Case notes

Location, location

Even if you win an adjudication and the court enforces it, you can still end up back at square one. Nicholas Markham-David managed Callow Quarry at Buckholt, Gwent, but lived in Salisbury. He also owned a farmhouse at Upper Skenchill that he wanted to refurbish and sell. Rohde started work in October 1998.

In 1999, Markham-David's marriage failed. Although his business address remained the same, he and his wife moved to separate addresses in Salisbury. Meanwhile, at Upper Skenchill differences arose about the quality of work, delays and the value of variations. Rohde started an adjudication in March 2001.

The adjudication notice and correspondence were sent to Markham-David's old address. They were returned undelivered. On May 18, the adjudicator decided Markham-David should pay Rohde £37,589. Rohde started proceedings to enforce the debt. The court documents were again sent to Markham-David's old address and to his ex-wife's new address. On March 18, 2002 the court gave Rohde judgment in default.

Markham-David did not become aware of the default judgment until October 2005. When he did he started proceedings to have it set aside. He said he had not seen any of the documents. He'd had a dispute with the tenants at his old home and his divorce had been acrimonious, so no mail was forwarded. Also, Rhode knew his business address. The court agreed that Markham-David had moved promptly and would have contested the proceedings. The judgment was set aside.

Moral: Serve it right.

_{Case: M. Rohde Construction versus Nicholas Markham-David. TCC - March 20, 2006 [Bliss IB 15/4]}

Quantum meruit

Phase 1 of Brunel's new sports facilities at Uxbridge included an outdoor athletics track and field events area, landscaping, storage and floodlighting.

In December 2001 Brunel invited tenders on the JCT With Contractor's Design 1998 form. On February 2, 2002, it accepted ERDC's tender for £1,238,635.00.

However, as Brunel was still waiting for full planning consent it sent ERDC a letter of intent to start work. This letter gave ERDC authorisation to proceed but was limited in time and value.

Planning was slow so Brunel issued further letters, the last being on August 2, 2002. This expired on September 1, 2002 when the work was far from complete and ERDC continued working.

Until the end of November ERDC's valuations had been based on the contract sum analysis in the proposed JCT contract. On November 20 Brunel issued the contract documents for signature.

This prompted ERDC to refuse to sign the contract, reasoning that the work content had changed significantly and it was only prepared to continue on a quantum meruit basis. By this ERDC meant cost plus.

Brunel maintained the works should be valued in accordance with the proposed contract.

ERDC left the site in March 2003 by agreement with the work still incomplete.

ERDC's cost-based final account was for about £2 million but Brunel only paid £1,266,366.30. The reduction was due to the different valuation methods less deductions Brunel made for unfinished and defective work and professional fees.

The court held that ERDC was entitled to be paid not on cost plus but on the values in the proposed contract for work which had been completed properly.

However, Brunel's proposed reductions were excessive. On that basis, ERDC was entitled to a further £360,110.09 excluding VAT.

Moral: Quantum meruit is not cost plus.

_{Case: ERDC Group Limited versus Brunel University TCC, March 29, 2006 [Bliss IB 14/3]}

Catalogue of overruns

ASM's companies provide architectural, structural and quantity surveying services. For years Plymco had provided ASM with a steady flow of refurbishment developments with occasional larger projects.

By 1993 Plymco decided it needed to redevelop its city centre site in Plymouth as out-of-town stores had made it too large for Plymco's needs.

It was a complex project involving a restaurant, post office, travel centre and other retail outlets with office space.

On Plymco's instructions ASM prepared various schemes, with forecasts ranging from £6.3 million to £8.8 million. Plymco needed outside funding and these schemes were discarded as being too expensive.

Plymco then found that Argos was looking for a large city centre site and in April 1996 it reached agreement that Argos could have 25,000 square feet in the basement and first floors.

Argos wanted possession by April 1997 and from Plymco's rough budget of the whole offices plus 75,000 square feet of retail development a cost of £5 million was projected. ASM was aware of Plymco's need for the development to cost no more than £5.5 million and the very tight deadlines required.

ASM prepared a scheme and while Plymco did not officially approve the budget it clearly adopted it once it had been provided.

The contract was let in a two-stage tendering process but in September 1996 the design was still described as being "100% provisional".

It took some 7,500 variations to complete the detail design at a final cost of £8,494,431.65.

In court Plymco argued that as Argos was signed up, the shell construction of its store should have been carried out first with the remaining work being let as a separate contract only after ASM had completed its designs.

If Argos had been first, the cost overrun would have been contained.

The court agreed, awarding Plymco £1,218,798.00 for cost overrun plus a further £173,290.00 for other savings that ASM should have achieved.

Moral: It is cheaper to put Argos first.

_{Case: Plymouth and South West Co-operative Society Limited versus Architecture, Structure and Management Limited. TCC January 10, 2006 [Bliss IB 11/4]}