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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Education Committee v Aegon Insurance [2002] JRC 162 (03 September 2002) URL: http://www.bailii.org/je/cases/UR/2002/2002_162.html Cite as: [2002] JRC 162 |
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2002/162
ROYAL COURT
(Samedi Division)
3rd September, 2002
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Before: |
H.W.B Page, Esq., Q.C., Commissioner and Jurats Le Brocq and Georgelin |
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Between |
The States of Jersey Education Committee |
Plaintiff |
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And |
Aegon Insurance Company (U.K) Ltd. |
Defendant |
Building contract - Bond - Recovery on the Bond before issue of the Architect's Certificate - Whether Architect's Certificate Valid - Acts of Default under the Bond - Mitigation of the Employer.
Advocate N.F. Journeaux for the Plaintiff.
Advocate A.D. Hoy for the Defendant.
judgment
the commissioner:
1. This case concerns the operation of a performance bond ("the Bond") dated 4th December 1992 entered into by Aegon Insurance Company Limited ("Aegon"), in connection with a building contract ("the Contract") between The States of Jersey Education Committee ("the States") and Mark Amy Limited ("Mark Amy"), as main contractors, similarly dated.
2. The Contract was in the form of the JCT Standard Form of Building Contract Local Authorities, With Quantites 1963 Edition (July 1973) Revision. The "Architect" appointed under Clause 3[A] of the Contract was the (then) Chief Architect to the States, Mr. Graeme Hutchison. In practice his deputy, Mr. Jon Kempster, the Principal Architect, performed much of the functions of the designated "Architect".
3. The Bond was in the traditional, archaic form, and read as follows:-
"BOND for the performance of Contract of New School Buildings of one/two storey construction plus basement car park at ROUGE BOUILLON SCHOOL
BY THIS BOND we MARK AMY LIMITED whose registered office is situated at Rue des Pres Trading Estate St Saviour Jersey Channel Islands (hereinafter called 'the Contractor') and AEGON INSURANCE COMPANY (UK) LIMITED whose registered office is situated at 136 Fenchurch Street London EC3M 6BL (hereinafter called 'the Surety') are held and firmly bound to the STATES OF JERSEY (hereinafter called 'the Employer') in the sum of £176,095 (One hundred and Seventysix thousand and Ninetyfive pounds) for the payment of which sum to the Employer the Contractor and their successors and the Surety and their successors and assigns bind themselves jointly and severally by these presents sealed with our respective seals
Signed and dated this fourth day of December 1992
WHEREAS by a Contract dated the fourth day of December 1992 (hereinafter called 'the said Contract') the Contractor agreed with the Employer to carry out and complete the works set out in the said Contract (and described above) in accordance with the Conditions of Contract Bills of Quantities Specifications and Drawings therein contained
NOW THE CONDITIONS of the above-written Bond are such that if the Contractor shall completely finish the said works specified in the said Contract in accordance with the Bills of Quantity Specification and Drawings and to the satisfaction of the Architect/Engineer to the States and in all other respects faithfully perform the stipulations and conditions of the said Contract then the above-written Bond shall be void otherwise it shall remain in full force."
4. The Contract works consisted of the partial re-development and extension of Rouge Bouillon School in St. Helier, the previous building having been destroyed by fire in April 1990. The Contract price was £2,699,029. The programme provided for the work to proceed in three phases designed to cause the minimum disruption to school activities. In the case of Phase I, which involved the excavation and construction of a semi-basement car park and boiler and other power plant rooms, partial handover was required by 3rd April 1993 in order to allow Phase II to begin on 20th April 1993.
5. The material events span a relatively short period of time between February and June 1993. For the most part they are not in dispute. Evidence of them is to be found to a large extent in contemporaneous correspondence and minutes. But oral evidence was also given, in support of the States' case by Mr. John Hay of Tillyards, the States' Quantity Surveyors, and by Mr. Jon Kempster and Mr. Graeme Hutchison; and, in support of Aegon's case, by Mr. Harold Livesey of College Hill Underwriters, Mr. Peter Cameron of Peter Cameron Limited, and Mr. Philip Crane and Mr. Charles Stephens of Mark Amy.
6. Although the Contract itself was not signed until early December 1992, work had begun on site some six weeks previously. By mid-January 1993, however, Mark Amy were experiencing financial difficulties as a result of problems encountered on another project in which they were engaged, difficulties which began to have a significant impact on operations on the Rouge Bouillon School site. Sub-contractors, including in particular the supplier of concrete, began to complain that they were not being paid; concrete deliveries to site were suspended or interrupted; and progress suffered accordingly. This particular problem was temporarily solved by the States making an arrangement, with the consent of Aegon, for direct payment of some at least of the sub-contractors. But progress remained unsatisfactory and on 12th February 1993 formal notice of default was given to Mark Amy pursuant to Clause 25(1)(b) of the Contract General Conditions requiring them to remedy the situation within fourteen days or risk having the Contract terminated. The notice was signed by Mr. Kempster.
7. The material sections of Clause 25 for present purposes are as follows:
"(1) Without prejudice to any other rights or remedies which the Employer may possess, if the Contractor shall make default in any one or more of the following respects, that is to say:-
(a) If he without reasonable cause wholly suspends the carrying out of the Works before completion thereof, or
(b) If he fails to proceed regularly and diligently with the Works, or
(c) If he refuses or persistently neglects to comply with a written notice from the Architect/Supervising Officer requiring him to remove defective work or improper materials ore goods and by such refusal or neglect the Works are materially affected, or
(d) If he fails to comply with the provisions of either clause 17 or clause 17A of these Conditions, the Architect/Supervising Officer may give to him a notice by registered post or recorded delivery specifying the default, and if the Contractor either shall continue such default for fourteen days after receipt of such notice or shall at any time thereafter repeat such default (whether previously repeated or not), then the Employer may within ten days after such continuance or repetition by notice by registered post or recorded delivery forthwith determine the employment of the Contractor under this Contract, provided that such notice shall not be given unreasonably or vexatiously."
"(4) In the event of the employment of the Contractor under this Contract being determined as aforesaid and so long as it has not been reinstated and continued, the following shall be the respective rights and duties of the Employer and Contractor:
(a) The Employer may employ and pay other persons to carry on and complete the Works and he or they enter upon the Works and use all temporary buildings, plant, tools, equipment, goods and materials intended for, delivered to and placed on or adjacent to the Works, and may purchase all materials and goods necessary for the carrying out and completion of the Works."
(b) .....................
(c) .....................
(d) The Contractor shall allow or pay to the Employer in the manner hereinafter appearing the amount of any direct loss and/or damage caused to the Employer by the determination. Until after completion of the Works under paragraph (a) of this sub-clause the Employer shall not be bound by any provision of this Contract to make any further payment to the Contractor, but upon such completion and the verification within a reasonable time the accounts therefor the Architect/Supervising Officer shall certify the amount of expenses incurred by the Employer and the amount of any direct loss and/or damage caused to the Employer by the determination and if such amounts when added to the monies paid to the Contractor before the date of determination exceed the total amount which would have been payable on due completion in accordance with this Contract, the difference shall be a debt payable to the Employer by the Contractor; and if the said amounts when added to the said monies be less than the said total amount, the difference shall be a debt payable by the Employer to the Contractor."
8. Negotiations with D.P. Bennett Limited ("Bennett") ensued with a view to that company taking over Mark Amy as a whole. Bennett was a United Kingdom based builder, supported by certain financial interests in Jersey, who had been introduced by Reads & Co. ("Reads"), Mark Amy's accountants. These negotiations foundered, however, at a meeting at the Town Hall on 12th March 1993. (Discussions were renewed subsequently, on a different basis, and continued for several weeks; but these, too, came to nothing in the end.)
9. The same day, 12th March 1993, Mark Amy ceased all further operations on site. Only about 11% of the total work, assessed by value, had been completed.
10. Anticipating difficulties, the Architect had, by this stage already instructed Tillyard Jersey, the Quantity Surveyors for the project, to explore the possibility of Charles Le Quesne (1956) Limited ("Charles Le Quesne") taking over the contract: they had been the second lowest bidder on the original tender. But as matters turned out, although Charles Le Quesne were in principle interested in the project, the terms on which they were prepared to step in were insufficiently attractive for the Architect to take them up: we return to this later.
11. At about the same time Peter Cameron (1991) Limited ("Peter Cameron"), a local firm of contractors with whom Mark Amy had friendly relations and had been in discussion, expressed a potential interest in taking over Mark Amy's contracts (as opposed to acquiring the company): they had been the highest of the unsuccessful tenderers for the original Rouge Bouillion School contract. In agreement with the directors of Mark Amy a (proposed) letter was drawn up by Mr. Peter Cameron dated 16th March 1993 addressed to Mr. Hutchison in his capacity as Chief Architect in the following terms:
"WITHOUT PREJUDICE
Prior to the situation that Mark Amy Limited now find themselves in, I had meetings with their Managing Director Philip Crane to which we explored ways our respective Companies could work together bearing in mind their financial predicament.
A proposal that was aired at our meetings was one which prior to a voluntary liquidation situation arising, Mark Amy Limited would assign to our Company (if Contractually possible and with the agreement of the Employers) their existing contracts which we would undertake to complete on their behalf, and offering employment to existing members of their staff. By such an arrangement, continuity of the contracts would be assured, with no disruption or additional costs to the Employer, the Bondsman would not be required to call-in the cross guarantees and indemnities from the Directors, who in the worse situation would be forced to sell their houses to meet the Personal Guarantees offered to the Bondsman, so would allow a Liquidator to maximise the assets of the Company to the Creditors.
Our Company would be happy to demonstrate our Financial Standing to allow such an arrangement to take place to the satisfaction of the employers on the respective contracts.
This letter has been written with the full knowledge of the Directors of Mark Amy Limited."
12. Mr. Cameron showed this letter to Mark Amy. They, however, on advice from Reads, decided not to deliver the letter at that stage in view of the renewed negotiations with Bennett that were by then taking place (on a more limited basis, under which Bennett would take over the Mark Amy contracts). In the event the letter remained in abeyance and was not delivered until 5th May 1993, following the final collapse of negotiations with Bennett.
13. In the meantime, negotiations between Bennett and the Viscount's department continued throughout the rest of March and the whole of April and reached an advanced stage. Those principally involved on behalf of the States included, among others, Mr.R.Lees, Deputy Treasurer. On 18th March 1993, the Education Committee met. Their Act records the following:
"The Committee, with reference to its Act No 2 of 14th October 1992 and with the Greffier of the States, the Chief Architect and the Deputy Treasurer of the States in attendance, recalled that the contract for the redevelopment of Rouge Bouillon School, St. Helier, had been awarded to Mark Amy Limited and considered the possible affect of that contract on the financial difficulties now faced by that Company. Discussions were continuing at the present time to determine whether Mark Amy Limited's existing contracts with States' Committees could effectively be continued by their purchase by a new company, or whether the Company would be declared "en desatre". The Committee noted that the work would be carried out in three phases and that the present state of the contract was that Phase 1 had been commenced. If Mark Amy Limited went "en désastre", its employment as the contractor would automatically be determined and new arrangements would have to be made to complete the project. The Committee was advised that a United Kingdom based company, D.P. Bennett Limited, was proposing the formation of a new company registered in Jersey to buy the existing contracts of Mark Amy Limited. Among the proposed terms of the purchase were- (a) that all existing contracts between the States of Jersey and Mark Amy Limited would be assigned en bloc to the new company; and (b) that the new company would be considered as a potential tenderer for States' contracts.
The Committee noted that the new company would propose to offer re-employment to all existing site staff and supervisors, and offer to re-engage all existing sub-contractors, but would reduce considerably the numbers of administrative staff.
The Committee was advised that, if an arrangement of the kind proposed by Mr. Bennett could be concluded, it would enable the contract for the redevelopment of Rouge Bouillon School to continue with minimum disruption. The Committee accordingly decided that, in the event of such an arrangement being concluded, it would agree to enter into appropriate arrangements with the new company for the completion of the redevelopment of the school subject to the following conditions -....."
14. On 14th April 1993 the Education Committee noted that negotiations with Bennett were progressing although certain legal matters were still to be finalised.
15. Meanwhile work on the Rouge Bouillon site was at a standstill and the originally programmed date for giving access to the Phase II portion of the site passed. By this time Mr. Hutchison was becoming greatly concerned about the protracted nature of the negotiations with Bennett and on 26th April 1993 wrote to Mr. Lees in the following terms:
"At the risk of jeopardising all the work which has gone into preparing the assignment to the contracts Mark Amy Ltd had with various Committees, I feel that a deadline must be set, say, 29th April 1992, for Mr. Bennett's new company to take on all the contracts referred to in Advocate Pallot's letter to Mr. Hillman of 22nd April. Some seven weeks have now passed since the sites were made secure and any advantage to the client Committee in opting for assignment is fast being eroded. I would ask that Mr. Bennett and his legal advisors be advised that unless the deadline set is met an alternative course of action will be set in motion. I trust you agree with this request."
16. On 28th April 1993 the Education Committee resolved to set a final deadline of 7th May 1993 for the situation to be resolved (the Act speaks of the Committee agreeing "to extend" the deadline, which suggests that, by this stage, one deadline had already been set and not met).
17. On 4th May 1993 Bennett wrote to Reads finally withdrawing from negotiations.
18. At this point Mark Amy, evidently in a last ditch attempt to rescue the situation, decided to try to make use of the letter from Peter Cameron that they had been holding in reserve since 16th March. Aegon claims that, on 5th May 1993, two representatives of the company, Mr. Philip Crane and Mr. Charles Stephens, accordingly delivered copies of this letter to Mr.Hutchison's offices at the Public Services Department, South Hill, St, Helier and to Mr. Lees' office at Cyril Le Marquand House.
19. The trial opened on the basis that the States denied that this letter had ever been received by either Mr. Hutchison or Mr. Lees, and Mr.Hutchison, in his evidence, confirmed that he had no recollection of ever having seen it. Mr. Lees was not called as a witness. But Mr. Crane and Mr. Stephens, although unable to recall the circumstances in detail, were in no doubt that copies of the letter had indeed been delivered. Mr. Crane had had a long association with Mark Amy, having at one time been Managing Director and subsequently Chairman and having originally retired in March 1988. In late 1992, he had then returned as Chief Executive, though in the event only for a few months. Mr. Stephens was, at the time, the Surveying Director for Mark Amy, a position that he had held for some twelve years. Both gave evidence of having driven together to Mr. Hutchison's office and to Mr. Lees's office and of having left copies of the letter in question for each of the two. In the event, Mr. Journaux, on behalf of the States, did not seek to contest this evidence; and we, for our part are satisfied that copies of the letter were in fact delivered and that Mr. Lees, at least, must have received his copy even if Mr. Hutchison did not.
20. The following day, 6th May 1993, a meeting took place under the chairmanship of Mr. G. C. Powell, Chief Adviser to the States, of representatives of the four departments with current contracts with Mark Amy (Public Health, Education, Public Services and Housing), the States Greffier and the States Treasury ("the Project Group"). According to a file note of the meeting, both Mr. Lees and Mr. Hutchison were present. The Education Department was represented by Mrs. Ann Esterton. According to the same file note, Mr. Lees reported on Bennett's withdrawal from negotiations and the letter of 4th May 1993 to Reads was noted. The file note continued:
"In the meantime, a further offer had been received for assignment of the contracts although financial problems were also associated with this offer [It seems likely that this was a reference to Peter Cameron's letter, though Mr. Hutchison said he had no recollection of it being discussed]. Mrs. Esterson advised the meeting that the Education Committee had already decided that, if the situation was not resolved by 7th May, it would determine the employment of Mark Amy Limited as contractors for the redevelopment of Rouge Bouillon School, St. Helier. In the circumstances, the Education Committee would be recommended to go out to tender for the Rouge Bouillon contract and, following a telephone meeting of that Committee, an Act to that effect would be passed on 7th May 1993."
21. At a meeting of the Education Committee the next day it was formally resolved to terminate Mark Amy's contract and to put the Rouge Bouillon School contract out for re-tendering:
"The Committee was advised that the aforementioned assignment to Mr. D.P. Bennett of D.P. Bennett Limited would not now take place. The Committee having recalled that it had decided, by Act No. 8 of 28th April 1993, that it would set a deadline of 7th May 1993 for the situation to be resolved and having now been advised that this had not been done, formally decided that the employment of Mark Amy Limited as a contractor should be determined on 7th May 1993, and authorised the Greffier of the States to take the necessary action. The Committee approved a proposal that the contract for Rouge Bouillon School should now go out to tender."
A letter dated 7th May 1993, signed by the Greffier of the States on behalf of the Education Committee, was then despatched by hand to Mark Amy giving formal notice of termination of their contract pursuant to Clause 25(i) (b) of the conditions "without prejudice to any other rights or remedies which I may possess".
22. Somewhere at about this point in time, it seems that the Public Services Department must have received a renewed expression of interest from Charles Le Quesne. But as the Act of that Committee dated 10th May 1993 records, "The Chief Architect advised that in view of the fact that the second lowest tender for the project was in excess of the funds voted for the project and the fact that Charles Le Quesne (1986) Limited was not prepared to accept responsibility for the piling and basement construction already undertaken by Mark Amy Limited, the Project Group had decided that further tenders should be invited from the contractors who had previously tendered for the project".
23. Also on 10th May 1993, a letter from Peter Cameron was delivered to Mark Amy headed "Without Prejuduce - Subject to Contract". This opened with a reference to a meeting with Mr. Lees and a subsequent telephone conversation with Mr. de Gruchy of the Viscount's Department on the evening of 7th May 1993. It then went on to set out a proposal under which Peter Cameron would in effect take over a number of the existing Mark Amy contracts and would acquire certain of their assets. The Rouge Bouillon School contract did not, however, form part of this package, and, indeed, was not mentioned. Mark Amy then wrote to the Viscount's Department enclosing a copy of this offer and recommending it as fair and reasonable "taking into account the fact that the 'Rouge Bouillon School' contract no longer forms part of this arrangement".
24. The Education Committee met again on 12th May 1993 and specifically considered, but rejected, the possibility of including the Rouge Bouillon School contract among those that Peter Cameron was proposing to take over:
"The Committee was advised that Peter Cameron Limited was now seeking to gain assignment of the contracts of Mark Amy Limited, subject to the finalisation of certain financial arrangements by that company. It was not possible to confirm how long it would take to complete those financial arrangements or indeed, that they would even take place.The Committee, having recalled that Phase I of the Rouge Bouillon contract had almost been completed and having been advised that the bondsman was happy for the remainder of the contract to go out to tender, decided to maintain its decision to invite tenders for the remainder of the School contract." (Act No.2 of 12th May 1993.)
25. Invitations to tender for completion of the Rouge Bouillon School Contract were sent out on 17th May 1993 and produced bids from four contractors of which the lowest was Charles Le Quesne at £2,458,521 (revised subsequently to £2,569,268) and the second lowest Peter Cameron at £2,873,100. On 9th June 1993 the Education Committee decided to accept Charles Le Quesne's tender. This, however, was on the basis of an extended contract period of 78 weeks, as against the original 60 weeks, and it was therefore thought right to ask each of the other contractors who had tendered to submit their alternative bids on the basis of a 78 week period. The resulting figures left Charles Le Quesne still with the lowest bid at £2,569,268 and Peter Cameron as the second lowest at £2,723,100. The revised figures were duly reported to the Education Committee on 23rd June 1993.
26. On 16th June 1993, Mr. Kempster wrote (i) to Charles Le Quesne accepting their revised tender and (ii) to Mr. Livesey on behalf of Aegon confirming that the Education Committee had accepted this bid. Work on site began on 28th June 1993. Meanwhile negotiations for Peter Cameron to take over a number of other Mark Amy contracts with States Committees, including the Education Committee's contract for Victoria College, were successfully concluded and were announced to creditors in a letter dated 29th June 1993.
27. On 2nd July 1993 the property of Mark Amy was finally declared en désastre. In response to the ensuing notice in the Jersey Gazette inviting claims against Mark Amy to be lodged with the Viscount's Department, Mr. Kempster wrote on 2nd August 1993 enclosing a copy of a letter dated 30th July 1993 from Tillyards. This estimated the additional costs of completing the Rouge Bouillon School contract resulting from the termination of Mark Amy's contract at £213,430.
28. There was little evidence before the Court of the precise course of events over the next fifteen months or so. But it appears that on 14th December 1993 Michel Voisin & Co., acting on behalf of the former directors of Mark Amy, wrote to the Viscount's Department registering an objection to the claim lodged in the desastre by the Education Committee and on 13th October 1994, followed this up with a further letter giving details of their objection. The general theme of this letter was that any additional costs involved in completing the Rouge Bouillon School contract were the result of the conduct of the Education Committee itself in failing to accept Charles Le Quesne's offer, in failing to take up Peter Cameron's offer in their letter dated 16th March 1993 (though it was acknowledged that this was not delivered until 5th May 1993), and in not permitting Aegon to introduce other potential contractors. The Viscount's office was invited to pass a copy of this letter to the Chief Architect; but, although there were indications in the trial documents that this was done and that the Chief Architect replied at some length, this subsequent correspondence was not in evidence.
29. By 12th December 1995, Tillyards had reached agreement with Charles Le Quesne on their final account and were able to write to the Chief Architect with a revised figure of £223,856 for the net additional expense involved in completing the work following termination of Mark Amy's contract. On 22nd March 1996 Mr. Hutchison accordingly wrote to the Viscount's Department enclosing "part [of that letter] which schedules the items totalling £223,856.29": although there was nothing specific to indicate as much, the "part" in question must have been the two-page "Appendix A" that was referred to in item 2.01 of the letter itself which read "Value of Charles Le Quesne Ltd's contract which equates to the balance of the original scope of work included in the Mark Amy Ltd contract (as attached Appendix A Breakdown) - £2,568,649."
30. The States's claim on the Bond was formally lodged in a letter from the Greffier to the States to Mr. Livesey on behalf of Aegon dated 31st May 1996 enclosing a copy (in this case, a complete copy, it seems) of Tillyards' letter dated 12th December 1995. The Greffier's letter drew attention to the Tillyard's figure of £238,856 for the additional expense of completing the Rouge Bouillon School contract and concluded "This sum exceeds the bond amount of £176,065. I would therefore formally request the payment of the bond in full forthwith". Although the subsequent correspondence was not in evidence, it is common ground that the claim was rejected and that the present action was initiated by the States on 20th January 1997. In it the States claims the sum of £176,095 together with interest from the date of its letter dated 31st May 1996.
31. The dispute between the parties as canvassed in the pleadings and in Counsel's respective skeleton arguments ranged over a number of matters, but in practice boiled down to two main issues. The first was, at heart, an issue about the circumstances that have to be shown to exist in order to trigger any liability at all under the Bond ("the trigger issue"): this was an issue in part of law and in part of fact. The second was whether the States had properly sought to mitigate its alleged loss, or - to put it more correctly - whether the 'loss' that the States sought to recover flowed from the default of Mark Amy or from the States's own shortcomings ("the mitigation issue"). Although logically second, it is convenient to take the mitigation issue first as it depends almost entirely on the facts that have just been reviewed.
32. Although the States had originally contended that, as regards its rights under the Bond, there was no legal obligation to mitigate any loss that might arise, by the time the trial opened Mr. Joureaux made it plain that he did not seek to maintain that argument. His case was that the States had acted entirely reasonably in the circumstances.
33. It was common ground that the burden was on the Aegon to show a failure on the part of the States to mitigate. A number of contentions were advanced by them at various stages in the history of this matter as amounting to allegedly unreasonable conduct by the States in this context. First, that Bennett, as a small house-builder in the United Kingdom, was never a suitable candidate to take over the contract from Mark Amy; in addition, the negotiations with them were permitted to drag on for far too long. Secondly, that Aegon had effectively been barred by Mr. Lees from introducing any potential contractors when they would otherwise have done so. Thirdly, that the States should have taken up Charles Le Quesne's offer to take over the contract. And fourthly, that the States should have taken up Peter Cameron's "offer" "which, had it been accepted would have involved the Plaintiff in little or no expenditure" (as Mr. Hoy's skeleton argument put it). But of these, only the last was, in practice, pursued with any vigour.
34. Evidence in relation to these matters was given by Mr. Harold Livesey, the underwriter and deputy chairman of College Hill Underwriters who wrote the performance bond in question here as agents for Aegon. He had been writing such bonds for some thirty years. In the case of this particular bond, his dealings had been mainly with Mr. Kempster and Mr. Lees. He had first become aware of potential difficulties when he had been informed of Mr. Kempster's letter to Mark Amy of 12th February 1993 giving notice of default under Clause 25(i) (b). Normally, he explained, when a contractor leaves a site - as Mark Amy did in this case on 12th March 1993 - representatives of the bondsman would liase with the employer with a view to working out some means of getting the contract completed, usually by securing its assignment to another contractor. His own company had considerable experience in handling this type of situation and would normally expect to bring about such an assignment in two to three weeks.
35. In the present case, however, Mr. Livesey had received a telephone call from Mr. Lees with a specific request not to intervene because of the negotiations that were taking place at that time with Bennett. According to Mr. Livesey, Mr. Lees was at pains to emphasise that this was highly confidential and he was not to mention it to Mr. Kempster. Thereafter he had further conversations with Mr. Lees from time to time, but there was no correspondence between them. He became concerned at the length of time that the talks were taking but continued to respect Mr. Lees' request that he should not take any action of his own. He was surprised and disappointed when Bennett's finally withdrew.
36. On 11th May 1993, Mr. Kempster had written to Aegon confirming that the Rouge Bouillon School contract would not after all be assigned to Bennett (there having been an earlier telephone call to this effect), that the Education Committee had formally terminated Mark Amy's employment, and that fresh tenders for completion of the contract were shortly to be invited from various contractors, including Charles Le Quesne and Peter Cameron. Mr. Livesey had then replied to this letter on 17th May 1993 noting that tenders were being invited for completion of the work and continuing as follows:
"Whilst we do not raise any objection to this, we would ask you to bear in mind that, when the problems with Mark Amy first appeared, back in February, both we, and your office, did have some discussion with the second lowest tenderer, Charles Le Quesne (1956) Ltd., at which time we were advised that Le Quesne would have been prepared to take over and complete Amy's contract for virtually the same price, thus enabling the States to complete without incurring any significant additional costs. In all of the circumstances, we trust that the States will not seek to impose any liability on the Surety for the delay in completion which now seems inevitable and that the tenders that are received for the completion of the works will be of a magnitude that will enable the States to complete without recourse to the Bond."
Mr. Kempster replied in turn on 19th May 1993 explaining that it was not correct that Charles Le Quesne would have been prepared "to take over and complete Amy's contract for virtually the same price": they had made it clear that they would only have been willing to take it on at their original rates - which would have involved an additional £108,963 - and would also have wanted to re-negotiate the preliminaries. The competitive climate of tendering in Jersey at that time was such, said Mr. Kempster, that inviting new tenders was the preferred option. There the correspondence seems to have rested.
37. In cross-examination by Mr. Journeaux, Mr. Livesey readily acknowledged that he had no basis for contesting what Mr. Kempster had said in his letter about the reasons why Charles Le Quesne's offer was not particularly attractive: he had no first hand knowledge of the discussions with that firm. Similarly, he was in no position to gainsay what Mr. John Hay of Tillyards had to say on the same subject (which had included the fact that Charles Le Quesne were not prepared to accept responsibility for the work already completed by Mark Amy). Pressed further by Mr. Journeaux, Mr. Livesey accepted that it had been reasonable for the States not to pursue Charles Le Quesne. It was also plain that, at the time, he was largely content to go along with the request from Lees and to allow the negotiations with Bennett to take their course, although he might have liked them to have been pinned down to a tighter timetable. Mark Amy themselves had, he accepted, thought them entirely appropriate. If, with the passage of time, he had eventually become troubled at the protracted nature of the negotiations, his concern was not such as to cause him to register it in any formal way: certainly not in writing. His letter of 17th May 1993 had been confined to the contention that the States should have pursued Charles Le Quesne's offer: it had made no complaint of any kind about the negotiations with Bennett or about Aegon being shut out from introducing other potential contractors. Having seen Mr. Livesey in the witness box we are also in no doubt that he was a man of sufficient experience and force of character to have voiced his disagreement with Mr. Lees had he thought it appropriate to do so.
38. It is also a striking fact that, throughout this period, Mark Amy apparently made no mention to Aegon of the Peter Cameron letter of 16th March 1993. In evidence, Mr. Livesey said he was surprised that it had not been discussed with his firm. In the event, it was not until January 1994 that he first had sight of it; and when he did see it he had taken the view that here was an offer that the States should have taken up, or at least should have investigated before putting the Rouge Bouillon School contract out to re-tender. Having heard the evidence, he said that he now had a better picture of the relevant considerations than before; and he appeared to acknowledge that it was not as black and white as he had previously supposed. He was not prepared to concede that there was nothing in the mitigation argument, but it was plain that his faith in it had been substantially shaken.
39. Mr. Livesey was followed in the witness-box by Mr. Cameron. He said that he had known Mark Amy for some time, that several of the directors of that firm were friends of his and he had hoped that he might have been able to help them when they had got into difficulties. He would not have contemplated acquiring the company as a whole, because of its liabilities but was, in principle, ready to consider taking over their contracts. It was against this background that his letter of 16th March 1993 was drawn up. It was a serious expression of interest. He had agreed to the letter being held in abeyance while negotiations with Bennett were going on, although he personally was sceptical about the likelihood of a successful outcome. When those negotiations had eventually collapsed he had confirmed to Mark Amy that he was still interested and had agreed to their request to make use of the letter. There had then been various discussions with representatives of the States which had resulted in his "Without Prejudice - Subject to Contract" letter dated 10th May 1993 setting out his proposals for taking over Mark Amy's contracts with the States - apart from the Rouge Bouillon School project. As to that particular contract, he said that it had been made clear to him from the start of discussions that that was to be treated differently and that the States was not interested in negotiating about it with him. He, for his part, was content to take on the other contracts.
40. The critical part of Mr. Cameron's evidence revolved around the question of the purpose and effect of his letter of 16th March 1993 and, in particular, the words in that letter reading "By such an arrangement, continuity of the contracts would be assured, with no disruption or additional costs to the Employer.......". It was suggested on behalf of Aegon that this amounted to a clear offer by Peter Cameron to take over all Mark Amy's contracts at no additional cost to the States, an offer which plainly ought to have been taken up. But this was not in our view a tenable view of this letter. In the first place, that was not the way in which the letter was expressed: read as a whole it plainly did no more than inform Mr. Hutchison that a proposal of this kind had been aired at meetings between Mark Amy and Peter Cameron and indicate an interest in demonstrating Peter Cameron's financial standing with a view to putting such an arrangement in place.
41. Secondly, when it came to exploring the terms on which Mr. Cameron would in fact have been prepared to take on the Rouge Bouillon School contract, it was clear that it was wholly improbable that Mr. Cameron would have been willing and able to complete it on the same terms, as to cost, as Mark Amy. On 6th May 1993, Tillyards had calculated a gross value of £287,138 for the work done by Mark Amy at the time when they left site: this left some £2.4million available to any contractor proposing to complete the work at no additional costs to the States, a figure as to which there was no serious dispute. But in none of his answers, either in evidence in chief or in cross-examination was Mr. Cameron prepared to say, categorically, that he would have been willing to complete the Rouge Bouillon School contract for that price. Everything he said was hedged around with qualifications of one kind or another. He had, he said, spent some time inspecting the site at some point and had assessed the contract as one in which the risk lay largely in the foundation structures; in as much as a large part of this had been completed already by Mark Amy, the contract would not have been too bad a one to take on. He would, however, have required much more information and there would, no doubt have been negotiations on the matter of price. There is, as he put it, "always scope for bargaining": an observation that appears to be well illustrated by the case of the other contracts taken over by Peter Cameron, where he managed to negotiate a package that involved not only the assignment of the contracts, on certain terms, but also the acquisition of a parcel of land and of the fixed assets of Mark Amy.
42. When, moreover, Peter Cameron came to bid for the re-tendered Rouge Bouillon School contract in June 1993, their quoted price of £2,723,100 (on the basis of an extended 78 week contract period) was well beyond both the £2.4 million mark and Charles Le Quesne's bid of £2,569,268. Asked about this in evidence, Mr. Cameron said that by that time he was unwell, was looking for a buyer for his company and was no longer much interested in that particular contract. But we were not altogether persuaded that that was really the explanation for the level of his bid, particularly having regard to the fact that Peter Cameron's had been the highest of the five original bids when the contract had first been put out to tender in 1992 (their bid being £3,261,323).
43. In summary, we do not think Mr. Cameron's evidence amounted to much more than this: that he would at one stage have been interested in principle in taking over the Rouge Bouillon School contract, as well as the others, and would have liked to discuss the possibility with representatives of the States. But whether he would in practice have been willing to take it on and, if so on what terms, would have depended on a better understanding of the state of the project and on the outcome of the negotiations. And, as to the States' decision to put the project out for re-tendering rather than negotiate with him, he recognised that they might have thought that they would get a better price that way and that you would need a "crystal ball" to say whether they were right or wrong.
44. In the end, Aegon's claim that the States handled the situation in which they found themselves unreasonably or ineptly and thereby failed to mitigate their loss proves, as it seems to us, to be wholly without substance. This applies equally to the negotiations with Bennett (including Mr. Lees' request to Mr. Livesey not to introduce any other contractors while those negotiations were continuing), those with Charles Le Quesne, and the possibility of Peter Cameron taking over. As to the last in particular, we say this in summary because (i) the Rouge Bouillon School contract was significantly different from the other contracts that were eventually taken over by Peter Cameron: the others were all in a far more advanced stage, most having reached the stage of substantial completion; we reject in particular the suggestion that the amount of work outstanding on the contract concerning a building known as The Limes was in anything like comparable to that remaining at the Rouge Bouillon School; (ii) there was nothing in the least unreasonable, in our view, in the members of the Education Committee making a firm decision in early May 1993 that they would prefer, in the case of the Rouge Bouillon School contract, the certainty of a re-tendering exercise to the uncertainty of embarking on another potentially protracted negotiation with a contractor; especially when the scope for negotiation on that contract was substantial, when the contractor in question had been the highest original bidder, and when his expression of interest was contained in a letter delivered at the eleventh hour, which was dated some seven weeks earlier and was unaccompanied (as appears to have been the case) by any covering letter of explanation for this delay or confirmation of continuing interest; and (iii) even if the States had been prepared to negotiate with Peter Cameron over the Rouge Bouillon School contract we think it most improbable that any better price would have been secured than that which was in fact obtained by the re-tendering process.
45. Mr. Journeaux's position was simple. By the express terms of the Bond, for Aegon to be released from liability, two conditions had to be satisfied: the Contractor had to (i) "completely finish the works specified in the said Contract in accordance with the Bills of Quantity Specification and Drawings and to the satisfaction of the Architect/Engineer to the States" and (ii) " in all other respects faithfully perform the stipulations and conditions of the said Contract". The corollary of this is that if the Contractor either failed to finish the work (to abbreviate the point) or in some other respect failed to adhere to the terms and conditions of the contract, the liability of the bondsman was triggered. In the present case both conditions had been breached: Mark Amy had failed to complete the work and had broken the terms of the contract. The loss suffered by the States, at £223,856 (as set out in Tillyard's letter dated 12th December 1995) exceeded the amount of the Bond, and Aegon was accordingly liable for the full £176,095 provided by it.
46. In its original pleading in answer to the States claim, dated 4th April 1997 Aegon took three main points: it put in issue the States' assertion that Mark Amy had failed duly to perform the contract and complete the work, and also Mark Amy's contention that as a result of Mark Amy's failure to proceed regularly and diligently with the works the States had terminated the contract with Mark Amy by written notice on 7th May 1993; it did not admit that the States had suffered the loss claimed; and it alleged a failure on the part of the States to mitigate any loss that it might have sustained. But by an amendment made on 29th September 2000, as well as maintaining and developing its challenge to the validity of the States' termination of Mark Amy's contract and its contentions on lack of mitigation, Aegon introduced a new theme to the effect that no liability under the Bond could arise until the Architect had issued a certificate under Clause 25(4) of the Conditions, that in the event, no such certificate had been issued, and accordingly no claim on the Bond could be made.
47. In practice, as developed by Mr. Hoy, it was this last theme (together with arguments on mitigation) that formed the principal basis of Aegon's case at trial: the challenge to the validity of the termination of Mark Amy's contract was abandoned. Mr. Hoy argued that, although the law recognises a species of contractual instrument, sometimes referred to as "on-demand" bonds, which are largely free-standing and not dependent for their operation on showing any breach of the contract in connection with which they have been provided, the Bond in the present case was of a different kind, being, in essence a guarantee by a surety (Aegon), up to a specified financial limit, of the performance of the construction contract by Mark Amy. Accordingly it was not enough for Mr. Journeaux to rely on a literal reading of the Bond and assert a failure of one or both of the specified conditions. If the States were to succeed they had to establish, Mr. Hoy submitted, not only a breach of contract by Mark Amy but also liability on their part to the States in damages or for compensation: it was satisfaction of this liability and nothing else that was, in effect, guaranteed by Aegon. But, he argued, the only potential liability of Mark Amy arising out of the termination of their contract was that provided by Clause 25(4)(d) of the contract Conditions (paragraph 7 above). That clause established a complete and exclusive code of the rights and duties of the parties following termination, the lynch-pin of which was the issue by the Architect of a certificate of additional expenses and loss or damage incurred as a result of the termination of the contract. Such a certificate had to await the completion of the work by the new contractor. Once it was issued, if the amount so certified "when added to the monies paid to the Contractor before the date of determination exceed the total amount which would have been payable on due completion in accordance with this Contract, the difference shall be a debt payable to the Employer by the Contractor." The States, could have taken a different course by treating Mark Amy's suspension of work and departure from site as a repudiation of their contract and claiming common law damages. But having opted for the contractual route provided by Clause 25(4), their sole right was to any debt to which they were entitled as a result of the operation of the machinery established by that clause.
48. That, at least, submitted Mr. Hoy, was the position as regards additional costs arising out of the termination of the contract: there might, in addition be other rights that had accrued to an Employer prior to the termination, but that (he suggested) was not the case here.
49. Mr. Journeaux, for his part, did not take issue with the proposition that the Bond was in the nature of a guarantee and that proof of damage flowing from breach or breaches of the conditions of the Bond - rather than mere assertion of it - was required: see Lord Atkin in Workington Harbour & Dock Board v. Trade Indemnity Co. Ltd (No.2) [1938] 2 AER 101 at 105 where, in the course of giving the leading speech, he said: "My Lords, both actions were brought on the money bond. [The report is of the decision in the second of two actions.] It is well established that in such an action the Plaintiff has to establish damages occasioned by the breach or breaches of the conditions, and, if he succeeds, he recovers judgment for the whole amount of the bond, but can only issue execution for the amount of the damages proved", a dictum approved by Lord Jauncey of Tullichettle in Trafalgar House Construction v. General Surety [1996] AC 199 at 207 in a speech with which the other members of the House agreed.
50. What Mr. Journeaux did take issue with was the contention that liability under the Bond depended on the issue of a certificate and establishing a debt under Clause 25(4) of the Conditions: liability under the Bond, he submitted, was dependent solely on establishing a breach of one of the two conditions expressed in that instrument (and proving loss flowing from that breach) and there was no warrant for introducing an additional requirement of this kind. In our view Mr. Journeaux was right about this. Our reasons are as follows.
51. In the first place, every bond is a contract, and - as with every contract - its effect depends in the end on a proper reading of its own, particular terms. It may be, as here, that it is in the nature of a guarantee and, if so, that will be one factor that has to be borne in mind as importing certain rights and obligations that are not otherwise spelt out. But the terms and effect of the particular guarantee in question still have to be determined as a matter of the true construction of the contract. The various authorities to which our attention was drawn demonstrate only too clearly that the terms and effect of bonds given in connection with construction contracts can vary considerably.
52. In the second place, the case of Perar BV v. General Surety & Guarantee Co. Ltd. (1994) 66 BLR 72, a decision of the English Court of Appeal, on which Mr. Hoy relied heavily in support of this part of Aegon's case, appears to us to be clearly distinguishable from the present case, in the following respects:
(i) Although in similar form to the present Bond, the Perar bond differed from it, in that its Condition was formulated in such a way as to discharge liability under it only if the contractors complied with the terms of the contract or "if, on default by the contractors, the Surety shall satisfy and discharge the damages sustained by the employer thereby up to the sum of £1,370,000...." (emphasis added). These two conditions were expressed disjunctively, and thus made the corollary, of liability, dependent on the contractor being in default (which, the Court held, was the same thing as being in breach of contract) and the surety failing to pay any resultant damages up to the specified amount (a provision which has no counterpart in the current Bond). On a true construction of the Perar bond, therefore, it was clearly contemplated by the parties that the employer was not entitled to make any demand under the bond unless and until the surety had failed to pay any damages incurred by the employer as a result of the contractor's default (a curiously tautological, but not uncommon, way of expressing things).
(ii) Although the relevant provisions of the construction contract in Perar were similar to those in the present case (the contract in Perar was in the 1981 form of the JCT Standard Form, with Contractors Design), the circumstances giving rise to the alleged liability on the bond were entirely different. The contractors had gone into administrative receivership and the contract had, accordingly, terminated automatically under Clause 27.2 of the Conditions. The employer's claim on the bond, largely for the costs of completing the work, failed because they were unable to establish any default (breach) by the contractor, that being a necessary condition of liability under the bond: Clauses 27.2 and 27.4 of the Conditions were intended, as Lord Justice Peter Gibson put it, "to provide a code for what should happen on the insolvency of the contractor, and ....this code specified what were the employer's and the contractor's respective rights and duties consequent on the automatic termination". There was, accordingly, no breach of contract: "There is no term in this contract that the contractor should not have an administrative receiver appointed of it".
(iii) One of the reasons for the court's view of Clauses 27.2 (together with 27.4) as constituting an exclusive code, was that, "unlike clause 27.1 [which provided for termination on default by the contractor] and clause 28.1 [which provided for termination ...........] it does not commence with the words 'Without prejudice to any other rights or remedies which the employer may possess'. If the parties wished to allow rights or remedies other than those set out in clauses 27.2 and 27.4 to be exercisable, then they would in my judgment have put in express words to that effect". But in the present case the provision under which termination occurred, Clause 25(4), does indeed open with the words "Without prejudice to any other rights or remedies which the Employer may possess...."
53. Another case involving a bond in substantially the same terms as that in Perar, drawn to our attention by Mr. Journeaux, was Nene Housing Society Ltd. V. the National Westminster Bank (1980) 16 BLR 22, a decision of Mr. Justice Mocatta. That also arose out of a situation in which the contractor had had a receiver and manager appointed, the contract had been automatically terminated (in that case under clause 25(2) of the JCT Form of Contract with Quantities 1963 Edition (1975 revision)), and no certificate of loss had yet been issued by the architect. But the facts differed from Perar in that the claim made against the bond was not (largely) for the costs of completing the work, but for the expense involved in remedying defects. The case before Mr. Justice Mocatta involved a number of preliminary points of law which included whether the plaintiff employer could recover on the bond before the issue of a certificate under clause 25(3)(d) (the relevant provision for certification of loss following termination). All other issues were referred for trial to the Official Referee. The issues of law were argued on the basis of certain assumed facts that included statements to the effect that the contractor had, prior to termination, "failed to carry out his work in accordance with the Drawings and Bills of Quantities and/or in a good and workmanlike manner and/or with proper materials" and that this had resulted in the employer incurring costs, after termination, in remedying "the defects in the Works caused by such failure". It was held that the absence of a certificate was immaterial to the claim, largely it seems, on the ground argued by Mr. Rokison, counsel for the plaintiff, that "there was no provision in the bond to the effect that the surety should not, in the case of default by the contractor, satisfy and discharge the damages sustained by the plaintiffs until the issue of a certificate by the architect".
54. Although this decision pre-dated that of the Court of Appeal in Perar by some fourteen years, it does not appear to have received any consideration in that case, and the question arises as to whether it can still be regarded as good law in the light of Perar. We are confident that it can be. Despite the similarities of the two cases as regards the terms of the Bond, the provisions for termination and certification and the fact that termination occurred automatically when the contractors went in to receivership, there is a fundamental point of distinction. As can be seen from the observations of judgment of Lord Justice Peter Gibson on the re-amended statement of claim in Perar, the plaintiff in that case had boxed itself into a position in which, in order to succeed, it had to establish that the circumstances of the termination itself involved, in one way or another, a breach by the contractor: no breach prior to that point was alleged. By contrast, in Nene the breaches of contract on which the claim under the bond was based had all occurred prior to termination, a circumstance that the Court of Appeal in Perar did not have occasion to consider.
55. In the present case, the contract had, likewise, plainly been breached by the contractor prior to termination. Mr. Hoy argued valiantly that this was not so: that the structure of the contract was such (i) that there was no breach of obligation to complete the works because, at the date when the contract was terminated, the specified date for completion of the first of the three sections had not passed, let alone the dates for the second and third sections, and (ii) although Mark Amy's departure from site on 12th March 1993 could properly be regarded as a breach of their obligation "regularly and diligently [to] proceed with the [works] " , as provided by Clause 21(1) of the contractual Conditions, this was not a relevant breach "as it did not sound in damages".
56. This second line of argument is, in our view, entirely fallacious. It would be an exceptional contract that did not treat a situation in which the contractor had, without cause, abandoned site with no realistic possibility of him returning (which, on any view, must have been the case by 7th May 1993, if not long before), as one giving rise, there and then, to an actionable claim for damages for breach and repudiation of the contract; and there is nothing in the terms of this particular contract to suggest that any such exceptional result was intended by the parties. To speak of a breach of this kind as not sounding in damages is quite wrong. The right to damages, in principle, flows inexorably from the breach and repudiation and can in no way be dependent on whether the repudiation is or is not "accepted" or whether the contract is subsequently terminated under the specific provisions of the contract - though the course taken may well have implications for the scope of damages that can be recovered. The act of termination is no more than a consequence of the material events: as Mr. Journeaux submitted, the loss in such circumstances flows from the breach not the termination as such. It follows that, from 12th March 1993 onwards, the States had an accrued right (that is, a cause of action for breach and repudiation by Mark Amy of their obligation to proceed regularly and diligently with work). Subject to being able to prove loss and damage (which might, of course, have posed certain practical difficulties), they also had, at that point, an immediate claim on the Bond. It is unnecessary to concern oneself with whether there were defects in the work performed by Mark Amy before they left site that could be treated as giving rise to a separate category of accrued right (the evidence suggested that there were at least some defects).
57. As to the other limb of the Bond, failure to complete the work, Mr. Hoy's submission has at first sight, a certain logic to it; but it is not one that will bear scrutiny. Abandonment of the contract by Mark Amy was not only a breach of their immediate obligation to proceed regularly and diligently with the works, but was also, plainly, an anticipatory repudiation of their obligation to complete them.
58. Our conclusions on this issue may, accordingly, be summarised as follows. Mark Amy's conduct in abandoning the works was a breach of both their obligation to proceed regularly and diligently with the works and their obligation to complete them on or before the specified dates. Those breaches had already arisen prior to the termination of the contract. The loss in respect of which the claim under the Bond is made flows from those breaches. These were accrued rights, and Mr. Hoy accepted from the outset that rights and remedies accrued prior to termination must be an exception to his argument that Clause 25(4) was an exclusive code of the employer's remedies. In any event, there is nothing in the present case that justifies treating that clause as an exclusive code in relation to the events which have happened: Perar is no authority for such a conclusion; Nene suggests otherwise, as do the opening words of Clause 25(4) "Without prejudice to any other rights or remedies which the Employer may possess". On a fair reading of the Bond, and making all proper allowance for the fact that it is in the nature of a guarantee, the conditions giving rise to liability have been satisfied and there is in nothing it to indicate that the issue of a certificate under Clause 25(4) is a necessary condition of Aegon's liability; nor is there anything in case law or principle that warrants implying such a term.
59. A certain amount of time at trial was spent in considering the extent to which a distinction could or needed to be made between pre and post termination losses. For example, a portion of the States' losses - though a small one - arose from the need to secure and maintain the site during the period between the time when Mark Amy left site and the date of termination. But in view of our conclusions on the issue of liability, no such exercise is required. We are satisfied that, on any view, the States have incurred loss and damage as a result of Mark Amy's breaches of contract in an amount well in excess of the value of the Bond.
60. In view of our conclusions, it is also unnecessary for us to deal at any length with Mr. Journeaux's secondary case that, even if he were wrong in his contention that the issue of a Clause 25(4) certificate was a pre-condition of liability, a certificate had in fact been issued. But in acknowledgment of the parties' respective contentions on this issue, a few brief observations, at least, may be made. Mr. Journeaux put forward three documents as, alternatively, amounting to a certificate: (i) a letter dated 2nd August 1993 to Mark Amy c/o the Viscount's Department, copied to Aegon, accompanied by a letter from Tillyards dated 30th July 1993 setting out the estimated additional costs likely to accrue "as a result of the determination Mark Amy Ltd.'s employment" (as it was put); (ii) a letter dated 14th February 1996 from Mr. Hutchison to the Viscount, following completion of the work by Charles Le Quesne and agreement of their final account, saying " I can advise that the loss sustained by the Education committee was £223,656.29", an amount that was subsequently amended to £223,856.29 by a further letter to the Viscount from Mr. Hutchison, accompanied by part of a letter from Tillyards dated 12th December 1995 giving the make up of this figure; and (iii) a formal document headed "Certificate of Employer's Expenses, Loss and/or Damage" signed by Mr. Hutchison and issued shortly before the start of the trial on 19th April 2002. The first could not qualify as a certificate under Clause 24(5) as it was given before the works were completed, in September 1994. And to recognise the third as such a certificate would be wholly artificial given that it was issued seven and a half years after completion. If there is a case at all for treating any of these documents as satisfying the requirements of Clause 25(4), it lies in the letters from Mr. Hutchison dated 14th February and 22nd March 1996 and a generous application of the line of approach described by Lord Justice Edmund Davies in Token Construction v Charlton Estates (1973) 1 BLR 48 at 52. Were it necessary to decide the point, we would be inclined, on balance, to hold that these two letters, taken together, were sufficient to amount to a certificate. It might, we suspect, also have been possible for the States to have advanced with some force a case in estoppel or waiver, having regard to the fact that no point about the absence, as yet, of any certificate was taken in the letter from Michael Voisin & Co. to the Viscount dated 13th October 1994 objecting to the filing by the States of a contingent claim in the désastre of Mark Amy, or at any time subsequently until (as far as we are aware) Aegon's Answer was amended in September 2000.
61. As to whether it is open to a Court, faced with a situation such as the present, either to dispense with the issue of a certificate or to issue a certificate itself - alternative arguments put forward by Mr. Journeaux - we take the view that this is a matter more properly left to another court on some future occasion on the basis of much fuller argument than was canvassed before us.
62. For these reasons, we hold that the Plaintiff is entitled to succeed on its claim against the Defendant under the Bond. There will, accordingly be judgment for the Plaintiff in an amount of £176,095 together with interest in an appropriate amount.
