The defendant building contractor secured a contract to carry out works of improvement to a sewage treatment works owned and operated by the claimant water company that treated wastewater. The claimant’s engagement of the defendant was under the terms of a design and build contract which incorporated a specification that required that the six tank sequencing batch reactor, the “SBR”, (which was to designed, supplied and installed by the defendant) should comply with certain stated performance requirements.

The claimant brought proceedings against the defendant contractor alleging that at all material times since its commission the SBR was unable to operate to the required capacity and/or produce effluent of the required quality. The claimant had incurred the cost of remedial work and sought to recover on the basis of the contract. The defendant counterclaimed for outstanding amounts they alleged were due from the claimant.

Reference

The claimant’s claim for financial relief, liquidated damages and declaratory relief was dismissed. The defendant was entitled to the relief counterclaimed together with interest. The judge found that the claimant had not proved that the defendant was unable to meet the performance requirements of the contract in respect of the relevant performance requirements of the SBR. The claimant had decided to determine the contract in the belief the SBR was unable to operate. This had led to remedial works being undertaken which were not actually required as on the evidence the judge was satisfied that the SBR as originally designed and built did not lack either adequate selector or treatment capacity.

In any event, the contract provided appropriate machinery for testing the SBR’s ability to meet the performance requirements and the claimant had not subjected the SBR to any of these performance tests. Had the claimant proceeded to performance testing and the SBR been operated properly, there was every reason to believe that it would have passed the performance tests in question.

  • Further case details
  • 8 July 2004 Queens Bench Division, Technology and Construction Court, Judgement of Judge Forbes.
  • For further information, call Tony Francis or Nicholas Gould on 0207 956 9354.

Postscript

The decision serves to highlight the dangers of jumping to conclusions without following the terms of the contract when the position the opposing parties find themselves in has been expressly provided for in the contract. In particular, if the contract provides for performance tests or investigations as to whether a piece of equipment meets the contractual performance criteria the safest policy is to carry out the specified tests or investigations. Although it is open for a claimant to try to prove it’s case without carrying out any of the contractual performance tests or investigations that are specified in the contract, judge Forbes noted that this “ is obviously a difficult burden to discharge”.