All posts by Practical Law Construction

REUTERS | Bogdan Cristel
August 14, 2019

Homeowners beware – adjudication can catch you out

I did a quick search to see what the internet could tell me about August. Apart from being the eighth month of the year, and one of seven months with 31 days, the Anglo-Saxons called it Weod monath, which means Weed month, because it is the month when weeds and other plants grow most rapidly. It also used to be the month when we celebrated the harvest (that happens later now, thanks to Henry VIII).

August is also the last of the summer months and it is always notoriously quiet in London, with everyone (it seems) taking holiday before the new school term starts.

For the litigators among you, it is also summer recess in the courts, which means there is often very little new to write about. Therefore, I was quite pleased to see Waksman J’s judgment in ICCT Ltd v Sylvein Pinto, which dates from earlier in the year but only recently became available.

If you are unfamiliar with this judgment, it is certainly a case of “homeowners beware”. Continue reading →

REUTERS | Kai Pfaffenbach
August 7, 2019

Quantum meruit – how much is too much?

A developer client recently called me for advice on a new residential development project. My client was in the process of negotiating building contract terms, including the contract sum, with its preferred contractor. In the meantime, both parties were keen for the contractor to start the works in order to keep to the project programme. My client asked if an initial letter of intent could be put in place, with a limited scope of work. He suggested that works beyond this scope could be valued at a later date or, failing that, on a quantum meruit basis.

We often receive similar queries from clients. While we would always suggest that a building contract should be entered into before construction works are commenced, it is relatively commonplace for a letter of intent to be issued while negotiations on the contract terms continue in the background. In practice, parties should be careful not to allow the works to progress beyond the scope agreed in a letter of intent without finalising the terms of the building contract, including the contract sum. This could lead to a claim for payment being assessed outside the contractual framework, as a restitutionary claim for a quantum meruit. Continue reading →

REUTERS | Rodrigo Garrido
July 24, 2019

Retention release?

Build UK recently published a set of minimum standards to be applied when using retentions, as well as their roadmap to zero retentions by 2023. This follows on from Build UK’s non-binding recommendations on contract terms, about which my colleague, Adriano Amorese, recently blogged.

For those of us involved in drafting and negotiating construction contracts, Build UK have also helpfully provided some template drafting for the JCT D&B contract, the JCT D&B sub-contract and the NEC4 ECC.

I applaud Build UK in their vision to have “fair and transparent payment practices” and, ultimately, to help cash flow throughout the construction supply chain where even a small retention could have a big impact on whether a contractor is able to remain trading. However, I’m yet to be convinced that getting rid of retentions is appropriate across the industry.  Continue reading →

REUTERS | Christian Hartmann
July 23, 2019

A natural and ordinary default: Network Rail v ABC

Late last month, judgment was handed down in Network Rail Infrastructure v ABC Electrification Ltd. A decision of Joanna Smith QC, sitting as a deputy judge of the High Court in the TCC, Network Rail is of interest not only as an example of meticulous contractual analysis, but as a case that highlights the manner in which bespoke amendments to an ICE Target Cost contract can have a profound impact on the operation of the Target Cost mechanism.

Continue reading →

REUTERS | Baz Ratner
July 19, 2019

Will new adjudication schemes solve the problem of rising adjudication costs in low value disputes?

Back in 2014, Matt blogged about the issue of whether adjudication is cost-effective for low value disputes. This was following the Court of Appeal’s judgment in Walker Construction (UK) Ltd v Quayside Homes Ltd where, following a low value adjudication over an outstanding payment of £23,400, the parties took the matter to trial and the defendant’s costs alone were an eye-watering £345,800.

This was a very extreme example, but there is no doubt that adjudication costs can be prohibitive for some lower value disputes. There are a variety of reasons for this. Some blame adjudicators spending too much time and not keeping enough control of the process, and others blame the increasing involvement of party representatives, whether lawyers or claims consultants, making the process more complicated than was originally intended. There is no doubt that these are both factors, and some adjudicators need to learn how to keep their fees proportionate when dealing with lower value disputes.

As for the involvement of lawyers and claims consultants, I don’t think that it should be considered a negative as, speaking from an adjudicator’s perspective, they can add great value regardless of the size of the dispute. Furthermore, it has led to a wealth of adjudication jurisprudence which, in turn, has helped to ensure that adjudicators comply with the rules of natural justice (subject to the time constraints), and proceed to reach decisions that are within their jurisdiction and are enforceable. In hindsight, given the wide scope of disputes that can be referred under the Construction Act 1996, the significant involvement of lawyers and claims consultants was always inevitable. Continue reading →

REUTERS | Russell Cheyne
July 19, 2019

Collateral warranties – how far can they go?

Our client, an employer, recently approached us for advice on a building contract and associated collateral warranties entered into a few months before. One of the collateral warranties, entered into between our client and a sub-contractor, seemed to impose unlimited liability on the sub-contractor.

The collateral warranty included none of the express exclusions of liability that appeared in the sub-contract and did not contain any “equivalent rights of defence” or “no greater liability” clauses. It was otherwise in what could be described as a standard market form and included no express provisions which limited it in any way by reference to the terms of the sub-contract.

In the event that there were defects for which the sub-contractor was liable, was it possible that the sub-contractor could have greater liability under the collateral warranty than it had under its sub-contract? Continue reading →

REUTERS | Nacho Doce
July 17, 2019

Extent of jurisdiction to award compensation under section 7(2) of the Party Wall Act 1996

The question of just how wide a party wall surveyor’s jurisdiction is to award compensation to an adjoining owner (under section 7(2) of the Party Wall Act 1996) has been the subject of a considerable amount of debate among party wall surveyors, so every opportunity for judicial scrutiny and clarification should be welcomed. Therefore, the slightly unusual circumstances that unfolded in the 2012 unreported case of Davis v Trustees of 2 Mulberry Walk provides us with some useful guidance in relation to the operation of section 7(2).

Continue reading →

REUTERS | Mukesh Gupta
July 17, 2019

FIDIC Emerald Book – first impressions

On 7 May 2019, FIDIC launched the Conditions of Contract for Underground Works (Emerald Book), the latest in its Rainbow Book series. The Emerald Book is a joint endeavour between FIDIC and International Tunnelling and Underground Space Association (ITA-AITES). This is the first dedicated international standard form for underground works. In this blog, I look at some of the fundamental principles behind the Emerald Book work and provide some first impressions. Continue reading →

REUTERS |
July 10, 2019

Willow v MTD: a successful Part 8 challenge after Hutton v Wilson

I read Matt Molloy’s blog, What happens when adjudicators make a mistake? with interest, as he mentioned the case of Willow Corp Sarl v MTD Contractors Ltd.

Bryan Cave Leighton Paisner acts for Willow in a dispute with MTD in relation to its role as main contractor in the design and construction of the Nobu Hotel, Shoreditch. Over the last 18 months the parties have been involved in a series of adjudications and court hearings, including a Part 7 claim by MTD and a Part 8 claim by Willow.

Last month, judgment was handed down by Pepperall J in relation to MTD’s Part 7 claim and Willow’s Part 8 claim, which were heard at the same time. I think the judgment raises at least two interesting issues, which I see that Matt touched on in his blog:

Continue reading →

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