Cases - Reinwood Ltd v L Brown & Sons
Record details
- Name
- Reinwood Ltd v L Brown & Sons
- Date
- [2008]
- Citation
- UKHL 12
- Legislation
- Keywords
- Contract - termination - non payment of a sum due under an interim certificate - notice of termination - whether the contractor had given the notice of termination unreasonably or vexatiously - JCT Standard Form (1998 Edn)
- Summary
-
The defendant contractor left the site having purported to determine the contract under clause 28.2.4 of the JCT Standard Form 1998, on the basis that the claimant employer had failing to pay a sum due under an interim certificate, and thereby had repeated a specified default under clause 28.1.1.1. The notice was served 7 days after the money had been due, and the money was in fact paid the day after the notice was served. The claimant claimed that the delay in payment had been caused by an administrative error. Six months earlier, there had been one previous default by the claimant, in relation to which the defendant had served an initial notice of default.
Having found the notices to be valid, the Court held that it was for the claimant to show that the contractor had determined the contract unreasonably or vexatiously, that latter term meaning with the motive being to oppress, harass or annoy the employer. This was an objective test, in that the fact that the individual contractor may have thought that his conduct in determining the contract was reasonable is not conclusive. The answer was to be ascertained by reference to the acts of a reasonable contractor, given all the circumstances which could include having regard to the contractor's own commercial interests, and whether the determination would have a disproportionate effect on the employer.
The circumstances considered by the Court included the fact that delay in payment had been caused by the claimant's own failure or incompetence, difficulties the defendant had experienced with a special purpose vehicle similar to the claimant company within the same group on another contract, and the manner in which the defendant's claims for loss and expense, allowed in earlier valuations, were then being valued downwards or disallowed in their entirety. The Court held that the defendant had acted neither vexatiously nor unreasonably.