Grove Developments Ltd v S&T [Part 3]

[2018] EWHC 123 (TCC)

The final issue arose out of liquidated damages (“LADs”) notices served by Grove. Under clause 2.29.1.2 Grove was required to serve a notice stating that it “may” require payment or withholding of LADs. This was termed a “warning notice”. Clause 2.29.2 then provided for a second notice, termed the deduction notice, under which an employer “requires” the contractor to pay LADs and/or notes that that the employer “will” withhold or deduct liquidated damages. Here, the warning notice was sent by Grove to S&T on 18 April 2017. The metadata showed that it was sent at 17:01 and received at 17:03 by S&T. The deduction notice was sent on the same day. The metadata showed that it was sent immediately, the Judge stressed that this meant, seconds, after the warning notice.

There was no dispute that Grove sent, and S&T received, the warning and deduction notices pursuant in the correct sequence. The issue raised by S&T was that the deduction notice was invalid because they were not given time to read/understand/digest the warning notice. Mr Justice Coulson said that he had “some sympathy” with S&T’s complaint about the brevity of the interval. However, on analysis of the contract terms as a whole, he did believe that it is possible to say that what Grove did was contrary to the contract. Clause 2.29 does not have a specified period between the warning notice and the deduction notice. Mr Justice Coulson noted that this made commercial sense. In respect of the LADs, the warning notice can only be issued after the non-completion notice. So by the time the warning notice is issued, the delay has already occurred. Therefore provided the two sets of notices were served in the correct sequence and were received in the correct sequence, they cannot be said to be defective. That was the position here.

Decision upheld on appeal. See Issue 222.

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