Monthly Archives: June 2022

REUTERS | Stephen Hird
June 29, 2022

FTH v Varis Developments – adjudication and insolvency meet head on again

In its decision in Bresco v Lonsdale, the Supreme Court confirmed that insolvent companies have the statutory and contractual right to adjudicate construction disputes, even if that claim is affected by insolvency set-off.

While Lord Briggs found overarching compatibility between the adjudication and insolvency regimes, that wasn’t to dismiss the difficulties arising between them, particularly those raised by insolvency set off. It is now settled law that these difficulties are not matters of jurisdiction: rather, they are factors for the courts to consider if the adjudication reaches enforcement stage on a case-by-case basis.

FTH Ltd v Varis Developments Ltd is the latest in a series of decisions (both before and after Bresco) that illustrates how the courts are grappling with insolvent parties’ applications for summary judgment to enforce adjudication decisions in their favour, this time in the context of a company voluntary administration (CVA). Continue reading →

REUTERS | Toby Melville
June 21, 2022

Adjudicator reaches decision in “procedurally unjust manner” so not enforced

Sometimes it feels that, as an adjudicator, you are damned if you do and are also damned if you don’t. In this case – Liverpool CC v Vital Infrastructure Asset Management (Viam) Ltd (In Administration) – it was both what the adjudicator did do and what he didn’t do that led the judge to issue a declaration that his decision was unenforceable.

But how did the judge, HHJ Stephen Davies, arrive at this point? Continue reading →

REUTERS | Jim Young
June 15, 2022

The obligation to pay a notified sum where the contractor is insolvent

The general rule created by section 111 of the Construction Act 1996 is well known: in the absence of a pay less notice, the notified sum is to be paid without set-off or deduction.

Although this is capable of causing problems for an employer in the short term, any overpayments can usually be corrected in future payment cycles (whether interim or final) or by a true value adjudication (following S&T (UK) Ltd v Grove Developments Ltd).

But what about when the contractor is or becomes insolvent? The concern for an employer here is obvious: money paid over to an insolvent contractor is liable to disappear into the general fund and be distributed at pennies in the pound, leaving the employer unable to recover the full value of any overpayment or cross-claims. There may not be any future payment cycles and, even if there are such cycles or a true value adjudication, it may be impossible to make a full recovery. Unlike the normal scenario, it will not simply come out in the wash.

What, therefore, can an employer do? Continue reading →

REUTERS | Toby Melville
June 14, 2022

Tort claims for economic loss on construction projects – Avantage v WSP

Construction claims usually arise out of a breach of contract, because it is easier to establish liability than under a tortious claim. However, where there is no contract or the contractual limitation period has expired, or a contracting party is insolvent or is uninsured, parties may have no choice but to bring a claim in tort.

To succeed in an action for negligence at common law, it is well established that a claimant must prove that the defendant owes it a duty of care, that the defendant has breached that duty, and that such breach caused the claimant to suffer loss.

But how do the courts apply these rules where there is a claim in tort for pure economic loss in the context of complex construction projects involving carefully negotiated construction contracts? Continue reading →

REUTERS |
June 13, 2022

Episode 11 of The Construction Briefing podcast

We have published the latest episode of our podcast, The Construction Briefing, featuring the Practical Law Construction editorial team.

This month, the team refer to further building safety developments, and also:

The Construction Briefing is an alternative way of learning about key developments in construction law, with our editorial team discussing some of the wider issues those developments raise.

You can subscribe wherever you get your podcasts (like Apple Podcasts, Google Podcasts and Spotify), enabling you to download and listen to all episodes on the go on your phone. Alternatively, you can use our audio and video RSS feed to access the latest edition as soon as it is published.

To give feedback or suggest topics for future episodes, please use Ask to contact us.

REUTERS | Tom Brenner
June 8, 2022

JCT Project Bank Account documentation – what’s changed in 2022?

In 1999, the first project bank account (PBA) was used on a Ministry of Defence project. Since that time they have been successfully used on a number of high profile major projects, for example Crossrail.

The government has promoted their use over the years and, since 2010, it has mandated their use on all government projects. The government’s 2020 Construction Playbook confirms that they should be used “unless there are compelling reasons not to”. Continue reading →

REUTERS | Eddie Keogh
June 8, 2022

TCC dismisses Part 8 claim concerning validity of pay less notice

While I may sound like a turkey voting for Christmas, I acknowledge that sometimes (and only sometimes), it makes sense for parties to go straight to the TCC rather than adjudicating. In particular, where a dispute turns on the validity of a notice and there is little disputed witness evidence, then the parties may well be best off seeking a Part 8 declaration, particularly where there are significant sums at stake.

Although the case that I want to discuss this week, Advance JV and others v Enisca Ltd, involved an adjudication followed by a Part 8 application, it is difficult to see the utility of the adjudication. However, I digress because the case really concerns the thorny issue of pay less notices, and the judgment contains some important lessons, particularly for paying parties. Continue reading →

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