Cleveland Bridge UK Ltd & Anor v Multiplex Constructions (UK) Ltd

In a construction subcontract, a valuation clause referring to work properly completed does not necessarily require every component to be valued by physical progress. The contract must be read as a whole. Where payment schedules distinguish fixed preliminaries from variable preliminaries, fixed items may be valued by scheduled monthly allocations and variable items by achievement of specified deliverables.

A certificate-based payment regime may bar contractual recovery for work completed after the last certificate. A contractor seeking restitution after repudiation must establish the applicable legal basis, including any fresh contract inferred from the innocent party’s conduct. An appellate court will not decide a new restitutionary claim without proper pleading and necessary factual findings. Retention must be brought into account at an appropriate time after repudiation.

The parties entered into a subcontract for the design, fabrication and erection of structural steelwork for Wembley Stadium. Following delay, they made a supplemental agreement establishing different payment arrangements, including fixed and variable preliminaries, lump-sum fabrication work and reimbursable site work. Cleveland Bridge later repudiated the subcontract, which Multiplex accepted.

Mr Justice Jackson’s quantum judgment in the Technology and Construction Court, reported at [2008] EWHC 2220 TCC, awarded Multiplex £6,154,246. Both parties appealed aspects of the schedule 2 valuation. Cleveland Bridge challenged the valuation of preliminaries, payment for later steel fabrication and labour, and the classification of on-site welding. Multiplex challenged the valuation of variations and the treatment of retention. The central issues concerned contractual construction, restitution after repudiation, and the effect of the parties’ positions on retention.

1. Disposition. The court unanimously allowed Cleveland Bridge’s appeal on the preliminaries issue, dismissed its restitutionary grounds, refused permission on the raker-welding ground, and allowed Multiplex’s appeal on both the SV399 variation and retention issues. The President gave the judgment; Lord Justice Dyson and Lord Justice Stanley Burnton agreed.
2. Preliminaries. The relevant subcontract provisions, payment schedules and neutral cashflow procedure were to be read together. Fixed preliminary items were payable by the monthly allocations in the schedules. Variable items were payable when their defined deliverables were achieved. The reference in schedule 1(a) to work properly completed, and the supplemental agreement, did not displace that scheme. Clause 21.6 gave Multiplex a power to revise the payment programme if it fell out of step with progress, but that power had not been used. Cleveland Bridge’s appeal on this ground succeeded.
3. Contractual payment and restitution. Under the certificate-based payment regime, contractual payment rights arose only on issue of a certificate or expiry of the period for issuing one. Cleveland Bridge therefore had no challenged contractual entitlement beyond the last certified periods. The court followed Sumpter v Hedges [1898] 1 QB 673: payment for incomplete lump-sum work depended on an inference of a fresh contract to pay, and the innocent party’s option to take the benefit was relevant. The unappealed materials exception did not establish a wider entitlement for later fabrication or labour.
4. Appellate and restitutionary issues. The restitutionary claim had barely been pleaded, was not advanced before the judge, and lacked the necessary factual findings. The court declined to determine it for the first time on appeal. Westdeutsche Landesbank v Islington London Borough Council [1996] AC 669, concerning an ultra vires interest swap and money had and received, could not be treated as overruling Sumpter v Hedges on builders’ materials.
5. Raker welding. The character of the work, rather than the employment status of the persons carrying it out, determined its classification. Welding the rakers remained fabrication even though it was performed on site. It therefore fell within the lump-sum fabrication provision, not the reimbursable erection and site-works provision.
6. SV399. SV399 was a variation notice adjusting the subcontract sum under clause 4.6. It was not an interim valuation of variation work completed by the notice date, despite the confusing presentation of figures alongside Cleveland Bridge’s valuation. The £2,370,728 represented Multiplex’s valuation of the undisputed variations on eventual completion, not the value completed by 15 February 2004. Multiplex’s appeal succeeded.
7. Retention. After repudiation, the contractual machinery for practical completion and release of retention no longer operated. Multiplex could not retain the money indefinitely, but it was not notionally obliged to release half on a practical-completion date which never occurred. Its concession extended only to March 2008, and interest was to be calculated by reference to that date. Multiplex’s appeal on retention was allowed to that extent.

1. Court of Appeal (Civil Division): On 19 February 2010, the court allowed both parties’ appeals in part. The decision is reported at [2010] EWCA Civ 139.
2. High Court of Justice, Queen’s Bench Division, Technology and Construction Court: Mr Justice Jackson’s quantum judgment of 29 September 2008, reported at [2008] EWHC 2220 TCC, awarded Multiplex £6,154,246.