UK: Case Law Update Issue 5 (2010)

Last Updated: 23 September 2010
Article by Keating Chambers

ADJUDICATION

Construction Law Journal Vol. 26 Issue 4 2010

contains the following articles:

Construction Act Review
by Peter Sheridan, Sheridan Gold
comprises a Slip Rule Update, reviewing recent case law, notably YCMS v Grabiner (Gaynor Chambers) and O'Donnell Development v Build Ability (Stephen Furst QC).

Adjudication at the crossroads: The Construction Act – one size fits all?
by Mark Atherton, Knowles
a revised and updated version of the article which appeared in the previous edition of Con LJ.

Construction Law Vol 21 Issue 6 July 2010

contains the following articles:

The GC/Works/1 adjudication provisions
by Andrew Shelling, Pinsent Masons.

A new era for enforcement
by Ann Levin and William Glynn, Herbert Smith.

Dispute Review Boards in UK construction
by Jameel Tarmohamed, Clyde & Co.

See Speymill Contracts v Baskind under Keating Chambers Reported Cases on evidence of fraud or deceit as grounds for resisting adjudication enforcement.

See Cleveland Bridge v Whessoe-Volter Stevins under Keating Chambers Reported Cases on the effect of s.105(2) HGCR Act on a LNG terminal steel and pipework subcontract.

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

ARBITRATION AND DISPUTE RESOLUTION

International Arbitration Law Review Vol. 13 Issue

contains the following articles:

International Investment Treaties and Arbitration as imbalanced instruments: a revisit
by Tra Pham, Catholic University of Leuven.

Revision of the UNCITRAL Arbitration Rules: further steps
by Guidiffa Cordero Moss, University of Oslo.

Comparing institutional arbitration rules: differences and similarities in a developing international practice
by Benedetto Coppo, Milan Arbitration Chamber.

Trends in documentary evidence and consequences for pre-arbitration document management
by Lukas Wyss, Bratschi Widerkehr & Buob, Berne.

Construction Law Vol 21 Issue 7 August 2010

contains the following articles:

Paying the price for pre-action expert shopping
by Hamish Lal and Katherine Robinson, Jones Day.

The severability of adjudicator's decisions
by Jane Fender-Alison, Dundas & Wilson.

Using statutory demands
By Jane Hughes, Collyer Bristow.

Insurance contracts and the rights of third parties
by John Wright, JD Risk Associates.

Time Bar Provisions

Anglian Water Services Ltd v Laing O'Rourke Utilities Ltd [2010] CILL 2873 TCC
Laing O'Rourke's solicitors had confirmed safe receipt of a faxed notice of dissatisfaction and Notice of Intention to Refer to Arbitration from Anglian. They then sought to argue that these were not validly served and therefore Anglian were time-barred in pursuing the arbitration. The court held that the service was valid but confirmed that Anglian would have been time-barred if this were not so. They could, however, have then sought an extension of time under s.12 Arbitration Act, since it would have been unjust to apply the time bar inflexibly when Anglian had been led to believe that the service was validly made.

Construction Law Journal 2010 Vol 26 No 5

contains the following articles:

Growth of dispute avoidance procedure in the construction industry: a revisit and new perspectives
by MS Mohd Danuri, SM Shaik Mohd Hussain, NE Mustaffa and MS Jaafar.

The proposed new Arbitration Law of Hong Kong
by Stephen Mau, Hong Kong Polytechnic University.

Arbitration Vol 76 No 3 August 2010

The first 10 articles are papers from the London Maritime Arbitration Association 2010 Conference.

The issue also contains the following articles:

Court intervention in arbitration: support or interference?
by John Laurie, Dechert.

The circumstances in which an adjudicator's decision is unenforceable or inappropriate in construction disputes
by Daniel Brawn, Kuit Steinart Levy, Manchester.

To order specific performance
by Robert Gemmell, MCMS, Birmingham.

The without-prejudice rule in England
by David Altaras, 36 Bedford Row.

Cultural nuances in mediating commercial disputes in Nigeria
by Funmi Roberts, Nigeria.

Can separability save Competenz-Competenz when there is a challenge to the existence of a contract?
by Kristy Haining, Freehills, Melbourne and Bruno Zeller, Victoria University.

Styles and effectiveness of negotiation
by James Savory, Rapproche.

The revised IBA Rules of Evidence
by Peter Rees, Debevoise & Plimpton.

How effective is LCIA's bite on arbitration in India?
by Anthony Edwards, Chancery House, Chambers Leeds.

Dispute resolution developments in Bahrain: creation of a new arbitral institution and introduction of a form of statutory arbitration
by Adam Vause and Henry Quinlan, Norton Rose, Dubai.

Global initiatives to promote efficiency
by Michael McIllwraith, GE Oil & Gas, Florence.

Arbitration Law Monthly Vol 10 No 7 August 2010

contains the following articles:

Appeal against award on Papas Olio v Grains & Fourrages
in the CA on the FOSFA time bar provisions.

Serious irregularity on Double K Oil Products v Neste Oil Oyj
on allegations of fraud and suppression of evidence.

Jurisdiction on Lidl v Just Fitness
on whether unresolved issues can be reopened after award.

Jurisdiction on Habas Sinai v Sometal
on whether an arbitration clause can be incorporated from one document into the parties' contract.

Jurisdiction on Norscot Rig Management v Essar Oilfields
on whether set-off between disputes was permissible.

CONSTRUCTION AND ENGINEERING CONTRACT DISPUTES LAW

Conditions Precedent

Education 4 Ayrshire Ltd v South Ayrshire Council [2010] Con LJ Vol. 26 Issue 4 327 Court of Session Outer House
A design and build contract under a Scottish schools PPP project contained notice provisions in respect of claims for extension of time and additional payment. E4A, the consortium undertaking the works, made claims which did not fulfil the requirements of formality. The court found in favour of the education authority client, South Ayrshire, on the grounds that "where the parties have laid down in clear terms what has to be done by one of them if he is to claim certain relief, the court should be slow to seek to relieve that party from the consequences of failure" (per Lord Glennie).

International Construction Law Review Vol 27 Part 3 July 2010

contains the following articles:

Acceleration of works and penalties for delay in France in construction projects
by Virginia Colaiuta, Hughes Hubbard & Reed, Paris.

Time and acceleration issues affecting international construction contracts: the German approach
by Stefan Osing, Heuking Kűhn, Lűer, Wojtek, Dűsseldorf.

An analysis of Tercon Contractors v British Columbia: or, if it walks like a duck ...
by Bruce Reynolds and Sharon Vogel, Borden Ladner Gervais, Toronto.

The evaluation of contractors' overheads claims in construction
by Franco Mastrandrea.

In search of the perfect project: incentivising performance and collaboration in construction projects through key performance indicators
Arrent van Wassenaer, Allen & Overy, Amsterdam.

Globalisation and the new contractual regime in international public works agreements in Egypt.
by Mohamed Ismail, Egyptian State Council.

Quantum Meruit Following Repudiation

Sopov v Kane Construction Pty Ltd (No. 2) [2010] Con LJ Vol 26 No 5 397 Victoria CA
The respondent contractor was held to have accepted the appellant client's repudiation, so that the respondent would be entitled to recover a quantum meruit. Contract price is merely a piece of evidence as to what the quantum should be, no more and no less than that. The measure should be the value of the benefit conferred. If variations were ordered, it was irrelevant whether they fell outside the original contractual scope.

Construction Law Journal 2010 Vol 26 No 5

contains the following articles:

Exploring the key risks and risk mitigation measures for Guaranteed Maximum Price and Target Cost Contracts in Construction
by Daniel Chan, Albert Chan, Patrick Lam and Joseph Chan, Hong Kong Polytechnic University.

New regulations introduced to prevent future crane failure
by Atiyah Malik, Berrymans Lace Mawer.

See WW Gear v McGee under Keating Chambers Reported Cases on the loss and expense claims procedure as a condition precedent.

Test for Equitable Set-Off

Geldof Metaalconstructie NV v Simon Carves Ltd [2010] CILL 2880 and [2010] 130 Con LR 37 (CA)
Under a contract for design supply and installation of elements of a biothanol plant, Geldof sought summary judgment for an invoice, after Simon Carves had issued a Notice of Termination. Simon Carves argued that three set-offs ought to be taken into account, arising from other disputes on the same project. The court reiterated the test from Lord Denning "it is not every cross claim which can be deducted. It is only cross claims that arise out of the same transaction or are closely connected with it. And it is only cross-claims which go directly to impeach the plaintiff's demands, that is, so closely connected with his demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross-claim". There were practical links here between the contracts and Geldof had made the position worse by threatening to halt work on one of the other contracts in order to try to enforce payment.

CONTRACT AND PROCUREMENT LAW

The Law Quarterly Review Vol. 126 July 2010

contains the following articles:

Fundamental breach in the Supreme Court of Canada
by Mitchell McInnes, University of Alberta, on the procurement case of Tercon Contractors v British Columbia on exclusion of rights under tender contracts.

The unconscionable bargain in the common law world
by David Capper, Queen's University, Belfast.

For the recognition of remedial terms agreed inter partes
by Soléne Rowan, Queens' College, Cambridge.

Construction Law Journal Vol. 26 Issue 4 2010

contains the following articles:

'The Corruption of the Commercial Process' revisited
by Jim Mason, University of the West of England, considering the modern application of John Huxtable's 1983 report on the imposition of contractual terms on specialist sub-contractors.

Enforceability considerations for deleting the extension of time provisions in building contracts
by Edwin Chan and Maria Au, Hong Kong Polytechnic University.

Construction Law Vol 21 Issue 6 July 2010

contains the following articles:

When stars are no guide
by Michael Phipps, Thurston Consultants (on the JCT Contract Guide Revision 2009).

Agreements promote risk reduction
by Professor Peter Hibberd, JCT.

Do I not like that (on negative declarations)
by Ashley Pigott, Wragge & Co.

The impact of insolvency on contracts
by Louise Shields, Dundas & Wilson.

Design – an insurer's perspective
by John Wright, JD Risk Associates.

Construction Law Vol 21 Issue 7 August 2010

contains the following articles:

Beware bespoke amendments (on 2009 revision of JCT With Quantities 2005)
by Michael Phipps, Thurston Consultants.

New public procurement regime can bite
by David Corderey, Maxwelll Winward.

Pre-construction agreements
by Peter Hibberd.

Drafting dispute resolution clauses
by Sean Marriott, Clyde & Co.

GENERAL AND PROFESSIONAL NEGLIGENCE

The Law Quarterly Review Vol. 126 July 2010

contains the following article:

Defensive practice or conflict of duties? Policy concerns in public authority negligence claims
by Hanna Wilberg, University of Auckland.

Construction Law Journal Vol. 26 Issue 4 2010

contains the following article:

Outflanking Murphy v Brentwood: claiming in tort for pure economic loss
by David Pliener, Hardwicke Chambers.

Economic Loss in Buncefield Explosions

Shell UK Ltd v Total UK Ltd [2010] 129 Con LR 104 CA
The CA overturned the judge on the issue of whether beneficial/equitable ownership of property could give rise to a special relationship with the tortfeasor so as to allow recovery of economic loss consequent upon physical damage to property. The court also had to consider Total's claim for indemnity, referring to the guidance towards contra proferentem, but adding a gloss where it was implausible that a party would agree to indemnify another against that other's own negligence.

Damages for Professional Negligence

Nahome v Last Cawthra Feather [2010] All ER (D) Ch. Div
The defendant solicitors had admitted liability for breach of their professional obligations in respect of the renewal of a business lease. The issue for the court was damages. The defendant contended for £28,000, being the value of the minimally profitable business lost. The claimant sought £1.8 million based on his plans for a lucrative internet-based business, but the court dismissed this as too remote; the test was not what the profits might have been, but what a purchaser would have paid at the time of the breach.

PRACTICE AND PROCEDURE

Letter of Intent and Contract Formation

RTS Flexible Systems Ltd v Molkerei Alois Muller GmBH [2010] 129 Con LR 1 Supreme Court
The Supreme Court allowed the appeal from the CA decision reported in 123 Con LR and noted in September 2009 issue. The claimant supplier of services began work for the defendant manufacturer under a letter of intent. The manufacturer confirmed 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. The CA had held that no contract was concluded after the lapse of the letter of intent, but the Supreme Court held that there was the necessary intention and all the essential terms were agreed, even though the draft written contract provided that it would not become effective until executed.

Entire Agreement Clause

North Eastern Properties Ltd v Coleman and Quinn [2010] TCLR T121 CA
The appellant purchaser agreed that they would receive a 2% 'finder's fee' from the respondent vendor in respect of each unit in a development of flats but this term was not included in the contracts for the sale of the land. The purchasers argued that these were therefore void under the Law of Property Miscellaneous Provisions Act. The CA upheld the trial judge's finding that the entire agreement clause confirmed that nothing had been omitted which governed the contract, so that the purchasers had not been entitled to rescind the contracts.

Entire Agreement Clause and Misrepresentation

BSkyB Ltd v HP Enterprise Services UK Ltd [2010] 129 Con LR 147 and [2010] Con LJ Vol. 26 Issue 4 289 QBD
BSkyB's claim concerned its commissioning of a customer relationship management system. Central to the outcome was the scope of an entire agreement clause in the contract between the parties. The clause had the effect of excluding any alleged collateral warranty or side agreement between the parties, but did not exclude the bringing of an action for negligent misrepresentation, although such a result could in principle be achieved by using clearer words. The Con LR Editorial Comment also notes the important findings by Ramsey J. on the requirements for the tort of deceit. There are also significant passages of the judgment on causation, mitigation and quantum.

Commercial Litigation Journal No. 31 May/June 2010

Contains the following articles:

A change in the wind
by Omar Qureshi and Joe Smith, CMS Cameron McKenna
(on the Bribery Act).

Recalculating
by Anthony Woolich and Sarah-Jane Thompson, Holman Fenwick & Willan
(on the Commercial Agents Directive).

Unnatural justice
by Andrew Hearn and Matthew Magee, Dechert
(on service of proceedings out of jurisdiction).

Moves with a motive
by Dorothy Henman and Neil Jamieson, Barlow Lyde & Gilbert
(on the tort of abuse of process).

Going up
by Sarah O'Driscoll, Weightmans
(on late payments and statutory interest).

A short spell inside
by Rosie Choueka and Simon Dodd, Lawrence Graham
(on competition compliance)

Questionnaire time
by Steven Friel and Caroline Bell, Davies Arnold Cooper
(on e-disclosure).

Without Prejudice Decision Overturned

Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] 129 Con LR 35 Court of Appeal
By a majority, the Court of Appeal overruled the decision of the Commercial Court, which included an early consideration of Chartbrook v Persimmon Homes. The context was a shipping dispute over freight forwarding agreements which had been the subject of a settlement not fully implemented. The Commercial Court decision, noted in the October 2009 issue, was that evidence of without prejudice negotiations could be considered to construe the settlement agreement. The majority of the CA started from the general rule that statements made 'without prejudice' are not admissible. There are exceptions, but these are clearly limited and the judge had proposed to create a new one.

See Priory Caring Services v Capita Property Services under Keating Chambers Reported Cases on the scope of a letter of release in relation to defects not manifest when it was issued.

Third Party Settlement

Siemens Building Technologies FE Ltd v Supershield Ltd [2010] 129 Con LR 52 CA
The TCC decision of this case was reported in 124 Con LR. Following the flooding of Slaughter & May's offices, Siemens as sub-contractor had settled with parties further up the chain after a multi-party mediation. Siemens maintained its Part 20 action against its sub-sub-contractor, Supershield, claiming the sums paid out in settlement of the claims above it. The TCC held Siemens entitled to recover in respect of a reasonable settlement it had made. This was upheld by the CA. The judge had correctly applied the test that the settlement figure had to be within the range of reasonableness. The judge had also been correct in interpreting the sub-sub-contract as imposing an obligation upon Supershield.

KEATING CHAMBERS REPORTED CASES

Speymill Contracts Ltd v Baskind [2010] 129 Con LR 66 CA
The Court of Appeal approved the reasoning of the TCC in SG South v King's Head Cirencester (Thomas Lazur) in holding that fraud or deceit by the enforcing party could be raised as a defence in resisting enforcement of an adjudication decision. However, on the facts, the allegations of theft were insufficient to prevent enforcement. Summary judgment was entered, but execution suspended because of the claimant's poor financial circumstances.
Marcus Taverner QC
Jonathan Selby

Priory Caring Services Ltd v Capita Property Services Ltd [2010] 129 Con LR 81 Court of Appeal
The appellant owners, Priory, alleged negligence in design, specification and supervision against the defendants, Captia, who had undertaken repair and refurbishment work on Priory's hotel, which had been fire damaged. The hotel had subsequently suffered from damp penetration. This appeal concerned a letter of release issued on behalf of Priority which resulted in its claim being struck out. Priory's appeal was based on their argument that the letter of release did not extend to the damp, which had only been discovered subsequently. The CA held that the possibility that defects not yet revealed might arise was clearly apparent when the letter was issued by Priory's solicitors. Priory's appeal was dismissed.
Alexander Nissen QC
Richard Coplin

Yuanda (UK) Ltd v WW Great Construction Ltd [2010] Con LJ Vol 26 No 5 TCC
Already reported in CILL, 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

WW Gear Ltd v McGee Group Ltd [2010] CILL 2884 TCC
The issue for the court was whether procedural requirements in the Trade Contract under the JCT Trade Contract Terms 2002 were a condition precedent for a loss and expense claim under the Construction Management arrangements for a hotel project. The court granted the contractor, Gear, a declaration that there was a condition precedent in the Trade Contract, although the drafting contained an obvious error. Comments of Lord Hoffmann in Chartbrook v Persimmon were approved.
Marc Rowlands
Abdul Jinadu

Cleveland Bridge UK Ltd v Volker Stevin JV [2010] CILL 2876 TCC
In a dispute over the final account of a sub-contract for pipework and steel on the Drayon LNG terminal at Milford Haven, the court had to decide whether the works were governed by the HGCR Act. It was held that the subcontract works included significant and substantial elements falling within the definition of excluded operations under s.105(2). While erection of the steelwork and the pipework was excluded, this did not extend to preparation of drawings and off-site fabrication. It was not possible to sever the excluded from the included and so the decision could not be partially enforced either.
Adrian Williamson QC
Lucy Garrett

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