Monthly Archives: January 2018

REUTERS | Regis Duvignau
January 30, 2018

A New Year’s resolution: read the whole contract before you sign it

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
January 30, 2018

Court orders party to adjudicate final account dispute

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
January 25, 2018

Learning from Carillion: under-bidding in the age of austerity

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
January 24, 2018

Sub-contractor insolvency – what lengths would you go to?

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
January 23, 2018

An update on the 2011 Construction Act amendments

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
January 17, 2018

Ziggurat: the crumbling edifice of surety bonds

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
January 17, 2018

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 →

REUTERS | Yiannis Kourtoglou
January 16, 2018

Court of Session reminds us how tough it is to resist enforcement of adjudicator’s decision

I’ve talked before about the meaning of a kitchen sink claim, where one of the parties has thrown everything (and the kitchen sink) into its claim. The concept also crops up in adjudication enforcement proceedings, when the defendant raises as many arguments as it can to resist enforcement of the adjudicator’s decision. It is how Practical Law described the challenges in Morgan Sindall Construction and Infrastructure Ltd v Westcrowns Contracting Services Ltd, and I’m not going to argue with them. Continue reading →

REUTERS | Dado Ruvic
January 9, 2018

TCC judgment illustrates danger of amending ABI bond

In my previous blog post, (Mis)Understanding Perar, I referred to the practice of employers of amending the standard ABI bond wording to cater for misconceived difficulties in claiming under a performance bond following the insolvency of the contractor. At the time, there was no reported decision on a bond wording that contained such amendments, but we now have one.  Continue reading →

REUTERS | Ilya Naymushin
January 9, 2018

Dangers of using email to serve arbitration (or adjudication) notices

This week I’m discussing Glencore Agriculture BV v Conqueror Holdings Ltd, which is a case arising out of a voyage charterparty for the transportation of corn from the Ukraine to Egypt.

Some of you might be wondering how this is relevant to construction disputes, but I assure you it is, both in respect of arbitration and adjudication. Continue reading →

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