Building Law Monthly

In AES-3C Martiza East EOOD v Crédit Agricole Corporate and Investment Bank [2011] EWHC 123 (TCC), [2011] All ER (D) 30 (Feb) Mr Justice Ramsay affirmed that on-demand bonds are payable against an appropriately worded demand accompanied by such documents as the demand requires and without proof of the existence of a liability under the underlying contract. It is therefore necessary to examine the terms of the on-demand bond with some care in order to identify whether its requirements have been satisfied. On the facts of the present case it was held that the claimant was entitled to summary judgment in respect of one of its demands but not in respect of the other because it could not demonstrate that it had complied with the terms on which the demand was required to be made.

In Bewley Homes plc v CNM Estates (Surbiton) Ltd [2010] EWHC 2619 (TCC), [2011] BLR 67 Mr Justice Akenhead held that the defendant had no arguable defence to a claim for payment brought under a settlement agreement which had been concluded between the parties after an adjudication. Further, he held that the defendant was not entitled to a stay of execution. In considering the entitlement of the defendant to seek a stay, he applied by analogy the principles applicable when a stay is sought in connection with the enforcement of a decision of an adjudicator. But in the case where a stay is sought in relation to the enforcement of a settlement agreement, the parties current financial position should be compared with their financial position at the moment of entry into the settlement agreement, not the time of entry into the underlying construction contract.

The issue before the Supreme Court in Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] UKSC 44, [2011] BLR 1 was whether facts which (a) are communicated between the parties in the course of without prejudice negotiations and (b) would but for the without prejudice rule be admissible as part of the factual matrix or surrounding circumstances as an aid to construction of an agreement which results from the negotiations, should be admissible in evidence. The Supreme Court concluded that such evidence should be admissible as a further exception to the principle that statements made in the course of without prejudice negotiations are not admissible in evidence.

In Azimut-Benetti Spa (Benetti Division) v Healey [2010] EWHC 2234 (Comm), [2010] All ER (D) 18 (Sep) Mr Justice Blair considered whether a clause in a Yacht Construction Contract that required the purchaser to pay 20% of the purchase price in the event that the contract was lawfully terminated by the builder was a penalty clause and therefore unenforceable. Blair J considered arguments and points of law that are common to orthodox construction contracts and held that where both parties had the benefit of expert representation in the conclusion of the contract and the terms, including the liquidated damages clause, were freely entered into such clauses will generally be enforced. Further, he added that ‘in a commercial contract of this kind, what the parties have agreed should normally be upheld’.