Case notes

Take him at his word

It’s not a construction case, but worth noting because broken verbal promises are common on sites. “Don’t worry, we’ll see you alright.” If you hear that, do worry, indeed.

Derek Ashdown, a printing machinery specialist, had a contract worth nearly £600,000 to supply a large Kamori colour press from France to a Mr Lamb’s firm in Australia.

Even dismantled it was huge so the shipping company, Cougar Freight Services, had agreed to provide special Hi-Cube containers for the loading.

Ashdown and Lamb travelled to France to witness the procedure but the containers never arrived. Ashdown was livid. He phoned Cougar’s Mr. Grainger and forcibly complained about the waste of time and expense for both him and his customer. Unless he was reimbursed he would never do business with Cougar again.

Ashdown said that Grainger agreed he should pass the costs to Cougar. Grainger also admitted that the failure of the containers to appear was down to an administrative error at Cougar.

They went to court, and Grainger denied agreeing to pay the costs, but admitted he did say that he was willing to pass the costs to his insurers. He also pointed to Cougar’s small print claiming that clause 28(A) excluded Cougar’s liability for costs.

The judge disagreed, holding that even based on Grainger’s own interpretation of that telephone call, the conversation meant that Grainger had waived Cougar’s exclusion clause.

As a result, Cougar was obliged to pay a total of £5,028 plus costs.

Moral: Be careful how you make promises

Case: Derek Ashdown versus Cougar Freight Services Ltd. Sept 6, 2004. Judgement supplied by Dennison Till of York.

The law as a protection racket... for consumers

It’s a jungle out there, which is why The Unfair Terms in Consumer Contracts Regulations 1999 protects poor little innocent consumers from rapacious vendors. But when it comes to doing construction work for owner-occupiers, the vendors are anywhere but at the top of the food chain, as this case illustrates.

Mr and Mrs Boston wanted to convert two flats into one in London. They hired an architect and QS. Contractor B&L gave the lowest price, which was negotiated down further to £436,923. The work was to take 18 weeks.

The preliminaries said the contract was to be JCT 1998, but the Bostons never did sign the contract.

The architect issued interim payment certificate No. 11 dated July 17, 2002 for £660,800 gross with a net payment of £115,995, but the Bostons tried to get B&L to accept only £50k until the work was complete. B&L invoked the adjudication clause and was awarded the £65,995 plus interest in June 2003.

The Bostons still did not pay, arguing the contract had not been finalised and the adjudicator had no jurisdiction. Anyway, he said, the unrecoverable expense of adjudication was unfair to consumers!

In a decision that was scathing of adjudication generally, the judge agreed that an adjudication clause might be unfair, whether or not the consumer had had professionals to advise him, if the clause caused a significant imbalance to the parties’ rights “contrary to the requirement of good faith”.

But if the consumer proposed the form of agreement containing the adjudication clause himself (as the Bostons had), then it would be difficult to argue the contractor had acted in bad faith. But B&L were plain out of luck, because the judge agreed that the JCT Contract had never been concluded and as such was void.

Moral: If it’s an owner-occupier, the customer is almost always right

Case: Bryen & Langley Limited versus Boston. T&CC November 4, 2004 [Bliss 1B43/1]

Not better late than never

This case shows that, just like Justice, a claim delayed is a claim denied. Birse built a warehouse for spice company McCormick in Haddenham, Bucks. The value was £4,003,487 and work had started in October 1995. Fluor Daniel was the Managing Contractor and McCormick’s agent.

The contract was a homemade and complex document with poorly worded clauses, but the payment provisions were clear: When Birse achieved a milestone it invoiced Fluor. If Fluor did not object within 14 days, the invoice would be paid within 30 days of its issue. There was also provision for agreeing Changes and claims.

By November 14 1996, Birse had completed the bulk of the work, and submitted a claim for additional site establishment costs for 29 separate Events. Although Fluor had promised to reply by November 25, 1996, it did not do so until February 1997.

In April 1997 Birse re-submitted the 29-Event claim but for a smaller total. Fluor rejected the bulk of it and hit Birse with a liquidated damages claim.

For whatever reason, Birse didn’t react to this until years later in May 2003, when it started proceedings. McCormick argued Birse was too late. Under law it had to act within six years.

The judge said that the general rule was that the cause of action arose when the work was done. So in this case the latest date would probably have been December 9, 1996 (14 days after Fluor had promised to reply to Birse’s November submission).

Birse’s April 1997 re-submission did not give rise to a new course of action, so by May 2003 Birse was out of time.

Moral: Get on with it!

McCormick hit the headlines for another reason recently. Some of its products - including Schwartz sauces and McDonalds salad dressings - were the subject of a national recall, after it was revealed the firm used chilli powder containing an illegal food dye. Sudan 1.

Case: Birse Construction versus McCormick (UK) Limited. T&CC December 9, 2004 [Bliss IB 01/5].