notice pursuant to clause 30.3.4 or clause 30.6.2 to the Contractor that he will deduct from monies due to the Contractor liquidated and ascertained damages at the rate stated in Appendix 1 …. for the period between the Completion Date of a Section and the date of practical completion of such Section.
24.2.2 If, under clause 25.3.3, the Employer fixes a later Completion Date for a Section, the Employer shall pay or repay to the Contractor any amounts received allowed or paid under clause 24.2.1 for the period up to such later Completion Date for such Section
….".
Clause 25 is the extension of time clause. In summary, it provides for the Contractor to give notice of delay to the progress of a Section, identifying the cause or causes of delay and any Relevant Event, particulars of the expected effect and an estimate of the delay in completion resulting therefrom. If the completion of a Section is likely to be delayed beyond the Completion Date as a result of a Relevant Event, the Employer on receipt of any notice, particulars and estimate "shall make in writing to the Contractor such extension of time, if any, for completion of such Section beyond the Completion Date for such Section as is the fair and reasonable, by fixing a later date as the Completion Date for such Section." (clause 25.3.1).
At the time that contract was entered into, the Works did not include any fit out works. The Contract Sum was £70,130,000. The Works were divided into 2 Sections. The Date for Completion of Section 1, stated in Appendix 1, was 1 September 2009 and the Date for Completion of Section 2 was 27 October 2009. The rates of liquidated and ascertained damages were (i) for Section 1, £54,000 per week (or pro rata for part thereof) for Week 1, £72,900 for Week 2 and £81,000 per week thereafter and (ii) for Section 2, £46,000 for Week 1, £62,000 for Week 2 and £69,000 per week thereafter.
In respect of the Contract Sum, clause 30.5 provided, following Practical Completion, for the Contractor, or otherwise the Employer, to produce a Final Account and Final Statement which would become conclusive, in accordance with the terms of the contract,...
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