Octoesse LLP v Trak Special Projects Ltd
Citation: [2016] EWHC 3180 (TCC)
Background Facts
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The project involved the construction of residential and retail units in Long Acre, London, under a JCT Intermediate Building Contract 2011.
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Original completion date: 22 September 2013 (likely meant to be 2014), later extended.
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Practical completion achieved: 13 February 2015.
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Certificate of non-completion issued: 3 October 2014.
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Further extension of time granted: 9 November 2015, cancelling prior non-completion certificate.
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After final certification, Octoesse issued a pay less notice deducting £89,250 in liquidated damages. Trak argued that the deduction was invalid because no valid certificate of non-completion existed after the extension of time, as required under clauses 2.22 and 2.23.
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Trak succeeded; the adjudicator ruled that the pay less notice was invalid, ordered Octoesse to pay £59,991.83 plus interest. Octoesse started Part 8 proceedings challenging the adjudicator's decision.
Judgment
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Clauses considered:
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Clause 2.22: Requires a certificate of non-completion if the contractor fails to finish by the completion date. If an extension of time is granted, this cancels any existing non-completion certificate.
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Clause 2.23: Allows deduction of liquidated damages only if a valid non-completion certificate exists.
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Key findings:
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The extension of time granted in November 2015 cancelled the prior certificate of non-completion.
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No new certificate of non-completion was issued after that extension.
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As a result, Octoesse was not entitled to deduct liquidated damages because the contractual preconditions were not satisfied.
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Outcome:
The court upheld the adjudicator’s decision and ordered Octoesse to pay the sums awarded. Octoesse’s request for declarations and to overturn the adjudication result was rejected.
General Principles Developed
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Strict compliance with contractual notice mechanisms:
Deduction of liquidated damages is only possible if all procedural and contractual preconditions (like a valid certificate of non-completion) are strictly met.
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Effect of extensions of time:
Granting an extension automatically cancels any existing non-completion certificate, reinforcing the requirement for precise and updated documentation.
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Mandatory interpretation of contractual "shall" provisions:
Courts interpret "shall" as imposing a strict obligation rather than discretionary compliance.
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Importance of accurate administrative steps:
The decision highlights that failure to reissue certificates after extensions can eliminate the right to liquidated damages, even if the contractor was previously in delay.