Ubhi Construction Limited v Aspire Enterprises (UK) Limited

An executed construction contract is not ordinarily treated as conditional on funding where the contract contains no such condition and the contemporaneous evidence does not establish one. The court may infer contractual intention from the agreement, the parties’ correspondence and their conduct. Damages for breach must compensate the claimant without double recovery. Recoverable loss may include reasonably established preparatory expenditure and proved lost profit, but a separate standstill claim cannot duplicate the same lost profit.

The claimant contractor alleged that it had entered into a JCT contract with the defendant for the construction of fourteen houses at Willenhall. The defendant denied that its associated individual had signed the contract and alternatively contended that any contract was conditional upon the defendant obtaining development funding.

The claimant sought payment of plant and equipment hire charges, standstill charges and damages for lost profit after the defendant engaged another contractor. The issues were whether the contract had been signed, whether it was conditional on funding, and what losses were recoverable.

1. Formation and signature. The court preferred the claimant’s witnesses and the contemporaneous documents. The associated individual had signed the JCT contract on 19 August 2016. Although he was not formally a director at that date, the defendant accepted that the contract would bind it if he had signed it.
2. Funding condition. The contract was not conditional on funding. It was an executed JCT contract and contained no express funding condition. No contemporaneous document recorded such a condition. Treating the contract as conditional would leave the claimant without meaningful protection and would lack commercial common sense. The parties’ subsequent discussions about varying or replacing the contract to satisfy funders did not make the existing contract conditional or unenforceable.
3. Hire charges and standstill charges. The claimant could recover the reasonable plant, fencing and related hire charges incurred to clear the site and remain ready to perform the contract. The standstill charges were not contractually payable and represented lost profit in substance. Awarding both would result in double recovery, so those charges were disallowed.
4. Lost profit. The claimant proved that its contract price included a 20% profit margin. The evidence, including the substantially lower price charged by the replacement contractor for the same work, supported that assessment. The court awarded lost profit of £279,675.
5. Disposition. Judgment was entered for the claimant in £307,115, comprising £27,440 for hire charges and £279,675 for lost profit.