REINSTATEMENT COSTS HELD TO BE RECOVERABLE

In Linklaters Business Services Ltd v Sir Robert McAlpine Ltd [2010] EWHC 2391 (TCC), [2011] BLR 108 (although note that the latter report does not contain the full judgment of the court), Mr Justice Akenhead held that the defendants had committed various breaches of contract in the redevelopment of premises leased by the claimants. The issues relating to the defendants’ liability in tort, which had taken up considerable time at the preliminary stages of the litigation, largely fell away (and in the one case where it was live, no liability was found to exist on the facts). In relation to the contractual liability of the defendants, the judgment is notable for its consideration of the circumstances in which a claimant is entitled to recover the cost of carrying out replacement works and also for the conclusion that the claimants were obliged to give credit for a contribution which they had received from their landlord towards the cost of the remedial works.

The facts

The claimants, Linklaters Business Services, were the lessees and occupiers of premises in London. They wished to embark upon a major project to bring the building up to the standards they required. The works included the provision of an air conditioning system which was distributed through the building, vertically, by means of insulated pipework. The first defendant, Sir Robert McAlpine Ltd (hereafter ‘McAlpine’), was the main contractor on the project. The first defendant sub-contracted the mechanical and electrical works (which included the insulated chilled water pipework for the air conditioning systems) to How Engineering Services Ltd (hereafter ‘How’) who in turn sub-sub-contracted the installation of the insulation works to Southern Installation (Medway) Ltd (hereafter ‘Southern’). McAlpine and How also provided written contractual warranties to the claimants that they had carried out their respective contractual obligations properly.