Case notes... from Ann Wright

A little too late

The Iggledens were not happy with their new house at Oxley Gardens, Shooters Hill, London SE18. They made a series of claims totalling between £200,000 and £250,000 including the costs of significant structural repairs against the builder, Fairview. However, 10 working days before the trial was due to start the Iggledens decided to throw in another claim for reduction in value of the house after the repairs had been completed, based on an undated expert valuation report prepared by a Mr C G Carey.

Carey considered that even after the repairs, the house would be worth some £20,000 less than its then current market value of £370,000-£375,000 (assuming no defects). In an appendix Carey compared the values of three similar properties. The Iggleden’s lawyers urged the inclusion of the reduction in value claim as a minor matter.

However, the judge disagreed. He first noted that the possibility of such a claim had been identified in a report two years earlier. In addition, if he allowed the report, within 10 days Fairview would have to find an available valuation expert with local knowledge. Once instructed, he would have to investigate the valuation issue and the other three properties, produce a draft report, discuss it with Fairview, produce a final report which could be exchanged, and meet with the Iggleden’s expert to narrow the issues.

The judge thought the timescale was unrealistic and refused to include the new claim.

Moral: Get your ideas in early.

Case: Mr & Mrs Iggleden v Fairview New Homes (Shooters Hill) Ltd (TCC June 1, 2007)

Damages damages

Reinwood was building 59 apartments at Duke Street in Castlefield, Manchester, with Brown as the contractor. The contract was dated January 16, 2003 on the JCT 1998 Standard Form. Liquidated and ascertained damages (LADs) were £13,000 per week.

The job ran slowly, but then several things happened quickly. On December 7, 2005, Brown applied for an extension of time. A week later the architect issued a certificate of non-completion under clause 24.4. On 11 January he also issued interim payment certificate number 29, which showed that £187,988 was due on the final date for payment of January 25, 2006.

On January 17, Reinwood issued a notice under clause 24.2 that it intended to deduct monies for LADs after December 1, 2005 and a second notice that it intended to withhold £61,629 in LADs from interim certificate number 29. Reinwood paid the balance of £126,359 on January 20, 2006.

On January 23 the architect extended Brown’s time to January 10, 2006 and on January 24 Brown wrote to Reinwood saying only £12,326 of LADs could be withheld. Brown reinforced this on January 26 by purportedly serving a notice of default under clause 28.2.1.1 for non payment.

Reinwood repaid the £49,303 of LADs on February 1, but when it subsequently failed to pay £39,981 for a later certificate, number 34, on June 28, 2006, Brown issued a notice of determination, ceased work and left site.

Brown relied on the January 26 notice as being a previous default. However, the court held that Reinwood was correct in repaying the balance of LADs on February 1 as being: ‘Within a reasonable time.’ Consequently, Brown’s January 26 notice had been void and Brown had repudiated the contract by ceasing work in July.

Moral: Be very very careful if you decide to stop work.

Case: Reinwood Ltd v L Brown & Sons Ltd. (Court of Appeal June 21, 2007)