UK: Construction, Property & Real Estate (Case Law Review, Issue 5 - June 2007)

Last Updated: 8 June 2007
Article by Keating Chambers

ADJUDICATION

Payment provisions in the Lords

Melville Dundas Ltd v George Wimpey UK Ltd [2007] 1 WLR 1136 HL
The first decision by the House of Lords on the payment provisions of the HGCR Act. By a majority of 3-2, the appeal of the appellant employer succeeded, the contractor had previously been successful; n the Court of Session. The contractor had gone into receivership, entitling the employer to terminate the (JCT 1998) contract, but the contractor claimed interim payments due in the absence of a withholding notice. It had been conceded in the lower courts that interim payments were not contractually payable after determination and the House of Lords held that this was not inconsistent with the payment provisions of the Act. There was a requirement that the contractor should be entitled to payment by instalments, but this did not mean that that entitlement had to be maintained after the contractor had become insolvent, giving a benefit to the contractor’s creditors against the employer, which was never intended by the Act.

Finality of decisions

Construction Act Review by Peter Sheridan and Dominic Helps, Shadbolts, Construction Law Journal 2007 Vol. 23 No. 3 p. 214
The regular Con LJ feature concentrates on the effect of s.108(3) HGCR Act to the effect that the adjudicator’s decision is binding pro tem. Leading cases are reviewed, notably Watkin Jones v Lidl (Simon Hughes), Emcor Drake & Scull v Costain Construction (Louise Randall), Quietfield v Vascroft in the TCC and CA (Matthew Holt and Abdul Jinadu) and HG Construction v Ashwell Homes (Finola O’Farrell QC and Matthew Holt). The authors highlight the apparent inconsistency between Quietfield and HG Construction, on the binding effect of decisions on subsequent adjudicators. The authors point out the distinction between the situation where the factual matrix underlying the dispute has changed between the earlier and later adjudications, as in Quietfield, and the situation, as in HG Construction, where it has not.

See Epping Electrical v Briggs & Forrester under Keating Chambers Reported Cases on effect of adjudication time-limits which are non-HGCR Act compliant.

See Aveat Heating v Jerram Falkus Construction under Keating Chambers Reported Cases on implication of Scheme provisions where contract time-limits were non-HGCR Act compliant.

See HG Construction v Ashwell Homes under Keating Chambers Reported Cases on the binding effect of an earlier adjudication on a dispute referred to a subsequent adjudication.

See Redworth Construction v Brookdale Healthcare under Keating Chambers Reported Cases on the existence of a written contract for adjudication purposes.

See Cubitt Building and Interiors v Fleetglade under Keating Chambers Reported Cases on the deadline for an adjudicator’s decision.

See Multiplex Constructions v Mott MacDonald under Keating Chambers Reported Cases on an adjudicator’s entitlement to determine the meaning of ‘pertinent records’ and the grant of a declaration as to jurisdiction.

CIC Responds

John Reilly, Chairman of the CIC’s Adjudication Board has announced that the 4th edition of the CIC Model Adjudication Procedure contains amendments to Paragraph 25 intended to accommodate the ruling in Epping Electrical v Briggs & Forrester (David Thomas QC) on time limits.

See Domsalla v Dyason under Keating Chambers Reported Cases on unfairness of withholding notice provisions in a JCT Minor Works contract.

See Mott MacDonald v London & Regional Properties under Keating Chambers Reported Cases on whether a letter of intent was a contract in writing under HGCR Act s.107 and on adjudicators’ liens.

ARBITRATION AND DISPUTE RESOLUTION

Injunction against arbitrator

A v B [2007] 1 All ER (Comm 591) Commercial Court
Arbitration of a dispute was commenced in Switzerland. The claimant commenced proceedings in the English courts, claiming that the arbitration agreement was inoperative and that the arbitrator should be injuncted from taking further steps. The defendants applied for a stay of the claim pursuant to s.9 of the Arbitration Act 1996, and/or for the proceedings to be set aside. Colman J held that there was no power pursuant to the 1996 Act to award an anti-arbitration injunction and that the claimant’s arbitration claims in the English courts should be stayed pending determination of the substantive issues in the arbitration.

Correction of award

Gold Coast Ltd v Naval Gijon SA [2007] 1 All ER (Comm) 237
The underlying arbitration proceedings arose out of the termination of a shipbuilding contract. In his 6th interim award, the arbitrator determined issues of quantum, but in his 7th award some months later he acknowledged an error in the 6th.

Under s.57 of the Arbitration Act 1996, the parties had had only 28 days to apply to the arbitrator to correct the 6th award, so were out of time. The court considered whether a retrospective extension of time could be granted pursuant to s.79, holding that the question of whether an extension of time could be granted depended on there being a substantial injustice. This involved looking to whether the failure to comply with the time limit was excusable and whether the application for which an extension of time was sought had a reasonable prospect of success. In any event, each s.79 case would turn on its own facts.

Stay following overpayment refused

G. Middleton Ltd v Berry Creek Overseas Development Ltd [2007] All ER (D) 358 TCC
Following arbitration awards in the claimant’s favour arising from a dispute over work under a JCT contract, the defendant failed to pay any of the sum awarded. Before enforcement proceedings were due to commence, the defendant alleged an overpayment on another contract and sought a stay of execution because of it.

The court rejected the application for the stay. The court would not embark on a detailed analysis as to how the arbitrator’s decision was reached or how the sum to be paid was arrived at. The awards gave no indication of an overpayment. To grant a stay would, in any event, be contrary to the balance of convenience, given that the belated claim in respect of overpayment related to a separate transaction.

Arbitration Act Reviewed I

Growing up fast by Khawar Qureshi QC, Serle Court Chambers, New Law Journal Vol. 157 No. 7270 27 April 2007 p. 586
This is the first of a two-part review by an international arbitration silk marking 10 years of the Arbitration Act 1996, during which time almost 400 cases have been reported. Qureshi notes that arbitration has been strongly supported by the courts, who have also demonstrated a tendency to adopt a more commonsense and less literal approach in ascertaining parties’ intentions, and an appreciation of the need for commercial certainty and finality. The first article reviews cases on the ambit of the arbitration clause, anti-suit injunctions, incorporation of an arbitration clause by reference and confidentiality.

Arbitration Act Reviewed II

Points of law by Khawar Qureshi QC, Serle Court Chambers, New Law Journal 4 May 2007 p.616
This is a concluding part of the two-part review of the ten years of operation of the Arbitration Act 1996. The article concentrates on case law, specifically on the tension between the desire for finality and the need for the possibility of redress on the grounds of fairness. The ‘new’ test of public importance plus serious doubt is considered. Considerable attention is paid to LHDA v Impregilo on s.68 applications and their restriction. The final subject is fairness and impartiality.

Dispute Resolution Magazine Vol. 13 No. 1 Fall 2006

(Journal of the American Bar Association Section of Dispute Resolution) contains the following articles:

Looking back, looking ahead: the role and relevance of ADR in responses to disasters
by Maria Volpe, City University of New York

Working towards critical mass, FEMA, ADR and disasters
by Cynthia Mazur, Federal Emergency Management Agency

Embedding mediators: benefits and challenges of the FEMA workplace model
by Robert Scott and Linda Baron, FEMA

Disaster mediation: lessons in conflict co-ordination
by Mel Rubin

After disaster strikes: do I volunteer as a mediator?
by Andrea Chasen

Classroom conversations about race, poverty and social status in the aftermath of Katrina
by Homer La Rue, Howard University and Lela Love

Unauthorised practice of law charges
by Sarah Rudolph Cole, Ohio State University

Neutral experts, standing neutrals
by Robert Glenn, Hunter Maclean, Exley & Dunn, Savannah and C. Allen Gibson, Buist Moore Smythe McGee, Charleston

International Arbitration Law Review Vol. 10 Issue 2 April 2007
contains the following articles:

Fiona Trust v Privalou: the Arbitration Act 1996 comes of age
by Elizabeth Snodgrass, Freshfields Bruckhaus Deringer, London

Has arbitration failed India or has India failed arbitration?
by Sarah Hilmer

Costs awards in international arbitration and the use of ‘sealed offers’ to limit liability for costs
by Poupak Anjomshoaa, White & Case, London

‘Manifest disregard of law’ as a ground for refusing enforcement of award in Asia
by Peer Chow, Mallesons Stephen Jaques, Hong Kong

Arbitration Law Monthly Vol. 7 No. 5 May 2007
contains the following articles:

Anti-suit relief
on Markel International v Craft (foreign proceedings disregarding an arbitration clause).

Proceedings in breach of an arbitration clause I
on Av B (stay of proceedings against arbitrator).

Proceedings in breach of an arbitration clause II
on A v B (the award of costs).

Costs of the enforcement of an adjudication award
on Gray & Sons v Essential Box Co. (Piers Stansfield)

Set-off
on RJ Knapman v Richards (approbation/ reprobation principle).

See Taylor Woodrow Holdings v Barnes & Elliott under Keating Chambers Reported Cases on the court’s discretion whether to determine a question of law in an arbitration when reference is sought.

Arbitration Vol.73 No.2 May 2007
contains the following articles:

Attorney secrecy v Attorney client privilege in internal commercial arbitration
by Bernard Meyer-Hauser and Philipp Sieber, Meyer Müller Ekhert, Zurich

On provisional measures in English arbitrations: a brief overview
by Per Runeland and Gordon Blanke, SJ Berwin, London

Empirically determined factors in appointing arbitrators in international commercial arbitration
by Emilia Onyema, Nigeria

Enforcing foreign arbitration awards in Switzerland: procedural obstacles and practical issue
by Anna Katharina Müller, Schellenberg Wittner, Zurich

Arbitration in Zimbabwe: the UNCITRAL Model Law in practice in a developing country
by John Reid-Rowland, Zimbabwe

Grading the arbitrator
by Michael McIllwraith, GE Oil & Gas

Pakistan and ICSID: a step in the right direction
by Shahid Jamil, Linklaters, London

The Chartered Institute of Arbitrators Code of Professional and Ethical Conduct for Members (January 2007)

and

The Chartered Institute of Arbitrators Code of Professional and Ethical Conduct for Officers and those with appointing authority (January 2007)

Arbitration Law Monthly Vol 7 No 6 June/July 2007
contains the following articles:

Proceedings in breach of an arbitration clause
Kallang Shipping v AXA Assurances
on restraining participation in foreign proceedings)

Enforcement of arbitration awards
(Kohn v Wagschal on public policy grounds for refusing summary enforcement of an award)

Serious irregularity
(Elektrim SA v Vivendi Universal
on fraud in the proceedings)

Expert determination
(Halifax Life v Equitable Life on the duties of an expert appointed to make a determination).

Mediation
(P4 v Unite Integrated Solutions plc
(Lucy Garrett) on the award of costs following refusal to go to mediation).

Mediation Costs

Recovering costs by Sohrab Daneshku, Lewis Silkin, New Law Journal, 4 May 2007
While most articles in the area concern recoverability of costs where a party has refused to go to mediation, this concerns the issue of whether the costs of a mediation – successful or otherwise – are recoverable as part of the general costs of litigation proceedings. The centrepiece of the article is the decision of National Westminster Bank v Feeney in the Supreme Court Costs Office. The master, holding that mediation costs were in principle recoverable as costs of the action, nevertheless distinguished between the mediator’s fees and preparation costs. The case was based on CEDR Solve’s Model Mediation Procedure. An appeal to the High Court will be heard during May.

See Trustees of the Edmond Stern Settlement v Levy under Keating Chambers Reported Cases on challenge to award for alleged serious irregularity in treatment of pleadings.

CONSTRUCTION AND ENGINEERING CONTRACT LAW

Extensions of time

Extension of time: a contract administrator’s perspective by Bevis Mak, Metcalf & Eddy, Construction Law Journal 2007 Vol. 23 No. 3 p.181
The author, a Hong Kong and UK qualified engineer, considers the obligations imposed on contract administrators regarding extension of time applications. In doing so, he reviews provisions of standard form contracts from the HKSAR and the UK and the main authorities, which feature Members of Chambers in a high proportion of cases, indeed, to a remarkable extent. The main cases discussed include Balfour Beatty v DLR (David Thomas QC), H. Fairweather v Wandsworth (John Marrin QC), Henry Boot v Malmaison (Finola O’Farrell QC), Royal Brompton v Hammond (No. 7) (Marcus Taverner QC, Adrian Williamson QC and Abdul Jinadu), Balfour Beatty v Chestermount (Richard Fernyhough QC, Paul Darling QC, Stephen Furst QC and Ian Pennicott QC), John Barker v London Portman Hotel (Finola O’Farrell QC), Ascon v McAlpine (Paul Darling QC) and Skanska v Eggar (Adrian Williamson QC).

There is a section on critical path analysis and comparison of different approaches, including diagrams and case studies.

Great Eastern v John Laing considered

Causation and the Great Eastern Hotel Part 1: The Thorny Issue by Sean Brannigan, 4 Pump Court and Peter Phillippo, Construction Law Journal [2007] Vol. 23 No. 3 p. 167

The authors examine the description in a Construction News article of the effect of some of HH Judge Wilcox’s findings in Great Eastern Hotel v John Laing Construction (Richard Fernyhough QC) on delay and analysis methods as "questionable". This is a two-part article on the case and the first part considers the context of the law of causation generally and specifically the issue of concurrent causes. The second part will consider the causal issues in the case itself.

See Multiplex Constructions v Honeywell Control Systems under Keating Chambers Reported Cases on the prevention principle and notices as conditions precedent to grant of extension of time.

See Shepherd Homes v Encia Remediation under Keating Chambers Reported Cases on whether a cap on liability formed part of the contract and whether it was reasonable within the meaning of UCTA.

See Multiplex Constructions v Cleveland Bridge under Keating Chambers Reported Cases for the CA decision on the effect of the entire agreement on inclusion of oral valuation in supplemental agreement.

Construction Newsletter March 2007

This new journal is edited by Gareth Parry, McGrigor Donald and published by Tottel. It contains the following articles:

HSE asbestos guidance
by Mike Sopp

Getting it right
by Paul Newman, 3 Paper Buildings
(on negotiation and unreasonableness).

Construction Law Vol. 18 Issue 4 May 2007
contains the following articles:

Making good on terminology
by Michael Phipps, Thurston Consultants
(on definitions within JCT 2005).

Three’s a crowd
by Cecily Davis and Corinne McCarthy, DLA Piper (on JCT Constructing Excellence partnering contract).

PFI and dispute resolution
by Lindy Patterson, Dundas & Wilson
(on dispute resolution procedures in PFI contracts).

New dawn for health and safety?
by Robert Bryan, Simmons & Simmons

Set-off rights to vanish from warranties?
by Paul Newman, 3 Paper Buildings
(on third party rights under contracts).

Defective workmanship – is it insurable?
by John D. Wright, JD Risk Associates

Time to focus on time
by Emma Shepherd, Lawrence Graham
(on Epping Electrical v Briggs & Forrester David Thomas QC).

Arbitration being left to the big battalions
by Michael Draper, Shadbolt & Co.

See Sydenhams (Timber Engineering) v CHG Holdings under Keating Chambers Reported Cases on direct contractual and payment arrangements between client and joinery specialist.

EoT and determination

Reinwood Ltd v L Brown & Sons Ltd [2007] BLM Vol.24 No.5 TCC
Although there were other issues in the case, the BLM report is limited to the test to be applied when deciding whether or not a contract has been terminated by a contractor "unreasonably or vexatiously". The judge set out six propositions as guidance, covering the burden of proof, the meaning of "vexatiously", the "reasonable contractor" test, the court not adopting its own view instead of that test, the objective nature of "unreasonable conduct" and the relevance of the effect on the employer.

Incorporation of terms

Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2007] BLM Vol.24, No.5 CA
Already reported in CILL. This is the CA’s decision on the appeal from the TCC judgment of 2006. The TCC had held that Skanska’s claim was not out of time under the draft contract because that contract was not incorporated into the agreement, being still under negotiation. However, the CA took the view that words in the client’s letter of intent "provide the Services under the terms of the Contract’" were sufficient to incorporate all the terms of the proposed contract. There was no inconsistency between those terms and the contents of the letter of intent.

The right to reject goods

JH Ritchie Ltd v Lloyd Ltd [2007] 1 WLR 670 BLM Vol.24, No.5 HL
The House of Lords held that the purchasers of machinery had not lost the right to reject goods, even though the vendors repaired defects in them and restored them to factory gate standard. The purchasers could still be entitled to reject them, even though repaired, although this would depend on the facts. In this case, the vendors refused to discuss the defect or explain what repairs had been carried out. In other cases, a request for repair and the carrying out of adequate repairs would be enough to deprive the purchaser of the right to reject the goods.

GENERAL AND PROFESSIONAL NEGLIGENCE

Liability for contamination

R (on the application of National Grid Gas Plc) v Environment Agency [2007] 1 All ER 1163 Administrative Court
Certain land owned and used as gas works by successive companies until 1952, was sold for residential development in 1965. In 2003, pursuant to Part IIA of the Environmental Protection Act 1990, the land was found to be contaminated. Under section 78F of the 1990 Act, the land was required to be "remediated" by an "appropriate person", being either the original polluter or the owner/occupier.

The Administrative Court had to decide whether the claimant, the most recent transferee of the property, rights and liabilities of various successive gas undertakers, could be an "appropriate person".

The court held that Part IIA was to be construed purposively and that the intention of Parliament had been that responsibility for contamination should primarily rest on the original polluter. Where assets, rights and liabilities had been transferred under a clear chain of statutory provisions ensuring continuity, the latest transferee was effectively the original polluter.

Liability for economic loss

Sunny Metal and Engineering Pte Ltd v Ng Khim Ming Eric [2007] 110 Con LR 115 Singapore High Court
The Singapore High Court confirmed that the law of Singapore on the existence of liability in tort for economic loss involves a two-stage process similar to the two-stage test laid down in Anns v Merton. Applying this process, the defendant architect, engaged under a design and build contract, owed a duty of care to the client directly. The architect also owed a contractual duty to the client under a deed of indemnity. The plaintiff client’s action was not barred by limitation, as the limitation period did not start with the contractual completion date but with the date when the main contractor finally completed work on the project. Damages recoverable would be restricted to loss actually suffered.

Temporary works: engineer’s duty

Hart Investments v Fidler [2007] All ER (D) 519 TCC
Already reported on adjudication issues. This concerns an action by the client against first defendant engineer and second defendant contractor, following collapse of temporary works supporting retained facades. The contractor was in liquidation. The point at issue was whether the engineer, retained only to design the permanent works, owed any duty to the client if he became aware of dangers created by the contractor’s work on the temporary works. The decision was that if an engineer engaged for permanent works observed that the state of temporary works was causing immediate danger to the permanent works, he was under a duty to the owner, in contract and tort, to take such steps as were available, including warning the owner, to avoid the danger.

Re-litigation

Laing v Taylor Walton Solicitors [2007] 09 EG 202 QBD
In an earlier, related, decision, the TCC had found that ambiguous documentation purportedly setting out the terms of an oral agreement between an investor and a property developer favoured the former. The developer, Laing, then sued its solicitors for negligence in drafting the documentation. The solicitors applied for summary judgment, inter alia, because the claim would involve the re-litigation of issues that had been decided. Langley J, applying the rule that the power to strike out should be exercised only where re-litigation would be manifestly unfair or would otherwise bring the administration of justice into disrepute, decided in Laing’s favour, recognising the force of their argument that this was an unusual case where the solicitors’ draftmanship had enabled the investors to pursue a case that they would not otherwise have done because they would have acknowledged the truth.

PRACTICE AND PROCEDURE

Experts: without prejudice

Aird v Prime Meridian Ltd [2007] BLR 105 CA
The CA allowed the defendants contractor’s appeal against the TCC decision in favour of the claimant employer. The contractors had unsuccessfully applied for a declaration that the claimant employer should not be allowed to amend its pleadings in a way inconsistent with the views expressed by the employer’s architect expert. The respective experts had been ordered to meet without prejudice and the action was stayed pending mediation. The TCC judge was not clear that privilege had been waived and so thought the expert’s statement to be a privileged document, even though normally an expert’s statement could be referred to, even when used for mediation.

The CA, allowing the contractor’s appeal, held that a joint statement under CPR 35.12 did not bind the parties and was not an admission. It was not privileged. The court could neither order a party to mediate nor order the parties to produce a privileged statement. The CPR 35.12 joint statement could not acquire privilege by being used in the mediation.

See Aldi Stores v WSP Group under Keating Chambers Reported Cases on striking out a claim which would involve re-litigation of previously settled allegations.

Meaning of ‘procure’

Nearfield Ltd v Lincoln Nominees Ltd and another [2007] 1 All Er (Comm) 441
The meaning of the word "procure" was considered in the context of a joint venture agreement. Peter Smith J held, applying the usual rules of contractual interpretation, that the normal meaning of the word "procure" was "to see to it". Thus a person agreeing to procure that someone else performed a contractual obligation was obliged to attempt to see to it that the person complied with the obligation, failing which he was required to pay damages calculated in the amount which ought to have been paid by the third party.

Reference to negotiations

Chartbrook Ltd v Persimmon Homes Ltd [2007] 11 EG Ch. Div.
The court considered whether the parties’ pre-contractual negotiations were admissible in construing a contract. It was held that regard could not be had to such negotiations and that the apparent inroad into the general negotiations exclusion, permitting reference to negotiations where the parties had chosen to attribute a meaning to a word from their "private dictionary" should not be extended to any case in which the word was a defined term. Briggs J stressed, obiter, that the exclusion should be maintained as otherwise every contract would be susceptible to reinterpretation by reference to the parties’ negotiations.

Staff costs as damages

Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] 110 Con LR 1 CA
Already reported in CILL. As a general principle, where a claimant can show that its staff were diverted from their normal activities to deal with the consequences of a tortious act disrupting the claimant’s business, the court would normally accept that damages should include the loss of the revenue they would have generated, at least to the cost of employing them for the non-productive period. This would apply unless the defendant could show the contrary. Thames Water had admitted liability for damage to the claimants caused by water escaping from a burst pipe; the appeal concerned quantum.

Slip rule

R&V Versicherung AG v Risk Insurance and Reinsurance Solutions SA (2007) Times Law Reports 26 February QBD
The court confirmed that CPR Rule 40.12, the slip rule, enabling a court at any time to correct an accidental slip or omission in an order or a judgment, extends no further than the correction of typographical errors or genuine slips. The rule cannot be used to correct errors of substance, nor to detract from an order made.

Measure of damages for outsourcing

Bridge UK.com Ltd v Abbey Pynford Plc [2007] All ER (D) 156
The defendant specialist ground engineering company was responsible for defective construction of foundations suitable for a 62 ton printing press. The delay to the claimant’s production which resulted, meant that the claimant had to outsource printing works. The claimant succeeded in demonstrating its entitlement to damages for loss of profit and the cost of the outsourced work, plus interest at 3% above Bank of England’s base rate.

See Claymore Services v Nautilus Properties under Keating Chambers Reported Cases on judicial discretion to vary interest payable in cases of unreasonable delay in proceedings.

The Commercial Litigation Journal January/February 2007
contains the following articles:

Without prejudice admissions: off the record?
by Andrew Howell and Matthew Davis, Barlow Lyde & Gilbert

Is London fighting its corner in international arbitration?
by Fred Konynenburg, Middleton Potts

Copyright: competing unconscionability comes of age
by Tim Ludbrook, 13 Old Square

Money laundering: yet more regulations to deal with ....
by Julian Connerty, Clyde & Co

Part 36: a new protocol
by Chloe Carswell, Reed Smith Richards Butler

Episode VII – the copyright wars?
by Eddie Powell and Michele Davis, Fladgate Fielder

Product recall: determining quantum
by Tony Levitt, RGL

The Commercial Litigation Journal March/April 2007
contains the following articles:

Client claims: the limits of limitation
by Peter Ashford, Cripps Harries Hall (on solicitors’ exclusion of liability)

Contracts: wise before or after the event
by Andrew Horrocks and Julian Killin, Barlow Lyde & Gilbert (on pre and post-contract conduct as an aid to interpretation)

Assessing the future of climate change litigation
by Paul Clarke, DLA

International litigation: the challenges of translating legal documents
by Ekaterina Sjostrand, 13 Old Square

ADR: is mediation becoming too formulaic?
by Anthony Pugh-Thomas

Disclosure: a new wake-up call
by Reza Alexander, DLA

Insider trading: no more Mr. Nice Guy
by Julian Connerty, Clyde & Co

Fast track costs consultation

The Department for Constitutional Affairs closed the consultation period on its proposals to increase fast-track trial costs at the beginning of May 2007. The DCA favoured an increase in line with the Retail Price Index, while the Bar Council has proposed increases linked to the average earnings index. It is anticipated that a new statutory instrument implementing the increases could be signed as early as June, coming into force October 2007.

Amendments to particulars of claim

Charles Church Developments Limited v (1) Stent Foundations Limited and (2) Peter Dann Limited [2007] 1 WLR 1203 TCC.
Already reported in BLR. The claim arose out of three incidents that occurred during a construction project. The claimant issued proceedings against the first defendant in relation to the first and third incidents and against the second defendant in relation to the second incident. The claim was issued shortly before lapse of limitation period and too late for compliance with the TCC Pre-action Protocol. After expiry of the limitation period the claimant sought to amend the particulars of claim so as to allege that the second incident arose from the first defendant’s breach of contract. Jackson J considered section 35 of the Limitation Act 1980 and CPR 17.4 in light of recent judicial analysis. He considered that he had the discretion to allow the amended claim and allowed it on the facts, having considered the effect of non-compliance with the Pre-action Protocol on the defendants’ position. Permission to appeal granted.  

KEATING CHAMBERS REPORTED CASES

Aldi Stores Ltd v WSP Group Plc [2007] BLR 113 TCC
Consulting engineers and environmental consultants successfully applied to strike out the claim of the respondent as an abuse of process because the effect would be to re-litigate the same alleged breaches of warranty which the applicants had faced and settled in actions brought by the company which had designed and constructed a retail development on the site. The disputes concerned vibro-compaction of the site which had allegedly caused settlement and damage to the buildings.
David Thomas QC

Shepherd Homes Ltd v Encia Remediation Ltd [2007] BLR 135 and [2007] 110 Con LR 90 TCC
In an offer/acceptance dispute concerning a piling sub-contract, it was held that the sub-contractors had successfully incorporated into the agreement a cap on liability based on the sub-contract price, although the cap did not invalidate an indemnity supported by PI for a much larger sum. The cap provision was held to be fair and reasonable within the meaning of s.3 of the Unfair Contract Terms Act.
Adam Constable

Epping Electrical Co Ltd v Briggs & Forrester [2007] BLR 126 and [2007] Con LJ Vol. 23 No. 3 239 TCC
The TCC followed the Scottish decision of Richie Bros v David Philp to the effect that the time limits for adjudicators to make their decisions are mandatory, so that failure to comply will produce an unenforceable decision. The sub-sub-contract in this case provided for use of the CIC Adjudication Procedure and it appeared that paragraph 25 of the CIC procedure is inconsistent with the mandatory nature of s.108(2) of the Act and paragraphs 16 and 24 of the Procedure. This is seen as a very important decision in that it throws into doubt the validity of a number of contractual adjudication regimes on similar grounds.
David Thomas QC

See new CIC amendment in Adjudication section.

Aveat Heating Ltd v Jerram Falkus Construction Ltd [2007] TCLR 3 TCC
The TCC held that, although the adjudication provisions of the GC/Works sub-contract were non-HGCR Act compliant, because the time limits did not satisfy s.108, the reference to adjudication was valid and the Scheme for Construction Contracts would apply, as the claimant contended. Only the award of costs and expenses could not stand, as the adjudicator had no such powers under the Scheme.
William Webb

Taylor Woodrow Holdings Ltd v Barnes & Elliott [2007] 110 Con LR 171 TCC
Already reported in CILL. The court held that it had a discretion under s.45 of the 1996 Arbitration Act to decide whether to determine a question of law referred to it. It then determined the question of law which was in dispute, holding that the claimants did not retain the risk of unforeseen structural works necessary before the contract could proceed. The case concerned the claimants’ acquisition of derelict hospital buildings for conversion to dwellings.
Richard Fernyhough QC
Elizabeth Repper

Redworth Construction Ltd v Brookdale Healthcare Ltd [2007] 110 Con LR 77 TCC
The claimant sought enforcement of an adjudication award in its favour, having made submission to the adjudicator that its agreement with the defendant was a construction contract on the basis of certain documents. In the enforcement proceedings, the claimant sought to rely on different documents to support its case, but the court held that the claimant could not change its position. The evidence did not establish that there was a contract in writing and enforcement action was dismissed.
Marcus Taverner QC

Cubitt Building and Interiors Ltd v Fleetglade Ltd [2007] 110 Con LR 36 TCC
The issue of an adjudication decision a few hours outside the deadline, when the decision had been reached within the time-limit, would not invalidate the decision. The adjudicator had mistakenly thought he was entitled to a lien and had incorrectly withheld publication to the parties, but only very briefly. Accordingly, the decision complied with the time-limit in the JCT Contract 1998 edition.
Alan Steynor

Multiplex Constructions (UK) Ltd v Mott MacDonald Ltd [2007] 110 Con LR 63 TCC
Already reported in CILL on the ‘pertinent records’ point. Enforcement was granted of an adjudicator’s decision against the respondent structural engineers on the Wembley Stadium project. The engineers had been novated to Multiplex, the main contractors. The engineers had sought to resist enforcement on the ground that the adjudicator had been wrong in his interpretation of what was meant by ‘pertinent records’ for the purposes of access to documents. The court held that the adjudicator was entitled to formulate his own interpretation and so was acting within his jurisdiction; whether he was right or wrong was irrelevant for enforcement purposes. While summary judgment could not be granted, because it could not be said whether there had been full compliance, it would be appropriate to grant a declaration on the jurisdiction point.
Simon Hughes

Claymore Services Ltd v Nautilus Properties Ltd [2007] All ER (D) 16 TCC
The court has discretion to disallow interest on judgment sums or to vary the rates downward and could exercise that discretion if it was the claimant whose unreasonable delay in commencing or undertaking proceedings increased the length of time before it got its award of damages. However, the court must be realistic about what can be expected of litigants, where they are businesses who cannot simply abandon work to litigate. What is reasonable/unreasonable conduct will depend on the circumstances; the court should also bear in mind that the defendant has use of the money while the claim is delayed.
Alexander Nissen

Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd [2007] All ER (D) 264 CA
This is the Court of Appeal hearing of the appeal against part of the findings of the TCC. The appeal hearing was principally concerned with the effect of the entire agreement clause and whether a sum agreed for payment by the claimant main contractor to the defendant sub-contractor was contractually binding. The claimant succeeded in its argument that the supplemental agreement did not incorporate any agreed sum, as the entire agreement clause precluded this, and the decision of the TCC was upheld.
Paul Buckingham
Simon Hargreaves

HG Construction Ltd v Ashwell Homes (East Anglia) Ltd [2007] CILL 2453 TCC
An adjudicator held that LAD provisions under JCT 98 With Contractor’s Design were enforceable, but on reference of a dispute over delay to a different adjudicator, the claimant obtained a finding that they were not and that LADs paid were repayable. The claimant brought proceedings to enforce the latter award, but the court held that the second adjudicator should have regarded the existing decision as already binding. The court considered Quietfield v Vascroft (Matthew Holt and Abdul Jinadu).
Finola O’Farrell QC
Matthew Holt

Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd [2007] CILL 2458 TCC
This is an important decision on the prevention principle; directions causing delay could still constitute acts of prevention, even though legitimate exercises of the contractor’s powers (the case concerns a Wembley Stadium IT and communications sub-contract). It is also important regarding notices as conditions precedent and the so-called Gaymark principle, which Jackson J. doubted, despite some support from Keating 8th edition. A settlement agreement made by Multiplex with the client had not had the effect of setting time at large under the sub-contract.
David Thomas QC
Marc Rowlands

Trustees of the Edmond Stern Settlement v Levy [2007] All ER (D) 359 TCC
In an arbitration between the applicant clients and the respondent building surveyor, the arbitrator found in favour of the surveyor. The clients applied to set aside the award under s.68 alleging breach of the obligation to allow each side a proper opportunity to present its case and to challenge that of its opponents under s.33 of the 1996 Arbitration Act. Specifically, the applicants argued that the arbitrator had failed to hold the respondent to its pleaded case and failed to require the respondent to amend it when necessary. The court dismissed the application as based on a situation far removed from the extreme circumstances contemplated by s.68 of the Act as "serious irregularity".
Jessica Stephens

Domsalla v Dyason [2007] All ER (D) 255 TCC
The defendant owner, whose house had burnt down, was told by his insurers to enter into a JCT Minor Works Contract (1998 edition) with the claimant contractor.  The contractor obtained an adjudication decision in its favour against the owner and applied for summary judgment by way of enforcement.  In refusing summary judgment, the defendant was given leave to defend the claim on the ground that the withholding notice provisions of the JCT Minor Works Contract were unfair within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999, and accordingly were not binding on him as a consumer. Further, the Court held that the doctrine of "unreviewable error" of an adjudicator’s decisions made within his jurisdiction only applied to statutory adjudications, which this was not.  Per curiam, the claimant was found to be an agent of his insurers, and the defendant was held to have enforceable rights under the Contracts (Rights of Third Parties) Act 1999 in respect of a payment mandate between insurers and contractor.
Calum Lamont

Mott MacDonald Ltd v London & Regional Properties Ltd [2007 All ER (D) 431 TCC
A letter of intent between the claimant consultant and the defendant client was held not to be an agreement in writing for the purposes of s.107(2) HGCR Act because it had been subject to substantial amendments, partly in writing, partly by conduct and partly to be inferred from conduct. Accordingly, this was not a statutory adjudication and the adjudicator lacked jurisdiction, so his decision could not be enforced by summary judgment. The court also made findings relating to the adjudicator’s inability to impose a lien to secure payment of his fees or to oblige the referring party to pay his fees as a condition of appointment.
Alexander Nissen QC

Sydenhams (Timber Engineering) Ltd v CHG Holdings Ltd
The case turned on the contractual, especially payment, arrangements between client CHG, main contractor and the claimant joinery specialist. CHG argued that the claimant, Sydenham was a sub-contractor to its main contractor, but the court held that there was a direct contract between Sydenham and CHG for joinery design and construction on the hotel under construction, although partly varied. Sydenham could therefore claim payment and release of retentions directly against CHG for all except the subject matter of the variation to the agreement.
Jonathan Selby
Krista Lee

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.

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

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