Commercial Disputes Weekly – Issue 21025 June 2024

Construction – Building Safety Fund
The Court of Appeal has provided invaluable guidance on the allocation of funds from the Building Safety Fund for cladding remediation works. Redrow challenged the Secretary of State’s (“SOS”) decision to allocate funding for work on two high rise buildings in Birmingham of which it had been the developer. As a result, Redrow were liable to repay the funds of up to £30m pursuant to the developer pledge. The building management company had made the application for funds, but Redrow considered it unnecessary as the building insurers had accepted liability for the work. The court confirmed that the correct eligibility criteria for the SOS’s decision was the Building Safety Act guidance issued in 2020 and 2022 and was satisfied that the SOS had followed that guidance. Although the insurers had accepted liability, there could be a delay in funds being released and therefore in the work commencing. Speed was a key factor so that cladding issues could be resolved as soon as possible and residents could feel safe.
R. (on the application of Redrow Plc) v Secretary of State for Levelling Up, Housing and Communities [2024] EWCA Civ 651, 14 June 2024

Planning – Environmental
The Supreme Court has decided, by a 3:2 majority, that Surrey County Council was required to take account of the fact that oil produced from a well would inevitably undergo combustion, as part of considering the “direct or indirect…effects of the project” for the purposes of planning permission. The council’s decision to grant planning permission for extension of oil production from a well near Horley in Surrey was unlawful as it had not considered the greenhouse gas emissions from oil combustion as part of its environmental impact assessment prior to granting permission. The fact that the oil had to be refined before combustion did not break the causal connection between its extraction and the greenhouse gas emissions. Oil differed from other commodities such as steel as the latter could be put to many different uses whilst there was no conjecture about the use to which oil would be put.
R. (on the application of Finch) v Surrey CC [2024] UKSC 20, 20 June 2024

Contract Interpretation – Loan Facility
The Court of Appeal has concluded that a participation agreement was not in fact a fixed term loan, as concluded by the lower court. The insertion of a “Maturity Date of Participation” in the participation agreement was not sufficiently clear wording to evidence a departure of the agreement from the master agreement between the parties. The participation agreement was a conventional sub-participation in the loan facility that had been extended to a mining company. The mining company had defaulted on the loan prior to the maturity date and the respondent was therefore not entitled to be repaid its investment of US$5m.
Yieldpoint Stable Value Fund LP v Kimura Commodity Trade Finance Fund Ltd [2024] EWCA Civ 639, 18 June 2024

Construction
The Technology and Construction Court has held a contractor to be liable to a sub-contractor for repudiatory breach of the contract. The judgment arose from the taking of a final account under a construction sub-contract for plumbing works carried out by A&V at a new student accommodation development, known as the Moulsecoomb Campus, for the University of Brighton. Bouygues UK Ltd was the main contractor, J&BH was the main sub-contractor and engaged A & V to carry out plumbing works. A & V left the Project in March 2021, at a time when it accepts the sub-contract works were incomplete. The court considered in detail the factual circumstances, which included issues of delay, whose responsibility that was, lack of proper notice for work and also allegations of inferior quality work. It concluded that there were acts of prevention by J&BH and it had failed to properly consider A&V’s application for an extension of time. J&BH had also committed a repudiatory breach of the contract by removing A&V from the IAuditor system, combined with other actions such as imposing labour on A&V. It was clear that J&BH had decided that A&V would not be permitted to complete its works. J&BH had no contractual right to terminate the agreement. A&V were entitled to accept that repudiation and did so by refusing to resume work.
A&V Building Solution Limited v J&B Hopkins Limited [2024] EWHC 1510 (TCC), 18 June 2024

Should you wish to discuss any of these cases in further detail, please speak with a member of our London dispute resolution team below, or your regular contact at Watson Farley & Williams: