The High Court has rejected a contractor\u2019s attempt to stop a bank paying a developer almost \u00a32.5m under a performance bond.<\/p>\n
The Technology and Construction Court ruled that Barclays Bank could not be restrained from meeting a demand made by Northern Gateway (FEC) No. 7 Ltd under a bond linked to a \u00a3117m Manchester housing scheme.<\/p>\n
The judgment was handed down on 4 February by His Honour Judge Stephen Davies, sitting as a High Court judge in Manchester.<\/p>\n
CR Construction (UK) Company Ltd had sought to block Barclays from paying \u00a32.48m claimed as liquidated damages, arguing the bond demand was invalid and that the underlying construction contract had already been discharged.<\/p>\n
The court found the application against the bank was \u201ccompletely misconceived\u201d because no allegation of fraud had been made, which is normally required to restrain payment under a performance bond.<\/p>\n
However, Judge Davies considered the merits of the case to avoid the \u201cdifficulty\u201d of the contractor returning to court with an application for an injunction against the client.<\/p>\n
He found that CR Construction did not have a strong case on any of its substantive arguments.<\/p>\n
The dispute arose from the Victoria Riverside project in Manchester, which involved the design and construction of 634 homes with associated commercial space and public realm works.<\/p>\n
Northern Gateway appointed CR Construction in September 2021 under an amended JCT Design and Build Contract 2016, with Arcadis acting as the client\u2019s agent.<\/p>\n
The contract required a performance bond equal to 10 per cent of the contract sum, which Barclays provided.<\/p>\n
Following delays, Arcadis issued non-completion notices and later levied liquidated damages of \u00a33.16m before terminating the contractor\u2019s employment in February 2025.<\/p>\n
Northern Gateway then made a demand on the bond in December 2025 for \u00a32.48m, counter-signed by Arcadis.<\/p>\n
CR Construction argued the bond demand was defective and that termination of the contract amounted to a repudiatory breach, discharging the bond.<\/p>\n
Judge Davies rejected those arguments, finding the bond wording was wide enough to survive termination and that the demand was clearly made by the employer, despite drafting shortcomings.<\/p>\n
The court also dismissed a separate attempt to force Barclays to return funds already received under a counter-guarantee provided by Hongkong and Shanghai Banking Corporation.<\/p>\n
The contractor has already started adjudication to challenge the termination and liquidated damages.<\/p>\n","protected":false},"excerpt":{"rendered":"
The High Court has rejected a contractor\u2019s attempt to stop a bank paying a developer almost \u00a32.5m under a performance bond. The Technology and Construction Court ruled that Barclays Bank could not be restrained from meeting a demand made by Northern Gateway (FEC) No. 7 Ltd under a bond linked to a \u00a3117m Manchester housing …<\/p>\n","protected":false},"author":129711,"featured_media":514598,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[578],"tags":[],"class_list":["post-537577","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal"],"yoast_head":"\n