REUTERS | Kim Hong-Ji

July to December 2013, a half year case review

Francis Bacon, Of Great Place:

“Set it down to thyself, as well to create good precedents as to follow them.”

The second half of 2013 has seen a number of important decisions affecting construction and engineering practitioners.

Construction and engineering decisions, July to December 2013

In ABB Ltd v Bam Nuttall Ltd, Akenhead J in the Technology and Construction Court (TCC) held that the adjudicator had breached the rules of natural justice when he relied on a clause of the sub-contract that neither party had referred to or relied upon.

In Ageas (UK) Ltd v Kwik-Fit (GB) Ltd, the High Court held that legal proceedings for a breach of warranty claim under a share purchase agreement had been validly served before the expiry of a time limit specified by the agreement. In the absence of any express provisions to the contrary, the word “serving” was given its ordinary meaning, which the court considered to be delivery in a form that brought the contents of the document being served to the actual attention of the intended recipient.

In Alexander & Law Ltd v Coveside (21BPR) Ltd, Coulson J in the TCC granted summary judgment to enforce an adjudicator’s decision, but stayed execution because of on-going winding up proceedings against the claimant.

In Aspect Contracts (Asbestos) Ltd v Higgins Construction plc, the Court of Appeal held that there is an 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 Brims Construction Ltd v A2M Development Ltd, Akenhead J in the TCC held that the adjudicator had not breached the rules of natural justice and did not lack jurisdiction when reaching his decision. The responding party had waived its right to challenge the adjudicator’s jurisdiction.

In CG Group Ltd v Breyer Group plc, Akenhead J in the TCC held that the adjudicator had not breached the rules of natural justice and did not exceed his jurisdiction when reaching his decision. The judgment also discusses the interaction between the payment provisions in the parties’ sub-contract, the amended Housing Grants, Construction and Regenerations Act 1996 (Construction Act 1996) and the amended Scheme for Construction Contracts 1998.

In Covanta Energy Ltd v Merseyside Waste Disposal Authority, Coulson J in the TCC granted an injunction preventing the defendant contracting authority from entering into a contract pending the outcome of an action by an unsuccessful bidder. As the procurement procedure was launched prior to 20 December 2009, the automatic suspension regime introduced by the Public Contracts (Amendment) Regulations 2009 did not apply.

In El Makdessi v Cavendish Square Holdings BV and another, the Court of Appeal overturned the first instance decision and held that clauses in a share purchase agreement were unenforceable penalties.

In FG Skerritt Ltd v Caledonian Building Systems Ltd, Ramsey J in the TCC enforced an adjudicator’s decision and declined to order a stay of execution provided the claimant’s parent company gave a guarantee relating to the sums due following the adjudicator’s decision.

In Genesis Housing Association Ltd v Liberty Syndicate Management Ltd, the Court of Appeal upheld Akenhead J’s first instance decision that the claimant could not recover under an insurance policy because it had given an inaccurate answer in the proposal form, which included a “basis of contract” clause.

In Gladman Commercial Properties v Fisher Hargreaves Proctor and others, the Court of Appeal upheld a first instance decision to strike out a claim for fraudulent and/or negligent misrepresentation on grounds of abuse of the court’s process. The case also acts as a reminder about joint liability. The defendants were joint tortfeasors with parties that the claimant had previously sued. Joint liability meant that when the claimant settled the previous proceedings and released those parties from liability, it also released the defendants.

In Glendalough Associated SA v Harris Calnan Construction Co Ltd, Edwards-Stuart J in the TCC declined to grant the declaratory relief sought, finding the parties had agreed that there was an agreement in writing under section 107(5) of the Construction Act 1996.

In Liberty Mercian Ltd v Cuddy Civil Engineering Ltd, the High Court declined to correct a mistake as to who should be the correct contracting party in a contract.

In Mitchell v News Group Newspapers Ltd, the Court of Appeal dismissed Mr Mitchell’s appeal against Master McCloud’s decision that, because he had failed to file his costs budget on time, his budget for future costs was set at court fees only.

In Oakapple Homes (Glossop) Ltd v DTR (2009) Ltd and others, Ramsey J in the TCC considered the meaning of a no greater liablity clause in a collateral warranty, in the context of an allegation of contributory negligence and a professional indemnity insurance policy. The court held that an architect and its insurers could be liable to an employer and the beneficiaries of a set of collateral warranties following allegations of breach of the architect’s appointment.

In Parkwood Leisure Ltd v Laing O’Rourke Wales and West Ltd, Akenhead J in the TCC held that a collateral warranty was a construction contract, as defined by section 104 of the Construction Act 1996.

In PGF II SA v OMFS Company 1 Ltd, the Court of Appeal held that, as a general rule, failure to respond at all to an invitation to participate in ADR is itself unreasonable, regardless of whether there was a good reason for refusing ADR. This was described as a “modest” extension of the guidelines set out in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576.

In Pioneer Cladding Ltd v John Graham Construction Ltd, Coulson J in the TCC ordered a stay of execution of enforcement of the adjudicator’s decision because Pioneer had misled John Graham about its financial stability, causing John Graham to enter into the contract on a false premise. Pioneer was not “a substantial company and financially stable” and did not have the cash reserves it suggested it had.

In Robbins v London Borough of Bexley, the Court of Appeal considered the principles of causation in a negligence claim for damages arising out of tree root damage. The court found that a tree owner’s duty was to take reasonable steps to prevent the trees from causing damage to a neighbouring landowner’s property. It was not a duty to implement a specific programme of work.

In Sabic UK Petrochemicals Ltd v Punj Lloyd Ltd,  Stuart-Smith J in the TCC ordered a contractor to pay £11.8 million for the costs of completing a project after its employment was terminated.

In Sea-Cargo Skips AS v State Bank of India, the High Court held that a demand made under a performance bond which failed to track the wording required of a demand set out in the bond was ambiguous in its meaning and therefore invalid.

In Squibb Group Ltd v London Pleasure Gardens Ltd and another, Stuart-Smith J in the TCC held that a funder had only a limited liability to a building contractor where the employer had defaulted on its payment obligations under the building contract.

In Urban I (Blonk Street) Ltd v Ayres and another, the Court of Appeal held that a developer’s delay of approximately one month did not deprive a buyer of substantially the whole benefit of the contract for a lease of a flat that was being built, and so the buyer was not entitled to terminate the agreement.

In Westshield Ltd v Whitehouse and another, Akenhead J in the TCC refused to grant summary judgment in adjudication enforcement proceedings because of the defendant’s claim in the claimant’s company voluntary arrangement (CVA).

In Willis v MRJ Rundell & Associates Ltd and another, Coulson J in the TCC declined to approve the costs budgets filed by the parties, on the basis that the budgeted costs were disproportionate and unreasonable.

Construction and engineering decisions, January to June 2013

For details of notable decisions from earlier in the year, see Blog post, January to June 2013, a half year case review.

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