Case notes

Reversed charges for BT

Geraghty was repairing leaking diesel tanks at Birchy Barn Service Station in Exeter when it drilled down near the verge. It had not checked with BT in advance, and its drill smashed a BT cable duct damaging three fibre-optic, one co-axial and one 620-pair copper cables. Whoops.

BT billed Geraghty £91,335 for the repairs. This included labour, materials, external contracts and subsistence with differing levels of overhead added. Geraghty admitted liability but balked at the size of BT’s bill.

In discussions, BT admitted it had wrongly charged for cables and joints. This made the agreed material figure £16,700, reducing BT’s claim to just over £82,000.

BT’s labour costs, including overtime charges and an overhead uplift of 126%, were £59,602.

In court, BT defended the 126% uplift because the charge was in line with OFTEL’s accounting requirements and had been accepted by OFTEL. The court looked very closely at the way BT’s accountancy procedures operated and how BT had calculated the 126%. It decided the uplift should be only 79.9%. With this and other rate adjustments, BT’s labour charge was brought down to £44,373.

Together with a reduction in the overheads on external contract costs, Geraghty was told to pay BT the reduced sum of £66,421.

Moral: It pays to talk

Case: British Telecommunications plc versus Geraghty & Miller International Inc. July 2004 QBD – Leeds [Bliss IB/37]

Steel erector’s most expensive trip

In 1999 steel erector Michael Humphereyes was working for electrical sub-contractor Bancroft, fitting cable trays and trunking on a new warehouse at Greenford. He needed to do some snagging work on cable trays he had installed in the bulk storage area a few days earlier and walked through the bulk storage area’s access door. Within a few steps he had tripped over one of a number of 5” (275mm) unmarked steel studs set into the concrete.

Humphereyes fell, twisting his knee and hitting his head on a scissors lift. Orthopedic damage was so bad his surgeon testified he could not lift weights and should never work on site again. Total damages were £304,221.

The studs were part of the shelving system and had been set out on the previous day by Nedcon, the site’s specialist shelving sub-contractor and installed by its sub-sub-contractor, Storage Engineering Services (SES).

The key issue was liability. The main contractor’s and Nedcon’s supervisors tried to blame SES, saying it had been given instructions to cordon off the studded floor areas. However the judge dismissed their evidence.

Similar attempts to blame Bancroft and/or Humphereyes were given short shrift by the judge. Nedcon also claimed that vital safety records had been sent to its Netherlands HQ and were unavailable to the court.

The judge determined the studs were a clear tripping hazard that should have been dealt with by notices and barriers. Therefore, both Nedcon and SES were liable in the proportions two-thirds and one-third respectively.

Moral: Holes are not the only hazards The studs had not been marked, there was no tape between them, the area had not been cordoned off, nor were there any barriers or warning notices.

Case: Michael Humphereyes versus Nedcon UK Limited and Storage Engineering Services Limited. July 2004 [BLISS IB/39]

Glasgow Airport is left grounded

UPS had a 20-year lease for a new unit at Glasgow Airport’s Cargo Centre. The specification said that ‘the floor system adopted must reflect the nature of the initial user (cargo freight handling and storage)’.

During the lease, UPS was responsible for repairs. The contractors and consultants had issued collateral warranties made to UPS. The floor was not up to standard and UPS claimed £744,490 for the airport’s breach of contract.

UPS argued Glasgow Airport had a responsibility under the lease to ensure that the unit had been constructed ‘in accordance with good practice and using quality materials’.

Glasgow Airport countered that UPS had accepted the unit as being ‘in all respects in good and substantial repair’. It said that UPS could only recover the cost of the remedial works under the defects liability (Clause 7). This required UPS to notify any defects within 12 months of practical completion, which UPS had failed to do. As a result, argued Glasgow Airport, UPS could not claim any loss and expense. Instead UPS had to use the collateral warranty to claim against the contractors and consultants. Its complaints about the floor were covered under its own obligation to repair during the lease.

The court disagreed. It held that the collateral warranty did not cover exactly the same ground as the lease, and Clause 7 was subject to any other rights or remedies UPS possessed. UPS was given the OK to continue.

Moral: Your obligations might stick to you Instead UPS had to use the collateral warranty to claim against the contractors and consultants. Anyway UPS’

Case: UPS Supply Chain Solutions versus Glasgow Airport Limited. October 2004 (Outer House) [BLISS IB/39]

The law can be a long and winding road

In this case, getting an enforceable adjudicator’s decision took 18 months, two adjudications and three court cases.

Amec & Whitefriars’ contract was partly contained in a letter of intent and based on the WCD 98. The contract even named the adjudicator as George Ashworth of Davis Langdon and Everett (DLE). If he was unavailable, he could nominate the adjudicator. But George Ashworth of DLE was not available because he did not exist.

Adjudication 1 Amec applied to RIBA, who nominated Michael Biscoe. He decided that Whitefriars should pay Amec £717,885.

Court Case 1 When Amec tried to enforce this decision, Whitefriars challenged Biscoe’s jurisdiction and alleged he had been biased. The judge decided the adjudicator should have been George Ashworth, or a person nominated by him. As a result, Biscoe had not had jurisdiction.

Adjudication 2 Amec pointed out there was no George Ashworth at DLE and applied again to RIBA, who again appointed Biscoe. He came up with pretty much the same decision.

Court cases 2 and 3 The court refused to enforce the decision. It agreed Biscoe did have jurisdiction but he had ‘been biased’. Amec appealed. The Court of Appeal held Biscoe did have jurisdiction as ‘George Ashworth’ had never been appointed.

The Appeal court also held that Biscoe had shown no bias, and the appeal was allowed.

Moral: Disputes can drag on. And on. And on

Case: Amec Capital Projects Limited versus Whitefriars City Estates Limited. Court of Appeal. October 2004 [BLISS IB/42]