Jerram Falkus Construction Ltd v Fenice

Jerram Falkus Construction Ltd v Fenice Investments Inc

Citation: [2011] EWHC 1935 (TCC)

Background Facts

Jerram Falkus Construction Ltd (JFC) a contractor and Fenice Investments Inc, an employer entered into a contract regarding a development at 150 Loudoun Road, London. The contract was a JCT Design and Build Contract 2005 with amendments.
Contractual completion date extended to 15 June 2009, actual completion was 9 September 2009 (86 days late).
Fenice claimed liquidated damages for delay.
JFC argued delays were due to Fenice’s acts of prevention, setting time at large and removing Fenice’s entitlement to liquidated damages. JFC also claimed loss and expense.
A prior adjudication decision (the third adjudication) had rejected JFC’s prevention arguments.
JFC also claimed a final account balance of £311,393.78, arguing Fenice had failed to challenge it properly.

Conclusive effect of adjudication:
- The third adjudication decision, which rejected JFC’s prevention arguments, had not been challenged within 28 days and was therefore conclusive per clause 1.9.4 of the contract.
- JFC was barred from re-litigating those prevention and extension of time arguments.

Final account conclusivity:
- Fenice's detailed challenge letter dated 24 January 2011 prevented JFC's final account from becoming conclusive.
- The final account could therefore still be contested in court, and JFC's argument for automatic payment of the claimed balance failed.

Delay and prevention arguments:
- Delays were caused primarily by JFC’s own failures (e.g., design errors, delayed preparation for statutory undertakers, levels problem in houses).
- Fenice did not act in a way that triggered the prevention principle; no acts prevented JFC from timely completion.

Liquidated damages:
- Fenice entitled to recover liquidated damages of £209,840 gross (£122,102 net).

Alleged oral agreement to reduce LADs:
- Court found no binding agreement to discount liquidated damages.

Conclusive adjudication decisions:
- An adjudicator’s decision becomes conclusive if not challenged in arbitration or litigation within the contractually required timeframe.

Effect of prevention principle and concurrency:
- Prevention principle only applies if employer’s act alone caused delay that prevented completion.
- Concurrent delays for which the contractor is responsible negate prevention claims.

Conclusive effect of final account statements:
- Employer’s detailed and timely challenge prevents a contractor’s final account from becoming conclusive under JCT terms.
- "Conclusive" means final settlement on items unless properly disputed.

Interpretation of contract provisions:
- Courts take a practical, commercially sensible approach to interpretation, avoiding artificial or rigid readings that frustrate contract purpose.

Approach to delay analysis:
- Courts require careful factual analysis to allocate responsibility for delays and resist broad assertions of prevention without clear causative evidence.

Settlement and partial agreements:
- Informal or "without prejudice" discussions cannot constitute binding variation of LAD provisions without clear agreement on essential terms.