Monthly Archives: February 2018

REUTERS |
February 28, 2018

The risk of having your cake and eating it: take care when drafting PCSAs

For several years now, two stage tendering – and with it the use of Pre-Construction Services Agreements (PCSAs) – has been the normal procurement route for major building projects, at least in the London commercial market. The June 2016 referendum vote was widely expected to mark a watershed and to herald a shift back towards a single stage approach, but in our experience that simply has not happened. Main contractors continue to be risk averse and will routinely decline to bid on a single stage basis, other than for “most favoured” clients. Carillion’s recent collapse has only brought the problem into sharper focus and has highlighted the dangers of bidding for work without a full appreciation of the risks involved.

Although widely used, there has until now been little judicial consideration of PCSAs and how they operate in practice. So Jefford J’s recent decision in Almacantar (Centre Point) Ltd v Sir Robert McAlpine Ltd is both welcome and of particular interest. Continue reading →

REUTERS | Rupak De Chowdhuri
February 27, 2018

Adjudicator mentoring, a tale of a chicken and an egg

When I sat down to write this week’s blog, we hadn’t had a published judgment on an adjudication case for a few weeks. That may have changed with Coulson J’s last TCC judgment, which came out today, but I’m leaving that one for Jonathan next week. Instead, you get a short piece on something I feel quite strongly about – adjudicator mentoring. Continue reading →

REUTERS | Faisal Al Nasser
February 27, 2018

Interpretation of PFI contracts: the long and winding road

Do long-term contracts need to be construed in a particular way? Do contracts that require the parties to work together and cooperate over a period of many years have their own special rules? Do they demand special treatment when it comes to questions of contractual interpretation?

Those are some of the questions raised by the judgment in Amey Birmingham Highways Ltd v Birmingham City Council, in which the Court of Appeal had to grapple with the complexities and oddities of a PFI contract. Continue reading →

REUTERS | Peter Cziborra
February 26, 2018

Contract (Third-Party Rights) (Scotland) Act 2017 now in force

The Contract (Third-Party Rights) (Scotland) Act 2017 was passed by the Scottish Parliament on 21 September 2017, it received Royal Assent on 20 October 2017 and it comes fully into force today, 26 February 2018, bringing Scottish contract law into line with the approach adopted in the rest of the UK vis-a-vis third party rights. The 2017 Act is not retrospective, so while the common law rule of jus quaesitum tertio does not now apply to contracts entered into in Scotland from 26 February 2018, it may still apply to contracts entered into before this date unless the contracting parties now contract otherwise.  Continue reading →

REUTERS | Siphiwe Sibeko
February 21, 2018

Harbour View, contractor insolvency and the importance of a guarantee expiry date

One of the interesting features of the recent decision of Coulson J in Ziggurat (Claremont Place) LLP v HCC International Insurance Company Plc is the effect on a guarantee of a contractor becoming insolvent many years after a construction project has been completed. In Ziggurat, the amended ABI model form of guarantee bond had not yet expired. This allowed the employer to make a claim under the guarantee arising out of the contractor’s insolvency, notwithstanding the fact that the contractor’s employment had already been terminated and the project had achieved practical completion.

The employer’s argument in Ziggurat was based on the Court of Appeal decision in Wilson and Sharp Investments Ltd v Harbour View Developments Ltd. The effect of the decision in Harbour View is that the employer’s rights under clauses 8.7 and 8.8 of the JCT contract, which arise upon the contractor’s insolvency, survive notwithstanding the fact the contractor’s employment has already been terminated. In other words, an insolvency event which occurs after termination of the contractor’s employment can be relied on to relieve the employer of payment obligations and to trigger the clause 8.7.4 accounting exercise. This has important implications for a bondsman providing a guarantee in respect of the contractor’s performance on a construction project, where the guarantee responds on an insolvency.  Continue reading →

REUTERS | Maxim Shemetov
February 20, 2018

From CAP to DAP: developments in dispute avoidance

Some of you may recall that back in 2015 I wrote about the Conflict Avoidance Process (CAP) developed by RICS’ Dispute Resolution Service and Transport for London. Since then CAP provisions have been included in the contracts of four major TfL projects, and there have been memoranda of understanding signed on other projects to allow the parties to use CAPs.

There have been over 15 CAP referrals to date, and the feedback received has been positive. Parties have found that the non-binding recommendations made by CAP members during the course of major projects have helped them to make informed judgments on how to proceed and avoid more formal dispute resolution proceedings. Certainly my experience when acting as a CAP member has been that parties have generally embraced the process.

However, since I wrote my blog about CAPs, there have been more developments in dispute avoidance. Continue reading →

REUTERS | Siphiwe Sibeko
February 14, 2018

Construction operations and “hybrid” contracts – an uncertain compromise

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
February 13, 2018

Partial stay as “claimant is now an SPV with no P”

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
February 6, 2018

Has the “rough justice” principle of adjudication been extended too far?

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 →

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