REUTERS | Tobias Schwarz
REUTERS | Tobias Schwarz

Many of you reading this will no doubt at some point have visited the Rolls Building in London, the home of the Chancery Division, the Admiralty and Commercial Courts, and the TCC. It was opened by the Queen in December 2011, but it would have been open somewhat earlier if the project had not been delayed. The main contractor, Carillion, blamed its sub-contractors (including Emcor) for the delay. In April 2016, Miss Recorder Nerys Jefford QC (as she was then) heard a trial of two preliminary issues. Continue reading

REUTERS | Radu Sigheti

While speaking to a client last week, I had an odd feeling of deja vu; I’m sure you have all experienced it at some point. I was listening to a client recalling a recent conversation with their construction director.

Currently at the end of the first stage of what they had hoped would be a two-stage design and build (DB) project, where the contractor would shoulder the bulk of the risk, they were now struggling to get the contractor to agree the price and terms for the main contract.

Feeling rather backed into a corner but reluctant to ditch the contractor at this stage and start again, the director had decided that the best way forward was to switch to construction management (CM). Continue reading

REUTERS | Anindito Mukherjee

Gosh, O’Farrell J’s judgment in Mailbox (Birmingham) Ltd v Galliford Try Construction Ltd is enough to make your head hurt.

While the adjudication enforcement principles appeared relatively simple, the court had to grapple with the question of whether Mailbox had the right to refer a dispute to adjudication in the first place. That means there is a lot in the judgment about legal and equitable assignment (had Mailbox assigned the benefit of the building contract to its funder, and then taken a re-assignment of those rights, or not), so reading it was a bit like being back studying law! Continue reading

REUTERS | Navesh Chitrakar

The Court of Appeal’s judgment in Carillion Construction Ltd v Emcor Engineering Services Ltd and another is an important decision concerning a standard form construction contract, the JCT Domestic Sub-Contract (known as DOM/2). The court confirmed an earlier TCC decision that delays can only be calculated by extending the period of time allowed for practical completion, not by creating a new period.

The effect of this decision is that contracting parties to the DOM/2 will be faced with uncertainty as to the commercial implications of a delay that arises after the date for completion has already passed. One party is likely to receive a windfall in this scenario, but it will be nearly impossible to predict in advance who this will be.

Now that the commercial implications of the clause have been highlighted, the JCT may well reconsider the manner in which delays are calculated so as to bring into alignment the period of culpable delays with the period of liability. Continue reading

REUTERS | Thomas Peter

The process leading to the 2017 edition of the main ACE form of appointment and related documents started two or three years ago. It arose in part because of a persistent market response that the 2009 editions (as revised) were too consultant friendly and perhaps not easy to use in terms of layout and style.

We had to come up with a solution that was logical, user friendly and allocated risk in a balanced way – normally placing it with the party best able to manage the risk in question; or, in keeping with the Government Construction Strategy, managed in a way that requires the parties to collaborate in identifying risks early and in finding an appropriate solution. We needed also to reflect modern trends such as BIM and Soft Landings.

What follows are a few examples to illustrate how we have sought to achieve this.  Continue reading

REUTERS | Srdjan Zivulovic

At the end of last month, I blogged about payment and pay less notices following Alexander Nissen QC’s judgment in Surrey and Sussex Healthcare NHS Trust v Logan Construction (South East) Ltd. This blog is also about payment and pay less notices, but this time I’m looking north of the border, to the Sheriff Appeal Court’s judgment in Trilogy Services Scotland Ltd v Windsor Residential. Continue reading

REUTERS | Bob Strong

This, the penultimate post in my series on variations, discusses valuation. In particular, the differences in approach construction contracts take to valuing variations and the implications of this, both during the project and in the assessment of tenders.

Construction contracts adopt two quite different approaches to the pricing of variations:

  • Using rates derived from a breakdown of the contract sum.
  • Using a separate schedule of rates or prices.

This distinction is often overlooked (or not fully appreciated), but it lies at the heart of a number of problem situations that arise in the valuation of variations.

Firstly, I will outline the two different methods to pricing variations before considering the implications of the distinction and the problems each gives rise to. Continue reading

REUTERS | Kacper Pempel

The beauty of an on demand bond or standby letter of credit is that the beneficiary can call the security instrument and pocket the money without having to prove that the contractor (or sub-contractor) is actually in default or owes the money. It is a separate, independent agreement between the beneficiary and the provider of the security, often a bank, which creates a primary obligation on the bank to pay out on first demand. Continue reading

REUTERS | Toby Melville

Given the “draconian consequences” of getting the timing under the Construction Act 1996 wrong, I can only imagine what a sinking feeling a party must experience when it realises that it hasn’t served a payment or pay less notice on time. In Kersfield Developments (Bridge Road) Ltd v Bray and Slaughter Ltd, it is likely to have happened to the employer’s agent on a Friday evening one day late last summer.
Continue reading