Case notes... From Ann Wright

Corporate responsibility

The law likes certainty. It doesn’t like claims where cause and effect (ie losses) have to be inferred rather than fully linked.

Recently, however, courts have held that it is not necessary for causal linkage to be overelaborate and cover every possibility. But when an arbitrator rejected a global claim and then found that it contained an acceptable smaller claim, London Underground Ltd (LUL) was miffed.

Citylink was involved in a project to design, install and operate a radio and transmission system covering voice, data and video on the Tube network. The work involved installing copper and fibre optic cables, plus communication equipment rooms (CER) and communication equipment cabinets.

LUL was responsible for certain enabling works, including power to the CERs. At the centre of the new system was a series of 11 core CERs connected by fibre optic cables forming the ‘corporate line’.

Other areas could not be completed before this corporate line was commissioned. Although Citylink produced a claim for 81 weeks based on a complicated critical path analysis (CPA), the arbitrator held CPA was inappropriate and did not provide the necessary causal links, and the claim was rejected.

However, he found from the evidence that LUL had delayed the power to the corporate line at Edgware Road, which gave Citylink an entitlement to a 48-week extension. In spite of LUL’s appeal, the court concurred with the arbitrator’s decision. Moral: Proving cause and effect is essential.

Case: London Underground Ltd v Citylink Telecommunications Ltd (TCC July 2007)

Mrs Tomlinson wanted to extend her house. She agreed with Wilson & Chamberlain (W&C) that she would make payments in six interim stages. Completion would be achieved when the Building Inspector issued his final certificate.

When the Building Control surveyor, Mr Hall, visited the site, he suggested an alternative foundation design, which was accepted, but there was no suggestion the contract price would change.

By June 17, 2005, the relationship between Mrs Tomlinson and W&C had degenerated. W&C wrote that it was leaving site with the extension unfinished until payment issues were resolved. If necessary W&C would commission a quantity surveyor to produce a report which W&C was confident would justify its stance over her lack of payment.

This promoted more letters and emails between the parties. On July 15, 2005, Mrs Tomlinson’s solicitor wrote that W&C had failed to use reasonable skill and care. In particular it said W&C had failed to construct the concrete base to Mr Hall’s design and it would cost approximately £26,000 to rebuild the slab.

Mrs Tomlinson would make no further payments until the work was certified as being satisfactory in accordance with the Building Regulations and stage payments would not be part of the contract.

W&C’s expert QS was refused permission to inspect the site and W&C could only return if it carried out the remedial works. W&C had also learned that Mrs Tomlinson had asked one of its subcontractors to finish the work.

In court W&C said it had suspended work because it anticipated a breach of contract by Mrs Tomlinson and the July 15 letter was only an invitation for W&C to return to complete the work at its own expense.

The court agreed that by her actions and the letter, Mrs Tomlinson had shown her intention to repudiate the contract and W&C was awarded damages.

Moral: Do not signal your intentions to repudiate.

Case: Tomlinson v Iain Wilson (T/A Wilson & Chamberlain) (TCC Leeds May 2007)

Stop press

In 2002 Bridge decided to move its printing and mailing business to a larger premises in Maldon, Essex. It bought a Heidelberg 10-colour 102 Speedmaster printing press and wanted to install it before moving into the new works.

When fully set up, the press machinery weighs 62 tonnes and needs a good level foundation and a dust-free atmosphere to operate. Bridge contacted specialist ground engineering company Abbey to provide a suitable concrete base.

Abbey investigated the site on August 13, 2002, and quoted £12,500, saying the work would be completed in 10 days and built to a 20mm tolerance. Bridge agreed and Abbey started work on August 19. Although this would have meant a completion date by September 2 Bridge arranged for the press installation to begin on September 11.

Abbey constructed the slab out of tolerance and hollow in places. It took until October 4 for Abbey to complete the remedial works, which inevitably created significant amounts of dust and debris. The press installer confirmed acceptance of the slab on October 12. Installation started on October 13, but due to the concrete dust and debris it took until October 28 to complete. Bridge claimed damages of £81,000 for having to print elsewhere due to the delays.

Abbey eventually admitted liability, but argued on quantum, claiming Bridge had not produced proper evidence of its losses. The judge allowed several of the invoices for transport to and charges from alternative printing houses for the period of delay. He also allowed Bridge’s management time as the sales director demonstrated that he had been diverted from his main job by spending time in resolving the problems caused by the delays.

However, as Bridge could not produce full records or timesheets the judge discounted the time claimed and the overhead charges and reduced Bridge’s claim by £20,000.

Moral: Not keeping proper records can be costly.

Case: Bridge Communications Ltd v Abbey Pynford plc (TCC April 4, 2007)