REUTERS | Gleb Garanich

July to September 2016 case review for construction practitioners

Charles Bukowski, Notes of a Dirty Old Man:

“Courts are places where the ending is written first and all that precedes is simply vaudeville.”

We have seen a number of interesting decisions affecting construction and engineering practitioners during the third quarter of 2016.

Adjudication cases from July to September 2016

In Beumer Group UK Ltd v Vinci Construction UK Ltd, Fraser J granted a number of declarations, finding that the adjudicator’s failure to disclose his involvement in a simultaneous adjudication involving one of the parties was a material breach of the rules of natural justice.

In Goldsworthy and others (t/a Goldsworthy Builders) v Harrison, Andrew Bartlett QC (sitting as a deputy High Court judge) held the parties had not entered into a JCT Minor Works, 2011 Edition. This meant the residential occupier exception applied and the parties had no statutory right to adjudicate a payment dispute.

In Ground Developments Ltd v FCC Construccion SA, Fraser J enforced an adjudicator’s decision, finding that he had not breached the rules of natural justice or exceeded his jurisdiction.

In Lulu Construction Ltd v Mulalley & Co Ltd, Mr Jonathan Acton-Davis QC (sitting as a deputy High Court judge) enforced an adjudicator’s decision, finding that he had jurisdiction to award costs claimed under the Late Payment of Commercial Debts (Interest) Act 1998.

In Paice and Springall v Harding (t/a MJ Harding Contractors), Ms Finola O’Farell QC (sitting as a deputy High Court judge) enforced an adjudicator’s decision, finding that there was no apparent bias and the decision was reached in time.

Other notable cases from July to September 2016

In Allen Tod Architecture Ltd v Capita Property and Infrastructure Ltd, HHJ David Grant permitted the claimant to call a new expert witness on condition that it disclose any report or document the original expert had produced setting out that expert’s opinion on the issues in the case, whether in draft or final form.

In Cooper and another v Thameside Construction Company Ltd, Carr J ordered insurers to pay part of the successful defendant’s costs in a subrogated claim relating to defective plumbing. In exercising its discretion under CPR 44, the court disallowed part of the defendant’s costs due to the unreasonable manner in which it had defended the claim.

In Gibbs v Lakeside Developments Ltd, the court confirmed that a purported acceptance of a settlement offer in an email with an attachment was actually a counter offer.

In Glenluce Fishing Co Ltd v Watermota Ltd, the court confirmed that a claim issued in time will not subsequently become time-barred if an amendment to the claim form, after expiry of the limitation period, requires that a higher court issue fee be paid.

In Gresham Pension Trustees v Cammack, the Court of Appeal reiterated that without prejudice privilege cannot be waived unilaterally.

In Hayward v Zurich Insurance Company plc, the Supreme Court ordered a settlement agreement to be set aside for fraudulent misrepresentation, finding that the defendant had been induced to enter into the agreement for a much greater sum than it would have done, but for the fraudulent misrepresentation.

In Howmet Ltd v Economy Devices Ltd, the Court of Appeal held that the manufacturer of a defective product was not liable in negligence for the loss suffered by a company after a fire at the factory where the product was used. The claimant had been aware that the product was defective and there was a risk of fire.

In MSC Mediterranean Shipping Company S.A. v Cottonex Anstalt, the Court of Appeal held that an innocent party faced with a repudiatory breach could not affirm the contract because the defaulting party could not perform its contractual obligations. The court also rejected the suggestion that the innocent party was prevented from affirming the contract because there was a general duty to act in good faith.

In Mascareignes Sterling Co Ltd v Chang Cheng Esquares Co Ltd (Mauritius), the Privy Council dismissed an employer’s appeal against an arbitral award determining the final account under a building contract. In doing so, it upheld the way in which substantial variations had been valued under a lump sum JCT contract.

In Monde Petroleum SA v Westernzagros Ltd, the court refused to imply a term into a commercial contract that a party would not terminate the contract in bad faith. The suggested term was rejected as unnecessary and inconsistent with the contract’s express termination provisions. The court also ruled that case law on implied duties of good faith in a contract did not affect an express contractual right to terminate.

In O’Hare v Coutts & Co, the court held that the defendant had not breached its duty to exercise reasonable skill and care when advising the claimants on making certain investments. The court held that the Bolam test did not apply. Instead, it preferred the Supreme Court’s approach in Montgomery v Lanarkshire Health Board [2015] UKSC 11.

In Patel v Mirzathe Supreme Court restated the law regarding illegal transactions, holding that the claimant was permitted to recover sums paid for an illegal purpose.

In R (Faraday Development Ltd) v West Berkshire Council and another, the court held that a development agreement was not a “public works contract” for the purposes of the public procurement rules. It provides useful guidance on the approach to follow when determining whether a development agreement falls within the scope of the procurement regime.

In Saga Cruises BDF Ltd v Fincantieri SPA, the court awarded liquidated damages for delay under a shipping contract and, obiter, reviewed existing authority on the so-called “no loss” argument and on concurrent delay.

In Signia Wealth Ltd v Marlborough Trust Company Ltd, the court ordered that a claim valued at around £13 million should be subject to costs management and refused an order for a split trial.

In Versloot Dredging BV v HDI Gerling Industrie Versicherung AG, the Supreme Court held that the fraudulent devices rule (which allows insurers to reject fraudulent claims), does not apply to an insured’s collateral lies in support of a claim that were immaterial to the insured’s right to recovery under an insurance policy.

In Volkerlaser Ltd v Nottingham City Council, Edwards-Stuart J refused to grant summary judgment on the contractor’s claim for sums due under an interim application.

In Willers v Joyce, the Supreme Court held that the tort of malicious prosecution should apply to civil as well as criminal cases and should not be subject to limited exceptions. In addition, it confirmed the status of Privy Council decisions.

In ZVI Construction Co LLC v University of Notre Dame (USA) in England, Mr Stephen Furst QC (sitting as a deputy High Court judge) declined to grant an injunction preventing the defendant from enforcing an expert’s decision. The court also refused to make declarations as to the meaning of a development agreement.

Further information

For details of previous judgments, see our January to March and April to June case reviews. Public procurement decisions are detailed in the Public procurement case tracker.

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