UK: Legal Developments In Construction Law: July 2019

Last Updated: 30 July 2019
Article by Mayer Brown

1.  No contract? But a quantum meruit will at least give a right to payment?

If parties fail to achieve a legally binding contract, there is always, of course, the fall-back position that the party carrying out requested work is entitled to be paid a reasonable sum for it. Or is it?

A company providing corporate finance and mergers and acquisitions advice claimed payment for services provided to a private equity firm in connection with the acquisition of a company. It claimed there was an oral agreement or, alternatively, that it was entitled to be paid on a quantum meruit basis, on the grounds of unjust enrichment, for valuable services provided.

The court ruled that there was no oral contract, noting that it is not uncommon in the courts for witnesses to deceive themselves in essentially honest, but nonetheless false, recollections. In determining the truth it is more helpful to focus on objective indicia, in the documents and in the inherent probabilities, than to rely on evidence as to a witness's memory, especially when the events in question took place a considerable time ago. Which left the quantum meruit claim. Was payment of a reasonable sum for the services the default position?

The court, in dismissing the claim, said that, in the absence of a contract, there is no general right to payment for requested services. From the case law it derived a number of propositions, in summary that:

  • the modern approach is to determine whether, in the circumstances, the law should impose on the defendant an obligation to pay an amount which the claimant deserved to be paid;
  • generally speaking, a person seeking to enter into a contract cannot claim the cost of estimating what it will cost them or deciding a price, the cost of bidding for the contract or of showing the other party their capability or skills;
  • the court is likely to impose such an obligation where the defendant has received an incontrovertible benefit (e.g. an immediate financial gain or saving of expense) as a result of the claimant's services; or where the defendant has requested the claimant to provide services or accepted them (having the ability to refuse them) when offered, knowing that the services were not intended to be free;
  • the court may not regard it as just to impose an obligation to pay if the claimant took the risk that they would only be reimbursed for their expenditure if there was a concluded contract; or if the court concludes that, in all the circumstances the risk should fall on the claimant;
  • the court may impose such an obligation if the defendant who has received the benefit has behaved unconscionably in declining to pay for it.

Moorgate Capital (Corporate Finance) Ltd v H.I.G. European Capital Partners LLP [2019] EWHC 1421

2.  Is an adjudicator's failure to address an issue fatal?

If an adjudicator fails to address an issue, for instance a key defence issue, is that a breach of natural justice, and potentially fatal to enforcement of the decision? In RGB P&C Ltd v Victory House General Partner Ltd the court said that, where the adjudicator has deliberately, but wrongly, declined to address an issue, particularly a crucial defence, it may well be that the adjudicator has not decided the dispute referred to them. Where, however, they have not expressly taken such a deliberate decision, but appear not to have addressed every issue, the more likely conclusion is that the issue is subsumed within consideration of the dispute as a whole.

The judge noted that the case of Pilon v Breyer had left open the possibility that an inadvertent failure to consider one of a number of issues might render a decision in breach of natural justice, but it would not ordinarily do so and it was difficult to identify any case in which a decision had not been enforced for this reason. The rarity of such cases seemed to be for two reasons. An inadvertent failure to address a particular issue is in the nature of an error within the adjudicator's jurisdiction rather than a breach of natural justice, but, if that was wrong, it would be an unusual case where the court would both infer that an issue had not been addressed and conclude that that failure was so significant that it meant that the adjudicator had not decided the dispute referred to them and/or that the conduct of the adjudication was so unfair that the decision should not enforced. The more significant the issue, the less likely it is to be inadvertently overlooked; the less significant it is, the more likely it is that it had been taken account of in the round.

RGB P&C Ltd v Victory House General Partner Ltd [2019] EWHC 1188

3.  Failure to identify 'contractual basis' sinks contractor's claim

2017 edition FIDIC contracts require a contractor, after giving a Notice of Claim, to submit, as part of its fully detailed Claim, a statement of the "contractual and/or other legal basis of the Claim". A Hong Kong court has recently considered the effect of a similar requirement, in a subcontract, for submission of the "contractual basis" (together with full and detailed particulars and claim evaluation) as a condition precedent to the subcontractor maintaining its right to pursue its previously notified claim for additional payment or loss and expense. The subcontractor had, at most, notified a factual basis for its claim, but had not identified which of the different bases listed in the relevant clause (e.g. breach of subcontract by contractor or variation) was said to have given rise to the claim. Did that matter?

The court ruled that what was required, under the clause, was the basis on which the subcontractor claimed it was entitled, under the subcontract, to maintain and pursue its claim, by reason, or as a result, of the factual circumstances. There might be one, or more, contractual bases which could be identified, but the "contractual basis" required was one or more of the different causes or events set out in the relevant subcontract clause as giving rise to a claim. The subcontractor had not complied strictly with the "contractual basis" requirement and consequently, by operation of the subcontract, it had no right to the payment claimed.

The court noted that, however much sympathy the contractor might deserve, the subcontract clause in question employed clear and mandatory language for the service and contents of the required notices, with no qualifying language such as "if practicable", or "in so far as the sub-contractor is able". There is commercial sense in allocating risks and attaining finality by designating strict time limits for claims to be made and for the contractual basis of claims to be specified. In particular, the language used was clear on its plain reading, and the decisions in Rainy Sky SA v Kookmin Bank and Arnold v Britton highlighted the importance of the language used in the provision to be construed, notwithstanding the need to read such language in the proper factual and commercial context. There was no basis for a court or tribunal to rewrite the subcontract or clause for the parties after the event.

Maeda Corporation and another v Bauer Hong Kong Ltd at: http://www.hklii.org/eng/hk/cases/ hkcfi/2019/916.html

4.  Government consults on its plans for new building safety regime

The government has set out its plans to overhaul the current building safety system for high rise residential buildings. The proposed new regime will be for buildings that are lived in by multiple households and 18 metres high (6 storeys) or more, but the government says that it wants to make sure that the new system, which will be regularly reviewed, is flexible so that it can adapt and expand to cover more buildings over time.

The proposals include the introduction of dutyholders who will be responsible for making sure buildings are safe and will have duties when a building is being designed and built, when people are living in the building, and that run throughout the building's life cycle. Also included are a new 'accountable person' role, who will be the dutyholder responsible for making sure that building fire and structural safety risks are reduced, a 'Golden thread', a set of key documents, held digitally, on building information, and a new, national, building safety regulator to ensure the regime is enforced robustly and effectively.

The government is also seeking feedback on the Regulatory Reform (Fire Safety) Order 2005, which regulates fire safety in non-domestic premises. This call for evidence is the first step to update the evidence base to ensure that the Order is fit for purpose for all regulated premises.

The consultation and the call for evidence both close on 31 July 2019.

https://www.gov.uk/government/consultations/ building-a-safer-future-proposals-for-reform- of-thebuilding-safety-regulatory-system/ building-a-safer-future-quick-read-guide

https://assets.publishing.service.gov.uk/ government/uploads/system/uploads/attachment_ data/file/806892/BSP_consultation.pdf

https://www.gov.uk/government/consultations/ the-regulatory-reform-fire-safety-order-2005-callfor-evidence

5.  Government set to consult on its plans for tougher prompt payment regime

Following its call for evidence in tackling late payment, the government is to consult on strengthening the powers of the Small Business Commissioner in respect of larger businesses which fail to make payments on time. The new powers could include compelling information and disclosure of payment terms and practices and imposing financial penalties or binding payment plans on large businesses found to have unfair payment practices.

The government is also to take a tough approach to large companies which do not comply with the Payment Practices Reporting Duty, the existing mandatory requirement on large businesses to report payment practice to a national database twice a year. The legislation allows for the prosecution of those which do not comply, and fines may be imposed.

See: https://www.gov.uk/government/news/ broad-new-measures-to-ensure-small-businessesget-paid-on-time

6.  New CIC Model Mediation Agreement and Procedure

The Construction Industry Council has published the first edition of its Model Mediation Agreement and Procedure.

The panel will consist of experienced, accredited, mediators who are members of CIC member organisations and have at least 10 years' post qualification experience in their primary profession. Panel members will follow the European Code of Conduct for Mediators.

See: http://cic.org.uk/news/article. php?s=2019-06-12-cic-publishes-a-modelmediation-agreement-and-procedure.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2019. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

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