Case notes... from Ann Wright

A case to answer

Courts cut costs by giving a summary judgment when one party has no real prospect of success in a full trial. It is usually the claimant who instigates this on the grounds that there is no defence to its arguments, but here it was the defendant.

The dispute revolved around residential development land near Great Yarmouth. Landfast became aware of the land’s possibilities in mid-2003 and it hired Cameron Taylor One to give advice and to commission the site investigations which were carried out by Fordham. Following the investigations and preliminary designs Landfast set up Landfast (Anglia) Ltd as a single-purpose vehicle to buy the land formally, which it did on 24 June 2004.

When work started, Anglia found the site was liable to subsidence and had to redesign the drainage with a vacuum system and support the roads on polystyrene. These changes cost £1,115,000 and Anglia sued Cameron for this, plus the diminution in value of the site (£500,000), extra costs of professional and legal fees (£234,558) and additional financing costs of £493,235. Cameron applied for summary judgment saying there was no case to answer on the grounds that Landfast had suffered no loss itself, there was no breach of contract between Cameron and Anglia, and the additional financing charges at 3% a month were excessive, as were the management and legal fees.

The judge disagreed, holding it was possible (and he put it no stronger than that) that Anglia had an arguable case on all counts. The case is to go to full trial.

Moral: Your advice may go further than you intended.

Case: Landfast (Anglia) v Cameron Taylor One (TCC 26 February 2008)

A sour date

Brown was building 59 apartments in Manchester for Reinwood. The 16 January 2003 contract was based on a JCT Standard Form 1998 Private with Quantities with a date for completion of 18 October 2004 and liquidated damages (LADs) of £13,000 a week for delays.

Brown applied for an extension of time under clause 25 on 7 December 2005. However, on 14 December, the architect issued a clause 24 certificate of non-completion.

On 11 January 2006, the architect issued interim payment certificate number 29 showing the net sum payable of £187,988 with a final date for payment of 25 January 2006.

On 17 January, Reinwood issued two notices – the first said that Reinwood’s intention was to deduct LADs for interim certificates issued after 14 December 2005. The second was a notice that Reinwood intended to withhold £61,629 LADs from interim certificate number 29.

As a result Reinwood planned to pay only £126,359 (the difference between the certified sum of the LADs) and paid this on 20 January (five days before the final date for payment).

However, on 23 January (still before the final date for payment) the architect issued an extension of time (EOT) until 10 January.

On 11 January, Brown wrote to Reinwood saying the EOT reduced the LADs to £12,326 and consequently £175,662 was due from interim certificate 29.

Reinwood did not make any additional payment and on 26 January Brown issued a notice of default under clause 28.2.1.1. Reinwood then said it would pay the £49,303 on 1 February 2006 and it did so.

Brown then argued it was entitled to determine its employment because Reinwood had failed to pay the sum due in full by the final date for payment of 25 January 2006 and as the January EOT had been issued before the final date for payment, Reinwood could not rely on the December non-completion certificate.

After much deliberation, the House of Lords disagreed. It noted that Reinwood had repaid the LADs within a reasonable time and therefore had discharged its duty.

Moral: Payment times are crucial.

Case: Reinwood v Brown & Sons (House of Lords February 2008)

Time is of the essence

You only have six years to bring an action under the Limitation Act 1980. And that is from the (rather vague) date on which the cause of action occurred.

Stephen and Elizabeth Watkins (the Watkins) were rather late in starting their litigation against JMW, but thought they were just in time.

The case surrounds the Watkins’ 1997 purchase of a site in Littleborough, Rochdale, from Wilfred Fleming and the agreement with Fleming and his brother to build them a house.

On 3 April 1998 they signed contracts for the land purchase and a building contract. Clause 21 of the contract said if the Flemings failed to complete the works by 31 August 1998, the Watkins could terminate the building agreement and pay the Flemings for work completed by that date. If there was a dispute the parties could appoint an expert who would give a binding decision as to the amount due.

On 6 August 1998, before completion, the Watkins wrote to the Flemings, saying: ‘Completion date. We confirm our verbal agreement waiving the August 31 completion date insofar as it relates to work covered by provisional sums or work held up consequentially to those delays.’

The Watkins claimed the letter was written with solicitor JMW’s advice and that it did not waive their right to refer any disputed costs to an expert. However, the Watkins found they had been compromised by the letter and became locked into a dispute with the Flemings. As a result, on 26 August 2004 the Watkins sued JMW for £50,000.

JMW argued that as this was more than six years after the 6 August 1998 letter had been written, the Watkins were out of time. In turn, the Watkins said that the dispute had not crystallised until August 31, 1998 when completion had not been achieved, or possibly in September 1998 when the NHBC had issued its certificate.

The court agreed with JMW and held the Watkins had been too late in starting the action.

Moral: Don’t delay – sue today.

Case: Watkins v Jones Maidment Wilson (Court of Appeal 14 March 2008)