Abc Electrification Ltd v Network Rail Infrastructure Ltd

Abc Electrification Ltd v Network Rail Infrastructure Ltd

The word 'default' in the definition of 'Disallowed Cost' means a failure to comply with contractual obligations, i.e., breach of contract, without any requirement for blame or culpability. The NR12 Amendments to the ICE Conditions were intended to shift risk to the contractor for all costs arising from its breaches, and the natural and ordinary meaning of 'default' applies. Arguments based on redundancy or commercial context do not justify a different interpretation.

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 (contract Interpretation) / Appeal From High Court Judgment
Outcome
Appeal dismissed
Legal Topics
Interpretation of Standard Form Contracts, Target Cost Contracts, Disallowed Cost Clauses
Contract Law Construction 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 (contract Interpretation) / Appeal From High Court Judgment

Legal Issues

  1. 1 Proper construction of the term 'default' in the definition of 'Disallowed Cost' under a Target Cost Contract as amended by NR12 Amendments
  2. 2 Whether 'default' requires an element of blame or culpability or simply means breach of contract

Ratio Decidendi

The word 'default' in the definition of 'Disallowed Cost' means a failure to comply with contractual obligations, i.e., breach of contract, without any requirement for blame or culpability. The NR12 Amendments to the ICE Conditions were intended to shift risk to the contractor for all costs arising from its breaches, and the natural and ordinary meaning of 'default' applies. Arguments based on redundancy or commercial context do not justify a different interpretation.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed; the High Court order stands.