Monthly Archives: July 2018

REUTERS | Yves Herman
July 24, 2018

Parties can’t adopt a “sit on the fence” approach to quantum

I’ve said before that I like reading Fraser J’s judgments because he has a nice turn of phrase and a penchant for plain talking. This is highlighted in his latest ICI v MMT judgment, where the following caught my eye:

“I do not share the good cheer of Jackson J at such a task.”

He was talking about how, in Multiplex v Cleveland Bridge, Jackson J was asked to value every piece of steel work in Wembley Stadium and had “expressed himself as ready cheerfully to undertake that task”. Fraser J said he was being asked to value over 42,000 metres of pipework installed in a paint manufacturing facility, where a great deal of work had to be redone as the design changed, and where a great deal of work was directly instructed on site. It is perhaps understandable why he didn’t share Jackson J’s good cheer. I’m not sure I would either.

Last time I considered why this piece of litigation “stands as something of an advertisement for adjudication”. Now I’m going to focus on the parties’ use of Scott Schedules. Continue reading →

REUTERS | Thomas Peter
July 18, 2018

Making collateral warranties interesting: the Office Depot case

The trouble with collateral warranties (CWs) is that they aren’t very interesting. Construction lawyers typically overdose on them as trainees and have had enough of them by the time they qualify. A brief foray into the world of third party rights and they are ready to move on to higher things, leaving the following cohort of trainees to pick up the next wave of CWs.

Some sections of the industry tend to pooh-pooh them as well. A vocal corner of the insurance world, with no vested interest to declare (other than a desire to sell latent defects insurance), persists in declaring that CWs “aren’t worth the paper they are written on”. (Like oral agreements, as some wag once said.) Decisions such as Parkwood, which I have previously blogged about, don’t exactly help to enhance their reputation. And the ritual pinhead dancing around net contribution and “no greater liability” clauses only reinforces the notion that CWs are little more than exercises in futility, designed to occupy the time of junior construction lawyers while their more glamorous corporate and finance colleagues get on with “real” work.  Continue reading →

REUTERS |
July 16, 2018

To re-score or not to re-score: procurement challenge of health care services tender

Stuart-Smith J’s judgment in Lancashire Care NHS Foundation Trust & Blackpool Teaching Hospitals NHS Foundation Trust v Lancashire County Council provides helpful guidance on how not to conduct moderation meetings and highlights the defendant’s failure to provide adequate reasons for its decision making. What it does not provide is a finding on who deserved to win the contract.

The judgment follows an expedited trial on a procurement challenge brought under the Public Contracts Regulations 2015. The court found that the decision to award a £104 million contract for the provision of community services under the Healthy Child Programme to Virgin Care Services Ltd should be set aside.

This post looks at the lessons in process and record keeping, and considers why the court set aside the decision without carrying out a rescoring exercise. Continue reading →

REUTERS | Thomas Peter
July 11, 2018

The reverse charge: shaking up VAT on construction services

1 October 2019 will see a significant shake-up of the VAT rules in the construction sector. New rules will come into force on that date which will, in many cases, require the recipient of the supply of construction services, rather than the supplier, to account for VAT on the supply. Large and small businesses making standard-rated or reduced-rated supplies of construction services may be impacted. There may be cash flow implications, which could be positive or negative, for the businesses concerned.

HMRC is to issue guidance on the new rules. Continue reading →

REUTERS | Alexander Kuznetsov
July 10, 2018

Multi-party disputes and co-mediation

As full-time mediators, we often co-mediate. In this post, we discuss why and how parties are using co-mediation.

Mediation and multi-party disputes

For all the well-known reasons, parties to any dispute will want to consider mediation.

Where there are multiple parties, such as businesses who have contributed design, work or materials to the same project or homeowners all affected by the same event, the desire to settle is obvious. A greater number of parties will bring greater risk: each party’s legal costs are likely to be increased by the fact that they are fighting on multiple fronts. At trial one party may ultimately be ordered to pay everyone’s costs.

Often no-one dares attempt unilateral settlement for fear of being brought back into the party by way of contribution proceedings by the remaining parties. Drafting a watertight Calderbank offer is challenging. The parties therefore all go forward in the litigation together. Continue reading →

REUTERS | Dominic Ebenbichler
July 10, 2018

Appeals on a point of law in arbitration and adjudication

One of the recurring themes on this blog is looking at what happens in arbitration and drawing parallels with what happens in adjudication. It is something that really interests me as I act as both adjudicator and arbitrator.

This week is no different and I am looking at the judgment in Fehn Schiffahrts GmbH & Co KG v Romani SPA, where the Commercial Court allowed an appeal on a point of law under section 69 of the Arbitration Act 1996 and remitted the award back to the three-person tribunal. Continue reading →

REUTERS | Shutterstock
July 4, 2018

Losing out on loss of bargain when terminating in reliance upon contractual rights

In the wake of the Carillion insolvency, many sub-contractors are likely to be investigating their rights to terminate their contracts with a now defunct main contractor. Looking for a clean break, they may be tempted by the explicit termination rights that standard form building contracts often contain, and that may be deployed in the event of main contractor insolvency.

On the surface, terminating appears as simple as writing to the liquidator citing the relevant provision, and declaring the contract to be at an end. However, a potential trap awaits the unwary. Unwitting sub-contractors may inadvertently forfeit any right to claim loss of bargain damages, that is, the loss of profits that would have been made had the contract carried through to completion. This is potentially a highly lucrative right, particularly if the sub-contractor is at the start of a multi-year project that was expected to generate significant future earnings.

This result arises from the case of Phones 4U Ltd (in administration) v EE Ltd.  Continue reading →

REUTERS | Amir Cohen
July 4, 2018

The costly business of ignoring interim assessments and agreed valuations: ICI v Merit Merrell Technology

Valuing a contractor’s work on a complex project is rarely an easy task. During the works, parties to a construction contract commonly devote significant resources to ensuring that the work is properly valued. These valuations are often carried out by people with close knowledge of the project, and under the NEC form of contract certified by an impartial project manager.

Given those efforts, can interim assessments and agreed valuations made during the course of the works be re-assessed and re-valued subsequently by the courts? If so, then what evidential weight should be given to these interim assessments and agreements when carrying out a subsequent valuation? Fraser J considered both of these questions in the quantum judgment in Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd. Continue reading →

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