A technical services company has lost an appeal in the Scottish courts over costs from a development delayed by Covid.
FES lost an appeal to the Court of Session over attempts to recoup the costs of delays to its work fitting out 177 Bothwell Street, the largest office building in Glasgow.
The dispute over £1.8m was between FES and developer HFD Construction. The case, which centred on a claimed lack of notification of delays, had been ongoing since 2022.
The case was a question of contractual interpretation of clauses based on the Standard Building Contract with Quantities for use in Scotland.
FES argued that a contract clause meant the firm could be reimbursed for related loss and expenses and moved to adjudication after experiencing delays.
The court decided there was no ambiguity in the clause over notification and that the firm had a duty to ensure other parties were “notified and advised” of potential liability within a limited (but not certain) time span. FES had not done this, the court decided.
FES began work on the 29,000 square metre 13-storey building in 2020 and was delayed due to issues including Scotland’s shutdown of construction due to the Covid pandemic.
The contract for the project included a clause stating that the contractor had to notify the architect or contract administrator as soon as a delay became reasonably apparent.
The clause said it should come with the contractor’s initial assessment of the loss or expense incurred as soon as is reasonably practicable.
The wording of the clauses is the same as appear in the JCT standard contract.
Lawyers for the firm argued at the Inner House of the Court of Session that the clause was not a “condition precedent” of it being paid for the extra costs, i.e. an obligation that only comes into force if other conditions are met.
They argued that the standard JCT contract the clauses are based on come with guidance stating that the terms are not meant to be considered “conditions precedent” for any entitlement for loss or expense. They also said the term “condition precedent” was directly used elsewhere in the contract but not in the clause in question.
Both the trigger and time limit for giving notice were also “imprecise and uncertain”, they added.
HFD’s lawyers said the clause was there to prevent prejudice to a client and prevent a contractor from “gaining an advantage” by submitting claims through a process other than by the agreed procedure.
Lord Carloway, Lord President of the Court of Session, said the clause contained the phrase “subject to… compliance with the provisions of [the] clause…” and that he could not ignore those words to find in favour of FES.
“The question posed to the court is in the accepted context of there having been no notification,” he added.
In his judgement, given in late October, he said that as there was no ambiguity in the wording of the clause over notification, there was no need to analyse other elements of the contract.
An adjudicator and commercial court had both found in favour of HFD earlier in the dispute.
The court refused the reclaiming motion and adhered to the decision of the commercial judge.
