Mansion Place Ltd v Fox Industrial Services Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeMr Justice Eyre
Judgment Date12 November 2021
Neutral Citation[2021] EWHC 2972 (TCC)
Docket NumberCase No: HT-2021-000033

[2021] EWHC 2972 (TCC)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT (QBD)

Royal Courts of Justice

7 Rolls Building, Fetter Lane,

London, EC4A 1NL

Before:

Mr Justice Eyre

Case No: HT-2021-000033

Between:
Mansion Place Limited
Claimant
and
Fox Industrial Services Limited
Defendant

Camille Slow and Dalton Hale (instructed by Addleshaw Goddard LLP) for the Claimant

Katie Lee (instructed by Excello Law Limited) for the Defendant

Hearing dates: 18 th, 19 th, 20 th October 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.

Mr Justice Eyre Mr Justice Eyre

Introduction.

1

The Claimant is a property developer. It is a special purpose vehicle which was formed for the refurbishment and extension of student accommodation at Hockley Point in Nottingham. The Defendant is a construction contractor which was engaged on 19 th February 2020 by the Claimant to perform those works pursuant to an amended form of the JCT Design and Build Contract (2016 edition) (“the Contract”).

2

There were delays in the performance of the works. The Defendant says that those were to a limited extent the result of the Covid-19 pandemic and the national lockdown imposed to address that and, to a greater extent, because of the Claimant's failure to give timely possession of the site and to clear it of students. The Claimant says that there was a failure on the part of the Defendant to progress the works and to commit sufficient labour and resources to undertaking the works. The Defendant sent a number of email communications to the Claimant and contends that those operated as notices of delay for the purposes of clause 2.24 of the Contract. The Claimant denies that the emails were effective as such notices alternatively that the Defendant failed to provide the particulars of the effects of the delay which were also required by clause 2.24. The Claimant served a number of notices of non-completion purportedly under clause 2.28.

3

On 22 nd October 2020 the Defendant served Interim Payment Application 10 and this resulted in Certificate 10 from the Employer's Agent in the sum of £367,103.44. On 13 th November 2020 the Claimant served a Pay Less Notice and a number of notices of intention to deduct liquidated damages. The Defendant disputed the Claimant's entitlement to make such deduction and referred the dispute to adjudication.

4

In the meantime, on 14 th October 2020, there had been a telephone conversation between Mr. Shankar Ramanathan and Mr. Mark Kite. Mr. Ramanathan is and was a director of Mansion Property Management Ltd which carried out property development and contract management functions on behalf of the Claimant. Mr. Kite is and was the Managing Director of the Defendant.

5

The Defendant says that the conversation of 14 th October 2020 resulted in a binding agreement whereby the Claimant agreed to forego any entitlement to liquidated damages and in return the Defendant agreed to forego any right to claim payment for loss and expense as a result of the delay in the works. It says that the agreement precluded the Claimant from serving the Pay Less Notice and from seeking to deduct liquidated damages from the sums due to the Defendant. The Claimant says that there was no such agreement. It does not accept that any agreement was made in that conversation and, alternatively, says that to the extent that reference was made to it foregoing its right to claim liquidated damages this was a waiver which it was entitled to and did revoke.

6

On 11 th January 2021 Mr. Paul Jensen, as adjudicator, decided that the 14 th October 2020 conversation had resulted in a binding agreement whereby the Claimant abandoned its right to claim or deduct liquidated damages and that as a consequence the sum of £367,103.44 plus interest was due to the Defendant.

7

It was that decision which caused the Claimant to commence the current proceedings in which the principal relief sought is a declaration that there was no such agreement on 14 th October 2020. The Defendant has counterclaimed seeking declarations giving effect to its interpretation of the dealings on 14 th October 2020 and of the parties' rights under the Contract.

The Issues .

8

The parties have agreed a list of seven issues two of which contain three sub-issues. However, there are in reality two central issues.

9

The first is the effect of the conversation on 14 th October 2020. Did that result in a binding agreement and if so, was it in terms which precluded the Claimant from seeking liquidated damages under the Contract?

10

Second, if that conversation did not result in a binding agreement with that effect is the Claimant nonetheless precluded from seeking liquidated damages? This involves consideration of the Defendant's contentions that:

i) It had served valid notices of delay pursuant to clause 2.24 and that such service coupled with the Claimant's failure to respond pursuant to clause 2.25 meant that the Claimant was not entitled to serve a non-completion notice and, accordingly, not entitled to seek liquidated damages under clause 2.29.

ii) Clause 2.29 is unenforceable as being a penalty.

iii) Clause 2.29 is unenforceable on the ground of uncertainty and/or by application of the principle in Bramall & Ogden v Sheffield City Council (1983) 29 BLR 73.

The Factual Background .

11

There were already 80 student rooms at Hockley Point. The works to be undertaken by the Defendant involved the building of an extension (Section 3 of the works) to increase the capacity to 139 rooms and the conversion of some of the existing bedrooms into en-suite bedrooms (Section 2).

12

Clause 2.24 of the Contract provided as follows for notice by the Defendant of delay to progress:

“.1 If and whenever it becomes reasonably apparent that the progress of the Works or any Section is being or is likely to be delayed the Contractor shall forthwith give notice to the Employer of the material circumstances, including the cause or causes of the delay, and shall identify in the notice any event which in his opinion is a Relevant Event.

.2 In respect of each event identified in the notice the Contractor shall, if practicable in such notice or otherwise in writing as soon as possible thereafter, give particulars of its expected effects, including an estimate of any expected delay in the completion of the Works or any Section beyond the relevant Completion Date.

.3 The Contractor shall forthwith notify the Employer of any material change in the estimated delay or in any other particulars and supply such further information as the Employer may at any time reasonably require.”

13

Clause 2.25 dealt with the fixing of the Completion Date and the first three sub-clauses are relevant providing:

“.1 If on receiving a notice and particulars under clause 2.24:

.1 any of the events which are stated to be a cause of delay is a Relevant Event; and

.2 completion of the Works or of any Section is likely to be delayed thereby beyond the relevant Completion Date,

then, save where these Conditions expressly provide otherwise, the Employer shall give an extension of time by fixing such later date as the Completion Date for the Works or Section as he then estimates to be fair and reasonable.

.2 Whether or not an extension is given, the Employer shall notify the Contractor of his decision in respect of any notice under clause 2.24 as soon as is reasonably practicable and in any event within 12 weeks of receipt of the required particulars. Where the period from receipt to the Completion Date is less than 12 weeks, he shall endeavour to do so prior to the Completion Date.

.3 The Employer shall in his decision state:

.1 the extension of time that he has attributed to each Relevant Event; and

.2 (in the case of a decision under clause 2.25. 4 or 2.25.5) the reduction in time that he has attributed to each Relevant Omission.”

14

Clause 2.28 addressed non-completion notices in these terms:

“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 quote 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.”

15

Clause 2.29 provided for the payment or allowance of liquidated damages at the rates set out in the Contract Particulars. Sub-clause 2.29.2.3 is of note for present purposes and provided that:

“If the Employer fixes a later Completion Date for the Works or a Section, the Employer shall pay or repaid to the Contractor any amounts recovered, allowed or paid under clause 2.29 for the period up to that later Completion Date.”

16

Clause 2.30 provided for the taking of possession by the Claimant of a part of the Works or of a Section before the Completion Statement for the Works or the Section as a whole and defined the part taken into possession and the date of taking possession as the “Relevant Part” and the “Relevant Date” respectively.

17

Clause 2.34 provided that:

“As from the Relevant Date, the rate of liquidated damages stated in the Contract Particulars in respect of the Works or Section containing the Relevant Part shall reduce by the same proportion as the value of the Relevant Part bears to the Contract Sum or to the relevant Section Sum, as shown in the Contract Particulars.”

18

Clause 4.19 provided for the Defendant to be entitled to reimbursement of direct...

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