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April to June 2016 case review for construction practitioners

Edmund Burke, Speech on conciliation with America:

“I am not determining a point of law; I am restoring tranquility.”

During the second quarter of 2016 we have seen a number of interesting decisions affecting construction and engineering practitioners.

Notable adjudication cases from April to June 2016

In Bouygues (UK) Ltd v Febrey Structures Ltd, Mr Jonathan Acton Davis QC declined to grant the declaratory relief sought, instead concluding that the contractor had failed to serve a payment or pay less notice in time. This meant the sub-contractor was entitled to the sums it had applied for.

In J Murphy & Sons Ltd v W Maher and Sons Ltd, Sir Robert Akenhead granted declaratory relief, confirming that a dispute arising out of the parties’ sub-sub-contract could be referred to adjudication.

In Stellite Construction Ltd v Vascroft Contractors Ltd, Carr J held that the adjudicator did not breach the rules of natural justice, but he did exceed his jurisdiction, so that part of his decision was severed.

Other notable cases from April to June 2016

In AMEC Foster Wheeler Group Ltd v Morgan Sindall Professional Services LtdEdwards-Stuart J decided preliminary issues relating to liability for ongoing projects under a business sale agreement that transferred a construction business from one contractor to another. The court also decided the scope of a certificate of making good defects.

In BNM v MGN Ltd, the Senior Costs Judge set out the reasons for halving the sums allowed as reasonable on a line by line assessment, on the basis that they were disproportionate.

In Cape Distribution Ltd v Cape Intermediate Holdings plc and Cape Intermediate Holdings plc v Aviva plc, the court held that a liability insurer could not bring a subrogated claim in the name of one insured party against its co-insured because the insurable interests of the co-insureds under the policy were coterminous.

In Carillion Construction Ltd v Woods Bagot Europe Ltd, Miss Recorder Nerys Jefford QC held that under a sub-contract any extension of time should run contiguously from the end of the existing period for completion. Further, that the contractor’s liability for liquidated damages was not extinguished by a supplemental agreement under which it acknowledged that it was in delay, agreed not to claim an extension of time and accepted an adjustment to the contract sum to account for liquidated damages that were payable.

In COD Hyde Ltd v Space Change Management Ltd, the court declined to grant an injunction restraining a building contractor from issuing a winding-up petition against its employer.

In Globe Motors Inc v TRW Lucas Variety Electric Steering Ltd, the Court of Appeal indicated, in obiter comments, that including an anti-oral variation clause in a contract would not prevent subsequent variation of the contract orally or by conduct.

In Hayfin Opal Luxco 3 SARL v Windermere VII CMBS plc, the court held, obiter, that whether a clause was a penalty cannot depend upon the ability of the particular contract-breaker to pay the specified amount, or the source from which he has to pay.

In MWB Business Exchange Centres Ltd v Rock Advertising Ltd, the Court of Appeal held that a clause requiring contract variations to be in writing and signed did not prevent a valid variation by oral agreement, thus endorsing its obiter comments in Globe Motors v TRW.

In PST Energy 7 Shipping LLC v OW Bunker Malta Ltd, the Supreme Court dismissed an appeal, upholding a Court of Appeal decision that a bunker supply contract was not a contract to which the Sale of Goods Act 1979 applied. As a result, the supplier could recover the price under the express terms of the contract at common law. The Supreme Court commented (obiter) that, if the SGA had applied, previous Court of Appeal authority that section 49 was an exhaustive code of the supplier’s rights to claim for the price (leaving only a claim for breach of contract), was wrongly decided.

In Reveille Independent LLC v Anotech International (UK) Ltd, the Court of Appeal held that the parties had waived the prescribed mode of acceptance.

In Ro-Bal Steel Fabrications Ltd v G Jones Site Services Ltd, the court dismissed a party’s winding-up petition, as there was a dispute over whether the Construction Act 1996 applied to the parties’ contract.

In Timothy Taylor Ltd v Mayfair House Corporation, the court held that a landlord was acting unreasonably, had breached its covenant for quiet enjoyment and was in derogation from grant by the manner in which it carried out rebuilding works.

In Transocean Drilling UK Ltd v Providence Resources plc, the Court of Appeal upheld knock-for-knock indemnities applicable to both parties to a commercial contract, with the result that a contractor succeeded in excluding liability for consequential loss as defined in the contract.

Further information

For details of previous judgments, see our January to March 2016 case review. Public procurement decisions are detailed in the Public procurement case tracker.

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