REUTERS | David Gray
April 18, 2019

Adjudication decisions procured by fraud

REUTERS | David Gray
April 18, 2019

Adjudication decisions procured by fraud

There is a robust policy of enforcing adjudicators’ decisions, and in not allowing that policy to be undermined simply because a party alleges fraud. However:

“Where, exceptionally, it is properly arguable on credible evidence that an adjudication decision was itself procured by fraud that was reasonably discovered after the adjudication, the court is unlikely to grant summary judgment.”

So said Pepperall J in PBS Energo AS v Bester Generacion UK Ltd, which proved to be one such exceptional case.

PBS had obtained an adjudicator’s decision in its favour for £1.7 million plus interest, but Bester successfully resisted enforcement on the basis of PBS’ fraud in procuring the adjudicator’s decision. Continue reading →

REUTERS | Eric Gaillard
April 17, 2019

Fraud, glorious fraud?

Once adjudication had found its feet in the early noughties, there was said to be only two ways for a responding party to avoid the consequences of an adjudicator’s decision. The first was to demonstrate that the adjudicator did not have the necessary jurisdiction, and the second was to demonstrate that they had made a material breach of the rules of natural justice. But then some inventive team of lawyers, no doubt reeling at the perceived injustice of coming second in an adjudication, came up with a third option: fraud. It might be taking it a little far, but I have visions of that team sat around singing the opening song from Oliver! (but replacing “food” with “fraud”) when they realised that fraud could be added to their arsenal of weapons to avoid enforcement!

The fact that fraud has taken some time to develop as a means of resisting enforcement is demonstrated by the fact that the first edition of Coulson on Construction Adjudication, published in 2007, made no reference to it. The first mention of fraud was in the second edition (published in 2011), and this commentary has steadily grown in the third and fourth editions.

TCC enforcement cases involving fraud now seem to come along quite frequently. For example, last month Matt blogged about Alexander Nissen QC’s judgment in BM Services Inc Ltd v Greyline Builders Ltd. I make no apology for the fact that I’m going to discuss another fraud case this week, namely Jefford J’s judgment in Grandlane Developments Ltd v Skymist Holdings Ltd, because this is such an important area. Continue reading →

REUTERS | Peter Cziborra
April 17, 2019

Injunction not granted in ongoing adjudication: Billingford v SMC Building

Imagine the scene: you are the responding party to an adjudication and right at the outset you spot that the adjudicator has been incorrectly appointed and does not have jurisdiction. You try to call a halt to the proceedings. The claimant refuses. Surely you can get an injunction? Why go to all the trouble, expense and effort of an adjudication, for which you won’t be able to recover your costs, only to incur further legal costs at enforcement proceedings, at which you are eventually vindicated? Wouldn’t it make more sense to call time on the adjudication and start again?

In Billingford Holdings Ltd & BFL Trade Ltd v SMC Building Solutions Ltd and another, Fraser J refused to grant an injunction. This blog post considers whether this approach can be reconciled with section 37 of the Senior Courts Act 1981, which provides that the court may grant an injunction in all cases in which it appears to the court to be just and convenient to do so and the overriding objective of saving expense. Continue reading →

REUTERS | Jean-Paul Pelissier
April 16, 2019

Adjudication matures as it gets the key to the door

On 1 May 2019, the statutory adjudication procedure introduced by the Construction Act 1996 will have been in force for 21 years. At the risk of over-egging an analogy, its life so far has followed a pattern familiar to parents:

  • In its infancy it had a devastating effect on many relationships.
  • As a toddler it thought it could do no wrong (see Macob v Morrison).
  • As it approached its teens it had an alarming and confusing growth spurt (particularly following the amendments in the LDEDC 2009).
  • Now, as it reaches maturity, it appears to be trying to shed some of its less attractive features (for example, see S&T v Grove Developments).

Grove was the first case in which a real fetter was recognised on the statutory right to refer a dispute to adjudication at any time. In that case, the Court of Appeal upheld Coulson J’s first instance decision, confirming that the employer could start an adjudication to dispute the true value of the works for which the contractor had claimed an interim application for payment, even though the employer had not served a valid pay less notice. However, the employer could not do so until after it had paid the notified sum due as a result of the failure to serve the notice.

The meaning and effect of Grove was considered recently in M Davenport Builders Ltd v Greer, where Stuart-Smith J was asked to enforce a “smash and grab” adjudication decision in connection with a building in Stockport.

Continue reading →

REUTERS |
April 10, 2019

Employer’s Agents and agreements for lease: the loyalty only goes so far…

A tenant client was recently surprised by a clause in its agreement for lease (AFL). The clause allowed the landlord to defer the target access date and long stop date commensurate with any extension of time granted by the Employer’s Agent (EA) under a JCT Design and Build contract for the landlord’s works.

It was the first time that the client had entered into an AFL so this was new territory for them. When they spotted the reference to the EA granting extensions of time, alarm bells started to ring.

Surely, they said, the very nature of the role of EA meant that when it came to taking any decisions under the building contract they would act in the landlord Employer’s favour? What if the EA decided to grant an extension of time under the building contract to postpone the access date and long stop date for the landlord? This delay would have serious consequences for the tenant. Not only in terms of serving out the notice period on its current tenancy but also in delaying the start of its planned works where its contractor was geared up and ready to go. What on earth could they do?

Don’t worry, we said: it will be fine. Here’s why. Continue reading →

REUTERS | Ali Hashisho
April 9, 2019

Is serial adjudication like lingchi?

Lingchi, also known as known as death by a thousand cuts, was a form of torture and execution used in China. According to Wikipedia, it may not have involved as many as 1,000 cuts, that would depend on the crime, the executioner and whether the family could afford a bribe to speed up the process (and reduce the number of cuts).

Finding myself increasingly involved in serial adjudication, I realise that it can be a valuable and efficient way to resolve disputes, particularly with sophisticated parties and their representatives. However, I sometimes feels like certain parties use the process to wear the other down. Hence the reference to lingchi!

The reason I mention this is because of Stuart-Smith J’s judgment in Hitachi Zosen Inova AG v John Sisk & Son Ltd, where the key issue was whether the dispute referred in the eighth adjudication was the “same or substantially the same” as the dispute referred in the second adjudication. Continue reading →

REUTERS | Leonhard Foeger
March 29, 2019

“Practical completion” considered by Court Appeal for first time in 50 years

It is well known that practical completion is often easier to recognise than it is to define, which is why the Court of Appeal’s judgment in Mears Ltd v Costplan Services (South East) Ltd and others is an important read for construction practitioners.

It was an appeal from Waksman J’s December 2018 judgment, which was dismissed, and is the first time in 50 years that the Court of Appeal has considered the meaning of “practical completion”. Continue reading →

REUTERS |
March 27, 2019

Brexit is not frustrating: Canary Wharf v European Medicines Agency

2014 was a simpler time. England crashed out of the World Cup in the group stages, a robot made the first ever landing on a comet, and the European Medicines Agency (EMA) signed a 25-year underlease (the lease) with the Canary Wharf Group for its headquarters in London.

Three years later, the Prime Minister formally invoked Article 50. This began the legal process of British withdrawal from the European Union. Citing Regulation 2018/1718, EMA relocated its London office to Amsterdam and wrote to Canary Wharf, informing them that it would treat Brexit as a frustration of the lease. Aggrieved by this decision, Canary Wharf sought a High Court declaration that the lease would not be frustrated by Brexit.

Why does this case matter to the construction industry? Because it concerns a decision on the rarely used doctrine of frustration, and the judgment contains a very useful summary of the principles of frustration that are equally applicable to construction contracts. Continue reading →

REUTERS | Darrin Zammit Lupi
March 26, 2019

Are jurisdictional reservations flavour of the month?

When I wrote about Coulson LJ’s judgment in Bresco  v Michael J Lonsdale, Cannon  v Primus back in January, I said that I thought the waiver points applicable to jurisdictional reservations were:

“… of greatest use to parties and those representatives who deal with adjudications on a day to day basis. After all, how often do adjudications involve insolvent parties? I certainly haven’t dealt with one for some time now. By contrast, I see general (and specific) reservations all the time.”

Fast-forward two months and it seems that, for once, my crystal ball skills are effective, as O’Farrell J has applied Coulson LJ’s principles on the reservations a party made (both general and specific) on two occasions: Ove Arup v Coleman Bennett and Donald Insall Associates Ltd v Kew Holdings Ltd. Continue reading →

REUTERS | Regis Duvignau
March 20, 2019

Can liquidated damages be claimed after termination? Wrong question!

Imagine this: a contractor undertakes to perform certain works by a specified date, and agrees to pay liquidated damages (LDs) if it does not complete by that date (subject to any entitlement to an extension of time). The contractor, through its own fault, is late and does not complete by the specified date. In fact, the contractor is very late and, in the end, the employer terminates the contract before the works are completed (as it is entitled to do under the contract).

For those of us involved in the construction industry, this scenario does not require too much imagination.

In my previous blog post, I said that whether LDs could be recovered after termination of the contract would appear on my hypothetical construction law exam paper. I was concerned about how and whether the unlucky student sitting this exam question would get to the right answer.

It turns out that there was a more fundamental problem – I asked the wrong question. The recent Court of Appeal decision in Triple Point Technology Technology Inc v PTT Public Co Ltd shows that I should have asked whether LDs are recoverable at all in the event of termination.  Continue reading →