Owner of insolvent sub-contractor liable as primary obligor (Multiplex v Dunne)

Owner of insolvent sub-contractor liable as primary obligor (Multiplex v Dunne)

In a summary judgment application, the court held that the defendant was liable as primary obligor under the terms of an agreement under which his company (the sub-contractor) had been provided with a £4m cash advance by the claimant contractor. It rejected the defendant’s argument that it only imposed secondary obligations on him.

This same-day case analysis is from LexisPSL Construction. Click here for a free trial.

Multiplex Construction Europe Ltd (formerly Brookfield Multiplex Construction Europe Ltd) v Dunne [2017] EWHC 3073 (TCC)

What are the practical implications of this case?

The case provides an example of the court construing the terms of a suretyship agreement to determine whether it is an indemnity (under which the surety has primary liability), or a guarantee (under which its liability is secondary, arising only where another person is in breach).

In particular, the judgment indicates (albeit on a technically obiter basis) that the contra proferentum rule (ie that any ambiguity is to be resolved against the party who put it forward and seeks to rely on it) now has a very limited role when interpreting such documents entered into by companies of equal bargaining power. In fact, the court noted that it had ‘only skeletal, if any, remains’ in commercial cases generally. Earlier this year the Court of Appeal had confirmed the rule’s limited application in relation to exclusion clauses (see News Analysis: Court of Appeal considers limitation and exclusion clause (Persimmon Homes v Arup)).

It also suggests that, where a provision contains two triggers for the surety’s liability, there is no reason why one trigger cannot create a primary obligation and the other a secondary obligation.

What was the background?

Multiplex appointed Mr Dunne’s company, Dunne Building and Civil Engineering Limited (DBCE), as sub-contractor under a number sub-contracts relating to various projects. When DBCE encountered financial

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login

About the author:

Jon is a Professional Support Lawyer at LexisNexis, specialising in construction law.

Jon trained at Hogan Lovells and qualified into the construction disputes team there in 2011. He joined LexisNexis in February 2016. Jon has experience of acting for various parties (including employers, main contractors, subcontractors and project managers) in relation to disputes arising out of construction and engineering projects in various jurisdictions. Jon has acted for clients in TCC litigation, arbitration, adjudication and mediation as well as providing advice on various aspects of construction and engineering projects.