Cottingham Racing Limited (“Cottingham”) is the owner of Cottingham Racecourse (the “Racecourse”), a horse racing track on the outskirts of Cottingham. The Racecourse hosts various horseracing meetings each year, with the season running from October to May. Recently, Cottingham hasalso been keen to open up other income streams from the Racecourse, such as hosting weddings and corporate events. A number of legal issues have recently arisen in relation to the Racecourse, on which Cottingham now seeks your advice.
(a)Cottingham decided to carry out a major refurbishment of the main concourse and other internal areas of the main grandstand, which holds around 2,000 spectators, over the summer months, when there are no horseracing meetings. Cottingham obtained quotes from 5 different building companies. The cheapest quote, by a considerable amount, was provided by North-SouthConstruction Ltd (“North-South”). Cottingham proceeded to enter into a contract with North-South. The construction work commenced on 1 June 2020 and in terms of the contract, the work was due to be completed by 5 September 2020 at the latest, for a total price of £1.3 million. The contract specified that if the work was not completed on time i.e. by 5 September 2020, for each day’s delay, North-Southwould be due to pay damages of £500 (you can assume that this is a liquidated damages clause rather than a penalty clause). Apart from the terms that had been negotiated individually, the contract was concluded on North-South’s standard terms of business.In the event, the building work was not completed until 9 September 2020. This resulted in Cottingham having to cancel a major business conference scheduled for 7-8 September 2020 due to be held in the corporate suites located within the grandstand. Cottingham had to refund the full price of £7,000 paid by the client for the event, £5000 of which would have been profit for Cottingham. The first major race meeting of the season was due to take place on 18 October 2020. The day before, some panellinghad come off the ceiling of the main concourse area of the grandstand leaving a rather large hole in the ceiling with wires hanging out of it. An inspection revealed that the issue was caused by poor workmanshipby North-South, that remedial work would take at least twoweeksto carry out –at a cost of £20,000 –and that in the meantime, the grandstand was unsafe for use. Consequently, although the race-meeting on 18 October went ahead, the crowd capacity had to be reduced by 2,000. This cost Cottingham £32,000 in lost ticket sales, of which £16,000 would have been profit for Cottingham. Furthermore, Cottingham had to cancel a wedding scheduled to be held in the grandstand corporate suites on 20 October 2020 at very short notice. As well as reimbursing thecost of £6,000 paid by the engagedcouple (£4,000 of which would have been profit for Cottingham), the engagedcouple are claiming another £6,000 from Cottingham for the stress and anguish that the cancellation of their wedding at such short notice has caused. Cottingham has some sympathy for the couple but is unsure if there would be any legal entitlement to the damages being claimed. Cottingham contacted North-Southdemanding reimbursement of all losses incurred in connection with the late completion of the work and the sub-standard nature of the workon the ceiling. With regard to the losses relating to the late completion of the work, North-South’s response was that its liability was capped at £2,000 under the contract. In terms of any losses relating to the faulty work on the ceiling, North-Southpointed to a term in its standard terms of business, which states that: “North-Southshall not be liable for rectifying any defects in work carried out unless such defects are notified to us within 30 days of the work being completed. Furthermore, North-South’s liability shall under no circumstances extend beyond the actual cost of rectifying defective work”.Advise Cottingham on the following matters:
(i)Can North-Southbe held liable for the full losses incurred by Cottingham in relation to the cancellation of the business conference?(ii)Is the clause that North-Southpoints to in its standard terms in response to Cottingham’s claim for compensation effective in excluding or limiting liability on the part of North-South?(iii)Assuming the clause that North-Southpoints to does not exclude or limit liability on the part of North-South, discuss what liability, if any, North-Southwould have for damages in respect of:(a) the cost of repairing the ceiling; (b) the lost ticket sales; and (c) the cancellation of the wedding. (b)Cottingham was looking to attract a greater level of sponsorship for its races but wished to outsource this task to another company with more expertise in this area. Cottingham was contacted by Lightning PR Ltd (“Lightning”). Lightning’s representative, Donal, visited Cottingham’s office to give a presentation on Lightning’s offering. Donal explained that Lightning had over 30 years’ experience in the sponsorship business acting for “big names” in the sporting world including “some of the UK and Ireland’s top racecourses”. Donal informed Cottingham that he had little doubt that Lightning could attract “at least £1 million” in race sponsorship in the next year, increasing this to £1.5 million by year 3. Impressed by these figures and Donal’s sales pitch generally, Cottingham entered into a four-year contract with Lightning starting in April 2020, whereby Cottingham would pay Lightning a fixed fee of £100,000 per year plus a further £10,000 for every £100,000 of sponsorship brought in.During the first year of the contract, however, Lightning has only brought in about £100,000 of sponsorship. Cottingham is very concerned about this and has made some investigations into Lightning. Cottingham has learned that Lightning is quite a small company essentially run by Donal and his wife, Chardonnay,from their house in Pocklington. While it does appear that Lightning had some involvement with another Yorkshire racecourse a few years ago, it seems rather an exaggeration to describe the racecourse in question as a “top racecourse.”Furthermore, Lightning does not appear to have acted for any other professional horseracing courses.When Cottingham questioned Donal on why his forecasts for sponsorship had proved so inaccurate Donal acknowledged that sponsorship levels had been “disappointing” but that his projections for sponsorship “were only predictions and I am only as good as the next person at predicting the future.”Advise Cottingham on its legal options with regard to its contract with Lightning. (c)One of theRacecourse’s biggest race meetings took place on 24 March 2021. For big events such as this, some VIP guests, as well as some of the top jockeys, prefer to travel to the racecourse by helicopter to fit in with their busy schedules. Cottingham therefore hasa contract in place with a helicopter company, Sprint-copter Limited (“Sprint-copter”), whereby on big race-days Sprint-copter providestwo helicopters for the whole day to bring guests to and from heliports located in Cambridgeshire and Cheshire to the Racecourse for a price of £12,000 per day in total. The contract was originally entered into in September 2018 and was for a four-year period. On 21 March 2021, Sprint-copter emailed Cottingham to inform Cottinghamthat due to increases in running costs, the price for helicopter hire would have to be increased to £20,000 per race-day. Cottingham responded that this was unreasonable and Sprint-copter had
absolutely no right to increase the price under the contract. Sprint-copter emailed back explaining that without the price rise the contract “would just not work for us” so if Cottingham wanted helicopters provided for the big race meeting on 24 March 2021, Cottingham would agree to the price increase. Cottingham, knowing that it had promised helicopter transport to various parties and that with just 3 days until the big race meeting there was no realistic possibility of making alternative arrangements, reluctantly agreed to the price increase, but it made it clear in its email to Sprint-copter that it was nothappy about Sprint-copter’s actions. Following the race meeting, Cottingham has received an invoice for £20,000 from Sprint-copter and now seeks your advice.Advise Cottingham on whether it is legally obliged to pay Sprint-copter the full amount of £20,000being demanded by Sprint-copter.
