Redbourn Group Ltd v Fairgate Developments Ltd

Damages for wrongful termination are assessed by asking what benefits the claimant would have received if the contract had continued until the earliest date on which it could lawfully have been terminated. A contract for services does not necessarily oblige a party to proceed through every contemplated stage of a project. The court must construe the particular agreement and the commercial circumstances. A contractual discretion must be exercised within any applicable requirements of honesty, good faith and rationality, but those requirements do not oblige a party to pursue an unviable or materially different project. Damages for loss of a chance cannot be awarded where the chance depends on continued employment beyond the period for which the defendant was contractually obliged to employ the claimant.

Redbourn Group Ltd was appointed as development and project manager for a proposed Wembley development by Fairgate Developments Ltd. Fairgate wrongfully repudiated the appointment in February 2016. Judgment in default had established liability, and Coulson J had ordered payment of specified remuneration, leaving causation and quantum for trial.

Redbourn claimed further contractual fees and, alternatively, damages for the lost chances of earning them. Fairgate contended that it could lawfully have abandoned the contemplated project or ceased employing Redbourn before those fees became payable. The central issues were the scope of Fairgate’s contractual obligations, the effect of the project’s failure to achieve site assembly, planning and commercial viability, and whether any loss-of-chance claim was available.

1. Disposition. Redbourn was entitled to judgment for £21,615, with VAT if payable. Its remaining claims were dismissed.
2. The governing exercise was to determine what would have happened if the contract had not been repudiated. The court had to assume lawful contractual performance and assess the defendant’s conduct in light of its commercial interests. It was not required to assume that the defendant would act uncommercially merely to benefit the claimant, applying the approach in Durham Tees Valley Airport Ltd v BMI Baby Ltd [2010] EWCA Civ 731.
3. Clause 7.1 gave an express right to terminate in specified circumstances, but it was not the exclusive means of ending the appointment. Clause 7.2 applied however termination occurred. The agreement did not oblige Fairgate to employ Redbourn through every contemplated stage or to continue an uneconomic project.
4. Fairgate could lawfully decide not to approve or pursue a planning application where the contractually contemplated project had ceased to be realistic. The inability to secure the Network Rail land and the later substantial cost estimate provided lawful points at which Fairgate could stop, or pursue a materially different project without being obliged to retain Redbourn.
5. The court considered the suggested limits on contractual discretion in Socimer International Bank Ltd v Standard Bank London Ltd [2008] EWCA Civ 116, but even assuming those limits applied, they did not require Fairgate to proceed. The analogy with wrongful dismissal in Lavarack v Woods of Colchester [1967] 1 QB 278 showed that damages could not extend beyond the period of lawful termination.
6. The alternative loss-of-chance claim failed both because the proposed project was unrealistic and because it sought compensation for a chance of continued employment beyond Fairgate’s contractual obligation. The issues concerning further fees and mitigation therefore did not arise.

This was a first-instance trial. The judgment records that judgment in default had been entered after Fairgate failed to serve a defence, and that Coulson J dismissed Fairgate’s application to set it aside in [2017] EWHC 1223 (TCC). Subsequent orders determined specified remuneration and directed trial of causation and quantum. The present court determined those remaining issues.