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Andrew Rigney KC and Patrick Maxwell successful in TCC claim for declaration

The London Borough of Harrow (“Harrow”) contracted with Engie Regeneration (Apollo) Limited (“Engie”) for works to schools in the Harrow area. Following completion of the works, the parties fell into dispute about a number of issues. Amongst those issues was Engie’s contention that Harrow was obliged to take out Latent Defects Insurance. Engie argued that, since Harrow had not taken out such an insurance policy, Engie was not liable for any defects discovered after the defects liability period (although this did not fall for determination on this application).

The dispute proved a major bar to settlement of the project account and, as a result, Harrow brought part 8 proceedings in the TCC to determine whether it was obliged to procure a policy of Latent Defects Insurance.

At trial before Cockerill J, Harrow contended that, on a proper construction of ACA PPC2000 (Amended 2008) Standard Form of Contract For Project Partnering (“the Partnering Terms”) and Commencement Agreements entered into pursuant to the Partnering Terms, it had no liability to take out a policy of Latent Defects Insurance.

Cockerill J broadly accepted Harrow’s submissions and found that conditions in the Partnering Terms and the Commencement Agreements that might give rise to an obligation to take out Latent Defects Insurance had not been met.

This was sufficient to dispose of the claim, but Cockerill J went on to make some points of general interest:

  1. Where, contrary to the Partnering Terms, the risks, period and amount of a policy of Latent Defects Insurance had not been specified in the Commencement Agreements, the court would not imply a term that the policy was to be taken out to cover the usual risks, for a reasonable period in a reasonable amount.
  2. Further, given the various types of Latent Defects Insurance policies available on the market, such a term would be too uncertain. Absent agreement as to these “essential terms” of an insurance policy, there was no complete agreement to take out a policy.

Andrew Rigney KC and Patrick Maxwell appeared for Harrow, instructed by Bevan Brittan LLP.

Michael Curtis KC appeared for Engie, instructed by Mayer Brown LLP.

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