Amey LG Ltd v Aggregate Industries UK Ltd

Where parties’ conduct temporarily prevents reliance on a contractual deadline, the resulting estoppel may postpone the start of the contractual period without replacing a fixed period with an indefinite reasonable-time obligation. A contractual audit right protecting the paying party does not ordinarily make completion of the audit a precondition to submission of a final statement, particularly where the right has been waived.

A court should not use declaratory relief to rewrite a contract or impose a new sanction for late performance. Restrictions on adjudication must be determined by reference to the particular reference and issues raised. A blanket declaration limiting future adjudications is inappropriate where permissibility is fact-specific.

The claimant, a main contractor, engaged the defendant as subcontractor for surfacing and associated works in Sheffield. The subcontract required a final statement within one month after completion of the services. The parties later operated payment arrangements concerning tar-bound materials, although the proposed deed of variation was never signed.

Following an earlier Part 8 hearing, Deputy Judge Nissen determined certain issues, including that the subcontract had terminated and that the parties’ interim payment arrangements did not remove the defendant’s right to challenge interim payments. The remaining Part 7 proceedings concerned the effect of the tar arrangements, the date for submission of the final statement, the defendant’s breach, and proposed limits on further adjudications.

1. Final statement. The defendant was obliged to provide a composite final statement by 1 July 2018 and was in breach by failing to do so. The parties’ conduct did not create a contractual variation incorporating the draft deed of variation. The defendant’s deliberate refusal to sign the deed and repeated assertions that it was not bound by it made that analysis untenable.
2. The conduct did, however, give rise to an estoppel. The claimant was estopped from denying the defendant’s entitlement to the agreed tar-related payments and from requiring a final statement before those arrangements had run their course. The estoppel postponed the start of the contractual one-month period; it did not replace that period with a reasonable-time obligation. By June 2018 the relevant payments and calculations were complete, so the claimant’s letter of 1 June 2018 triggered the one-month period.
3. The audit provisions protected the claimant. They did not require the claimant to audit the defendant’s figures before the final statement could be submitted. The claimant’s June and July 2018 letters waived any such requirement.
4. Even if a reasonable period had applied, it had expired. The assessment was objective. The defendant’s decision to delay preparation while pursuing a possible commercial settlement, awaiting the Mosborough adjudication, or awaiting an audit was a calculated commercial choice and was not reasonable.
5. The court granted declarations that the final statement was due by 1 July 2018 and that the defendant could no longer make interim payment applications, while ensuring that an incorrect valuation methodology would not invalidate the final statement. It refused declarations that the defendant remained in breach or that a further reasonable period should be fixed, since those declarations would effectively rewrite the subcontract.
6. A blanket restriction on future adjudications was refused. Whether a reference is permissible depends on the particular payment and issues raised, and is best determined initially by the adjudicator. Eurocom Ltd v Siemens [2014] EWHC 3710 (TCC) concerned repeated adjudication of the same issue. Grove Development Ltd v S & T (UK) Ltd [2018] EWHC 123 (TCC), [2018] BLR 173, and the Court of Appeal decision [2018] EWCA Civ 2448, [2019] BLR 1 did not establish that every adjudication must be confined to true-value issues.

The judgment was a first-instance determination following an earlier Part 8 hearing before Deputy Judge Nissen. That earlier order determined certain issues and directed the remaining claims to proceed under Part 7. The present court determined the remaining declarations at trial.