CASE STUDY
Arbicon were approached by a Subcontractor, Modular Connexions Limited, with regards to a dispute with a Main Contractor over payment and damages following repudiatory breach of contract.
Modular Connexions were under a bespoke subcontract for the assembly of four modular apartment buildings in Bristol, for a sum of circa £612K.
The Main Contractor was required to provide the modules for these buildings, but these were delivered to site in a poor condition, showing evidence of considerable water damage. This and many other issues caused by the Main Contractor resulted in a delay to the progress of the works. However, with no valid reason, the Main Contractor held Modular Connexions responsible for the water damage and the delays, and immediately terminated the Sub-Contract during a Teams Meeting.
Modular
Connexions considered that the Main Contractor had wrongfully terminated the
Sub-Contract and was in repudiatory breach. As such, Modular Connexions
accepted the repudiatory breach and left the site. Modular Connexions required substantial
payment for the works it had carried out up to the termination and claimed damages
in respect of the repudiatory breach. The Main Contractor’s case was that no
further sums were due pursuant to their termination.
Arbicon worked closely with Modular Connexions to develop and submit its final application for payment, including a damages claim, totalling £172K. However, the Main Contractor maintained its position that it had terminated the Sub-Contract correctly and claimed the value was minus £620K to be obtained from Modular Connexions in respect of a number of spurious and entirely unevidenced counter claims.
Arbicon referred the case to Adjudication to ascertain whether the Main Contractor had committed a repudiatory breach and to obtain payment for the true value of the works, and the damages arising from the wrongful termination of the Sub-Contract.
The Adjudicator concluded that the Main Contractor was in repudiatory breach, and that the Main Contractor had prevented Modular Connexions from progressing the works in accordance with the programme and had wrongfully terminated.
Arbicon secured a good result, Modular Connexions were awarded circa £124K, this taking into consideration payments already made, plus interest. The Main Contractor was also ordered to pay the Adjudicator’s fee.
A particular issue that arose during the Adjudication was in respect of the logistics of issuing a Notice of Adjudication to an overseas company. The bespoke contract was very specific as to the manner of service of the notice and hence Arbicon had to engage lawyers in the distant European country concerned to hand-deliver and obtain a signature as evidence of proof of service. It is important that service of Notice provisions are looked at when signing the contract! Modular Connexions had to do this to commence the Adjudication.
£124,000
“Following the wrongful contract termination, we contacted Arbicon to assist us with our dispute and obtain payment we believed to be due to us. Arbicon are very professional and it is clear that they have a high level of expertise in repudiatory breach and Adjudication. We would highly recommend Arbicon to any contractor that needs contractual assistance.”
- Paul Ryan, Commercial Manager, Modular Connexions Limited
Arbicon Comment
“We were delighted to assist Modular Connexions Limited in their Adjudication, to evidence that the Main Contractor was in repudiatory breach and to secure a good financial outcome for our client. The challenge of working with lawyers in a non-English speaking country was something I’d not experienced before, but I was pleased that the lawyers concerned fully appreciated the importance of construction Adjudication in the UK, and I must acknowledge their vigilance in obtaining proof of service of the notice of Adjudication.”
- John Elven, Senior Consultant, Arbicon ADR Ltd