The Claimant, Mansion Place Limited (“MPL”), is a property developer who was doing an extension and refurbishment of student accommodation at Hockley Point in Nottingham, (the “Works”). The Defendant, Fox Industrial Services Limited (“Fox”), is a construction contractor. 

Fox was engaged in February 2020 to perform the Works pursuant to an amended form of the JCT Design and Build Contract (2016 edition) (“the Contract”). Performance of the works was delayed from the outset and the parties differed as to the cause of delays. Fox put forward this was due to issues in relation to the Covid-19 Pandemic and because MPL failed to give timely possession of the site and clear it of students. MPL contended delay was due to Fox’s failure to commit sufficient labour and resources to the Works. On 22 October 2020, Fox served an Interim Payment Application and on 13 November 2020, MPL served a Pay Less Notice and several notices of intention to deduct liquidated and ascertained damages (“LADs”). Fox consequently referred the dispute to adjudication. The issues before the court were (1) was the conversation held on 14 October 2020 legally binding as had been determined by the adjudicatior and (2) if the conversation was not binding, was MPL stopped from seeking LADs.

On or around the same time as the above,  there was a telephone conversation between the Managing Director of Fox and a director of MPL. The contents of the call are disputed. Fox argued MPL agreed to forego any entitlement to LADs in return for Fox foregoing the right to claim payment for loss and expense because of delay. MPL disagreed. On 11 January 2021, the adjudicator decided the conversation had resulted in a binding agreement and the amount certified in the Interim Payment Application of £367,103.44, was due plus interest. 

On 29 September 2020, MPL sent a notice of non-completion in respect of Section 2 of the Works. Fox responded on 02 October 2020 reiterating its claim to be entitled to an extension of time and compensation for the delay. Further non-completion notices were sent on 06 October 2020 and then, the above conversation took place. 

Following this decision, MPL commenced proceedings for relief on the basis there was no agreement from the call. Fox counterclaimed seeking declarations giving effect to its interpretations of the dealings of the conversation and of the parties’ rights under the Contract. 

The Judge, in considering the validity of the agreement reached on the telephone concluded that he was satisfied that, despite the differing evidence, each man was seeking to give his honest recollection of what had been said. This was formed, in part, by the demeanour of the witnesses in the witness box. He considered their evidence through the “prism of the contemporaneous documents; of their subsequent actions…” which meant that the Judge considered the conduct of the parties after the call. For MPL, these factors were (i) Mr. Ramanathan instigated the call to encourage Fox to complete the Work while bypassing the legal stances regarding the delay; (ii)  MPL continued to prepare its claim for LADs and (iii) there were internal MPL documents which showed concern that Fox would potentially leave the site or deliberately delay the works and the dropping of the LAD claim could be commercially a sensible move. 

Fox, on the other hand, relied upon (i) the “gentleman’s agreement” which was reached on the phone; an email shortly after the call which referred to MPL being “good to their word” and an email of 09 November 2020 which prepared a response to MPL’s letter. Whilst the email of 09 November 2020 was an internal email, the Judge was satisfied that this reflected a genuine understanding of the conversation which took place. 

As for the additional arguments run by Fox, Justice Eyre reviewed each in turn. Firstly, following consideration of the Contract, the proper interpretation for serving a Non-Completion Notice provides for Completion Date to remain as defined with the consequences which follow from failure to complete the works by that date until a new Completion Date is actually fixed. Consequently, MPL was not precluded from serving a Non-Completion Notice and would have been able to claim LADs. Regarding the second point, whether the LADs clause was inoperable, the Judge followed the current case law and relied on Fox’s negotiations with MPL on this clause, noting there was commercial understanding between the two parties.  Therefore, Justice Eyre decided that the provision would not have been struck out. As for if the clause was inoperable, Justice Eyre decided the LADs was operable because the clause operated by applying a specific calculation regarding how LADs would be paid and the amount of reduction that would be applied. 

This case is an important reminder that witness evidence is important- particularly in the context of oral conversations. In doing so, the court will consider the contemporary actions of the parties following the call and how this compares to evidence produced at trial. Therefore, the case is a reminder , to review their recording procedures and ensure, as a matter of good business practice, detailed notes are drafted following inter-party discussions.