Construction

Barratt Homes Limited (Respondents) v Dwr Cymru Cyfyngedig (Welsh Water) (Appellants), [2009] UKSC 13

Tue, 02 Feb 2010 23:15:11 GMT

Supreme Court - Press Summary

The Respondents, Barratt Homes Limited, were engaged in building a substantial development of homes and a primary school in Llanfoist, near Abergavenny in Monmouthshire. They sought to exercise the right of a property owner under s 106 Water Industry Act 1991 to connect the drains to the public sewer at a point close to the development. The appellant sewerage undertakers, Welsh Water, argued that it was entitled to insist on a connection at point some 300m further downstream, as the sewer did not have the capacity to deal with the increased load until that point.

Welsh Water succeeded in the High Court but the decision was reversed on appeal and Barratt Homes made the connection at the place of its choice. Welsh Water pursued an appeal to the Supreme Court, seeking to establish that s 106 gave a sewerage undertaker the right to refuse to permit connection to the public sewer at an unsuitable point.

JUDGMENT
The Supreme Court dismissed the appeal (Lady Hale dissenting). The judgment of the majority was given by Lord Phillips.

REASONS FOR THE JUDGMENT
 The exercise of the right of a property owner to discharge into a public sewer pursuant to s 106 Water Industry Act 1991 (‘the 1991 Act’) was an absolute right which could not be prevented on the ground that the additional discharge would create a nuisance. That was for thesewerage undertaker to deal with [paras 23-26]. The right to object to the ‘mode of construction’ in s 106(4) did not extend to the point of connection [para 32]. It was significant that in nearly a century and a half since the first enactment conferring this right was passed, this was the first dispute between an owner and sewerage undertaker as to the point of connection to a public sewer to have reached the courts [para 38].

 The real problem behind the dispute in this case lay in the requirement to give only 21 days’ notice to a sewerage undertaker before exercising the absolute right in s 106. This was manifestly unsatisfactory in relation to a development which in this case would add 25% or more to the load on the public sewer [para 41]. The only way to achieve a deferral of the right was through the planning process, in which both the sewerage undertaker and OFWAT should be consulted. More thought might need to be given to the interaction of planning and water regulation systems under modern law to ensure that the different interests were adequately protected [paras 57-58].

 The 21 day limit for refusing applications to connect to the public sewer in s 106(4) was mandatory, in view of the fact that it was a criminal offence to connect a drain after such notice had been given [para 62].

 Lady Hale would have allowed the appeal on the construction of s 106(4). The legislative history led her to conclude that Parliament had not intended to cut down the scope of the local authority’s power to control the place and manner of connection in the Public Health Act 1936 (the predecessor to the 1991 Act), while leaving the position in Scotland unchanged [para 73]. The words ‘mode of construction or condition’ in s 106(4) should be interpreted as including the place of connection to the public sewer [para 79].

Reinwood Limited v L Brown & Sons Limited

Thu, 11 Dec 2008 10:35:00 GMT

In a 2008 House of Lords decision relating to withholding notices, a Contractor claimed to be entitled to determine its JCT '98 Private with Quantities contract on the ground (amongst others) that the Employer had repeatedly failed to make payment of sums due under the contract by the final date for payment.

Reinwood Ltd v L Brown & Sons Ltd [2008] UKHL 12 (20 February 2008)

Wed, 20 Feb 2008 00:00:00 GMT

The House of Lords gave its decision on s.111 withholding notices under the Housing Grants, Construction and Regeneration Act 1996 in the context of the deduction of liquidated damages (LDs) under the JCT Standard Form of Building Contract 1998 edition. The issue for the House was whether an employer who served a withholding notice intending to deduct LDs from an interim payment was entitled to withhold LDs after an extension of time had been granted in advance of the final date for payment, i.e. are employer’s rights altered by events that occur between the giving of the withholding notice and the final date for payment. The House dismissed the appeal, holding that an employer may withhold LDs against payment due to the contractor under an interim certificate despite the grant of an EOT where he has paid against the withholding notice early. The House of Lords considered that the policy of the 1996 Act provided a regime with notices so that parties are entitled to know where they stand. In the present case, the employer was entitled to give the withholding notice when it did and it had paid in reliance on that notice before the extension had been granted. The employer would then be obliged to repay the liquidated damages under clause 24.2.2 in accordance with the default provisions of the Scheme. Lord Neuberger said that this would be due after 7 days and the final date for payment would be 17 days. The fact that the employer had paid early in reliance on its withholding notice seems to have been the deciding factor in the case. The House expressly left open for debate whether the result might have been different if the extension of time had been issued before the employer had paid in advance of the final date for payment. Lord Neuberger, giving the lead opinion with which the other Lords agreed, said there was “undoubtedly a case” for saying that the Employer would not have succeeded upon those facts: there was a difference between paying out on the strength of a notice which was accurate at the time of paying and paying out in reliance on a notice which is no longer accurate. The House acknowledged there were arguments either way and because it was not “tolerably clear” it would be “wrong to express a view on this outstanding question”. Lord Hope, giving additional reasons, thought that a contractor was not in a position to complain about non-payment of the amount properly due unless he had referred to adjudication, before the final date for payment, a dispute concerning the claimed entitlement in the withholding notice.

Melville Dundas Ltd & Ors v. George Wimpey UK Ltd & Ors (Scotland) [2007] UKHL 18 (25 April 2007)

Wed, 25 Apr 2007 00:00:00 GMT

This case was the first occasion on which the House of Lords considered the adjudication provisions of the Housing Grants, Construction and Regeneration Act 1996 (“the Act”). Their Lordships held that on the construction of the contract the employer was entitled to withhold any payment whatever and (adopting a purposive approach to s. 111 of the Act) that there was no conflict with s. 111(1) of the Act. Their Lordships commented that the purpose of the notice requirement in s. 111 of the Act was to enable the contractor to know immediately and with clarity why a payment was being withheld.

Melville Dundas Ltd & Ors v. George Wimpey UK Ltd & Ors (Scotland) [2007] UKHL 18 (25 April 2007)

Fri, 20 Apr 2007 00:00:00 GMT

A was the employer under a JCT Standard Form of Building Contract with Contractor's Design (1998 edition) and R was contractor. The contract provided for interim payments on a monthly basis based on an application for payment being made by R. On 2 May 2003 R applied for an interim payment; no withholding notice was served and the payment fell due on 16 May 2003. A failed to make payment and on 22 May 03 an administrative receiver was appointed in respect of R. On 30 May 2003, A determined the contract under clause 27.3.4 by virtue of the administration order. The issues on appeal was (i) whether the words "any further payment" in clause 27 extended to an interim payment that the employer was already liable to pay under the terms of the contract before determination of the employment; and (ii) whether Clause 27.6.5.1 invalidated the provisions of the Housing Grants, Construction and Regeneration Act 1996. The HL was unanimous on its opinion on issue 1 (that "any further payment" in clause 27 of the contract extended to any sums payable by the employer). On issue 2, the majority held (3:2) that there was no conflict between clause 27 and the statutory requirements as to the terms that the contract should contain. The parties to a construction contract were entitled to agree terms which gave effect to insolvency set off provisions as between parties and there was nothing intrinsically unfair about such terms. It would have been impossible for a withholding notice to have been served in the circumstances. Appeal allowed.

Metropole (Folkstone) Ltd v Revenue & Customs [2006] UKVAT V19917 (04 December 2006)

Mon, 04 Dec 2006 00:00:00 GMT

C appealed against D's decision that supply of works to replace the balcony of a listed building were standard rated for VAT purposes. The balcony had been demolished as an emergency measure because it was unsafe and was replaced with a replica. Held that the works properly construed amounted to repair or maintenance because the changes were not fundamental or radical and the works therefore fell outside the scope of schedule 8, Group 6 to the Value Added Tax Act 1994.

Haward & Ors v. Fawcetts (a firm) & Ors [2006] UKHL 9 (1 March 2006)

Wed, 01 Mar 2006 00:00:00 GMT

This was a case concerned with solicitors’ negligence, but the findings on what constitutes “knowledge” for the purposes of section 14A of the Limitation Act 1980 are likely to have wide application in the law of negligence of construction professionals. Their Lordships held that “knowledge” meant knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a claim; and that knowledge that damage was “attributable” in whole or in part to the defendant’s acts or omissions within section 14A(8)(a) of the Limitation Act 1980 meant: (1) knowledge in broad terms of the facts on which the complaint was based; and (2) knowledge that there was a real possibility that the defendant’s acts or omissions had been a cause of the damage. The burden of proof was on the claimant.

Lesotho Highlands Development Authority v. Impregilo SpA & Ors [2005] UKHL 43 (30 June 2005)

Thu, 30 Jun 2005 00:00:00 GMT

Challenge to Arbitrator's award under s 69(2)(b) of Arbitration Act 1996 on the basis that award was made in excess of jurisdiction. C also challenged the award of interest. Underlying contract had been for the construction of a dam in Lesotho and had provided for payment to contractors in Maloti. The value of Maloti had plummetted between the time when C should have made payment under the contract and the date of the Arbitrator's award and the Arbitrator awarded payment in the currency of the contractors. HL held (1) that the decision to award payment in a different currency constituted an error of law rather than evidence of the tribunal exceedings its powers within the meaning of section 68(2)(b) of the 1996 Act; (2) there were no findings of fact from first instance or CA that C suffered substantial injustice as a result of award of interest which would be a precondition to invoking remedy under s 68 of Act and power to award interest was available under Act unless parties expressly agreed to contrary.