£140k settlement achieved for plumbing and heating contractor in Adjudication

Construction Team
Working with and advising a plumbing and heating contractor

Holmes & Hills’ team of specialist construction solicitors was approached by a plumbing and heating contractor which sought advice and representation in relation to a claim for repudiatory breach of Contract against a national house builder.

Establishing a repudiatory breach of contract

The Contractor had entered into a contract with a national housebuilder (the Developer) to provide plumbing and heating for 115 properties on a new build site, the value of the contract being worth approximately £900,000. Initially, the works progressed well however, during October 2020, approximately a third of the way through completion, the contractor was notified by other contractors that a new plumbing and heating contractor was appointed and that they would be responsible for the remaining work. This was confirmed the following week, when the Contractor arrived on the site to work on a specific plot and found a new heating and plumbing contractor conducting work.

At this point, the Contractor wrote to the Developer to terminate the contract for repudiatory breach for employing others to complete the Works. However, the developer failed to respond and subsequently the contractor issued a Final Account which included payment for; the contract works to the date of termination, variations, demobilisation and loss of payment. The Contractor sought payment of £170,000. Unfortunately, the Developer responded claiming no further payment would be made and that the contract was on a plot-by-plot basis and therefore no loss of profit could be claimed. It was at this point that the Contractor contacted Holmes & Hills Solicitors team of Construction Law specialists.

Adjudication proceedings

Given that previous discussions between the developer and contractor had been unfruitful, Holmes & Hills Solicitors that an Adjudication be commenced, this seeking:

  1. That the Developer was in repudiatory breach of Contract for employing others to complete the Works; and
  2. That the contractor was entitled to payment of circa £170,000 as per the Final Account.

An initial attempt by the Developer to avoid the Adjudication was dismissed and a subsequent response provided that the Developer was entitled to employ alternative contractors as the Contract was issued on a plot-by-plot basis. The Developer also raised that the Contractors works were of a poor quality in support of their decision.

Holmes & Hills’ team of construction solicitors were able to provide substantiating evidence and the Adjudicator ruled in the Contractor’s (our client’s) favour. This meant that the Developer had no entitlement to employ others and there was a repudiatory breach. Factoring in the profit that would have been made on the remaining contract the Developer was ordered to make payment of £140,000 as well as paying the Adjudicator’s fees and expenses. Payment was received within 7 days and no further enforcement action was required.

Understand the construction contract

This case reinforces the importance of fully understanding a Contract. The Developer firmly believed the Contract was operated on a plot-by-plot basis, however the way in which the Contract was run on a daily basis meant that this overrode what the parties had entered into contractually.

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