Case Law- Eco World – Valleymore Embassy Gardens Company Limited v Dobler UK Limited'

Eco World – Valleymore Embassy Gardens Company Limited v Dobler UK Limited [2021] EWHV 2207 (TCC) Judgment of the TCC 3 August 2021

The contractor has completed two blocks, and the employer has taken possession. Because the third block was delayed, the employer imposes Liquidated Damages (LD). There is no provision in the contract to reduce LD for the partial completion.

The contractor contended that the employer could not use the contract LD rate for the delayed third blocks, and that the employer should use the proportional LD rate for the delayed block.

* Should the LD be proportional and just apply to the third block? No, the contract LD rate shall apply. LD will apply until the contractor achieves Practical Completion for the whole contract.

* Is the amount an LD or a penalty (since it applies to all three blocks but not the third)? – The LD rate reflects the intention of the parties and is not a penalty.

There are no such issues with FIDIC contracts since FIDIC includes a clause that allows the LD to be proportionated in comparable circumstances. 

Red Book 1999- 18.2 – “…….If a Taking-Over Certificate has been issued for a part of the Works (other than a Section), the delay damages thereafter for completion of the remainder of the Works shall be reduced. ……”