REUTERS | Regis Duvignau

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

REUTERS | Amit Dave

It’s over a year since the second editions of the Rainbow Suite were published and the recent conferences in London and the Middle East provided a forum to reflect on the changes. Indeed, this was reflected in the respective agendas. There were sessions dedicated to responding to commentary on the second editions and also to comparisons with other “international” standard forms. Errata for the Second Editions were also published in December 2018, picking up on largely typographical points.

One year on, the conversation has changed from considering the changes from an academic, theoretical perspective to whether and how they might be applied in a more practical context. Understandably, given the extent of the changes in the second editions (particularly when compared, for example, to the “light touch” approach adopted by NEC in the NEC4 update, and its subsequent round of amendments), it is still early days. However, there are indications that the first contracts based on the second editions have been awarded – or at least are being seriously considered for new projects. For most, though, the benefits of greater clarity and certainty that the drafters have sought to provide are still being evaluated against the consequential increase in complexity and decrease in flexibility, and the advantages of using the tried-and-tested 1999 forms.  Continue reading

REUTERS | Ilya Naymushin

A few weeks ago I was finishing a paper on fraud, which was based on a SCL talk that I’d given a little while before. Some of you may have been there. I have to confess that it is a lot easier blogging than it is writing one of those papers: the word count is a killer! Anyway, I digress. The reason I’ve mentioned my paper is because, just as I was getting to the end of it, Alexander Nissen QC’s judgment in BM Services Inc Ltd v Greyline Builders Ltd became available and fraud was a key issue in the enforcement proceedings that he dealt with.

I thought I’d better take a look and share my thoughts on what I think is a good example of the courts applying established guidance in cases of fraud and adjudication. Think cases like SG South v King’s Head Cirencester, Speymill Contracts v Baskind, GPS Marine v Ringway and, most recently, Gosvenor v Aygun, which all tell us that there is a difference between an issue that was or could have been decided in the adjudication, and an issue raised for the first time in enforcement proceedings.

There is also some interesting stuff in there about adjudicators’ fees and it is, I think, a good example of the TCC’s continuing supporting for adjudication. Continue reading

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I read with interest Paul Bury’s blog, which touched on the case of Zagora Management Ltd v Zurich Insurance plc as it relates to claims against approved inspectors. I’m interested in the case for a different reason: it’s one of the first superior court decisions, post-Grenfell, that deals with the liability consequences of high-rise properties containing combustible cladding.

As is now etched in our collective memory, on 14 June 2017, a fire broke out in Grenfell Tower, in West London, resulting in the tragic loss of life. Since the time of this event, many owners of high-rise buildings across the UK have learned that their cladding contains combustible components, which may include aluminium composite panels with combustible cores (ACPs), phenolic insulation, or a wide range of other components – or is missing cavity barriers or other fire protection measures.

A challenging question that owners and contractors may ask their legal advisors is the extent to which the (potentially very substantial) cost of removing and replacing the combustible components, or rectifying these other issues, can be recovered. Since Grenfell, claims of this nature have been (and are being) made against a variety of participants including contractors, subcontractors, consultants, approved inspectors and insurers. Continue reading

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The Court of Appeal’s judgment in S&T v Grove is still the most talked about construction case almost four months after it was handed down, which has much to do with the questions that parties and representatives raised about its practical implications. I discussed some of these implications shortly after the judgment was handed-down, and in particular the Court of Appeal’s finding that:

“… both the Act and the contract must be construed as prohibiting the employer from embarking upon an adjudication to obtain a re-valuation of the work before he has complied with his immediate payment obligation.”

I said at the time that:

“… it is quite clear that, despite section 108 providing a party with the right to refer a dispute to adjudication ‘at any time’, the Court of Appeal has found that there is a fetter on this right, namely that where an employer has not paid the notified sum in accordance with section 111, that employer is unable to refer a dispute concerning the correct value of the works to adjudication.”

In M Davenport Builders v Colin and Julia Greer, Stuart-Smith J has applied S&T v Grove, but with a twist that arguably dispels the conclusion that there is a fetter to the right to adjudicate. Continue reading

REUTERS | Thomas Peter

Construction and engineering contracts often contain provisions specifying that, within a particular time, one party (traditionally the contractor) must notify the other (the employer and/or the contract administrator) of a claim or the likelihood that it might advance a claim. Sometimes these “time-bar” notice provisions are elevated beyond being merely an obligation, to the status of a condition precedent to being able to pursue a successful claim. If such provisions are enforceable, they can be severe: a failure to serve the required notice in the required timescale will be fatal, regardless of the merits of the underlying claim. A well-known example of such a provision is found in clause 20.1 of the 1999 FIDIC contracts.

Unsurprisingly, many contractors have found themselves needing to construct nuanced arguments to get around the “trap” of clause 20.1. As the default final dispute resolution mechanism in FIDIC contracts is arbitration, reported court decisions giving guidance on the specific language used are rare, although some (but most definitely not all) other widely-used standard forms contain similar provisions. There are, nonetheless, a stock of standard arguments that are typically deployed.  Continue reading

REUTERS | David Gray

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

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 & KirklandO’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

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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