REUTERS | Stephen Hird

July to December 2014, a half year case review

Abraham Lincoln:

“Let me not be understood as saying that there are no bad laws, nor that grievances may not arise for the redress of which no legal provisions have been made. I mean to say no such thing. But I do mean to say that although bad laws, if they exist, should be repealed as soon as possible, still, while they continue in force, for the sake of example they should be religiously observed.”

The second half of 2014 has seen a number of important decisions affecting construction and engineering practitioners. 

Notable decisions from July to December 2014

In Appeal by Charles Henshaw and Sons Ltd against Stewart and Shields Ltd (a rare appellate court decision), Lady Smith in the Inner House of the Court of Session rejected an appeal against an adjudicator’s decision and enforced it. She once again reinforced the courts’ support for the adjudication process.

In Bache and others v Zurich Insurance plc, Akenhead J held that purchasers can, in principle, claim under a new home insurance policy.

In Bluewater Energy Services BV v Mercon Steel Structures BV, Ramsey J held that a contractor had validly terminated a sub-contract and was entitled to damages.

In Denton v TH White Ltd and others, the Court of Appeal issued guidance in the form of a three-stage test to be applied in applications for relief from sanctions under CPR 3.9. This test replaced the Mitchell guidelines.

In Decision 4A 124/2014, a Swiss court held that an arbitral tribunal had jurisdiction to hear a dispute that had not gone through the dispute adjudication board (DAB) procedure in a FIDIC contract.

In Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd, the High Court held a clause requiring the parties to seek to resolve a dispute by “friendly discussion” before arbitration proceedings was enforceable.

In Eurocom Ltd v Siemens plc, Ramsey J held that there was a “strong prima facie” case that the referring party’s representative made a fraudulent misrepresentation when it applied to RICS for an adjudicator to be nominated. This invalidated the adjudicator’s appointment, which meant he lacked jurisdiction to reach a decision.

In Fermanagh District Council v Gibson (Banbridge) Ltd, the Court of Appeal in Northern Ireland declined to extend time for the bringing of arbitration proceedings under section 12(3)(a) of the Arbitration Act 1996 (a notice of dissatisfaction had not been served under an NEC2 Engineering and Construction Contract).

In Greenwich Millennium Village Ltd v Essex Services Group plc, the Court of Appeal upheld Coulson J’s first instance decision that a sub-sub-sub-contractor was liable to indemnify a sub-sub-contractor against damage to a development in London.

In Harding (t/a MJ Harding Contractors) v Paice, Edwards-Stuart J held that the fourth adjudicator was not asked to decide the same dispute as the third adjudicator had decided, so he refused to grant an injunction.

In Hunt v Optima (Cambridge) Ltd, the Court of Appeal allowed the architect’s appeal against a finding that it was in breach of its duty of care to the purchasers when issuing certificates.

In Hurley Palmer Flatt Ltd v Barclays Bank plcRamsey J held that the Contracts (Rights of Third Parties) Act 1999 did not grant a third party the right to adjudicate a dispute arising under the construction contract (in this case, a professional appointment).

In ISG Construction Ltd v Seevic College, Edwards-Stuart J held the lack of a pay less notice meant the employer had agreed the value of the works the contractor claimed in an interim certificate. He also held that the second adjudicator was asked to decide the same dispute as the first adjudicator had decided, so he lacked jurisdiction.

In JSC BTA Bank v Ablyazov, the High Court held that privileged documents should be disclosed on the basis of the iniquity exception.

In Kitt v The Laundry Building Ltd, Akenhead J held that the adjudicator could sue either party as they were jointly and severally liable for his fees.

In Laing O’Rourke Construction Ltd v Healthcare Support (Newcastle) Ltd, Edwards-Stuart J granted a declaration regarding the completion criteria an independent tester should use under related PFI contracts.

In Liberty Mercian Ltd v Cuddy Civil Engineering Ltd, Ramsey J ordered the defendant contractor to pay £420,000 into court as substituted performance for the provision of a performance bond.

In Northrop Grumman Mission Systems Europe Ltd v BAE Systems (Al Diriyah C4I) Ltd, Ramsey J held a party’s refusal to mediate was unreasonable (but there was no costs sanction due to other factors).

In Peterborough City Council v Enterprise Managed Services Ltd, Edwards-Stuart J ordered a stay of court proceedings to allow the parties’ dispute to be determined by an adjudicator in accordance with the contractual FIDIC Silver Book dispute adjudication board (DAB) procedure.

In Prince Abdulaziz v Apex Global Management Ltd, the Supreme Court confirmed that the merits of a party’s case are irrelevant in case management decisions. It is rare for the Supreme Court to get involved with case management decisions.

In Rendlesham Estates plc v Barr Ltd, Edwards-Stuart J found a building contractor liable to residential owners of two apartment blocks under section 1 of the Defective Premises Act 1972.

In Savoye and Savoye Ltd v Spicers LtdAkenhead J considered the meaning of “forming… part of the land” under section 105 of the Construction Act 1996, holding that a contract to install a substantial industrial conveyor belt system was a construction contract, in part because the installed system formed part of the land.

In Shafi v Rutherford, the Court of Appeal upheld a judge’s decision that an expert determination was not valid and not enforceable.

In T Clarke (Scotland) Ltd v MMAXX Underfloor Heating Ltd, Lord Bracadale in the Inner House, Court of Session, upheld Lord Woolman’s earlier refusal to grant an interim interdict (injunction) to prevent a party adjudicating.

In Unaoil Ltd v Leighton Offshore Pte Ltd, the High Court held that a contractor should pay its sub-contractor advance payments due under a memorandum of agreement.

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