Cases - Bath and North East Somerset District Council v Mowlem plc

Record details

Name

Bath and North East Somerset District Council v Mowlem plc

Date

[2004]

Citation

EWCA Civ 115

Keywords

Construction contract - civil procedure – liquidated damages provision - interim injunction – whether liquidated damages clause prevented application for interim injunction – whether applicant for interim injunction could rely on higher level of actual loss to show inadequate compensation if left to claim in damages

Summary

This case concerned the Bath Spa project and the failing paint finish to the pools. Bath and North East Somerset District Council ("BANES") blamed Mowlem for poor workmanship and Mowlem blamed BANES' consultants for poor design and specification. In these circumstances Mowlem refused to comply with an instruction to remove the paint under the defects provisions of the contract but offered to do so under the variation provisions. BANES therefore instructed others to do the work but Mowlem refused to give them access to the site.

BANES therefore applied for an interlocutory injunction to force Mowlem to give BANES' other contractor access to the site to undertake the works. This application would only be successful if BANES could persuade the judge that damages would be an inadequate remedy. Mowlem argued that if it was subsequently found that they were wrong not to comply with the instruction and that the works were delayed as a result that BANES would be able to recover liquidated damages for the period of delay. BANES argued that the liquidated damages for delay were less than their quantifiable actual loss arising out of the delay and took no account of other unquantifiable losses such as damage to reputation.

In their judgment the Court of Appeal recognised that in agreeing levels of liquidated damages the parties may deliberately have agreed to limit the financial loss recoverable. It was open for the parties to agree what they liked provided that it did not amount to a penalty.

Further the Court of Appeal confirmed that Mowlem is not entitled to breach its contract. The agreement on liquidated and ascertained damages is not an agreed price to permit Mowlem to do so, and does not preclude the court granting any other relief that may be appropriate.

Therefore, the Court concluded that an interlocutory injunction would be appropriate if liquidated and ascertained damages do not give rise to adequate compensation, so that to leave a party to a claim in damages may mean that it will suffer loss which the grant of an interlocutory injunction would completely avoid.