Construction disputes inevitably take time to resolve and that can cause cash flow problems. However, as one High Court case showed, judges have the power to make interim compensation awards to those who have a cast-iron case.
The case concerned a 10-storey office block which began to be seriously affected by water ingress seven years after it was completed. Its developer faced having to spend over £2 million on remedial works and professional fees. It launched legal action against the contractor that had been employed to design and construct the building and had guaranteed the quality of its work by way of various warranties.
In granting the developer a £300,000 interim payment pending a trial of the action, the Court found that the contractor had no viable defence to aspects of the claim and that the developer was more than likely to win substantial damages. The interim payment represented a reasonable proportion of the likely sum that would be awarded to the developer in due course.
The contractor itself had the benefit of an indemnity from a subcontractor who had designed and installed the building’s glazing, curtain walling and cladding. In those circumstances, the subcontractor was ordered to make an interim payment to the contractor equal to the sum the contractor had to pay the developer.