Leander Construction Limited v Mullaley and Company Limited

Case reference: 
[2011] EWHC 3449 (TCC)
Wednesday, 21 December 2011

Key terms: 
s111 – form of withholding notice

Leander was engaged pursuant to a subcontract to carry out groundworks, drainage, concrete framework and associated works for Mulalley. Mulalley issued withholding notices on the basis that Leander was obliged, but failed, to carry out the subcontract works in accordance with the programmed dates/periods in the Activity Schedule, which was one of the subcontract documents. It was accepted at the hearing that the dates in this Schedule were not contractually binding. However, Mulalley argued that Leander had an implied obligation to proceed regularly and diligently with the works and the Activity Schedule represented the best way to measure whether or not Leander complied with that term. The parties agreed that if there was no implied term, the withholding notices would be invalid. The Judge declined to imply a term into the subcontract that would oblige Leander to proceed with its works regularly and diligently. Although it was not necessary to do so, the Judge then considered the form of the withholding notices. The Judge emphasised that the Court had to take a pragmatic view. Although it was clear that the withholding notices were based on the untenable assumption that the Activity Schedule provided contractually binding dates, that did not mean that the same Schedule could not be a tool to measure the regular and diligent performance of the subcontract works, if there was such an implied obligation. Therefore, if there was an implied term, the Judge would not have ruled that the withholding notices were invalid.

Key contact

Tel: +44 (0)20 7421 1986
Tel: +44 (0)20 7421 1986