Building Law Monthly

In Merit Process Engineering Ltd v Balfour Beatty Engineering Service (HY) Ltd [2012] EWHC 1376 (TCC), [2012] All ER (D) 09 (Jun) Mr Justice Edwards-Stuart held that the failure of the parties to reach agreement on the price of the works had the consequence that the parties had not entered into a sub-contract on the terms alleged by the defendant. While he recognised that parties can commit themselves to binding legal relations even though there are further terms still be agreed, a court is likely to be slow to reach this conclusion where the failure to agree relates to an important term of the contract, such as the price. Nor had the parties provided any objective criteria by which the price could be ascertained and so it was held that the failure to reach agreement was fatal to the existence of a contract on the terms put forward by the defendant.

In Point West London Ltd v Mivan Ltd [2012] EWHC 1223 (TCC), [2012] All ER (D) 91 (Jun) Mr Justice Ramsay held that, as a matter of interpretation, a settlement agreement concluded between the claimant developer and the defendant contractor had been intended to bring to an end the defendant’s responsibilities and obligations in respect of any and all outstanding matters, including defects which were patent in the work carried out by the defendant at the date of entry into the agreement so that the agreement covered all outstanding payment matters and outstanding defects in all of the defendant’s works. He therefore held that the defendant was entitled to a declaration that, in essence, the settlement agreement precluded the claimant from seeking damages or specific performance in respect of the defects in respect of which the claimant brought the present proceedings.

The extent to which English law recognises and gives effect to an obligation to act in good faith remains a matter of some dispute. In our June 2012 issue (at pp11–12) we considered the judgment of Mr Justice Cranston in Compass Group UK and Ireland Ltd v Mid Essex Hospital Services NHS Trust [2012] EWHC 781 (QB), [2012] All ER (D) 230 (Mar) in which he upheld the validity of a clause which required the parties to co-operate with each other in good faith in the performance of the contract. But in the more recent case of Shaker v Vistajet Group Holding SA [2012] EWHC 1329 (Comm), [2012] All ER (D) 141 (May) Mr Justice Teare adopted a more sceptical approach which suggests that a pre-contractual duty to act in good faith remains generally unenforceable.

In London Borough of Enfield v Outdoor Plus Ltd [2012] EWCA Civ 608, [2012] All ER (D) 87 (May) the Court of Appeal held that, when assessing damages for trespass to land, the Court must start with the admitted trespass and then construct a hypothetical negotiation between the claimant and the defendant for the purpose of ascertaining the value of the benefit of the trespass to a reasonable person in the position of the party who has committed the trespass.

In West Country Renovations Ltd v McDowell [2012] EWHC 307 (TCC), [2012] 3 All ER 106, Mr Justice Akenhead provided guidance on the subject of the circumstances in which claims should be commenced before a High Court judge in the Technology and Construction Court (‘TCC’) and when they should be commenced in other courts, such as the County Court. While recognising a number of exceptional cases, Akenhead J, having consulted with other High Court judges of the TCC, held that, generally, claims which are for less than £250,000 should be commenced in County Courts or other High Court centres outside London which have TCC designated judges. In this way it is hoped that the High Court judges of the TCC will not have to handle an excessive number of low value claims and can concentrate on cases which are of high value, have an international component or raise new or difficult points of law.