Alstom Power Ltd v Somi Impianti SRL

A contractual definition of subcontractor’s equipment may extend to project documentation where the documents are required to complete the works and do not form part of the permanent works. Contractual vesting provisions may therefore transfer title to such documentation when it is brought onto the site. Where a subcontractor removes or retains the documents in breach of contract, injunctions may be appropriate if damages are inadequate, particularly where the defendant’s financial position makes recovery doubtful and replacement costs are substantial. Deliberate breaches of undertakings and injunctions constitute serious contempt. In fixing a fine, the court should consider both the seriousness of the breach and the contemnor’s financial position.

Alstom Power Limited engaged Somi Impianti S.R.L. as a subcontractor on the construction of a power plant. Following Somi’s financial difficulties, unjustified suspension of work, culpable delay and failure to pay suppliers, Alstom terminated the subcontract.

Somi had removed from the site and taken to Italy turnover packages containing completion, testing and other technical documents required for handover of the works. Alstom sought summary judgment, injunctions requiring return of the documents, and sanctions for Somi’s breaches of an undertaking and a subsequent injunction. Somi did not participate in the hearing or provide evidence challenging Alstom’s case.

1. Summary judgment and title. On the unchallenged evidence, Somi had removed the turnover packages from the site and jurisdiction. Under the subcontract, “Subcontractor’s Equipment” covered things of whatsoever nature required for execution and completion of the works, excluding things forming part of the permanent works. The turnover packages fell within that definition. Title vested in Alstom when the documents were brought onto the site under clause 54.2.
2. The documents also constituted goods and materials within clauses 54.9 and 54.14. Somi therefore had no contractual right to remove them and was obliged to deliver them to Alstom. Its continuing refusal to return them was a further breach of contract.
3. Termination. Proper grounds existed under clause 63. Somi was financially unable to proceed, had unjustifiably suspended work, and had incurred liquidated damages which exceeded, or were likely to exceed, the contractual cap. The adjudicators’ decisions provided further corroboration of the substantial culpable delay and sums due.
4. Injunctions. Injunctive relief was appropriate. The documents had little value to Somi except as a bargaining tool, while damages were inadequate because Somi was in financial difficulty and Alstom would otherwise incur substantial and probably irrecoverable costs to recreate the missing documentation.
5. Contempt. Somi deliberately breached both the undertaking given on 10 November 2011 and the injunction made on 21 November 2011. A fine of £40,000 was imposed, divided equally between the two contempts. In assessing the fine, the court considered the deliberate nature of the breaches and Somi’s financial position. The court indicated that an application to reduce the fine would be considered only if Somi promptly complied with the injunctions.
6. Summary judgment was entered, injunctions were granted, Somi was ordered to pay the assessed costs of the summary judgment application and an interim payment of £175,000 on account of the proceedings’ indemnity costs. Questions concerning damages and sums due following termination were reserved.

Not stated in the judgment.