[2020] UKSC 25

Retentions have been a common feature in the construction industry for over 100 years, yet over the past two years there has been a growing shift in the construction industry’s views on retentions and whether reform of retention as we know it is required. Adele Parsons discusses these recent developments further.

[2019] EWHC 2651 (TCC)

Kookmin Bank v Rainy Sky SA & Others

[2011] UKSC 50

We covered this case back in Issue 120. The case has now reached the Supreme Court where the decision of the Court of Appeal was overturned. In doing so, Lord Clarke adopted the interpretation of the bond which was most consistent with business common sense.

HHJ Purle had to consider an application for directions by liquidators of WGL, a company which was involved in a construction project for the School under a JCT Intermediate Building Contract (with Contractor’s Design) 2005 as amended. A dispute had arisen as to who owed money to whom, and the court was asked to decide the correct forum for resolving that dispute. According to the liquidators, around £615k was due to WGL, and according to the School, £270k was due to them.

The claim here related to the ACA Standard Form of Contract for Term Partnering, which as Mr Justice Edwards-Stuart said was specifically devised for situations where one party requires the other to carry out a series of relatively minor but repetitive or cyclical tasks over a substantial period or “Term”: here building, repair and related services for a local authority. The employer or client would place orders for particular “Tasks” during the Term and the contractor (or Connaught), referred to as the “Service Provider”, would carry them out and submit monthly valuations for payment.

[2019] EWCA Civ 230

This was an appeal by the supplier of a software system against a TCC judgment dismissing its claim and ordering it to pay substantial damages on the counterclaim. The main issue of principle which arose was how to apply a clause imposing liquidated damages for delay in circumstances where the contractor or supplier never achieves completion.

[2019] EWCA Civ 27

[2019] EWCA Civ 27

The Cannon case was heard at the same time as the Bresco appeal, although if searching for it, the case will be found under the Bresco name and reference. Here, there was a lengthy procedural history culminating in Cannon resisting summary judgment of an adjudication decision on the basis that Primus might not be able to repay the sums, because Primus was in a CVA. The Judge at first instance said:

[2017] EWHC 1206 (Ch)

Deputy Judge Alexander QC had to consider an application for an order that R be restrained from proceeding further with a creditor’s petition to wind up B. The Judge was in no doubt that the application was misconceived. First B was not unable to pay its debts. B on the evidence provided to the court was solvent with cash in hand and a substantial unused credit facility. Further, the reason B had not paid the substantial sums claimed was that it had arguable defences as well as substantial cross-claims of its own. The Judge was clear that: