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Contractual damages: A game of two halves

A dispute over improvement work at Yeovil Town FC went to the Court of Appeal after it kicked off in 2013.

In a bid to out-pundit Gary Lineker and co, the Court of Appeal has just decided that “Yeovil Town is a successful professional football club”.

With this success, however, come the trials and tribulations of disputes.

In the recent case of Gartell & Son v Yeovil Town Football & Athletic Club Ltd [2016] EWCA Civ 62, the court looked at the application of the principle that contractual damages are intended to put the innocent party in the position it would have been in if the contract had been properly performed.

Grounds for dispute

Yeovil employed Gartell to carry out improvement works to its football pitches. The works were defective and ultimately put the pitches into a worse condition.

The club refused to pay for the work, and defended a claim by Gartell on the basis that there had been a ‘total failure of consideration’. Yeovil also counterclaimed the cost of employing another contractor to carry out remedial works.

The trial judge found there had indeed been a total failure of consideration and further found for Yeovil on its counterclaim.

In assessing the level of damages, on the plus side was the remedial work but, on the basis that there had been a total failure of consideration, the court did not net off the Gartell contract price.

Score draw

The Court of Appeal upheld the finding that there had been a total failure of consideration despite Gartell having provided labour and materials.

The fact was that no part of the contractually agreed performance had been delivered, and so Yeovil were discharged from having to pay Gartell.

“The case illustrates how an overly ‘lawyerly’ approach can sometimes lead one off the path of common sense. If it does not feel right then, more often than not, it isn’t”

However, Yeovil could not insist Gartell also pay the full cost of the remedial works. The only damages available were the additional costs Yeovil had incurred beyond the sums it would have paid had Gartell done the job properly, amounting to just £335.

Final whistle

The decision must be correct, otherwise Yeovil would have got the work done to its pitches for free.

It illustrates how an overly ‘lawyerly’ approach can sometimes lead one off the path of common sense. If it does not feel right then, more often than not, it isn’t.

The court’s finding of a total failure of consideration potentially allows employers to avoid making any payment where the works are fundamentally defective, even in circumstances where lots of work have in fact been undertaken.

However, this is of limited benefit to an employer who still requires the original works to be carried out.

Given these proceedings kicked off in 2013 and three years later turned up at the Court of Appeal concerning an amount of just £335, it shows that something has gone horribly wrong with the process for both parties.

Yeovil’s transfer kitty has certainly not been filled.

Steven Carey is a partner in the real estate, construction and engineering team, and Chris Busaileh is an associate in the construction, engineering and projects team, at Charles Russell Speechlys

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