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ISG Retail Ltd (“ISG”) was (at the time of judgment) a main contractor, and FK Construction Ltd (“FK”). its roofing and cladding subcontractor under a subcontract in respect of Avonmouth, Bristol (the “Project”). These two parties that have been involved in a series of adjudications in respect of the Project, a number of which have resulted in proceedings in the courts. In this particular action ISG was the Claimant and FK the Defendant. It relates to a decision of Mr Matthew Molloy (the “Adjudicator”) dated 14 April 2023 (the “Decision”). ISG, under Part 8 of the Civil Procedure Rules, sought various declarations to the ultimate effect that an extension of time awarded to FK in the Decision be overturned.
The subcontract between ISG and FK was dated 28 September 2021 (the “Subcontract”). The terms of the Subcontract are not relevant to this case, save for clauses 9 and 20. Clause 9 of the Subcontract concerned progress and practical completion, and included a provision at clause 9(5) that entitled FK to a fair and reasonable extension of time if it is delayed by a number of specified circumstances, provided it has given written notice to ISG of the circumstance and the impact of the delay within 14 days. Clause 20 provided a means for FK to make a claim for its direct loss and/or expense by making a written application to ISG within 14 days.
In the course of the Project, FK gave notice of delays by way of a total of 106 Early Warning Notices (“EWNs”). In May 2022, FK lodged an application for an Extension of Time of 183 days. Following correspondence between the parties, ISG referred the valuation of FK’s works to adjudication. ISG argued that FK had failed to comply with clause 9(5), that this clause was a condition precedent, and that ISG had not waived the requirement to comply with it. In response, ISG argued that that it had issued EWNs which met the contractual notice requirements, that in any event ISG had waived its entitlement to rely on clause 9(5), and/or was estopped from doing so as ISG had failed to issue valid notices and instead responded substantively to the extension of time claim. In the Decision, the Adjudicator agreed that clause 9(5) was a condition precedent, but also found that FK had complied with it, and that FK was entitled to wait until the impact of the delaying events had finished to provide its analysis. On this basis, he awarded an extension of time of 188 days and prolongation costs of £198,000 to FK.
ISG brought Part 8 proceedings on 21 September 2023 for declarations: that Clause 9(5) was a condition precedent to FK’s entitlement to an extension of time; that FK’s EWNs did not satisfy the requirements of clause 9(5); that ISG did not waive and is not estopped relying upon its right to insist upon compliance with clause 9(5); that FK was therefore not entitled to the 188 day extension of time; and that the EWNs were not valid notices for the purpose of an Extension of Time claim. It argued at court that 9(5) was self-evidently a condition precedent, and that of the 106 EWNs issued by FK, only one complied with this clause.
FK argued that it was inappropriate, and risked being an abuse of process, to determine one aspect of this dispute in Part 8 proceedings, when the entire dispute had not been brought for final determination. As to clause 9(5), it argued that the 14 day time limit relied on by ISG in support of this being a condition precedent was “directory” as opposed to mandatory. It also argued that it had complied with clause 9(5) by way of EWNs, correspondence and/or discussion on site. It further argued that evidence of compliance with clause 9(5) and the effect of the EWNs on the recipient at the time were questions of fact.
The judge declined to make any determinations on the basis that he considered that the proceedings were not suitable for Part 8 determination, as there were likely to be substantial disputes of fact as to breach of clause 9(5) and whether ISG had waived its right to rely on any breach. On breach, he concluded that it was evident that there was regular and routine engagement on site between the parties, and accordingly a determination of breach was “likely to give rise to substantial disputes of fact as to whether and, if so, how notification was given other than by way of EWNs”. On waiver and estoppel, the judge concluded that FK had an arguable case with a real prospect of success. In respect of both of the above issues, he considered it necessary for both parties’ cases to be fully pleaded out for these to be capable of determination. He also declined to determine whether clause 9(5) was a condition precedent, as he considered there to be little purpose in determining this without also determining breach and waiver/estoppel.
This case highlights two points to be aware of at different stages of a project. Firstly, it emphasises the importance of understanding and taking steps to comply with the contractual notice requirements, in order to avoid ambiguity should a dispute arise. Further, it serves to remind parties that Part 8 proceedings are unsuitable for questions where there is likely to be a substantial dispute of fact, and it is worth interrogating one’s own case to be sure this is not the case.