Case notes

Complex claims

The Davenports wanted to refurbish their house in Knightsbridge. David Jones carried out most of the design work. The refurbishment included damp-proofing the basement, extensive electrical rewiring, a new central heating boiler, installation of warmed flooring and general finishing work.

Initially the Davenports hired TL Construction (UK) Ltd, a construction firm run by a Polish principal and using Polish operatives. There was a simple written contract with TL Construction but no proper specification or completion periods. The work was paid for in cash on a cost plus basis.

After a month the Davenports got fed up of the slow speed and excessive cost of work and sacked TL Construction. They hired Monovan to check TL Construction’s work and give a guide price for completion. Monovan quoted around £100,000, but as it still took longer than the Davenports liked and the work was costing considerably more than the guide price the dispute went to court.

Monovan claimed £116,087.03 and the Davenports cross-claimed £181, 948.63 for completing Monovan’s work and remedying its defects. There were five claim issues and 61 items of cross claim, including items valued as low as £100 or even £60 for things such as rot to doors and repairing a shed roof. In the trial the judge had to carefully consider all the five claim issues and the 61 cross claim items separately.

Although the judge generally found for Monovan in its claims, these were reduced by the Davenports’ cross claims. The net sum and the legal costs are yet to be decided. But if Monovan had actually completed its work it would have significantly reduced the court time and its legal costs.

Moral: Narrow the issues before going to court.

^{Case: Monovan Construction Ltd versus Simon Davenport and Angelika Davenport. TCC May 22, 2006.}

Redworth blows hot and cold

Winning an adjudication can be just the first step in resolving a dispute, the second is to enforce it. In Redworth Construction versus Brookdale Healthcare, Brookdale alleged Redworth had completed a £5m care home project in Bedfordshire late. In September 2005, it knocked £300,000 off Redworth’s account for “Penalty 15 weeks at £20,000”. But at adjudication it was decided that Brookdale should pay Redworth £210,576.67.

Like many construction projects the contract had slid into existence rather than being a full set of terms and conditions. John Dickie Associates had designed the care home in 2003. By April 2003 Brookdale was negotiating with Redworth and issued a document saying the JCT With Contractor’s Design contract would apply.

For example, the rate for liquidated damages was £20,000/week but it gave no Date for Completion. Negotiations continued as the price changed and by November 21, 2003 the two main directors shook hands on a deal at £4.5m. Brookdale still made changes and a further letter on December 19 2003 spelled out the Dates for Completion.

In practice, the JCT design and build conditions did not apply as John Dickie continued to design the project with Redworth only having an informal input and being given the design changes as variations, which totalled £942,066.

If a contract is in writing, adjudication is not enforceable. In this adjudication, Redworth argued the contract had been formed in writing on November 21, because it thought the case would have been damaged by the Sectional Completion Dates in the December 19 letter. The adjudicator ruled in Redworth’s favour. However, Redworth later argued in court that the contract had really been formed on December 19, as it was indisputably in writing.

The judge said Redworth could not blow hot and cold like this. He had to form his judgment on information given to the adjudicator and he held that there was no written contract on November 19, so the adjudicator’s decision would not be enforced.

Moral: Change your tack at your peril.

^{Case: Redworth Construction Ltd versus Brookdale Healthcare Ltd. TCC July 31, 2006.}

Cleveland’s highs and lows

Cleveland Bridge UK’s high point on the Wembley Stadium Project was on June 29, 2004. It was the date that Multiplex finally agreed CB had lifted the Wembley Arch to its 112 degree position.

Under revised agreements made on February 18 and June 16, 2004, Multiplex had to pay CB a £1.25m bonus within 14 days.

However CB’s pleasure was short-lived. On June 30, Multiplex gave 28 days’ notice that it would take all remaining on-site erection work from CB. Worse, on July 5 Multiplex wrote saying CB would not get the £1.25m bonus for lifting the arch, because CB had fabricated more than 100 members out of tolerance and delayed the work.

On July 16 Multiplex issued certificates revaluing CB’s works downward for inefficient working and misalignment. The reductions meant that CB actually owed Multiplex a net £11,874,500 plus VAT when earlier payments were taken into account. Naturally CB protested.

Each party blamed the other and eventually CB quit the site arguing Multiplex had repudiated the contract.

CB’s initial DOM/2 sub-contract dated September 2002 had been to design, fabricate, supply, deliver and erect the structural steelwork for £60m. After a 44-week design/fabrication period the work was to start in July/August 2003 with an 81-week completion period.

CB’s work was delayed from the start. Initially the project designer, Mott MacDonald, was late in releasing the design information and there were other delays. To regularise the situation and settle all claims and disputes, CB and Multiplex made supplemental agreements in February and June 2004. But the court held that these agreements did not cover deductions for work or materials that were not in accordance with the contract.

Although Multiplex had been ruthless it had generally been legally correct in its actions.

Moral: Supplemental agreements are not a cure-all.

^{Case: Multiplex Constructions (UK) Ltd (Claimant/PArt 20 Defendant) versus Cleveland Bridge UK Ltd
(First Defendant/Part 20 Claimant) Cleveland Bridge Dorman Long Engineering Ltd (Second Defendant). TCC June 5, 2006.}