Court of Appeal upholds “MAP” route to termination

The contract in question is the NHF (National Housing Federation) Schedule of Rates Form of Contract 2011, which we, at Anthony Collins Solicitors, comprehensively revised and updated for Rand/M3 in 2011, and still keep up-to-date for them.

The court case was a decision of the Court of Appeal in Sutton Housing Partnership Limited v Rydon Maintenance Limited [2017] EWCA 359.

I was pleased to see that the contract passed scrutiny with flying colours, even though Sutton had substituted their own KPI (Key Performance Indicator) Framework for the KPI Framework document provided with the template contract. Had Sutton used the version from the template contract, both the MAP (Minimum Acceptable Performance) levels and worked examples would have been clearly set out in the KPI Framework document. Instead, in the KPI framework drafted by Sutton, the MAP levels were expressed as “examples”, leading to a concern whether those MAP levels were contractual requirements.

In the case, the court decided that unless the “example” figures were treated as being the contractual MAP levels, the contractual provisions dealing with termination for failure to achieve those MAP levels would have been redundant. As the court had established that the MAP levels were contractual requirements, they upheld Sutton’s right to terminate the contract (following a notice period to give Rydon an opportunity to improve performance) as a result of Rydon’s failure to achieve those MAP levels.

Although this was a victory for Sutton, they won’t be able to recover the full costs of the court proceedings from Rydon, and will be out of pocket as a result. Sutton initially lost in the High Court and, therefore, had to appeal to the Court of Appeal. Had the MAP levels been clearly expressed, as set out in the template KPI Framework provided with the NHF Schedule of Rates Form of Contract 2011, it is very unlikely that Rydon would have even gone to court, let alone have won in the High Court.

This case demonstrates that when you are amending template contracts and replacing documents within them, those bespoke documents and amendments need to cover everything clearly in the template documents they are being drafted to replace.

Rather than substituting whole documents, it is usually better and safer to keep the documents provided as part of the template contract, and add into them any bespoke amendments (such as to add financial incentivisation, as Sutton wished to do) rather than replacing them altogether.

If you would like more information about this topic, please contact Andrew Millross. For more information about the work that we do at Anthony Collins Solicitors, please visit our website.

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