REUTERS | Toby Melville

Construction is an expensive business

The song says “When the going gets tough, the tough get going. In the construction industry, this means “When the going gets tough, the tough get suing”. There is no doubt that things are tough at present.

This translates into every day life in a number of ways:

More disputes

We have previously written about the increase in the number of adjudications and the increase in the amount of high court litigation. There are no signs of this abating. People are busy either advising at the pre-action stage or dealing with disputes; even the TCC has reported an increase in business and a lengthening of the time between issuing an application and appearing before a judge, even on adjudication enforcement applications.

Cash flow is king

As the Specialist Engineering Contractors’ Group (SEC Group) keeps telling us, small and medium sized contractors are struggling in the current economic downturn. They want greater protection from the consequences of upstream insolvency (see their suggested amendments to the LDEDC Bill 2008).

Shortened payment periods in the public sector

The Government and the Olympic Delivery Authority have tried to help things along, by shortening payment periods (see blog post). However, firms are still becoming insolvent.

Parties are more cost conscious

In recent weeks, the TCC has dealt with two cases where the parties sought to recover the costs they incurred in complying with the pre-action protocol. Although the circumstances of both cases were different (in Bovis v Kendrick, there was an application under section 9 of the Arbitration Act 1996 to stay the court proceedings to arbitration; in Roundstone v Stephenson, there was an application to set aside judgment in default of defence), in both instances the court ordered one party to pay the costs thrown away.

What next?

Without a crystal ball, it is difficult to predict what will happen over the next few months.

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