REUTERS | Aly Song

January to June 2013, a half year case review

Aristotle:

“How many a dispute could have been deflated into a single paragraph if the disputants had dared to define their terms.”

The first half of 2013 has seen a number of important decisions affecting construction and engineering practitioners:

  • Arcadis UK Ltd v May and Baker Ltd (t/a Sanofi).
  • Aspect Contracts (Asbestos) Ltd v Higgins Construction plc.
  • Atkins Ltd v Secretary of State for Transport.
  • Aviva Insurance Ltd v Hackney Empire Ltd.
  • Cadogan Petroleum Holdings Ltd v Global Process Systems LLC.
  • Close Brothers Ltd v Ridsdale and others.
  • Farrelly (M&E) Building Services Ltd v Byrne Brothers (Formwork) Ltd.
  • Hamid v Francis Bradshaw Partnership.
  • Henry v News Group Newspapers Ltd.
  • Hunt and others v Optima (Cambridge) Ltd and others.
  • John Grimes Partnership Ltd v Gubbins.
  • Kudos Catering (UK) Ltd v Manchester Central Convention Complex Ltd.
  • Manolete Partners plc v Hastings Borough Council.
  • Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (trading as Medirest).
  • Mueller Europe Ltd v Central Roofing (South Wales) Ltd.
  • Murray and another v Neil Dowlman Architecture Ltd.
  • National Merchant Buying Society Ltd v Bellamy and another.
  • Nulty and others v Milton Keynes Borough Council.
  • R (Prudential plc and another) v Special Commissioner of Income Tax and another.
  • Telford Homes (Creekside) Ltd v Ampurius Nu Homes Holdings Ltd.
  • Transport for Greater Manchester v Thales Transport & Security Ltd.
  • TSG Building Services plc v South Anglia Housing Ltd.
  • West and another v Ian Finlay & Associates.
  • Westfields Construction Ltd v Lewis.
  • Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers Ltd.
  • Willmott Dixon Housing Ltd v Newlon Housing Trust.
  • WSP Cel Ltd v Dalkia Utilities Services plc.
  • Yam Seng PTE Ltd v International Trade Corporation Ltd.
  • Zennstrom and another v Fagot and others.

In Arcadis UK Ltd v May and Baker Ltd (t/a Sanofi), Akenhead J in the TCC held that there was no breach of the rules of natural justice when the second adjudicator considered the first adjudicator’s decision. The second adjudicator’s decision was enforced.

In Aspect Contracts (Asbestos) Ltd v Higgins Construction plc, Akenhead J held that there is no implied term that an unsuccessful party in an adjudication under the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649) (Scheme for Construction Contracts 1998) is entitled to have the dispute determined by litigation and to a repayment of monies paid, if those court proceedings are successful.

In Atkins Ltd v Secretary of State for Transport, Akenhead J in the TCC rejected a challenge to an arbitrator’s decision refusing relief under the compensation event provisions of a contract based on the NEC3 Engineering and Construction Contract (ECC).

In Aviva Insurance Ltd v Hackney Empire Ltd, the Court of Appeal held that interim payments made to a contractor did not discharge the guarantee because the payments were separate to the building contract benefitting from the performance bond.

In Cadogan Petroleum Holdings Ltd v Global Process Systems, the High Court considered whether the claimant seller was entitled to keep instalment payments and to receive from the buyer sums outstanding at the date of termination of the sale agreement.

In Close Brothers Ltd v Ridsdale and others, the High Court considered, among other things, the effect of variations to arrangements under a facility letter. It had to determine whether the variations created an entirely new obligation outside the purview of a guarantee of the obligations under the facility letter or were merely amendments of the existing obligations.

In Farrelly (M&E) Building Services Ltd v Byrne Brothers (Formwork) Ltd, Ramsey J in the TCC held that the adjudicator had not breached the rules of natural justice when he interpreted the compensation events clause in the parties’ NEC3 sub-contract.

In Hamid v Francis Bradshaw Partnership, the Court of Appeal held that a signatory to a contract was contracting personally even though he had signed the letter above and below a name which was the trading name of a limited company.

In Henry v News Group Newspapers Ltd, the Court of Appeal unanimously allowed an appeal against a decision by the Senior Costs Judge, ruling that there was good reason to depart from the appellant’s approved costs budget, in circumstances where the appellant’s actual costs exceeded her budget.

In Hunt and others v Optima (Cambridge) Ltd and others, Akenhead J in the TCC held a property developer landlord liable for breach of sale agreements and repairing covenants. In addition, the architect was in breach of its duty of care to the purchasers.

In John Grimes Partnership Ltd v Gubbins, the Court of Appeal considered whether damages for breach of contract were too remote, where they were for losses arising out of a fall in the market value of property.

In Kudos Catering (UK) Ltd v Manchester Central Convention Complex Ltd, the Court of Appeal gave a restrictive interpretation to a clause excluding all liability for loss of profits in a fully-negotiated commercial contract.

In Manolete Partners plc v Hastings Borough CouncilRamsey J in the TCC held that a council was liable to pay compensation under section 106 of the Building Act 1984 (BA 1984), as a result of the exercise of the council’s statutory powers under section 78 of the BA 1984 restricting access to a pier because of concerns for public safety.

In Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (trading as Medirest), the Court of Appeal overturned the High Court’s decision by holding that a customer was not subject to an implied term to refrain from exercising a contractual discretion in an arbitrary, capricious or irrational manner where the discretion consisted of a decision whether to exercise an absolute contract right.

In Mueller Europe Ltd v Central Roofing (South Wales) Ltd, Stuart-Smith J in the TCC held that a roofing contractor was liable for a fire at a factory. Among other things, the court considered the extent of the employer’s contractual obligations, the doctrines of waiver and estoppel by convention, and contributory negligence.

In Murray and another v Neil Dowlman Architecture Ltd, Coulson J in the TCC gave guidance on the circumstances in which an approved costs budget can be subsequently revised or rectified.

In National Merchant Buying Society Ltd v Bellamy and another, the Court of Appeal upheld the first instance judgment that the guarantee in question was a conventional all monies guarantee and there was no reason why it should be linked to or limited by the existing contract.

In Nulty and others v Milton Keynes Borough Council, the Court of Appeal rejected the insurer’s appeal against a ruling that a series of fires that damaged a recycling plant were caused by a cigarette discarded by a self-employed engineer. In doing so, the court addressed the complicated question of causation in situations where no single cause seems inherently likely.

In R (Prudential plc and another) v Special Commissioner of Income Tax and another, the Supreme Court dismissed Prudential’s appeal, refusing to extend the scope of legal advice privilege to tax law advice given by accountants (and other professionals).

In Telford Homes (Creekside) Ltd v Ampurius Nu Homes Holdings Ltd, the Court of Appeal overturned a first instance decision and found that a landlord was not in repudiatory breach of an agreement for lease by delaying construction works.

In Transport for Greater Manchester v Thales Transport & Security Ltd, Akenhead J in the TCC considered what type of information and documents must be disclosed under an audit clause in an agreement to supply services, and in what circumstances it was permissible to withhold such information.

In TSG Building Services plc v South Anglia Housing Ltd, Akenhead J in the TCC held that the express good faith clause in the parties’ term partnering contract did not extend to acting reasonably when terminating the contract. Also, there was no implied duty of good faith.

In West and another v Ian Finlay & Associates, Edwards-Stuart J in the TCC applied existing authorities on negligence claims against professional consultants and found that a net contribution clause did not include reference to the main contractor.

In Westfields Construction Ltd v Lewis, Coulson J in the TCC, enforced an adjudicator’s decision, rejecting the defendant’s argument that he was a residential occupier under section 106 of the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996).

In Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers Ltd, Lord Malcolm in the Outer House of the Court of Session declined to enforce an adjudicator’s decision because he breached the rules of natural justice. Further, it would be disproportionate and wrong to enforce the decision, relying on Article 1 of the First Protocol of the European Convention on Human Rights (ECHR).

In Willmott Dixon Housing Ltd v Newlon Housing Trust, Ramsey J in the TCC enforced an adjudicator’s two decisions, finding he had jurisdiction even though the responding party did not receive the referrals when they were served on the adjudicator. The court also rejected an argument about the number of diputes referred to the adjudicator.

In WSP Cel Ltd v Dalkia Utilities Services plc, Ramsey J in the TCC held that the parties’ consent agreement varied the terms of their NEC3 Professional Services Contract (PSC) so that the adjudicator had jurisdiction to decide his own jurisdiction. His decision was enforced.

In Yam Seng PTE Ltd v International Trade Corporation Ltd, the High Court implied a number of obligations into a distribution agreement, characterising them as aspects of good faith.

In Zennstrom and another v Fagot and others, Edwards-Stuart J in the TCC found that a couple who built and sold a new house, which was later found to be defective, did not owe a duty under the Defective Premises Act 1972 (DPA 1972).

For details of notable decisions from 2012, see:

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