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January to March 2017 case review for construction practitioners

Algernon Charles Swinburne, Atalanta in Calydon:

“And frosts are slain and flowers begotten, and in green underwood and cover, blossom by blossom the spring begins.”

In keeping with the time of year, we decided to spring clean and have changed the format of our quarterly review. What follows are some of the more interesting decisions affecting construction and engineering practitioners during the first quarter of 2017.

Adjudication

In Bell Building Projects Ltd v Arnold Clark Automobiles Ltd, Lord Tyre in the Court of Session held that an adjudicator did not breach the rules of natural justice in the way he conducted the adjudication and dealt with the late submission of information.

In Hutton Construction Ltd v Wilson Properties (London) Ltd, Coulson J set out the guidance that parties must follow when deciding whether to challenge the enforcement of an adjudicator’s decision.

In Kersfield Developments (Bridge Road) Ltd v Bray and Slaughter Ltd, O’Farrell J enforced an adjudicator’s decision, finding the contractor had correctly applied for payment and the employer had failed to serve a valid payment or pay less notice.

In Mailbox (Birmingham) Ltd v Galliford Try Construction Ltd, O’Farrell J held that the benefit of the building contract had been re-assigned to the claimant, which meant the adjudicator had jurisdiction to hear the dispute referred.

In NKT Cables A/S v SP Power Systems Ltd, Lady Wolff in the Court of Session held that a slip rule could be implied, but that the adjudicator exceeded the scope of that implied term when he amended his decision. The adjudicator also failed to “exhaust his jurisdiction” by failing to consider parts of the defence.

In South Coast Construction Ltd v Iverson Road Ltd, Coulson J held that if the moratorium under rule 43(6)(b) of Schedule B1 to the Insolvency Act 1986 had continued (it had expired and a liquidator had been appointed), the court’s discretion would have been exercised to allow the claimant’s application to enforce an adjudicator’s decision to continue.

In Universal Piling & Construction Ltd v VG Clements Ltd, O’Farrell J declared that the second adjudicator was not asked to decide the same dispute as the first adjudicator. The declaratory relief sought was refused.

Arbitration

In Celtic Bioenergy Ltd v Knowles Ltd, Jefford J set aside an arbitrator’s award under section 68 of the Arbitration Act 1996, finding that the award had been obtained by fraud within the meaning of section 68(2)(g).

In Costain Ltd v Tarmac Holdings Ltd, Coulson J held that the parties’ sub-contract included an arbitration agreement, the dispute came within section 9(1) of the Arbitration Act 1996 and the arbitration agreement was neither “inoperative” nor “null and void” under section 9(4).

In H v L and others, the Commercial Court rejected an application to remove an arbitrator under section 24 of the Arbitration Act 1996.

In Halcrow Group Ltd v Blackpool BC, HHJ Raynor QC dismissed a challenge to the arbitrator’s award brought under sections 68 and 69 of the Arbitration Act 1996.

In Symbion Power LLC v Venco Imtiaz Construction Co, Jefford J dismissed a challenge to the arbitrator’s award brought under section 68 of the Arbitration Act 1996. The court also reminded arbitrators that they should not correspond privately with their appointing parties.

In Teekay Tankers Ltd v STX Offshore & Shipbuilding Co Ltd, the Commercial Court decided that the disclosure of certain arbitration awards was in the interests of justice and did not breach obligations of confidentiality.

Construction claims

In Carillion Construction Ltd v Emcor Engineering Services Ltd, the Court of Appeal upheld a TCC decision that an extension of time should run contiguously from the existing date for completion.

In SSE Generation Ltd v Hochtief Solutions AG, Lord Woolman decided that a contractor was not in breach of its duty of care in relation to the construction of a tunnel that later collapsed, although it was in breach for failing to carry out remedial works.

Contract formation

In MacInnes v Gross, the High Court held that a discussion between businessmen over dinner in a restaurant did not amount to an intention to establish legal relations.

In Teekay Tankers Ltd v STX Offshore and Shipbuilding Co Ltd, the Commercial Court held that an option agreement for the purchase of ships was unenforceable as an agreement to agree.

Contract interpretation

In Astor Management AG v Atalaya Mining plc, the Commercial Court found that an obligation to use all reasonable endeavours to obtain a senior debt facility was legally enforceable.

In Irish Bank Resolution Corp Ltd (In Special Liquidation) v Camden Market Holdings Corp, the Court of Appeal reiterated that, when considering the existence of an implied term to give effect to the parties’ intention, the express terms of the contract are the starting point. The pleaded implied term must not contradict any express term.

In McGee Group Ltd v Galliford Try Building Ltd, Coulson J granted a sub-contractor declarations that all of the contractor’s financial claims, whether described as loss, expense or damages, for delay and disruption caused by the sub-contractor were capped at 10% of the sub-contract sum.

Equitable doctrines and remedies

In Borough of Milton Keynes v Viridor (Community Recycling MK) Ltd, Coulson J rectified a waste recycling contract on the grounds of mistake.

Insurance, indemnities, guarantees and bonds

In MUR Joint Ventures BV v Compagnie Monegasque De Banque, the Commercial Court confirmed that while the doctrine of strict compliance applies to letters of credit, the degree of compliance required by an on demand guarantee (or performance bond) is determined by construction of the particular guarantee.

In National Infrastructure Development Co Ltd v Banco Santander SA, the Court of Appeal confirmed that the fraud exception is inapplicable where the beneficiary under a standby letter of credit held an honest belief that amounts were due and owing.

In Petrosaudi Oil Services (Venezuela) Ltd v Novo Banco SA, the Court of Appeal held that a presentation under a letter of credit was valid where there was an obligation to pay the sums demanded at the time, even though there was a restriction on the discharge of that obligation by the debtor.

In Zurich Insurance plc v Maccaferri Ltd, the Court of Appeal held that the appellant insurers were not entitled to reject liability under a combined product and public liability policy for breach of a notification condition precedent contained in the policy.

Litigation

In Al-Rawas v Hassan Khan & Co (a firm), the Court of Appeal confirmed that primary limitation periods (under section 35(3) of the Limitation Act 1980) apply to counterclaims.

In Euro-Asian Oil SA v Credit Suisse AG, the Commercial Court held that where costs were awarded under a contract that referred to “reasonable attorney fees”, costs were limited to costs on the standard basis.

In Merrix v Heart of England NHS Foundation Trust, Carr J held that when assessing costs on the standard basis, the costs judge should not depart from the receiving party’s last approved budget unless satisfied that there was good reason to do so.

In Tchenguiz v Grant Thornton UK LLP, the Commercial Court held that permission under CPR 31.22 was needed to review a disclosed document for a collateral purpose.

Mediation

In Thakkar v Patel, Jackson LJ in the Court of Appeal upheld a “tough” costs order and warned parties against dragging their heels on mediation

Payment under the Construction Act 1996

In Surrey and Sussex Healthcare NHS Trust v Logan Construction (South East) Ltd, Alexander Nissen QC granted declaratory relief, finding that both the contractor and the employer’s payment and pay less notices were valid.

In Trilogy Services Scotland Ltd v Windsor Residential, the Scottish Sheriff Appeal court decided that a contractor did not have to prove that a solicitors’ letter to the employer was intended as a default payment notice.

Professional appointments

In BPE Solicitors v Hughes-Holland, the Supreme Court considered the SAAMCO principle and the liability of professional advisers, and dismissed an appeal, finding that the defendant firm of solicitors was not liable to the claimant in damages.

In Palmer v Nightingale (t/a Andover Pest Control), Coulson J dismissed a professional negligence claim against a pest controller, finding that rodent bait blocks he placed in the claimant’s property had not caused the fire. The court also considered how it should approach causation in competing theory cases.

In Signature Realty Ltd v Fortis Developments Ltd, the High Court found that copyright in an architect’s drawings was infringed in a case where the claimant property developer who obtained the planning permission was not the developer who built the building.

Want more?

For further information and for details of last year’s judgments, see our January to March, April to June, July to September and October to December case reviews. Public procurement decisions are detailed in the Public procurement case tracker.

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