Mace v Baltic: the Schedule of Derogations earns its keep

Case Law Review: Mace v Baltic [2026] EWHC 976 (TCC)

When parties spend weeks negotiating a Schedule of Derogations into a JCT Design and Build contract, they would expect it to have contractual effect. Baltic Investment Holdings argued, in adjudication and then before Adrian Williamson KC, that it did rather less than Mace Construct thought. The judgment, handed down on 28 April 2026, holds that the Schedule of Derogations had contractual effect and was not displaced by the standard override wording in clause 1.3.

The contract was for the refurbishment of the Baltic Exchange Building at 38 St Mary Axe, signed on 15 December 2023 on an amended JCT D&B 2016 form. The Contractor’s Proposals included a document called “Derogations Final.pdf”. The Schedule listed a number of items, the heritage windows among them, and limited Mace’s design responsibility for those items by reference to a defined process: derogations to be concluded, approvals obtained, and formal instruction received before responsibility would transfer.

On 24 December 2024 the Employer’s Agent granted Mace 7 weeks and 5 days of extension across three events, on the basis that the delays resulted from changes to the Employer’s Requirements and the need to obtain further planning approvals and listed building consents. Baltic referred the matter to adjudication. Mr Nigel Davies, in a decision of 29 August 2025 (corrected on 2 September), reduced the extension to zero. Mace then issued Part 8 proceedings seeking seven declarations.

Baltic’s case on design was that, whatever the Schedule of Derogations did during the initial period, from 2 February 2024 Mace bore full and unqualified design responsibility for the listed items, with the wording about derogations being concluded and a formal instruction received to be given no weight. The amended clause 1.3 said nothing in any other Contract Document could “override or modify” the Conditions. Mace’s case, accepted by the court, was that the Schedule had to be construed in the context of the contractual process the parties had agreed.

The judge rejected Baltic’s argument that Mace became fully responsible for the listed design items on 2 February 2024 regardless of instruction. The route to that conclusion took clause 1.3 limb by limb. Item (i), that the Agreement and Conditions are to be read as a whole, was orthodox. Item (ii), the override or modify wording, was the heart of Baltic’s case. The judge tested it against the OED. “Override” means to prevail over; nobody suggested the Schedule did that. “Modify” means to alter in the direction of mildness or moderation, to qualify or moderate. The Schedule did not have that effect upon the Agreement and the Conditions; it “explains and supplements” them, by clarifying how Mace was to perform its design obligations on the listed items. There was, in the judge’s words, “nothing for this item to bite upon”. On item (iii), the judge held there was no relevant discrepancy on his analysis; and that, if there had been, the Schedule of Amendments would prevail, which would still support Mace because the Schedule of Amendments calls up the Schedule of Derogations and creates the Initial Scope of Works regime. Item (iv) gave the Schedule of Derogations express primacy over the Employer’s Requirements.

The judge also noted that JCT clauses of this type have contained similar wording since at least 1939, and that courts have generally given effect to bespoke provisions rather than allow standard wording to erase them.

Declarations 1, 2, 4 and 5 were granted. Declaration 3 was granted subject to revised wording, with the reference to consents under clause 2.1.3 to be removed because it strayed into the planning issue dealt with separately. Declaration 6, on planning delays, was refused on the basis that it would either paraphrase the express terms in clauses 2.1.3 and 2.26.13 or venture into fact-sensitive territory unsuitable for declaratory relief.

Declaration 7 was the adventurous one. Mace sought a declaration that neither an adjudicator nor the court could fix a completion date earlier than the one already fixed by the Employer’s Agent under clause 2.25.1, on the basis that clause 2.25.1 calls for a prospective estimate that a later tribunal could not replicate. Williamson KC was unmoved. Paragraph 20 of the Scheme empowers the adjudicator to open up, revise and review decisions taken under the contract, and the adjudicator stands in the shoes of the Employer or Agent for the clause 2.25.1 exercise. The difficulty of carrying out that prospective task at a later date was a matter of evidence and procedure, not an objection of principle.

For contractors, the practical message is this. A Schedule of Derogations that defers design responsibility until a defined process has run its course is a Schedule that keeps the design risk with the employer until that process completes. For employers, do not assume that “override or modify” wording in a priority clause neutralises bespoke carve-outs that the parties spent weeks agreeing. For adjudicators, paragraph 20 of the Scheme remains available to revisit a prospective extension of time, with evidential difficulty no objection of principle.

Who won and why

Mace won on the substance of the design dispute. The court granted declarations 1, 2, 4 and 5, and granted declaration 3 subject to revised wording. That meant the Schedule of Derogations was confirmed as part of the contract, and Mace did not take on design responsibility for the derogation items until the contractual derogation process had been concluded, approvals obtained, and formal instruction received. Baltic’s argument that clause 1.3 swept the Schedule aside was rejected. Baltic took the points on declarations 6 and 7, but those were the narrower questions: declaration 6 was refused as too fact-sensitive and as a paraphrase of express terms, and declaration 7 was refused because paragraph 20 of the Scheme allows an adjudicator to revisit the Employer’s Agent’s prospective extension. On the issue that mattered most for the parties’ design risk allocation, Mace prevailed.

Summary

• Citation: Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC), Adrian Williamson KC sitting as a Deputy Judge of the High Court. Hearing 15 April 2026, judgment handed down 28 April 2026.
• Refurbishment of the Baltic Exchange Building (38 St Mary Axe, listed) under an amended JCT D&B 2016 dated 15 December 2023. Schedule of Derogations (“Derogations Final.pdf”) incorporated into the Contractor’s Proposals.
• The court held that the Schedule of Derogations was effective and was not displaced by the standard override wording in clause 1.3. Per the OED, “modify” means to qualify or moderate, which the Schedule did not do; it “explains and supplements” the Conditions. Item (iv) gave the Schedule of Derogations express primacy over the Employer’s Requirements.
• The judge rejected Baltic’s argument that Mace became fully responsible for the listed design items on 2 February 2024 regardless of instruction.
• Declarations 1 and 2 granted: the Tender Clarifications and Schedule of Derogations were incorporated into the Contract.
• Declarations 4 and 5 were granted, and the court held that Mace did not take on design responsibility for the derogation items until the contractual derogation process had been concluded, approvals obtained, and formal instruction received.
• Declaration 3 was granted, but the planning reference under clause 2.1.3 was to be removed from the final wording.
• Declaration 6 was refused because planning delay disputes were too fact-sensitive and because the declaration would merely paraphrase express contractual provisions.
• Declaration 7 was refused because the adjudicator could reopen and review the Employer’s Agent’s extension-of-time decision under paragraph 20 of the Scheme, standing in the shoes of the Employer or Agent for the clause 2.25.1 exercise. Evidential difficulty is a procedural matter, not an objection of principle.