Almacantar (Centre Point) Ltd v Sir Robert McAlpine Ltd, Court of Appeal - Technology and Construction Court, February 21, 2018, [2018] EWHC 232 (TCC)

Resolution Date:February 21, 2018
Issuing Organization:Technology and Construction Court
Actores:Almacantar (Centre Point) Ltd v Sir Robert McAlpine Ltd
 
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Case No: HT-2017-000149

Neutral Citation Number: [2018] EWHC 232 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 21/02/2018

Before :

MRS JUSTICE JEFFORD DBE

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Between :

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Mr Stephen Dennison QC and Mr Peter Land (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant

Mr Sean Brannigan QC and Mr James Leabeater (instructed by MacFarlanes LLP) for the Defendant

Hearing date: 9th October 2017

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Judgment1. This dispute arises out of a project to redevelop the landmark Centre Point Tower and surrounding properties at the junction of New Oxford Street and Charing Cross Road. The project involves the redevelopment of these buildings, largely for residential use with some retail and other facilities, at a cost in excess of £100 million.

  1. The parties, Almacantar (Centre Point) Limited (``Almacantar''), the developer, and Sir Robert McAlpine (``SRM'') entered into a Pre-Construction Services Agreement (``the PCSA'') on 17 September 2012. In September 2014, the PCSA was terminated by consent. This dispute centres on SRM's right to further payment following that termination and in particular, and as I explain further below, to payment of the balance of 50% of the Fee under the PCSA.

  2. On 15 September 2015 SRM issued its application no. 25 claiming that amount, being £948,072.35 (plus VAT), and subsequently issued an invoice dated 19 February 2016, which Almacantar refused to pay. In April 2017 SRM then commenced an adjudication. The adjudicator's decision in June 2017 was in SRM's favour. I note that the amount awarded to SRM (and paid by Almacantar) included a small amount which did not form part of the 50% of the Fee and is not in issue in these proceedings.

  3. Almacantar then commenced these Part 8 proceedings seeking the following declarations:

    ``(1) On a true construction of the PCSA, McAlpine was only entitled to payment in respect of the balance of 50% of the Fee (as varied):

    (a) in the event that McAlpine and Almacantar entered a construction contract for the Project; and

    (b) on the occurrence of the first valuation following commencement on site under such contract.

    (2) As a result of McAlpine not entering a construction contract for the Project before the PCSA was terminated on 15 September 2014, McAlpine has no entitlement to the balance of 50% of the Fee awarded by the Adjudicator in the Decision.

    (3) The Decision was wrong and does not bind the parties.''

    Almacantar further claimed repayment of the sums paid to SRM plus interest.

    The PCSA

  4. It seems to me clear, and indeed largely uncontroversial, that the background to the entering into of the PCSA was as follows. Almacantar intended to procure the construction contract for the project using a two stage procedure. The first stage was to select a contractor to enter into the PCSA and on 16 November 2011 Almacantar issued an ``Invitation to Provide Pre-Construction Services Submission''. That sought ``a proposal to undertake pre-construction services ... with a view to agreeing a design and build construction contract subject to satisfactory agreement of terms.''. The Services identified were in due course incorporated into the PCSA. They included services under the headings Programme Preparation, Construction Advice, Cost Advice, Design and Procurement Services, etc. The Invitation sought amongst other things a fixed price lump sum for the provision of pre-construction services and various indicative percentage additions for overheads and profit (for example, on sub-contract tender sums and novated consultants' fees). The Invitation included the following statement:

    ``The Client will hold back 50% of the pre-construction fee which will ONLY be released at the first valuation subsequent to the signing of the main contract. The client reserves the right to abandon the project and will only be liable for costs up to the end of the month in which cancellation takes place.''

  5. The second stage involved the performance of the Services under the PCSA. In broad terms the nature of the PCSA was that it was an agreement under which the contractor would develop the Contractor's Proposals and identify a Contract Sum with the intention that the parties would then enter into a design and build contract on that basis. The recitals to the PCSA recorded that amongst other things (i) SRM was in receipt of a schedule of proposed amendments to the JCT Design and Build Contract 2011 edition which were still to be agreed between the parties and (ii) that overheads and profit were agreed at 3% to be applied to the net value of the sub-contract tender sums and novated consultants' fees but that the design development and pricing contingency percentage was still to be agreed.

  6. It is, however, common ground between the parties that neither of them was obliged to enter into such a contract or any contract.

  7. This scheme was reflected in the terms of the PCSA entered into on 17 September 2012. The terms of the PCSA are at the heart of this dispute and I set them out in some degree of detail below. I observe at the outset, however, that although the term of the PCSA ran initially to 30 June 2013 (clause 21), it was extended by agreement on three occasions to 31 December 2013, then to 31 March 2014, and then to 30 June 2014. As I understand it, although there was no detailed evidence about this, the Fee and the instalments (to which I refer below) were adjusted accordingly.

    Terms of the PCSA

  8. In the PCSA, Almacantar is referred to as the Employer and SRM as the Contractor. I set out below the terms of the PCSA that seem to me to be material to the argument. Passages underlined are my emphasis.

    (i) Recital (v)

    The Employer will hold back 50% of the pre-construction fee which will only be released at the first valuation subsequent to commencement on site under the main contract.

    (ii) Clause 1 Interpretation

    1.1 The provisions of the First Schedule - Part A, shall apply to the interpretation of this Agreement.

    (iii) Clause 2 Appointment

    2.1 The Employer engages the Contractor and the Contractor agrees to provide the Services subject to and in accordance with the provisions of this Agreement...

    (iv) Clause 3 Services

    3.1 The Contractor shall perform the Services in accordance with this Agreement.

    (v) Clause 5 Main Contract

    5.1 The Employer and the Contractor acknowledge that they have entered into negotiations to agree:

    5.1.1 the terms and conditions of the Main Contract (which, for the avoidance of doubt, do not at the date hereof include the documents referred to in clause 5.1A)

    5.1.2 the Programme.

    5.1A The Employer and the Contractor shall during the Pre-Construction Phase negotiate and endeavour to agree the contents of:

    5.1A.1 the Employer's Requirements; and

    5.1A.2 the Contractor's Proposals.

    5.1B The Employer and the Contractor acknowledge and agree that the appointments to be entered into by the Employer with the Design Consultants (as such term is defined in the Main Contract) shall be in the form or substantially the form set out in the Ninth Schedule.

    5.2 The obligation to negotiate and endeavour to agree the documents referred to in clause 5.1A shall be subject to clauses 5.5 and 16 and the Employer is not under any duty or obligation to enter into the Main Contract whether with the Contractor or any other entity.

    5.3 Without prejudice to the Employer's obligation to pay the Contractor in accordance with clause 12, the Contractor shall not be entitled to claim from the Employer in respect of expectation of contract or for any loss of profits, loss of contracts, loss of opportunity, tender or bid costs or any other compensation of whatsoever nature if for any reason whatsoever the Main Contract is not entered into with the Contractor .....

    ...

    5.5. The Employer shall have the right at its sole discretion and any time not to proceed with or to bring to an end negotiations with the Contractor for the award of the Main Contract or to decide not to enter into the Main Contract with the Contractor, whether or not negotiations have been concluded to their mutual satisfaction. In such circumstances, the Employer shall give the Contractor written notice of its decision and the engagement of the Contractor under this agreement shall thereupon terminate automatically subject to the provisions of clause 16. The Employer shall be entitled at its sole discretion to put the Main Contract out to competitive tender and/or to negotiate and/or enter into the Main Contract with another contractor or to proceed or not to proceed with the Project in whole or in part as it sees fit.

    .....

    5.7 The Employer may, at any time, within 30 days, following agreement of the Contract Sum, require the Contractor to enter into the Main Contract and the Contractor shall so enter into such contract.

    5.8 If at any time within 30 days following...

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