REUTERS | David Gray
February 13, 2019

The primacy of insolvency law over construction law

REUTERS | David Gray
February 13, 2019

The primacy of insolvency law over construction law

With the Court of Appeal’s decision in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd just a few weeks old, it is hardly surprising that people are looking again at the relationship between insolvency law and adjudication, noting that in cases of liquidation where parties have a cross claim, construction law defers to insolvency law.

This was clearly illustrated in Gregg Nowak Ltd v CSS Electrical Distributors Ltd, which came before HHJ Bailey earlier this month. Continue reading →

REUTERS | Wolfgang Rattay
February 12, 2019

Consequential corrections are covered by adjudicator’s slip rule

The slip rule is an essential part of the adjudicator’s toolbox, for situations when a mistake has crept into our decision or, as I put it back in 2011:

“It is a handy implied term for those occasions when adjudicators make a mistake.”

It took on statutory form in 2011 with section 108(3A) of the Construction Act 1996 and paragraph 22A of the Scheme for Construction Contracts 1998. Prior to this, we relied on a number of cases, including Bloor v Bowmer & Kirkland, O’Donnell Developments Ltd v Build Ability Ltd (where Ramsey J said the adjudicator must not be “giving effect to second thoughts or intentions but of giving proper effect to his first thoughts”), Redwing Construction Ltd v Wishart and YCMS Ltd v Grabiner (where Akenhead J said that the adjudicator’s mistake must be a “genuine slip which failed to give effect to his first thoughts”).

Over the years, I have looked at the slip rule a few times, most recently to consider Lady Wolff’s judgment in NKT Cables A/S v SP Power Systems Ltd, where she confirmed that it is there to enable an adjudicator to correct clerical or typographical errors, not to allow “changes to the reasoned or intended basis of the decision”.

I’m looking at it again today because, in Axis v Multiplex, Roger ter Haar QC held that, when used properly, the slip rule extends to consequential corrections.  Continue reading →

REUTERS |
February 11, 2019

Private AI – claims against approved inspectors

The extent to which property owners of a defective building have a valid claim against professionals with involvement in the development is a subject that has recently seen an upsurge in interest and litigation. In the past months two TCC judgments have been published that consider the particular role and potential liabilities of approved inspectors (AIs): Zagora Management Ltd and others v Zurich Insurance plc and others and Lessees and Management Company of Herons Court v Heronslea Ltd and others.

To the disappointment of property owners, and perhaps the relief of insurers, these cases demonstrate the difficulties claimants face in succeeding against AIs.  Continue reading →

REUTERS | Gilles Adt
February 6, 2019

Adjudication and insolvency – guidance from the Court of Appeal

Summer 2018 will be remembered as a special time by many readers of this blog: whether it was the spectacular weather, the giddy heights hit by the England football team, or Fraser J’s decision in Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (In Liquidation), it was a summer to remember.

To recap on the latter, Fraser J granted an injunction preventing an insolvent contractor from pursuing an adjudication. The case was the subject of a considerable amount of commentary, including from my colleague Marcus Birch. Importantly, Bresco was in liquidation, rather than some other insolvency procedure. The case was seen as the death knell for the practice of liquidators bringing adjudications.

Perhaps understandably the decision of HHJ Waksman QC in Cannon Corporate Ltd v Primus Build Ltd received considerably less attention. In that case, the judge granted summary judgment and refused a stay of execution to an insolvent contractor in a company voluntary arrangement (CVA). In other words, a company in a CVA might (depending on the facts) still be able to refer matters to adjudication.

In a conjoined appeal, the Court of Appeal has upheld both decisions, and in doing so has provided some useful guidance on whether adjudication remains an option for insolvent companies. Continue reading →

REUTERS | Max Rossi
January 30, 2019

Does Cannon v Primus mean an end to general jurisdictional reservations?

It was only published at the end of last week, so I’m not sure if you’ve had chance to look at Coulson LJ’s judgment in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd, Cannon Corporate Ltd v Primus Build Ltd.

If not, then you should. It contains some important stuff about liquidation and CVAs, and when it is appropriate (and possible) to adjudicate if the referring party is subject to one of those processes. I’m hardly giving the game away to say that you can’t if the party is in liquidation, but you can if it is subject to a CVA. As ever, it is a bit more complicated than that because, although Coulson LJ decided that the adjudicator has jurisdiction in both cases (to borrow Mr Crangle’s phraseology), it will be “an exercise in futility” if the referring party is in liquidation. This was described as theoretical jurisdiction and led Coulson LJ to conclude that adjudication and the insolvency regimes are incompatible. In his view, the solution to that incompatibility is for a court to grant an injunction to prevent an adjudication from continuing and to prevent the liquidator and, more importantly, the responding party from wasting costs.

It is all very interesting and I’m sure we will see plenty of column inches devoted to these aspects of the judgment. However, I think the waiver points applicable to jurisdictional reservations that are discussed in the Cannon v Primus part of the judgment are 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. Therefore, waiver is what I plan to focus on today. Continue reading →

REUTERS |
January 23, 2019

Practically complete or completely impractical? Navigating the pitfalls of what constitutes practical completion

Many a construction dispute turns on defects. A significant subset of those turn on whether the existence of defects prevents practical completion from taking place. It’s not surprising that these situations are contentious: contractors are keen that practical completion is certified so as to avoid or limit their liability for liquidated damages, trigger the return of retention monies and, often, to bring about an assessment of sums they consider due under the final account. Employers may be understandably reluctant to take possession of a property which they consider defective and by resisting practical completion an employer can put pressure on a contractor by withholding sums that would otherwise become due.

Practical completion is therefore an important concept in construction contracts, although one that is often not precisely defined, which can cause uncertainty and hinder the operation of the contract. Continue reading →

REUTERS | Ricardo Moraes
January 15, 2019

Football transfer windows, arbitration and adjudication all in one sentence

Football’s transfer window is open and the papers are full of stories about who may be leaving, who may be arriving and who hasn’t got any money to spend. Speculation is rife, but does anyone wonder what really happens behind the scenes when a footballer’s contract of employment is terminated and he goes off to play for another club?

Apparently, there are rules about this. In England, the FA is the governing body and it has rules that all clubs and players are bound by. These rules extend to termination, either “with just cause” or ” with a sporting cause” and also encompass the “consequences of terminating a contract without just cause”.  Essentially, it means compensation is payable by the party in breach (usually the player). If the player has to pay compensation, he is jointly and severally liable with his new club to pay the old club. In practice, I guess the player’s transfer fee is the “compensation”.

This is all set out in some detail in the judgment in Fleetwood Wanderers Ltd v AFC Fylde Ltd, where the Commercial Court had to decide whether an arbitrator had breached his section 33 duty to act fairly and impartially. Continue reading →

REUTERS | Stefan Wermuth
January 8, 2019

Do liquidated damages survive termination? (answer in no more than 1000 words)

Whether liquidated damages (LDs) can be claimed after termination is a question which comes up regularly. It is very relevant in the current climate where contracts are often terminated following contractor insolvency. If I were devising a construction law exam paper, this classic question would undoubtedly appear.

An unlucky student sitting my imaginary exam paper might start with the recent case of GPP Big Field LLP v Solar EPC Solutions. This case concerned five EPC contracts relating to solar power generation plants in the UK. The contractor became insolvent and GPP (the employer) sued the parent company of the contractor as guarantor/indemnifier of the contractor’s obligations under four of the EPC contracts. Continue reading →

REUTERS | Heinz-Peter Bader
January 2, 2019

My 2019 wish list

Firstly, and most importantly, a Happy New Year to you all!

As regular readers to this blog will know, in our first piece each year Matt or I like to set out our construction law wish list for the coming 12 months. I don’t know whether it’s been caused by over indulging in turkey and Christmas pudding, but I’ve been struggling to come up with my list, so I decided to refer back to the last list I wrote in 2017 for some inspiration. Continue reading →