REUTERS | Siphiwe Sibeko

The Construction Act 1996 has recently come in for some stick. Not, in this particular case, because of its operation, but because of the exceptional circumstances in which it does not apply. This stick is revived, previously-wielded stick, but stick all the same.

In the latest Severfield decision of November 2017, Severfield (UK) Ltd v Duro Felguera UK Ltd (No. 2) [2017] EWHC 3066 (TCC), Coulson J reaffirmed his criticism of the “misconceived” basis on which Parliament justified the exclusion of certain industries from the provisions of the Construction Act and of the injustices which may flow from that exclusion.  Continue reading

REUTERS | Ammar Awad

Coulson J has a certain turn of phrase, one that will be sadly missed from TCC judgments when he moves up to the Court of Appeal next month. My title is borrowed from the discussion on whether there ought to be a stay execution, hidden away at paragraph 71 of his judgment in Equitix ESI CHP (Wrexham) Ltd v Bester Generacion UK Ltd. It made me smile when I came across it. Continue reading

REUTERS | Christian Hartmann

I haven’t blogged about alleged breaches of natural justice for a while, so here goes with the first reported judgment from Joanna Smith QC, who was sitting as a deputy High Court judge in the TCC. In my view, the judgment in Victory House General Partner Ltd v RGB P&C Ltd is very well written: it is clear, concise and very readable.

Before diving into the natural justice issues, I should just mention the warning about using Part 8, a warning that Jefford J first gave last year in Merit Holdings Ltd v Michael J Lonsdale Ltd. I looked at that judgment at the time and note Victory House is another example of a case where the TCC is trying to crack down on what the judges perceive to be an abuse of the Part 8 process. Continue reading

REUTERS | Regis Duvignau

It’s the time of year when many of us may be looking to adopt good habits for our New Year’s resolutions. For those tasked with reviewing and agreeing contract documents – in particular the technical and pricing documents – the recent decision of Coulson J in Dynniq UK Ltd v Lancashire County Council may provide some timely inspiration.

The case involved interpreting wording within pricing documents of a term service contract, and afforded Coulson J the opportunity to remind us of the established principles of contract interpretation.

However, what surprised me when reading this case was not these principles – or the court’s application of them – but the fact that this dispute had come so far in the first place. This is especially given that the TCC found that the proper interpretation “[does not give] rise to any real difficulties at all” and that there is “no lack of clarity in the words” which were at issue.

This got me thinking about the importance of fully appreciating the wording used in the pricing documents and other technical annexures to a contract (even where the contract is based on an industry standard form) and the effect this may have on the contract’s operation. Continue reading

REUTERS | Dominic Ebenbichler

There is a well-known saying, “beggars can’t be choosers”, which is generally accepted to mean that sometimes you have to accept a situation because it is the only one available to you. I feel a bit like that discussing a recent Fraser J extempore judgment, Meadway Private Clients (Liongate) Ltd v Wildacre Ltd.

What caught my eye in the Lawtel report I was sent was the order to commence an adjudication. Continue reading

REUTERS | Carlo Allegri

With the recent collapse of the last pillars holding Carillion’s crumbling edifice upright, the usual cries of “how did this happen” have started to echo across the national press.

One suggestion is that Carillion may have been guilty of under-pricing jobs to win work and fill its pipeline. Having had no real dealings with Carillion I would not want to speculate on the cause of its woes. However, deliberate under-pricing does represent something of a systemic issue in the industry, particularly in the public sector and in utilities where procurement regulations apply.

The procurement regulations are designed to ensure that work is placed through an open and competitive market. In an efficient market, economists tell us, the price should be right. If so, how do we end up with a situation where systemic under-pricing is a “thing”? Continue reading

REUTERS | Ilya Naymushin

Over the past few months, a number of large construction companies have been making headlines for facing severe financial difficulties. However, sub-contractor insolvency can also cause considerable problems for other parties on construction projects who have contractual relations with that party.

In Multiplex Construction Europe Ltd v Dunne, the main contractor (Multiplex) took steps to try to secure the solvency of its sub-contractor (DBCE), by advancing DBCE £4 million so it could see the project to completion. The fact that Multiplex advanced such a significant sum demonstrates the enormity of sub-contractor insolvency, as does the willingness of DBCE’s owner to stand as surety in his personal capacity for the sums advanced.

The case is a timely reminder of the care that parties should take when entering into suretyship agreements, particularly when such agreements are capable of amounting to a contract of indemnity, and the consequences that thereby follow for the surety. Continue reading

REUTERS | Grigory Dukor

Some of you may recall that in November last year I blogged about the government’s consultation on the 2011 amendments to the Construction Act 1996. Not the most exciting topic I admit, but important nevertheless. The consultation closed last Friday (19 January), and I hope as many of you as possible had your say.

I was recently a member of a panel at an event concerning the consultation, which was organised by Gowling WLG and Practical Law, and expertly chaired by Paul Darling OBE QC.

Therefore, this week I am going to discuss some of the issues raised at the event about the 2011 amendments. However, before doing so, many of you will be aware that the government ran a parallel consultation on the practice of cash retentions under construction contracts and, as this was also discussed by the panel, I thought it would be a useful place to start. Continue reading

REUTERS | Tobias Schwarz

I read the decision in Ziggurat with some incredulity. I hadn’t intended to trespass on Karen Spencer’s territory, and overall I’d agree with her conclusion that the amendments made to the ABI form seem to have confused rather than clarified matters. I’d also agree with Roddy Cormack’s comment that more radical surgery is needed if the employer wishes to secure earlier payment following the contractor’s insolvency. But I did want to offer some thoughts on what the decision tells us about wider issues in the surety bonding market. Continue reading

REUTERS | Clodagh Kilcoyne

Retention of title revisited

We all have our favourite points when it comes to contract drafting. Some people are busy thinking up solutions to the conundrum of concurrent causes of delay. Others focus on how reasonable skill and care limitations can survive in complex contracts.

Some purchasers of construction services have a policy of not paying out more than the value received. One of the ways of managing this is to make sure that they own whatever they have paid for or, better still, whatever has been brought to the site.

The problem is that, at the other end of the supply chain, there will be somebody who has the opposite (but equally worthy) aim. Suppliers don’t want to part with ownership of their products until they have been paid. Continue reading