UK: Case Law Update - Issue 4, 2008

Last Updated: 15 May 2008
Article by Keating Chambers

ADJUDICATION

See Reinwood v L Brown under Keating Chambers Reported Cases on the employer's right to deduct LADs where a certificate of non-completion had been cancelled.

Interim payment provisions

PC Harrington Contractors Ltd v Multiplex Constructions (UK) Ltd [2008] CILL 2544 TCC
A sub-contract on the Wembley Stadium project contained provisions for interim payments. Following a dispute between main contractor Multiplex and concrete sub-contractor Harrington, Multiplex referred the matter to adjudication. Harrington argued that on the figures which it claimed were established, it should start the adjudication with £2.3 million in hand and claimed a declaration to that effect. Refusing the declaration, the court held that the provisions comprised a scheme for making interim payments, not for establishing the ultimate position as between the parties.

Pierce Design

Section 111 and Melville Dundas revisited: the Pierce Design case by Peter Sheridan and Dominic Helps, Shadbolt & Co, Construction Law Journal 2008 Vol.24 No.2 p.95
The regular Construction Act review concentrates on the application of Melville Dundas by the TCC in Pierce Design International v Johnston (Lucy Garrett and Richard Coplin) on the issue of withholding of sums payable without a withholding notice under HGCR Act s.111. The authors suggest means by which contractors can seek protection against the effect of these decisions and point out that it benefits them in setting off losses under sub-contracts; it is not wholly an anti-contractor decision.

Indemnity costs

Harris Calnan Construction Co. Ltd v Ridgewood (Kensington) Ltd [2008] BLR 132 TCC
The court awarded indemnity costs in enforcement proceedings where the defendant had known or should have known that it had no defence and no basis for challenging the award on lack of jurisdiction. The challenger had not reserved its position on jurisdiction in the adjudication and so would be taken to have agreed to be bound by the adjudicator's decision.

See Edenbooth Ltd v Cre8 Developments Ltd under Keating Chambers Reported Cases on the residential occupier exception and natural justice.

Natural justice

Cantillon Ltd v Urvasco Ltd [2008] CILL 2504 TCC
In a piling dispute referred to adjudication, the defendant refused to meet a decision against it and the claimant brought enforcement proceedings. The defendant argued unsuccessfully that the adjudicator had breached the rules of natural justice; the court held that if one party argued a point and the other failed to address it, that was not the adjudicator's fault. In ascertaining what the dispute comprised, the claimant was not limited to matters raised before it crystallised.

Estates Gazette No. 0812 / 29 Mar 2008
contains the following article:

No place for a weak hand
by Hamish Lal, Dundas & Wilson LLP
Adjudications are only the first step in the process of resolving contract disputes. They can be challenged, but any party that does so must have a strong case.

No written agreement
BSF Consulting Engineers v MacDonald Crosbie [2008] All ER (D) 171 TCC
In a dispute between the claimant civil engineers and the defendant contractors for whom they had been working, the claimants sought to enforce an adjudication award in their favour. The defendants took the point that the scope of the works and claimants fees were not expressly agreed and could only be implied, so that there was no sufficient contract in writing for s.107 HGCR Act. The court held that the Scheme, and thus the right to adjudication, could only be implied where there was a written contract for the purposes of the Act. Accordingly, leave to defend was granted, since it was arguable that the adjudicator had no jurisdiction.

ARBITRATION AND DISPUTE RESOLUTION

Arbitration International Vol.24 No.1 2008
contains the following articles:

Birth of ICSID case
(Transcript of 17th Annual Workshop of Institute for Transnational Arbitration)

E-disclosure in international arbitration
by Robert Smit and Tyler Robinson, Simpson Thacher & Bartlett

Party appointed expert witnesses in international arbitration: a protocol at last
by Doug Jones, Clayton Utz, Melbourne

An umbrella just for two? BIT obligations observance clauses and the parties to a contract
by Nick Gallus, Queens University, Canada

Albon v Naza Motor Trading: necessity for a court to find that there is an arbitration agreement before determining that it is null and void
by Nicholas Pengelley

Arbitration Law Monthly Vol.8 No.4 April 2008
contains the following articles:

Serious irregularity
on OAO Northern Shipping Co v Remolcadores De Marin
(deciding the dispute on issues not argued).

Anti-suit injunctions

On Starlight Shipping Co v Tai Ping Insurance Co.
(on the scope of the court's power to grant relief).

Stay of juridical proceedings
on Loon Energy Inc v Integra Mining
(existence of a dispute).

Judicial support for arbitrations
on Pacific Maritime (Asia) v Holystone Overseas
(freezing injunctions)

Enforcement of arbitration awards
on ED & F Sugar v Lendoudis
(enforcement mechanisms).

ADR study

Encouraged, pushed or forced the order of the day? by Aaron Hudson-Tyreman, King's College, London, Construction Law Journal (2008) Vol.24 No.2 p.79
The author provides an interim report on an ongoing survey of the use of mediation in construction disputes being carried out at King's College London in co-operation with the TCC judges. The research considers: in what circumstances mediation is an efficacious alternative to litigation, whether and at what stage a court should encourage mediation and which mediation techniques are particularly useful. This interim report gives details of response rate and the questions put; there are statistics given on types of case mediated and the stages at which particular outcomes were achieved. The results to date provide evidence of "a healthy desire by the parties to seek mediation." The study is due to be concluded in the summer of 2008, after which a further, more detailed report is promised.

International Construction Law Review 2008 Vol.25 Part 2
contains the following articles:

Chinese arbitration requirements a trap for FIDIC ICC arbitration?
by Gotz-Sebastian Hök, Stieglmeier & Collegen, Berlin

Obtaining the right international arbitral tribunal: a practitioner's view
by Christopher Seppala, White & Case, Paris

The power to grant Mareva injunctions in aid of foreign proceedings: principles, recent developments, and the Civil Justice (Miscellaneous Amendments) Bill in Hong Kong
by Henry Suen and Sai On Cheung, City University of Hong Kong

Governing Law

Braes of Doune Wind Farm (Scotland) Ltd v Alfred McAlpine Business Services Ltd [2008] LAWTEL TCC
The applicant employer under an EPC contract applied for leave to challenge an arbitration award on a point of law. The contract was under English law and the CIMAR regime, with a seat in Glasgow for the arbitration. The project was a wind farm in Scotland. The contractor argued that the English court had no jurisdiction to hear the application. This argument was unsuccessful: the parties had agreed to exclusive' jurisdiction for the English courts. However, on the facts, the application was unsuccessful and the contractor could enforce the arbitrator's award.

Journal of International Arbitration April 2008 Vol. 25 No. 2
contains the following articles:

Arbitration in the Arab world: an interview with Professor Ahmed Sadek El-Kosheri, ICC

The DIAC Rules and the new UAE Arbitration Law
by Essam Al Tamimi and Emma van Son, Al Tamimi & Co, Dubai.

Arbitration in Jordan: from old to new
by Omar Aljazy, Amman.

ICC Arbitration in the Arab world
by Lara Hammoud and Sami Houerbi, ICC.

Enforcement of foreign arbitral awards in Maghceb countries
by Ahmed Ouerfel, Tunisia.

How Bilateral Investment Treaties can protect foreign investors abroad
by Robert Greig, Claudia Annacker and Roland Ziade, Cleary Gottlieb Steen & Hamilton, Paris.

Arab Arbitration v International Arbitration? The case for a reconciliation
by Jalal El Ahdab, Orrick Herrington & Sutcliffe and Ruth Stackpool-Moore, Debevoise and Plimpton.

Towards a reflexive sociology of the arbitration field in the Arab World
by Abdulhay Sayed, Damascus Law School.

CONTRACT AND PROCUREMENT LAW

International Construction Law Review 2008 Vol.25 Part 2
contains the following articles:

Construction law: an overview of recent developments in the Baltics
by Dalia Foigt, Julija Kirkilene (Lithuania), Sigita Kravale (Latvia), Margus Mugu (Estonia)

FIDIC Design Build Operate Glitter or Gold?
by Samanthan Landsberry, Clayton Utz, Sydney

Contractors' liability under the Civil Codes of Algeria, Egypt, Qatar and the UAE
By Said Hanafi

See Bodill & Sons v Matta under Keating Chambers Reported Cases on the requirements for a trust account for retention monies under a JCT contract.

Construction Law April 2008 Vol. 18 Issue 3
contains the following articles:

Contract Sum disputes can be avoided
by Michael Phipps, Thurston Consultants.

Routes to dispute resolution
by Andrew Jones, HBJ Gately Wareing.

Insurance implications of collateral warranties
by John D. Wright, JD Wright Associates

Sustainability contracts
by Simon Oats and Tom Douglas, Eversheds.

Public Procurement Law Review (2008) Vol 17 PPLR Issue 2
contains the following articles:

The revision of the WTO Agreement on Government Procurement: to what extent might it contribute to the expansion of current membership?
by Valeria Guimaraes de lima e Silva

The SIBR Program: Small Businesses and "Individuals" on the Cutting Edge.
by Damien C Specht; Jenner & Block, Washington DC

CONSTRUCTION AND ENGINEERING CONTRACT DISPUTES LAW

See London Underground Ltd v Metronet BCV Ltd under Keating Chambers Reported Cases on entitlement to issue a corrective action notice under a PPP project.

See John F Hunt Demolition v ASME Engineering under Keating Chambers Reported Cases on the JCT 98 insurance provisions and settlements under Biggins v Permanite.

See Steria Ltd v Sigma Wireless Communications Ltd under Keating Chambers Reported Cases on time bars/conditions precedent and concurrency.

See Tyco Fire & Integrated Solutions v Rolls Royce under Keating Chambers Reported Cases on contractual requirement for joint names insurance for specified perils.

Economic duress and consideration

Adam Opel GmbH v Mintras Automotive (UK) Ltd [2008] CILL QBD

This non-construction case (it derives from motor manufacturing) examines economic duress in the context of commercial negotiation, referring to DSND Subsea v Petroleum Geo Services ASA (Timothy Elliott QC and Jonathan Lee, Stephen Furst QC and Marcus Taverner QC) and holding a contract to be void by reason of economic duress. In the discussion of the need for consideration, there is criticism of Wiliams v Roffey Bros, although as a Court of Appeal authority it could not be overruled.

Construction Law April 2008 Vol. 29 Issue 3
contains the following articles:

The value of time
by Shaun Tame, Brown Jacobson (on City Inn v Shepherd Construction)

Finally, a definition for practical completion
by Hamish Lal and Emily Busby, Dundas & Wilson.

Knowing assignment a little better
by Paul Newman, 3 Paper Buildings.

Jaw jaw
by John Sheils, Shadbolt & Co.

See London & Regional (St. George's Court) v Ministry of Defence under Keating Chambers Reported Cases on whether disputed claims had been certified and on no-loss argument.

GENERAL AND PROFESSIONAL NEGLIGENCE

See London Fire and Emergency Planning Authority v Halcrow Gilbert under Keating Chambers Reported Cases on failure of action for negligent design where remedial works not carried out.

Liability for results of fire

Biffa Waste Services Ltd v Maschinenfabrik Erst Hese [2008] BLM Vol 25 No 4 TCC
Following a fire at a domestic waste plant, Biffa, who were engaged under a PFI contract to collect and recycle waste, sued parties engaged in the construction of the plant in contract and tort. The main points of interest in the tortious claims are the scope of vicarious liability for the actions of non-employees and the scope of the non-delegable duty placed upon an employer who has employed another to discharge his extra-hazardous obligations. The contractual claims required consideration of the role of the liquidated damages clause in limiting liability of the party in breach and the avoidance of double recovery.

See Kajima UK Engineering v Underwriter Insurance Co under Keating Chambers Reported Cases on the effect of notification of defects on the scope of insurance cover.

PRACTICE AND PROCEDURE

Pre-action protocol

Orange Communications Services Ltd v Hoare Lea [2008] BLM Vol.25 No.3 p.6 TCC
In deciding whether proceedings should be stayed for the TCC Pre-action Protocol process, especially where there are Part 20 proceedings, the following considerations are relevant: (i) when it was known that the party was going to be joined (ii) what information that party had been given and when (iii) how large a part that party would play (iv) what stay could be accommodated without jeopardising the overall timetable (v) any requirement of justice regarding delay of whole timetable and trial date (vi) whether costs order could compensate (vii) alternatives to a stay (viii) utility of stay/protocol process. The court considered authorities on its case management powers.

Costs on abandonment of item and mediation

Nigel Witham Ltd v Robert Lesley Smith

[2008] TCLR 3 [2008] CILL 2557

[2008] BLM Vol.25 No.3 TCC
The defendant clients were held to be the successful party in that the claimant designers had had to pay them a small amount as the net result of an action for fees with a counterclaim, subject to a 15% reduction in respect of a counterclaim item which had been abandoned. The judge rejected the claimants' allegation that the defendants had refused to mediate, although he doubted whether an early mediation would have led to a settlement in the case.

See Aldi Stores v WSP Group under Keating Chambers Reported Cases on criteria for striking out where difficulties had not been raised with court in settling main action in complex multi-party proceedings.

Case management and the TCC

The Tower of Babel: what happens when a building project goes wrong by Mr. Justice Jackson, Construction Law Journal 2008 Vol.24 No.2 p.87
This is the text of the 2006 Denning lecture delivered at the end of November 2006. After considering the range of types of construction dispute, Jackson J considered the TCC and, after treating its history and development, looked at the effect of the CPR and the 2nd edition of the TCC Guide on case management in the court. The lecture ends with an overview of the (then) current TCC.

Waiver of privilege

Galliford Try Construction Ltd v Mott MacDonald Ltd [2008] All ER (D) 30 TCC
The defendant engineer succeeded in an application to remove part of a witness statement by a former director of the claimant design and build contractor on the ground that it related to without prejudice discussions and so was privileged. The claimant contended unsuccessfully that the privilege had been waived. The court held that much of the case law on admissibility and without prejudice material had survived; the CPR had not introduced a completely new regime destroying all previous authority.

Transfer of proceedings

Collins v Drumgold [2008] All ER (D) 27 TCC
The court had to consider an application for transfer of a £300,000 claim from Cambridge County Court to the TCC after the exchange of a large number of pleadings. The claim was by a client against the contractor for breach of contract and/or statutory duty. The court discussed the criteria which militated in favour of allowing the application on the facts.

Construction Newsletter March 2008
contains the following articles:

What you've put me through
by Paul Newman, 3 Paper Buildings (on the law of damages)

Qualifications are key' Construction Skills Certification Scheme
by Katie Graham, Stephenson Harwood

Fixed costs

Amber Construction Services Ltd v London Interspace HG Ltd [2008] BLR 74 TCC
Where the Solicitors Fees' box on the claim form had been filled in TBA', the court retained discretion to allow costs in respect of categories normally treated as fixed costs.

Relitigation as abuse of process

Taylor Walton v Laing [2008] BLR 65 CA
Following a dispute between property developers, the TCC gave judgment against Mr. Laing on the facts. Laing then issued proceedings against solicitors Taylor Walton, alleging professional negligence against them, relying on similar facts to those in the earlier case. The Court of Appeal, reversing the TCC, allowed Taylor Walton's application to strike out the claim on the ground that the second action squarely sought to relitigate the findings of the first judge.

Wrongful repudiation damages

Golden Strait Corporation v Nippon Kisen Kubishika Kaisha [2007] 2 WLR 891, [2008] BLM Vol 25 No 4 HL
The issue for the House of Lords was the assessment of damages for wrongful repudiation during the currency of a long-term contract and whether such an assessment should take account of events after the acceptance of the repudiation. Prof Gunther Treitel has been critical of the decision to move away from the date of the repudiation for assessment of quantum, a movement he regards as likely to impair commercial certainty and without compelling reasons to do so. See Law Quarterly Review Vol 123 Jan 2007.

Subsequent conduct in contract interpretation

Wholesale Distributors Ltd v Gibbons Holdings Ltd [2007] BLM Vol 25 No 4 New Zealand SC

A majority of the Supreme Court of New Zealand departed, on the case before them, from the rule of English contract law that a court cannot have regard to conduct subsequent to contract formation in interpreting the contract. It is believed that English courts have not yet gone so far down this road as the NZ court.

Interest on late payments

Ruttle Plant Hire Ltd v Secretary of State for Environment, Food and Rural Affairs [2008] All ER (D) 191 TCC
The claimant provided plant, materials and labour to the government in controlling a swine fever outbreak. The dispute concerned interest payable on sums owed following a re-invoicing. The court had to interpret the provisions of the Late Payment of Commercial Debts (Interest) Act 1998 as to what could be claimed, specifically as to what constituted reasonableness of a particular rate.

KEATING CHAMBERS REPORTED CASES

Aldi Stores Ltd v WSP Group plc [2008] CILL 2549 CA
Already reported in BLR, the appellant had secured a judgment against its design and build contractor. It did not pursue claims against the respondent professionals who had given it warranties in respect of their work on the development. Another owner on the site pursued the respondents and others and those claims were settled at the start of the trial. The appellant was unable to enforce against the contractor or its insurers and so now brought claims against the respondents. The action was struck out as an abuse of process by the TCC but was reinstated on appeal. In doing so, the Court of Appeal gave guidance as to the practice to be followed in similar situations in future.
David Thomas QC

Bodill & Sons (Contractors) Ltd v Mattu [2008] CILL 2553 TCC
The court held that an account set up by the client for retention monies under JCT 98 did not meet the requirements of making clear to the bank that it was a trust account or subject to a trust. A reasonable period for setting up such an account is two to three weeks and it should be designated as a trust account. The contractor accordingly was entitled to undertakings that the client would now do this.
Abdul Jinadu

London Fire and Emergency Planning Authority v Halcrow Gilbert Associates Ltd [2008] Con LJ 24 No.2 103 TCC
The client authority claimed in contract and tort for the cost of repair of the fire damage, investigation, replacement of equipment and use of alternative facilities, following uncontrolled fires at its training centre, The Fire House. The defendants were respectively the engineers who designed the ductwork at The Fire House (Halcrow) and the building services contractor (Lorne Stewart) and the claims concerned breach of duty in performance of services in pre-fire work on The Fire House and in remedial schemes. The court reviewed the law on expert evidence in finding that a witness for the claimant had been unable to give impartial evidence because of a conflict of interest. In the result, Halcrow was largely exonerated from allegations of breach of its design duty, except in its duty to review design in the light of experience of the fire. Lorne Stewart had breached its obligations to rectify defects in its work but liability under the contract had not been triggered, since the client had not undertaken the remedial works. The court was not satisfied that it intended to reinstate The Fire House. The claims failed.

Finola O'Farrell QC, Marcus Taverner QC

Steria Ltd v Sigma Wireless Communications Ltd [2008] BLR 79 TCC
Already reported in CILL, this report concentrates on the time bar/condition precedent aspects of the case, which derives from the provision for a new computerised system for the fire and ambulance services in the Republic of Ireland. However, the case also contains important discussion of concurrent delay, apparently endorsing the approach in Malmaison (Finola O'Farrell QC) and in Keating 8th edition and the prevention principle analysis of Jackson J in Multiplex Constructions v Honeywell Control Systems (No.2) (David Thomas QC and Marc Rowlands)
Simon Hargreaves

Tyco Fire and Integrated Solutions (UK) Ltd v Rolls Royce Motor Cars Ltd [2008] All ER (D) 16 CA
The Court of Appeal reversed the finding of the TCC noted in March 2008 and reported in BLR. The claimant contractor agreed to provide a fire protection system under a design and build contract at the premises of the defendant client. The contract required the client to take out joint names insurance in respect of specified perils, which was not done. When water from the mains flooded the client's premises, the client obtained damages in adjudication. The first instance court, applying CRS v Taylor Young, held that the parties had provided contractually for dealing with damage caused by specified perils, so that the joint names insurance was the fund to which both parties should have been able to look. The CA distinguished the CRS case, upholding the employer's appeal.
David Thomas QC, Krista Lee

Edenbooth Ltd v Cre8 Developments Ltd [2008] All ER (D) 20 TCC
The claimant succeeded in getting enforcement of an adjudication decision when the defendant failed to pay. The defendant was a company which engaged the claimant to do work to the adjoining houses of two of the directors of the company. The defendant argued that it was a residential occupier' under s.106(1)(a) of the HGCR Act and therefore not subject to the adjudication regime by reason of the exception. The court rejected this argument. The defendant's argument that the speed with which it was required to produce information in adjudication was contrary to natural justice was also rejected.
James Thompson

London Underground Ltd v Metronet BCV Ltd [2008] All ER (D) 208 TCC
The client successfully sought a ruling that it was entitled to issue corrective action notices' under a PPP contract for upgrading the London Underground. The defendant contractors had argued that the issue of such notices was limited to certain specified failures which did not cover the client's actions.
Finola O'Farrell QC

John F Hunt Demolition Ltd v ASME Engineering Ltd [2008] BLR 115 TCC
Already reported in Con LR. The case concerns the preliminary hearing of two unrelated questions: namely, the relationship between the insurance provisions in the JCT Contract (1998 edition) and the existence of common law duties of care and the question of reasonableness of a settlement under the Biggins v Permanite principle.
Jonathan Selby

Kajima UK Engineering Ltd v Underwriter Insurance Co Ltd [2008] CILL 2567 TCC
The defendant insurance company had provided the claimant main contractor with indemnity insurance during the performance of a design and build contract for a block of flats. Notification by the claimant was only effective in respect of defects and damage to the works, during the period of cover. The scope did not extend to defects revealed by later investigations, since they could not be connected to those within the period of cover.
Adrian Williamson QC

Reinwood Ltd v L Brown & Sons Ltd [2008] UKHL 12; [2008] 08 EG 156 (CS)
The House of Lords considered the issue of whether the cancellation of the certificate of non-completion under Clause 24 (of the JCT 98) by the grant of an extension of time had the effect that the employer could no longer justify a LAD deduction. Upholding the decision of the Court of Appeal, the House of Lords held that the employer's right to deduct LADs was not lost by the grant of the extension of time even if its effect was to cancel the certificate of non-completion. The cancellation of the non-completion certificate did not have retrospective effect and the employer was therefore entitled to rely on that certificate.
John Marrin QC, Stephen Furst QC

London & Regional (St. George's Court) Ltd v Ministry of Defence [2008] EWHC 526 LAWTEL TCC
The case concerned preliminary issues in a dispute arising from the refurbishment of offices owned by the Crown Estate and let to the claimant, who had sub-let to the defendant government ministry. The claimant had undertaken to do the works and issues arose as to whether variations required by the defendant had been certified by the claimant's consultants as a binding determination of the defendant's liability and whether the claimant had suffered any recoverable loss and/or was entitled to pursue the claim.
Paul Darling QC

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.

For further information on how our members can assist you, please contact the Senior Clerks, John Munton and Nick Child, in the first instance, on +44 (0) 20 7544 2600. They and their teams of Clerks will be pleased to advise you on the member of Keating Chambers appropriate to your requirements.

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These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions