REUTERS | Darren Staples
June 12, 2018

Security of payment legislation in Australia – a time for change?

REUTERS | Darren Staples
June 12, 2018

Security of payment legislation in Australia – a time for change?

You may recall that back in November I blogged about the UK government’s review of the 2011 amendments to the Construction Act 1996, and I revisited the topic after the consultation closed in January. The results of the consultation have not been published and the relevant page of the BEIS website does not give an indication of when they might be published; rather, it simply states that “We are analysing your feedback”.

However, I was interested to see that the UK is not the only country reviewing its security of payment legislation, and that John Murray has published his review of the Australian legislation, “Building Trust and Harmony”.

I should begin with a confession. I’ve not read the whole of the report but, in fairness, it is 350 pages long and includes 86 recommendations, so it is a mammoth piece of work. I thought that I would take a look at just a few of those recommendations in this week’s blog. Continue reading →

REUTERS | Pascal Rossignol
June 6, 2018

Prospective analysis of compensation events under NEC: shutting one’s eyes and groping in the dark?

The NEC contract is built on the spirit of mutual trust and co-operation. One area in which this plays out is in the context of applications for an extension of time or a change in the prices by a contractor. The project manager is required to assess these applications on a prospective or forecasted basis, at the time the relevant compensation event occurs.

However, one issue that the courts have not yet fully grappled with is how that assessment works when the contractual mechanism relating to quotations is not followed and the time and money effects of the compensation event fall to be considered after the impact of the event has played out. This post considers that scenario in the context of two recent cases: Northern Ireland Housing Executive v Healthy Buildings (Ireland) Ltd and Fluor v Shanghai Zhenhua Heavy Industry Ltd. Continue reading →

REUTERS | Alexandre Meneghini
June 5, 2018

I was re-reading the Ikarian Reefer only last week

Sometimes the old cases are the best ones and that surely has to be true of the Ikarian Reefer. Even now, over 25 years since the judgment at first instance was handed down (and countless other pieces of guidance have been published) we still see experts getting it wrong.

I’m not sure if anyone remembers what the case was about (I certainly didn’t) but, even without looking it up, I’d have guessed it was a shipping case (the clue is in the name!). Continue reading →

REUTERS | Tobias Schwarz
May 29, 2018

Determination of preliminary points of law by courts in arbitration and adjudication

The Palladium is a mighty fine looking “superyacht”. It is an impressive 95 metres long and has all the features one would expect on such a luxury craft, including a helicopter landing pad and swimming pool. A Google search suggests that the yacht is worth circa $200 million, so one can see that a defect in the paint finish would be costly to rectify. It is this defect that ultimately led the parties to an arbitration, for which a five-week hearing was set.

The case ended up before the court because, during the arbitration, an issue arose as to whether the yacht builder’s without prejudice settlement offer had been accepted by the purchaser in correspondence. The purchaser contended that a binding settlement had been reached, which the builder denied. Continue reading →

REUTERS | Mike Blake
May 25, 2018

Can God create a stone s/he cannot lift?

Since at least medieval times, philosophers have struggled with what has become known as the “omnipotence paradox“:

“If God is all powerful, can s/he create a stone so heavy s/he cannot lift it?”

Thomas Aquinas and Rene Descartes, among others, would no doubt be relieved to know that the English Supreme Court has now resolved the matter (in Rock Advertising v MWB Business Exchange Centres). At least, that is no doubt what Lord Sumption would like us to think. There may also be some construction lawyers rifling back through recent advices to check whether a swift re-think might be necessary. Continue reading →

REUTERS |
May 23, 2018

The avalanche effect: key issues in modular building

Increasingly, our clients are requesting that we incorporate provisions for modular building techniques into their construction contracts. There seems to be a real trend for including at least some aspects of “modular” into development and other projects.

It is open to debate whether this is driven by improvements in design and adaptability of modular building as a construction method, or by market forces such as labour shortages and rising material costs. The fact remains that modular building is on the increase and brings with it some key considerations in terms of risk. Continue reading →

REUTERS | Ralph Orlowski
May 23, 2018

Show me the way (in contract drafting)

I recently looked at some bespoke drafting that, as Eric Morecombe might have put it, had all the right words, but not necessarily in the right order. To avoid a fracas, I suggested that using a familiar standard form might be a better starting point and would save quite a bit of time. My idea was received with surprising enthusiasm.

There will always be aspects of the standard forms that don’t achieve the collective hopes and dreams of the parties, hence the practice of amending them. But, if you start with the right form, you often find that most of the drafting fits the bill. Continue reading →

REUTERS | Jim Young
May 22, 2018

Fraud and its impact on proceedings, including adjudication

I was in Dublin last week giving a talk to the Irish branch of the SCL. I’d prepared a talk on fraud in arbitration, adjudication and mediation and, during the day, I was made aware of the judgment in WL Construction Ltd v Chawke and Bohan (a thank you is due to Mark Warren in this regard). As it wasn’t a case I was familiar with, I thought I’d take a look and share my thoughts on the blog.

Funnily enough, it is almost exactly 12 months since I last looked at fraud, and on that occasion I borrowed from Lord Denning’s infamous statement in Lazarus Estates Ltd v Beasley that:

“No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.”

When you see what happened in WL Construction, you will realise just how on point Lord Denning was over 60 years ago. Continue reading →

REUTERS |
May 16, 2018

Nearly, but not quite: the difficulties of resisting payment of an on-demand guarantee

It is notoriously difficult to resist payment following a call on an on-demand guarantee or bond. Generally, nothing less than a seriously arguable case of fraud by the beneficiary will suffice. The stringency of this test is backed by strong policy arguments militating in favour of protecting the integrity of the banking system. However, even where a seriously arguable case of fraud is made out, the balance of convenience may weigh against injunctive relief, as demonstrated recently in Tetronics (International) Ltd v HSBC Bank plc. Continue reading →

REUTERS | Dado Ruvic
May 15, 2018

Retention proposals take shape: analysing the text of the Aldous Bill

For many years, parts of the construction sector have pushed for improvement of the market’s treatment of retention monies. Post-Carillion and its devastating impact on suppliers, however, matters may have reached a tipping point.

On 9 January 2018 – a few days before the construction giant’s collapse – the backbencher Peter Aldous introduced the Construction (Retention Deposit Schemes) Bill under Parliament’s Ten Minute Rule.

Given the importance of government support in mustering a majority in the House of Commons, relatively few Private Members’ Bills (PMB) become law. To this end, proponents of the “Aldous Bill”, not least the Waveney MP himself, have been busily promoting its merits within the industry and rallying support among politicians ahead of it being debated by MPs at the second reading. Continue reading →