Yarm Road Ltd v Costain Ltd [2001] HT01228 TCC

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

A novation agreement made after the HGCR Act 1996 came into force which novates rights and obligations under a construction contract made before the HGCR Act 1996 came into force constitutes a construction contract within the meaning of section 104 HGCR Act and the parties to it are therefore entitled to refer a dispute to adjudication. However the Court's decision in this case is not to be taken as deciding that sections 109-113 of the Act have a retrospective effect

HHJ Richard Havery QC, Technology and Construction Court

30 July 2001

The application before the court was for a declaration sought by Y that it was entitled to pursue two disputed monetary claims against C by way of adjudication as provided for by the HGCR Act 1996. The question was whether the contract between the parties was a "construction contract" within the meaning of section 104 of the HGCR Act.

C was a contractor for road widening works under an ICE contract, 5th edition. C sub-contracted some of the works to CSE. The sub-contract was entered into in August 1995 and incorporated the FCEC sub-contract (the blue form) with amendments. CSE then changed its name to R. A novation agreement was entered into on 14 August 1998 novating the sub-contract from R to Y. In contemplation of the novation agreement, on 10 August 1998 C and R concluded a supplemental agreement to vary the provisions for calculation and reimbursement of the sub-contractor.

C contended that if the novation agreement were found to constitute a construction contract within the meaning of the Act, the Act would have a retrospective effect. C submitted that the novation agreement did not make a new provision for the carrying out of construction operations in that the same operations were already provided for by the sub-contract. C also contended that if the novation agreement was confirmed as a construction contract, Y would have the benefit of referring any dispute, which could go back as far as 1995, to adjudication.

The judge accepted that anomalies could be potentially serious, but held that the wording of the Act is clear and that the novation agreement did fall within section 104(1)(a) and section 104(6)(a) of the HGCR Act. He emphasised however that the court was not to be taken to have decided that the provisions of sections 109-113 of the Act were retrospective.

The judge made the declaration sought by Y.

A novation agreement made after the HGCR Act 1996 came into force which novates rights and obligations under a construction contract made before the HGCR Act 1996 came into force constitutes a construction contract within the meaning of section 104 HGCR Act and the parties to it are therefore entitled to refer a dispute to adjudication. However the Court's decision in this case is not to be taken as deciding that sections 109-113 of the Act have a retrospective effect.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

 

Click here to read full-screen | Click here to print the case