Case notes...

Temporary dispute

Wembley stadium’s disputes continue. This one is a continuation of the Multiplex and Cleveland Bridge (CB) row over the roof arch and the steelwork. Cleveland Bridge was the sub-contractor for the design, fabrication, supply, delivery and erection of the steelwork, but problems arose which caused significant delays.

In early 2004 Multiplex and CB held a series of meetings to try to resolve the issues between them, speed up the work and help CB’s cash flow. These culminated in a supplemental agreement of June 2004, under which CB was to receive £12m for the completion of the remaining works, except that certain items, including erection and site works, were to be on a cost-reimbursable basis. There were schedules of the various works, although the ‘temp works roof props’ were excluded from the lump sum. The production of design and fabrication drawings were included in the lump sum.

Multiplex initially paid CB for the temporary works design on a cost basis, but disallowed the design costs in its Certificate 35 (issued on June 25, 2004). This and other matters caused CB to leave site on August 2, 2004. Multiplex then claimed approximately £15m from roof temporary works.

The court held that the phrase ‘temp works roof props’ could only mean the design, drafting and fabrication of all temporary work for the roof and was not part of the fixed lump sum.

Moral: Word supplemental agreements carefully.

Case: Multiplex Constructions (UL) v Cleveland Bridge UK. and another. (TCC Feb 1, 2007)

The cap fits

This case concerns the preliminary issue as to whether or not a cap on damages applied. Shepherd Homes Limited (SHL) wanted to build 94 houses on its Eden Park site at Hart Lane, Hartlepool. The underlying soil is peat and the foundations needed piling.

SHL hired AIG Remediation (now called Encia) as civils contractor for the ground works, roads, sewers, piling, ring beams and floors. Encia was part of AIG International, one of the world’s largest insurance groups.

After exchanges of letters and several discussions Encia hired Green Piling to carry out the piling works for £91,316 for phase I and £156,286 for phase II. Encia’s contract prices were £777,459 for phase I (46 Plots) and £1,236,031.80 for phase II (48 plots). By contrast Green’s total turnover for 2000-01 was only £336,682.

Green carried out the piling between July 2001 and September 2002. But in May 2003 settlement started to occur in the properties. SHL claimed up to £10m from Encia and Encia blamed Green. The full trial is scheduled for June this year.

In the meantime Green argued that clause 4.3 of its terms and conditions applied and restricted its liability to its contract price.

When Encia had accepted Green’s price and instructed it to start work, the only change in Green’s conditions was an increase in the payment period from 14 to 28 days. There was the possibility of savings through value engineering but Green’s clause 4.3 was not discussed.

Encia never sent a formal order, although it said it would. Encia’s Mr Kane sent a letter to Green confirming the start date of 2 July and saying that Green would be responsible for all the risks of ground conditions whether foreseen, unforeseen or unforeseeable. Green responded to that letter on July 9 thanking Encia for its order.

Meanwhile Green’s Mr Bates had been involved with the value engineering and produced a revised design for the pile head/ground beam connection and confirmed Green’s £1m PI policy. There have been no complaints about this design.

In court, the judge held that Green’s clause 4.3 had been fairly brought to Encia’s notice. Encia’s Mr Kane had clearly read Green’s terms and conditions, the cap was not onerous or unreasonable and had been included in the contract by Encia accepting Green’s quotation.

Green was ruled to have a cap on its liability.

Moral: Referring to a quotation includes its terms and conditions.

Case: Shepherd Homes Ltd v Encia Remediation Ltd and Green Piling Ltd. (TCC January 2007)

Out of time

Oxford Architects Partnership (OAP) was the architect for Cheltenham Ladies College’s new art and technology block. OAP was commissioned under the RIBA Conditions of Engagement CE/95. These included article 5, which said that no action or proceedings for any breach of the agreement could be started against OAP after six years from completion of OAP’s services, or, if OAP was providing stages K-L (contract administration), six years from the certificate of practical completion.

Cowlin Construction did the work and achieved practical completion on November 25, 1998. Just less than six years later, on November 24, 2004, the college served an arbitration notice on OAP. The claim was for faulty basement tanking, defective and warped fire doors and for failing to issue information to Zisman, Bowyer + Partners (ZBP), the college’s engineering consultant.

OAP argued that the College had started its action too late and was time-barred by the Limitation Act 1980 as all the causes had arisen before November 24, 1998. The arbitrator disagreed, holding that OAP had had the opportunity for rectifying any defective designs in the basement tanking and the fire doors right up to practical completion. Similarly, the wording of article 5 applied to all OAP’s work, which meant the claim was within the time allowed.

OAP appealed and the Judge found that article 5 did not supplant the statutory limitation period, but could restrict it if, for example, OAP’s appointment had been a deed and subject to a 12-year statutory limitation period. As all the main causes of action had taken place prior to November 24, 1998, they were all time-barred. The only possible exception was the attempted late remedial work to the fire doors.

Moral: Don’t delay action too long.

Case: The Oxford Architect’s Partnership v The Cheltenham Ladies College (TCC November 17, 2006)