Judges find construction manager knowingly allowed subcontractor to sign misunderstood payment agreement
The Court of Appeal has upheld a ruling that construction manager Mace acted "unconscionably" on a project in the City of London.

The court concluded that it was reasonable for the trial judge to have found that Mace had permitted a subcontractor to reach final settlement with the client on a mistaken understanding of what it was being paid for.

The subcontractor was unaware that its payment included money for variations and additional works, whereas Mace knew that it did. The court upheld the trial judge's finding that it was "unconscionable" of Mace to do this.

The case arose between toilet contractor Hurst Stores and Interiors and ML Europe Property, and it centred on the final accounts for work on the headquarters of investment bank Merrill Lynch.

ML Europe Property had appointed Mace as construction manager for the project and Mace had acted as the leader and co-ordinator of all the trade contracts.

Hurst had been contracted by Mace to undertake extensive fit-out works on a fixed price agreement, which was adjustable by measured variations.

The dispute was essentially over whether the final account document signed by Hurst included or excluded extra sums owed for cost-adjustable works issued by Mace.

The Court of Appeal rejected the claim by ML Europe Property that the final settlement of account signed by Hurst included additional orders issued by Mace.

ML Europe Property argued that the evidence did not support the finding reached by the trial judge, which was that Hurst's project manager had been mistaken as to the nature of the documents he signed. But the appeal court judges ruled that there was ample evidence to conclude that he had been mistaken.

The court granted a declaration, sought by Hurst, that this document could be amended to make it clear that the payment was strictly for work carried out by Hurst. The declaration also made clear that the project manager had no authority to enter into an agreement that included payment for Mace's services.

Mace declined to comment.