Judge blasts "smash and grab raid" on Freedom Church

Tuesday 05 May 2020

A Jersey judge has blasted a construction company for attempting a "smash and grab raid" on the Freedom Church, as he ruled the religious group shouldn't be overcharged £280k for work on the old Odeon cinema.

The comments came in the judgment of Master of the Royal Court, Advocate Matthew Thompson, as he ruled against Ductclean (UK) Limited in a dispute over contract costs.

The Freedom Church, which is a corporate body of a Christian charity, had agreed on a fixed price contract for £1.24m with Ductclean in June 2018.

But in July 2019, the building company, having already been paid just over a million, sought a further interim payment of £448,797, which would have brought the total to £1.52m. 

The architect/contractor Freedom Church had hired - Richard Gilpin of GDG Limited – refused to pay up.

Pictured: Ductclean (UK) Limited was hired by the Freedom Church to carry out building work on the old Odeon cinema site.

In addition to sharing “extensive criticism” of the company’s performance in a five-page email, Mr Gilpin said that Ductclean had never mention any sort of cost variation during the 14 months of the contract.

He also referred to defective workmanship and significant overruns.

Ductclean then took the case to Royal Institution of Chartered Surveyors for an adjudicator to be appointed.  

The adjudicator eventually ruled in favour of the building company, noting that Mr Gilpin’s email could not be taken as a ‘pay-less’ notice, as it failed to mention how much the Freedom Church was prepared to pay out of the sum Ductclean claimed. 

However, Jersey's Royal Court declined to give legal effect to the adjudicator's ruling.

Pictured: DCUK has lost its bid to have the Freedom Church pay up £279,620 on top of the £1.24million contract price.

Advocate Jeremy Garrood, representing Ductclean, argued that both parties had agreed to resolve disputes through adjudication.

However, Advocate Jeremy Heywood, for the Freedom Church, said the adjudicator’s decision should not be enforced as he had failed to take into account certain matters, leading to a “substantial breach of natural justice”. 

In his judgment, Advocate Thompson described the case as “a smash and grab raid”. “This was particularly so in this case because a fixed price had been agreed of £1,240,000,” he wrote.

“There had been no variations approved by the defendant through its architect which was the only way in which variations to price could occur. What the plaintiff was seeking was a payment significantly in excess of the contractual sum.  

“This allowed me to be cautious where there was a valid counterclaim raised by the defendant. What was therefore taking place in this case was the plaintiff as the contractor putting undue pressure on the defendant as the employer under the Contract.”

Pictured: The Freedom Church had agreed on a fixed price contract for £1.24million with Ductclean (UK) Limited in June 2018.

The Master of the Royal court eventually concluded the adjudicator “had fallen into error” by disregarding the fact the contract was a fixed price one and so no money was due in excess of the agreed contract price of £1.24m.

“The flaw in [Ductclean's] argument is that it is entitled to be paid for carrying out work even where the price claimed for such work goes beyond the terms of the contract agreed between the parties namely a fixed price,” he wrote. 

“When the plaintiff entered into the Contract with the defendant, it knew it had agreed a fixed price contract. It had therefore decided to accept a commercial risk that in performing the Contract the plaintiff might suffer a loss.”

Advocate Thompson therefore concluded that Ductclean should not be entitled to enforce the full award suggested by the adjudicator’s decision, which would have led Freedom Church to pay 21.73% more than the contract price. He said the decision should only be enforced to the agreed fixed price of £1.24m. 

Pictured: Advocate Thompson concluded Ductclean should only be paid £168,909. 

With the agreed 5% retention, the total owed was £1.17m, the Master of the Royal Court wrote, adding that, with around £1m having already been paid, the remaining balance was £168,909. 

He concluded: “I do not consider in view of the guarantee of the parent company that there is any prejudice to the defendant in the plaintiff requiring payment at this stage.”