Abc Electrification Ltd v Network Rail Infrastructure Ltd [2020] EWCA Civ 1645 (04 December 2020)

Abc Electrification Ltd v Network Rail Infrastructure Ltd [2020] EWCA Civ 1645 (04 December 2020)

The word 'default' in the definition of 'Disallowed Cost' means a failure by the contractor to comply with its contractual obligations, i.e., a breach of contract, without any requirement for blame or culpability. The contract language is clear and unambiguous, and the NR12 Amendments intentionally shifted the risk allocation. Arguments based on redundancy or commercial common sense do not justify departing from the natural meaning.

Citation
[2020] EWCA Civ 1645
Parties
Appellant/defendant: ABC Electrification Limited; Respondent/claimant: Network Rail Infrastructure Limited
Jurisdiction
England and Wales
Judgment Date
04 December 2020
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From Technology and Construction Court
Outcome
Appeal dismissed
Legal Topics
Interpretation of Standard Form Contracts, Target Cost Contracts, Disallowed Cost Clauses
Construction Law Contract Law Interpretation of Standard Form Contracts Target Cost Contracts Disallowed Cost Clauses

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Parties

ABC Electrification Limited

Appellant/defendant

Network Rail Infrastructure Limited

Respondent/claimant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From Technology and Construction Court

Legal Issues

  1. 1 Proper construction of the term 'default' in the definition of 'Disallowed Cost' under a Target Cost Contract as amended by NR 12 Amendments
  2. 2 Whether 'default' requires blame or culpability or simply breach of contract

Ratio Decidendi

The word 'default' in the definition of 'Disallowed Cost' means a failure by the contractor to comply with its contractual obligations, i.e., a breach of contract, without any requirement for blame or culpability. The contract language is clear and unambiguous, and the NR12 Amendments intentionally shifted the risk allocation. Arguments based on redundancy or commercial common sense do not justify departing from the natural meaning.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed; the declaratory relief granted by the lower court stands.