Legal Developments In Construction Law

• Published date: 27 July 2023
• Subject Matter: Government, Public Sector, Real Estate and Construction, Government Contracts, Procurement & PPP, Construction & Planning
• Law Firm: Mayer Brown
• Author: Mayer Brown

1. No special interpretation rules for exclusion or limitation clauses, says the court, but...

In times gone by, the courts found ways to curb excessive exclusion clauses, until, of course, the Unfair Contract Terms Act came along. But although the statute is there for the courts to deploy, when needed, are there still special rules of interpretation to be applied to an exclusion, or a limitation, clause?

In Drax Energy Solutions Ltd v Wipro Ltd the court said there were not. Supreme Court and Court of Appeal judgments have confirmed that commercial parties are free to make their own bargains and allocate risks as they think fit, and that the task of the court is to interpret the words used fairly, applying the ordinary methods of contractual interpretation. The parties are, however, not lightly to be taken to have intended to cut down the remedies which the law provides for breach of important contractual obligations, without using clear words having that effect. The principle is essentially one of common sense; parties do not normally give up valuable rights without making it clear that they intend to do so.

Drax Energy Solutions Ltd v Wipro Ltd [2023] EWHC 1342 (TCC) (09 June 2023)

2. Can "Can't pay" stop adjudication enforcement?

The policy behind adjudication is "pay now, argue later", robustly enforced by the courts, but what if the paying party can't? Can that stop enforcement?

In J & B Hopkins Ltd v A & V Building Solution Ltd the court noted that the Civil Procedure Rules give the court discretion to order a stay of execution if satisfied that:

1. there are special circumstances which render it inexpedient to enforce the judgment or order, or
2. the applicant is unable from any reason to pay the money.

Case law has additionally said that, if (b) is relied on, the burden is on an applicant to show, on the balance of probabilities, that it is unable to pay, including that no funds would be made available to it, including by its owner or by some other closely associated person. The court should judge the probable availability of the funds by reference to the underlying realities of the company's financial position; and by reference to all aspects of its relationship with its owner, including, obviously, the extent to which they are directing (and have directed) its affairs and are supporting (and have supported) it in financial terms.

Even if the court is satisfied that the applicant is unable to pay, it must still consider its discretion as to whether...