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April to June 2017 case review for construction practitioners

Shakespeare, Hamlet:

“Give every man thine ear, but few thy voice; take each man’s censure, but reserve thy judgment.”

A selection of the more interesting decisions affecting construction and engineering practitioners during the second quarter of 2017.

Adjudication

In Aecom Design Build Ltd v Staptina Engineering Services Ltd, Fraser J held that the adjudicator did not exceed her jurisdiction or breach the rules of natural justice, declining to make a declaration that would have severed parts of her decision.

In Breyer Group plc v RBK Engineering Ltd, the High Court (Chancery Division) dismissed the defendant’s winding-up petition and indicated that payment disputes arising out of construction contracts ought to be dealt with in adjudication or court proceedings.

In Dawnus Construction Holdings Ltd v Marsh Life Ltd, HHJ McKenna enforced an adjudicator’s decision in the claimant’s favour, finding that the defendant had waived its right to challenge the decision by inviting the adjudicator to correct it under the slip rule.

In Mailbox (Birmingham) Ltd v Galliford Try Building Ltd, Coulson J held that the employer’s entitlement to liquidated damages from the first adjudication was final and binding, as was the contractor’s extension of time claim (which was also part of the crystallised dispute), but that the contractor could refer a dispute as to termination to a second adjudicator.

In RCS Contractors Ltd v Conway, Coulson J enforced an oral sub-contract, agreeing with the adjudicator that there was one single agreement, not three separate sub-contracts.

In Structure Consulting Ltd v Maroush Food Production Ltd, O’Farrell J enforced an adjudicator’s decision and declined to grant a stay of execution pending the outcome of separate CPR 8 proceedings.

In Waldeck Associates Ltd v Decomo UK Ltd, Jefford J enforced an adjudicator’s second decision, finding it did not contradict the adjudicator’s first decision.

Construction claims

In GB Building Solutions Ltd v SFS Fire Services Ltd (t/a Central Fire Protection), HHJ Stephen Davies interpreted a JCT sub-contract to establish that practical completion occurred before the date of a flood that affected the project so the sub-contractor was not co-insured under the CAR policy when the loss occurred.

In Glen Water Ltd v Northern Ireland Water Ltd, the Northern Ireland High Court found that a project manager’s letter did not constitute a compensation event under a PFI project agreement.

In Northern Ireland Housing Executive v Healthy Buildings (Ireland) Ltd, the Northern Ireland High Court held that a compensation event under an NEC3 contract should be assessed on the basis of actual rather than forecast cost.

Contract formation

In African Export-Import Bank v Shebah Exploration & Production Company Ltd, the Court of Appeal confirmed that parties who had used industry standard terms as a starting point for a loan agreement, and which had been the subject of detailed negotiations, were not dealing on written standard terms of business. Consequently, the agreement was not subject to the Unfair Contract Terms Act 1977.

In General Nutrition Investment Company v Holland and Barrett International Ltd, the High Court (Chancery Division) held that notices of termination served by an equitable assignee of a trade mark licence agreement were invalid because no notice of the assignment had been given to the licensee.

Contract interpretation

In Dawnus Construction Holdings v Amey LG Ltd, HHJ Keyser QC granted declaratory relief, finding that certain main contract terms were incorporated into the parties’ sub-contract, which meant the parties had a fettered right to litigate disputes.

In Goodlife Foods Ltd v Hall Fire Protection Ltd, HHJ Stephen Davies decided a preliminary issue, finding that the contract’s exclusion clause excluded any claim in negligence. The court also decided that the exclusion clause was reasonable under the Unfair Contract Terms Act 1977 (UCTA).

In Persimmon Homes Ltd v Ove Arup & Partners Ltd, the Court of Appeal held that the wording “liability for any claim in relation to asbestos is excluded” excluded all liability relating to asbestos, including liability arising from negligence. It also confirmed that the contra proferentem rule has a very limited role in interpreting commercial contracts.

In Sutton Housing Partnership Ltd v Rydon Maintenance Ltd, the Court of Appeal overturned a TCC decision, finding that “example” figures in a contract were binding rather than merely illustrative.

In Wood v Capita Insurance Services Ltd, the Supreme Court dismissed an appeal against the Court of Appeal’s findings concerning the true construction of an indemnity in a share purchase agreement. In doing so, it rejected the proposition that Arnold v Britton involved a recalibration of the approach summarised in Rainy Sky v Kookmin Bank and confirmed that on their approach to contractual interpretation, Rainy Sky and Arnold were saying the same thing.

Damages

In Globalia Business Travel SAU (formerly Travelplan SAU) v Fulton Shipping Inc of Panama, the Supreme Court considered the basis of damages for wrongful repudiation of a charterparty, and whether damages should take into account the benefit the shipowners had received (they had sold the vessel for more than would have been available at the end of the charter period).

Insurance

In Gard Marine and Energy Ltd v China National Chartering Company Ltd, the Supreme Court considered whether sub-charterers had breached a safe port warranty in certain time charterparties and the effect of a joint insurance provision in a demise charterparty. It also commented obiter that generally, in cases of co-insurance, insurers will be prevented from pursuing a subrogation claim against a co-insured.

In Leeds Beckett University v Travelers Insurance Company Ltd, Coulson J declined to grant a declaration that the defendant insurer was liable to pay for property damage under the terms of a property insurance policy, deciding that the damage suffered was not “accidental damage” within the meaning of the policy.

In Peel Port Shareholder Finance Company Ltd v Dornoch Ltd, Jefford J dismissed an application for pre-action disclosure under CPR 31.16 of a public liability insurance policy issued by the defendant insurers to their insured.

In Sun Alliance (Bahamas) Ltd and another v Scandi Enterprises Ltd (Bahamas), the Privy Council considered the scope of a contractors all risks (CAR) insurance policy, and confirmed that the insurer was entitled to refuse a claim under the policy.

Litigation

In Bombardier Transportation UK Ltd v Merseytravel, Coulson J granted the claimant’s application to vary the terms of a consent order.

In Findcharm Ltd v Churchill Group Ltd, Coulson J assessed the parties’ costs budgets, finding that the defendant’s Precedent R was “completely unrealistic” and was an abuse of the costs budgeting process.

In Harrison v University Hospitals Coventry and Warwickshire NHS Trust, the Court of Appeal confirmed that when a costs management order has been made, the future (estimated costs) element of the costs budget is binding on a subsequent detailed assessment. However, the incurred costs element of the budget is not binding on a later assessment.

In Ndole Assets Ltd v Designer M&E Services UK LtdCoulson J held that a claims consultancy run by an unregistered barrister was permitted to serve a claim on behalf of a litigant in person (it was not unlawful under section 12 of the Legal Services Act 2007).

In Shaw v Grouby, the Court of Appeal held that the trial judge had not become so involved in the examination of witnesses that he made it impossible for the defendants’ counsel to conduct his clients’ case properly, or lost the ability to reach balanced and objective conclusions on the evidence he heard.

In Spartafield Ltd v Penten Group Ltd, Alexander Nissen QC (sitting as a deputy High Court judge), rejected an application for a non-party costs order under section 51 of the Senior Courts Act 1981, against a director of the defendant company.

Nuisance

In Williams v Network Rail Infrastructure Ltd, Cardiff County Court decided that the defendant had caused an actionable nuisance by failing to take reasonable steps to prevent Japanese knotweed from blighting domestic properties next to its railway embankment.

Party walls

In Lea Valley Developments Ltd v Derbyshire, O’Farrell J held that the court’s inherent jurisdiction allowed it to grant declarations relating to the proper measure of damages under the Party Wall etc. Act 1996 (PWA 1996).

In Lea Valley Developments Ltd v Derbyshire, Adrian Williamson QC (sitting as a deputy High Court judge) made a number of declarations regarding a building owner and adjoining owner’s claims under the PWA 1996.

Professional appointments

In Lejonvarn v Burgess, the Court of Appeal upheld a TCC finding that a professional consultant owed a duty of care in tort for services that she performed gratuitously for her friends.

Settlement

In Vanden Recycling Ltd v Kras Recycling BV, the Court of Appeal gave guidance on the settlement of claims against joint tortfeasors.

Want more?

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

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