Building contract – Breach of contract – Damages – First defendant through company engaging claimant as main contractor for substantial building project – Defendant assembling design and professional team for project – Delays occurring in design work – Claimant seeking extension of contract due to delays caused by defendants – Claimant seeking damages for loss and expense incurred – Whether action constituting global claim – Whether claimant entitled to damages – Claim allowed
In 2004, the claimant was engaged by the first defendant, through his company, the second defendant, as main contractor on a substantial £15 million building project. The agreement was in the JCT Standard Form of Building Contract 1998 Edition Private Without Quantities, incorporating various specific amendments, as modified by the Contractors Designed Portion Supplement Without Quantities 1998 edition (revised November 2003). The first defendant and his wife initially assembled a design and professional team in respect of the project but very little design work had been completed when the construction work began. The project was estimated to take about 18 months to complete but fell behind schedule and the relationship between the parties deteriorated. The work was not finally completed until July 2008.
The claimant subsequently brought a claim against the defendants, the first part of which related to wrongful deductions totalling £854,596 from February 2007 onwards, for liquidated damages for delay (for which the claimant was not liable) and for defective works. The second part of the claim related to various delay and disruption claims between March 2006 and February 2007. The claimant contended that the delays had been caused by factors for which it was not responsible and in respect of which it was entitled not only to an extension of time under clause 25 of the contract but also to recompense for loss and/or expense under clause 26 of the contract. The defendants resisted the claim arguing, inter alia, that the claim for loss and expense claim could be categorised as a “global” or “total” cost claim which was barred by authority.
Held: The claim was allowed.
Claims by contractors for delay or disruption related loss and expense had to be proved as a matter of fact. As a matter of principle, it did not have to be shown by a claimant contractor that it was impossible to plead and prove cause and effect in the normal way or that such impossibility was not the fault of the party seeking to advance the global claim. In the absence of contractual restrictions on global cost or loss claims, the claimant contractor simply had to demonstrate on a balance of probabilities that, first, events occurred which entitled it to loss and expense, secondly, that those events caused delay and/or disruption and thirdly, that such delay or disruption caused it to incur loss and/or expense or damage.
The claimant contractor had to show that it was impossible to plead and prove cause and effect in the normal way or that such impossibility was not the fault of the party seeking to advance the global claim. If there were no contractual restrictions on global cost or loss claims, the claimant contractor simply had to prove its case on a balance of probabilities. Clause 26 of the present contract laid down conditions precedent which, if not complied with, would bar to that extent claims under that clause. If and to the extent that those conditions were satisfied, there was nothing in clause 26 which stated that the direct loss and/or expense could not be ascertained by appropriate assessments. It was open to contractors to prove those elements with whatever evidence would satisfy the requisite standard of proof.
There was nothing in principle wrong with a total or global cost claim. However, there were added evidential difficulties in many cases which a claimant contractor had to overcome. It generally had to establish, on a balance of probabilities, that the loss which it had incurred would not have been incurred in any event. The fact that one or a series of events or factors caused or contributed to the total or global loss did not necessarily mean that the claimant could recover nothing. It depended on what the impact of those events or factors was. There was no need for the court to go down the global or total cost route if the actual cost attributable to individual loss causing events could be readily or practicably determined. A tribunal might be more sceptical about a global cost claim if the direct linkage approach was readily available but was not deployed but that did not mean that the global cost claim should be rejected out of hand: Merton London Borough Council v Stanley Hugh Leach Ltd (1985) 32 BLR 51 considered.
Earlier authorities did not support the defendant’s argument that a global award should not be allowed where the contractor had himself created the impossibility of disentanglement. In principle, unless the contract dictated that a global cost claim was not permissible if certain hurdles were not overcome, such a claim might be permissible on the facts and subject to proof. On any proper analysis of the present case, the claimant’s loss and expense claim did not fall readily into a categorisation of being a global or total cost claim. There had been no, or no maintained, complaint that the claimant’s final pleadings had not sufficiently identified a comprehensible case in relation to delay. The claimant’s case was related solely to the periods of delay for which it asserted that it was entitled to extensions of time. Even if a global cost claim could not be allowed unless it was impracticable or very difficult for the contractor to relate every penny of loss to each established and pleaded event which entitled it to loss and/expense, the court was satisfied that it was impracticable or very difficult for the claimant in this case: Merton London Borough Council case and John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd (1996) 82 BLR 81 considered.
The court was satisfied that the claimant was delayed by factors occurring in the March to July 2008 period that entitled it to an extension of time through to 7 July 2008 when the works were, properly analysed, practically complete. Those factors were the absence of effective and informed instructions from the architects as to what should be done in relation to ABW, the Light Wall and the Courtyard Sliding Doors. A concurrent cause was the delays and additions to the snagging caused by the presence of the numerous directly employed contractors which was not the risk or responsibility of WLC.
Sean Brannigan QC and Anneliese Day QC (instructed by Reynolds Porter Chamberlain LLP) appeared for the claimant; David Sears QC, Serena Cheng and David Johnson (instructed by Nabarros LLP) appeared for the defendants.
