Projects & Construction Law Update 11 October 2017

Please find below Clyde & Co's latest projects and construction law update from September 2017

CASE UPDATE

But what does it mean? The court's approach to competing interpretations

Vinci Construction UK Ltd v Beumer Group UK Ltd [2017] EWHC 2196 (TCC)

The courts have once again shown their reluctance to hold a contract void for uncertainty, finding that the sectional completion and delay damages provisions of the relevant subcontract were operable and enforceable - potentially leaving the subcontractor in the lurch in respect of its liability to pay liquidated damages and the quantum thereof.

Vinci Construction UK Ltd (Vinci) subcontracted Beumer Group UK Ltd (Beumer) to design, supply and install a baggage handling system at Gatwick Airport. The subcontract works were divided into various sections, each with different completion dates and different liquidated damages that applied. Delays occurred and a dispute arose about the operation of the sectional completion dates and the applicable liquidated damages. The dispute was referred to adjudication where the adjudicator found the provisions to be uncertain, inoperable and unenforceable. Vinci commenced proceedings seeking a declaration the provisions were valid.

The crux of the issue was whether or not it was unclear in what sections the various works fell and therefore what liquidated damages regime applied to what works. The contract in question was a heavily amended NEC3 Option A, containing numerous schedules, secondary option clauses and bespoke amendments. In deciding that the sectional works were sufficiently identifiable, the court considered the principles set out in Arnold v Britton [2015] UKSC 36 to ascertain the intention of the parties by reference to what a reasonable person, having all the background knowledge which would have been available to the parties, would have understood them to mean, using the language in the contract.

It was held that the parties must have had some understanding of the works falling within each section as they had expressly made provision for sectional completion and for different rates of liquidated damages to apply to different sections. While there was no definition of "baggage" or "remaining works" (being the descriptions given to the sections in dispute), based on an objective reading of the descriptions set out in the relevant schedule and the contract as a whole, the court was satisfied that the works could be separately identified.

The case...