Part 2 of the Building Law Reports covers the following key judgments:
- ABC Electrification Ltd v National Rail Infrastructure Ltd  EWCA Civ 1645
- Global Switch Estates Ltd v Sudlows Ltd  EWHC 3314 (TCC)
- Standard Life Assurance Ltd v Gleeds (UK) (A Firm) and Others  EWHC 3419 (TCC)
- Aqua Leisure International Ltd v Benchmark Leisure Ltd  EWHC 3511 (TCC)
- RG Carter Projects Ltd v CUA Property Ltd  EWHC 3417 (TCC)
Introduction to the Building Law Reports Part 2 
ABC Electrification Ltd v Network Rail Infrastructure Ltd is a Court of Appeal decision about the construction of the ICE Target Cost Contract Conditions and in particular the proper interpretation of the word “default” in the wider definition of the term “Disallowed Cost”. ABC was entitled to payment by Network Rail based in part on the “Total Cost” (defined so as to exclude, amongst other things, Disallowed Cost). Disallowed Cost included cost due to “default”. The issue was whether default was to be construed widely or narrowly. The court held the natural meaning was a breach of a contractual duty and there was no way in which it could be construed as only applying to breaches where there was “fault” on the part of ABC. One problem was that there was nothing in the contract qualifying the word “default” and also there was no definition of fault.
O’Farrell J addressed in an adjudication enforcement in Global Switch Estates Ltd v Sudlows Ltd a jurisdictional and natural justice issue that sets a trap for adjudicators which too many of them fall into. This is where the referring party seeks in its notice and referral to limit the dispute in such a way that the responding party, apparently, is limited in what defences it can put forward. Whilst any referring party can put forward a dispute that is limited in scope, it cannot effectively prevent the responding party from presenting any arguable defence to what is referred. A failure by the adjudicator to address the arguable defence on its merits (factual or legal) will amount to a breach of the rules of natural justice and the more arguable the defence is the greater the chance that the court will refuse to enforce the adjudication decision, as happened in this case.
Mr Justice Kerr had to deal with a complex striking out application of some £25 million’s worth of claim in which it was argued by professional firms sued for negligence that the loss was calculated by impermissible extrapolation from an analysis of a relatively small part of their work. The judgment in Standard Life Assurance Ltd v Gleeds (UK) (A Firm) and Others has a useful summary of the practice involved in striking out applications. It also contains clear support for the approach adopted by the court in the Walter Lilly case that there is nothing in principle wrong with “global” claims, albeit that they are subject to the principle that any damages must be established on a balance of probabilities. He also agreed with the commentary in the Building Law Reports in this context, which is gratifying.
In Aqua Leisure International Ltd v Benchmark Leisure Ltd, the TCC, in another adjudication enforcement case, addressed two issues, the first being the extent to which an agreement said to have been made to settle the dispute and subsequent to the decision adjudicator’s decision impacted upon it. The judge decided that the “agreement” was subject to contract and to being reduced writing and was therefore not binding or a bar to enforcement. The second issue was whether or not there was any effective agreement whereby the adjudicator was given a discretion to award payment of legal costs. Under the current legislation, there is no such discretion in circumstances in which there is not an agreement between the parties in the underlying construction contract or after the reference to adjudication, any such agreement having to be in writing. He went on to order the payment of some of these costs on account, which is, increasingly, the standard way of proceeding.
The costs of and occasioned by the abandonment by amendment of a substantial part of a party’s claim or defence was considered in RG Carter Projects Ltd v CUA Property Ltd, a decision of Pepperall J. The claimant had presented its claim on the basis of misrepresentation, alternatively for extensions of time and sums due under a building contract. It discontinued its claim for misrepresentation and the claim was cut by 87 per cent from £14 million to £1.85 million. The judge decided that the conventional approach, namely that the claimant should pay for the costs of and occasioned by the consequential amendments and specifically the costs of the abandoned claims, should be applied.
Finally, the editors would like to thank our co-editor, Chantal-Aimée Doerries QC, for her sterling service as an editor of Building Law Reports since 1999, who is standing down. Her support and hard work over 21 years is very much appreciated.
About the Building Law Reports
Edited by members and former members of Atkin Chambers, the Building Law Reports are essential reading for legal professionals, construction industry professionals, law libraries and universities. Each report provides expert commentary on key judgments from the editors, including the substance of a case and its implications on past and future decisions.
Described as “the most established and authoritative construction law reports available”, they provide comprehensive coverage from the Technology and Construction Court, Court of Appeal, Supreme Court and other relevant jurisdictions worldwide, including Hong Kong, Australia and Singapore.
Consulting Editor: The Honourable Mr Justice Fraser