Case Law Update

Steven Walker QC
Society of Construction Law, 19 November 2020
A-G of the Virgin Islands v Global Water Associates Ltd

Attorney-General of the Virgin Islands v Global Water Associates Ltd [2020] UKPC 18

Remoteness

Alderson B.:
“The proper rule in such a case as the present is this:- Where two parties have made a contract which
one of them has broken, the damages which the other party ought to receive in respect of such breach
of contract should be such as may fairly and reasonably be considered either arising naturally, ie,
according to the usual course of things, from such breach of contract itself, or such as may reasonably
be supposed to have been in the contemplation of both parties, at the time they made the contract, as
the probable result of the breach of it.”

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A-G of the Virgin Islands v Global Water Associates Ltd

Lord Hodge:
[22] In an age when cases of this nature were determined by juries who did not have to give
reasons for their decisions, Alderson B’s formulations gave judges a clear basis for their legal
directions which the juries were then to apply to the facts. But when such cases came to be
determined by judges who have to give reasoned judgments, the formulations were subjected
to closer scrutiny and some expansion.

[28] In the common law tradition the phrases and expressions used by judges do not have and
should not be accorded the status of the words of a statute. In the Board’s view it is more
important to identify what it is that judges have been trying to encapsulate in their choice of
language. And that is whether as a question of fact the parties to a contract, or at least the
defendant, reasonably contemplated, if they applied their minds to the possibility of breach
when formulating the terms of the contract, that breach might cause a particular type of loss. In
the context of contractual liability, the court is not concerned solely with the percentage chance
of such an event occurring, although that is not irrelevant.

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A-G of the Virgin Islands v Global Water Associates Ltd

Lord Hodge identifies five points at [31-35]

(1) The purpose of damages for breach of contract is to put the party whose rights have been
breached in the same position, so far as money can do so, as if his or her rights had been
observed.
(2) The party in a breach of contract is entitled to recover only such part of the loss actually resulting
as was, at the time the contract was made, reasonably contemplated as liable to result from the
breach. To be recoverable, the type of loss must have been reasonably contemplated as a serious
possibility.
(3) What was reasonably contemplated depends upon the knowledge which the parties possessed at
that time or, in any event, which the party, who later commits the breach, then possessed.
(4) The test to be applied is an objective one. One assumes that the defendant at the time the
contract was made had thought about the consequences of its breach.
(5) The criterion for deciding what the defendant must be taken to have had in his or her
contemplation as the result of a breach of their contract is a factual one.

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Endurance Corporate Capital v Sartex

Endurance Corporate Capital Ltd v Sartex Quilts & Textiles Ltd [2020] EWCA Civ 308

Measure of loss

Leggatt LJ:
[63] Cases in which there is a dispute about what action it would be reasonable to expect the
claimant to take in order to remedy loss of, damage to or a defect in property for which the
defendant is contractually liable are typically cases where some feature of the property which it
would be expensive to reinstate has, or is said to have, particular subjective value to the
claimant which it would not naturally be expected to have to other owners who intended to use
the property for the same purposes. In such a case whether or not the claimant genuinely
intends to reinstate this feature of the property if awarded the cost of doing so is relevant in the
first place from an evidential point of view in ascertaining whether the feature does indeed have
such subjective value. It may also be said to be unreasonable to require the defendant to pay
the cost of reinstating a feature which is only of such subjective value if the claimant does not
or will not actually incur that cost.

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Endurance Corporate Capital Ltd v Sartex

Betterment
[90] In considering whether a deduction should be made for 'betterment', I think it necessary to
distinguish between different senses of that term. One form of betterment arises where an insured,
rather than seeking simply to reinstate property substantially as it was before it was destroyed or
damaged, chooses to make improvements to the property at an additional cost.

[92] There is no betterment in this sense where the insured does not choose to incur additional costs
in making improvements to the property which go beyond reinstatement. This may occur where, for
example, the insured uses modern materials for rebuilding which cost less than materials of the kind
originally used but which have advantages such as better thermal insulation. Another example would
be where an old machine is destroyed of a kind which can only reasonably be replaced by buying a
new machine because there is no market in which a machine of a similar age can readily be found. In
the first of these examples there is no additional cost incurred by the insured and in the second
example the additional cost (of a new machine over and above the likely cost of an old machine, had it
been available) is unavoidable.

[93] …in such situations a further distinction needs to be made. This is between benefits that take the
form of money (or which the claimant could reasonably be expected to realise in terms of money) and
other, non-pecuniary benefits.

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Rushbond v JS Design Partnership

Rushbond plc v The J S Design Partnership LLP [2020] EWHC 1982 (TCC)

Existence of duty of care

O’Farrell J.

“the courts have rejected the use of a universal test to determine the circumstances in which a duty of
care will be found to exist. The starting point is for the court to consider whether the circumstances of
the case in question have been found to give rise to the existence or non-existence of a duty of care in
other cases. In determining whether or not to extend a duty of care to novel situations, the court
adopts an incremental basis by analogy with established categories of case where a duty has been
found to exist”.

There is no general duty of care to prevent third parties from causing damage. The court considered
the exceptional circumstances where such a duty can arise and decided that no duty was owed on the
facts of this case.

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C Spencer Ltd v MW High Tech Projects UK Ltd

C Spencer Ltd v MW High Tech Projects UK Ltd [2020] EWCA Civ 331; [2020] BLR 364
Hybrid contract – payment notice

The case determines whether, in the case of a hybrid contract (which provides for the execution of
both construction operations within the Act and construction operations outside the Act), a valid
payment notice is required to identify separately the sum due in respect of construction operations
only, along with the basis on which that sum has been calculated.

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MW High Tech Projects UK Ltd v Balfour Beatty
Kilpatrick

MW High Tech Projects UK Ltd v Balfour Beatty Kilpatrick Ltd [2020]

EWHC 1413 (TCC)

Adjudication – Jurisdiction – Whether dispute crystallised

The case considered whether or not there was a crystallised dispute in respect of the claim referred to
adjudication. The principles to be applied were et out by Jackson J in Amec Civil Engineering Ltd v
The Secretary of State for Transport [2004] EWHC 2339 (TCC) at [68] (approved by Clark LJ in Collins
Ltd v Baltic Quay Management (1994) Ltd [2004] EWCA Civ 1757). The Judge also referred to
additional guidance in Cantillon v Urvasco [2008] EWHC 282.

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J & B Hopkins v Trant Engineering

J&B Hopkins v Trant Engineering [2020] EWHC 1305 (TCC); [2020] BLR 534

Adjudication – the “correction principle”

Fraser J.:
“It is, therefore, undoubtedly the case that there is something which, for today's purposes, can helpfully
be referred to as, the “correction principle” established by the authorities. By “correction principle” I
mean that if an interim application is subject to a failure by a particular party to issue the required
notices, leading to the result that by that failure the sum applied for becomes due, any correction to
reflect the true value of the work (and the application) is permissible on later applications. However,
the quid pro quo of that is that the amount due on the original application as a result of the failure to
serve the required notices – here, Application Number 26 – is precisely that: the amount due.”

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Maftoon v Sayed

Maftoon t/a FM Construction Services v Sayed and another [2020] EWHC 1801 (TCC)

Adjudication – Jurisdiction – Identity of contracting party

Judge Davis-White QC noted that the case bore a striking similarity to Hamid (T/A Hamid Properties) v
Francis Bradshaw Partnership [2013] EWCA Civ 470; [2013] BLR 447 and concluded that the contract
had been entered into with Mr Sayed in his personal capacity.

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Dickie & Moore Ltd v Robert James McLeish

Dickie & Moore Ltd v Robert James McLeish and others [2020] CSIH 38, Inner House, Court of
Session
Adjudication enforcement – severance of decision

Lord Drummond Young:

[40] In the foregoing authorities it is perhaps possible to discern a development in the attitude of courts
to the possibility of severance and the manner in which it can be carried out. Initially, there is a
potentially rigid distinction between “single dispute” cases and cases where more than one dispute is
referred to adjudication. In the later cases, however, a more nuanced and flexible approach is taken.
The distinction between single-dispute and other cases ceases to be decisive, but rather becomes a
factor in a flexible and practical approach. The fact that the dispute is presented as a single dispute is
clearly a matter of some relevance to the important question of whether severance is possible, but
there may be cases where, as in Beck Interiors, what is presented as a single dispute flowing from a
single cause can be analyzed into component elements, in that case actual loss and liquidated
damages, which are conceptually independent of each other. Consequently the existence or otherwise
of a single dispute should not be conclusive.

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Dickie & Moore Ltd v Robert James McLeish

“Breach of the principles of natural justice inevitably casts an element of doubt over the whole of the
adjudicator’s reasoning.” ([44])

“The critical question is whether the adjudicator’s reasoning in the invalid part of his decision has had
a significant effect on his reasoning in the ex facie valid part”. ([45])

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Other cases concerning adjudication

ISG Construction Ltd v Platform Interior Solutions Ltd [2020] EWHC 1120
Adjudication enforcement – exceptions to enforcement - Part 8 claims.

WRW Construction Ltd v Datblygau Davies Developments Ltd [2020] EWHC 1965 (TCC)
Enforcement of decision on value can include an order for payment.

Lane End Developments Construction Ltd v Kingstone Civil Engineering Ltd [2020] EWHC 2338 (TCC)
Request for appointment under the Scheme must follow the Notice of Adjudication.

PBS Energo AS v Bester Generacion UK Ltd [2020] EWCA Civ 404

A defendant seeking to resist the summary enforcement of an adjudicator’s decision by raising
an allegation of fraud is not required to plead and serve a defence.

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Empyreal Energy Ltd v Daylighting Power

Empyreal Energy Ltd v Daylighting Power Ltd [2020] EWHC 1971 (TCC)

Expert determination – interpretation of expert determination clause

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Steven Walker QC

Silk 2012
sjwalker@atkinchambers.com

Steven specialises in advising and representing parties to complex commercial contracts relating to a wide range of
subject matter including the design and delivery of buildings, oil and gas installations, power generation plant, process
and engineering plant, ships, IT systems, telecommunications systems, PFI/PPP, facilities management and
professional services.

He has extensive experience in the energy sector having been heavily involved in a number of projects concerning the
design and construction of offshore wind farms, energy from waste plants and other forms of renewable energy.

Transport-related projects have formed an important part of Steven’s practice over the past 25 years. His first case in
the sector concerned the Eurostar high-speed train sets and since then he has been involved in numerous projects in
the road, rail and air sectors including the construction of the HS1 high-speed rail link, airport runways and other airport
infrastructure, overground and underground rail and tram systems, road construction/extension, and communication
systems.

He has appeared as advocate in the Technology and Construction Court (TCC), the Court of Appeal, numerous
arbitrations (including ICC, DIAC, UNCITRAL, HKIAC, LCIA and LMAA) and adjudications, and in expert determination
and mediation. His arbitration experience includes substantial international experience.
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