MALLINO DEVELOPMENT LIMITED v ESSEX DEMOLITION CONTRACTORS LIMITED

MALLINO DEVELOPMENT LIMITED v ESSEX DEMOLITION CONTRACTORS LIMITED

Mallino breached clause 2 of the Variation Contract by failing to re-tender Section 3 Works including EDC. The minimum contractual obligation principle does not apply because the contract imposed a mandatory obligation to re-tender. EDC had a real and substantial chance of being awarded Section 3 Works, and damages should be assessed based on the likelihood of contract award, not the minimum obligation. EDC is entitled to damages reflecting a 66% chance of success, calculated on the proven quantum of lost profit and overhead contribution.

Parties
Appellant/claimant: Mallino Development Limited; Respondent/defendant: Essex Demolition Contractors Limited
Jurisdiction
England and Wales
Judgment Date
10 June 2022
Procedural Posture
Civil / Final Judgment After Trial
Outcome
EDC’s counterclaim succeeds in part; damages awarded.
Legal Topics
Breach of Contract, Damages, Loss of Chance, Tender Process, Variation Contract, Overhead and Profit Contribution
Contract Law Construction Law Breach of Contract Damages Loss of Chance Tender Process Variation Contract Overhead and Profit Contribution

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Parties

Mallino Development Limited

Appellant/claimant

Essex Demolition Contractors Limited

Respondent/defendant

Procedural Posture

Civil / Final Judgment After Trial

Legal Issues

  1. 1 Is EDC entitled to recover profit/fixed overhead contribution for works it may have secured as a result of a successful tender for section 3 of the Works?
  2. 2 What are the principles by which EDC’s entitlement to recover lost profits and/or loss of overheads contribution in respect of the Section 3 Works are to be measured?
  3. 3 Is the correct measure of loss to assess the minimum contractual obligation available to Mallino?

Ratio Decidendi

Mallino breached clause 2 of the Variation Contract by failing to re-tender Section 3 Works including EDC. The minimum contractual obligation principle does not apply because the contract imposed a mandatory obligation to re-tender. EDC had a real and substantial chance of being awarded Section 3 Works, and damages should be assessed based on the likelihood of contract award, not the minimum obligation. EDC is entitled to damages reflecting a 66% chance of success, calculated on the proven quantum of lost profit and overhead contribution.

Court Disposition

EDC’s counterclaim succeeds in part; damages awarded.

Orders

  • EDC awarded damages assessed at 66% of £321,391.71, being £212,118.53.
  • Further hearing to be fixed on interest, costs, and treatment of sums paid pursuant to Second Adjudication Decision.