Contractor denied £10m payout after business collapse ended contract

A construction firm has had its legal claim denied in the High Court, after seeking a payout for the premature termination of a contract.

Shaylor Group owed £47m when went into administration in 2019 during a construction project in the Jewellery Quarter for Valescure Property. In its claim, Shaylor says that its work had been undervalued and wanted more than double the £9.01m it received.

Work on the £18.7m project to build 157 apartments was halted and Shaylor was only entitled to payment for work it had completed to the point of its collapse.

Whilst High Court documents show that the project was far from completion, Shaylor said that its work was valued at £20.3m.

This was disputed by Valescure, which had assessed the work to be worth £9.4m in a statement in 2019.

Judge Mr Justice Kerr warned that granting the increase to Shaylor might constitute an “unlawful windfall” for the former contractor.

An adjudication in 2022 determined that Shaylor was not owed any further payment. However, a second adjudicator in September of that year concluded that Shaylor was owed an additional £356,008. Following this, Valescure was liquidated.

Shaylor contested the decision in the High Court, arguing that the adjudicators had erred in their calculation of the amount owed.

Despite warnings from the Official Receiver that Valescure lacked assets to fulfil either the £9.4m or £20m claims, Shaylor pursued the case to validate its debt during the liquidation process.

In his recent ruling, Justice Kerr heard that Valescure was not liable for the £20.3m claimed by Shaylor, largely due to Valescure’s own liquidation process, which left it without sufficient funds to mount a defence.

Had Valescure been financially equipped, the case may have been different.

The first adjudicator found that Valescure had failed to state accounts with all money owed within the contractual timeframe.

Justice Kerr clarified that Grainger PLC, the subsequent developer, became the employer responsible for stating the project’s completion, a stage that had not yet been reached.

The second adjudicator determined that Grainger PLC’s expenses and losses from the project would not be considered in determining liabilities to Shaylor.