Case notes... from Ann Wright

A Harrowing experience

Although not a construction case, the same problems can apply in construction when a piece of kit is used only intermittently.

Mr Ritchie is a farmer in Paisley. On 4 March, 1999, he bought a seed drill and harrow from Lloyd for £14,217.

He started using them for seeding on 26 April, 1999, but two days later he noticed a vibration in the harrow’s drive train. As this continued on 29 April, he called Lloyd’s fitter, Mr Fairley, who arranged for the harrow to be returned for inspection and lent Mr Ritchie a second-hand harrow to continue his seeding.

Mr Fairley found that the harrow was missing two of its rotors, which made the machine work unsatisfactorily and unfit for its purpose. He obtained and fitted spares in May and informed Mr Ritchie the harrow had been repaired to ‘factory gate specification’, but gave no other details.

Mr Ritchie was concerned both that the fault may have caused other damage when he was using the harrow and that he would not be able to test the harrow until the following spring. He asked Lloyd for details of the repairs and an engineer’s report, but his request was refused.

The lower courts supported Lloyd as the harrow had been repaired to a satisfactory quality. However, the House of Lords agreed with Mr Ritchie. As the harrow had been defective at the original time of delivery he had not lost his right to reject it.

Moral: You are entitled to the details of the fault.

Case: J & H Ritchie Ltd v Lloyd Ltd (Scotland) (UKHL March 2007)

Adding fuel to the fire

Lloyds and Zurich had insured Mr Dyason’s house and contents for £293,000. During the night of 10-11 January 2003 the house caught fire and needed to be demolished and rebuilt.

The insurers appointed GAB Robins as loss adjusters. GAB Robins’ Paul Thorson was in charge, providing project management and surveying services for the rebuild, including plans and approvals. Although Mr Dyason was not involved in this process, in July 2003 he was asked to sign the contract for £197,620 as the employer. He also signed a mandate allowing Robins to instruct the builder, Domsella, formally and allowing the insurers to pay Domsella directly.

The rebuilding took place between 3 October, 2003 and 28 May, 2004. It was late.

Domsella blamed too many instructions from too many people, including Mr Dyason, Mr Thorson, the Building inspectors and the NHBC inspectors.

Mr Thorson gave an extension to 9 July. But by late September 2004 the house was still not finished and Mr Dyason complained about Mr Thorson.

On 1 October, Domsella threatened to determine because of Mr Dyason’s continued instructions and his interference with the subcontractors.

Following complaints from Mr Dyason, GAB Robins replaced Mr Thorson with Mr Gordon, who quickly blamed Domsella for the delays, warning that Domsella could be dismissed if the job was not completed by the end of November. Domsella then issued several interim applications that were not paid. This was partly because Lloyds TSB was jibbing at having to pay more than £332,000 in total. Under the rules of the Construction Act, the employer must issue a withholding notice within a set period if they are not going to pay – which didn’t happen.

After an abortive Statutory Demand, on 28 June, 2006, Domsella went to adjudication. The adjudicator awarded Domsella £151,042. Mr Dyason argued that as he was the resident, adjudication did not apply as the Construction Act does not cover domestic owners.

Although the judge disagreed with Mr Dyason because he was actually the insurer’s agent, it found that as Mr Dyason was not involved in certification or payments, the withholding notice provisions did not apply to him.

Moral: Get the strength of the insurance companies around you.

Case: Steve Domsella v Kenneth Dyason. (TCC May 2007)

The cost of delay

In construction and civil engineering disputes you must first follow the pre-action protocol, which allows the parties to see documents, understand each other’s position and try to settle. Starting court proceedings late, however, can put you out of time.

Charles Church was developing a project at Vauxhall Bridge, London. During piling there were three incidents, the first in August 2000. Charles Church blamed Stent for the first and third incidents and Peter Dann for the second.

During initial correspondence, Stent had disclosed much of its information, but communication had petered out in September 2004.

In February 2006 Charles Church issued its claim. However, Stent did not receive details of the claim until 8 June, 2006.

Stent’s solicitors immediately argued that there had been no attempt to comply with the pre-action protocol and wanted Charles Church to disclose its documents so Stent could understand the case properly.

Charles Church’s solicitors agreed they had not followed the protocol but said this was because of the contractual and factual complications of the case and the extensive input from its experts.

They also claimed that if the protocol had been followed there was a danger that the case would be out of time as the initial incident had taken place six years previously. The full trial was set down for mid-2007.

By October 2006 Charles Church’s estimates were £800,000 costs to date (with a full estimate of £1.8m). Stent’s figures were £91,000 (£665,000) and Peter Dann’s £80,000 (£900,000).

The court held that if Charles Church had followed the protocol in February 2006 it was likely that there would have been a settlement without the need for court proceedings.

As a result Charles Church had to pay 50% of Stent’s costs between 9 June, 2006 and 13 April, 2007. In addition, whatever the outcome, Charles Church had to bear 50% of its own costs from 14 February, 2006 to 13 April, 2007.

Moral: Don’t delay. Claim today.

Case: Charles Church Developments v Stent Foundations Ltd. & Peter Dann Ltd. (TCC March 2007)