Mace Construct Limited v Baltic Investment Holdings Limited

In these Part 8 proceedings, the Claimant (Mace) seeks declarations as to the proper construction of a contract (the Contract) for the refurbishment (the Works) of the Baltic Exchange Building, 38 St Mary Axe, London (the Building). The Defendant (Baltic) is the Employer under the Contract.

The Contract was dated 15 December 2023, was on an amended JCT Design and Build Contract 2016 form and incorporated the Employer’s Requirements

The parties are in dispute over a range of matters, but, by way of background to the present proceedings it is relevant to note that on 24th December 2024, the Employer’s Agent granted extensions of time totalling 7 weeks and 5 days under various clauses of the Contract in relation to three events, two of which were the subject of claims by Mace for extensions of time. This was on the basis that the delays resulted from changes to the design contained in the Employer’s Requirements and/or the need to obtain further planning approvals and listed building consents, none of which was held to be within the scope of Mace’s contractual responsibility.

Baltic challenged this grant of extensions of time in an adjudication. The decision of Mr Nigel Davies (the Adjudicator) was dated 29 August 2025 and corrected on 2nd September 2025 (the Decision). The Adjudicator concluded that the extension granted on 24 December 2024 was not binding on him, and he reviewed and revised it in the light of his findings so as to reduce it to zero.

Mace do not, as I understand it, agree with a great deal of what the Adjudicator decided, both legally and factually. However, for present purposes, Mace simply invite the Court to grant the declaratory relief discussed below.

Likewise, Baltic are substantially at odds with Mace on numerous factual matters, some of which have been rehearsed in the evidence submitted in the present proceedings. However, Ms Stephens KC, who appears for Baltic, accepted that these were proper Part 8 proceedings and that it was not necessary to delve into the disputed facts in order to resolve the issues relevant to the declarations.

Against that brief background, I propose to deal with the matters as follows:

The parties were in agreement as to the relevant principles of contractual interpretation. These were summarised as follows in Mace’s skeleton argument, and I shall proceed on that basis:

As to propositions 3 and 4, I would emphasise what Sir Kim Lewison says at para 7.24 as follows:

These matters can be dealt with shortly.

Mace seek the following declarations:

It is now common ground that the Tender Clarifications and the Schedule of Derogations have been incorporated into the Contract. Mace therefore invite the Court to so declare.

Ms Stephens KC resists the grant of such relief on the basis that it is unnecessary, there being no dispute that these documents were indeed incorporated into the Contract. As to this Mr Streatfeild-James KC, who appears for Mace, observes that Baltic has consistently maintained during the adjudication that the Schedule of Derogations was not incorporated into the Contract. The Adjudicator extended this argument to the Tender Clarifications. He submits, and I agree, that determination of the documents which formed part of the Contract is the obvious starting point for any consideration of the rights of the parties.

I would therefore grant declarations 1 and 2 as asked.

Mace seek the following declarations:

It is immediately apparent that these declarations are concerned with the limits, if any, of Mace’s responsibilities in relation to design.

The following aspects of design responsibility appeared uncontroversial:

It was also common ground that, for a short initial period, Mace’s obligations were further defined and limited as follows:

Ms Stephens KC submitted, and I agree, that this arrangement was similar to the issue of a Letter of Intent, with limited obligations on each side. This arrangement was concerned with “the Initial Scope of Works”, defined in the Schedule of Amendments as “the site setup and establishment by the Contractor, completion of the design associated with the activities outlined within the Derogations Programme_V3, undertaking of surveys as listed within the pricing schedule and associated preliminary spend.”

Ms Stephens KC accepted, as I understood her submissions, that during this initial period, Mace’s design obligations were limited by section 1 and section 2 para 2 in the Schedule of Derogations, with emphasis added, and the whole of section 2 set out for clarity:

However, she submitted that Mace bore full and unqualified design responsibility for the listed items from 2nd February 2024. In other words, she, in effect, submitted that no weight was to be attached to the words emphasised in the preceding paragraph, i.e. section 2 para 1. This really is the crux of the dispute between the parties, for Mr Streatfeild-James KC submits that Mace only undertook such responsibility for the listed items once Mace had received the necessary instructions.

For the reasons I set out below, I think that Mace’s case is to be preferred on this issue.

I start by asking what these commercial parties were seeking to achieve in agreeing, in this sophisticated and complex Contract, a Schedule of Derogations. After all (per the OED) a derogation is, inter alia, “the partial abrogation or repeal of a law, contract, treaty, legal right, etc.” The example is there given of a statute (from 1793) which “gives a privilege to the debtor, in derogation of the common law right of the creditor”. It seems to me clear that the parties were agreeing, in relation to the listed items, that Mace’s obligations were to be in some way limited.

Next, and as the passage above cited from Lewison makes clear, the Court should seek to give effect to the entirety of the agreement between the parties. It seems to me that it would be an odd result if paragraphs 1 and 2 of the Schedule of Derogations were to be given effect to, save for the words emphasised above (“Once the derogations listed in this document have been concluded…Mace Construct Ltd will take design responsibility on the items listed above”).

The parties clearly intended that there would be a process of to and fro on the design of these items, which would be concluded with the issue of an instruction to Mace. The Derogations Programme_V3 (as referred to in the definition of “Initial Scope of Works”) set out a series of steps for each of the listed items. In each case, the steps led up to the provision of an instruction to Mace.

For example, in relation to the windows, there were the following steps (with some spelling corrections supplied):

Thus, it seems to me that, unless there is some reason not to do so, effect should be given to the whole of the Contract, including all the provisions of the Schedule of Derogations and the Derogations Programme_V3.

Ms Stephens KC submits that there is such a reason and she relies in particular upon the provisions of clause 1.3, as substantially amended:

Item (i) simply states the obvious. It is in accordance with the principles of contractual interpretation summarised above. It should be noted that JCT Forms have contained similar wording to items (i) and (ii) since at least 1939. The courts have wrestled with this wording on a number of occasions and have, in general, concluded that effect can and should be given to the entirety of the contractual documents, notwithstanding the “override or modify” wording or variants thereof: see the discussion in Keating on Construction Contracts (12th ed) paras 21-058 to 21-065. Whilst, of course, each contract must be interpreted on its own wording, and the Contract was subject to extensive bespoke amendments, this past history provides a useful sense check. The Court is entitled to look with some initial scepticism at the proposition that carefully agreed bespoke provisions are not to be operated as the parties appear to have intended.

As to item (ii) the following points can be made:

As regards (iii), it seems to me that, if there were a discrepancy of this kind, then the Schedule of Amendments would prevail. For the reasons set out above, I do not think there is such a discrepancy. But if there was such a discrepancy, then the Schedule of Amendments prevails. And it is the Schedule of Derogations, called up and referenced in the Schedule of Amendments, which creates the Initial Scope of Works regime summarised above. Thus, the Schedule of Derogations would prevail.

This view is reinforced by item (iv). This, if it is necessary to refer to it, gives primacy to the Schedule of Derogations.

For these reasons, I prefer Mace’s case in relation to the design issues. I think that it is appropriate to grant declarations 3 to 5, subject to one point. Declaration 3 refers to “consents under clause…2.1.3”. This seems to be directed at the vexed question of planning, which I deal with next. As at present advised I do not think that this wording should be included within declaration 3. I did not receive any detailed submissions on the precise wording of the declarations and so do not decide this point finally, pending receipt of drafts which respond to my Judgment.

This declaration is directed at planning issues. It provides as follows:

The Building is listed. It is also in a prominent position in the City of London. The Works of refurbishment of the Building were likely, therefore, to raise planning issues. These could in turn cause delay to the Works. This might be due to, inter alia:

The parties were aware of these possibilities and catered for them, inter alia, as follows:

Mr Streatfeild-James KC accepts that the wording of declaration 6 is muddled. In particular, reference to delays “which were not reasonably foreseeable at the date of the Contract” appears to be based on a misreading of an amendment to a different clause, clause 2.26.14. He invites me, in effect, to rescue what I can from the wording provided.

I agree that the wording is muddled, but I consider that the problem goes deeper than that. As is apparent from my summary at paragraph 35 above, delay due to planning issues is likely to be highly fact sensitive and potentially complex. Suppose Mace make a submission which is rejected by the City of London as lacking essential details. Delay then occurs. It may be that the application was a perfectly good one and was wrongly rejected. Or it may be good in parts and should have been dealt with to some degree by the City. And so on.

Furthermore, the bulk of the relevant contractual material here consists of detailed express terms which deal with responsibility for planning delays: conditions 2.1.3 and 2.26.13. I do not think it is appropriate to grant declarations which seek to paraphrase these sorts of terms. The parties must rely upon their express contractual rights and obligations.

The design reference in the Schedule of Derogations (“Mace Construct Ltd will take design responsibility, excluding planning approval”) is puzzling, but I do not think it can be construed in a vacuum. It may assist Mace in certain factual situations, but that would have to be a fact specific enquiry.

For these reasons, I would not grant declaration 6. Either I would simply be reciting the wording of certain express terms or I would be venturing into territory which is factually complex. This may also impact upon the proper wording of declaration 3: see above.

This declaration is sought in the following terms:

This declaration raises different and somewhat novel issues.

The relevant provisions of the Contract in relation to extensions of time are as follows, with emphasis added:

Mr Streatfeild-James KC points out, correctly, that the exercise to be performed under clause 2.25.1 is prospective. The Employer, or his Agent, must estimate the effect, in the future, of Relevant Events which have occurred. Moreover, as he submits, the Employer is then fixed with this extension of time, even during the clause 2.25.5 process at the end of the contract, unless there have been Relevant Omissions.

Mr Streatfeild-James KC refers to the following helpful passage in Keating on Construction Contracts (12th ed):

Thus far, I agree with these submissions, which seem to me to be entirely orthodox. But Mr Streatfeild-James KC then makes the bold further submission that an extension of time granted under clause 2.25.1, however incorrect, cannot be reviewed by the adjudicator or the court. The core of this submission appeared to be that the adjudicator or the court would never be in a position to carry out the prospective exercise required by clause 2.25.1 but would be looking at the matter retrospectively, knowing how matters had turned out.

Ms Stephens KC retorts that this (somewhat surprising) conclusion that the Employer is eternally saddled with an erroneous extension of time ignores the power of review given to the adjudicator.

It is common ground that the Contract provides for Adjudication, and that the provisions of the Scheme for Construction Contracts (England and Wales) Regulations 1998, as amended, apply (the Scheme). The relevant provision is as follows:

Ms Stephens KC submits that this empowers and requires the adjudicator to “stand in the shoes” of the Employer/Agent performing his duties under clause 2.25.1. I agree. The Adjudicator can open up, revise and review the extension of time granted under clause 2.25.1, but, in so doing, he is to carry out the task which that clause requires, i.e. a prospective assessment in response to the notice and particulars submitted under clause 2.24.

I accept that, as Mr Streatfeild-James KC in effect submits, this may be a difficult task for the adjudicator, who has to travel back to the time at which the notice and particulars were submitted under clause 2.24. This requires him to ignore what has happened since that date. However, these all seem to me to be points as to the evidence and procedure which the adjudicator should consider and adopt. They are not objections of principle to the adjudicator carrying out his reviewing function under paragraph 20 of the Scheme.

For these reasons, I decline to grant declaration 7.

For these reasons I would grant declarations 1,2 4 and 5 as asked, but I would not grant declarations 6 and 7.

In relation to the wording of declaration 3, and any other consequential matters which may arise, I would invite Counsel to agree matters if possible, failing which a short further hearing will be convened.