Thomas Barnes & Sons Plc ((in Administration)) v Blackburn with Darwen Borough Council
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 17 October 2022 |
| Neutral Citation | [2022] EWHC 2598 (TCC) |
| Docket Number | Case No: HT-2020-MAN-000023 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2022] EWHC 2598 (TCC)
His Honour Judge Stephen Davies sitting as a High Court Judge
Case No: HT-2020-MAN-000023
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Manchester Civil Justice Centre
Jennifer Jones (instructed by Hill Dickinson LLP, Solicitors, Liverpool) for the Claimant
Lynne McCafferty KC (instructed by Blake Morgan LLP, Solicitors, Oxford) for the Defendant
Hearing dates: 12 – 15, 18–22, 25, 27 July 2022
Date draft judgment handed down: 6 October 2022
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10:30am on 17 October 2022 by circulation to the parties or their representatives by email and by release to The National Archives.
I direct that pursuant to CPR PD 39A paragraph 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.
His Honour Judge Stephen Davies
| Section | Paragraphs | |
| A | Introduction and summary of decision | 01 – 15 |
| B | The witnesses | 16 – 47 |
| C | The pleaded cases | 48 – 60 |
| D | Formation of the contract | 61 – 72 |
| E | The relevant contract terms summarised | 73 – 82 |
| F | Contractual design and design co-ordination obligations | 83 – 98 |
| G | The claimant's claims for extensions of time and compensation for prolongation | 99 – 157 |
| H | Was the claimant in breach of contract such as would have entitled the defendant to terminate or to accept the claimant's repudiatory breach the contract on 4 June 2015? | 158 – 226 |
| I | Did the claimant validly terminate the contract on or around 4 June 2015? | 228 – 259 |
| J | The consequences of my finding that the defendant was entitled to and did effectively accept the claimant's repudiatory breach of the contract? | 260 – 263 |
| K | Reasons not to undertake a quantification of the claimant's claim | 264 – 278 |
A. Introduction and summary of decision
This claim arises out of a contract for the construction of Blackburn Bus Station (“ the bus station”) entered into between the claimant, Thomas Barnes & Sons plc (in administration), as the contractor and the defendant, Blackburn with Darwen Borough Council, as the employer.
The bus station is a rectangular shaped structure, built to a contemporary design on the site of the old town market. There is a hub area at one end (“ the hub”), providing office space on ground and mezzanine first floor levels, with the rest of the structure comprising the concourse (“ the concourse”) affording waiting space and access to buses. The whole structure is encased in structural frameless external glazing running from floor to ceiling. Structural support to the roof is provided in the concourse area by a number of striking U shaped loop steelwork structures encased in white glass reinforced plastic (“ GRP”), with a number of non-structural similar looking loops suspended from the roof between them. The bus station was shortlisted for a design award and an internet search will show why.
Rather more prosaically, however, the construction of the bus station was subject to significant cost increases and delay overruns and it is the allocation of responsibility for these matters, rather than the merits of its design, which is what this case is about.
The contract was terminated by the defendant for alleged default by the claimant on 4 June 2015 before work was finished and the defendant proceeded to have the work completed by a replacement contractor.
According to the claimant, it was the combination of the defendant's failure to make interim payments and the defendant's wrongful termination of the contract which caused the claimant to go into administration later in 2015.
By this action, brought in 2020, the administrators pursue claims for: (a) monies said to be due under the contract on a proper valuation of the works done at termination (including claims for loss and expense said to have been suffered as a result of the prolongation of the contract period for matters for which the defendant is said to be responsible); and (b) damages for wrongful termination representing the claimant's loss of profit on the remaining works. The administrators have been able to afford to do so through the financial support of members of the Barnes family who were the owners of the claimant company and who are secured creditors in the administration.
The claim as advanced at trial is in the sum of £1,788,953.76, net of VAT and interest, which is considerably less than that originally pleaded but is the valuation which the claimant's quantum expert has put on the claim.
The defendant disputes the claim in its entirety, alleging that the true final account position, taking into account all monies properly due to the claimant and all monies properly due from the claimant, is that the claimant is indebted to the defendant in the sum of £1,865,975. This is based on the contractual provisions under which where the employer validly terminates the contract for contractor breach it is entitled to charge the contractor with the extra amount it has had to pay to have the works completed, as compared with what it would have paid under the contract and has already paid the contractor. The defendant does not advance a separate counterclaim to seek to recover the alleged overpayment, not surprisingly since that would be a fruitless exercise given that Barnes is in administration with — according to the administrators' progress reports — no prospect of recovery for unsecured creditors, unless the claimant was to recover sufficient in this litigation to discharge what is owed to the Barnes family as secured creditors and leave an excess for distribution to the unsecured creditors.
The real significance to this case of the defendant's final account claim is that if – which is hotly disputed by the claimant and which I must determine — the defendant can establish that it validly terminated the contract, it will be able to avoid paying the claimant anything further since, as the claimant realistically accepts – for reasons which I shall explain in due course — the amount paid to the remedial contractor – which is a matter of record – is such that the amount due to the defendant would inevitably exceed the amount due to the claimant, even if the claimant established its full claim.
It is apparent that those who were running the claimant company at the time strongly believe that the problems which led to its being removed from the project were, in very large part, a consequence of failings by the property and infrastructure arm of the well known company, Capita plc, which had been hired by the defendant to provide a full design and project administration service on this project. The claimant's case is that those within the defendant and Capita who were responsible for this project were very keen to pin the blame for the serious time and cost overruns on the project on someone else and that the defendant's decision to terminate was both led by Capita and politically motivated to put the blame on the claimant. All of this is disputed by the defendant.
In addition to the criticisms made by the claimant against Capita, the arguments advanced also require me to consider certain aspects of the performance of the claimant's subcontractors, particularly its specialist structural glazing sub-contractor, Saint-Gobain Glass (UK) Ltd (trading as and known as “ Glassolutions”) and its specialist GRP cladding subcontractor, Millfield GRP Ltd (“ Millfield”). Since neither Capita nor these subcontractors are parties to these proceedings, and since none of their present or former employees have given evidence, I should make clear that any views I may express about their performance are made for the purposes of this case only and based solely on the evidence and arguments advanced before me.
I heard factual evidence over 4 days and expert evidence over a further 5 days. I then received written and oral closing submissions, including separate supplemental written submissions accompanied by an updated excel spreadsheet produced by the quantum experts in relation to the quantum issues which divided the parties.
I am extremely grateful to the legal advisers for their preparation of the case and, in particular, to counsel, Ms Jones for the claimant and Ms McCafferty KC for the defendant, for their comprehensive well-reasoned opening and closing submissions and for their excellent focussed cross-examination and for their co-operation throughout the trial to ensure that it was completed on time despite the sheer quantity of evidence to be addressed.
In summary, my decision is as follows:
(a) The claimant has established an entitlement to an extension of time (“ EOT”) to 10 August 2015, which is greater than that allowed and contended for by the defendant but significantly less than that claimed and contended for by the claimant.
(b) However, the claimant has established an entitlement to prolongation and, hence, an entitlement to delay-related damages, for only 27 days beyond that commensurate with the EOT already granted by the defendant during the course of the contract. This will have a significant impact on the valuation of its delay related claim.
(c) As at 4 June 2015 the defendant was entitled both to terminate the contract under the contractual termination provisions for delay-related default on the part of the claimant and to accept the claimant's delay-related breaches as repudiatory and thus entitling it to treat the contract as discharged, to remove the claimant from the site and to engage replacement contractors to complete the works.
(d) Although the defendant failed to follow...
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