Case notes

Pain versus gain

Alstom had a pain-gain agreement with Railtrack and had intended to include a similar agreement in its subcontract with Jarvis. However, the details were never agreed, perhaps because once the subcontract was signed, 20 months after work started, it became clear that there was going to be rather more pain than gain.

So when Alstom asked Jarvis for the £839,000 of 'pain' in the final account, Jarvis argued that without a detailed agreement it could not be liable and that there was no 'difference' for an adjudicator or court to consider. Jarvis' contract was for £26,750,000.

The adjudicator agreed with Jarvis. However, the court held that there was a 'difference' to be decided and invited Alstom to make further submissions so that it could do so.

Moral: Get it in writing
Case: Alstom Signalling Ltd (T/A Alstom Transport Information Solutions) versus Jarvis Facilities Ltd. (Case No. 1) May 2004 Technology and Construction Court (T&CC)

McAlpine's million-pound mêlée

Sir Robert McAlpine had already asked Emcor Drake & Scull (EDS) to price the M&E contract when it agreed the main contract with Dudley NHS Trust. The form was different to the one it had asked EDS to price, so it asked the M&E firm to submit a revised bid to suit the main contract conditions, which it did.

To meet the project programme, McAlpine issued an order limited to £1,000,000 to allow EDS to commence its design and procurement. McAlpine intended to replace the order with the formal subcontract documentation when it had been prepared, but it never did. EDS did not sign the order either. Instead, the company started design work, proposing its own different terms and conditions six weeks later.

Later relations broke down, with McAlpine alleging that EDS had repudiated the contract. EDS wanted £1,105,160.55 for work completed. McAlpine denied any liability, claiming it had overpaid and wanted payment against the losses that EDS had incurred by quitting.

The case went to court, and the court was asked to decide whether there was a subcontract for the whole of the M&E works or not. It held that although EDS was bound to enter into a subcontract, McAlpine had not offered one following EDS's proposal for different terms and conditions. Therefore it decided McAlpine should pay EDS a reasonable sum up to the limit of the purchase order.

Moral: If it's not offered, it can't be accepted.
Case: Emcor Drake & Scull Ltd versus Sir Robert McAlpine Ltd. May 2004, T&CC

Mediations on a theme

It's not about construction, but Halsey versus the NHS Trust is important because prior to this case, people thought that if you refused to mediate, you could lose out on legal costs - even if you won the case.

Mrs Hasley wanted £7,500 compensation after her husband Bert died in hospital. He had been admitted with kidney failure, lung disease, fractured ribs and had suffered heart attacks. A post-mortem found some food from a nasal gastric tube in his left lung. There was a dispute as to whether this was a cause or a result of his death.

Mrs Halsey's solicitors wrote several letters to the Trust and one to the Secretary of State for Health requesting mediation, warning that if the case went to trial, the NHS bill for legal costs could run to £100k. The Trust felt that its resources would be wasted so offered a 'drop hands' settlement for her to walk away, where there is no payment and each side bears its own legal costs.

Mrs Halsey continued the legal action. When she lost, she would not pay the Trust's costs because it had refused to mediate.

The Court of Appeal said her solicitor's letters were "somewhat tactical" and the letter to the Secretary of State was an attempt to extort a sum (plus costs) in settlement of a very small claim which, at best, was speculative. She had not shown that the Trust had acted unreasonably in refusing to mediate, and so she lost again.

Moral: You can refuse to mediate
Case: Halsey versus Milton Keynes General NHS Trust; Steel versus Joy and Halliday, May 11, 2004 Court of Appeal

Telling tales to teacher

Paul Cook's contract administrator had agreed to attend a meeting proposed by an adjudicator to discuss details of a dispute about Vaultrise's final account. The administrator said that Cook's solicitor would attend.

The meeting was scheduled for January 27, 2004 then postponed to February 12, 2004. By agreement, the date for the adjudicator's decision was extended to February 20.

Cook's solicitor wrote that he could not attend until February 23, only to decide at a later date that he could make February 16. But that was too late for the adjudicator to make his decision in time and he decided the meeting must go ahead as scheduled but that written representations could be made on any legal points. Cook and his administrator introduced new witness statements at the meeting and there was argument with Vaultrise.

However, it was only after the adjudicator's decision had been published that Cook complained about unfairness at the meeting.

In the enforcement hearing, Cook said that as he had not been legally represented at the meeting, the adjudicator did not have power to determine the dispute. The court disagreed with Cook, also holding that the adjudicator had been reasonable in refusing to hold the meeting on February 16, 2004. Cook could have sought legal representation elsewhere.

Moral: Pitch in earlier. Don't moan later
Case: Vaultrise Ltd versus Paul Cook April 26, 2004, T&CC