Construction, Property & Real Estate - Case Law Review (March 2007)

ADJUDICATION

See Quietfield v Vascroft Contractors under Keating Chambers Reported Cases on failure to consider new evidence in subsequent adjudication.

Hart Investments Ltd v Fidler [2007] 109 Con LR 67 TCC, [2007] TCLR 1 and [2007] BLR 30.
Already reported in CILL and noted in KC in Brief January 2007. The TCC held invalid a referral notice served eight, rather than seven, days after the notice of intention to refer under paragraph 7 of the Scheme for Construction Contracts. This decision departs somewhat from statements in English cases such as Barnes & Elliott v Taylor Woodrow and Simons v Aardvark (Paul Darling QC) in favour of the stricter approach to time limits of Scottish cases such as Ritchie Bros v Philp. See now also Epping Electrical v Briggs & Forrester (David Thomas QC).

Natural justice: further developments by Dominic Helps and Peter Sheridan, Shadbolts. Construction Law Journal [2007] Vol.23 No.1 p.46
In their regular Construction Act Review, the authors return to the subject they addressed two years ago in Construction Law Journal [2005] Vol.21 No.2. They comment extensively on Carillion Construction v Devonport Royal Dockyard (Stephen Furst QC and Louise Randall) and include fairly detailed consideration of All in One Building v Makers UK (Calum Lamont), Quietfield v Vascroft (Abdul Jinadu and Matthew Holt), Kier Regional v City & General (Adrian Williamson), Rohde Construction v Markham-David (Elizabeth Repper), the Scottish case of Ardmore Construction v Taylor Woodrow and Rankilor & Perco v Igoe.

Kershaw Mechanical Services Ltd v Kendrick Construction Ltd [2006] CILL 2359 TCC
Already noted in CILL and noted in KC In Brief September 2006. The main significance of the case is the argument, and subsequent discussion in the judgment, of the philosophy underpinning judicial interpretation of the provisions in the Arbitration Act governing challenges to awards. The court rejected the idea of a philosophy of outright non-intervention and distinguished between s.69 challenges (as in this case) and s.68 serious irregularity challenges as in the Lesotho Highlands case. Note: the court observed that in a s.69 challenge the court should receive a copy of the award and of any document referred to in the award which would be necessary to determine the matter.

Sinclair v Woods of Winchester (No. 2) [2007] 109 Con LR 14 TCC
In earlier proceedings (2005 102 Con LR) the claimants had tried to have the arbitrator removed. Now they sought to challenge the award under s.69 Arbitration Act 1996. Leave to do so was refused because the claimants’ objection to the arbitrator’s finding as to faulty design of a flat roof was not a question of law and the issues of causation raised were mixed fact and law. Insofar as any questions of law were raised, they had been correctly answered by the arbitrator.

Construction Law Vol.18 Issue 1 January 2007 p.32
Construction Law has just replaced its regular Adjudication monitor from Pinsent Masons with an Alternative Dispute Resolution column to be contributed by Shadbolts. The first one considers the 41^st amendment to the CPR, which amends the Pre-action Protocol Practice Direction and was introduced in April 2006. It requires litigants to continue to try to sort out their differences through ADR or face the consequences in costs. The options suggested in the PD are negotiation/discussion, early neutral evaluation (including adjudication, arbitration or Expert Determination and the TCC’s Court Settlement Process) and mediation.

Arbitration Law Monthly Vol.17 No.3 March 2007 contains the following articles:

Error of law (on Sea Trade Maritime Corporation v Hellenic Mutual War Risks (No.2) – incorporation of applicable law clauses)

Consumer arbitration (on Claro v Centro Movil Milenium in the ECJ – right of consumer to challenge an arbitration award)

Enforcement of arbitration (on Svenska Petroleum v Republic of Lithuania – enforcement against a state)

International Arbitration Law Review Vol.10 Issue 1 February 2007 contains the following articles:

The recent ‘reform’ of the Italian Civil Procedure Chapter on Arbitration
by Monique Sasson, Italian Bar

Remedies against awards in international arbitration: setting aside of awards under Italian law
by Cecilia Carrara, Macchidi Cellere Gangemi, Rome

The Indian Arbitration Law: towards a new jurisprudence
by Sumeet Kachwaha, Kachwaha and Partners

The influence of the new law on Arbitration agreements and arbitrato irrituale
by Domenico di Pietro, Mayer Brown Rowe & Maw, London

Global Arbitration Review Vol.2 Issue 1 February 2007 contains the following articles:

2006 in retrospect by Loukas Mistelis, Queen Mary College, London reviews arbitration in the last year

English Act’s 10^th anniversary by Sarita Woolhouse provides detailed statistics on reported cases under the Act

The Chorzow approach rejuvenated?
by Manuel Abdala, James Nicholson and Pablo Spiller, University of California at Berkeley ALIGN on compensation under bilateral investment treaties

Fiona Trust v Privalov:
by Laurence Shore and Iain Maxwell, Herbert Smith

on validity of arbitration agreements where fraud is alleged

Options for change in the annulment process
by Claudia Salmon (New York) and Kate Knox (London), DLA Piper on the ICSID procedure for challenge to awards

Statistics from arbitral institutes for 2006 provides detailed statistics on arbitrations from AAA, Vienna, Cairo, Germany, Hong Kong, ICSID, Singapore, LCIA, Stockholm and Switzerland.

Chattan Developments Ltd v Reigill Civil Engineering Contractors Ltd [2007] All ER (D) 155 TCC
A first arbitrator having found that an agreement for a residential development incorporated the terms of JCT 80, including the LAD provisions, a second arbitrator held that the parties had shown intention that no unliquidated damages should be claimable in addition. The claimant client sought to challenge the second arbitrator’s award under s.69 Arbitration Act on a point of law but it was held, rejecting the challenge, that the second arbitrator had made relevant findings of fact and applied correct principles of law, so it could not be said that the award was unlawful.

G Middleton Ltd v Berry Creek Overseas Development Ltd [2007] All ER (D) 358 TCC
The defendant client sought a stay of execution on arbitration awards in favour of its contractor arguing that the arbitrator’s basis of calculation had been incorrect and that it was entitled to a separate refund. The court, applying Wimbledon Construction v Vago (Simon Hughes) refused the stay, holding that the arbitrator’s methods could not be analysed on an application for a stay and that an alleged entitlement to a refund should not ground a stay of enforcement on the balance of convenience.

Construction Law Vol.18 Issue 2 March 2007 contains the following articles:

Partnering demands contract integration
by David Mosey, Trowers & Hamlins (on PPC 2000 partnering contract).

Sectionalised contract better late than never
by Michael Phipps, Thurston Consultants (on JCT 2005)

Review of the year 2006
by Simon Lewis, Dickinson Dees

Next generation PFI contract
by Craig Davis, Freshfields

The FIDIC Client/Consultant Model Services Agreement 2006
by Tim McGoldrick, Driver Consult

Risk and insurance in NEC 2005
by John D Wright, JD Risk Associates

See ERDC v Brunel University under Keating Chambers Reported Cases on quantum meruit as a basis for payment for work done under and after letters of intent.

TFW Printers Ltd v Interserve Project Services Ltd [2007] 109 Con LR 1 CA
Already reported in CILL and noted in KC In Brief November 2006. The CA allowed an appeal by the claimant building owner in respect of the defendant contractor’s liability for flooding allegedly caused by defective workmanship under the JCT Minor Works Contract. The judge had to consider the duration of the contractor’s liability after practical completion. The Court of Appeal doubted whether taPractice Note would conclusively establish what the JCT intended on this point, but based the decision on the fact that the Practice Note was not clear on the point in any event.

Leighton Contractors (Asia) Ltd v Stelux Holdings Ltd [2007] Con LJ Vol.23 No.1 p.70 Hong Kong SAR Court of First Instance
A challenge by contractors Leighton against an arbitrator’s award in favour of the client Stelux failed. Leighton argued unsuccessfully that the arbitrator was not entitled to hold that substructure works were so delayed by the contractor that it did not matter if tender information was given later than originally envisaged and that Stelux’s failure could not have caused actual delay. The project was executed under the Hong Kong Standard Form of Building Contract.

Reinwood Ltd v L Brown and Sons Ltd [2007] BLR 10 TCC
Already reported in CILL and noted in KC in Brief February 2007. On the question of extension of time under JCT 98 with Contractor’s Design, it was held that no particularly formality was necessary for the grant of an extension of time, provided the document contained the information required by the contract. If a new completion date was fixed, thus cancelling a certificate of non-completion, the right to deduct LADs under that certificate was lost. The court also offered guidance as to whether the contractor’s notice was given reasonably or vexatiously. The six propositions covered: 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.

Current Trends in risk allocation in construction projects and their implications for industry participants by Patrick Mead, Carter Newell, Brisbane, Construction Law Journal [2007] Vol.23 No.1 p.23
The article, by an Australian lawyer, provides an overview of risk allocation in construction projects and the methods adopted by participants to manage that risk, specifically in the context of more recent forms of procurement. The role of the insurance industry in determining risk allocation is also considered, as is the negotiation of allocation of risk for uninsurable events. The author offers two hypothetical case studies, based on a joint mining and civil engineering project and on a design and construct building contract.

See Midland Expressway v Carillion Construction (No.1) under Keating Chambers Reported Cases on meaning of ‘provisional sum’ in construction contract.

See Honeywell Control Systems v Multiplex Constructions under Keating Chambers Reported Cases on sub-contractor’s entitlement to view amended version of main contract.

Tramtrack Croydon Ltd v London Bus Services Ltd [2007] All ER (D) 14 Commercial Court
The case concerns the interpretation of a provision of the concession agreement on the Croydon Tramlink project which required that the parties "shall in good faith agree (acting reasonably)" the financial arrangements for compensating the claimant concession holder. The court held that reasonableness was a criterion which could be utilised on an expert determination (as provided in the agreement) or by a court.

Tamares (Vincent Square) v Fairpoint Properties [2007] Times Law Reports 14 Feb Ch.Div.
Sets out the relevant principles to be applied when assessing damages for infringement of a right to light where an injunction was refused. The defendant in the course of redevelopment of its site, had demolished a single-story building with a flat roof and replaced it with a three-storey building with a pitched roof.

See Offer-Hoar v Larkstore under Keating Chambers Reported Cases on assignment of a contractual right of action against a consultant from vendor to purchaser of site.

Regan v Paul Properties Ltd [2007] BLR 56 CA
Already noted in KC in Brief November 2006. The CA held that damages were an insufficient remedy where the owner of a long lease established an actionable nuisance resulting from the defendant’s construction of a building which reduced the light available to the claimant’s living room. The CA held that the deputy judge had been wrong to place the onus on the appellant to show why damages should not be awarded and to direct himself on the relevance of the conduct of the respondents. The respondents had taken a calculated risk in proceeding with the development after the claim had been asserted against them. On the facts, an injunction was the appropriate remedy.

Pearson Education Ltd v Charter Partnership [2007] EWCA Civ 130 CA
The appellant architects failed to persuade the CA to follow its decision in Baxall Securities v Sheard Walshaw (Louise Randall) and their appeal against liability for negligent design of a warehouse rainwater system was dismissed. The tenants (Pearson) had not known of an earlier flood and had had no reason to order an investigation into the adequacy of the system. No event broke the chain of causation between the architects’ specification of an inadequate design capacity and the eventual flooding which caused the tenant loss.

Construction Law Vol. 18 Issue 2 March 2007 contains the following articles:

Experts need a watchful eye
by Paul Newman, 3 Paper Buildings (on expert witness guidance)

Damages versus injunctions
by Sebastian Kokelaar, Mills & Reeve (on Regan v Paul Properties)

Litigation – the last resort
by Michael Draper, Shadbolt & Co (on adverse costs orders for refusal to mediate)

Lloyds Maritime and Commercial Law Quarterly - Part 1 February 2007 contains the following articles:

Loss of chance and the evaluation of hypotheticals in contractual clams
by Jill Poole, University of the West of England

The problem of abusive calls on demand guarantees
by Nelson Enonchong, University of Birmingham

Payments into Court
Note that amendments to CPR Part 36 which come into force on April 6 2007 significantly change the rules on offers to settle, following acceptance of representations by Dyson LJ and the London Solicitors Litigation Association that payments into court should be abandoned.

Construction Law Journal [2007] Vol.23 No.1 p.12
The second annual report since the reorganisation of the TCC contains details of its members, a breakdown of cases by subject category, information on the regional TCC centres and some comments on the TCC Guide and other events and issues during the year under the review.

Ian Duncan Wallace QC: obituaries
Ian Norman Duncan Wallace QC: an obituary by John Tackaberry QC, Arbitration Chambers and Ian Duncan Wallace QC: a tribute by His Honour Judge Thornton QC
Construction Law Journal [2007] Vol.23 No.1.

See P4 Ltd v Unite Integrated Solutions under Keating Chambers Reported Cases on the costs consequences of unreasonable refusal to mediate and failure to provide relevant information at an early stage of proceedings.

See Secretary of State for Transport v Pell Frischmann under Keating Chambers Reported Cases on the criteria for an order for disclosure of documents against a non-party.

Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] CILL 2429 CA
Already noted in KC in Brief February 2007. 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.

Quietfield Ltd v Vascroft Contractors Ltd [2007] 109 Con LR 29 TCC
Already noted in KC in Brief May 2006. In the first adjudication, the adjudicator had held that Vascroft had failed to show entitlement to an extension of time. Quietfield subsequently began a second and then a third adjudication and the (same) adjudicator held that he was bound by his original finding and refused to consider Vascroft’s new evidence challenging it. Quietfield commenced enforcement proceedings in the TCC but the court held that the adjudicator had been wrong not to consider the new evidence in the third adjudication.

ERDC Group Ltd v Brunel University [2007] 109 Con LR 114 TCC
Already reported in BLR and noted in KC in Brief September 2006. Formal execution of the contract documents being deferred until after planning permission was obtained, work proceeded under a series of letters of appointment and then continued after their expiry. The claimant contractor claimed entitlement on the basis of quantum meruit for work done. The defendant denied that this should be assessed on a cost-plus basis and argued that defective work should be taken into account. The court rejected the defendant’s right to set off sums owing, but accepted that the quantum meruit should reflect any sub-standard work and an allowance for delay. The basis for the quantum meruit would be primarily to reference to the rates and prices in the earlier work.
Simon Hargreaves

Offer-Hoar v Larkstore Ltd [2007] 109 Con LR 92 CA
Otherwise reported as Technotrade v Larkstore and noted in KC in Brief October 2006, this is the CA decision on appeal from TCC. The CA upheld the TCC’s finding in favour of the Part 20 claimant owner who had purchased a site which had suffered a landslip, damaging adjoining properties. The court had to decide whether the owner could sue the Part 20 defendant, who had prepared a soils report for the vendor. The owner was held to have acquired the vendor’s right to sue the Part 20 defendant in contract: Linden Gardens v Lenesta Sludge (Richard Fernyhough QC and Marcus Taverner QC) was applied on assignment. The CA upheld the TCC’s finding in favour of the Part 20 claimant that the Part 20 claimant could claim substantial damages from the Part 20 defendant for breach of contract by virtue of the assignment.
Christopher Thomas QC
Gaynor Chambers

Honeywell Control Systems Ltd v Multiplex Constructions (UK) Ltd [2007] All ER (D) 342 TCC
The claimant sub-contractor sought a declaration against the defendant main contractor on the Wembley Stadium project that it was entitled to view a settlement agreement reached between the main contractor and the employer which had varied some of the terms of the main contract. The defendant argued unsuccessfully that the claimant was only entitled to view the contract in its original unamended form.
David Thomas QC
Marc Rowlands

Note: other important issues were decided in this litigation, which will be reported in due course.

Cubitt Building & Interiors Ltd v Fleetglade Ltd [2007] CILL 2431 TCC
Already noted in KC in Brief February 2007. 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

Epping Electrical Co Ltd v Briggs and Forrester (Plumbing Services) Ltd [2007] CILL 2438 TCC
Already noted in KC in Brief February 2007. The TCC followed the Scottish decision of Ritchie Bros v David Philp to the effect that 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 as it throws into doubt the validity of a number of contractual adjudication regimes on similar grounds. See also Areat Heating v Jerram Falqus (William Webb) soon to be reported in CILL.
David Thomas QC

Midland Expressway Ltd v Carillion Construction Ltd (No.1) [2007] Construction Law Journal Vol.23 No.1 p.75 CA
Already reported in ConLR and noted in KC in Brief January 2007. The first instance decision was on a number of issues arising out of the M6 Birmingham Northern Relied toll road project. It went to the Court of Appeal on the meaning of ‘provisional sum’ and the contractors’ entitlement to be paid. The CA dismissed the contractors’ appeal, upholding the employer’s case that a provisional sum was only payable at all under the contract and to the extent that the employer so instructed. The appropriate actual amount would be substituted. The CA criticised the lack of clarity in the contractual provisions.
Nerys Jefford

P4 Ltd v Unite Integrated Solutions plc [2007] BLR 1 TCC
Already reported in CILL and noted in KC in Brief – February 2007. This is the decision on costs of the main case. Although the defendant, Unite, had been successful and so would normally have been entitled to its costs from the beginning of the action, it was denied a proportion of its costs because of its failure to provide relevant information at an early stage of proceedings and prior to formal disclosure, and because of its refusal to agree to mediation. The BLR Editors suggest that the refusal to go to mediation must have weighed heavily with Ramsey J.
Lucy Garrett

Secretary of State for Transport v Pell Frischman Consultants Ltd [2007] BLR 46 TCC
This case derives from the Thelwall Viaduct project (which also gave rise to AMEC v Secretary of State (John Marrin QC, Sarah Hannaford, Simon Hughes). Pell Frischman was the engineer for the project and the Secretary of State issued proceedings against the firm and AMEC. This hearing concerned an application for disclosure of documents made by Pell Frischman against a non-party to the proceedings brought by the Secretary of State, namely AMEC, and the threshold requirements for such an order, namely obvious relevance and likelihood of assisting both sides in the action. The application was dismissed on the facts in relation to these requirements. The Secretary of State was represented, although not a party to the application, as being directly interested in the outcome.
Adam Constable and Jessica Stephens

Construction Law Summer School, Cambridge
12 September 2006
Specialist workshop on latest techniques in dispute resolution
Paul Darling QC

Mills & Reeve, Cambridge
21 September 2006
JCT 2005 One Year On
Philip Boulding QC and Calum Lamont

Wardell Armstrong/Moore & Co
22 September 2006
Expert Witness Training
Simon Hughes

Reed Smith, London
5 October 2006
Current Issues in Construction Related Professional Negligence
Vincent Moran

The Construction Law Conference, London
13 October 2006
The Changing Construction Law Landscape
Stephen Furst QC (with Ramsey J.)

JCT 2005 – the new Suite
Adrian Williamson QC and Lucy Garrett

Adjudication trends and developments
Adam Constable and Gideon Scott Holland

Panel Session
John Uff QC (Chairman)
Paul Darling QC
Marcus Taverner QC and Rosemary Jackson QC

Professional Negligence Update
David Thomas QC and Vincent Moran

Panel Session
Paul Darling QC
Alexander Nissen QC
Simon Hughes
Sam Townend

International Society of Construction Law Conference, Singapore
16 October 2006
The Middle East Construction Industry
Richard Harding (Chairman)

Professional Negligence Issues in the Construction Industry
17 October 2006
Nerys Jefford

Hong Kong Society of Construction Law Conference, Hong Kong
20 October 2006

Key-note address on International Dispute Resolution
John Marrin QC

Front end project issues
Nerys Jefford

Contract Administrators: obligation of impartiality? Is the employer liable for their failures?
Timothy Elliott QC

Recent developments in construction law
Stephen Furst QC

Contractual Adjudication
Sarah Hannaford

Design liability: reasonable skill and care or fitness for purpose
Ian Pennicott QC

The NEC Contract
Philip Boulding QC

Law Council of Australia:
Business Law Section Construction and Infrastructure Law Committee,
Melbourne 24 Oct 2006
Current developments in English construction law and practice
John Uff QC

Chartered Institute of Arbitrators, London
14 November 2006
‘Out of Africa’: international arbitrators’ powers
on currency and interest reviewed in the Lords.
Robert Evans

Geological Society Engineering Group, London
22 November 2006
Contractual provisions
Risk in ground conditions
John Uff QC

Mills & Reeve Seminar, Birmingham
22 November 2006
JCT 1 year on
Philip Boulding QC and Calum Lamont

Cambridge Litigation Lunch Group
Downing College, Cambridge
29 November 2006
International arbitrators’ powers on currency and interest reviewed in the Lords
Robert Evans

IBC Delay in Complex
Construction Conference, London
12 December 2006
John Uff QC (Chairman)

Cork Council Seminar, Cork
12 December 2006
Potential pitfalls in arbitration
Stephen Furst QC and Jane Lemon

Osborne Clarke, Bristol
11 January 2007
Black holes: Larkstore
Gaynor Chambers

and

Set-off and abatement
William Webb

Society of Construction Law, Derby
30 January 2007
Adjudication case law update
Jonathan Selby

Institute of Arbitrators and Mediators, Melbourne
14 February 2007
Arbitration in a changing market
John Uff QC

University of Technology, Sydney
16 February 2007
Developments in law and ethics in the construction industry
John Uff QC

CLT Building Contracts for Property Professionals Seminar, London
20 February 2007
NEC Update
Simon Hughes

King’s College, London
20 February 2007
Statutory adjudication
Robert Gaitskell QC

Professional Negligence Bar Association, London
21 February 2007
Mediating professional negligence claims
Robert Gaitskell QC

Adjudication Society, London
22 February 2007
10 myths about adjudication
Adam Constable (Panellist)

Hammond, Manchester
8 March 2007
Adjudication Update
Lucy Garrett

Professional negligence and Reforms in the TCC
James Thompson
Gideon Scott Holland (Chairman)

Pinsent Masons
13 March 2007
International Arbitration
Robert Gaitskell QC

CMS Cameron McKenna, London
13 March 2007
Unfair contract terms
Jonathan Selby

Chartered Institute of Arbitrators, Hatfield
14 March 2007
Arbitrators’ powers regarding currency and interest
Alexander Nissen QC

Berwin Leighton Paisner, London
19 March 2007
NEC 3^rd Edition
Justin Mort

Building defects
Adam Constable and Calum Lamont
Adjudication update
Tom Lazur

Mayer Brown Rowe & Maw, London
21 March 2007
Award of damages against construction professionals
Adrian Williamson QC

Duties of care in construction
Vince Moran

The law of concurrent causation in tort
James Thompson

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 D.Litt Barrister) Visiting Professor of Law, Oxford Brookes University. www.keatingchambers.com

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.