The Claimant, Almacantar (Centre Point) Limited (“Almacantar”), sought Part 8 declarations on the true construction of a Pre-Contract Services Agreement (“PCSA”), entitlement to the balance of a 50% pre-construction fee (“the fee”) as agreed between the Parties and a declaration that the Adjudicator’s Decision was wrong. Jefford J granted the first two declarations and held the third, regarding the Adjudicator’s Decision was unnecessary. 

The dispute evolved from a PCSA agreed between Almacantar and Sir Robert McAlpine Limited (“SRM”) relating to the redevelopment of the Centre Point Tower and surrounding properties. The intention, although as both parties acknowledged during proceedings not binding, was that the PCSA would be entered into for the purposes of developing the Contractor’s Proposals (along with a Contract Sum) and ultimately would result in both parties entering into a design and build contract on that basis. However, for reasons which are not relevant to the dispute, the PCSA was terminated by consent in September 2014. 

The issue, which had already been decided at adjudication, was whether SRM was entitled to keep the balance of the Fee which, under the payment terms, would “only be released at the first valuation subsequent to commencement on site under the main contract”. SRM’s position was that the Fee was payable when a main contractor was appointed- under the definitions that did not necessarily need to be SRM. The secondary argument was that the Fee was described as “lump sum” payable in instalments. Therefore, the intention of the PCSA was that the Fee would ultimately be paid. 

Almancantar, on the other hand, argued that termination under Clause 16 (the termination clause), although agreed, was clear that the further payment can only be a proportion of the next monthly instalment due and there was no further entitlement to the payment of the Fee. Moreover, it was subject to Clause 21 which noted that if the main contract was not entered into by 30 June 2013, then the Agreement was terminated in any event. The secondary position was that the Fee was only due on the first valuation of a main contract with SRM.

Jefford J gave great consideration to Clause 16 and held that the termination clause did apply, providing reasons at paragraph 36 of her judgment. She made reference to the termination of the Agreement itself under the cover of a letter dated 23 September 2014 which evoked Clause 21. The fact that neither party had raised the Fee was commercially sensible because the PCSA had been wound down and SRM had been paid everything they were owed. 

In relation to SRM’s position regarding the main contract, Jefford J held that the references to “main contract” were to a main contract with SRM despite the lack of definition. Bringing in “commercial reality”, Jefford J considered the purposes behind the PCSA which was ultimately to enter into a design and build contract.

This case highlights the need to ensure that terms are drafted with care, particularly when there are defined terms. The lack of “main contract” definition was something that Jefford J had to consider and ultimately impacted upon SRM’s ability to claim the remaining Fee. Likewise, when winding down the PCSA, if payment was the intention then this should have been considered by both Parties at that stage.