BuildLaw Issue 34 December 2018 | Page 33

The reduced ROCs accreditation was a direct result of delays to commissioning which were already compensated by liquidated damages. GPP, on the other hand, noted that the EPC contracts contained a separate obligation to achieve the higher ROCs accreditation.
The court agreed with Solar that the failure to achieve the required level of ROCs was purely a consequence of failing to achieve commissioning by the stipulated date and was not therefore an independent breach outside the ambit of the liquidated damages provision. However, “not without some misgivings” the court found that the EPC contracts treated “that part of the loss that relates to the failure to achieve the contracted level of ROCs as falling outside the ambit of the Delay Damages provision”.
The primary reason for the court reaching this conclusion was that the EPC contracts provided an express right of termination for failing to achieve the required level of ROCs. Upon such a termination the parties were obliged to attempt to agree a revised Price, with guidance being given as to the level of reduction which might be agreed for a specified reduction in ROCs. This suggested that GPP was intended to be compensated for a reduced level of ROCs separately from the Delay Damages provision.
Conclusion and implications
This decision makes a number of significant findings as to the operation of liquidated damages provisions in construction contracts. The case appears to be the first decision in which a challenge to the validity of liquidated damages provisions has been rejected in a construction context after the Supreme Court’s decision in the Cavendish Square case. This may be evidence of a more lenient approach being adopted, although the clause in this case may well have been upheld on the law as it stood prior to the Supreme Court’s decision.
The court’s finding as to liquidated damages continuing to accrue post-termination is controversial and adds support to the decision in Hall v Van Der Heiden. It is unfortunate that authorities supporting a contrary approach do not appear to have been cited to the court. This issue is likely to require resolution by the Court of Appeal