Almacantar (Centre Point) Ltd v Sir Robert McAlpine Ltd

Under a pre-construction services agreement, termination provisions may constitute an exclusive regime governing the contractor’s entitlement to further payment. Where the agreement provides for payment of a final fee instalment only upon the first valuation after commencement of the main contract, that entitlement does not survive termination unless the contract so provides. The relevant words must be construed in their contractual context. A defined term such as “Main Contract” may take its meaning from the provision in which it appears. In this case, references to the main contract as the trigger for the final 50 per cent of the fee meant a contract with the pre-construction contractor, not a replacement contractor.

Almacantar and Sir Robert McAlpine Ltd entered into a pre-construction services agreement for the redevelopment of Centre Point. The agreement provided for payment of 50 per cent of the fee during the pre-construction phase and the balance upon the first valuation after commencement on site under the main contract.

The parties later agreed to end the arrangement before a construction contract was entered into with Sir Robert McAlpine. A subsequent adjudication awarded the balance of the fee to Sir Robert McAlpine. Almacantar brought Part 8 proceedings seeking declarations that the balance was not payable and repayment of the adjudication award. The issues were the effect of the termination provisions and the meaning of the contractual trigger for payment of the final instalment.

1. Declarations and repayment. Almacantar succeeded on its principal claims. Sir Robert McAlpine was not entitled to the balance of the 50 per cent fee awarded in the adjudication. The court made the first two declarations sought, held the third declaration unnecessary, and ordered repayment of £948,070.35 plus VAT and interest, with further interest to be determined.
2. Effect of termination. Clause 12 and the Fifth Schedule governed payment of the fee during performance of the agreement. Where the contractor’s engagement was terminated, clause 16.4.1 provided the applicable entitlement: accrued instalments and a fair and reasonable proportion of the next following instalment, commensurate with services properly performed up to termination. That provision superseded any inconsistent entitlement under clause 12.
3. Clause 16.4.1 was directed to a further application for payment for services performed up to termination, normally through the monthly payment machinery in paragraph 3 of the Fifth Schedule. It did not provide for a later application for the final 50 per cent after a gap of many months. The agreement contained no mechanism for payment of part of the second half of the fee following termination.
4. Application of clause 16. Clause 16 applied where the agreement ended under clause 21 by the passage of time, as well as where the contractor’s engagement was terminated by notice. It also applied where the parties agreed to bring the agreement to an end in circumstances falling within clause 5.5. Construing the agreement otherwise would leave the contractor without a coherent entitlement to payment on termination.
5. Meaning of the payment trigger. Although “Main Contract” was defined broadly, its meaning depended on context. In the recital, clause 12.1A and First Schedule Part D, the reference to the main contract meant a contract between Almacantar and Sir Robert McAlpine. The balance of the fee therefore became payable only if Sir Robert McAlpine entered into and performed that contract. A replacement contract with another contractor did not trigger payment.

The judgment was a first-instance determination following an adjudication commenced by Sir Robert McAlpine in April 2017. The adjudicator’s June 2017 decision awarded the balance of the fee to Sir Robert McAlpine. Almacantar then commenced Part 8 proceedings. The High Court held that the adjudication award was wrong on the issues decided and ordered repayment.