UK: Case Law Review - Construction, Property & Real Estate (November 2008)

ADJUDICATION

Alleged bias in nomination

Makers UK Ltd v Camden London Borough Council [2008] BLR 470 TCC
Already reported in CILL, Camden sought to challenge the adjudicator's decision on the ground that he had been improperly appointed by RIBA. Makers had contacted RIBA to request the appointment of the adjudicator actually appointed. The court rejected the existence of an implied term that neither party should seek to influence the appointment, since the nominating body was under no obligation to accede to the representations. There was no appearance of bias in appointing an adjudicator previously requested by one of the parties.

Construction Contracts Bill

Construction Act Review by Peter Sheridan and Dominic Helps Construction Law Journal 2008 Vol. 24 No. 7 p. 572
The regular column from Shadbolt & Co. provides an overview of the proposals contained in the draft legislation the purpose of which is to reform the HGCR Act. The principal reforms covered in the commentary are the repeat of the s.107 requirement that the Construction Contract must be in writing to be covered, provision in contracts for adjudication costs, the adjudicator's fees and expenses, pay when certified provisions, stage payments and payment notices and withholding notices.

Extension of time for service of response

CJP Builders Ltd v William Verry Ltd [2008] TCLR 10 TCC
Already reported in CILL, contractors Verry engaged subcontractors CJP under a DOM/2 sub-contract. CJP referred a withholding notice dispute to adjudication. Verry requested an extension of time beyond the seven days in the DOM Conditions and was over five hours beyond the extended deadline in serving its response. The adjudicator held that he could not consider the response and found in favour of CJP. In an action for enforcement, the court held that the adjudicator had the power to set the timetable and that his failure to consider the response was a breach of natural justice.

See VGC Construction v Jackson Civil Engineering under Keating Chambers Reported Cases on attempt to resist enforcement of adjudicator's decision on grounds that claim was nebulous and ill-defined or had been withdrawn.

Extension of time for service of response

CJP Builders Ltd v William Verry Ltd [2008] BLR 545 TCC
Already reported in CILL, contractors Verry engaged subcontractors CJP on a DOM/2 sub-contract. CJP referred a withholding notice dispute to adjudication. Verry requested an extension of time beyond the seven days in the DOM conditions and was over five hours beyond the extended deadline in serving its response. The adjudicator held that he could not consider the response and found in favour of CJP. In an action for enforcement, the court held that the adjudicator had the power to set the timetable and that his failure to consider the response was a breach of natural justice.

ARBITRATION AND DISPUTE RESOLUTION

See The Coal Authority v Davidson under Keating Chambers Reported Cases on challenge to arbitration award on compensation under Coal Mining Subsidence Act.

Arbitration clause unfair

Mylcrist Builders Ltd v Buck [2008] CILL 2624 TCC
The builder's 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.

Construction Law Vol. 19 Issue 9 November 2008 contains the following articles:

Arbitration (Scotland) Bill – myth or reality?
by Lindy Patterson, Dundas & Wilson

Judges as mediators
by John Sheils, Shadbolt & Co

Arbitration Law Monthly Vol. 8 No. 10 November 2008 contains the following articles:

Seat of the arbitration
on Braes of Doune Wind Farm (Scotland) v Alfred McAlpine Business Services (identification of seat).

Separability
on Entico Corporation v UNESCO (on existence of arbitration agreement)

Supporting foreign arbitrations
on Mobil Cerro Negro v Petroleos de Venezuela
(interim relief in favour of foreign proceedings)

Appeal on point of law
on Royal & Sun Alliance Insurance v BAE Systems
(s.69 challenge)

Journal of International Arbitration Vol. 25 No. 5 2008 contains the following articles:

Party autonomy in international commercial arbitration: popular fallacy or proven fact?
by Mia Louise Livingstone, Baker & McKenzie, Melbourne

Party autonomy in Mainland Chinese international arbitration
by Graeme Johnston, Herbert Smith, Shanghai

State responsibility and investment arbitration
by Kaj Hobér, Mannheimer Swartling, Stockholm

Arbitration in equity and amiable composition under Portuguese law
by Antonio Sampaio Caramelo, Morais Leitao

Section 37h of the German Securities Trading Act and its non-compliance with European law
by Roman Jordans, CMS Hasche Sigle, Cologne

The need for speed in international arbitration
by Klaus Peter Berger, University of Cologne

Finality over choice
by Timothy Tyler and Archis Parasharami, Mayer Brown

A Pro Domo pleading of in-house Counsel and their necessary participation in international commercial arbitration
by Jean-Claude Najar

Recent arbitration-related developments in the UAE
by Roza Mohtashami

International Arbitration Law Review 2008 Vol.11 Issue 5 contains the following articles:

50^th Anniversary of the New York Convention: any progress in recognition and enforcement of foreign arbitral awards in Ukraine?
by Tetiana Bersheda Vucurovic, Levy Kaufmann-Kholer, Geneva

Complex dispute resolution clauses: has the desire to control the dispute process led to increased uncertainty?
by Catherine Bellsham-Revell, Olswang, London

Confidentiality and public access in arbitration – the Norwegian approach
by Ola Nisja, Attorney-General: Office, Oslo

Disclosure and confidentiality

Emmott v Michael Wilson & Partners Ltd [2008] BLR 515 CA
This is not a construction case; it concerns a dispute between a British Virgin Islands law firm and a former employee accused of poaching its business, which was legal advice in Kazakhstan. The importance of the case is the extensive discussion by the court of the principles of confidentiality and privacy in arbitration, arising when the firm undertook litigation in BVI and other jurisdictions as well as London arbitration. The issue was whether documents in the arbitration proceedings should have been made available to the foreign courts, (and whether the appeal was academic given that they already had been). The CA considered the implied obligation of privacy in arbitration and the exception based on public interest, which was applicable here, since otherwise the foreign courts might be misled.

CONTRACT AND PROCUREMENT LAW

Challenges to framework agreement and contract awards

Construction Industry Law Letter October 2008 2630-2632
CILL featured short notes of three procurement cases recently decided by the Northern Ireland High Court.

Henry Brothers (Magherafelt) Ltd v Dept for Education for Northern Ireland

McLaughlin & Harvey Ltd v Dept of Finance and Personnel

McConnell Archive Storage Ltd v Belfast City Council

McLaughlin & Harvey and Henry Bros concerned applications for injunctions to prevent the award of contracts to the tenderer chosen by the awarding authority. In McLaughlin & Harvey the contractor had tendered unsuccessfully for a place in a framework agreement and alleged that the government had utilised a methodology for marking the tenders which had not been disclosed in advance.

In the Henry Brothers case, the contractor had failed to secure a place in a framework agreement for schools modernisation and alleged that the government had wrongly used the tenderers fee percentages as the sole commercial criterion for award. In the two reported decisions, both contractors failed to obtain interlocutory injunctions. In McLaughlin & Harvey, this was because damages would be an adequate remedy and in Henry Bros because, on the balance of convenience, the delay and increased cost to the schools' modernisation was contrary to the public interest. Public policy was also the determining factor in the McConnell Archive Storage case, where a contractor unsuccessfully argued that the Council could not change its decision on discovering errors in its evaluation without application to the High Court under the Public Contracts Regulations 2006.

Note that, since these reported decisions were made, Henry Bros succeed in the trial of its action against the Department of Education. Coghlin J held that "The original decision to rely on the percentage fees and bands was based upon an incorrect factual assumption sufficient to amount to a manifest error." The award had thus been made unlawfully and the contractors' challenge was successful.

Construction Law Volume 19 Issue 8 October 2008
contains the following articles:

Changes can make for ambiguity
by Michael Phipps, Thurston Consultants (on JCT insurance provisions)

Fair payment advice ignored
by Tom Pemberton, Shadbolt & Co (on OGC Guidance)

Don't set off down the wrong path
by Owen Williams and Hannah Bleakley, Lewis Silkin (on set off and drafting LD clauses)

Directors' and officers' insurance
by John Wright, JD Risk Associates

Construction Law Volume 19 Issue 9 November 2008
contains the following articles:

Standard contracts can't cover everything
by Michael Phipps, Thurston Consultants (on insurance under JCT 2005)

Savings with third party rights
by Dean Larder and Stacey Collins, Pinsent Masons
(on collateral warranties and third party rights)

Watch out for contractor insolvency
by Emelita Robbins, Herbert Smith

Risk management for professionals
by John D. Wright, JD Risk Associates

Ensuring fair policy
by Paul Newman, 3 Paper Buildings on EC procurement rules

Waiting not over for Contracts Bill
by Dominic Helps, Shadbolt & Co

CONSTRUCTION AND ENGINEERING CONTRACT DISPUTES LAW

Prescription and Limitation in Scotland

ANM Group Ltd v Gilcomston North Ltd [2008] BLR 481 Court of Session Outer House
This is a case under the Prescription and Limitation (Scotland) Act 1973 with wider relevance whenever limitation statutes provide for 'reasonable knowledge' of a cause of action. Premature cracking was occurring to fibre cement roof sheeting on the pursuers' building, which some of the defenders had secretly inspected without notifying the pursuers until later. The court accepted that the pursuers were not aware and could not with reasonable diligence have been aware of the damage. There is also discussion of the 'temporary disconformity" theory as to when breach of contract can be said to have occurred, although some of the claims were in delict.

Delay Analysis

Analysing concurrent delays
by Richard Anderson, Arbitration Chambers and The critical path, delay analysis and "Windows"
by Roger Gibson
Construction Law Journal 2008 Vol. 24 No. 7 is a special issue on delay analysis. The Anderson article considers the different approaches to concurrent delay: the traditional "first-in-line" approach, the dominant cause approach and the new "apportionment" approach favoured by the Scottish Court of Session in City Inn v Shepherd. The City Inn case is the subject of an extensive report (pp 590-667) and commentary by Keith Pickavance of Hill International.

The Gibson article is an extended case commentary on the latest instalment of Mirant Asia v Ove Arup [2007] EWHC 918 in the TCC, in which HH Judge Toulmin made some remarks in which he favoured "Windows" analysis, i.e. reviewing the course of a project month by month, over "watershed analysis", which he described as "a less reliable form of critical path analysis".

Construction Law Volume 19 Issue 8 October 2008
contains the following articles:

Where shall I start? by Paul Newman, 3 Paper buildings (on transfer of construction disputes from County Court to TCC)

Dispute resolution terminology
by Jane Hughes, Collyer Bristow

Pipe down, the Master of the Rolls is talking!
by John Sheils, Shadbolt & Co (on compulsory mediation)

Overpayment for defective works
by Andrew Jones, Gately Wareing

Restitution claim by NSC fails

Yew Sang Hong Ltd v Hong Kong Housing Authority [2008] BLR 563 HK CA
Nominated sub contractors Yew Sang were unpaid by the main contractors when the latter went into insolvency. There was certified work unpaid and retentions not released. Yew Sang brought an action directly against the client, the Hong Kong Housing Authority, on several grounds and appealed to the Court of Appeal on the principle of unjust enrichment, since the client had had the benefit of Yew Sang's work. The HKCA dismissed Yew Sang's appeal, stating that, although the client had been enriched, it was not unjust enrichment. What had happened resulted from the contractual system agreed by the parties, including the allocation of risk. The courts should be slow to interfere with allocation and restitution should not be allowed to subvert a contractual or statutory regime.

GENERAL AND PROFESSIONAL NEGLIGENCE

Real danger needed for nuisance

Birmingham Development Co Ltd v Tyler [2008] BLR 445 CA
The Court of Appeal held that it was insufficient for an action in nuisance that the claimant was fearful of the consequences of the defendant's actions. It was necessary that the fear should be well-founded, meaning that the activities were actually dangerous. During the claimant's demolition work for development, it uncovered boundary walls owned by the defendant which the claimant alleged were dangerous and constituted a nuisance. The claimant's appeal was dismissed.

SAAMCO revisited by the Lords

Transfield Shipping Inc. v Mercator Shipping Inc. [2008] BLM Vol. 25 No. 9 HL
Following delays, a ship which was subject to a charter was not available to the new charterers. The owners of the ship claimed damages from the charterers for the loss of the difference between original rate of hire and reduced rate agreed for late delivery. The charterers denied that damages should relate to dealings with the new charterers but argued that they should be the difference between market rate and charter rate. During 2004, market rates had more than doubled. The majority arbitrators found for the owners, on an application of the first limb of Hadley v Baxendale. The Commercial Court and CA upheld this. Lord Hoffmann and the House of Lords, however, allowed the appeal by the charterers: "if, therefore, one considers what these parties, contracting against the background of market expectations found by the arbitrators, would reasonably have considered the extent of the liability they were undertaking, I think it is clear that they would have considered losses arising from the loss of the following fixture a type or kind of loss for which the charterer was not assuming responsibility".

As well as Hadley v Baxendale, Lord Hoffmann and Baroness Hale considered South Australia Asset Management v York Montague on the role of foreseeability of loss exacerbated by market movement in measure of damages.

Personal injury in nuisance

Claimants appearing on the Register of the Corby Group Litigation v Corby Borough Council [2008] BLM Vol. 25 No. 9 CA
Already reported in BLR, the claimants, born with physical deformities, brought a group action pleaded in negligence and public nuisance against the Council, which had acquired and used 680 acres of heavily contaminated land from British Steel. The allegation was that exposure to toxic materials during the reclamation and decontamination programme had affected the pregnancies of the claimants' mothers. The Council applied to strike out the nuisance claim on the ground that it could only affect rights over land, but the Master and then the Court of Appeal dismissed the application, on the grounds that it was at least arguable that a personal injury claim could be brought in public nuisance.

PRACTICE AND PROCEDURE

District Registry transfer to TCC rejected

Neath Port Talbot County Borough Council v Currie & Brown Project Management Ltd [2008] BLR 464 TCC
The solicitors for the defendant project managers on a PFI waste to energy project sought the transfer of a professional negligence action from the TCC at Bristol to London for hearing by a HCJ. Ramsey J, sitting in the Bristol District Registry TCC, dismissed the application to transfer to London because the Bristol court was the most appropriate court on the balance of convenience and fairness between the parties. The case would, however, be tried before a HCJ. Judgment was given for the claimants, the Council on this application. There is discussion of CPR Part 30 and the TCC Guide.

Pre-action disclosure

SES Contracting Ltd v UK Coal Plc [2008] Con LJ Vol. 24 No.6 p.518
The successful tenderers for a coal industry project had sought to obtain the services of staff of SES, an unsuccessful tenderer. SES sought to obtain disclosure of information by UK Coal, who had awarded the contract. In the result, the court held that CPR 31.16 had been satisfied and that the applicants had no legitimate grounds for complaint, but that the respondents should pay the costs of the application, because the applicants had solid grounds for believing that the tender process had been conducted irregularly and that there had been breach of fiduciary duty by former SES staff.

Court-appointed assessors

Balcombe Group plc v London Development Agency [2008] TCLR 8 TCC
The claimant had been appointed as consultants on the acquisition of land for the Olympics 2012 project in Stratford and claimed fees of £600,000. The LDA, the client, contended for the appointment of an assessor under CPR 35.15 arguing that the court would be assisted by having the assistance of a person well versed in the Compensation Code relevant to Compulsory Purchase and Compensation.

Coulson J dismissed the LDA's application: holding that the sum of £600,000 was relatively modest for the TCC and that the judge was capable of assessing recoverability under the Code. A previous failed mediation suggested that a further third party would not make any significant difference in achieving a settlement.

Party Wall Dispute costs

Onigbanjo v Pearson [2008] BLR 507 Mayor and City of London Court
The respondents had initially consented to works specified in the appellant's party wall notice, but sought to appoint a party wall surveyor when the works damaged their property. The appellant refused to participate in the process and challenged the jurisdiction of the party wall surveyor, particularly on costs. The court, dismissing the appeal, confirmed that the dispute process under the Party Wall etc Act 1996 is available also to parties who have initially consented to the works if a dispute then arises. The surveyor's jurisdiction extended to the award of solicitors' and counsel's costs as well as those of the respondent's surveyor.

Late payments as repudiatory breach

Alan Auld Associates Ltd v Rick Pollard Associates [2008] BLM Vol. 25 No. 9 CA
Already reported in BLR, under a contract for professional services, the defendant agreed to provide advisory work on removal of radioactive waste on behalf of the claimant, to the UK Atomic Energy Authority. The claimant frequently delayed payment to the defendant. The issue for the court was whether this repeated late payment constituted repudiatory breach by the claimant, entitling the defendant to terminate the contract. The judge found that time was of the essence in the payment obligation and that the defendant had been justified in terminating the contract. The claimant's appeal was dismissed by the CA, whose members noted that the claimant's late payments had been persistent and cynical and that the defendant, while not an employee, was dependent on the payments as its only source of income in an analogous way and had made repeated complaints.

Proprietary estopel and quantum meruit

Yeoman's Row Management Ltd v Cobbe [2008] BLM Vol. 25 No. 9 HL
Appellant landowners agreed orally with respondent developers for development of appellant's site. Respondent was to obtain planning permission and acquire site for agreed price, receiving 50% of any profit above a maximum figure. After the respondent had obtained planning permission, the appellant sought to increase the price for the site, and to reduce the respondent's profit share to 40% of the profit above a much higher maximum figure. The respondent's claim that the appellant was estopped from changing its position failed. Neither was there an enforceable contract, because it lacked the necessary formalities under the Law of Property (Miscellaneous Provisions) Act 1989. However, on the facts, the developer was entitled to a quantum meruit, because it had provided services beneficial to the appellant and there had been no intention that they should be free.

The Commercial Litigation Journal September/October 2008 No.21 contains the following articles:

Res judicata: play it again by Richard Power, Berwin Leighton Paisner

Arbitration: crossing the border by David Howell and Sarah Thomas, Fulbright & Jaworski

Summary judgment: speed, justice and complexity
by Tom Ellis and Sian Forbes, Bevan Brittan

Cross-border disclosure: the confusion of tongues
by Rob Jones, Kroll Ontrack

Corporate manslaughter: bad company
by Victor Rae-Reeves, Clyde & Co

Funding claims: behind the scenes access
by Bob Gordon, 1^st Class Legal

Training: the value of learning
by Fiona Cunningham, Nottingham Law School

Admissibility of extrinsic evidence
Bradford v James [2008] BLR 538 CA
Although the CA reaffirmed the principle that extrinsic evidence will not normally be admitted to interpret a conveyance of land, the appellant purchasers succeeded in their appeal against the first instance judge's interpretation of the conveyance. Extrinsic evidence must always be handled cautiously in construing earlier documents.

KEATING CHAMBERS REPORTED CASES

The Coal Authority v Davidson [2008] CILL 2621 TCC
An arbitrator had awarded compensation under the Coal Mining Subsidence Act to provide compensation to homeowners who suffered subsidence to their properties due to coal mining. The Coal Authority succeeded in challenging the award on the ground that the arbitrator had erred in law in awarding compensation when no new physical damage had occurred following remedial works. The judge was satisfied that the arbitrator's decision was 'obviously wrong' in law under s.69 Arbitration Act and so both granted leave to challenge the award and varied the award to dismiss the compensation claims.
Paul Darling QC

VGC Construction Ltd v Jackson Civil Engineering Ltd [2008] CILL 2627 TCC
The respondent main contractors, Jackson, sought to resist enforcement of an adjudication decision in favour of the applicant sub-contractor VGC. The court, granting VGC's application, rejected Jackson's arguments that there had been a binding agreement to withdraw the claim or that it had been so nebulous and ill-defined as to be incapable of giving rise to a dispute.
Sarah Hannaford QC Alexander Nissen QC Samuel Townend

Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd [2008] EWHC 2280 (LAWTEL) TCC
This costs hearing in the long running Wembley Stadium litigation received widespread media coverage. The claimant contractor, Multiplex, had obtained a net £6.1 million after judgments on many issues. The court rejected Multiplex's suggestion that Cleveland Bridge should pay all the costs, but held that Multiplex should be treated as the successful party entitled to a costs order, because Cleveland Bridge had not accepted that it owed anything. However, Multiplex had failed comprehensively on some points and a proportionate costs order was perfectly practicable and appropriate. The judgment sets out the breakdown and reasoning on all issues, but overall Cleveland Bridge had to pay 20% of the costs of the action, increased from 10% because of their failure to make an offer.

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.

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