The Week That Was - 15 September 2023

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

High Court decides on proper construction of liability cap

The High Court has decided on the proper construction of a liability cap in Drax Energy Solutions Limited v Wipro.  The contract in question in the case limited the supplier's liability to 150% of charges paid in the preceding twelve months from the date of the claim.  Drax argued this applied individually to each claim, while Wipro asserted it was an aggregate cap.

The court ruled in favour of an aggregate cap, citing the clause's wording, the phrase "total liability," and the absence of "for each claim." Consistency with similar contract clauses in other decisions supported this interpretation.

This decision illustrates the importance of precision when drafting limitation of liability clauses and the need to consider potential disputes and ensure that negotiated terms align with the entire contract. Limitation of liability clauses are crucial risk management tools in contracts, especially when potential claims could outweigh the contract's value.  

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Liverpool FC signs up firm to complete £80m stadium project

Lancashire-based Rayner Rowen Construction has been appointed by Liverpool Football Club to complete its stadium upgrade project.
This comes as a direct result of the collapse of the previous contractor Buckingham Contracting Group.  Buckingham is understood to have left the £80m project in mid-August after the £665m-turnover contractor ceased trading.

Rayner Rowen Construction have worked with the club previously when transforming the club shop into a bar in 2018 and will now undertake the final stages of the works on the Anfield Road Stand.  Once completed, the stand will add 7,000 new seats to the stadium, boosting capacity to 61,000.

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Proportion of RAAC likely to be higher among schools yet to return Department of Education questionnaires

With one in 10 schools having yet to provide a response to the Department for Education's RAAC (Reinforced Autoclaved Aerated Concrete) surveys, is feared by some that these schools may be more widely affected by the problem material.  The delayed response rate may mean that some schools are undertaking more invasive investigations in order to confirm the presence of RAAC.

Earlier this year, property consultant Rapleys conducted its own research which estimated that up to 10% of schools may have used RAAC and the Department of Education has confirmed it expects many more cases.  It has created a list of schools in England where RAAC has been found which shows 19 schools have delayed the start of term and 4 are restricted to fully remote learning.

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Law Commission Publishes Proposals for English Arbitration

On 6 September 2023,the English Law Commission published its final report on amendments to the Arbitration Act 1996. Its proposals include:

• A statutory and continuing duty on arbitrators to disclose any concerns on their impartiality (a codification of the position in Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48).
• A new power to decide claims or issues summarily, but only if the relevant party has no real prospect of succeeding on (or defeating) that claim or issue. Parties can opt out of this power by agreement. 
• A provision for, a Court to make orders against third parties mirroring those in English Court proceedings including freezing injunctions and evidence preservation orders (under section 44). 
• A simplification of challenges to the substantive jurisdiction of a tribunal (under section 67) from the current re-hearing to a more limited review.
• A rule providing for the default proper law of the arbitration agreement to be the law of the seat of arbitration, unless the parties expressly agree otherwise.

The approach taken with these proposals appears to be to encourage parties to arbitrate, rather than to adjudicate or litigate disputes.
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Scots take lead on cladding remediation

The devolved Scottish administration has indicated it will introduce a Cladding Remediation Bill in 2023 – 2024. The Bill would give Scottish ministers new powers to remediate buildings with unsafe cladding that present a risk to life. Under the planned legislation, a new Building Safety Levy will be set up, equivalent to the one already established by the UK Government. £400m has been set aside for this purpose and its cost is likely to rise. Legislation to ban combustible cladding on high-risk buildings, and the highest-risk metal-composite cladding material from all buildings was passed by the Scottish Parliament on 22 April 2022 and amended the Building (Scotland) Regulations 2004. The new levy for Scotland would compel developers to make a “fair contribution” financially to cladding remediation.

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Authors for this week's edition: Jonathan Chambers, Sharona Zovich, and Tom Cameron

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.