UK: Case Law Update – Issue 4 (2010)

Last Updated: 22 July 2010
Article by Keating Chambers

ADJUDICATION

See William Hare v Shepherd Construction under Keating Chambers Reported Cases on the insolvency exception to the pay when paid provisions of the HGCR Act.

Two contracts argument fails

Supablast (Nationwide) Ltd v Story Rail Ltd [2010] BLR 211 TCC
Main contractor Story sought to challenge the jurisdiction of an adjudicator who had decided in favour of sub-contractor Supablast. Story argued that there were separate subcontracts for different elements of the works and that no adjudicator could preside over more than one adjudication. The court rejected this on the facts, holding that there was only one subcontract and/or the parties had behaved as if there was only one.

See Speymill Contracts v Baskind under Keating Chambers Reported Cases on the fraud defence to enforcement.

See SG South v Swan Yard (Cirencester) under Keating Chambers Reported Cases on 'statutory estoppel' in s.107(5) HGCR Act.

Construction Law Vol. 21 Issue 5 June 2010
contains the following articles:

Adjudication and liquidation
by Andrew Jones, HBJ Gateley Wareing

Injuncting adjudication
by Peter Stockill and Michael Taylor, 4 Pump Court

See Anglo Swiss Holdings v Packman under Keating Chambers Reported Cases on criteria for injunction to restrain adjudication.

See Yuanda (UK) v WW Gear under Keating Chambers Reported Cases on disapproval of Tolent clauses under s.108 HGCR Act.

Failure to consider defence condemned

Pilon v Breyer Group plc [2010] BLM Vole 27 No 5 TCC
The adjudicator's decision not to consider a defence relied upon by the defendant constituted a material breach of the rules of natural justice, rendering the adjudicator's decision unenforceable. The adjudicator had decided that he had no jurisdiction to consider the set-off defence raised by Breyer because related to elements of the work which were not in dispute. The case is notable for analayis of Quartzelec v Honeywell Control Systems. (Fionnuala McCredie)

ARBITRATION AND DISPUTE RESOLUTION

Arbitration Vol. 76 No. 2 May 2010
contains the following articles:

Amendments to the Singapore International Arbitration Act
by Leng Sun Chan, Ang & Partners, Singapore

The role of the doctrines of champerty and maintenance in arbitration
by Jern-Fei Ng, Maxwell Chambers, Singapore

The court's powers to intervene in arbitration matters in England and Wales, with particular reference to the court's inherent and residual discretion
by Daniel Brawn, Kuit Steinart Levy, Manchester

The right of appeal and judicial scrutiny of arbitral decisions and awards
by the Hon. Justice Edward Torgbor, Stellenbosch University

'Litigation triage': the early assessment of civil and commercial claims and disputes
by Jonathan Haydn-Williams, Goodman Derrick

Jackson endorses the benefits of mediation in the legal process in England and Wales
by Ann Brady, Rougemont Chambers, Exeter

Mediation: a scheme in operation at the Mayor's and City of London Court
by Anthony Connerty, Lamb Chambers

Settlements in international arbitration: comments on the CEDR Settlement Rules
by Masood Ahmed, Birmingham City University

Effect of party insolvency on arbitration proceedings: pause for thought in testing times
by Jonathan Sutcliffe and James Rogers, Fulbright & Jaworski

Arbitration Law Monthly Vol. 10 No 6 June/July 2010
contains the following articles

Arbitral procedure
Car & Car Pte Ltd v Volkswagen AG in the Singapore High Court on the SIAC Rules.

Jurisdiction
Republic of Serbia v Image Sat International
on where jurisdiction is not justifiable in the English courts.

Agreement to arbitrate
Capes (Hatherden) v Western Arable Services
on whether an arbitration clause was incorporated by a course of dealing.

Commencing an arbitration
Lantic Sugar v Boffin Investments
on restriction on the Court's powers to extend limitation periods for commencement of arbitration.

CONSTRUCTION AND ENGINEERING CONTRACT DISPUTES LAW

Construction Law Vol. 21 Issue 4 May 2010
contains the following articles:

Suspension might not be repudiation
by Vijay Bange, Trowers & Hamlins
(on Mayhaven Healthcare v Bothma)
(Ian Pennicott and Krista Lee)

A right to repair
by Stuart Davey, Pinsent Masons

Forewarned is forearmed
by Martin Baldock, Stroz Friedberg
(on use of electronic evidence in litigation)

Enough already!
by David Owens, Clyde & Co
(on enforcement of adjudication, noting Amec Group Ltd v Thames Water Utilities Ltd)
(Simon Hargreaves QC and Lucy Garrett)

CONTRACT AND PROCUREMENT LAW

Construction Law Vol. 21 Issue 4 May 2010
contains the following articles:

Forms need checking against contract wording
by Michael Phipps, Thurston Consultants

Lords rule on letters of intent
by Chris Kirby-Turner, Thomson Snell & Passmore (on Chartbrook v Persimmon implications)

Avoid recipe for disaster
by Shona Frame, MacRoberts
(on precedence of contract terms)

Insurance cover for delayed projects
by John Wright, JD Risk Associates

Construction Law Vol. 21 Issue 5 June 2010
contains the following articles:

Definitions need to be brought together
by Michael Phipps, Thurston Consultants
(on JCT 2009 Guide, Appendix B)

FIDIC subcontract faces a test
by Tia Starey, Clyde & Co

Insurance and environmental liability
by John Wright, JD Risk Associates

Notices – a trap for the unwary
by Alexander Grant, Pinsent Masons

New remedies for public procurement
by Sophie Charveron, K&L Gates

Letter of intent and formation

RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co [2010] BLM Vol. 27 No. 4 Supreme Court
The defendant dairy manufacturer wished to retain the claimant to supply services for automation of processes and equipment. After providing some quotations, the claimant was awarded the job and the defendant issued a letter of intent, confirming its wish to proceed with the project 'as set out in the offer', subject to finalisation of price and completion date and using an amended version of the MF/1 form of contract, to be executed within four weeks. Work started as negotiations proceeded and the letter of intent was extended for three months. A final draft contract was produced but never signed, leading the claimant to commence proceedings. The TCC had held that, after the lapse of the letter of intent, the parties had reached full agreement on the obligations relating to the work. The CA held that MF/1 could not become operative until signed and thus no contract had been concluded after the letter of intent lapsed. The Supreme Court, allowing the appeal from the CA, held that the parties were working under a contract, but not on the same basis as the TCC had thought.

GENERAL AND PROFESSIONAL NEGLIGENCE

Occupiers Liability Act appeal fails

Mann v Northern Electric Distribution Ltd [2010] EWCA Civ 141 All ER (D)
15 year old claimant failed on appeal in proceedings under Occupiers Liability Act 1984. He had been seriously injured in an electricity substation, having climbed over six metre walls and railings with spiked wire. The CA upheld the trial judge's view that his means of access was not foreseeable and the defendant occupier was not in breach of its duty to him as a foreseeable trespasser.

Solicitors' negligence

Tom Hoskins plc v EMW Law [2010] EWHC 478 Ch. Div NLJ 23 April 584
Although a solicitor is not normally required to give general commercial advice to a client, here it was within the solicitors' retainer to advise assignees of a chain of pubs of the need to obtain the landlords' consent and what might be required, even though it was the clients who bore the responsibility of seeking the consent. The claim in negligence for this and for delay was held to be made out.

PRACTICE AND PROCEDURE

Issue estoppel

Hi-Lite Electrical Ltd v Wolseley UK Ltd [2010] BLR 225 TCC
Following a fire at the owner's premises, the owner sued contractor Hi-Lite, who had fitted a pump provided by the supplier Wolseley. Judgment was given against Hi-Lite, including the finding that the pump was the cause of the incident. Wolseley had not been involved to that point but Hi-Lite now sought contribution from it. Wolseley disputed the cause of the fire, which Hi-Lite claimed was an abuse of process since it had already been decided by a judge in proceedings where Wolseley could have applied to participate. The Court held that it was not abusive to 'keep their powder dry' while others litigated and it would not be unfair to allow Wolseley to dispute the first findings of the judge.

Frustration argument fails

Gold Group Properties Ltd v BDW Trading Ltd [2010] BLR 235 and BLM Vol. 27 No. 4 TCC
Barratt, the developer, argued that its development agreement with the site owner, Gold, was frustrated by the failure of the sale prices of the units on the project to meet the schedule of minimum prices. This was caused by the economic and property recession and the court held that this was not a frustrating event, reviewing the frustration case law. Neither were the minimum prices a condition precedent to Barratt undertaking the development.

Proprietary Estoppel

Henry v Henry [2010] BLM Vol. 27 No 5 Privy Council
In this appeal from the Court of Appeal of the Eastern Caribbean, the Privy Council gave judgment for the appellant. A landowner had died without fulfilling her promise to leave a share of land to the claimant in return for caring for her. The Privy Council found that the trial judge had been wrong to reject the claim for proprietary estoppel on the ground of absence of detriment. The appellant had foregone the opportunity of a better life elsewhere, which was capable of constituting detriment. The Privy Council applied the doctrine of proportionality in weighing promise against benefit.

Remoteness of damage in contract

Sylvia Shipping Co. Ltd v Progress Bulk Carriers Ltd [2010] BLM Vol 27 No 5 Commercial Court.
The House of Lords' decision in Transfield Shipping v Mercator Shipping was considered in this case and the 'orthodox approach' to remoteness under Hadley v Baxendale reasserted. Transfield had decided that the broader ground, based on 'assumption of responsibility' might be used, but the Commercial Court said that this would be in the minority of cases where the orthodox approach would lead to "an unquantifiable, unpredictable, uncontrollable or disproportionate liability or where there is clear evidence that such a liability would be contrary to market understanding and expectation".

The case concerned a time charter of a ship which had not been ready for sub-charter, use due to breach of maintenance obligations by the owners.

Uncertainty and assessment of damages

Durham Tees Valley Airport v BMI Baby Ltd [2010] BLM Vol 27 No 5 CA
The Court of Appeal rejected the defendant airline's contention that its contract with the airport was void for uncertainty because it did not specify the number of flights agreed. The CA emphasised the reluctance of modern courts to find a contract void for uncertainty. The court also rejected the defendant's argument that in assessing damages it should be assumed that the defendant would have performed the contract in the way most profitable to itself. The defendant had a single obligation to perform, albeit with some measure of discretion as to manner.

Construction Law Vol. 21 Issue 5 June 2010
contains the following article:

Keeping costs down
by Alastair Young, Gateley Wareing
(on litigation costs)

Misrepresentation and entire agreement

BSkyB Ltd v HP Enterprise Services UK Ltd [2010] BLR 267 and [2010] CILL 2841 TCC
The CILL focuses on misrepresentation aspects of the judgment on BskyB's claim regarding its commissioning of a customer relationship management system. The BLR Report is complete. One of the key aspects of the case was the scope of the entire agreement clause. Although it excluded any alleged collateral warranty or side agreement, it did not exclude the bringing of an action for negligent misrepresentation. Such a result could have been achieved but only by using clearer words. There are also important findings on causation, mitigation and quantum.

KEATING CHAMBERS REPORTED CASES

Speymill Contracts Ltd v Baskind [2010] BLR 257 CA
The respondent defendant, the owner, alleged that certain files, including withholding notices, had been stolen by the claimant contractor, the appellant. The CA, in granting summary judgment, with stay of execution, considered the fraud defence and the heavy burden on a defendant alleging it to support it with clear and unambiguous evidence. The CA approved SG South v King's Head Cirencester (Thomas Lazur)
Marcus Taverner QC
Jonathan Selby

William Hare Ltd v Shepherd Construction Ltd [2010] BLM Vol. 27 No. 4 CA
The Court of Appeal upheld the TCC in deciding that a pay when paid clause could not be brought within the insolvency exception, because the contract had not been updated to reflect the change in the statutory definition of insolvency. The CA was clear that the onus was upon the party seeking to rely on a clause of this kind to get it right.
Stephen Furst QC

Vector Investments v JD Williams [2010] BLR 195 TCC
In a professional negligence case, the client, Vector, had been awarded £750,000 damages against the defendant architect Williams out of the £6 million claimed. In the costs hearing, both parties claimed success. The court awarded Vector its costs up until the defendant's offer of settlement was made and 50% from there until the eventual Tomlin Order. The claimant was obliged to give £30,000 credit for costs wasted by the defendant as a result of the claimant's conduct on disclosure.
Paul Darling QC
Thomas Lazur

SG South Ltd v Swan Yard (Cirencester) Ltd [2010] BLM Vol. 27 No. 4 TCC
Notwithstanding that the contract in question was not in writing, the court upheld the adjudicator's jurisdiction on the ground that the defendants had expressly stated in writing that they did not object to his jurisdiction. The effect of s.107(5) was to act as a kind of statutory estoppel, preventing the deployment of this defence.
Thomas Lazur

Anglo Swiss Holdings v Packman Lucas Ltd [2010] CILL 2846 TCC
Part of the extensive Mentmore litigation, this element concerned an application for an injunction to restrain adjudication. The court considered the criteria for granting an injunction to restrain adjudication and found them similar in principle to those for restraining litigation as unreasonable or oppressive. On the facts, consultant engineers Packman would be granted an injunction to restrain adjudication. The clients had not honoured the first adjudication awards.
Marc Rowlands

Yuanda (UK) Ltd and WW Gear Construction Ltd [2010] BLM Vol. 27 No.5 and [2010] CILL 2849 TCC
The adjudication provisions under a trade contract on a London hotel project were an amended version of the TeCSA Rules, making Yuanda liable for all costs in the adjudication whatever the outcome. This was held not to be unreasonable for UCTA purposes nor void for uncertainty, but it did fail to comply with the requirements of s.108 HGCR Act and so would be replaced by the Scheme. Bridgway v Tolent (Tolent clauses) disapproved. On the Late Payment of Commercial Debts (Interest) Act, 0.5% above base would not constitute a substantial remedy, so it would be replaced by 8% above the reference rate.
Gideon Scott-Holland

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nchild@keatingchambers.com

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The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.

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