Ashtenne (AIF) Ltd v O'Neill

Where an order requires the value of property removed by contractors to be offset against removal costs, the contractual arrangements must operate so that the required deduction is made, will be made, or the property is treated as having no value. A contractor’s unilateral understanding that its quoted price is irreducible does not determine the contract. The court construes the agreement objectively in its context. Recoverable costs are confined to reasonable costs and expenses of removing the relevant equipment in accordance with the order. Costs attributable to unrelated property, pre-existing defects, or improvements for a future tenant are not recoverable.

The claimant landlord obtained an order requiring the defendant, who owned plant and machinery left at industrial premises, to remove the equipment. When the defendant failed to do so, a further order authorised the claimant to arrange removal and recover its reasonable costs and expenses.

The claimant sought recovery of approximately £239,000. The principal disputes concerned whether scrap values had to be credited against the contractor’s charges, whether hazardous-waste and electrical works were properly attributable to removal, and whether various repairs, clearances and improvements fell within the order.

1. Credit for scrap value. The 2005 order required the value of the plant and equipment to the contractors to be offset against the costs of dismantling and removal. “Value” was broad enough to include prospective or estimated value, as well as value realised on sale. The contracting arrangements therefore had to provide for a deduction already made, a deduction to be made, or a zero valuation.
2. The contractor’s quotation and the surrounding evidence did not establish an agreed irreducible net price. The words “disposal” and “disposed of”, read objectively and in context, did not by themselves confer the proceeds of disposal on the contractor. A deduction of £20,000 was made, in addition to the previously credited £8,000.
3. Scope of recoverable costs. The defendant was liable only for reasonable costs and expenses of removing the defined equipment in accordance with the order. Necessary works to make the equipment safe and accessible could be recoverable, including proportionate hazardous-waste removal and isolation of connected services. The claimant could not charge the defendant for waste, property or defects attributable to the former tenant, or for works serving the premises generally.
4. Works improving the premises for a prospective tenant, rather than facilitating removal, were outside the order. The court also deducted costs for items outside the defined equipment, duplicated or excessive works, work that should have been included in the contractor’s quotation, and costs relating to the adjacent unit.
5. Subject to correction of errors and omissions, further submissions on one flooring item, and VAT adjustment, the sum payable was assessed at £71,491.95, after deductions including the £75,000 interim payment. Costs were reserved.

The judgment describes earlier steps in the same proceedings:

• High Court (Chancery Division): Pumfrey J made an order on agreed terms requiring the defendant to remove the equipment.
• High Court (Chancery Division): Mr Nicholas Davidson QC, sitting as a Deputy Judge, made the 2005 order authorising the claimant to remove the equipment and recover reasonable costs and expenses.
• High Court (Chancery Division): Mr Justice Lindsay determined the claimant’s subsequent costs application and assessed the amount recoverable, subject to further submissions.