The design was at fault, but who was to blame?
When they saw water and soil flooding into the basement, Henry Boot's site team must have been mortified. Boot was rebuilding Lomond House in Glasgow for the Cooperative Insurance Society (CIS) and also had responsibility for developing the design concept provided by the CIS's consulting engineers, Crouch Hogg Waterman (CHW). The tender documentation had included a site investigation report provided by Terra Tek. CIS demanded compensation.
"You provided the report," retorted Boot. "It was incorporated into the contract and we relied on it. Anyway, we just had to prepare drawings in accordance with CHW's concept design."
"Oh no," said CHW. "The basement walls were within the contractor's design portion. It was Boot's responsibility to develop and complete the concept design to a design capable of being constructed."
The case went to court. The judge found that the Terra Tek report had not been included in the contract documents and was for guidance only. Also, Boot was obliged to report any defects or deficiencies, real or potential, in the concept design it had been given. The full trial is scheduled for November.
Moral: Completing the design means checking the previous design
Cooperative Insurance Society Ltd v (1) Henry Boot (Scotland) Ltd (2) Henry Boot PLC (3) Crouch Hogg Waterman. In the Technology and Construction Court, July 2002.
The written rules
Skimping on the paperwork is tempting but can cost you dear
Instructions amending a contract are inevitable in construction. Unforeseen ground conditions, room size alterations, changes in finishes - they all happen. Although most contracts require written instructions, contractors often act on the professional team's oral instructions. This is great for a hassle-free life on site but if things go wrong, everyone is vulnerable.
That's what happened on a job where Gillies Ramsay Diamond (GRD) was the contract administrator and PJW Enterprises (PJW) the employer.
The job went sour and PJW had to pay its contractor £30,000 more than it thought it should. An adjudicator ordered GRD to compensate PJW, but GRD demanded a judicial review. Although the application was thrown out on a technicality, the court said there was no clear basis for professional negligence.
So the hassle-free approach has now given rise to six adjudications and one court case and it may still continue.
Moral: Casual can be costly
Case: Gillies Ramsay Diamond v PJW Enterprises Ltd. In the Outer House, Court of Session, June 2002.
Flaws in the floor
Something was wrong with the floor, but the contractor blew the litigation
The vinyl floor first started to bubble in 1995. It was repaired but more bubbling soon appeared.
The flooring contractor, K Systems, agreed to survey the floor and complete repairs quickly but insisted on an official order before doing the work.
The floor continued to deteriorate. The contractor, Interserve, instructed K Systems to start work immediately and arrange for an independent report into the failures.
K Systems did the repairs but the building owners were unhappy and complained. So Interserve paid another company to do the work.
More than five years on, Interserve started legal proceedings to recover the money. Although both sides argued there had been changes that kept the claims alive, the court held they were outside the Scottish five-year time limit. Both companies lost out.
Moral: Don't delay, time can run out
Case: Interserve Project Services Ltd v K Systems Ltd. In the Outer House, Court of Session, June 2002.
Small print stalemate
What happens when both parties insist on their own conditions of sale?
Suppliers like to provide goods and services under their own conditions of sale, which often let them get off lightly in the event of delays or faults. Likewise, buyers try to impose their own conditions, penalising the supplier heavily for errors. So A sends out the order on his conditions, B confirms the sale on its conditions, A rejects these and reverts to its own, and so on. In a dispute it's usually the firm with the last shot that prevails.
However, not only are the restrictive conditions complex, they are often not read properly. In a dispute, there can be a preliminary issue about whose conditions apply. Just such an argument raged between Leicester Circuits and Coates Brothers. The case involved new ink supplied for printed circuit boards that proved to be faulty.
Each side argued that their own small print applied. "I suspect," said the judge, "that executives don't read the fine print in which standard conditions appear."
Neither party had agreed to the terms and it was probable neither had given thought to them. As a result, they were bound only by the Sale of Goods Act 1979.
Moral: The battle can end in a draw
Case: Leicester Circuits Ltd v Coates Brothers PLC. EWHC812 QB February 2002.
Source
Construction Manager
Postscript
Ann Wright is an adjudicator and quantity surveyor. Email info@wreghitt.co.uk
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