Eco WorldBallymore Embassy Gardens Company Ltd v Dobler UK Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell |
| Judgment Date | 03 August 2021 |
| Neutral Citation | [2021] EWHC 2207 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Claim No: HT-2020-000392 |
[2021] EWHC 2207 (TCC)
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
Mrs Justice O'Farrell DBE
Claim No: HT-2020-000392
Andrew Rigney QC & Crispin Winser (instructed by DLA Piper UK LLP) for the Claimant
James Bowling (instructed by Fladgate LLP) for the Defendant
Hearing date: 26 th January 2021
Further submissions: 18 th & 30 th March 2021
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.
This is the hearing of a Part 8 claim for declarations as to the proper construction and effect of the liquidated damages provisions in a construction contract entered into between the Claimant (“EWB”) and the Defendant (“Dobler”), in circumstances where EWB has taken over part of the works as completed.
EWB's position is that the liquidated damages clause is void and/or unenforceable. The contract permits EWB to take partial possession of the works in advance of practical completion but does not contain any mechanism for reducing the level of liquidated damages to reflect such early possession. In those circumstances, EWB is entitled to claim general damages for delay, including any substantiated damages above the contractual liquidated damages cap.
Dobler's position is that the liquidated damages clause is valid and operable. There is an effective mechanism for reducing liquidated damages when partial occupation is taken by EWB. Alternatively, if the liquidated damages clause is penal and void, general damages are nevertheless capped at the level of liquidated damages in the contract.
The parties agree that if the Part 8 Claim fails, judgment should be entered for Dobler without the need for enforcement proceedings.
The Contract
EWB is a property developer. Dobler is the UK subsidiary of the German curtain walling and glazing company, Dobler Metallbau GmbH.
By a contract in writing dated 11 July 2016, EWB engaged Dobler as Trade Contractor to carry out the design, supply and installation of the façade and glazing works for Building A04, part of a development of apartments known as Embassy Gardens Phase 2, Nine Elms, London SW8 5BA (“the Contract”).
The Contract included the following documents:
i) Articles of Agreement;
ii) Trade Contract Particulars;
iii) The JCT 2011 Construction Management Trade Contract (“the Conditions”), subject to a schedule of modifications.
The “Works” were defined in Clause 1.1 of the Conditions as:
“the work referred to in the Agreement, as more particularly shown, described or referred to in the Trade Contract Documents, which is to be carried out by the Trade Contractor as part of the Project, including any changes made to that work in accordance with this Trade Contract.”
The work referred to in the Agreement was:
“the design, supply and installation of facade and glazing works (the “Works”) for Building A04 as part of the design and construction of Buildings A03, A04 and A05, Embassy Gardens Phase 2, Nine Elms, London SW8 5BA (the “Project”).”
Building A04 comprises three residential blocks arranged around a ground level courtyard:
i) Block A is twenty-three storeys in height and provides one hundred and seventy-nine high value residential apartments and penthouses;
ii) Blocks B and C provide eighty affordable housing units over ten-storeys.
The lump sum Contract price was £8,604,809, subject to adjustment in accordance with the terms of the Contract.
The Completion Period was defined in clause 1.1 of the Conditions as:
“the period for completion of the Works or such works in a Section as stated in Part 3 of the Trade Contract Particulars (item 6) or as revised in accordance with these Conditions.”
Part 3 of the Trade Contract Particulars set out the programme for the Works. Following design, procurement and materials delivery, the period required for execution of the Works on site, after the expiry of the period of notice to commence work, was fifty-four weeks.
The Contract did not contain any provision for the Works to be carried out or completed within Sections.
Clause 2.5 of the Conditions (as amended) stated:
“The Works shall be carried out and completed in accordance with the programme details stated in Part 3 of the Trade Contract Particulars and regularly and diligently and in such order, and at such time or times and in such manner as the Construction Manager shall instruct, subject, as respects construction but not design work, to receipt by the Trade Contractor of notice to commence work in accordance with those particulars and subject to clauses 2.25 to 2.28. If the Trade Contractor is in breach of the foregoing he shall without prejudice to and pending the final determination or agreement between the parties as to the amount of such loss or damage (if any) suffered or to be suffered by the Employer in consequence thereof forthwith pay or allow to the Employer such sum as the Employer shall bona fide estimate as the amount of such loss or damage such estimate to be binding and conclusive upon the Trade Contractor until such final determination or agreement.”
Clause 2.6 of the Conditions clarified that Dobler, as one of a number of trade contractors working on the project, would not have exclusive possession of any part of the site when carrying out its Works:
“The Construction Manager shall permit the Trade Contractor to occupy so much of the site of the Project as is reasonably required for the execution of the Works, but such occupation shall not be exclusive and the Trade Contractor shall not object to the use or occupation of that part of the site by any other person engaged by the Employer on or in connection with the Project unless such use or occupation will or is likely to cause or contribute to any delay or obstruction of the Trade Contractor in the execution of the Works.”
Clause 2.31 of the Conditions (as amended) stated:
“.1 The Trade Contractor shall give the Construction Manager not less than 10 (ten) Business Days' notice of the date upon which the Trade Contractor considers that the Works in any Section will be complete. The Construction Manager and representatives of the Funder shall be entitled to inspect the Works …
.2 The Construction Manager shall, within 10 (ten) Business Days of any inspection made pursuant to clause 2.31.1, notify the Trade Contractor of any outstanding matters which require to be attended to before the Works in the relevant Section can be considered to be complete in accordance with the Trade Contract Documents and the Trade Contractor shall attend to such matters …
.3 The Construction Manager shall issue a certificate as to the date when practical completion of the Works shall be deemed to have taken place for all purposes of the Trade Contract …”
Clause 2.32.1 of the Conditions (as amended) contained provisions for liquidated damages to be payable in respect of late completion of the Works in the following terms:
“2.32.1 If the Trade Contractor fails to complete the Works or works in a Section by the relevant Date for Completion of a Section or the Works, the Employer may, not later than 5 days before the final date for payment of the amount payable under clause 4.16, give notice to the Trade Contractor which shall state that for the period between the relevant Date for Completion of a Section or the Works and the date of practical completion of the Works or Section that:
2.32.1.1 he requires the Trade Contractor to pay liquidated damages at the rate stated in the Trade Contract Particulars, or lesser rate stated in the notice, in which event the Employer may recover the same as a debt; and/or
2.32.1.2 that he will withhold or deduct liquidated damages at the rate stated in the Trade Contract Particulars, or at such lesser stated rate, from sums due to the Trade Contractor.
2.32.2 If the Employer intends to withhold or deduct all or any of the liquidated damages payable, an appropriate Pay Less Notice must be given by or on behalf of the Employer.”
The Trade Contract Particulars specified the rate of liquidated damages applicable under the Contract:
“The following rates of liquidated damages will apply for the first 4 weeks (inclusive) of delay in completion of the Works beyond the Date for Completion:
• £nil per week or pro rata for part of a week.
Liquidated damages will apply thereafter at the rate of £25,000 per week (or pro rata for part of a week) up to an aggregate maximum of 7% of the final Trade Contract Sum…”
Clause 2.33 (as amended) provided for EWB to take over part of the Works prior to practical completion of the whole Works:
“If at any time or times prior to the date of issue by the Construction Manager of the certificate of practical completion for the Works or such works in a Section that the Employer wishes to take over any part or parts of the Works or such works in a Section, then, notwithstanding anything expressed or implied elsewhere in this Trade Contract, the Employer may take over such part or parts. The Construction Manager shall thereupon give the Trade Contractor notice identifying the part or parts taken over and giving the date when the Employer took over those part or parts (“the Relevant Part” and “the Relevant Date” respectively).”
Clause 2.34 stated:
“For the purpose of clauses...
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