Red cards for the CBUK team at Wembley Stadium Review of Multiplex v CBUK: High Court Ruling

At the start of the match Multiplex were the main contractors in charge of the construction of the multi million pound new Wembley football Stadium and CBUK were their former suppliers of the steel used in the construction of the £60M steelwork contract.  The game all went horribly wrong.  CBUK weren't being paid what they thought they should be by Multiplex and decided to down tools and walk off the pitch in August 2004.

Multiplex, revalued the company's work by deducting around £14 million from its account and refused to pay £1.25 million previously agreed for the lifting of the arch.  CBUK cried foul claiming Multiplex were in anticipatory breach of contract which, CBUK said, entitled them to cease play and seek damages, at once, from Multiplex.  

Multiplex maintained that they had acted lawfully throughout the duration of play.  Multiplex contended that it was CBUK who were in fact in breach of contract by abandoning the site in August 2004. Multiplex wanted damages too, at once, from CBUK.

The parties couldn't agree on who had won so they trotted off to court for a re-match.  There was a lot at stake for both teams.

If CBUK's version of events were accepted by the court then CBUK would be entitled to damages and legal costs of the action payable by Multiplex, however, if the court agreed with Multiplex then Multiplex would be entitled to damages and legal costs of the action would be payable by CBUK.  There was, therefore, no question of the parties reaching a draw in this match.  

After the court had delved into the contract and the long drawn out history of the works, on 5 June 2006, it was found that Multiplex had acted lawfully throughout play and that their actions had not amounted to a repudiatory breach of contract.  This finding mean't that it was CBUK who had been in repudiatory breach of its contract by walking off the site in August 2004.  

Red cards all round for the CBUK team.  Not only had CBUK lost the match but Multiplex was now able to claim damages of £3m from CBUK and CBUK's principal claims were found to be void.  The court also ordered CBUK to pay 80% of Multiplex's legal costs for the action so far.  An interim payment of £700,000 against costs was ordered as payable by CBUK to Multiplex within 14 days from the judgement.

The damages payable to Multiplex by CBUK will be settled by the court in January 2007, unless it is settled out of court by the parties.  On the basis of the finding on 5 June 2006, Multiplex will be able to claim around £20-£25m from CBUK.  This could be offset by a counterclaim of about £12m from CBUK.

This case highlights the very real dangers of getting it wrong in deciding whether a parties actions constitute a repudiatory breach.  Be careful when electing to treat another parties actions as a repudiatory breach as if you get it wrong you may find yourself being sent off the pitch with a red card and extensive damages and legal costs to pay to the opposing team !

If you would like any further information or advice on repudiation of contracts, or any other area of construction law, then please telephone Nigel Wood or Simon Thomas at the Wilkes Partnership on 0121 233 4333.