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Earl Ferrers: It is always tempting, when the noble Lord says "I hope that the Government will be able to consider this simple amendment", to do so. We always consider simple amendments, as well as difficult ones.

It is clear that the noble Lord, Lord Howie, is sensitive to the word "award" which I suspect he identifies chiefly with arbitration proceedings. It is true that the word has particular associations with arbitrators, but of course they do not enjoy a monopoly over the word. It is also frequently used in connection with other decisions, particularly where money is involved. Subsection (4) of Clause 108, where it appears, is concerned entirely with payment.

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I do not believe that the word "award" is inappropriate and the alternative suggestion does not serve so well. However, I am happy to consider the matter again to see whether we have got the right wording. If the noble Lord will be content with that, I shall ensure that that is done.

Lord Howie of Troon: I am content and I sincerely hope that the noble Lord's consideration will bear fruit in due course. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 175 not moved.]

Clause 108 agreed to.

Clause 109 [Right to suspend performance for non-payment]:

Baroness Hamwee had given notice of her intention to move Amendment No. 176:


Page 62, line 15, at end insert--
("( ) Payment made under this Part shall be without prejudice to any right of the party making payment to claim repayment or compensation, or both, pursuant to the Scheme for Construction Contracts.").

The noble Baroness said: I do not think it would be fruitful to pursue this matter before seeing the explanation of the workings which we were promised earlier this evening. That being so, I shall not move the amendment.

[Amendment No. 176 not moved.]

9.30 p.m.

Lord Howie of Troon moved Amendment No. 177:


Page 62, line 16, at beginning insert ("Subject to subsection (5)").

The noble Lord said: Amendment No. 177 goes hand in hand with, and paves the way for, Amendment No. 181. As drafted, the Bill appears to assume an immediate resumption of work when work has been properly stopped following a suspension. That level of rough justice is too rough, even for the construction industry. The duration of the suspension may be easily definable but provision has to be made to cover time lost and costs incurred in demobilisation of plant and staff and then remobilisation at a later period, or perhaps, if there is an extension of time, changing from summer working to winter working, where the costs may very well be quite different. The defaulting party in this matter should be responsible for the time and for the costs. I beg to move.

Earl Ferrers: The two significant new elements here are further extensions of contractual time limits to allow for disruption and the idea that costs should be recoverable against a defaulting party. The provisions of Clause 109 permit the suspension of work but they are not intended to encourage it. Suspension should always be a last resort where one party has refused payment and has failed to give effective notice of doing so or where he has refused to comply with an adjudicator's award. If suspension happened in other circumstances, we would always expect the remaining parties to pursue their claims vigorously.

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Since legitimate suspension should only occur where conflict is serious, there are dangers in making it too easy for parties to add further elements to the dispute. Extending contractual time limits by the period of suspension might be relatively straightforward but adding further periods for consequential delays and disruption is unlikely to be a simple matter. We would not wish to stop parties pursuing extensions of time or indeed the recovery of costs if they made proper provision for that in their contract. But that is a very different matter from giving them a statutory right in those circumstances which might encourage suspension in cases where it would be by no means easy to work out the full consequences. That could lead to further litigation, the very thing which we are trying to avoid. I hope the noble Lord will realise that, although his amendment may be well intentioned, it would lead to more complications than if it were not in the Bill.

Lord Monkswell: There is a difficulty in this situation and I suggest that one should look at the matter from the other direction. The assumption is that if someone does not pay, the contractor has a right to stop work. But what would happen if one party wanted to delay the contract and cause difficulties for the other party? Under this clause virtually the only recourse is to stop work. That stopping of work might put the contractor into difficulties, which might be exactly what the first party wants. We need to be careful about viewing from one perspective. I suspect that that is what my noble friend Lord Howie of Troon is getting at in his amendment.

Lord Howie of Troon: I did not have anything quite so Machiavellian in mind, though it is extremely interesting to have it put there by my noble friend. The noble Earl is overlooking the point that, while extensions of time are quite proper and occur frequently, they have consequential knock-on effects. It is those consequential knock-on effects with which I am hoping to deal in this amendment.

The consequential effects may be consequential on other parties. The stoppage of time of one contractor may produce adverse conditions for a sub-contractor or even a later sub-contractor, perhaps throwing him from summer working into winter working. That is easily the most obvious example of what I have in mind. I am sure that the Minister will pay close attention to my comments when he reads Hansard, as he always does. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Ferrers moved Amendment No. 178:


Page 62, line 17, after ("computing") insert ("for the purposes of").

The noble Earl said: In moving this amendment I shall speak to Amendments Nos. 179 and 180. I admit at the outset that Clause 109(4) is somewhat ambiguous. Our intention was to make sure that where suspension had been properly conducted any contractual time limits, such as for the purpose of incurring penalties or winning bonuses, would be extended by the period of suspension. Several experts have pointed out to us that the clause can be read differently. The amendments

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which I have laid are designed to rectify that situation. I hope that they will meet with the approval of the Committee. I beg to move.

On Question, amendment agreed to.

Earl Ferrers moved Amendments Nos. 179 and 180:


Page 62, line 18, leave out ("for the completion") and insert ("the time taken").
Page 62, line 19, leave out first ("of") and insert ("to complete").

On Question, amendments agreed to.

[Amendment No. 181 not moved.]

On Question, Whether Clause 109, as amended, shall stand part of the Bill?

Lord Williams of Elvel: Before we leave Clause 109, I am advised by the Law Society of Scotland that it is of the view that the clause has no useful place in Scots law in view of the common law of retention and the law of unjustified enrichment which applies in Scotland. I sometimes wish that we had the law of unjustified enrichment in England and Wales.

Earl Ferrers: The noble Lord, Lord Williams of Elvel, is remarkably knowledgeable about many things. Before coming to this Committee stage I briefed myself on a number of matters but I have not done so on unjustified enrichment. I am sure that I am rich in intellectual knowledge and that is about as far as it goes, and that does not go very far anyhow. I shall certainly look at the point and consider who is justified and who is not as regards enrichment. I shall ensure that that point is considered before the next stage of the Bill.

Clause 109, as amended, agreed to.

Clause 110 [Prohibition of conditional payment provisions]:

Lord Howie of Troon moved Amendment No. 182:


Page 62, line 23, leave out subsections (1) to (5) and insert--
("(1) Any provision in a contract whereby payment to a party who is required to provide construction work is dependent on payment being made by some other person is void.").

The noble Lord said: This amendment leaves out a very large part of Clause 110 and may seem somewhat severe for that reason. I shall explain why. The clause is unclear because it mixes the problems of insolvency with those of payment where no insolvency occurs. These are two separate conditions and they should be kept separate.

The main contractor can defend himself against insolvency. He should not attempt to recoup his costs from the subcontractor or from a number of them. As always, the devil is in the detail and the detail here is how the subcontractor is to know when or if the main contractor has been paid. The subcontractor is entitled to be paid for the work he has done whether or not the main contractor has been paid for the work he has done.

I know that the big contractors do not care for this amendment and they have a problem. Insolvency is a serious matter and if it is to be dealt with in the Bill, as it probably should be, this is not the place to do it. The Bill should leave payment and insolvency as separate

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matters. The clause should be split in two to indicate that it deals with two quite separate and disparate matters. I beg to move.


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