The importance of accuracy when following the JCT termination notices

The Court reminds us of the importance of accuracy when following the JCT termination notices: Thomas Barnes & Sons Plc (in Administration) v Blackburn with Darwen Borough Council.

The Case

Thomas Barnes and Sons PLC were appointed by Blackburn with Darwen Borough Council (the ‘Defendants’) on the construction of a contemporary bus station on the site of the old town market. Take a look at the completed work on the internet: it is a stunning and award winning design. However, there were severe delays and significant cost increases on the project, so much so that the Defendant terminated the contract for alleged default before the work was finalized. They then proceeded to engage a replacement contractor to finish the job.

The administrators for Thomas Barnes and Sons PLC (the ‘Claimants’) subsequently brought claims against the Defendants for wrongful termination of the contract of works, seeking recovery of the monies due under the contract.

The claim was heard in the Technology and Construction Court over several days and the scope of the case was broad: not only examining the validity of the termination notice, but then in turn moving on to whether the Employer had itself repudiated the contract, or whether the ineffective termination notice could take effect as an acceptance of repudiation at common law. The claim covered liability aspects on extensions of time, compensation for prolongation, assessment on concurrent delay … the list continues.

Eventually, the Judge found the Claimant had no prospect of recovering any sums, as any which could have been established under a final account analysis would be extinguished by the Defendant’s right to recover and set off the cost of having the contract completed by the replacement contractors.

Termination Notices under JCT Design and Build Contract and the Standard Building Contract

Both the JCT Design and Build Contract and the Standard Building Contract lay out the specific defaults which can give a Contract Administrator/Architect/Employer (the ‘Employer’) the right to terminate. If following such default the Employer wishes to terminate the contract, they must comply with the strict procedural requirements of termination or risk repudiation of the contract.

What this means for you:

The case of Thomas Barnes & Sons Plc (in Administration) v Blackburn with Darwen Borough Council was a complicated and, one would imagine, very expensive claim. It is a useful reminder of the importance of strict compliance with termination requirements, and highlights the risk of lengthy and expensive litigation if not correctly followed.

If you need guidance on terminating a construction contract or are concerned that one has been issued incorrectly, the LP Construction Team is ready to help. Do contact us either via email or call us on 01603 610911.