Construction Law Quarterly

Le résumé fourni par la source

Stuart Ross, Director, ArupWelcome to the fourth edition of Construction Law Quarterly for 2023. We have a bumper edition with a diverse range of papers reflecting both topical issues and the broader challenges being faced in the construction law sphere.Our first paper from the team at Gowling WLG focuses on a Court of Appeal decision that relates to construction insurance. The authors describe a recent case where the Court of Appeal dismissed a contractor’s attempts to rely on what is known as a ‘co-insurance defence.’ The Court found that the contractor was not insured under the project policy for damage caused by its own defective work – despite the policy, on its face, extending cover for the damage in question to both the owner (the Rugby Football Union in this case) and the contractor. This case is relevant given that putting in place a single insurance policy for the mutual benefit of multiple parties is common in the construction industry.The second paper in this edition looks to tackle the issue of limitation periods and how these relate to matters that may constitute a continuing nuisance. The case related to an oil spill in December 2011 which had contaminated land. Although this case relates to an oil spill, the Supreme Court decision could have far-reaching consequences for anyone involved in the transportation of potential noxious or hazardous goods, including those in construction dealing with contaminated land. The Supreme Court found that the distinction between continuing nuisance and continuing harm was of particular relevance, with the Court reluctant to undermine the limitations set in current law.Our third paper is a case review that clarifies the NEC3 provisions in terms of notices in relation to referring a matter to arbitration. In this case the Technology and Construction Court refused the Claimant’s application, agreeing with the arbitrator that the pre-conditions for arbitration, in particular that sufficient notice had been served, had not been met.The fourth paper of this edition relates to the TCC decision which reaffirms difficulties in defending fire safety and defects claims post-Grenfell. The case that this decision relates also touches on standard of care provisions, highly relevant to design and construction practices. The Court found that treating a more onerous strict obligation as qualified by the duty of reasonable skill and care would render the more onerous strict obligation redundant (following the reasoning in MT Hojgaard A/S1). The Court also found that there was a failure to comply with the Building Regulations and that this itself was a failure to act with reasonable skill and care.The fifth paper at first glance may seem to be focused on matters related to shipping, but it is clear will have relevance to those in the construction industry where force majeure and reasonableness are relevant. This case is especially topical as it also relates to sanctions. The Commercial Court found that a contractual requirement to use ‘reasonable endeavours’ to mitigate the impact of a force majeure event did not require anything other than contractual performance.Our final paper is from Sean Wilken KC of Keating Chambers which describes the UK Government’s increasing use of the law of contract to resolve policy issues and what legal scope there may be for the private sector. The paper covers competition law and good faith obligations as well as the deployment of public law doctrines. While none of these arguments are straightforward, they certainly give much food for thought for the private sector.As we head into the winter months in the northern hemisphere, the CLQ team hope that these papers and case briefings provide an interesting read but also one that helps keep you all up to date on the latest construction law issues.As ever, should you have a short article or legal update that you would be interested in submitting for inclusion in a future issue please contact the journal editor at support@emerald.com.The content and the opinions expressed have been provided for information purposes only. It should not be relied on as a substitute for specific legal advice on any particular topic.Ashley Pigott, Partner, Gowling WLGSamantha Holland, Partner, Gowling WLGJatinder Sahota, Senior Associate, Gowling WLGEmma Knight, PSL Principal Associate, Gowling WLGIn FM Conway Limited v The Rugby Football Union2, the Court of Appeal dismissed a contractor’s attempts to rely on a co-insurance defence to claims brought by the Rugby Football Union (RFU).Notably, the Court of Appeal held that the contractor was not insured under the project policy for damage caused by its own defective work – despite the policy, on its face, extending cover for the damage in question to both the RFU and the contractor.We summarise below the background to the decision, what is meant by the ‘co-insurance defence’ and why the Court of Appeal held that the contractor, in this case, was not entitled to rely upon it.The dispute arose out of construction works carried out as part of an upgrade of Twickenham Stadium in advance of the 2015 Rugby World Cup.The Rugby Football Union (RFU) engaged:Conway was appointed under an amended 2011 JCT Standard Building Contract (the Building Contract)3, incorporating Insurance Option C. Option C required the RFU to effect and maintain a Joint Names Policy for All Risk Insurance.RFU took out a project insurance policy (the Policy) with Royal & Sun Alliance Insurance (RSA), which expressly referred to JCT Option C in respect of the ductwork package, and under which Conway was named as a co-insured.It was common ground between the parties that Option C did not require the RFU to effect insurance, on Conway’s behalf, that would insure Conway against the cost of rectifying damage caused by Conway’s own defective work.The policy also contained a waiver of ‘all rights of subrogation which [the insurer] may have or acquire against any insured party’.Following practical completion of the ductwork, water and debris were noted in the ducts, and damage was caused to high voltage cables that were pulled through the ductwork (as part of another contractor’s works package).The RFU commenced proceedings against CSP and Conway, seeking damages of around £4.4 million in respect of alleged defects in both the design and installation of the ductwork. This was made up of around £3.3 million in respect of the cost of replacing the damaged cables (the replacement costs), and £1.1 million relating to the cost of rectifying the ductwork itself.The RFU recovered the replacement costs of £3.3 million under the insurance policy. RSA, the insurer, then brought a subrogated claim against Conway to recover the sum paid out.The ‘co-insurance defence’, as asserted by Conway, may arise in cases where parties are co-insured in respect of the same damage. Whilst this can arise in a number of different sectors, it is particularly common in the construction industry for parties to affect a single insurance policy for their mutual benefit.The key principles of the co-insurance defence were set out in the 2017 Supreme Court decision in Gard Marine v China National Chartering 4. As noted by Lord Toulson, there are two key questions that must be considered:The ‘critical question’ as set out in Gard Marine 4, is whether the ‘contractual scheme’ between the parties, such as the underlying contract, precludes any claim between the co-insured parties in respect of the insured loss.Mr Justice Eyre in the Technology and Construction Court (TCC) held that recourse to the insurance policy was not, nor was it intended to be, the ‘sole remedy for loss suffered by the RFU as a consequence of breach or other default by Conway.’ He held, amongst other things, that the policy:Since Conway was not co-insured for these losses, the TCC held that the co-insurance defence was not available to it. Further, RSA was entitled to bring a subrogated claim in the name of RFU against Co

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