Trade contracting — Construction manager — Delay — Estimate of loss and damage — Whether construction manager can determine loss and damage unless breach admitted or no arguable grounds — Whether construction manager has made fair and reasonable extension to completion date — Appeal by contractors allowed
The appellants, Redpath Dorman Long Ltd, were trade contractors for the erection of structural steel at the Broadgate development, City of London; the respondents were the employers for phases 6 and 7 of the scheme. In accordance with the terms of the building contracts: (1) the appellants agreed to complete the works by the respective completion dates, subject to such fair and reasonable extensions of time as the construction manager may grant; and (2) if the appellants were in breach of this obligation to complete, the construction manager was to estimate the resulting loss or damage and this became payable by the appellants to the respondents.
The construction manager determined that the appellants had not completed by the extended completion dates and estimated the losses of which the respondents obtained summary judgment by an order of His Honour Judge Bowsher QC (November 17 1989). The appellants appealed contending that it was arguable whether the construction manager had determined the correct completion dates, that the manager should have extended time to later dates, that the appellants cannot be bound by the construction manager’s estimate of loss until the completion dates have been determined and that they were entitled to a set-off to the amount of the losses estimated.
Held The appeal was allowed.
The obligation to pay the loss and damage is subject to a contingent condition that the appellants must be in breach of the contractual obligation to complete by the completion dates; if that breach is denied by the contractors and not proved by the employers, the contracts do not provide that the construction manager’s determination of the loss and damage liability is binding.
If the respondents’ claims had succeeded, it is arguable for ord 14 purposes that a court of equity would have restrained them from enforcing their claims without taking into account the appellants’ claims for equal sums, being the loss the appellants would suffer as a result of the respondents’ conduct for which the appellants hold the respondents responsible.
John Blackburn QC and Andrew Goddard (instructed by Clifford Chance) appeared for the appellants; and John Dyson QC and Timothy Elliott (instructed by McKenna & Co) appeared for the respondents.
