NEC ECC: Option A Claim for Business Rates

A main Contractor is making a compensation event for the recovery of business rates charged by the council. The council have billed the contractor for business rates for the areas occupied by the Contractor plus one temporary building taken over by the employer (a visitors centre).

The compensation event was rejected by the employer on the basis of the following clause…

114.1 Without prejudice to the generality of the foregoing, all taxes, levies,
import duties, rates, charges, National Insurance contributions and the like assessed on the Contractor are borne by the Contractor and the Contractor indemnifies the Employer against all actions, claims, costs, charges and expenses relating to the recovery of the foregoing.

Firstly, I am not sure why this would constitute a compensation event, as it looks like a normal charge which applies to most non-domestic property, including Contractor’s site huts, etc

The clause you refer to (Taxes 114.1) looks like a typical ‘standard type’ clause which is related to indemnity, that is the Contractor indemnifying the Employer against ‘actions, claims, costs, charges and expenses relating to the RECOVERY of the foregoing’.

This requires the stated ‘charges’ to be borne (paid) by the Contractor (whether or not they constitute a compensation event) , although if any action is taken to recover these ‘charges’ then the Contractor indemnifies the Employer against the costs of recovery, which may be charged directly to the Employer.

From what you have said the Contractor’s notification of a compensation event is for a matter which the Contractor is responsible for anyway and the Employer is merely confusing the matter further by ‘rejecting’ the notification with reference to a clause which doesn’t appear to apply in this instance, whether or not the notification was valid.