Case notes

Gotta get a message to you

You can send letters quickly by email, slowly by hand and somewhere in the middle is the Royal Mail. They can all cause problems.

Palmac was building three houses in Stratford-upon-Avon for Park Lane Estates. The project was worth £500,000 and was under a JCT with Contractor’s Design 1998.

Palmac had made payment applications by fax, post and by hand, but Application No. 20, it so happened, was served by email.

Park Lane issued no notice of payment, nor notice of withholding. Under the rules it should have paid. As it did not, Palmac resorted to adjudication.

The adjudicator decided Park Lane should pay £169,912 plus VAT, plus the adjudicator’s fees. Park Lane refused, and Palmac wanted the court to enforce the decision.

Park Lane argued that, as the Application No. 20 had come by email, it was not effective, so the adjudicator’s decision was invalid because, without an application, there was no dispute.

The judge found that a pre-contract meeting had given a schedule of contact details for the parties – and they included email addresses.

In addition, she said that under clause 1.5 of the contract, a document is deemed to be effectively served if actual service can be proved. It was not disputed that Park Lane had received the application. Therefore, Park Lane was wrong on both points and had no real prospect of defending its claim in a full hearing.

The adjudicator’s decision was enforced.

Moral: Organise your inbox

Case: Palmac Contracting Limited versus Park Lane Estates Limited. TCC March 18, 2005. [Bliss IB 15]

A friendly favour? Well, it’ll cost ya...

Brian Kennedy and Gerry Hamill were friends. At least Hamill thought so. Both were construction men: Kennedy a building surveyor and Hamill an architect.

So really, they both ought to have known better.

Kennedy wanted to refurbish and extend his new house at Drumbo, Northern Ireland, and since Hamill had worked on a similar project for a mutual friend, he agreed to help.

Suspicious that he’d overpaid for the house, Kennedy wanted to keep the refurb costs under £40k. To do so, he would organise the Aga, the kitchen, the slate and wooden floors and various other bits.

Hamill faxed Kennedy on July 28, 1997, saying that he would perform the RIBA services to tender stage for a fee discounted by 33%. The architectural service contract was signed in March 1998.

Hamill undertook the design and helped appoint Gray & Son as contractor under the JCT Minor Works Form. Initially Hamill was not providing post-contract services, but during a design meeting Mrs Kennedy asked him if he would “keep an eye on the building while he was on site”.

Hamill replied that the builder was responsible for his own quality, but that, as a friend, he would perform some supervising and administration duties without charge.

By 1999, Kennedy and the builder had fallen out completely. Part of the problem was non-payment and delays in the Employer supplied items.

Hamill tried to reconcile the differences, eventually issuing Practical and Final Certificates, although not all the works had been done.

Gray & Son took Brian Kennedy to arbitration, but then went bust before the arbitration was completed. The arbitrator had to sue Kennedy for his fees.

Kennedy then sued his erstwhile mate Hamill for the costs of incomplete work (£2,700), a contractor’s tender increase (£8,000) and of the arbitration (£21,000).

In court, Kennedy dropped the last item and the judge threw out the tender increase, only allowing Kennedy the sum of £2,700 for work included in the final account but which had not been done.

Moral: Favours can be pricey

Case: Brian Kennedy versus Gerry Hamill, practising as Gerry Hamill Chartered Architect. High Court Northern Ireland QBD (Commercial) March 18, 2005. [Bliss IB 14/3]

Rubbish ruling in Leeds

Leeds Metropolitan University runs an excellent MSc course in Construction Law and Arbitration, so, by the judge’s comments in this case, it is unlikely that any LMU students were involved in this dispute about the refurbishment of the University’s Macaulay Hall.

The main contractor, Totty, had sub-let the design, supply and erection of the M&E to Gill and Wilkinson. Totty had to complete on 17 August, 2003, Gill at the end of June.

Gill sub-sub-contracted Machenair for the mechanical installation mostly on a labour-only basis.

In April 2003 Gill asked Totty for an extension of time. Totty refused, arguing that there had always been work available for Gill.

Then in June the University rejected Gill’s proposed water heaters. Acceptable replacements did not arrive until the end of July.

On August 1, Totty sent Gill a stiff letter complaining about Gill’s delays. It listed 30 outstanding items, plus the testing and commissioning.

Machenair finished about August 21, and wanted £91,173 for its final account. Gill disagreed and wanted to charge Machenair for the delays and for clearing rubbish.

Because the parties had not set out their positions clearly in written schedules, the Judge had to sit through evidence on the delays and each of 45 variations (eventually only totalling £24,411).

He eventually found that Machenair had not caused any delays. The only counter charge Gill could make was £500 for the rubbish.

In awarding Machenair a net amount of £78,183, the judge commented that the parties’ conduct had significantly increased their legal costs.

Moral: Clearly set out the arguments before the case starts

Case: Machenair Limited versus Gill and Wilkinson Limited. Leeds TCC March 14, 2005. [Bliss IB 14/5]