Suspension
The Contractor failed to make payment of £270,000 to the Sub-Contractor in accordance with the terms of the subcontract so, under instruction, we submitted a suspension notice to the Contractor and the Subcontractor then suspended on expiry of the 7 day notice period.
Repudiatory breach
During the suspension the Subcontractor visited site and found the Contractor had employed others to carry out the Subcontract works. We advised the remedies included either affirming (staying in) the contract and claiming damages for the breach or accepting the repudiatory breach thereby ending the contract and claiming damages for the breach.
Termination
Being aware the Subcontractor had visited site, the Contractor wrote to the Subcontractor advising that it considered the suspension invalid because only one, and not two, suspension notices were provided, and that it considered it was entitled to employ others to carry out the subcontract works because (a) the suspension was invalid and (b) the Subcontractor was in delay. Under instruction and in accordance with our previous advice we responded to advise why we considered that the Contractors position was not in accordance with the facts or the express terms, and not in accordance with the rights provided by the Construction Act[1] in respect of suspension[2]. We further advised that the Subcontractor accepted the repudiatory breach, the contract was thereby ended, and our client intended to claim damages arising from the breach.
Dispute Resolution Negotiations
Following the acceptance of the repudiatory breach, the late payment subject of the suspension was paid by the Contractor but there was still the matter of payment for contract and extra works, materials supplied and damages. We attended a meeting with the Subcontractor, Contractor and the Contractors Solicitors where we assisted in reaching an agreement in principle of a payment to the Subcontractor of £288,000 in full and final settlement of the dispute subject to negotiating written terms for the settlement agreement to include agreed warranties to be provided by the Subcontractor.
We advised the Subcontractor that legal advice was required for some aspects of the written agreements, so we procured the legal advice, offered our own advice on matters relating to quantum, and managed the communication between the parties on the negotiation on terms.
Adjudication
The Subcontractor became concerned the negotiations were becoming protracted because the Contractor was not forthcoming with agreements on written terms. So, under instruction we drafted the relevant submissions and started an Adjudication for the true value of the payment due following termination. After the adjudicator was appointed, we offered to stay proceedings by agreement, subject also to the adjudicator’s agreement, for 1 week, to give opportunity for the settlement agreement negotiations to be resumed and properly finalised.
Settlement Agreement
We attended a further meeting with the Subcontractor, the Contractor, and the Contractor’s Solicitors to discuss the settlement and the circumstances. The settlement terms were then completed within the week thereby ending the Adjudication by agreement to the benefit of both parties, following which the Subcontractor received its payment of £288,000.
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[1] The Housing Grants, Construction, and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 (HGCRA)
[2] HGCRA s.112.
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