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Mr Justice Deeny criticised the consultancy firm for withholding the relevant documents, stating that this was entirely antipathetic to a spirit of mutual trust and co-operation which had been reinforced throughout the original contract between the two parties.

Factual background

Healthy Buildings Ltd. provides consultancy services which include the assessment of the presence of and risks of asbestos in buildings.

The Northern Ireland Housing Executive (NIHE) awarded Healthy Buildings two Asbestos Surveying Services Contracts in December 2012 for its Belfast and North East areas. The Contracts were in the form of the NEC3 Professional Services Contract (June 2005) as amended.

An instruction changing the scope of the works was communicated by NIHE to Healthy Buildings at a meeting on 10 January 2013. NIHE did not notify this instruction as a compensation event under the terms of the Contract but ought to have done so.

In accordance with Clause 61.1 of the contract, NIHE ought to have instructed Healthy Buildings to submit a quotation on 10 January 2013 in relation to the assessment of the effects of that compensation event on the contracts for Belfast and North East

Healthy Buildings notified that instruction as a compensation event to NIHE on 21 May 2013.

Quotations were sought by NIHE on 19 August 2013 (Belfast) and 22 October 2013 (North East) and provided by Healthy Buildings on 29 August 2013 (Belfast) and 31 October 2013 (North East). In accordance with Clause 63 those quotations were to assess the effects of the compensation event in each contract.

Clause 62.3 of the contract entitles NIHE to reject a consultant’s quotations and Clause 64.1 permits NIHE to make its own assessment.

NIHE rejected Healthy Buildings’ quotations and assessed the effect of the compensation event as being zero on 14 November 2013 (Belfast) and 21 November 2013 (North East).

The dispute as to the effect of the compensation event was referred to Adjudication and the Adjudicator issued his temporarily binding Decisions on 24 January 2014. NIHE has paid Healthy Buildings in accordance with those Decisions.

NIHE then issued proceedings challenging those Decisions and claims re-payment of sums paid. Healthy Buildings has also challenged those Decisions and counterclaims for further monies in addition to those awarded by the Adjudicator and paid by NIHE.

High Court

The High Court judgment was concerned with the proper interpretation of New Engineering Contract 3, Professional Services Contract.

Initially NIHE pressed for discovery of Healthy Buildings’ actual records and costs relating to the period after the change of instruction of 10 January 2013, however this was resisted by Healthy Buildings on the ground of relevance.

At the hearing of the discovery summons the parties agreed that the matter was more appropriately dealt with by way of two preliminary issues.

The questions for determination by the court were:

Justice Deeny was satisfied that both of the above questions should be answered in the affirmative.

Stating that the need to look at the agreement overall was ‘a cardinal principle of contractual interpretation’, Justice Deeny explained that the contract in question began with the agreement that NIHE and Healthy Buildings should act “in the spirit of mutual trust and co-operation”.

In the circumstances, Justice Deeny stated that Healthy Buildings’ refusal to hand over its actual time sheets and records for work done during the contract was entirely antipathetic to a spirit of mutual trust and co-operation which he said was reinforced throughout the contract.

Furthermore, evidence from time sheets and other material, of what Healthy Buildings actually did in that period, particularly with reference to the change in instructions, was not only relevant evidence but clearly the best evidence to assist the court in calculating the “compensation” to which Healthy Buildings should be entitled.

Consequently, Justice Deeny ordered Healthy Buildings to make discovery of all relevant documents in its possession, custody, or power relating to the actual costs incurred and time spent by it as a result of and following NIHE’s instruction of 10 January 2013.