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Walter Lilly seems to be flavour of the month in submissions

I don’t know if Mackay is to Scottish names what Smith is to English names, Jones is to Welsh names and Molloy is to Irish names, but it seems to have featured fairly regularly in the posts on this blog over the last year or so.

It was in July last year that we had Akenhead J’s seminal judgment in Walter Lilly v Mackay, which I discussed at the time. More recently, Jonathan considered Lord Malcolm’s judgment in the whisky distillery case, White and Mackay v Blyth & Blyth (same name, significantly different facts). It’s not just us either, as Alastair Walls has also considered both judgments and, more recently, James Ladner referred to prolongation claims.

But it’s not just a name that is appearing in blog posts and press articles (for example, I saw that Tony Bingham referred to the delay claim elements of the judgment in Building a few weeks ago). Reference to the judgment seems to crop up in just about every adjudication submission we receive at MCMS these days. I guess it’s all to do with the scope of Akenhead J’s judgment in Walter Lilly.

Quick reminder about the judgment in Walter Lilly

For those that don’t recall the details, in a nutshell Akenhead J held that Walter Lilly was:

  • Not liable for most of the issues associated with the major defects in the works. Things like the walnut veneer, the leather in the library, the courtyard sliding doors and the fancy light wall and suspended ceiling. After careful analysis of the facts, it was apparent that Walter Lilly had no design liability whatsoever for these items, and therefore it had no liability to Mr Mackay. This may not have been what the parties envisaged at the outset, when they started the project on a JCT Standard form of Building Contract, Private Without Quantities, with a Contractor’s Design Portion Supplement (and a bespoke schedule of amendments). However, perhaps someone should have realised problems may arise, since the contract stated the design of the works was not complete and the CDP was described as:

    “the work referred to… includes the construction of certain works as notified by the Employer to the Contractor in writing.”

  • Entitled to an extension of time for the whole of the delay to practical completion. In reaching this conclusion, the court drew a distinction between an architect’s  prospective assessment of a delay before practical completion and a court’s retrospective analysis following practical completion (this could also be substituted for an adjudicator, arbitrator or the architect). A number of authorities, including Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd and City Inn v Shepherd were considered as part of this analysis. The court followed Malmaison and reinforced its view that City Inn is not to be followed in England.
  • Owed significant sums by way of loss and expense, including head office overheads under the Emden formula. The court also concluded that the Walter Lilly’s claim was not a “global or total cost claim”.

Overall, Walter Lilly recovered damages in the region of £2.33 million plus interest, and its costs.

Given the scope of the issues covered, it’s perhaps no surprise that we see it referred to so regularly. I suspect it is unlikely to be a passing phase either, with Mr Mackay’s appeal application refused earlier this year, and substantial construction litigation a rare thing in the twenty-first century. At the time of the judgment, PLC wrote:

“The breadth, detail and analysis of the judgment means it will undoubtedly be referred to in future TCC litigation.”

We may not have reached that stage quite yet, but the day can’t be far away.

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