Conflict Avoidance

This Practice Note offers guidance on subrogation in the insurance context. It sets out the legal basis, purpose and practical operation of subrogation, and indicates how to tell rights of subrogation apart from other mechanisms such as assignment or contribution. It also considers common situations, including subrogation against co-insureds, the use of express subrogation clauses and waivers of subrogation. In addition, it covers how recoveries are allocated and the insured’s duty to co-operate with insurers. What is the right of subrogation? In insurance and reinsurance, the right of subrogation allows an insurer or reinsurer, once it has indemnified the (re)insured, to step into that party’s position and bring proceedings in the (re)insured’s name. For this Practice Note, ‘insurer’ should be read as ‘(re)insurer’ and ‘insured’ as ‘(re)insured’. The insurer may then exercise any of the insured’s rights or remedies against third parties arising from the...

Appointing a receiver offers creditors and certain other parties a means to safeguard their interests in a company’s assets. This note outlines the available forms of receivership and the key consequences of a receiver being appointed. For access to materials within the Receivership subtopic, refer to: Receiverships—overview. The following features apply across all receivership types: A company does not have to be insolvent to enter receivership Other creditors may still pursue claims despite a receiver being appointed During the receivership, the company’s dealings with property covered by the appointment are curtailed Receivership does not automatically lead to liquidation (the winding up of its affairs) Further points specific to particular receivership forms are outlined below. Law of Property Act ( LPA)/fixed charge receiver Under the Law of Property Act 1925 ( LPA 1925), a mortgagee may appoint an LPA...

Process and effect Liquidation, or winding up, is the method by which a company’s affairs are concluded and the company’s existence is brought to a close. When a company enters liquidation: its trade stops, although it may need to be continued for a short period during the winding up (for example, to enforce any valuable agreements) its assets are realised, meaning converted into a liquid form the resulting proceeds are paid out to those entitled A liquidator must perform this role in accordance with the duties imposed and powers given to them under the Insolvency Act 1986 ( IA 1986) and the Insolvency ( England and Wales) Rules 2016, SI 2016/1024. For more details, see Practice Note: Role, powers, functions and duties of a liquidator......

What is insurance law? Insurance law divides into three strands: insurance contract law, setting the rules of the bargain between policyholders and insurers the law of intermediaries, governing insurance arranged via agents (as with the majority of placements) insurance company law, addressing prudential soundness, integrity and the supervision of insurers This Practice Note focuses chiefly on insurance contract law. For wider regulatory material, see our ‘regulation of insurance’ subtopic, including Insurance & Reinsurance—regulatory framework—overview and Insurance & Reinsurance— Regulated activities—overview. Reform of the insurance sector In January 2006, the Law Commission and the Scottish Law Commission (together, the Law Commissions) began consulting on modernising insurance contract law. Their programme was then separated into three streams: consumer insurance law reform: pre-contract disclosure and misrepresentation insurance contract law reform: business disclosure, warranties, insurers’ remedies for fraudulent claims, and late payment insurance contract law...

Many contracts include provisions on resolving disputes. At times these are simple terms stipulating litigation or possibly arbitration, sometimes also spelling out jurisdiction and the governing law. Yet a clause can instead prescribe other routes of alternative dispute resolution ( ADR) to be pursued should a dispute arise, offering an alternative to litigation or arbitration. Such provisions are often labelled ADR clauses. Parties have a number of options open to them (see below), and it is vital to appreciate the consequences of the drafting choices you make. This Practice Note reviews several clause formulations and evaluates the issues that may arise in relation to each category. The types of dispute resolution clause considered in this Practice Note are: litigation only clauses mediation clauses multi-tier clauses (escalation clauses) hybrid clauses carve-out clauses For guidance on the principal questions around the...

What is novation? Novation describes the passing of a contracting party’s rights and duties to a third party. In effect, one party to the agreement (the ‘outgoing party’) is replaced by another (the ‘incoming party’); in legal terms, the original agreement is discharged, amounting to the extinguishing of that contract and the creation of a new contract under which the same obligations must still be performed, albeit by different participants. Novation is not the same as assignment: an assignment transfers only the benefits of a contract, whereas novation moves both the benefit and the burden to the incoming third party. Contractual benefits cover the right to have the contract performed; burdens comprise obligations such as carrying out the duties and making payments due under the contract. In practice, the incoming party takes over performance in place of the outgoing party. See Practice Notes:...

This Practice Note gives guidance on the scope and interpretation of section 38 of the Building Act 1984 ( BA 1984) The government signalled that BA 1984, s 38 would commence ‘alongside’ the legislative changes that took effect under the Building Safety Act 2022 on 28 June 2022, but no regulations have yet been published to commence it. Section 38 states that, where a duty set by the building regulations is breached and damage results, the breach is actionable. In effect, parties who do not comply with the building regulations may face civil liability. This Practice Note clarifies what the building regulations cover, who may bring or face claims under BA 1984, s 38, and the damages that might be recovered in a claim relying on s 38. The focus is on those regulatory provisions that prescribe standards for building work, where...

Building Safety Act 2022 ( BSA 2022) In July 2021, the government laid the Building Safety Bill before Parliament, aimed at delivering the recommendations and principles from Dame Judith Hackitt’s Independent Review of Building Regulations and Fire Safety, and confronting the urgent safety issues exposed by the Grenfell Tower tragedy of July 2017. Branded as the most significant overhaul of building safety rules in a generation, it obtained Royal Assent on 28 April 2022, becoming the Building Safety Act 2022 ( BSA 2022). BSA 2022 makes sweeping changes to the law and regulation of building safety, with the objective of securing the safety of people in or around buildings and improving the standard of buildings. This Practice Note outlines for construction lawyers the principal elements of BSA 2022, including its reshaping of regulatory regimes and standards for building and fire safety and for...

A no loss defence frequently emerges from the contractual matrix that surrounds construction projects. By way of illustration, an agreement might be novated, the employer may lack ownership of the land where the works are carried out, or the development could be sold after completion before any defects come to light. Such situations (among others) can each trigger a no loss defence from a contractor or consultant said to be in breach of contract. What is the no loss defence? Damages for breach of contract are compensatory, aiming to place the claimant in the position it would have occupied had the contract been performed as intended. If a breach results in no loss, no damages—or at most only nominal damages—will be awarded. See Practice Note: Contractual damages—general principles. Where a breach does cause loss, but that loss is suffered by a third party, the...

What is an assignment An assignment involves passing a right or interest held by one party (the assignor) to another (the assignee), such as transferring an employer’s rights under a building contract to the buyer of the finished works. In this Practice Note, the party required to perform the contractual obligations is called the 'obligor'. A properly effected assignment allows the assignee to require performance of contractual duties—for instance, to request rectification of defects and/or to commence proceedings. This Practice Note explores the various mechanisms available by which parties may implement an assignment within construction documentation (eg construction contracts, appointments and collateral warranties), together with the consequences of doing so. It also clarifies the practical impact of each method for parties seeking to secure or enforce rights effectively......

Paragon Group Ltd v FK Facades Ltd [2026] EWHC 78 ( TCC) What are the practical implications of this case? Until this decision, there was no clear authority addressing whether the assignee of the benefit of a building contract enjoys a right to commence adjudication. That absence sat uneasily with long-standing industry practice, under which assignees have commonly proceeded on the footing that the entitlement to adjudicate could be relied upon. Earlier authorities contained inconsistent dicta: in some, the court moved forward on the basis that a right to adjudicate might validly be assigned (see, for example, Enterprise Managed Services Ltd v Tony Mc Fadden Utilities Ltd); in others, the court offered obiter remarks suggesting the point was not entirely simple (see, for example, Westdawn Refurbishments Ltd v Roselodge Ltd (unreported, 2006)). None of those decisions, however, culminated in a binding ruling on this...

An assignment is the passing of a right or interest held by one party (the assignor) to another (the assignee), e.g. transferring the employer’s rights under a construction contract to the buyer of the finished works. For this Practice Note, the counterparty to the contract in which rights are being assigned is termed the 'obligor'. For more on what an assignment is, why it occurs in construction, how it functions and the steps required to implement effective assignments, see Practice Note: Assignment in construction contracts. See also Practice Note: Legal and equitable assignment in construction contracts for guidance on the alternative methods by which parties may give effect to an assignment on construction projects (at law or in equity) and the prerequisites for each. Where a construction document, such as a building contract, collateral warranty or consultant appointment, says nothing about...

This Practice Note This Practice Note reviews the standard form novation agreements issued by the City of London Law Society ( CLLS) and the Construction Industry Council ( CIC). Novation is now widespread on construction schemes. It arises in various contexts and has, in particular, become routine on design and build procurements. For more on novation generally, see Practice Note: Novation in construction projects. Parties often adopt their own bespoke novation agreements, so numerous versions circulate. In 2004, two standard forms appeared—one from the CLLS construction committee and one from the CIC. The CIC later released an ‘ab initio’ form in November 2018, and a second edition of the ‘switch’ form in July 2021. Each agreement is a brief, straightforward document that avoids unnecessary provisions, though they adopt different approaches to novating the consultant. They do, however, each tackle the key issues arising from Blyth &...

Lenders and other financiers commonly obtain an assignment of the benefit of the suite of construction documents in respect of a development as an extra element of the security package supporting their loan to fund the project. See Practice Notes: Assignment in construction contracts and Legal and equitable assignment in construction contracts for further guidance and practical context. This Practice Note also examines the various approaches used for such an assignment and highlights some of the risks involved. For convenience in this note, all funders are called ‘banks’. Why does a bank wish to take an assignment? It should be noted that assigning the construction documents is only one of a number of security measures that a bank will hold. It will also probably register a charge against the employer itself and will also benefit from a suite of collateral warranties from the...

This Practice Note explores why the assignment of rights matters in construction and identifies when parties may need to transfer their rights. It contrasts assignment with novation and outlines the steps required to complete a valid assignment. It also examines the consequences of an assignment and the matters parties ought to note when pursuing claims after an assignment. The implications of the Business Contract Terms ( Assignment of Receivables) Regulations 2018 are also highlighted. When assessing assignment provisions in a construction contract, see: Assignment of construction documents—checklist for the key points to review. For guidance on restrictions on assignments in construction, see Practice Note: Restrictions on the assignment of rights in construction contracts... What is an assignment? This Practice Note concentrates on how assignment operates in the sphere of construction contracts, but the legal principles are relevant across multiple sectors, including banking and finance (see...

An increasing cohort of developers is reporting that co-located battery storage schemes have secured project finance. This marks significant progress, given that as recently as 2018 grid-scale batteries were treated as an emerging asset class, with many funders having written them off as unsuitable for project finance. This Practice Note sets out key considerations for both lenders and developers looking to project finance co-located battery storage projects. For more information on: construction considerations for co-located battery storage projects, see Practice Note: Energy storage—construction issues property aspects regarding co-located battery storage projects, see Practice Note: Battery storage projects—property issues planning matters, including in relation to co-located battery storage, see Practice Note: The planning regime for energy storage in England and Wales battery storage projects more broadly, see Practice Notes: Scaling up energy storage—revenue opportunities in Great Britain and Energy storage...

When drafting or negotiating a deed of novation in the context of a design and build construction project where a consultant is being novated from the employer to the contractor (see Practice Note: Novation in construction projects), the following should be taken into account: Consideration Confirm that the novation is supported by consideration. If it is absent, or its existence is uncertain, the novation should be executed as a deed. Underlying agreement The deed of novation should identify the original appointment under which the consultant was engaged, together with a concise summary of the services they were retained to provide. Declaration of novation The deed should record (typically in the recitals) that the consultant and the former employer have agreed to transfer the underlying agreement to the new employer (that is, the contractor) on the terms contained in the deed of...

Estate Management and Business Development Company Ltd v Junior Sammy Contractors Ltd ( Trinidad and Tobago) [2024] UKPC 33 What are the practical implications of this case? This decision examines when a party may invoke the defences of abatement or fraud to resist paying amounts certified as due under interim payment certificates. It also clarifies the difference between an outright assignment of all contractual rights (ie including the right to commence proceedings) and an assignment by way of charge, under which the Contractor remains able to bring proceedings to recover amounts owed. What was the background? Estate Management and Business Development Company Ltd (the Employer), a wholly owned state company incorporated in Trinidad and Tobago, entered into a contract dated 4 February 2015 with Junior Sammy Contractors Ltd (the Contractor). Under that agreement, the Contractor agreed to perform residential infrastructure works (the Works) for the Employer at the...

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...