Morris Homes (West Midlands) Limited v Keay & Another [2013] EWHC 932 (TCC)
This decision shows that there is a difference between an obligation to carry out works diligently and an obligation to use all reasonable endeavours to ensure that works are completed.
This was a case where a landlord developer suspended work because the recession had made the project unviable. In the agreement for lease with prospective tenants, there were separate obligations requiring the landlord:
- to carry out the works diligently in a good and workmanlike manner with good quality materials and
- to use all reasonable endeavours to ensure that the works were completed as soon as reasonably practicable (unless prevented or delayed by any circumstances not within the reasonable control of the landlord).
The High Court (HHJ David Grant) held that there was a difference between the two obligations. The obligation to carry out works "diligently" connoted (as per the Ampurius v Telford decision) connoted both "due care" and "due assiduity/expedition". A "reasonable endeavours" obligation to complete works was a separate obligation. It was perfectly possible for a party to comply with a reasonable endeavours obligation (for instance by taking reasonable endeavours to ensure that it had sufficient capital and other management resources available), but yet be in breach of an obligation to carry out the works diligently.
Comment.The better course of action when drafting performance obligations, therefore, is to include both an obligation to use due diligence and a reasonable endeavours to complete.
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