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January to June 2015, a half year case review

Lord Denning, Parker v Parker:

“What is the argument on the other side? Only this, that no case has been found in which it has been done before. That argument does not appeal to me in the least. If we never do anything which has not been done before, we shall never get anywhere. The law will stand still while the rest of the world goes on, and that will be bad for both.”

The first half of 2015 has seen a number of important decisions affecting construction and engineering practitioners.

Notable decisions from January to June 2015

In Al Waddan Hotel Ltd v Man Enterprise Sal (Offshore), HHJ Raeside QC held that the employer was not entitled to take advantage of its own wrong in enforcing a condition precedent under FIDIC Red Book.

In Arnold v Britton, the Supreme Court held that a service charge clause in leases of holiday chalets should be interpreted as obliging the tenants to pay a fixed sum with a fixed annual increase even though this would ultimately lead to a massive annual charge. The case confirms that the usual principles of interpretation apply to service charge clauses and that the court will not step in to save a party from a bad bargain.

In Aspect Contracts (Asbestos) Ltd v Higgins Construction plc, the Supreme Court held that there is an implied term that a paying party in an adjudication under the Scheme for Construction Contracts 1998 is entitled to have the dispute determined by litigation and to repayment of monies paid, if those court proceedings are successful.

In Aspen Insurance UK Ltd v Adana Construction Ltd, the Court of Appeal considered the operation of a construction all risks insurance policy and the distinction between its public liability and product liability coverage.

In CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd, Coulson J halved the claimant’s costs budget after reviewing the options open to the court in respect of incurred and future costs.

In D&K Drost Consult GmbH v Foremost Leisure (Holdings) Ltd, the Court of Appeal held that professional consultants were entitled to payment for preliminary services on a development.

In Fairhurst Ward Abbotts Ltd v 25 Culcross Street Investments Ltd Sarl, Carr J held that a claim form could be served on a Luxembourg single purpose vehicle (SPV) at its development site in London.

In Galliford Try Building Ltd v Estura Ltd, Edwards-Stuart J granted a partial stay of enforcement, finding that it would cause “manifest injustice” to the paying party if the adjudicator’s decision was enforced in full.

In Goldswain and another v Beltec Ltd (t/a BCS Consulting) and another, Coulson J held that the  engineer did not have a duty to warn its client, the property owner, that the contractor’s  works were not in accordance with the engineering design. The engineer had no obligation to supervise the construction works or visit site once the works had started.

In ISG Retail Ltd v Castletech Construction Ltd, Edwards-Stuart J held that the adjudicator had jurisdiction to award restitution as it was an available remedy following a breach of contract.

In Jacobs E&C Ltd v Laker Vent Engineering Ltd, Ramsey J refused an application for an interim injunction under section 44 of the Arbitration 1996 and refused the defendant’s cross-application for a stay of the court proceedings under section 9 of the Arbitration Act 1996.

In Laporte and another v The Commissioner of Police of the Metropolis, the High Court penalised a successful defendant for failing to engage in ADR.

In Leeds City Council v Waco UK Ltd, Edwards-Stuart J held that an application for payment was invalid because it was made early. This meant the adjudicator’s decision in favour of the contractor  could not stand.

In Mears Ltd v Shoreline Housing Partnership Ltd, Akenhead J held that an employer was estopped from recouping alleged overpayments under an NEC3 Term Service Contract (TSC).

In MSC Mediterranean Shipping Company SA v Cottonex Anstalt, the Commercial Court held that a party had no right to keep a repudiated contract alive and claim liquidated damages.

In MT Højgaard A/S v E.On Climate and Renewables UK Robin Rigg East Ltd, the Court of Appeal allowed an appeal and cross-appeal, finding that the contract did not require the contractor to warrant that foundations would have  a service life of 20 years.

In MW High Tech Projects UK Ltd and another v Biffa Waste Services Ltd, Stuart-Smith J lifted an interim injunction preventing an employer from calling an on-demand bond. This was on the basis that a court can only intervene in the call of an on-demand bond if there is a seriously arguable case of fraud or it is positively established that the beneficiary is precluded from making a call by the underlying contract.

In MW High Tech Projects UK Ltd v Haase Environmental Consulting GmbH, Coulson J  summarised the applicable principles when deciding whether to grant a declaration. In interpreting the appointment, he indicated that the consultant was, on the face of it, in breach of contract by changing its design in a way that increased the contractor’s cost.

In Paice and another v MJ Harding (t/a MJ Harding Contractors), Coulson J held that a telephone call to the fourth adjudicator’s office two months before the fourth adjudication gave rise to the possibility of bias.

In ParkingEye Ltd v Beavis, the Court of Appeal held that a parking charge was not a penalty even though it was intended to act as a deterrent. The court concluded that the charges were justified by a combination of social and commercial factors.

In PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation, the Singapore Court of Appeal ruled that an interim award enforcing a Dispute Adjudication Board (DAB) decision under the FIDIC Red Book was a final decision in relation to its subject matter, and therefore could be enforced as an interim or partial award in accordance with Singapore law.

In Rydon Maintenance Ltd v Affinity Sutton Housing Ltd, HHJ Raeside QC held that the adjudicator had not breached the rules of natural justice as there was no procedural irregularity or bias.

In Saint Gobain Building Distribution Ltd (t/a International Decorative Surfaces) v Hillmead Joinery (Swindon) Ltd, HHJ David Grant held that various limitations of liability in standard term contracts were unreasonable under UCTA.

In Savoye and Savoye Ltd v Spicers Ltd, Akenhead J dismissed the claimant’s claim for indemnity costs, finding that the defendant’s conduct had not been “out of the norm” or unreasonable to a high degree. The court set out a number of factors it should take into account when assessing proportionality and the reasonableness of costs in adjudication enforcement proceedings.

In Secretary of State for Defence v Turner Estate Solutions Ltd, Coulson J determined preliminary issues of law on interpretation of a maximum price target cost contract in favour of the employer, following an application under section 45 of the Arbitration Act 1996.

In St Austell Printing Company Ltd v Dawnus Construction Holdings Ltd, Coulson J enforced an adjudicator’s decision, holding that the dispute referred to adjudication had crystallised and the adjudicator had power to determine the dispute, which formed part of a larger claim and had been “cherry picked” from it.

In Stork Technical Services (RGB) Ltd v Marion Howitson Ross, Lord Tyre in the Outer House, Court of Session held that the contract with the adjudicator was a contract for the supply of services, which was entered into with the adjudicator’s employer.

In Thai Airways International Public Company Ltd v KI Holdings Co Ltdthe Commercial Court provided guidance on the law of mitigation following a breach of contract.

In The Trustees of the Marc Gilbard 2009 Settlement Trust v OD Developments and Projects Ltd, Coulson J granted a declaration effectively preventing a contractor starting adjudication proceedings over a year after the final certificate had been issued under a JCT contract.

Further information

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