EWJ June 61 2025 web - Flipbook - Page 74
Remediation Costs Can you have “a Rolls Royce
Solution to a Ford Escort Problem”?
by Claire Kilpatrick and Jake Wright - www.stevens-bolton.com
Southern Electricity Power Distribution PLC v OCU Modus Ltd [2025] EWHC 723 (TCC)
(27 March 2025)
Construction works carry inherent risks of
imperfections, yet when defects arise, what are parties
reasonably expected to do? The court was asked to assess the reasonableness of the remedial works in the
recent case of Southern Electricity Power Distribution PLC
v OCU Modus Ltd [2025] EWHC 723 (TCC) (27 March
2025) where the adopted remedial works were
described as the "Rolls Royce" option.
Remedial works
Following further investigation and testing, SEPD
assessed what remedial works would be best placed to
fix the situation and narrowed down its options to:
1. full replacement of both circuits and all the joints; or
2. replacement of all joints and up to 10% partial
replacement of the circuit; or
3. replacement of all joints that had not already been
replaced.
Background
Southern Electric Power Distribution PLC (SEPD),
owns and operates electricity distribution infrastructure across the UK. One of its customers, a photovoltaic solar farm at Wroughton Airfield, entered into
a connection agreement which required the installation of two 7km 33kV ducted underground cable
circuits including 6 cables in total.
Having assessed these options, SEPD opted for full
replacement of the Works (the Adopted Solution).
SEPD’s remedial works focused on replacing the existing circuit by installing new cable along a different
route, not alongside the existing route (the overlay
method). This Adopted Solution was to avoid any outages caused by any disconnection and reliance upon
any additional items of Modus’ Works which were defective (including the ductwork, reinstatement materials and backfill of topsoil which also did not meet the
contractual specification). SEPD’s total claim value for
the repairs was £2,642,237.71.
SEPD engaged OCU Modus Limited (Modus), for the
design, supply, installation, commissioning and adoption of the electricity and distribution equipment (the
Works) by a contract dated 13 February 2016 (the
Agreement). The Agreement required the Works to
meet certain minimum standards. The works were
completed and following some pre-completion
testing, SEPD energised the circuit and signed a
completion certificate on 4 April 2016.
Modus denied liability for the defects and/or denied
that it was reasonable for SEPD to have chosen a remedial solution which required full replacement
works and recovery of the costs of doing so from
Modus – counsel for Modus was quoted within the
judgement as describing the issue as “whether SEPD
should be compensated for implementing a Rolls
Royce solution to a Ford Escort problem”.
Discovery of the defects
A short time after the cables had been energised, one
of the circuits failed. SEPD’s investigations discovered
undocumented amendments and repairs which were
visible to all of the cables, although it was not clear who
had carried out the repairs or when. One of these issues appeared to be the cause of the failure. Modus
denied responsibility for the alleged defects and
claimed the defective work and subsequent repairs
were due to a third party and had been carried out
without their authorisation or knowledge.
The decision
Ultimately the court held that Modus was responsible
for the defective works. The judge then distilled the
arguments regarding the reasonableness of the
Adopted Solution and associated costs into three
central questions, as follows:
1. was it reasonable for SEPD to replace the circuits by
the Adopted Solution?
SEPD performed emergency repairs and re-ran the
tests, but the Works failed to meet the minimum standards required under the Agreement. Further investigation suggested that there were multiple issues with
the circuit and a number of other unrecorded repairs
and other issues. Following these further investigations, the minimum required standard was dropped
to a lower standard. However, even at the lower
thresholds, subsequent testing showed five of the six
cables were still defective.
EXPERT WITNESS JOURNAL
2. if it was reasonable, are the actual costs of doing so
properly attributable to the defendant's wrong rather
than a consequence of the claimant's choice?
3. if so, are the actual costs of doing so themselves
reasonable?
The judge, Justice Constable, gave the answer to all
three questions as "yes" and noted that “it was
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