Tale of the expected

This is a story about a dispute over the ultra pure water plant at the Siemens factory in North Tyneside. It is all to do with the electrical installation. Some of the contractors became ultra brassed off. Certainly, NALA Engineering and Roselec did. The clue is in one of the letters from NALA: “To date we have received nothing but false promises and total inertia in responding to our letters and request for Roselec to come out and state their undertakings to complete the contract and to compensate us accordingly. The whole contract has been a catalogue of inexactitudes and lies.” NALA said all that on the day its patience finally gave out and it packed its pliers and left the site forever. The judge in last month’s trial thought it ought to have stayed.

It is worth reading the judgment: NALA Engineering Ltd vs Roselec Ltd (July 1999, Judge Wilcox, Technology and Construction Court), since it is absolutely nothing out of the ordinary. It is because the events are so ordinary and everyday that there are lessons to be learned. Not only is it useful for construction but for new adjudicators and old arbitrators, too.

The NALA contract was to install cable trays.

It was worth £260 000. The time allowed was about nine weeks. The small print was Roselec’s home-made form; it included a term that allowed Roselec to instruct NALA to adjust its manner of working for which additional expenses would be paid. The contract also contained an obvious silent term (known as an implied term) whereby Roselec would not prevent or impede the efficient and economic progress of the contract works . So far, so good.

The judge said that the provision of the superstructure by others to carry NALA’s cable trays was dilatory and unco-ordinated. There was no programme laid down for sequencing work on the areas for the cable trays. Promises were made further up the contractual chain that everything would be ready, so that NALA could keep a full team of electricians on site with a reasonable prospect of their being occupied in an economic way. But it didn’t happen. The lads were not fully occupied. What’s worse, trades started to tumble over one another. Worse again, the work actually done was inconsistent and disrupted. NALA did its best to move the lads around. Smooth and unhindered performance never happened.

Now then, it is well known, all else apart, that most contracts automatically imply a term that one party will not prevent the other from performing its role. So, did Roselec breach such a term? After all, it looks as though NALA was well and truly messed about. The judge said no. He thought, on the facts, that all the problems came from further up the contractual chain. Roselec did its best; it was not Roselec that impeded due progress of the cable tray work. So, Roselec was not to be blamed for the problems.

Presumably, NALA became frustrated with the financial aspects of the job. Usually, money is paid out to umpteen chaps on site, but there’s not much sign of cash coming in. In my experience, that’s because the other party is trying to get paid from the next one up the line, and so on. Instead of being all done in November 1998, NALA was still there come January 1999. Obviously bruised by now, NALA said it wanted all the lads to be paid on a daywork basis. The Roselec manager said in reply: “No way would I give NALA daywork – your men would be lying around like loppy dogs.”

The lads were not fully occupied. Trades started to tumble over one another. Worse, the work done was inconsistent

But NALA was insistent. It had blokes on the job, but it didn’t a clue when the work would be finished and was shelling out week on week.

Now it made its mistake. It wrote in unambiguous terms that unless it was moved on to daywork basis, it would pull out. Roselec said no but – and this is important – it confirmed that it would pay for uneconomic working. With that, NALA left the site.

So Roselec had no option but to employ another cable tray installing company. It piled up that work on daywork sheets and charged it all to NALA. It might have succeeded with that: the judge said NALA had no right to leave site, since there were clear promises to pay the uneconomic working. NALA had repudiated its contract, and Roselec could charge it the reasonable extra cost of going elsewhere to finish the job.

But now it was Rosalec’s turn to boob.

It tried to charge NALA £127 500, but there was evidence that the replacement contractor put teams on jobs that a single worker could have completed. Unimpressed by all that, the judge dismissed Roselec’s counterclaim.