UK: Construction, Property & Real Estate (Case Law Review, Issue 4 - May 2007)

ADJUDICATION

Construction Law Vol 18 Issue 3 April 2007 contains the following articles:

The validity of adjudicators’ decisions
by Hamish Lal and Emily Busby, Dundas & Wilson.

Pay now; argue later
by Paul Newman, 3 Paper Buildings.

Dispute Adjudication Boards
by Michael Draper, Shadbolt & Co.

See Aveat Heating v Jerram Falkus Construction under Keating Chambers Reported Cases on implication of Scheme provisions where contract time –limits were non-HGCR Act compliant.

See Cubitt Building & Interiors v Fleetglade under Keating Chambers Reported Cases on deadline for issue of adjudicator’s decision.

R J Knapman Ltd v Richards [2007] 108 Con LR 64 TCC
The defendant attempted to resist enforcement of an adjudicator’s decision on the ground that the claimant could not apply to enforce the parts of the decision it liked, while rejecting the parts it disapproved; the so-called approbation/reprobation principle. The defendant’s argument was based on comments in Shimizu v Automajor (Adam Constable) and Durtnell v Kaduna (Adrian Williamson QC). However, the TCC held that this was "not the sort of case where the approbation/reprobation principle is relevant or applicable." The claimant might be found not have complied with an aspect of the decision, but that would not disentitle the claimant to enforce the money claim, although it might entitle the defendant to a remedy. Applying Balfour Beatty v Serco (Tim Elliott QC and Paul Buckingham), the adjudicator had not undertaken a full review of entitlement to extension of time and so set-off would not be granted.

Bennett (Electrical) Services Ltd v Inviron Ltd [2007] BLM Vol.24 No.3 TCC
A letter of intent issued by the defendant in favour of the claimant was held not to constitute a construction contract for the purposes of s.107 HGCR Act. The crucial factor was that the letter of intent was expressed to be ‘subject to contract.’ Accordingly, the adjudicator would not have jurisdiction to determine a dispute between the parties.

See McConnell Dowell Constructors (Aust) v National Grid Gas under Keating Chambers Reported Cases on adjudicator’s jurisdiction over a supplemental agreement.

See Quietfield v Vascroft under Keating Chambers Reported Cases on failure to consider new evidence in subsequent adjudication.

See Multiplex Constructions v Mott MacDonald under Keating Chambers Reported Cases on an adjudicator’s entitlement to determine the meaning of ‘pertinent records.’

Late adjudicators’ decision revisited and late referral notice by Peter Sheridan and Dominic Helps, Shadbolts, Construction Law Journal 2007 Vol.23 No.2 p.137.
The regular Construction Act Review column returns to the issue of late decisions by adjudicators (following the first treatment ‘Adjudicators’ decisions: better late than never?’ at (2006) 22 Const LJ No.1). There is detailed commentary on Epping Electrical Co Ltd v Briggs & Forrester (David Thomas QC) and also, in the context of late referral notices, on the decision of HH Judge Coulson in Hart v Fidler. The authors conclude that it is now probably the law of England & Wales, as well as Scotland, that when an adjudicator’s decision is reached late, it is invalid for lack of jurisdiction. Jurisdiction would also be lacking if the referral notice is served out of time and any decision then made a nullity.

See Gray and Sons Builders (Bedford) v Essential Box Company under Keating Chambers Reported Cases on indemnity costs in enforcement proceedings.

Dispute Resolution Magazine Summer 2006 Vol 12 No 4 contains the following articles:

Judicial ethics and judicial settlement practices
by the Hon John Cratsley, Harvard Law School.

Classwide arbitration
by Mitchell Chyette, Leland Parachin Steinberg Matzger & Melnick, San Francisco.

Guide to confidentiality under the Federal Administrative Dispute Resolution Act
by Stephen Shapiro and Deborah Kant.

The effects of an ADR ‘Confer and report’ rule
by Rozelle Wissler and Bob Dauber, Arizona State University.

ICC International Court of Arbitration Bulletin Vol 17 No 2 contains the following articles:

Arbitration in Brazil: law and practice from an ICC perspective
by Cristian Conejero Roos and Renato Grion, ICC.

Arbitration in Yemen
by Hamid Gharavi and Lara Karam, Salans, Paris.

‘New claims’ in ICC arbitration: navigating Article 19 of the ICC Rules
by Eric Schwartz, LeBoeuf Lamb Greene & Macrae, Paris.

Journal of International Arbitration Vol 24 No 2 April 2007 contains the following articles:

Investment treaty arbitration – an Australian perspective
by Peter Turner and Mark Mangan, Freshfields Bruckhaus Deringer, Paris and Alex Baykitch, Blake Dawson Waldron, Sydney.

Precedent in Investment Treat Arbitration – a citation analysis of a developing jurisprudence
by Jeffery Commission, Linklaters, New York.

Procedural guarantees of human rights in arbitration proceedings – a still unsettled problem?
by Aleksander Jaksic, University of Belgrade.

Arbitration and the World Trade Organisation – the forgotten provisions of Article 25 of the Dispute Settlement Understanding
by Bahsar Malkawi, Hashemite University, Jordan.

Arbitration International 2007 Vol 23 No 1 contains the following articles:

LCIA Court decision on challenges to arbitrators: a proposal to publish
by Geoff Nicholas and Constantine Partasides, Freshfields Bruckhaus Deringer.

Perspectives on State Party arbitration: the future of BITs – the practitioner’s perspective
by Richard Kreindler, Shearman & Sterling, Frankfurt.

Limits on court review of international arbitration awards assessed in light of states’ interests and in particular in light of EU law requirements
by Phillip Landolt, Tavernier Tschanz, Geneva.

Enterprise v State: the new David and Goliath
The Clayton Utz Lecture 2006
By Karl-Heinz Bockstiegel, University of Cologne.

UNCITRAL’s Model Law on International Commercial Conciliation
by Pieter Sanders, Erasmus University, Rotterdam.

Bricks without straw: arbitration in Roman Britain
by Derek Roebuck, Institute of Advanced Legal Studies.

Arbitration Law Monthly Vol 17 No 4 April 2007 contains the following articles:

Separability and illegality in arbitration
(on the interaction between sections 7, 9 and 72 of the Arbitration Act 1979).

Adjudication: challenges to adjudication
(on McConnell Dowell Constructors (Aust) v National Grid
(Alexander Nissen QC))

Alternative dispute resolution
(on Aird and Aird v Prime Meridian Ltd: without prejudice privilege in mediation).

Document disclosure in international construction arbitration by Shawn Conway and Nathan O’Malley, Van Mens & Wisselink, Netherlands, Construction Law Journal 2007 Vol.23 No.2 p.105
The authors consider contractual rights to documents and focus in particular on the US position and the International Bar Association regime, the US Federal Arbitration Act, the Uniform Arbitration Act and the US Uniform Laws, as well as some reference to the UK Act, the Swiss Federal Law and the Hague Evidence Convention. The article is not particularly limited to construction arbitrations, despite its title.

Construction Law Vol 18 Issue 3 April 2007 contains the following articles:

Blank spaces are no solution
by Michael Phipps, Thurston Consultants
(on the Contract Particulars in JCT 2005).

PPC2000 – clients wanting their cake and eating it?
by Richard Dartnell, Pinsent Masons.

The CDM Regulations 2007
by Karen Weetman and Olivia Blessington, Shadbolt & Co.

Professional indemnity – getting claims paid
by John D Wright, JD Risk Associates.

Assessing damages in lieu of an injunction
by Sebastian Kokelaar, Mills & Reeve.

Sutcliffe v Lloyd [2007] BLM Vol 24 No 4 April 2007 and [2007] 10 EG 183 CA
The CA held the claimant builder entitled to an estoppel to prevent the defendant developer from resiling from promises made in respect of participation in a development which was subsequently abandoned. The judge had been entitled to conclude that it would be unconscionable if the developer could withdraw its promises on abandonment of the project. The CA considers the effect of entire agreement clauses.

Rhodia International Holdings Ltd v Huntsman International LLC BLM Vol 24 No 3 March 2007 Commercial Court
The court considered the meaning of an obligation in a contract to use ‘reasonable endeavours’. It confirmed that it was a lower standard than ‘best endeavours’. An obligation to use reasonable endeavours requires a party to take one of a range of possible courses of action, whereas an obligation to use best endeavours requires a party to pursue all serious alternatives. The court would be willing to try to apply the standard to given facts.

Tamares (Vincent Square) v Fairpoint Properties [2007] 14 EG 106 and BLM Vol 24 No 3 March 2007 Ch. Div.
This judgment sets out the relevant principles to be applied when assessing damages for infringement of a right to light where an injunction was refused. The defendant, in the course of redevelopment of its site, had demolished a single-storey building with a flat roof and replaced it with a three-storey building with a pitched roof.

Chattan Developments Ltd v Reigill Civil Engineering Contractors Ltd [2007] All ER (D) 155 TCC
In a situation where the parties to a (JCT 1980) contract had deleted the LAD clause, they had also agreed orally at a meeting that damages would not be claimable. In arbitration, the arbitrator found that this had the effect of excluding a claim for unliquidated damages. The claimant developer sought to challenge the arbitrator’s decision under s.69 Arbitration Act 1996 on a point of law. However, the court, applying Temloc v Errill (Paul Darling QC), upheld the arbitrator’s decision on the facts and laws.

International Construction Law Review Vol. 24 Part 2 April 2007 Contains the following articles:

New rules for expedited construction arbitration in the United States
by Jesse Grove III, Thelen Reid Brown Raysman & Steiner

Concurrent and sequential causes of delay
by Paul Tobin, Clayton Utz, Sydney

The Price-Quality Method: legal implications of the evaluation process
by Low Sui Pheng, National University of Singapore John Barber, King’s College, London and Pauline Ang, Ministry of Defence, Singapore

Tender procedures best practices: an analysis with some comments from counsel to a Europe-based dredging contractor
By L. Imbrechts

Artpower Ltd v Bespoke Couture Ltd [2007] BLM Vol 24 No. 3 CA
In a (non-construction) contract, the termination clause made provision for termination where the other party committed a material breach of any term of the Agreement. The CA had to decide whether the commission of such a breach automatically terminated the contract. It was held that it did not: it was necessary for the innocent party to take some positive step in order to exercise the right of termination which the breach had conferred.

Kane Constructions v Sopov [2007] Con LJ Vol.23 No.2 145 Supreme Court of Victoria
The plaintiff contractor succeeded in allegations that the defendant owners’ contract superintendent had failed to perform his duty independently in making decisions on progress claims. The Superintendent, a QS appointed following the resignation of his architect predecessor, was criticised by the court for avoiding making decisions in the hope that an agreement would emerge between contractor and owners. He had got into a position where he ceased to be independent.

Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2006] CILL 2449 CA
This is the CA decision on the appeal from the 2006 TCC judgment. Somerfield’s appeal was upheld. The TCC had held that Skanska’s claim was not out of time under the draft contract because that contract was not incorporated into the agreement, being still under negotiation. However, the CA took the view that words in the client’s letter of intent ‘provide the Services under the terms of the Contract’ were sufficient to incorporate all the terms of the proposed contract. There was no inconsistency between those terms and the contents of the letter of intent.

Monavon Construction Ltd v Davenport (No.1) [2007] 108 Con LR 15 TCC
An agreement concluded orally in a coffee shop for work to complete refurbishment of an expensive Knightsbridge house at cost plus a mark-up of 20% did not include a price cap of £100,000 as the clients contended. The precise scope of the works had not been defined and so the £100,000 could only be a guide figure and not contractually enforceable.

Vranicki v Architects Registration Board BLM Vol 24 No 4 Admin. Court
The court dismissed an appeal by an architect against findings of the Board’s Professional Conduct Committee that she had been guilty of unacceptable professional conduct and serious professional incompetence in ‘failing to provide or negotiate an appropriate contractual protection’ for the client in ensuring that different contractors liaise together, and ‘failure to administer the project competently’. In the latter matter, although she was conscientious in visiting the site, her failure to issue appropriate written instructions resulted in poor administration of the contract. The court would not simply bow to the decision of the Committee, but would be reluctant to interfere with its factual findings, recognising its expertise in matters concerning professional competence.

Pearson Education Ltd v The Charter Partnership Ltd [2007] 09 EG 203 and BLM Vol 24 No 4 April 2007 CA
The appellant architects failed to persuade the CA to follow its decision in Baxall Securities v Sheard Walshaw (Louise Randall) and their appeal against liability for negligent design of a warehouse rainwater system was dismissed. The tenants (Pearson) had not known of an earlier flood and had no reason to order an investigation into the adequacy of the system. No event broke the chain of causation between the architects’ specification of an inadequate design capacity and the eventual flooding which caused the tenant loss.

Brett v University of Reading BLM Vol 24 No 4 April 2007 CA
The CA clarified the position on causation in an asbestos-related personal injury case following the House of Lords decisions in Fairchild v Glenhaven and Barker v Corus. Although the rule requiring the claimant to prove the requisite causal link between negligent breach of duty and loss had been relaxed, this did not mean other requirements had been similarly relaxed. In this case, the failure to prove negligent breach of duty in precautions against inhalation of asbestos dust resulted in the dismissal of the claimant’s case.

See Plymouth and South West Co-operative Society v Architecture Structure and Management under Keating Chambers Reported Cases on negligent advice by architects on contract strategy and cost savings.

Thakrar v Jackson [2007] All ER (D) 271 TCC
The TCC held that an exchange of letters concerning a final sum to be paid by the defendants in an action by the claimants would not constitute a binding compromise. The defendants argued that the action had been settled. The court gave guidance as to the approach to be taken to any alleged compromise, considering the parties’ intention to create legal relations, which had been absent here.

Monovan Construction Ltd v Davenport (No.2) [2007] 108 Con LR 34 TCC
In circumstances where neither party had behaved unreasonably (despite both alleging unreasonable behaviour and claiming indemnity costs) in conduct of its case and neither had made an admissible offer to settle or payment into court, the court had to consider who should be awarded costs. Monovan’s claims had totalled £116,000, while the defendants cross-claimed £365,000, with a net result of a £5,000 award to the defendants. The parties had been involved in a ‘score draw’ and each should pay its own costs.

Aird v Prime Meridian Ltd [2007] 108 Con LR 1 TCC
Contractors unsuccessfully applied for a declaration that the claimant employer should not be allowed to amend its pleadings in a way inconsistent with the views expressed by the employer’s architect expert. The respective experts had been ordered to meet without prejudice and the action was stayed pending mediation. The court held that it was not clear that privilege had been waived and so the statement of the expert was a privileged document, even though normally an expert’s statement could be referred to, even when used for mediation.

See Bella Casa v Vinestone under Keating Chambers Reported Cases on the measure of damages for deprivation of use of a residential property.

Gurney Consulting Engineers v Gleeds Health and Safety Ltd [2007] 108 Con LR 58 TCC
The judge reminded both parties that they had a duty to keep the court informed of the initiation and progress of settlement negotiations, even after the trial. If the draft judgment had been sent to the parties before they settled, the court had discretion whether to publish it or not. If they settled between trial and draft judgment and informed the court, the judgment should not be published. In this case HH Judge Coulson’s 130 page judgment would not be published.

Charles Church Developments Ltd v Stent Foundations Ltd [2007] BLR 81 [2007] TCLR 2 TCC
Already reported in CILL. In an action relating to damage caused to neighbouring properties by piling works, arguments were raised as to whether subsequent incidents connected with remedial work would raise new causes of action. The limitation period being about to expire, Charles Church had served the claim without following the pre-action protocol. They now sought leave to amend to deal with responsibility for the subsequent incidents. The defendants resisted this as raising new causes of action. The TCC considered the factors for and against allowing amendment of pleadings before holding that the balance in this case favoured allowing amendment. The defendants could be compensated in costs for the claimants’ failure to comply with the pre-action protocol.

Mareva injunctions: evolving principles and practices revisited by Henry Suen and Sai On Cheung, City University of Hong Kong, Construction Law Journal 2007 Vol. 23 No. 2 p.117
The authors consider the use of the Mareva injunction, particularly in the Hong Kong context, for freezing foreign parties’ assets within the jurisdiction, freezing assets of non-foreign defendants and freezing of assets outside the jurisdiction. They consider the necessary conditions for granting a Mareva, and the court’s discretion in granting them. The article is not exclusively construction-related, but it does comment on two Hong Kong cases from the residential sector, where a Mareva was granted and one where it was refused.

See McGlinn v Waltham Contractors under Keating Chambers Reported Cases on the measure of damages for defective construction.

See McGlinn v Waltham Contractors (No 2) under Keating Chambers Reported Cases on the criteria for allowing evidence to be given by video link.

Avraamides v Colwill [2007] BLR 76 CA
This is important as a (still) relatively rare reported decision on the Contracts (Rights of Third Parties) Act 1999, indeed, the BLR Editors describe it as "The first of which we are aware to address the requirements of Section 1(3)" i.e. the requirement of identification of the third party. It is, moreover, a case which is related to construction work. The issue was the entitlement of the claimants to be treated as third parties under the Act. The CA held that, under s.1(3) of the Act, the third party has to be identified in the contract by name, as a member of a class or as answering a particular description, conditions which were not satisfied here, so that the agreement did not identify any third parties capable of benefiting from contractual rights under the Act.

Aveat Heating Ltd v Jerram Falkus Construction Ltd [2007] CILL 2452 and BLM Vol 24 No 4 April 2007 TCC
The court held that the adjudication provisions of the GC/Works sub-contract were non-HGCR Act compliant, because the time limits did not satisfy s.108, but nevertheless that the reference to adjudication was valid and the Scheme for Construction Contracts would be implied, as the claimant contended. Only the award of costs and expenses could not stand, as the adjudicator had no such powers under the Scheme.
William Webb

Cubitt Building & Interiors Ltd v Fleetglade [2007] BLM Vol 24 No 3 March 2007 TCC
The issue of an adjudication decision a few hours outside the deadline, when the decision had been reached within the time limit, would not invalidate the decision. The adjudicator had mistakenly thought he was entitled to a lien and had incorrectly withheld publication to the parties, but only very briefly. Accordingly, the decision complied with the time-limit in the JCT Contract 1998 edition.
Alan Steynor

McConnell Dowell Constructors (Aust) Pty Ltd v National Grid Gas plc [2007] BLR 92 TCC
Where a supplemental agreement had been reached by the parties to a contract for the construction of a gas pipeline, the court had to decide whether it was covered by the adjudication agreement. In the result, the supplemental agreement was to be construed as a variation of the original contract and so the adjudicator had jurisdiction over both.
Alexander Nissen QC

Quietfield Ltd v Vascroft Construction [2007] BLR 67 CA
This is the CA decision on the appeal from the TCC, judgment, dismissing the appeal by claimants Quietfield, the owner. The adjudicator had held in the first adjudication that contractors Vascroft had failed to show entitlement to an extension of time. Quietfield subsequently began a second and then a third adjudication and the (same) adjudicator held that he was bound by his original finding and refused to consider Vascroft’s new evidence challenging it. Quietfield commenced enforcement proceedings in the TCC but the court held that the adjudicator had been wrong not to consider the new evidence in the third adjudication. The CA held that the judge had reached the right conclusion and the award would not be enforced.
Matthew Holt
Abdul Jinadu

McGlinn v Waltham Contractors Ltd [2007] CILL 2441 TCC
This is part of ongoing litigation which has given rise to reported decisions on recovery of costs for discontinued claim and application to give evidence by video link. This concerns the measure of damages for defects in a luxury house designed and built by the defendants in Jersey. The claimant argued entitlement to the cost of demolition and rebuild, but the TCC held that the "correct measure of loss was the cost of the work necessary to repair the individual defects for which each separate defendant was liable and responsible."

The court considered at some length the Great Ormond Street decision (John Marrin QC) and distinguished it on the facts, also referring to its treatment in the 8^th edition of Keating.
Adrian Williamson QC
Jonathan Selby

Already reported in BLR. A reported decision on recovery of costs for a discontinued claim (Lucy Garrett) was also reported in 2005. See also a further decision on assessment of damages in this section.

This was an application by the claimant for an order that he could give his evidence by video link in the trial of this claim for damages regarding defective construction of his house in Jersey. Although the judge noted that cross-examination was never quite as effective by this method, the application was granted because there was no significant prejudice to the defendants, whereas the claimant’s tax status would be jeopardised if he left Jersey to come to London.
Adrian Williamson QC
Jonathan Selby

Gray & Sons Builders (Bedford) Ltd v Essential Box Co. Ltd [2007] 108 Con LR 49 TCC
Where an adjudicator’s award had not been met by payment from the defendant, the defendant’s solicitors had indicated that the claimant’s enforcement proceedings would be contested and took a number of technical points. On the day before the hearing of the enforcement application, they indicated that the application would not be contested. The claimant obtained indemnity costs, the court holding that defendants who avoided paying on an adjudicator’s decision until the last moment or beyond were seeking to frustrate the intention of the adjudication provisions of the HGCR Act.
Piers Stansfield

Plymouth and South West Co-operative Society Ltd v Architecture, Structure and Management Ltd [2007] 108 Con LR 77 TCC
Already reported in CILL. The claimant clients succeeded in their action against the defendant architects for professional negligence in failing to advise of a suitable contract strategy and failing to advise on cost saving opportunities during the works. Accordingly, the additional costs incurred plus the costs savings were recoverable.
Paul Darling QC
Justin Mort

Multiplex Construction (UK) Ltd v Mott Macdonald Ltd [2007] CILL 2446 TCC
Enforcement was granted of an adjudicator’s decision against the respondent structural engineers on the Wembley Stadium project. The engineers had been novated to Multiplex, the main contractors. The engineers had sought to resist enforcement on the ground that the adjudicator had been wrong in his interpretation of what was meant by ‘pertinent records’ for the purposes of access to documents. The court held that the adjudicator was entitled to formulate his own interpretation and so was acting within his jurisdiction; whether he was right or wrong was irrelevant for enforcement purposes.
Simon Hughes

Bella Casa Ltd v Vinestone Ltd [2007] 108 Con LR 148 TCC
Already reported in BLR. The TCC had to consider the measure of damages in respect of deprivation of use of a residential building following allegedly defective design and construction work. The court held that such matters as service charges and utility bills might be recoverable in principle, but that general damages calculated by reference to interest on the balance of the purchase price could not be recovered as contrary to principle.
Finola O’Farrell QC
Justin Mort

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