David Streatfeild-James KC and Mathias Cheung successful in Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC) 

David Streatfeild-James KC and Mathias Cheung acted successfully for the Claimant in Mace Construct Ltd v Baltic Investment Holdings Ltd. This is a Part 8 claim concerning the effect of a Schedule of Derogations under an amended JCT Design and Build Contract 2016, which sought to carve out certain listed items of work from the contractor’s design responsibility. The Court granted the majority of the declarations sought by the Claimant in relation to the interpretation and effect of the Schedule of Derogations.

Background

The Claimant (“Mace”) was engaged by the Defendant (“Baltic”) under an amended JCT Design and Build Contract 2016 (“Contract“) to carry out the refurbishment of the Baltic Exchange Building, 38 St Mary Axe, London. 

The parties are in dispute as to the liability and costs for various delays which occurred on the project, including delays resulting from changes to the design in the Employer’s requirements and/or the need to obtain further planning approvals and consents, linked to the items listed in the Schedule of Derogations.

Under the Contract, Mace was required to carry out and complete the design of the Works, and in particular:

• Clause 2.1.3 provided that Mace “shall be responsible for obtaining all consents necessary for the carrying out and completion of the Works (to the extent that these have not already been obtained) and shall comply with such consents and for the discharge of any conditions or reserved matters contained within the planning permission(s) for the Works without any adjustment to the Contract Sum and the Contractor shall not have nor make any claim for an extension of time under clause 2.25 or for loss and expense under clause 4.20”.

• Clause 2.17 provided that Mace shall be “fully responsible and liable in all respects for the entire design of the Works regardless of whether it had been (a) prepared by or on behalf of Mace and/or (b) carried out on or before the date of the Contract”. 

​The Contractor’s Proposals contained, inter alia, a Schedule of Derogations, which set out a number of listed items of work and provided (among other things):

• By paragraph 1, that “Mace Construct Ltd are unable to take design responsibility, associated risk of any discrepancies, inconsistencies and inadequacy of the below listed items until the period of initial design development is complete on the 2nd February 2024, 6 working weeks from anticipated contract execution date (08 December 2023)”; and

• By paragraph 2, that “[o]nce the derogations listed in this document have been concluded and approval from all parties obtained, and formal instruction received Mace Construct Ltd will take design responsibility on the items listed above. Mace Construct Ltd will take design responsibility, excluding planning approval from the 2nd of February 2024, 6 working weeks from anticipated contract execution date (08 December 2023)”.

Baltic’s position was that the Schedule of Derogations was inconsistent with the amended JCT Conditions and so the latter should take precedence, by virtue of the hierarchy clause in clause 1.3 of the Contract which provides that “[n]othing contained in any other Contract Document or any Framework Agreement, irrespective of their terms, shall override or modify the Agreement or these Conditions or the Schedule of Amendments”.

In an adjudication between the parties in 2025, the adjudicator, Mr Nigel Davies, decided against Mace on (among other things) the status and effect of the Schedule of Derogations. Mace therefore commenced Part 8 proceedings to seek final declarations from the Court as to (among other things) the status and effect of the Schedule of Derogations.

Decision

Deputy High Court Judge Adrian Williamson KC held at [22] that Mace’s interpretation of the Contract on the effect of the Schedule of Derogations was to be preferred.

The Judge started by noting at [23] that in the Schedule of Derogations, the parties were clearly agreeing that Mace’s obligations in relation to the listed items were to be in some way limited. He then concluded at [24] that “the Court should give effect to the entirety of the agreement between the parties”, and it would be an odd result if no effect is given to the words in paragraph 2 of the Schedule of Derogations to the effect that Mace would take design responsibility “[o]nce the derogations listed in this document have been concluded”.

As to the effect of the hierarchy clause in clause 1.3, the Judge observed at [29] that “[t]he courts have wrestled with this wording on a number of occasions and have, in general, concluded that effect can and should be given to the entirety of the contractual documents”, and “[t]he Court is entitled to look with some initial scepticism at the proposition that carefully agreed bespoke provisions are not to be operated as the parties appear to have intended”.

The Judge ultimately took the view at [30] that the Schedule of Derogations did not seek to override or modify the JCT Conditions but “[r]ather it explains and supplements them, by clarifying how and in what way Mace is to perform its design obligations and undertake its design responsibility in relation to the listed items”.  As such, the Judge concluded the parties had agreed “Mace’s obligations were to be in some way limited” [23] in relation to the items listed in the Schedule of Derogations, and it could and should give effect to the Schedule of Derogations.

On this basis, the Judge granted the majority of the declarations sought by Mace as to the incorporation and interpretation of the Schedule of Derogations, thus confirming that Mace did not take on any design responsibility or the associated risks for the listed items until the design solutions for those items were finally approved and instructed by Baltic.

David Streatfeild-James KC and Mathias Cheung were instructed by Mantle Law (UK) LLP and acted for the successful Claimant.