UK: Case Law Review - Construction, Property & Real Estate (February 2009)

Last Updated: 23 February 2009
Article by Keating Chambers

ADJUDICATION

See Balfour Beatty Construction Northern v Modus Corovest under Keating Chambers Reported Cases on enforcement of adjudication and attempts to set-off a cross-claim.

See Air Design (Kent) v Deerglen (Jersey) under Keating Chambers Reported Cases on an adjudicator's jurisdiction to decide how many contracts the parties had made.

See Avoncroft Construction v Sharba Homes under Keating Chambers Reported Cases on contractual defence to liquidated damages based on partial possession, set-off and validity of withholding notice.

See Euro Construction Scaffolding v SLLB Construction under Keating Chambers Reported Cases on adjudicator's jurisdiction to decide on his jurisdiction.

Electronic Communication Of Decision

CSC Braehead Leisure Ltd v Laing O-Rourke Scotland Ltd [2009] BLR 49 Court of Session Outer House

The Scottish Court upheld as valid the transmission by e-mail of an adjudicator's decision within the extended time limit granted to him, even though there was no signature. Difficulty was created by the adjudicator's expression of the decision as 'interim', a practice criticised by the BLR Editors, but the court held that it was, properly construed, not an interim decision, because it decided liability and addressed quantum.

See Dalkia Energy & Technical Services v Bell Group under Keating Chambers Reported Cases on jurisdiction to rule on incorporation of standard terms in Part 8 proceedings.

ARBITRATION AND DISPUTE RESOLUTION

Multi-Tier Dispute Resolution

Ardentia Ltd v British Telecommunications plc [2008] 119 Con LR 50 Ch. Div.

This is on IT, rather than construction, but is of interest as "one of the few decisions concerning dispute resolution escalation clauses" as the Con LR editors describe it. It arose from a software licensing dispute. The agreement contained dispute resolution provisions with escalating stages from (i) notice in writing of a dispute (ii) meeting of representatives (iii) meeting at CEO level and (iv) consideration of mediation. However, there was an exception allowing the parties to seek interim injunctions. The court held that such an application would not entitle the court to deal with the substantive issues and Ardentia could not give a notice of intention to commence proceedings until the escalating states had been exhausted.

See Taylor Woodrow v RMD Kwikform under Keating Chambers Reported Cases on whether arbitration has been validly commenced by a letter from the claimant.

Arbitration Clause Unfair

Mylcrist Builders Ltd v Buck [2008] BLM Vol. 26 No. 1 TCC

Already reported in BLR, the builders' standard terms of contract contained an arbitration clause and they proposed to refer a payment dispute to arbitration. The client, an individual owner-occupier, succeeded in her argument (appearing in person) that the clause was unfair pursuant to the Unfair Terms in Consumer Contracts Regulations 1999. The builders failed in their argument that they had achieved a valid appointment of an arbitrator under s.17 Arbitration Act when the other party refused to appoint; this was held only to apply to parties each appointing an arbitrator and not to a sole arbitrator.

Public Policy Challenge Fails

R v V [2008] 119 Con LR 73 Commercial Court

In an arbitration arising from an agreement for the provision of consultancy services in the Libyan oil industry, the arbitrators gave an award in favour of V, the claimant. It was an ICC arbitration in London under English law. The defendant sought to challenge the award under s.68 of the Arbitration Act and under s.81(1)(c) as contrary to public policy. Following Lesotho Highlands Development Authority v Impregilo, the court held that s.68 could not be used to circumvent the restrictions on the court's power of intervention, while s.81 was not applicable, since the agreement was neither contrary to the Libyan Penal Code nor to English public policy.

No Costs For Invalid Arbitration

Crest Nicholson (Eastern) Ltd v Western [2008] 119 Con LR 18 TCC

Already reported in BLR, in a dispute over the NHBC Buildmark scheme, the court held that an arbitrator who had heard submissions from both parties had no jurisdiction, because there was no arbitration clause in the Buildmark policy. On the question as to whether the court could award costs for an invalid arbitration, it was held that there was no clear statutory power to do so and so the court could not make such an award.

See Cubitt Building & Interiors v Richardson Roofing (Industrial) under Keating Chambers Reported Cases on refusal of stay of arbitration pending adjudication.

Journal of International Arbitration Vol. 25 No. 6 December 2008

Is a special issue celebrating the 50th anniversary of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. It contains articles on the United States, Canada, Europe, Central Asia, Asia, Nigeria and Australia/ New Zealand.

Recent Research

Dame Hazel Genn of UCL, in her December 2008 Hamlyn Lecture, criticises tendencies to ignore 'justice' in promotion of mediation: "just about settlement rather than about just settlement." and accuses ADR professionals of greater interest in large-scale commercial disputes.

University of Westminster report on Direct Access, finds a 89% satisfaction rating among clients directly instructing barristers.

The Bar is organising promotional events to get this message across and encourage use of Public Access to the Bar.

Construction Law Vol 20 Issue 1 January 2009
contains the following articles:

Insurers, subrogation and costs
by Bevan Farmer, Shadbolt & Co.

Quick on the draw by Paul Newman, 3 Paper Buildings (on pre-action protocol compliance)
Of Johnny Halliday and chocolate teapots
by John Sheils, Shadbolt & Co. (on CEDR mediation/adjudication process)

CONTRACT AND PROCUREMENT LAW

International Construction Law Review Vol. 26 No. 1 January 2009
contains the following articles:

The four criteria of risk allocation in construction contracts
by Nael Bunni

Relationship between FIDIC Conditions and public procurement law – reliability of tender documents
by Götz-Sebastian Hök, Hök, Stieglmeier & Collegen, Berlin

OGC Contracts Of Choice
JCT News Release 2 January 2009

The JCT has announced that the review by Arup concluded in late 2008 for the Office of Government Commerce (OGC) has found that three contract forms now satisfy the principles of the OGC Achieving Excellence in Construction. As well as NEC 3, identified in 2005 as OGC contract of choice, the JCT Constructing Excellence Contract (JCT-CE) and the ACA's PPC 2000 (given a 2008 're-launch') do so. The Arup review noted expressly that "Each contract (of the 3) satisfies OGC's Evaluation Criteria". These relate to encouragement of collaborative working, good management, performance and dispute resolution.

See Diamond Build v Clapham Park Homes under Keating Chambers Reported Cases on the contractual effect of a letter of intent.

Use Of Sub-Criteria And Marking Unlawful

Letting International Ltd v London Borough of Newham [2008] 119 Con LR 89 QBD

NB that the claimant is reported elsewhere as 'Lettings'.

Lettings, the unsuccessful tenderers for two framework agreements covering procurement, maintenance and management of dwellings for Newham, succeeded in their challenge of the tendering and award process. After first obtaining an injunction (upheld at [2007] EWCA Civ. 1522) to stop the award, at the trial they established breach of the Public Contracts Regulations 2006 by Newham. Newham had failed adequately to disclose its award criteria and weightings in advance and specifically had used sub-criteria which were not disclosed, and which were not mere scoring machinery, as Newham tried to contend. Newham had also failed to be transparent in its scoring, offering only three out of five for fully meeting a criterion and reserving the remaining two marks for those who exceeded it. Some, although not all, of the 'manifest errors' in marking were also held to be established. The recent decision of the ECJ in Lianakis v Dimas Alexandroupolis was applied.

Public Contracts Regulations Breach

McLaughlin & Harvey Ltd v Department of Finance and Personnel (No. 3) [2008] CILL 2653 QBD (N1)

As reported in CILL, the court held that the provision of additional criteria and weightings after tenders had been submitted was a breach of Regulation 47 of the Public Contracts Regulations 2006. This hearing was to decide on the appropriate remedy for a tenderer which had not been given a place in a proposed framework agreement. The court's decision was that the award of places to other tenderers could not stand and should be set aside. It would then be a matter for the client (the Department) if it wished to persist with the framework agreement method of procurement.

Construction Law Vol 20 Issue 1 January 2009
contains the following articles:

Termination of contract
by Michael Phipps, Thurston Consultants (on JCT 2005).

Funders and distressed projects
by Lindy Patterson, Dundas & Wilson.

Who is a sub-contractor under the NEC?
by Tim McGoldrick, Driver Consult

Insuring against insolvency
by John D. Wright, JD Risk Associates.

The road to hell ... (on letters of intent)
by Tony Dymond and Matthew Walker, Herbert Smith.

JCT Pre-Construction Contract

JCT has announced the launch of its Pre-Construction Services Agreements, for appointment of contractor and specialists respectively, for use up to second stage tender and award of contracts for construction phase. These are intended for use with JCT 2005.

CONSTRUCTION AND ENGINEERING CONTRACT DISPUTES LAW

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

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

See Fitzpatrick Contractors v Tyco Fire & Integrated Solutions under Keating Chambers Reported Cases on interpretation of the scope of a quantum cap in a sub-contract.

See AE Yates Trenchless Solutions v Black & Veatch under Keating Chambers Reported Cases on an IChemE Brown Book 'battle of forms'.

International Construction Law Review Vol. 26 No. 1 January 2009
contains the following articles:

Can prevention be cured by time bars?
by Doug Jones, Clayton Utz, Sydney

Concurrent causation in construction claims
by Franco Mastrandrea

The development of a case law in construction disputes relating to FIDIC contracts
by Christopher Seppala, White & Case, Paris

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.

Liquidated Damages

Liberty Mercian Ltd v Dean & Dyball Construction Ltd [2008] CILL 2648 and [2009] BLR 29 TCC

The TCC upheld a sectional completion agreement used with JCT 98 sectional completion amendments despite a discrepancy between 'date for completion' and 'date of completion' which the contractor said made it void for uncertainty, thus setting time at large. The liquidated damages provisions were not a penalty as both parties recognised the effect of delay in the first section on the subsequent sections of the work, even though this had not been made explicit. The contractor was not entitled to an extension of time for its delay.

See Reinwood v L Brown & Sons under Keating Chambers Reported Cases for the CA's decision on the contractor's entitlement to rely on notice of default in termination, subsequent to HL decision on validity of notice of default.

GENERAL AND PROFESSIONAL NEGLIGENCE

Breach Of Party Wall Procedure

Hough v Annear [2008] 119 Con LR 57 County Court

Failure to comply with s.3 of the Party Wall Act during the construction of an extension did not constitute a separate cause of action for breach of statutory duty.

Liability For Results Of Fire

Biffa Waste Services Ltd v Maschinenfabrik Ernst Hese [2008] 118 Con LR and [2008] BLM Vol. 26 No. 1 TCC

Already reported in BLM, 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 now CA reversal of this decision in this section.

Damages For Wasted Expenditure

Funnell v Adams & Remer [2008] 119 Con LR 193 QBD

Already reported in BLR, the claimant landscape gardeners sued their solicitors for failing to identify clauses in a lease obliging them to undertake works the value of which would then be reflected in the rent review. The claimants managed to extricate themselves from the lease and claimed the cost of doing so and the loss sustained by embarking on a venture then aborted at an early stage. The defendants, though admitting negligence, denied liability for the losses. The judge, considering SAAMCO v York Montague (Vincent Moran), held that the conventional approach of measuring the value of the lease with and without the offending provisions might be displaced in a particular case. The act of extricating oneself from a predicament did not necessarily break the chain of causation and here the cost of doing so should be recoverable, as should the costs wasted by embarking on an abortive venture.

CA Vicarious Liability Reversal

Biffa Waste Services Ltd v Maschinen Fabrik Ernst Hese [2009] BLR 1 CA
The CA reversed the TCC's findings on the scope of vicarious liability for the actions of non-employees. The TCC had been wrong to equate 'supervision' with 'control'. The case arose out of a fire at a domestic waste plant, following welding works carried out by non-employees of the defendants.

PRACTICE AND PROCEDURE

See Multiplex Constructions v Cleveland Bridge (No. 2) under Keating Chambers Reported Cases on interest on interim costs and determination of costs.

Costs For Failure To Comply With Protocol

TJ Brent Ltd v Black & Veatch [2008] 119 Con LR 1 TCC

Already reported in BLM, a claim had been made by the employers against the claimant contractors and the contractors had commenced proceedings against the defendant engineers, who denied all liability and refused to attend meetings to discuss the matter. The employers' claim was settled by the claimant, who now sought a contribution from the defendant under the Civil Liability Construction Act. The defendant made an application for costs against the claimant for non-compliance with the Pre-Action Protocol. The application was refused; any non-compliance was technical and the application was intended to secure a tactical advantage.

Limitation Period For Negligent Advice

Watkins v Jones Maidment Wilson [2008] 118 Con LR 1 CA

The claimants, the clients, alleged that their solicitors, the defendants had given negligent advice in entering into agreements for the construction of a house. The Court of Appeal, dismissing the claimants' appeal, held that the claimants had suffered loss as soon as the advice was given and acted upon, even though the extent of the loss was not clear until later.

Unreasonableness In Mediation

Earl of Malmesbury v Strutt & Parker [2008] 118 Con LR 68 QBD

After the claimants had succeeded on liability in a negligent valuation case, the parties went to mediation on quantum. The claimant offered to accept £9 million and was ultimately awarded £900,000. The court held the claimant's position to have been unreasonable, causing the mediation to fail. Unreasonableness in mediation could be treated as placing a party in the same position as someone refusing to go to mediation. The claimants' costs were £1.84 million but their unreasonableness was reflected in the costs order, giving them 80% on liability and 70% on quantum. The Con LR editors note that "This appears to be the first case in which a court has been asked to consider the costs consequences in the situation where a party has agreed to mediate but has then taken an unreasonable position in the mediation".

False Evidence

KJM Superbikes Ltd v Hinton [2008] CILL 2645 CA

The CA held that the only factor for a court to take into account in deciding whether to allow an action to be brought for contempt of court was whether it was in the public interest. The CA allowed an appeal by the applicant, who had sought to bring proceedings for contempt against a witness who had admitted giving false evidence in a trademark dispute. The judge had ruled this to be a contempt but had said that it would be disproportionate to allow KJM's application. The CA held that the judge had not given the contempt sufficient weight.

KEATING CHAMBERS REPORTED CASES

Taylor Woodrow Construction v RMD Kwikform [2008] 118 Con LR TCC

Already reported in BLR, following collapse of scaffolding provided by the defendant, the claimant's solicitors sent a letter noting that the contract contained provision for arbitration and asking whether the defendant would rely on that or would agree to participate in litigation. The claimant then obtained unilateral appointment of an arbitrator by the President of the Chartered Institute of Arbitrators. The court accepted the defendant's contention that there had been no valid reference and so no commencement of the arbitration. The arbitrator was thus not validly appointed. The claimant's letter had not been objectively clear and was thus not sufficient to commence proceedings.
David Thomas QC
Richard Coplin

Diamond Build Ltd v Clapham Park Homes Ltd [2008] 119 Con LR 18 TCC

Already reported in CILL, a letter of intent for a refurbishment project was held to have given rise to a simple contract with all the necessary elements, to cover the period until a formal contract could be entered into. The claimant successfully contended that the contract was based on the (JCT) standard form referred to in the specification.
Marc Rowlands

AE Yates Trenchless Solutions Ltd v Black & Veatch Ltd [2008] EWHC 3183 TCC LAWTEL

In a 'battle of the forms' case, it was held that the terms and conditions of the IChemE Brown Book form of sub-contract (2nd ed. 2004) took precedence over the contents of the terms and conditions of the sub-contractor's quotation, where the two conflicted. The defendant contractor obtained declarations to this effect against the claimant sub-contractor.
Rosemary Jackson QC
Marcus Taverner QC

Euro Construction Scaffolding Ltd v SLLB Construction Ltd [2008] EWHC 3160 TCC Lawtel

Although the parties had not agreed that the adjudicator had power to rule on his own jurisdiction, he did have jurisdiction and therefore could decide the claim referred. His decision based on the quotation, which constituted the writing for s.107 purposes was therefore enforceable.
Jessica Stephens
Jonathan Selby

Tyco Fire and Integrated Solutions (UK) Ltd v Rolls Royce Motor Cars Ltd [2008] 118 Con LR 25 CA

Already reported in BLR, the Court of Appeal reversed the finding of the TCC. 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 be able to look. The CA, in upholding the employer's appeal, distinguished the CRS case.
David Thomas QC
Krista Lee

Steria Ltd v Sigma Wireless Communications Ltd [2008] 118 Con LR 177 TCC

Already reported in BLR, the case derives from the provision of a new computerised system for the fire and ambulance services in the Republic of Ireland. One important aspect is the time bar/condition precedent issue, but the judgment 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

Avoncroft Construction Ltd v Sharba Homes (CN) Ltd [2008] 119 Con LR 130 TCC

Already reported in TCLR. Note that different reports refer to 'Sharba' and 'Charba'. This covers the issue of entitlement to stay enforcement of an adjudicator's decision due to the claimant's financial position. It also deals with the contractor's contractual defence to a claim for liquidated damages and the employer's set-off rights and the invalidity of a withholding notice served out of time. The contractor's defence was based on a partial possession argument.
James Thompson

Fitzpatrick Contractors Ltd v Tyco Fire and Integrated Solutions (UK) Ltd [2008] 119 Con LR 155 TCC

The court had to consider the effect of a quantum cap in a sub-contract and whether it protected the sub-contractor. It was construed as being concerned with the liability of the claimant to third parties and was not a provision which would limit the sub-contractor's liability to the main contractor for breach of the sub-contract.
David Thomas QC
Jonathan Lee

Cubitt Building & Interiors Ltd v Richardson Roofing (Industrial) Ltd [2008] 119 Con LR 137 TCC

Already reported in BLR, in refusing the claimant's application for a stay of arbitration pending adjudication, the court emphasised that whether there should be a stay during the arbitration was entirely a matter for the arbitrator's discretion. There is no obligation, either under the DOM/1 conditions incorporated into the sub-contract or under the HGCR Act, to refer a dispute to adjudication, but a party can do so at any time. If involved in arbitration, application would be made for relief which could be built into the arbitration timetable if the arbitrator thinks fit because applying the overriding objective, it involves a prospect of resolution. However, an order for a stay should not be granted if it would prevent expeditious resolution by arbitration (or litigation) already commenced.
Gaynor Chambers

Balfour Beatty Construction Northern Ltd v Modus Corovest (Blackpool) Ltd [2008] BLM Vol. 26 No. 1 TCC

The contractor obtained summary judgment to enforce an adjudicator's decision in its favour against the respondent owner. The owner failed in attempts to obtain summary judgment for liquidated damages and to set off that claim against the sums owed to the contractor under the adjudication decision.
Stephen Furst QC
Piers Stansfield

Air Design (Kent) Ltd v Deerglen (Jersey) Ltd [2008] BLM Vol. 26 No. 1 TCC

The claimant sub-contractor succeeded in enforcing the decision of an adjudicator against the defendant main contractor. The main contractor had argued that there were disputes under at least 3 sub-contracts, which did not all have adjudication provisions, so that the adjudicator had no jurisdiction. The court held that the adjudicator was entitled to decide the question as to whether there was more than one contract or one varied by agreement, which he had done.
Gaynor Chambers

Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd (No. 2) [2008] 118 Con LR 16 CA

This is a Court of Appeal decision on costs in relation to the temporary works element of the Wembley Stadium steel sub-contract. The CA held that it had jurisdiction to award interest on an interim payment of costs which had to be repaid following reversal of a first instance decision on appeal. The court determined that Multiplex as the winning party should have 50% of its costs; a short point won by Cleveland Bridge had greater financial effect, but time spent by the court is a very significant factor.
Paul Buckingham
Adrian Williamson QC
Lucy Garrett

London & Regional (St. George's Court) Ltd v Ministry of Defence [2008] CILL 2651 and [2009] BLR 20 CA

This is the appeal against the TCC decision. 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 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. The decision of the CA was that the existence of certificates was not a condition precedent to payment, nor were the certificates conclusive of the parties' rights. A settlement agreement did not prevent the claimant from bringing its claim.
Paul Darling QC

Reinwood Ltd v L Brown & Sons Ltd [2009] BLR 37 CA

This is a significant sequel to the litigation which culminated in the House of Lords decision at [2007] BLR 305 upholding the employer's right to deduct LADs. Here the Court of Appeal upheld the TCC in finding that the contractor was entitled to rely on a notice of default in claiming entitlement to repudiate the contract, even though the default notice was not mentioned in the notice of determination.
Stephen Furst QC
John Marrin QC

Dalkia Energy & Technical Services Ltd v Bell Group Ltd [2009] EWHC 73 LAWTEL TCC

An adjudicator's decision on whether the defendant sub-contractor's terms and conditions were validly incorporated into the sub-contract was part of the dispute referred to him and thus not normally a matter for the court to interfere with on enforcement. However, in Part 8 proceedings, the court would have jurisdiction to decide this matter and held that the standard terms were so incorporated.
Calum Lamont

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If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.