Makers UK, an insolvent arm of top 20 contractor Keller, is chasing more than £4 million from London’s Camden council in a bitter battle over a failed social housing contract.
The pair are set to do battle in the High Court in November with Camden – who launched the legal proceedings – claiming £1 million from the firm it claims repudiated the multi-million pound housing maintenance deal.
Mr Justice Akenhead said the council was essentially seeking “to establish that it lawfully terminated Makers’ employment under the contract and to recover the net sum of over £1 million said broadly to be due to it as a consequence of that termination”.
He added: “Makers by its counterclaim claims some £4 million of which only a relatively small part relates to the consequences of the repudiation; the bulk relates to the allegedly unpaid and uncertified sums for work done.”
The claims centre around a contract started between Camden and Makers in 2005 to carry out extensive refurbishment works at Whittington Estate, in Highgate.
The contractor had been on site for 18 months when, in July 2007, Camden claimed to have terminated Makers’ employment under the contract, which had an estimated value of £4.3 million.
Camden last month attempted to curb any onslaught from Makers – which last year had an adjudicator from the Royal Institute of British Architects rule it did not in fact repudiate – by requesting the High Court block all further claims from the contractor because of its financially unstable position.
However the High Court has thrown out Camden’s request and also put pressure on it to cough up money already owed to its former contractor under the litigation so far.
The pair’s already “strained” relationship has soured further with Camden refusing to pay the legal costs for last year’s adjudication, claiming any money it paid to Makers would be unrecoverable if a decision was in future found to be flawed.
While Mr Justice Akenhead accepted Makers was in dire financial shape, he said it was his understanding Keller would foot any costs that may need to be repaid to Camdenand told the court that “Makers has a real prospect of successfully defending the [High Court] claim”.
Makers ‘solvent’ when it won camden contract
Makers was “solvent and trading profitably” when it won Camden council’s contract for the Whittington Estate, court papers show.
High Court judge Mr Justice Akenhead said that, in September 2005, the company’s profits were about £400,000 and the capital value of the company was some £1.5 million.
Makers most recent financial results, from 2007, showed a trading loss of more than £8 million and a negative capital value of more than £10 million.
He said: “The currently available evidence overall clearly indicates that Makers is insolvent in the sense that it can not currently pay its debts as they fall due.
“It is taking no new work, Keller has removed any financial support or obligation to provide such support, its balance sheet position is dire and there is no obvious prospect of it ever, off its own bat, being able to pay back any sum which might be awarded due to it under a future adjudication decision.
“The [company’s] financial position is now wholly different to its financial position in 2005.”
However the judge accepted the company’s financial demise was not caused to the collapse of the Camden contract, and the money it was owed from that deal, alone.
He said: “There can be no doubt that Makers’ financial position is not on any count wholly attributable to Camden’s failure to pay those sums which might be awarded by an adjudicator in the future.”