Following on from our case law update covering January – June 2012, a selection of cases which may affect our clients and contacts in the property and construction sectors decided in the second half of 2012 is set out below:
Dangers of letters of intent
Ampleforth Abbey Trust v Turner & Townsend Project Management Ltd [2012] EWHC 2137 (TCC)
Substantial construction works had been carried out entirely under letters of intent which made no provision for liquidated damages for delay. No formal building contract was ever signed. The works were delayed and the Trust claimed against its project managers, claiming that had a fully executed building contract been in place then the Trust would have reached a more favourable outcome in its dispute with the contractor over the delay. The court found that the project manager had failed to take the reasonable steps required to procure the completed building contract and was therefore in breach of contract. The judge noted that the project manager had failed to exercise sufficient focus on the matters holding up execution of the contract or to exert sufficient pressure on the contractor to finalise the contract. This highlights the importance of ensuring that building contracts are signed, rather than simply relying on letters of intent.
Extensions of time and loss and expense
Walter Lilly & Company Limited v Mackay & Anor [2012] EWHC 1773 (TCC)
In this important decision (one of several to be decided between these parties) the court clarified the position in respect of several issues which arise regularly on construction projects. In relation to loss and expense claims, the judge confirmed that the obligation on the Architect/Contract Administrator to "ascertain" loss and expense does not mean that the contractor has to prove its claim "beyond reasonable doubt" instead, the balance of probabilities test applies. The judge also confirmed that it is legitimate for the contractor to bear in mind the knowledge that the Architect/Contract Administrator has of the project when supplying supporting documents for his claim.
The judge also took the opportunity to clarify the position with regards to extensions of time where there are concurrent delays to the works. It was confirmed that (unless there are express contractual terms stating otherwise) where there are two concurrent delays, one which entitles the contractor to an extension of time and one which does not, then there should not be any apportionment between the two delays. The contractor should receive an extension of time for the whole period of the relevant delay.
Public Procurement – beware the limits
Turning Point Ltd v Norfolk County Council [2012] EWHC 2121 (TCC)
The relevant public procurement regulations provide that a bidder who wants to claim for a breach of the public procurement rules by the potential employer must do so within 30 days of the date when the bidder knew (or ought to have known) that grounds for starting the proceedings had arisen. This can result in a difficult choice for bidders to make who may otherwise want to wait to see the outcome of the bid before making a claim (and potentially damaging its relationship with the potential employer). The bidder in this case was barred by the 30 day statutory limitation period. The Court holding that there was no good reason in this case to extend the 30 day period and noting that a good reason "will usually be something which was beyond the control of the given Claimant; it could include significant illness or detention of relevant members of the tendering team."
The judge also made it clear that if an invitation to tender states that no caveats to the terms will be accepted, then the employer can legally reject a bid which does include caveats without clarifying first with the tenderer. Tenderers should therefore carefully check whether the ITT contains a provision preventing qualifications and caveats – and should also keep in mind the 30 day rule.
Tree root damage
Robbins v London Borough of Bexley [2012] EWHC 2257 (TCC)
This case confirmed that damage caused to your property by trees planted by a Local Authority may be recoverable. It highlights the need to notify the Authority as soon as damage is apparent so that the Authority is put on notice, which can prove to be very important in future litigation.
Ad hoc adjudication
Clark Electrical Ltd v JMD Developments (UK) Ltd [2012] EWHC 2627 (TCC)
This case looked at whether a party can accept the adjudicator's jurisdiction by paying the adjudicator's fee up front. Clark had been engaged by JMD to carry out electrical works on a new distillery. A dispute arose and Clark issued a notice of adjudication. The adjudicator's terms required the parties to pay a proportion of his fees on account. JMD were not familiar with adjudication, but paid their share in any event. JMD's advisors then wrote to the adjudicator asserting that the works were not covered by the Construction Act and could not therefore be referred to adjudication. The adjudicator agreed that the works were not covered by the Act, but decided that there was an ad hoc adjudication agreement because of the payment of the fee and continued, his ultimate decision went in Clark's favour. Clark then applied to have the judgment enforced. The Court held however that the payment of the appointment fee by JMD did not amount to a submission to the jurisdiction in the full sense and Clark's claim for summary judgment failed.
Paying the adjudicator if his decision is Unenforceable
PC Harrington Contractors Ltd v Systech International Ltd [2012] EWCA Civ 1371
In what should be a comforting decision for those engaging in adjudication, the Court held that where the adjudicator's decision was unenforceable (in this case because of a breach of the rules of natural justice) then he was not entitled to be paid. The parties bargain with the adjudicator was for an enforceable decision. The Court noted that if adjudicators are concerned by this decision then they should seek to incorporate into their terms a provision covering payment in the event of a decision not being delivered or proving to be unenforceable (if the parties to the adjudication will accept this).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
