UK: News in Brief: Construction, Property & Real Estate (October/November 2005)

Last Updated: 8 December 2005
Article by Keating Chambers

Adjudication internationally
Construction industry adjudication: a comparative study of international practice by Edwin Chan, Charles Chan and Martyn Hills, Hong Kong Polytechnic University, Journal of International Arbitration Vol. 22 No. 5 October 2005 p.363
The article attempts a sweep of the jurisdictions currently having or developing adjudication regimes: Hong Kong, England and Wales (omitting Scotland for some reason) and Australia and New Zealand. There is also some consideration of FIDIC Dispute Adjudication Boards.

Basis for enforcement
Juridical basis for enforcement of adjudicator’s decisions revisited by Peter Sheridan and Dominic Helps, Shadbolts.
Construction Law Journal, [2005] Vol. 21 No.6 p.435
The regular Construction Act Review column consists largely of a paper by Nicholas Gould, Fenwick Elliott which carries on the debate about the nature of the enforcement of adjudication.

Sheridan and Helps have previously expressed the view that an adjudicator’s decision is not enforceable per se and that what is being enforced is the contractual obligation to comply. Robert Fenwick Elliott’s view is that an adjudicator’s decision is enforceable per se. Nicholas Gould, reviewing the relevant case law, offers a third explanation, namely that what is enforced is the underlying contractual right or obligation in dispute.

Time for jurisdiction challenge
Not too late to object
By Lawrence Davies, Pinsent Masons, Construction Law
Vol. 16 Issue 8 October 2005 p.32
Considers the proposition that ‘Any challenge to jurisdiction must be taken at the earliest possible opportunity’ from Cowlin Construction v CFW Architects. This raises the possibility of some sort of time limit for jurisdictional objections. However, the conclusion, based on a review of the case law, is that mere slowness to take a jurisdictional point will not preclude eventual action, provided no step has been taken which could be construed as affirming the adjudicator’s jurisdiction.

Incorporation and Unfairness
Allen Wilson Shopfitters v Anthony Buckingham [2005] EWHC 1165 TCC (BLM Vol.22 No.8) (LAWTEL)
A letter of intent was held to contain a contract evidenced in writing for the purposes of giving an adjudicator jurisdiction to hear a dispute. The adjudication agreement contained in the JCT contract which was incorporated was held not to be contrary to the Unfair Terms in Consumer Contracts Regulations 1999, it reversed the HGCR Act exclusion of a dwelling owned by a party to the dispute.

First NZ CA adjudication case
Adjudication: the first case in the NZ Court of Appeal by Hon Robert Smellie QC, International Construction Law Review Vol. 22 Part 4 Oct 2005 pp 523-526
This is a case note on George Developments Ltd v Canam Construction Ltd. CA 244/04, in which the NZ Court of Appeal gave judgment in April 2005. George had succeeded in getting summary judgment in enforcing an adjudication award in their favour. The issue for the CA was the meaning of ‘payment claims’ under the Construction Contracts Act 2003. The author concludes that that the court, in dismissing the appeal with costs, sent "a clear message that the reforms in the Act, in accordance with its stated purposes, are not to be thwarted by technical or literalist arguments."

Incorporation and unfairness
Bryen & Langley v Boston [2005] BLM Vol. 22 No.9 CA.

Already reported in CILL, this is the appeal from a TCC decision. The CA allowed the appeal, holding that the JCT standard form of contract had, on the facts, been incorporated into the parties’ contract and that the adjudication provisions in the contract would not be unenforceable as contrary to the Unfair Terms in Consumer Contracts Regulations 1999.

The residential occupier & exclusion
Adjudication and the residential occupier by Dominic Helps and Peter Sheridan, 2005 Con L J Vol 21 No 7 p, 521.
The regular Construction Act Review considers consumer policy issues underlying the exclusion from the operation of the HGCR Act construction contracts with residential occupiers. This involves a consideration of the leading cases, including those on the applicability (or not) of the Unfair Terms in Consumer Contracts Regulations 1999: Picardi v Cuniberti, Lovell v Legg and Carver, Westminster Building v Beckingham and Bryen & Langley v Boston. The authors conclude by summarising the principles for the application of the Regulations in such cases.

ARBITRATION AND DISPUTE RESOLUTION

Journal of International Arbitration Vol.
22 No. 5 October 2005
contains the following articles:
Arbitrating disputes in the resource industries
by Michael Pryles, Clayton Utz, Melbourne
Drawing a line in the sand: defining the scope of arbitrable disputes in Australia
by James Morrison, Couderts, Sydney
The IBA Guidelines on Conflicts of Interest in International Arbitration: an overview
by Phillip Landolt, Lalive, Geneva
Brazil’s new Public - Private Partnership Law: one step forward, two steps back
by Clavio Valença Filho and Joao Bosco Lee, Castro Valença, Lee e Araújo, Brazil
Arbitrability of exclusive distributorship agreements in Belgium: Lex Fori (and Lex Contractus)?
by Herman Verbist, Brussels Bar

Arbitration Law Monthly Vol.5 No. 9 October 2005 contains the following articles:
Separability of arbitration agreements
on Continental Enterprises v Shandong Zhucheng Foreign Trade Group (illegality of the underlying contract)
Anti-suit injunctions in arbitration cases
on Through Transport Mutual Insurance v New India Assurance (subrogation proceedings)
Procedural irregularity
on Newfield Construction v Tomlinson (failure to take account of the arguments)
Evidence in the arbitration
On South Tyneside Borough Council v Wickes Building Supplies (on witness summonses)

Arbitration Law Monthly Vol.5 No.10 November 2005 contains the following articles:
Procedure
on Thyssen Canada v Mariana Maritime
(objection to serious irregularity and waiver)
Parties to the arbitration
on SEB Trygg Holding v Manches
(on proceedings commenced in the wrong name)
Law applicable to the substantive contract
on King v Brandywine Reinsurance
(on the significance of the arbitration clause)
Enforcement of New York Convention awards
by Louis Flannery, Howes Percival on IPCQ v Nigerian National Petroleum Corp
(on court powers to order security for costs and claims)
Stay of arbitration proceedings
on Carvill America Incorporated v Camperdown UK
(on third party rights)
Anti-suit injunctions
on C v RHL (on mediation as an alternative to injunctive relief)

International Construction Law Review Vol. 22 Part 4 October 2005
Contains the following articles:
International construction contracts and dispute resolution: an Egyptian perspective
by Said Hanafi, Mena Associates, Cairo
The enforcement of UK adjudication decisions in EFTA/EU countries – unrecognisable judgments?
by Kevin Barrett, Wragge & Co.
All’s well that ends well: London remains a suitable venue for international arbitration – but only thanks to the House of Lords
by Antonio Crivellaro, Bonelli Erede Pappalardo, Milan
and Review of arbitrators’ exercise of power in English law: the House of Lords decides
by Ellis Baker and Anthony Lavers, White & Case, London (both on Lesotho Highlands Development Authority v Impregilo)
Third party interventions in construction dispute negotiation
by Sai On Cheung, Kenneth Yiu and Esther Leung, City University, Hong Kong.

Asian Dispute Review October 2005
Contains the following articles:
The Bangladesh Arbitration Act 2001
By Munir Maniruzzaman, University of Portsmouth
Procedural problems in arbitration
By Mr. Justice Reyes, High Court of Hong Kong
A challenge to the appointment of an arbitrator under the UNCITRAL Rules
By Craig Shepherd and Anita Chiu, Herbert Smith, Hong Kong.
The time limit for making an arbitration award
By Dato Kevin Woo, Chartered Arbitrator, Malaysia
Proposed changes to the ICSID Arbitration Rules
By Mark Kantor, Georgetown University
What an Asian company needs to know about enforcing arbitral awards in the United States
By Jung-Hye Yeum, Duane Morlis, New York
The internationalisation of commercial mediation
By Elizabeth Burch, London
Challenge of errors in arbitral awards
By Ellis Baker and Anthony Lavers, White & Case, London
How final is final? Calderbank offers in arbitration and the re-opening of final awards
by Tim Haynes, Pacific Chambers, Hong Kong
Enforcing an ADR agreement
By Keith Mak, Baker & McKenzie, Hong Kong

Related Disputes

City & General v AYH plc [2005] All ER (D) 165 (LAWTEL) TCC
Project Manager AYH refused to concur in the appointment of an arbitrator to hear disputes between them and their client who had already been appointed to hear disputes between the client and main contractor. The court exercised its discretion under s.18 Arbitration Act 1996 to appoint the same arbitrator, given that a material portion of the issues were the same or substantially connected with those in the dispute already referred to arbitration. The commercial purpose of the arbitration clause was clearly that such related disputes should be heard by the same arbitrator, to avoid multiplicity of proceedings and inconsistent findings.

Challenge to award
Lesotho Highlands Development Authority v Impregilo [2005] CILL 2279 HL

Already reported in BLR, this is a major decision of the House of Lords on judicial challenges to arbitral awards, reversing an unanimous Court of Appeal. Lord Steyn, giving the principal speech, referred to the far-reaching changes made by the Arbitration Act 1996 to the prospects of challenge and to the powers of arbitrators. In this case, being an ICC arbitration, challenge on point of law was excluded. The allegation was that the arbitrators had exceeded their powers in the currency of the award and in the award of interest. The majority (Lord Phillips dissenting) held that there was no excess of jurisdiction by the arbitrators:

"The erroneous exercise of an available power cannot by itself amount to an excess of power. A mere error of law will not amount to an excess of power under s. 68 (2)(b)"

CONSTRUCTION AND ENGINEERING CONTRACT LAW

Retentions
Do we need retentions?
By Ronan Champion, EC Harris, Construction Law Journal [2005] Vol. 21 No. 6 p.403
The author reviews the arguments for and against the use of retentions to protect against non-completion and failure to remedy defects. He considers the history of the practice and its rationale, as well as alternatives such as various types of bond. His conclusion is that the majority of owners, at least, will "justifiably continue to insist on retention in construction contracts."

Construction Law Vol. 16 Issue 8 October 2005
contains the following articles:
JCT makes useful improvements
And
New contracts can reduce confusion
by Michael Phipps, Thurston Consultants
(both on JCT 2005 suite of contracts)
Paved with good intentions
by Shona Frame, MacRoberts
(on working under letters of intent)
Agency staff not a liability free option
by Jill Kelly, Clarks Legal
(on use of agency workers)
Design cover under contract works policies
by John D Wright, JD Risk Associates
(on design wordings in insurance)

International Construction Law Review Vol. 22 Part 4 October 2005
Contains the following articles:
The concept of a ‘body governed by public law’ in European procurement law
by Dr. H. Nijholt, Maastricht University.
Commercial exploitation in construction contracts: the role of economic duress and unjust enrichment
by Hamish Lal, Keating Chambers
(featuring DSND Subsea v Petroleum Geo-Services)


Porto Human Heritage City Urban Regeneration Companies: New possibilities and some problems for the construction sector
by Ana Medeiros, Antonio Vilar & Associados, Porto.

South African procurement
Client strategic objectives: the impact of choice of construction contract on project delivery by Peter Richards, Paul Bowen and David Root, (University of Cape Town) and Akintola Akintoye (Glasgow Caledonian University) 2005 Con L J Vol 21 No 7 p.473.
The article explores how the procurement method selected acts as a crucial constraint on the client’s strategic objectives. The contract referred to is the main South African construction contract, the JBCC Principal Building Agreement and the case study used to illustrate the discussion a turn-key project for a new-build student residence for a state tertiary education institution. The authors conclude that the arrangement was excessively complex and that the client was disadvantaged by not being a party to the construction contract itself.

See Henry Boot Construction v Alstom Combined Cycles under Keating Chambers Reported Cases on certificates as a condition precedent to payment and accrual of the right of action.

See Alfred McAlpine Capital Projects v Tilebox under Keating Chambers Reported Cases on liquidated damages and penalty

See Costain v Bechtel under Keating Chambers Reported Cases on contract administration duties of project managers.

GENERAL AND PROFESSIONAL NEGLIGENCE

Disability discrimination
Roads v Central Trains Ltd [2005] Con LJ Vol. 21 No. 6 p.456 CA
The CA allowed an appeal by a wheelchair user against the first instance decision that it was not reasonable to require Central Trains to provide a taxi to take him from one platform to another at Thetford station, in the absence of a viable route. The case was brought under ss 19 and 21 Disability Discrimination Act requiring service providers to take reasonable steps to remove or alter physical features or provide alternatives.

Damage to buildings by trees
Seeing the wood for the trees – Loftus-Brigham and apportionment of damage by Simon Brown QC and Susan Lindsey, Crown Office Chambers, Construction Law Journal, [2005] Vol. 21 No. 6 p.431
The Court of Appeal decision in Loftus-Brigham v London Borough of Ealing on the correct test of causation in cases of damage to buildings by trees caused the case to be remitted for re-trial, although apparently it has since settled. Counsel who appeared for the defendants at trial and in the Court of Appeal consider the implications of the CA’s view on apportionment. They are particularly concerned about the application of the ‘material contribution test’ from Fairchild v Glenhaven Funeral Services to tree-roots cases, regarding it as a "forensic fudge on causation."

Causation
Causation by Lord Hoffman, Law Quarterly Review Vol. 121 October 2005 p.592
This is the text of the 2005 Blackstone Lecture by Lord Hoffman, dealing extensively with his speech in the House of Lords in South Australia Asset Management Corp v York Montague. Lord Hoffman accepts criticisms made by Professor Jane Stapleton of his language in the famous passages relating to causation, blurring the distinction between the scope of the valuer’s duty of care and the extent of the consequences for which the valuer is liable. Lord Hoffman summarises what he sees as the current position on causation, including Fairchild v Glenhaven Funeral Services "an exceptional case" and Chester v Afshar "Another recent deviation".

Negligence and nuisance
Mistry v Thakor [2005] BLM Vol. 22 No. 9 p.10 Court of Appeal
Previously reported in CILL, this was on negligence, nuisance and imputed knowledge. Following injury to the claimant when the cladding fell off a building as he walked along a public highway, he sued the owners of the building, who issued Part 20 proceedings against the property managers and a previous tenant. The Court of Appeal upheld the judges’ findings on the liability of the owners on the basis of their imputed knowledge of the defects and upheld the 80% contribution against the property manager.

Co-insurance and subrogation
Contract works and contractors’ all risk policies – a comparative analysis of the UK and Australian Courts’ approach by Patrick Mead, Carter Newell, Brisbane 2005 Con L J Vol 21 No 7 p.493.

The author compares and contrasts the approach of courts in the UK and Australia respectively to the issues highlighted in the House of Lords in Co-operative Retail Services v Taylor Young, which gets surprisingly summary treatment given its impact in the UK. The treatment of Petrofina v Magnaload, Stone Vickers v Appledore and National Oilwell v Davy Offshore is much better. The position in Australia is significantly affected by the Insurance Contracts Act. The author proposes that a contractor might be regarded as holding the benefit of an insurance policy on trust for a sub-contractor.

PRACTICE AND PROCEDURE

Construction Law Vol. 16 Issue 8 October 2005
contains the following articles:
Counterclaim may not bring security
by Anthony Edwards, Park Lane Chambers (on applications for security for costs)
Sophistry damages law
by Paul Newman, Hugh James
(on limitation periods in construction defects cases)

Non-monetary payment
Baker & Davies plc v Leslie Wilks Associates
[2005] 3 All ER 603 TCC
The word ‘payment’ under s.1 Civil Liability (Contribution) Act 1978 was held to be capable of including a payment in kind. The claimant contractor could be entitled to claim contribution from its structural engineer even though the contractor had settled the employer’s claim against it by doing remedial work at its own expense, rather than paying over a sum of money to the employer.

Interlocutory injunctions
Refusal to comply: not a good idea by Thomas Thompson
Construction Law Journal [2005] Vol. 21 No. 6 p.419
The article is centred on the Court of Appeal’s decision in Bath NE Somerset DC v Mowlem on a refusal by a contractor to carry out an architect’s instruction and the availability of an interlocutory injunction to prevent the contractor from barring a substitute contractor sent in to do the work. The author advises contractors to raise complaints about specification/design at an early stage, since arguing against an instruction comes too late and invites contractual sanction.

The Commercial Litigation Journal No. 3 Sept/Oct 2005
Contains the following articles:
Bluff and bluster or unfair conduct?
by David Higham, Nottingham Law School on how far solicitors can go in negotiation without breaking their Code of Conduct.
A significant blow for defendants
by Hannah Parry and Kate Bevan Jones, SJ Berwin on McGlinn v Waltham Contractors

Tried and tested
by Fiona Cunningham, Nottingham Law School on the use of business project management techniques in commercial litigation.
A broad church needs a united vision
by Tony Guise, Guise Solicitors
on improved representation for commercial litigators.
Safety is paramount
by Lesley Gray, Clyde & Co on the £15 million corporate fine in HM Advocate v Transco.
What are your obligations?
by Shaistah Akhtar, SJ Berwin
on the effect of money-laundering regulation on litigation.
A useful doctrine
by Gregory Durston, Kingston University on similar fact evidence in civil trials.

Losing their bite
by Paul Friedman and Jonathan Lea, Clyde & Co on the enforcement of exclusive jurisdiction agreements.

CPR Amendment
Note the CPR Third Amendment came into force on 1st October. As well as 12 new rules, including rule 60.7 specifically on TCC orders, there are amendments to over 30 existing rules.

Striking-out
Atos Consulting Ltd v Avis Europe plc [2005] TCLR 7 TCC.
Under a contract for the supply of IT consultancy services, both parties alleged repudiatory breach against the other. The defendant took the view that the claim was unsatisfactory and that the defendant ought to initiate the claim. The defendant therefore applied to strike out the claim. The court’s decision, refusing the application, considered the grounds for strike-out under CPR rule 3.4 (20(b)

    1. where the statement of case was such as to prevent the just disposal of proceedings or
    2. the statement of case was such as to create a substantial obstruction to the just disposal of the proceedings. There could be no strike-out on the grounds alleged.

See Briggs & Forrester Electrical v Governors of Southfield School for Girls under Keating Chambers Reported Cases on orders for disclosure of documents under the pre-action protocol.

KEATING CHAMBERS REPORTED CASES

Costain Ltd v Bechtel Ltd [2005] TCLR 6 and [2005] BLM Vol. 22 No.8 p.1 TCC
Already reported in CILL, this concerns alleged improper interference by project managers in impartial contract administration. Following a meeting with the project managers on the Channel Tunnel Rail Link project, the contract administrators increased disallowance of contractors’ claims. The contractors alleged improper interference causing the client to breach the contract and they sought interim injunctions. The project managers argued that under the (amended) NEC contract there was no duty of impartiality on the project managers. The court entertained doubts about this and held that there was a serious issue to be tried, but refused the injunctions, since on the balance of convenience, damages would be an adequate remedy.
David Thomas QC

Alfred McAlpine Capital Project Ltd v Tilebox Ltd [2005] Con L J Vol 21 No 7 539 TCC
Already reported in BLR, this case contains a useful review of the modern law on the distinction between liquidated damages and penalties. On the facts, the liquidated damages provision in the JCT WCD 1998 contract for £45,000 per week was a genuine pre-estimate of loss and the actual loss suffered by the developer, Tilebox, was higher. The contractor therefore failed to obtain a declaration that the provision was a penalty.
Paul Darling QC

Henry Boot Construction Ltd v Alstom Combined Cycles [2005] CILL 2276 and BLM Vol 22 No 9 p.1 CA.
This concerns the point at which the contractor’s right to payment arises and whether (in an ICE 6th edition contract) the issue of a certificate is a condition precedent to payment. The right to claim interest on a sum which should have been certified becomes statute-barred six years after accrual of the right.
Stephen Furst QC

Briggs & Forrester Electrical v Governors of Southfield School for Girls [2005] CILL 2273 TCC
In a case on alleged asbestos contamination by electrical contractors, the TCC had to consider the extent to which disclosure should be granted against the School in favour of the defendant contractors. The court held that it would exercise its discretion in favour of an order for disclosure of quantum documents, but not for a wider order, since the parties were still operating under the pre-action protocol.
Simon Hargeaves

This material is prepared for Chambers by our Director of Professional Support, Professor Anthony Lavers (LL.B., M.Phil, Ph.D. MCI.Arb, MRICS Barrister), Visiting Professor of Law, Oxford Brookes University.

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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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