Thomas Barnes & Sons Plc (in administration) v Blackburn with Darwen Borough Council

In a construction contract dispute, a contractor may obtain an extension of time for delay caused by an employer-risk event even where another concurrent cause is the contractor’s responsibility. Recovery of prolongation costs may nevertheless fail where the contract requires a loss to satisfy a “but for” test or excludes costs caused by contractor default.

A contractual termination notice must comply with mandatory service provisions where the contract so requires. An ineffective notice does not necessarily amount to repudiation if the employer was substantively entitled to terminate, the contractor knew of the intended termination, and the premature exclusion caused no material adverse impact. A contractor’s serious unwillingness or inability to proceed regularly and diligently may justify contractual termination and acceptance of repudiatory breach.

The claimant contractor sought payment under a JCT building contract and damages for wrongful termination after the defendant employer removed it from a bus-station project on 4 June 2015. The claims included valuation of work, extension of time, prolongation costs and loss of profit.

The employer alleged serious contractor defaults, including delay, failure to proceed regularly and diligently, substantial suspension of the works, and failure to manage and pay subcontractors. It relied on contractual termination provisions and, alternatively, acceptance of repudiatory breach.

The principal issues were the claimant’s entitlement to extensions of time and prolongation, whether the employer was entitled to terminate or accept repudiatory breach, whether the termination notice complied with the contractual service provisions, and the consequences for the claimant’s final account.

1. Extension of time and concurrent delay. The claimant was entitled to an additional 119 days’ extension of time, producing a revised completion date of 10 August 2015. Delay to remedial works for the hub steelwork and delay to roof coverings were concurrent causes of delay to the critical path. Under the applicable contractual provisions, the claimant was entitled to an extension of time because the employer-risk event was an effective cause of delay. However, it was entitled to prolongation costs for only 27 days because the concurrent period was also affected by contractor-responsible delay and clause 2.29A excluded costs caused by contractor default (paras [140]-[148], [157]).
2. Delay analysis. The court was not required to select mechanically between competing expert methodologies. The ultimate question was what delayed the works and for how long. The SCL Protocol supplied guidance rather than a statement of law, and substantial deviation from a selected method was relevant only to the weight of the expert evidence where the method was inappropriate or the deviation unexplained (paras [109]-[115]).
3. Contractor default. By 4 June 2015 the claimant was in serious and significant breach. It had failed to proceed regularly and diligently, had substantially suspended meaningful activity, and had made clear that it would not proceed without an unjustified extension of time and a commitment to fund acceleration. Those breaches entitled the employer to terminate under clause 8.4 and to accept repudiatory breach (paras [201], [207]-[218]).
4. Service of termination notice. Clause 1.7.4 required service at the claimant’s registered office by hand or recorded or special delivery post. The employer’s earlier delivery by email and at the site did not comply, and the contractual termination was therefore initially ineffective. The contractual requirement was mandatory, and any non-trivial departure invalidated the notice (paras [231]-[242]).
5. Repudiation and premature exclusion. The ineffective service and removal from site did not constitute repudiation. The employer was substantively entitled to terminate, the claimant knew of the decision and intended contractual service, and removal approximately two working days early caused no material adverse impact. The employer’s later recorded-delivery notice took effect when deemed served (paras [243]-[259]).
6. Consequences. Whether characterised as contractual termination or acceptance of repudiatory breach, the employer’s properly incurred completion costs would extinguish any amount the claimant might establish on its final account. The claim therefore failed, and the court did not undertake the disproportionate and unnecessary quantum assessment (paras [260]-[278]).