Case notes

Enhanced mathematics

Wimpey was buying land by the Thames in Erith, Kent from VI Components (VIC). The land had planning permission for 231 flats. To allow fair shares of price inflation, Wimpey offered a base price of £2.6 million plus half the amount by which Wimpey’s total sales exceeded £20.61m, the estimated price for selling all the flats.

Sounds simple? It wasn’t.

First, the flat sizes and numbers could (and did) change in the final design. Secondly, the flats’ basic prices attracted enhancements for features such as river view (+10%), undercroft parking (+£2,000) and £1,000 for each floor above ground.

So the £20.61m basic price had to be adjusted before VIC’s 50% share could be calculated. Wimpey’s Mr Ketteridge and VIC’s Mr Youens toyed with various formulae over several months, all of which were faulty because the enhancements were always added in afterwards. The formulae were included in two draft clauses. Youens then worked on the maths over a weekend to refine them and produced a single version merging the clauses.

Ketteridge agreed the new formula and clause, not noticing that the enhancements were now not being added back in. As a result VI would gain £800,000.

The court said Ketteridge had seriously erred but VIC’s conduct was ‘unconscionable’ in not drawing Wimpey’s attention to the change. As a result, an additional line ‘Plus Enhancements’ would be added.

Moral: Check your clauses carefully

Case: George Wimpey (UK) Limited [formerly Wimpey Homes (Holdings) Limited] versus VI Components Limited, June 2004

‘Your contract is delayed. Please listen for announcements...’

Connex SE and Connex SC had the Kent and Sussex rail franchises respectively in 2000. They wanted to install CCTV in 50 stations in a project called Phase 9. They engaged Condes for the design and project management. MJ Building, a CCTV specialist submitted a price and in September, Condes told it to start work immediately. No written contract or order was issued.

Then Condes informed MJ that work was to be suspended. MJ wanted an extension of time and, if work was cancelled, to claim. In November, Condes told MJ to proceed with a revised Phase 9 on the basis there was no claim.

Come December 2001, Connex SE told MJ that four named stations were to be completed and no others started. MJ responded by claiming £199,326.23 for materials procured for the cancelled stations. Negotiations continued but on November 29, 2002 MJ said Connex SE had repudiated the contract.

Condes and MJ agreed in February 2002 that 11 stations had been dropped from the Connex SC work and the new contract total was £937,847. However by then Connex SC had new owners which wanted to curtail Phase 9 altogether.

Two years later MJ gave notice of adjudication for £362,914 to both the Connex companies.

The adjudication was stayed for a court decision. The court held MJ had had a single contract with both Connex companies. February 2002’s deal had not allowed for MJ’s expenditure on materials and work done for stations subsequently withdrawn. So MJ could make a claim.

Moral: Be sure to get it in writing

Case: Connex South Eastern Limited versus MJ Building Services Group plc, June 2004

Protection for the forgotten workforce

This case is about cleaning but has resonance for our industry as it concerns agency employees.

Patricia Dacas had worked as cleaner for Wandsworth Borough Council at a hostel over four years. Wandsworth provided her cleaning materials, equipment and a uniform. She worked a five day, 40-hour week under the control of the hostel management, but she was working through an agency, Brook Street, with whom she had a temporary worker agreement. An assignment like the one Dacas held could be terminated at any time without notice and without liability.

In April 2001, Wandsworth alleged that she had been rude to a visitor and asked Brook Street not to send her again. Brook Street then said it could find no further work for her.

Dacas tried to sue for unfair dismissal, but the Employment Tribunal held that as she was not an employee of either firm she could not.

She appealed to the Employment Appeals Tribunal but only against the Brook Street ruling. It held she was indeed a Brook Street employee.

It was now Brook Street’s turn to appeal. The Court of Appeal decided she was not a Brook Street employee but over time and practice she might have become a Wandsworth employee.

The court of appeal ruled that in future Employment Tribunals had to consider the possibility that the agency worker/client relationship might result in employment.

Moral: Agency staff have rights too

Case: Brook Street Bureau (UK) Limited versus Patricia Dacas. Court of Appeal, March 2004

The finer points of global claims

Laing employed Doyle as a works contractor on two packages (WP 2010 and WP 2011) at the new Scottish Widows HQ in Edinburgh. WP 2011 was due to finish in April 1996 but took another 22 weeks to complete. Doyle wanted an extension of time for this period together with a payment of £4.8m. This sum included loss and expense for delay and disruption due to late instructions plus late issue of drawings and design details.

Part of Doyle’s claim was that the late completion of WP2010, for which Doyle had been already given an extension of time, had also delayed WP2011. Laing argued that to be successful Doyle had to show (1) that Laing was legally responsible for an event and (2) that Doyle had suffered loss or incurred expense and (3) that the loss or expense was caused by that event. It said that Doyle’s claim was a global one and that Laing was not legally responsible for some of the events included by Doyle. As a result Doyle’s claim was void.

The court held that common sense must be applied to the principles of causation.

It examined Doyle’s pleadings and concluded that it was not pursuing a purely global claim. For example Doyle compared disrupted labour costs with those actual costs incurred during periods of ‘normal productivity’ on site, not with theoretical tender figures. Secondly, labour costs incurred as a result of delays were calculated separately from those of disruption. As a result, Doyle was entitled to prove the detail of its causation and to the costs if it could do so.

Moral: Detail is power

Case: John Doyle Construction Limited versus Laing Management (Scotland) Limited, June 2004. Extra Division (Inner House)