The High Court has ruled that Kier must pay RG Carter for remedial work it agreed to carry out on a school in Boston, Lincolnshire.
Kier argued RG Carter’s demand for £205,908 was outside the two-year timeframe in which it was allowed to claim under the Limitations Act 1980.
RG Carter built a new science block for Boston Grammar School in Lincolnshire designed by Kier Business Services Limited (formerly Mouchel Business Services Limited), but problems with water ingress into the building later emerged.
The question of who should pay for the remedial work went to arbitration in December 2014.
RG Carter agreed to carry out external works at its own cost in June 2015, while the cost of internal works would be split with Kier.
Following the work being carried out, the firms entered a standstill period on 28 April 2017 while they discussed the settlement. This effectively stopped the two-year countdown.
RG Carter then started proceedings against Kier to claim the £205,908 on 20 September 2017.
In the case heard by deputy High Court judge Edward Pepperall in January this year, Kier argued that the two-year window had already shut before they entered the standstill on 28 April 2017, meaning RG Carter could not make its claim.
Kier claimed the countdown should start from the point when “an agreement in principle was reached”, which she said was on 16 April 2015.
RG Carter contended that while it had agreed in principle to carry out remedial works, the scope of these works – and crucially the cost – was not finalised until the agreement was signed on 29 June 2015.
RG Carter argued that the countdown should start from 29 June 2015, which would put the start of the standstill date of 28 April 2017 well within the two-year window.
In a judgement handed down last Thursday, the court found in favour of RG Carter.
He said an agreement to carry out work and an agreement on the cost were distinct stages of the agreement, not a matter of working out “fine details”, as Kier had argued.
Mr Pepperall added that the negotiations in April were “subject to contract” and that the two firms were not bound to carry out the work until the formal written agreement was signed on 29 June 2015.
“The contribution claim was therefore brought in time and the limitation defence fails,” he said.
Kier has been contacted for comment. RG Carter declined to comment.