Getting your money back

3 December, 2015

A recent TCC case (William Clark Partnership v Dock Street PCT) has highlighted the difficulties in pursuing claims against construction professionals for breach of contract but has opened the door for the potential use of abatement in certain circumstances. 

William Clark Partnership (WCP) claimed against Dock Street (DS) to recover the balance of fees due for providing quantity surveying and project management services relating to the construction of a healthcare centre.  In return, DS counter-claimed against WCP for a cost-overrun of £733,394 and argued that the fees due to WCP should be abated or reduced to account for poor performance.

On the facts, the court found that WCP’s performance had been “seriously deficient”, particularly in relation to cost reporting which was “virtually non-existent”.  However, DS failed to establish that WCP’s failings had directly caused the overrun. The claims for breach of contract and negligence therefore failed.  Claims like these can often fail due to the difficulty in showing how things would have turned out differently if the professional had not acted negligently and DS failed to prove here that no substantial part of the overrun would have been incurred in any event. 

DS had some success with its defence of abatement though.  This defence operates by reducing the price payable for goods or services on account of defective performance of a contract and does not require proof of loss caused by a breach.  Whilst abatement does not usually apply to professional services contracts, the court held there to be an exception where the services (or distinct elements) have not been performed or performed so badly as to be worthless.  The court had to consider what (if any) distinct elements of the professional service fell into this category and decided that only one (the obligation to provide regular costs reports) did.  The court made a deduction from the claim for unpaid fees based on the time that would otherwise have been spent on producing these reports. 

The case is interesting due to the court’s acceptance of the abatement argument which may be useful in circumstances where a party may otherwise struggle to establish causation in a breach of contract claim.  However, the threshold for the argument to succeed is still very high and will only be applicable in limited circumstances.

By James Lee, Managing Associate