Case notes

Shoe shop brought to heel
Datum Contracts International (Datum) had refurbished and fitted out a new shoe shop for Guardi Shoes (Guardi). The job needed snagging, but Guardi told Datum not to do it since it had lost confidence in Datum. Guardi's solicitors wrote to Datum saying no more payments would be made until the differences had been resolved.

So Datum called in an adjudicator who ruled in favour of Datum, because Guardi hadn't given a notice of withholding. Guardi was ordered to pay £108K.

Guardi started paying back the money in installments of £4,500 a month but ceased, still owing £78,000. Datum issued a Statutory Demand for the balance and then presented Guardi with a winding-up petition. Guardi obtained an injunction for 10 days preventing Datum from advertising the petition. Guardi still owed £69,877.

Guardi tried to continue the injunction, saying it had a cross-claim of £64,000 that would rise to £69,000.

The Court said that Guardi had not issued a notice of withholding and could not now act as if it had. Datum was allowed to advertise the petition.

Moral: Always issue a notice

Case: Guardi Shoes Ltd and Datum Contracts International. High Court October 28, 2002

Ballast weighs its chances
Ballast Wiltshire (Ballast) was the management contractor for the Terrace and Object Buildings, Home for the Future Project in Glasgow. The employer was the Burrell Company.

The project was completed in 1999 but Ballast felt it had been underpaid some £1.6 million. Certificates which had been issued showed a value over £500,000 less.

Ballast referred the dispute to adjudication in late 2001. It asked the adjudicator to assess the value of the work done and what Burrell owed Ballast including management fees and loss & expense.

JCT procedures hadn't been followed properly, so the adjudicator said the issues and methods used lacked certainty and reliability as to value and 'the question was not valid'. Ballast then went to court. The court ruled that the adjudicator had erred and therefore Ballast was free to appoint another adjudicator.

Burrell appealed but the court still upheld the lower court's decision.

Ballast has now waited three years and still hasn't managed to get past the starting line.

Moral: Adminster the contract properly

Case: Ballast plc v The Burrell Company (Construction Management) Limited Extra Division, Inner House, Court of Session, Scotland. December 2002

Who's in charge around here?
In 1999 Planned Storage Systems (PSS) provided a quote to refurbish the fifth floor of a London building for Helicopter Grafix, a subsidiary of DPM Consultants (DPM) which owned the whole building.

Later PSS was asked to provide a quote to refurbish the basement, occupied by new company Media Circus Interactive (MCI), a subsidiary of Helicopter Grafix. PSS had credit checked Helicopter Grafix and found it was OK - MCI was too new to have one.

PSS also sent the second quote to Helicopter Grafix. The group chairman, who owned 9,999 out of 10,000 shares, and who was chairman of all three companies, confirmed that Helicopter Grafix would guarantee the works.

When the job went badly wrong, PSS found it had to go to court on the issue of who it was in contract with before it could progress to the main issues.

The court decided that Helicopter Grafix had entered into a contract with PSS. It took a whole court case just to get PSS out of the starting blocks.

Moral: Clarify contract before disputes

Case: Planned Storage Systems v (1) DPM Design Consultants Limited; (2) Helicopter Grafix Limited; (3) Media Circus Interactive Limited. Technology & Construction Court October 2002

Crying over spilt milk
Unigate's Marshfield dairy caught fire and was badly damaged. When Unigate found that some of the fire compartment walls had not been correctly constructed, it sued E Turner & Sons (Turner) which had built the dairy. The case was settled for £1.6 million.

Turner had employed architectural practice H D Watkins & Associates (HDW) to provide 'partial architectural services'. HDW's engagement wasn't in writing and HDW did not have a supervisory role. Unigate had obtained its own planning and building approvals, although HDW had answered later queries from the authorities.

At the time of construction, the authority had notified Unigate that the first floor laboratories and offices had to be two-hour fire resistant. As a result, HDW produced a drawing showing a firewall being built to the underside of the roof. But firewalls were only built to the underside of the polystyrene sheets and not up to the roof.

The Court of Appeal found that in principle an architect could be liable, as he couldn't excuse himself from action on the grounds that he had delegated the design, unless he had his employer's permission. But in this case HDW's drawing had been sufficient to indicate how the walls should have been constructed and it was not liable.

Moral: Responsibility's a tricky business

Case: Bellfield Computer Services Ltd. & Others and E Turner & Sons Limited & Others. Court of Appeal, December 18, 2002