2012 Construction Case Law Summary (July - December)

Following on from our case law update covering January – June 2012, a selection of cases which may affect our clients and contacts in the property and construction sectors decided in the second half of 2012 is set out below:

Dangers of letters of intent

Ampleforth Abbey Trust v Turner & Townsend Project Management Ltd [2012] EWHC 2137 (TCC)

Substantial construction works had been carried out entirely under letters of intent which made no provision for liquidated damages for delay. No formal building contract was ever signed. The works were delayed and the Trust claimed against its project managers, claiming that had a fully executed building contract been in place then the Trust would have reached a more favourable outcome in its dispute with the contractor over the delay. The court found that the project manager had failed to take the reasonable steps required to procure the completed building contract and was therefore in breach of contract. The judge noted that the project manager had failed to exercise sufficient focus on the matters holding up execution of the contract or to exert sufficient pressure on the contractor to finalise the contract. This highlights the importance of ensuring that building contracts are signed, rather than simply relying on letters of intent.

Extensions of time and loss and expense

Walter Lilly & Company Limited v Mackay & Anor [2012] EWHC 1773 (TCC)

In this important decision (one of several to be decided between these parties) the court clarified the position in respect of several issues which arise regularly on construction projects. In relation to loss and expense claims, the judge confirmed that the obligation on the Architect/Contract Administrator to "ascertain" loss and expense does not mean that the contractor has to prove its claim "beyond reasonable doubt" instead, the balance of probabilities test applies. The judge also confirmed that it is legitimate for the contractor to bear in mind the knowledge that the Architect/Contract Administrator has of the project when supplying supporting documents for his claim.

The judge also took the opportunity to clarify the position with regards to extensions of time where there are concurrent delays to the works. It was confirmed that (unless there are express contractual terms stating otherwise) where there are two concurrent delays, one which entitles the contractor to an extension of time and one which does not, then there should not be any apportionment...