Local Government Lawyer Home Page

Sharpe Edge Webpage Banner

Welcome to Sharpe Edge, Sharpe Pritchard’s local government legal hub on Local Government Lawyer.

Sharpe Edge features news, views and analysis from our team of specialist local government lawyers working at the heart of the latest legal developments. Sharpe Edge platform is also the only place where local government lawyers can get e-access to two law books by our Head of Local Government Rob Hann: The Guide to Local Authority Charging and Trading Powers (‘LACAT’) and The Guide to Local Authority Companies and Partnerships (‘LACAP’).



Slide background

Make your mind up! Liquidated Damages clause upheld despite Employer’s challenge

<a href=In the recent case of Eco World Ballymore (EWB) v Dobler[1] , an Employer took the unusual position of challenging their own entitlement to liquidated damages (LDs) on the ground that the LDs provision constituted an unenforceable penalty clause. Clare Mendelle and James Goldthorpe investigate.

Applying the penalty clause test as set out in Cavendish Square Holdings v Makdessi[2] , the TCC judge upheld the LDs clause in a judgment which demonstrates the Court’s reluctance to intervene in carefully negotiated commercial bargains.


EWB engaged Dobler to carry out façade and glazing works at three residential blocks at the Embassy Gardens site in Nine Elms. The contract contained a provision which entitled EWB to LDs of £25,000 per week in the event of late completion, capped at 7% of the final contract sum. Whilst sectional completion did not apply, the contract provided that EWB could take early possession prior to practical completion, which it did in respect of two blocks.

After the works were certified as complete, disputes arose between the parties regarding the final account valuation. The key part of these disputes related to the extent and validity of LDs payable following delays to the final stages of the works. Over the course of three adjudications, EWB and Dobler switched positions as to the validity of the LDs clause, with each party taking turns to argue that the liquidated damages regime was void and unenforceable for uncertainty or because it operated as a penalty.

At the TCC, EWB asked the court for declarations as to the proper construction and effect of the LDs provisions. By this stage, EWB claimed that the LDs regime was void or unenforceable as a penalty because it did not take into account their early possession, and sought general damages for delay which they claimed would not be subject to the 7% cap. Dobler argued that the LDs regime allowed for a lower rate of LDs to be levied, which avoided turning the clause into penalty in the event that parts of the work were taken over. It also argued that there was an implied requirement for EWB to act reasonably when deciding whether to levy a lower rate.


Applying the test set out in the Makdessi case the Court decided that the LDs clause was valid and enforceable. This was because:

  • The provisions were reasonably clear and certain and capable of being operated.
  • The LDs were not a penalty because:
  • They had been negotiated by the parties with professional input;
  • EWB had a legitimate interest in making sure Dobler completed the works as a whole by the agreed date;
  • By fixing the rate of damages, the parties avoided the difficulty of calculating and proving any loss suffered by EWB; and
  • There was no evidence to suggest that the level of damages was unreasonable or disproportionate to EWB’s likely losses in the event of late completion of any one of the blocks.

As part of her reasoning, Mrs Justice O’Farrell also stressed that “[t]he court should be cautious about any interference in the freedom of the parties to agree commercial terms”, especially where they have benefited from legal advice.

Though ultimately moot given the conclusion reached above, the Court disagreed with Dobler’s argument that there was an implied term that the discretion to set the rate of LDs must be exercised reasonably: there was no need for such a term to make the provision work. As such, if the LDs provision had been found to be unenforceable, an implied term would not have saved it.

The court also considered whether general damages would have been subject to the 7% cap. Interestingly, it was held that they would, as in the court’s view the commercial purpose of the provision had been twofold: (i) to provide for automatic liability for damages in the event of delay; and (ii) to limit Dobler’s overall liability for late completion to a specific percentage of the contract sum.


EWB v Dobler is unusual in that an Employer challenged its own entitlement to LDs. The parties’ changing positions over the course of the dispute was playfully described as a “volte-face” by the judge. However, there was almost certainly a commercial tipping point during the dispute which explains EWB’s decision to seek to recover its actual losses as general damages, as opposed to the lesser sums it was entitled to under the LD regime.

For Employers on construction projects, there are two key lessons to be learned from this case:

Clearly drafted, commercially agreed LDs clauses represent the most cost effective and certain means of recovering damages for delays even where the Employer has taken partial possession of the site; and
Limits on a Contractor’s liability should allow enough scope for the full recovery of the Employer’s losses in the event of likely breaches, especially as courts may interpret such caps – even those contained in an otherwise unenforceable penalty clause – as being a general limitation of liability.

Clare Mendelle is a Professional Support Lawyer and James Goldthorpe a Paralegal at Sharpe Pritchard LLP.

[1] Eco World Ballymore Embassy Gardens Company Limited v Dobler UK Limited [2021] EWHC 2207 (TCC)

[2] [2015] UKSC 67

For further insight and resources on local government legal issues from Sharpe Pritchard, please visit the SharpeEdge page by clicking on the banner below.

sharpe edge 600x100

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email  This email address is being protected from spambots. You need JavaScript enabled to view it..

LACAT BookFREE download!

A Guide to Local Authority Charging and Trading Powers

Written and edited by Sharpe Pritchard’s Head of Local Government, Rob Hann,

A Guide to Local Authority Charging and Trading Powers covers:

• Updated charging powers compendium          • Commercial trading options

• Teckal ‘public to public’                                    • Localism Act


LACAT BookAvailable to buy:

A Guide to Local Authority Companies and Partnerships

An invaluable, comprehensive toolkit for lawyers, law firms and others advising
on or participating in Local Authority Companies and Partnerships”

- Local Authority Chief Executive


  More Articles

Icons Hazard

Unconscious Bias, Discrimination and a Warning to Public Sector Employers

Christian Grierson and Julie Bann discuss two employment tribunal judgements, which provide a stark warning to public sector employers about unconscious bias and discrimination.
<a href=

Levelling up – A new opportunity for further devolution in England?

Rob Hann explores the Government's 'levelling up' policy and looks at whether it is an opportunity for further devolution in England.
<a href=

Time limits for commencing proceedings in procurement challenges

Colin Ricciardiello discusses a landmark procurement challenge judgment on the time limit for commencing proceedings.
Icons Hazard

The Revised National Planning Policy Framework: Better design, greener outcomes?

Alastair Lewis and Sarah Wertheim outline the latest National Planning Policy Framework changes and explain how future developments will be impacted by the new rules.
<a href=

Loose talk costs money: Oral agreement to forego liquidated damages was valid

Michael Comba outlines and analyses a contract dispute resolution: Mansion Place Ltd v Fox Industrial Services Ltd [2021] EWHC 2972 (TCC)
<a href=

Procurement reform – an update

Radhika Devesher and Natasha Barlow provide a summary of the proposed and enacted changes to the UK procurement regime post-Brexit.
Icons Court

The Public Procurement Review Service Report: Procurement Pitfalls and How to Avoid Them

Juli Lau and Beth Edwards examine some of the most common procurement pitfalls and provide a checklist of points for local authorities to bear in mind in order to avoid costly errors.
<a href=

JCT Dispute Adjudication Board Rules: a case of “three’s a crowd”?

Peter Jansen who specialises in construction law and dispute resolution, examines the roles and functions of the JCT’s Dispute Adjudication Board and highlights some key considerations for parties planning to adopt the Rules in their JCT contracts.
<a href=

The Electric Vehicle Revolution or…

Emily Knowles discusses new legislation on the requirement of electric vehicle charging points, and its potential impact on the Electric Vehicle Revolution.
<a href=

Consultation on the Electronic Communications Code – What’s Changing?

Lillee Reid-Hunt outlines the legislative changes to the Electronic Communications Code.
Icons Court

You Must Adjudicate First NEC3 imposes obligation to adjudicate first before commencing court proceedings.

Michael Comba discusses NEC3 imposing an obligation to adjudicate first before commencing court proceedings.
Icons Court

Rocking aground the Christmas tree

Clare Mendelle and George Dale discuss and solve a common construction scenario, looking at the position under the Contract, and how the Employer should deal with the Contractor's request.
Icons Hazard

Adequacy Decision Granted to the UK

Charlotte Smith considers two recent adequacy decisions and explains how this affects existing data practices.
<a href=

Managing employees with long COVID and employees who have anxiety about returning to the office

Julie Bann and Victoria Smith consider how Long Covid may be treated under existing employment laws and provide compliance guidance for employers.
<a href=

Environment Act 2021: What Does it Mean for Waste Authorities?

Sally Stock, Juli Lau, Ellen Painter and Beth Edwards discuss notable changes made to the Environment Bill 2021-2022, which received Royal Assent on the 9th November.
<a href=

ESG and its relevance to the public sector

Peter Collins and Sydney Chandler discuss the growing importance of Environmental, Social, and Governance criteria in public procurement.
<a href=

JCT 101: Time and Punishment

Rachel Murray-Smith, Clare Mendelle and Laura Campbell discuss a common Construction scenario regarding the Practical Completion of a project, and the position under the unamended JCT DB 2016.
Icons Court

The importance of due process, communication and fairness in employee conduct investigations – what you need to know.

Julie Bann and James Hughes discuss the importance of fairness in employee conduct investigations, taking a look at the London Borough of Hammersmith and Fulham -v- Mr S Keable case.
<a href=

Becoming More Inclusive: VAT and Public Procurement

Juli Lau, Natasha Barlow and Beth Edwards examine the recently published Public Procurement Regulations 2021, focussing upon amendments to the thresholds within various procurement regimes.
<a href=

The LADs are Alright

Laura Campbell discusses liquidated damages in construction contracts, focussing upon the long-running Triple Point saga which ended in the Supreme Court this year.
<a href=

Procurement Policy Note 08/21

Juli Lau and Beth Edwards outline Procurement Policy Note 08/21, recently published by the Cabinet office.
Icons Court

Hard Times: Improving Air Quality with Clean Air Zones

Rob Hann and James Goldthorpe examine the introduction of Clean Air Zones to improve air quality across the UK.
<a href=

Autumn Budget Spending Review 2021 – What Public Bodies Need To Know

Rob Hann and James Hughes examine the Autumn Budget Spending Review 2021, looking at what Public Bodies need to know.
<a href=

Net Zero – What’s new for local authorities?

Steve Gummer and Sophie Drysdale look at two major climate publications: the Heat and Buildings Strategy and the Net Zero Strategy.
Icons Hazard

Jumping to conclusions: Final Statements, liquidated damages and material breaches of natural justice

Michael Comba looks at a recent Technology and Construction Court case that provides useful guidance on the JCT’s procedural requirements on disputing Final Statements.
Icons Court

Three times one equals one: Several disputed payment applications amount to a single dispute

Michael Comba considers a case in which the High Court dismissed an employer’s argument that an adjudicator lacked jurisdiction because the referral concerned three separate payment applications and, therefore, comprised three separate disputes.
<a href=

Warm feelings or hot air: the Heat and Buildings Strategy and Heat Networks

This week the government published its Heat and Buildings Strategy (Strategy). This contained vital innovations and essential step changes in terms of how heating is provided, writes Steve Gummer.
<a href=

Procurement reforms: update from Cabinet Office

Rob Hann, Nicola Sumner and Juli Lau assess the Cabinet Office's update on the progress of the government's public procurement reforms.
Icons Court

Bond, Performance Bond. Delivering value for the Public Sector?

Justin Mendelle examines whether public sector clients achieve value for money from the provision of performance bonds.
Icons Hazard

Not so personal messages: R. (on the application of Good Law Project Ltd) v Secretary of State for Health and Social Care and Abingdon Health Plc [2021] EWHC 2595 (TCC)

Nicola Sumner, Juli Lau and Beth Edwards look at The Good Law Project's challenge of the direct award by the Secretary of State for Health and Social Care of three contracts for the production and supply of rapid Covid-19 antibody tests (the “Contracts”).
<a href=

Insolvency – Termination and Beyond

Rachel Murray-Smith and Clare Mendelle consider the potential warning signs of, and the compliant manner for dealing with, contractor insolvency.
Icons Court

Settlement agreements – waiving Personal Injury claims

In the case of Farnham-Oliver v RM Educational Resources LTD, the Queen’s Bench Division of the High Court allowed a Personal Injury claim (“PI claim”) to be pursued by an employee against his former employer despite the parties signing a Settlement Agreement in respect of an Employment Tribunal claim on the same issue. Julie Bann and James Hughes report.
Icons Hazard

Mandatory Vaccination for Care Home Workers in England – Update

Rachel Murray-Smith and Francesca Gallagher look at the detail of the government's guidance on compulsory vaccination for care staff.
<a href=

Are Collateral Warranties Construction Contracts? Timing is Key.

Clare Mendelle and Anna Sidebottom examine the recently decided case of Toppan v Simply[1], which has provided guidance on when collateral warranties may be considered “construction contracts” under the Housing Grants, Construction and Regeneration Act 1996 and so give the warranty holder the right to adjudicate.
Icons Court

Climate emergency or climate catastrophe?

Rob Hann asks how central & local government departments and councils can work together more effectively to combat the challenges to achieve net zero by 2050.
Slide background