Legal Developments In Construction Law: May 2021

• Published date: 31 May 2021
• Subject Matter: Government, Public Sector, Real Estate and Construction, Government Contracts, Procurement & PPP, Construction & Planning
• Law Firm: Mayer Brown
• Author: Mayer Brown

1. When fixing defects might not be an end of the matter - what about blight?

Defects in a construction project may be remedied and paid for but what if the project is blighted, and worth less than if it never had any defects? Can damages also be recovered for that blight? In a marathon judgment dealing with claims in respect of the construction and sale of solar energy parks, this was one of many questions that the court had to consider.

The court referred to the Court of Appeal judgment in Strange v Westbury Homes (Holdings) Ltd where the Court noted that, in principle, it is possible for a court to award damages for a residual diminution in value of property following satisfactory completion of remedial works, if it is satisfied that the residual diminution in value has been proved by cogent evidence.

Where the court awards both remedial damages and damages to reflect a residual diminution in value i.e. 'blight', it must avoid double counting and the assessment of blight damages must be conducted on the basis that full and complete remediation has occurred, in accordance with the court's conclusions as to what defects exist and what work is necessary to remedy them. In making that assessment, it is reasonable to take into account wider market factors such as the nature of the market and the attitude to risk, reputation, and the history of the assets, but the existence and quantum of any alleged blight must be proved by cogent evidence. Generalised views or assertions are inadequate.

Toucan Energy Holdings Ltd v Wirsol Energy Ltd [2021]EWHC 895 (Comm)

2. Court of Appeal revisits the strict constraints on implying contract terms

When a court implies a term in a contract, it is including something that the parties did not mention. Because it is a potential intrusion into the parties' agreement, the implication of terms is subject to strict constraints. In a dispute about payment under a design services agreement in respect of some high quality apartments in Singapore, the Court of Appeal revisited the rules.

Under the agreement the designers were to be paid one third of their fee with the balance, plus any incentive payment and commission, only due on the signing of sale and purchase agreements for the apartments (or legal completion). Completion of the apartments was delayed but, by then, following the global financial crash, there had been a significant fall in the Singapore property market. The developer claimed it had unsuccessfully attempted to sell...