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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> London & Regional (St George's Court) Ltd v Ministry of Defence & Anor [2008] EWHC 526 (TCC) (18 March 2008) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2008/526.html Cite as: [2008] EWHC 526 (TCC) |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
133-137 Fetter Lane London, EC4A 1HD |
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B e f o r e :
____________________
LONDON & REGIONAL (ST GEORGE'S COURT) LIMITED |
Claimant |
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- and - |
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MINISTRY OF DEFENCE AND THE SECRETARY OF STATE FOR DEFENCE |
Defendant |
____________________
Miss Stephanie Barwise QC and Marc Lixenberg (instructed by Treasury Solicitor) for the Defendant
Hearing dates: 13 and 14 February 2008
____________________
Crown Copyright ©
The Honourable Mr Justice Coulson:
A. INTRODUCTION
B. THE CONTRACTURAL FRAMEWORK
B1. The Building Agreement
" the works which are to be constructed on the Site in accordance with this Agreement being either the Base Scheme or the Enhanced Scheme and more fully described in the Base Scheme Building Documents or the Enhanced Scheme Building Documents respectively."
B2. The Agreement For Lease ("AFL")
" the works to be carried out by the Landlord by way of major refurbishment of the Property as shown in the Approved Plans."
The Approved Plans were themselves defined as:
" the output specification contained within volume 2 of the Employer's Requirements produced by the Employer's Agent together with associated documentation, plans and drawings referred to therein and such term shall include any variations from alternations and additions to and revisions of the Approved Plans made from time to time in accordance with this Agreement."
"3. The Landlord's Works
3.1 The Landlord will procure that the Landlord's Works are carried out and all other requirements of the Approved Plans are met:
(a) in a proper and workmanlike manner and in accordance with good building practice
(b) with good quality and suitable materials
(c) in accordance with Approved Plans and the Requisite Consents
(d) in compliance with all statutes, statutory orders and regulations made under or deriving validity from them and any requirements and codes of practice of local authorities and competent authorities affecting the Landlord's Works
(e) in accordance with the Building Agreement
3.9 The Landlord may from time to time make such variations to the Approved Plans as may in the circumstances reasonably be necessary but if the variations would have the effect of reducing the size or the amenities of the Property the Landlord may not do so without the consent of the Tenant (such consent not to be unreasonably withheld) and the Landlord will in any event follow the procedures set out in the Approved Plans which shall prevail in the event of any conflict with the provisions of this sub-clause 3.9.
3.10 Subject to any procedures set out in the Approved Plans the Tenant will be deemed to have approved any variation requiring its consent within ten working days of the date on which the Landlord sends the Tenant an application for consent unless the Tenant notifies the Landlord in writing of any reasonable objection to the variation within that period.
3.11 Without limitation to the requirements of the Approved Plans the Landlord will keep the Tenant informed of:
(a) the progress of the Landlord's Works and
(b) any material problems or delays affecting the Landlord's Works."
"4. Tenant's Variations
4.1 The Tenant may request the Landlord to incorporate Tenant's Variations in the Landlord's Works and the Landlord shall not unreasonably withhold its consent to any such request provided that
(a) any necessary additional Requisite Consent can reasonably be obtained
(b) the execution of the Landlord's Works incorporating the Tenant's Variations would not constitute a breach of any of the matters set out in Clause 3.1(d)
(c) the Building Contractor and the Professional Team are reasonably able to incorporate such Tenant's Variations into their design and programmes
(d) the incorporation of the Tenant's Variations will not reduce the Net Lettable Area of the Premises nor otherwise conflict with the Landlord's Obligations in the Building Agreement.
4.2 The Tenant will pay the costs and incidental expenses of the Tenant's Variations (including without limitation the cost of any delay to the Landlord's Works and any professional fees for the Landlord or the Superior Landlord giving their consent to the Tenant's Variations) as they are incurred as to which:
(a) in respect of the costs of the Tenant's Variations payment is to be made against the Employer's Agent's certificates of the costs and incidental expenses within 30 days of delivery of the certificates to the Tenant and
(b) in respect of incidental expenses and professional fees payment is to be made within 30 days of written demand
(c) if payment is not made within 30 days of the delivery of the certificate the Tenant will pay interest on so much of the expenditure as for the time being remains unpaid at the Prescribed Rate calculated from the date on which the payment was due.
4.3 If the incorporation of any Tenant's Variations into the Landlord's Works delays the Date of Practical Completion the Landlord shall procure that the Employer's Agent serves on the Tenant a notice specifying the Date of Notional Practical Completion.
4.4 Clause 3 applies to Tenant's Variations as incorporated into the Landlord's Works as it does to the other Landlord's Works."
"Any certificate issued by the Employer's Agent shall save in the case of manifest error be final and binding."
There was an adjudication provision at Clause 15, and no general prohibition on assignment.
B3. The Building Contract
"The Contractor shall upon and subject to the Conditions carry out and complete the Works referred to in the Employer's Requirements, the Contractor's Proposals , the Articles of Agreement, these Conditions and the Appendices in accordance with the aforementioned documents and for that purpose shall complete the design for the Works including the selection of any specifications for any kinds and standards of the materials and goods and workmanship to be used in the construction of the Works so far as not described or stated in the Employer's Requirements or Contractor's Proposals. The Contractor shall comply with any Instruction and be bound by any decision of the Employer issued or made under or pursuant to the Conditions and any such instruction or decision shall have effect except to the extent that any such instruction or decision is varied "
"The Employer [the Claimant] has supplied to the Contractor [Shepherd] a copy of those provisions of the Building Agreement, Agreement for Lease and any agreement entered into by the Employer with any financier which relate to the design or construction of the Works. The Contractor shall assume and perform as part of his obligations hereunder the Employer's obligations under such provisions and undertakes to the Employer that he has performed and will continue to perform his obligations hereunder so that no act, omission or default of the Contractor shall constitute, cause and contribute to any breach by the Employer of such provisions."
C. OUTLINE OF THE RELEVANT EVENTS
"2. The Crown Estates Commissioners ("CEC") and Defence Estates ("DE")/ Ministry of Defence ("MOD") recognised at the outset (i.e. before the Defendant and the Claimant entered into the AFL, and the Claimant engaged Shepherd Construction Ltd ("SCL") to carry out construction works at the development pursuant to the Building Contract dated 22 March 2001 ("Building Contract")) the possibility of disputes arising in respect of the evaluation of the time and costs consequences of any Tenant's Variations.
3. At one stage there was talk of putting in place an internal change control procedure to be operated between CEC and DE/MOD for the agreement, authorisation and recording of changes. This proposed procedure (which was not implemented) involved the use of a two-page document entitled "change control sheet" in order to:
(a) describe the change, its cost and programme effects;
(b) authorise the incorporation of the change into the works contract; and
(c) confirm and acknowledge the issues of the works contract variation instruction.
4. CEC appointed Drivers Jonas as Surveyors pursuant to the Building Agreement dated 28 March 2001 ("Building Agreement"). Drivers Jonas provided contractual, technical and financial advice to CEC in relation to the project including the cost of the physical building works.
5. DE is responsible for the management of MOD property. It acted on behalf of the MOD in relation to the procurement of the building works including the cost of the same.
6. The MOD was neither a party to the Building Agreement nor the Building Contract and had no part in their administration."
"Shepherd has prepared a claim for an extension of time associated with the introduction of additional room uses, not specified in the Output Specification, which we have forwarded for comment to Drives Jonas and Babtie. In advance of their comments we have undertaken our own review of the file and conclude that an extension of time may be appropriate in the order of 4 weeks."
"7. On or around 25 March 2002 Kerry Hutchings requested from David Manning of Tweeds details of what (at that time) Tweeds considered to be Tenant's Variations. Mr Hutchings requested details of the cost of the Tenant's Variations so that the MOD could carry out an assessment of those costs."
The email from Mr Hutchings of 25 March 2002 expressly asked for:
" as much of Shepherd's submission as possible to assist us in our assessment of your contractor's calculations and assumptions in arriving at what they believe are variation costs due from the MOD."
"8. On 8 April 2002 Babtie, DE and Tweeds met to discuss a changes schedule put forward by Shepherd. Babtie identified what it considered were further Tenant's Variations which had not been previously identified and were still to be valued."
"4. Although Tweeds are not specific about the changes there is no doubt that the introduction of the DESO specialist areas and DMT training rooms were not declared to the developer and contractor until the issue of the stage 1 space data sheets
5. The issue of the space data sheets coincided with a flurry of activity by all parties concerned, as the agreements and contracts between the various parties were being finalised, signed and exchanged.
6. The specialist areas are outside the scope of works defined in the Output Specification and a variation to the contract
7. We previously indicated verbally that we were of the opinion that a strong case could be made for an extension of time because of the introduction of the specialist areas "
"9. At a meeting on 23 May 2002 between the Claimant, Tweeds, Kerry Hutchings of DE and David Waterhouse of Babtie, Tweeds produced a document entitled "Schedule of Outstanding Financial Issues with the MOD". The said document was later renamed "Schedule of Tenant Enhancements for MOD".
10. The document was to act as a register of MOD changes for agreement as changes and agreement of the value of the same."
This is the Schedule which, in a much later version, is said by the Defendant in these proceedings to constitute a certificate, issued by Tweeds, which cannot now be opened up or challenged.
"This is an informal analysis which I have discussed with relevant parties but is not intended to be the definitive answer on this matter but should prevent you wasting time making suggestions which we could not accept."
"Some of the figures are their estimates, some are Shepherd Construction's. Two items, 5 and 12, are agreed figures As stated this is part of a larger agreement to be drawn up between MOD and L&R and we are looking for an independent assessment that the agreed figures represent a fair and reasonable commercial agreement."
Again, it is difficult to see how or why the Defendant could have been justified in incurring the costs of another consultant if, in fact, they considered that they were stuck with the Tweeds' valuation, whether it represented a fair and reasonable figure or not.
" in terms of work content only, with yourself or with your advisers. With the exception of Items 1, 2, 5 and 12, all costs are budget in nature and require formal agreement with your advisers. It is in our joint interests that this exercise is completed speedily and I intend that we should work jointly to achieve a 'sign-off' date of 25th September."
"In terms of variations already instructed, or otherwise acknowledged between us, these have been summarised in budgetary terms and included on the attached Schedule of MOD costs, serial 5, attached. The financial aspect of this schedule is subject to agreement with your QS. The inclusion of all items has either been agreed with yourself or DE and any items of dispute have been deleted or noted as a Developer issue in previous discussions. To this end it is my opinion that the schedule constitutes a list of agreed variations for which the Developer will be entitled to seek reimbursement, in full, when agreed.
Clause 4.2 of the Agreement states that "the Tenant will pay the cost of the Tenant's Variation as they are incurred against the employer's agent's certificates " To date we have incurred £384,411 in our latest Interim Certificates on account of amounts included in the costs schedule and L&R will raise an invoice this week for reimbursement purposes. We are happy to provide a copy of our valuation build up and certificate to prove expenditure or alternatively to agreed amounts with your appointed QS. Please advise your preference."
"In order to do this he is willing, where full details are not available, to accept a professional opinion that Tweeds evaluation of a variation is commercially reasonable and that MOD are not being ripped off. (The background to this is that the agreement MOD have with CEC and L&R states that Tweeds are to value variations and MOD are to pay that valuation.)"
On 22 December 2002 Mr Hutchings emailed Mr Waterhouse to say that they were "very close to drawing a line under variations". A new version of the Schedule was referred to in an email from Tweeds of 23 December 2002.
"I am not happy about constantly having to check revised drafts of what is an incomplete and non-comprehensive document. Is accuracy a requirement even? Equally I am unhappy about the format in which the "Schedule of Tenant Enhancements for MOD" is now presented. The original purpose of this document was to act as a register of MOD potential changes for agreement as changes and then agreement of the financial consequences. Entries were made as items arose. Some items which would have been changes were rescinded and some which the developer originally thought were changes were subsequently accepted as being contracted works or design developments. Rather than deleting these items they remain on the schedule with an appropriate comment in the right hand column. This latest format has deleted the right hand column and comments. Hence there are items on the schedule that have not been incorporated into the works but the schedule leads you to believe that they have, eg items 4, 5, 9, 14, 20, 26. Also some of the items are still in dispute as to whether they are changes or not."
In his reply Mr Prior, a solicitor working on the draft lease, said that the schedules:
" are intended to be indicative only Their purpose is to assist the rent review process at the appropriate times in helping to show what should be assumed for the hypothetical lease and would should be disregarded but the main reference will be the output specification itself."
"2. The sums invoiced represent a limit of liability. The final sums will be agreed as fair and reasonable by DE's sponsored quantity surveyor.
3. The interim sums invoiced should now be paid to the Crown Estates Commissioners on the basis that payments will not be made to contractors until the final value of the works have been agreed. Any overpayment should be paid to MOD."
As was apparent during the oral evidence, it is difficult to read this as recording anything other than the Defendant's desire to ensure that it was getting value for money from the Works generally and the Tenant's Variations in particular. Again, I consider it to be inconsistent with the proposition now advanced by the Defendant, namely that Tweeds could make a final and binding determination of the Defendant's liability, regardless of the reasonableness (or otherwise) of the figures themselves.
"2. As explained the original purpose of this document was to act as a register of MOD potential changes for agreement as bona fides changes and then agreement of the financial consequences. Entries were made as items arose. Some items, which would have been changes, were rescinded and some that the developer originally thought were changes were subsequently accepted as being contracted works or design development. Rather than deleting these items they remain on the Schedule with an appropriate comment in the status column
5. Issue 7A of the Schedule was supposed to find the full extent of the possible MOD variations and after discussion and agreement the narrative given in column 2 of the Schedule was appended to the lease agreement.
6. It is part of our remit, upon receipt of substantiation from the Developer's agent [Tweeds] to make comment on his final valuation of the MOD enhancement. This process is ongoing as we have not yet received all substantiation."
On 24 March 2003, JSP sent Tweeds their updated comments on Issue 8 of the Schedule, emphasising that a number of their comments against individual items simply stated "information required".
"12. The Defendant did not consider or treat Issues 1 to 9 of the Schedule:
(a) As certificates issued by Tweeds under Clause 4.2(a) of the AFL; or
(b) As final and binding under Clause 2.7 of the AFL.
13. The Defendant did not make payments against any of Issues 1 to 9 of the Schedule within 30 days of each Schedule being delivered to it or at all."
"The Developer has demonstrated a remarkable relaxation to the Tenant in seeking the agreement of your cost advisers to a Schedule that was largely accepted by DE under the guidance of Kerry Hutchings but I trust that we can all agree that it has been to the MOD's benefit, thus far.
As you are aware the Lease allows for the developer to recover from the tenant the cost of any variation works undertaken at its request. The pre-condition to recovery of the developer's costs is the confirmation from Tweeds that the costs have been certified in an interim payment to our Contractor. Please be advised that these costs were actually included in certificate number 22 dated 9 July 2003 and we now intend to raise an invoice to the Crown to recover the balance of monies owing.
The total value of costs to date is £1,249,858, inclusive of fees totalling £73,898, of which £750,000 has been invoiced, leaving a balance due of £499,858, excluding VAT. It is our intention to cease further discussions with your cost advisors on the minor issues remaining to be agreed with them and to seek recovery of these monies as provided for within the Lease."
" represents the only valid claim of the contract. It is unique in that it has been acknowledged by the Crown to be a valid concern, and we are entitled, under the contract, to review our earlier opinion concerning time award based on any better particulars that Shepherd may produce."
In addition, he described certain other claims, which are also pursued in these proceedings, as "merely padding, included to respect the opinions of site-based personnel".
D. THE SETTLEMENT AGREEMENT AND THEREAFTER
"The claims (or potential claims) against the MOD briefly described in the Schedule to this Agreement."
The Schedule described four claims, including the three claims pursued by the Claimant against the Defendant in these proceedings. The first item in the Schedule was the space planning claim.
"1. Definitions and Interpretation:
MOD Claims | means the claims (or potential claims) against the MOD briefly described in the Schedule to this Agreement
|
Sums due from the Contractor |
means any and all sums due from and/or payable by the Contractor to the Employer pursuant to the Building Contract and Supplemental Agreement; |
Sums due from the Employer |
means any and all sums due from and/or payable by the Employer to the Contractor pursuant to the Building Contract and Supplemental Agreement, apart from sums due and/or payable in respect of the MOD Claims |
2. Settlement of Sums Due (apart from the MOD claims).
2.1 Within 14 days of the date of this Agreement the Employer shall pay to the Contractor without any deduction or set-off the sum of one million, two hundred and eighty six thousand one hundred and seventeen pounds (£1,286,117) plus VAT in full and final settlement of:
2.1.1 Sums due from the Employer; and
2.1.2 Sums due from the Contractor.
3. Current Status of the MOD Claims
3.1 The Employer warrants and undertakes to the Contractor that save for the exchanges of correspondence and conversations specifically identified and referred to in the Employer's Agent's facsimile letter to the Employer's solicitors dated 9th January 2004 (copy attached) it has not historically said or done anything and will not in the future say or do anything which might compromise, prejudice or adversely affect the pursuit, prosecution and/or enforcement of the MOD Claims against the MOD. The Employer warrants to the Contractor that as far as the Employer is aware it has not by act or omission done anything to prejudice the validity or enforceability of the MOD Claims under the Agreement for Lease and, save in relation to claims or cross-claims arising due to defects in the Works, the MOD have no claims or cross-claims against the Employer under or in connection with the Agreement for Lease which might be raised against the MOD Claims by way set-off or counterclaim.
4. Pursuit of the MOD Claims
4.1 Henceforth the Contractor shall be entitled to pursue, prosecute and if necessary enforce the MOD claims against the MOD in lieu of the Employer. The Contractor shall be entitled to use the Employer's name in pursuing, prosecuting and enforcing the MOD Claims against the MOD under the Agreement for Lease and in any ensuing adjudication, arbitration and/or litigation.
4.2 The Contractor shall have full and unfettered control and full and unfettered discretion as to the pursuit and conduct of the MOD Claims against the MOD and any ensuing adjudication arbitration and/or litigation. The Contractor shall also have full and unfettered discretion as to any compromise or settlement reached with the MOD and/or the enforcement of any award or judgment made against the MOD in any adjudication arbitration or litigation relating to the MOD claims.
4.3 The Employer shall provide or procure (at its own cost and/or expense) whatever information and/or assistance the Contractor may reasonably require in and about the pursuit of the MOD claims against the MOD
4.4 The Employer will, if necessary, join with the Contractor in any adjudication, arbitration or litigation which the Contractor deems necessary or appropriate to the pursuit, prosecution and/or enforcement of the MOD claims against the MOD.
4.5 The Contractor shall indemnify the Employer in respect of any costs and disbursements which might be awarded against the Employer in any adjudication, arbitration and/or litigation commenced by the Contractor against the MOD in the name of the Employer."
E. THE CERTIFICATE ISSUES
E1. The Particular Issues That Arise
"1. What is the proper construction of Clauses 2.7 and/or 4.2 of the AFL including:
(a) what is the nature of a certificate referred to in Clause 4.2 and 2.7?
(b) are certificates within the meaning of Clause 2.7 and/or 4.2 of the AFL binding as to the fact and amount of a Tenant's Variation?
(c) is a certificate a condition precedent to the Defendant's Obligation to make payment to the Claimant under Clause 4.2 of the AFL?
2. If a certificate was a condition precedent to the Defendant's Obligation to pay under Clause 4.2 of the AFL then whether the parties (by their failure to operate the certification procedure in Clause 4.2 AFL) operated on a common assumption that certificates were not required and/or waived the requirement.
3. Whether Issue 10 of the document known as "Schedule of Tenant's Enhancements" issued on 14 October 2003 ("the Schedule") by Tweeds was a certificate within the meaning of Clause 2.7 and/or Clause 4.2 of the AFL?"
E2. The Contractual Regime
E3. The Parties' Conduct
E4. Issue 10 of the Schedule
E4.1 Legal Principles
"That clause required him to 'certify' in writing. While no set form of certificate is provided, unlike that under Clause 21(a) and (b), it must clearly appear that the document relied upon is the physical expression of a certifying process. One should, therefore, have some regard to the factors of 'form', 'substance' and 'intent' of which Mr Justice Devlin spoke in the admittedly different circumstances of Minster Trust Ltd v Traps Tractors Ltd [1954] 1 WLR 963. Or, to adopt a passage in Hudson (10th Edition, page 479), the document should be 'the expression in a definite form of the exercise of the opinion of the architect in relation to some matter provided for by the terms of the contract'. And, as Mr Garland accepted, it must be free from ambiguity."
The Court of Appeal concluded that the letter did not amount to a certificate because the letter did not purport to certify that the works ought reasonably to have been completed by a certain date, either in form or substance or intent.
E4.2 Was Issue 10 A Certificate?
"It is our intention to cease further discussions with your cost advisors on the minor issues to be agreed with them and to seek recovery of these monies as provided for within the Lease."
E4.3 Estoppel
E5. Answer To The Certification Issues
F. THE CAPACITY ISSUES
F1. Overview
claims into a legal 'black hole'1,
with the consequential windfall to the Defendant of having had the benefit of varied works for which they have not had to pay. In my view, only the clearest words in the Settlement Agreement could lead to such a result. For the reasons set out below, I do not consider that, on a proper construction of the terms of the Settlement Agreement, such a result can arise.
F2. The Capacity Issues
"4. Whether the present proceedings are brought by the Claimant pursuant to the name-borrowing arrangement contained in Clause 4 of the Settlement Agreement between the Claimant and Shepherd dated 17 May 2004.
5. Whether the Claimant is entitled to pursue proceedings on the basis of name-borrowing, or the alleged agency, or whether proceedings brought on either basis are illegitimate due to:
(a) the Defendant not having been informed/not having consented to such procedure;
(b) such procedure being contrary to the express/implied terms of the AFL;
(c) the Settlement Agreement being unlawful either on the grounds that it is champertous/akin to an unlawful Contingency fee arrangement;
(d) in all the circumstances, the present proceedings are an abuse of process." [1]
1 An expression first used by Lord Stewart in GUS Property Management Ltd v Littlewoods Mail Order Services Ltd [1982] S.L.T. 533. There is a comprehensive review of the 'black Hole cases' by David Friedman QC in the Construction Law Journal, vol 24 No.1.
F3. The Nature Of The Claimant's Claim And The Effect Of The Settlement Agreement
F4. The Claimant's Capacity/General
"Since the health authority knew the terms of the sub-contract and directed Crouch to enter into it, the health authority cannot be heard to object to Crown arbitrating in Crouch's name pursuant to the provisions of the sub-contract."
F5. Champerty
F5.1 Principles of Law
a) the mere fact that litigation services have been provided in return for a promise in the share of the proceeds is not by itself sufficient to justify that promise being held to be unenforceable: see R (Factortame) Ltd v Secretary of State for Transport (No.8) [2003] QB 381;
b) in considering whether an agreement is unlawful on grounds of maintenance or champerty, the question is whether the agreement has a tendency to corrupt public justice and that such a question requires the closest attention to the nature and surrounding circumstance of a particular agreement: see Giles v Thompson;
c) the modern authorities demonstrated a flexible approach where courts have generally declined to hold that an agreement under which a party provided assistance with litigation in return for a share of the proceeds was unenforceable: see, for example, Papera Traders Co Ltd v Hyundai (Merchant) Marine Co Ltd (No.2) [2002] 2 Lloyd's Rep 692 ;
d) the rules against champerty, so far as they have survived, are primarily concerned with the protection of the integrity of the litigation process in this jurisdiction: see Papera.
F5.2 The Parties' Submissions
F5.3 Discussion
F6. Other Arguments
F7. Answers to Capacity Issues
G. THE 'NO LOSS' ISSUE
G1. The Issue
"Whether the effect of the Settlement Agreement is that no further sum is due from the Claimant to Shepherd with the result that the Claimant has incurred no cost or expense as defined by Clause 4.2 of the AFL and therefore has no entitlement to claim against the Defendant under that Clause."
G2. The Defendant's Case
" in the event that APPH are held liable to [Cammell Laird] in the action to indemnify APPH against Cammell Laird's claim against APPH The amount of Redman Broughton's liability to APPH shall be limited to the amount of that sum of money to which Redman Broughton are or may become entitled under or by virtue of any order or judgment made or entered or any term of any settlement agreement made in the action in Redman Broughton's name against any other fourth party "
On 23 January 1991 Cammell Laird's claim against APPH was settled for £5 million.
G3. The Threshold Point
"The purpose and object of the agreement dated 29 November 1990 was to ensure that those who were at fault and could afford to pay damages in respect of their fault to those with whom they were in a contractual relationship should pay damages. Conversely Redman Broughton, who were prepared to admit fault but who could not pay damages out of their own pocket, were released from their liability to pay damages save to the extent of their recovery from others who could afford to pay.
The fundamental question that has to be decided is whether the agreement can be so construed as to give effect to the intention of the parties without doing violence to the language of the agreement. In my judgment, that question can be answered in the affirmative. Clause 1(a) could have been more happily drafted to achieve its purpose. However, I do not accept that it means, as Mr Rokison submitted, that Redman Broughton's liability to APPH was expressed to be the amount that Redman Broughton were entitled to recover from the fourth parties and that such a construction led inevitably to the circular argument which found favour with the judge."
G4. Other Considerations
G5. Answer to No Loss Issue
H. CONCLUSIONS
"Underlining all these cases can be heard the drumbeat of a constant theme, which could possibly be described as ubi Ius ibi remedium, the maximum that where there is a right there is a remedy: but it could also be said the courts are anxious to see, if possible, that where a real loss has been caused by a real breach of contract, then there should if at all possible be a real remedy which directs recovery from the defendant towards the party which has suffered the loss"
For the reasons which are set out above, I am in no doubt that, in this case, if these heads of claim were Tenant's Variations, there is a real loss to Shepherd (and the Claimant) which has been caused by a real failure by the Defendant to pay under the AFL, and that there should be a real remedy which directs recovery against the Defendant, the beneficiary of the works.
"7. Whether the Claimant is not entitled to the declaration sought by it at the prayer of the Particulars of Claim on the grounds that such declarations:
(a) are hypothetical and/or of no utility by reason of the issues at paragraphs 1-7 above and/or
(b) would not settle the dispute between the parties, since were the declarations sought by the Claimant granted, the Claimant would invite Tweeds to issue a further certificate."