Ann Wright rounds up the rulings that affect you

Live by the sword...

Bullying gets whacked in court

When Techni-Track Europa challenged US-owned Johnson Control Systems on a site, Johnson's Brian Russell told the company: "I'll crush you, you'll be finished! You play by my rules or not at all!" He kicked Techni-Track off site and, claiming overpayments, won an injunction freezing the company's bank account. Within weeks, Techni-Track was forced into administrative receivership.

Techni-Track had been sub-subcontracted to Johnson to wire complex control systems on a job for six lab buildings. Johnson was a subcontractor to LMK Joint Venture, which was building the labs (pictured) for Glaxo.

LMK wanted to accelerate but refused to issue an acceleration order that would have allowed extra payment. Techni-Track took on more labour but its costs, together with sums for unpaid variations and claims, stretched its cash flow. Techni-Track asked for speedier payment plus a sum for the variations and claims. Johnson initially agreed and paid £150,000, but then terminated Techni-Track for non-performance and, claiming the £150,000 back, obtained the injunction.

Eight years later Techni-Track's MD had amassed enough money to take the fight to court, winning nearly £300,000 in damages.

Moral: Eight years on, actions can rebound

Case: Johnson Control Systems Limited v Techni-Track Europa Limited, August 2002, EWHC 1613 (TCC)

Who's who?

When the letterhead leaves its mark

Chinadome wanted to develop a London site, so C&N Associates wrote to Imperial Homes Development Ltd, which operates from the same address, confirming it would act as agent. Imperial agreed but insisted the project should be in Chinadome's name, with all bills and accounts going to Chinadome.

Accordingly, C&N wrote to builder Mr Gibson, then a sole trader but who later formed Gibson (Construction) UK Ltd, confirming "on behalf of our client, Imperial" that he was to proceed.

Gibson sent his invoices to Chinadome, which made two payments. When a dispute arose, he took Imperial to adjudication and won and went to court when Imperial refused to pay.

Imperial argued it should be Gibson (Construction) UK Ltd against Chinadome. The judge, however, decided the builder had done his work and C&N had authority to make a contract on behalf of Imperial or Chinadome. Imperial had to stump up.

Moral: You can't hide behind a name

Case: Gibson v Imperial Homes Development Ltd, February 2002, EWHC 676 (QB)

League loses the rematch

Even when backed by armies of lawyers, the big boys can still get it wrong

This one is from a different ball game to construction but the rules still apply. When ITV Digital (formerly ONDigital) went down the tubes, the Football League lost TV rights revenue of £180m. The League, however, had an ace. ONDigital's initial bid document had said, "ONDigital and its shareholders will guarantee all funding to the League outlined in this document."

"Great," said the League. "The shareholders are Carlton and Granada Media. We'll call in the guarantee."

Carlton and Granada denied they had guaranteed ITVDigital's liabilities. They said the wording had been part of a 'subject to contract' proposal.

The court agreed with Carlton and Granada Media that the words 'subject to contract' remained in effect until they were waived or replaced. No guarantee had been directly included in the final contract, so the League lost.

Moral: If the phrase 'subject to contract' is used, the contract isn't binding until it has been finalised

Case: Carlton Communications and Granada Media Plc v The Football League, August 2002, EWHC 1650 (Com) QBD

If it ain't written, you'll get bitten

Duelling pair told to sort it out

Bill Clarke was the driving force behind E Clarke & Son (Coaches). He liked to spend time in the workshops and conduct business in one-to-one discussions. He was also a success and needed to expand. He found an old Bird's Eye cold store in London and asked Act Construction to arrange for planning approval. After months of wrangling with the planners, a modified scheme was approved.

Act then started on the construction work but left the site as financial problems at Clarke grew. A dispute arose about the amount paid and Act sued for £200,000. Clarke counter-claimed for sums overpaid plus damages for failure to complete and defective work.

The case went to appeal. Clarke contended it had struck a deal, with Act orally agreeing to build the coach depot for a maximum price of £815,000. The appeal court agreed there had been a contract but ruled that the scope and price were not agreed. A reasonable remuneration was cost plus 15%. Clarke and Act were sent away to agree the calculations.

Moral: Writing is better than fighting

Case: Act Construction Ltd v E. Clarke & Son (Coaches) Ltd, July 2002, EWCA CIV 972, Court of Appeal Civil Division