Local Government Lawyer Home Page


Sharpe Edge Webpage Banner

Welcome to Sharpe Edge, Sharpe Pritchard’s local government legal hub on Local Government Lawyer.

Sharpe Edge features news, views and analysis from our team of specialist local government lawyers working at the heart of the latest legal developments. Sharpe Edge platform is also the only place where local government lawyers can get e-access to two law books by our Head of Local Government Rob Hann: The Guide to Local Authority Charging and Trading Powers (‘LACAT’) and The Guide to Local Authority Companies and Partnerships (‘LACAP’).

 

                                                                                                  

Slide background

Disallowed Costs, Definitions and Default

Icons CourtThe recent case of ABC Electrification Limited v Network Infrastructure Limited [2020] EWCA Civ 1645 saw legal practitioners jousting over the definition of a solitary word – namely, “default”. In this case regarding the scope of ‘Disallowed Costs’ in a common rail industry contract, the Court of Appeal issued a stark reminder to contractors that the meaning of individual words can be the difference between millions of pounds.

Background

In ABC v Network Rail, costs amounting to £13.4 million following delays to the upgrade of a major railway line drew the clauses of a Target Cost Contract into sharp focus for both parties.

The contract in question was the ICE Target Costs Contract, subject to a set of amendments which are standard across the rail industry. The salient features of the contract were as follows:

  • For carrying out the works ABC would receive its fee and a sum for its “Total Costs”, equating to total costs incurred minus “Disallowed costs” and costs covered by the fee.
  • “Disallowed Costs” was defined in the contract to include “any cost due to negligence or default on the part of the Contractor”.
  • ‘Default’, however, was not explicitly defined in the Contract.

Defining ‘default’ as any failure to comply with contractual obligations, Network Rail sought to categorise £13.4 million of delay-related costs as ‘Disallowed Costs’. ABC argued that this definition was too broad and that, like negligence, ‘default’ pertained to an element of blame or culpability. They further argued that this was a pre-requisite for categorising Disallowed Costs under a proper construction of the contract and was in-keeping with the gain/pain ‘ethos’ of the agreement

Decision / Comment

Emphasising the importance of giving words their ‘natural and ordinary meaning’, the appeal judges agreed with Network Rail that ‘default’ should be defined as a failure to fulfil an obligation. Disallowed Costs, therefore, included costs incurred due to ABC’s failure to comply with its contractual obligations.

From the perspective of both Employer and Contractor, this case underscores the importance of defining key terms with clarity and concision. To learn from ABC’s mistakes, parties should resist relying on the underlying ‘ethos’ of a standard form contract – especially where there have been amendments – rather than defining key terms, particularly where those terms otherwise have a natural and ordinary meaning.

Clare Mendelle is a Professional Support Lawyer and James Goldthorpe is a Paralegal at Sharpe Pritchard LLP

For further insight and resources on local government legal issues from Sharpe Pritchard, please visit the SharpeEdge page by clicking on the banner below.

sharpe edge 600x100

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email This email address is being protected from spambots. You need JavaScript enabled to view it.

LACAT BookFREE download!

A Guide to Local Authority Charging and Trading Powers

Written and edited by Sharpe Pritchard’s Head of Local Government, Rob Hann,

A Guide to Local Authority Charging and Trading Powers covers:

• Updated charging powers compendium          • Commercial trading options

• Teckal ‘public to public’                                    • Localism Act

FREE DOWNLOAD

LACAT BookAvailable to buy:

A Guide to Local Authority Companies and Partnerships

An invaluable, comprehensive toolkit for lawyers, law firms and others advising
on or participating in Local Authority Companies and Partnerships”

- Local Authority Chief Executive

BUY NOW

  More Articles

Icons Court

Transparency in Procurement: Procurement Policy Note (“PPN”) 07/21

Julie Lau, Clare Mendelle and Beth Edwards outline the new regime for publishing procurement notices post-Brexit
Icons Court

When procurement law and contracts for interests in land meet

Colin Ricciardiello provides a case law update examining cases that have examined the overlap between a requirement to procure and a contract for the disposal of an interest in land.
tb w74 h74 crop int a734a5aec8e0dcb7849ee8ebeb84a53d

UK granted data protection adequacy decision

Charlotte Smith summarises the new data protection adequacy decision.

First Impressions on the New Subsidy Control Bill

Last week the Government published its new Subsidy Control Bill. The Bill represents a significant shift in the way in which subsidies are assessed and also provides some clarity about the regime that will replace the EU State aid regime, writes Peter Collins.
Icons Court

Managing new enforcement powers for councils under the Traffic management Act 2004

Rob Hann considers the recent legislative changes to traffic management in England, including the introduction of Clean Air Zones and widening local authorities enforcement powers for moving traffic offences.
Icons Court

Implementing Net Zero: Taking account of Carbon Reduction Plans in the Procurement of Major Government Contracts

The Government recently published the Procurement Policy Note 06/21. This will require suppliers bidding for major government contracts to provide a Carbon Reduction Plan at the selection stage and commit to achieving Net Zero by 2050, writes Clare Mendelle and James Goldthorpe.
tb w74 h74 crop int a734a5aec8e0dcb7849ee8ebeb84a53d

Public Procurement Update June 2021

On 3 June 2021, the Government issued the National Procurement Policy Statement (NPPS), and the associated Procurement Policy Note (PPN). George Dale explains what each document does.

What a bind: Section 106 planning obligations where there are multiple land interests

Rachel Lee and Christos Paphiti consider whether the case of R (on the application of McLaren) v Woking Borough Council impacts upon local planning authorities (LPAs) ability to properly consider the land interests and parties as regards to performance of specific obligations.
Icons Court

The use of experts only works when everyone plays by the same rules

Colin Ricciardiello looks at the use of expert witnesses in the wake of an important recent decision.
Icons Court

Unlawful Award of Contract

The High Court has ruled that the Minister for the Cabinet Office, Michael Gove, broke the law by giving a contract to a market research company, Public First, who are run by long-time associates of his. Anna Sidebottom, Francesca Gallagher and Clare Mendelle report.
Icons Date

Time after time: extending time for determination of a prior approval application

Rachel Lee and Christos Paphiti examine the time period for determination of Prior Approval (‘PA’) applications and explore how a local authority can extend the time period for determination.
Icons Date

The Cram Slam – Part 26A Restructuring Plans and Commercial Leases

David Nelson looks at the impact on landlords of a controversial High Court decision to allow a restructuring plan for a chain of health clubs.
Icons Court

The limits of an adjudicator's jurisdiction

Dr Paul Hughes and Anna Sidebottom look at the effect of Prater v Sisk [2021] on the ability of an Adjudicator to rely on previous 'out of jurisdiction' decisions between the same parties
Icons House

The Queen’s Speech and Judicial Review

Colin Ricciardiello looks at the likely effects of the government's proposed changes to the judicial review process.
Icons House

The Subsidy Control Bill

Ryan Copeland and James Hughes analyse the main provisions of the Subsidy Control Bill announced in the recent Queen’s speech.
Icons Court

Councils unable to hold meetings remotely from 7th May

Radhika Devesher considers the fallout from the High Court's decision that online council meetings cannot continue past 7th May and outlines the practical steps that councils can take to ensure that the decision-making process is not adversely affected.
Icons Court

You can’t claim that! Court finds exclusion clauses work just like any other clause

The recent case of Mott MacDonald Limited v Trant Engineering Limited serves as a timely reminder that exclusion clauses in construction contracts can and do work and will be enforced by the courts to prevent what may otherwise be valid claims write Clare Mendelle and James Goldthorpe.
Icons Date

Sparks Flying: Increasing Network Connectivity For Tenants

Lillee Reid-Hunt, James Nelson and Natasha Barlow look at the potential impact of The Telecommunications Infrastructure (Leasehold Property) Act 2021 on reducing delays in the installation of telecommunications equipment to leasehold properties.
Icons House

Subcontract held to govern works commenced before execution

Clare Mendelle and James Goldthorpe examine a case which considered which terms governed liability for works carried out prior to the execution of a contract.
Icons Court

No overlap between substance and jurisdictional issues

Clare Mendelle and James Goldthorpe examine the implications of Ex Novo Limited v MPS Housing Limited [2020] EWHC 3804 (TCC)]
Icons Court

Home is where the heart is

Bernadette Hillman and Christos Paphiti outline the new permitted development right and what it means for the property sector and planners
Icons Date

Can a worker get paid for sleeping?

Some jobs such as care workers, security guards and nightwatchmen require the individual to work night shifts where they may, with the approval of their employer, sleep during some or all of the shift, but nevertheless remain on standby during that time.
Icons Date

Can you decline to sponsor skilled workers under the new immigration rules?

Is there an obligation to consider resident workforce prior to employing migrants? Julie Bann and Aleksandra Wolek report.
Icons House

The Long Goodbye to the PFI

Rob Hann, Sharpe Pritchard’s Head of Local Government takes a look at the House of Common’s Public Account Committees’ recent report into the pending expiry of PFI contracts which contains some interesting recommendations….
Icons Court

Changes to the Electronic Communications Code

The Department for Digital, Culture, Media and Sport has commenced a consultation on changes to the Electronic Communications Code 2017 (the “Code”). James Nelson, Lillee Reid-Hunt and Natasha Barlow report.
Icons Court

The Heat Networks (Scotland) Bill

Until last week the heat network sector in Scotland was not specifically regulated. The recent Heat Networks (Scotland) Bill seeks to rectify this by creating a regulatory framework and licencing system designed to encourage the increased use of heat networks.
Icons Date

A step in the right direction

Rob Hann and Juli Lau outline Sharpe Pritchard’s response to the Government’s Green Paper on reforming the ‘outdated’ public procurement regime.
Rob Hann

Life on the Edge!

This week sees the launch of Sharpe Edge – the home of Sharpe Pritchard on Local Government Lawyer. We have created Sharpe Edge for local authorities who are looking for ways to help their communities rebuild and regenerate following the devasting impact of the Covid-19 Pandemic.
Icons Court

Teckal and Beyond….

In this article Rob Hann, Sharpe Pritchard’s Head of Local Government, takes a look at what isn’t covered in the recent Green Paper on Transforming the UK’s Public Procurement rules, namely the exception contained in regulation 12 of the Public Contracts Regulations 2015 (PCR 2015), commonly referred to as the Teckal exemption and asks whether Teckal is ‘fit for purpose’ in a post Brexit, post pandemic environment?
Icons Court

Jurisdiction Clauses & Enforcing Adjudication Decisions

The case of Motacus Constructions Ltd v Paolo Castelli Spa [2021] EWHC 356 (TCC) confirms adjudication’s status as an interim-binding measure and reinforces its importance as a dispute resolution forum in the construction industry.
Icons Date

Procurement in an Emergency – Requirements for Transparency

Public procurement has never had such a high profile as it has in recent months and most especially since the decision in Good Law Project and Others v Secretary of State for Health and Social Care ([2021] EWHC 346 (Admin)). However, in practice, has anything changed?
Icons Court

Automatic suspension and withdrawal of the decision to award

Colin Ricciardello examines a recent case where an authority sought to end an automatic contract making suspension by withdrawal of the decision to award the contract.
Icons House

Rooftop rows: What does an imposed Code agreement mean for site providers and operators?

Lillee Reid-Hunt and Christos Paphiti consider a recent Upper Tribunal decision that provides useful guidance on what site providers and telecoms operators can expect from the terms of an imposed Code agreement, especially in relation to upgrading and sharing of equipment and ballpark consideration and compensation figures.
Icons Date

Curing a breach of the Public Sector Equality Duty in possession proceedings

Christian Grierson and Simon Kiely examine the impact of a High Court judge’s ruling on whether a breach of the public sector equality duty (PSED) can be cured in possession proceedings.
Icons Court

Insolvency influx – the upsurge of CVAs

James Nelson examines the rise in Company Voluntary Arrangements, analyses their impact on commercial leases and explains how landlords, including public bodies and local authorities, can respond.
Icons Court

HMO licensing, the ‘fit and proper’ test and spent convictions

The Court of Appeal has provided clarity for the test of a ‘fit and proper’ licence holder for houses in multiple occupancy (HMOs), write Simon Kiely and Christian Grierson.
Slide background