Crushed by claim files and in fear of the adjudicator? Just hope you remembered to include a contract clause that will force your adversary to reveal all

Tony Bingham

When I was a lad, I loved riding on trams. The smell, the noise was wonderful - they rattled and rolled. Then, one day, those “Green Goddesses” were dumped and the track torn up. Now trams and busways are being reborn, albeit uncomfortably.

Bam Nuttall got at odds with the local council over its new Cambridge Busway, and £100m turns on this dispute. Edinburgh has seen a very public mega-spat when consortium contractors Bilfinger Berger and Siemens didn’t see eye-to-eye with customer Transport Initiatives Edinburgh (TIE). That job had an original out-turn cost of £375m. It now looks like being three years late and £776m.

Now another tram job is in the news. It’s the next part of the £1bn worth of work on Greater Manchester Tramway extensions from Oldham and Rochdale to east and south Manchester. Thales Transport is the contractor for this modest phase contract of £22m, of which only about £8m has been paid. By now it is four years into the project and Manchester is claiming £36m from Thales for being late. Thales is claiming £42m from Manchester for being late. In other words: it’s not down to me, mate. It’s the usual stuff of construction claims: alleged variations, late instructions or information and lack of co-operation, plus delays. This one dispute has come to court on an interesting and unusual contractual angle, which I will tell you about in a moment.

Two clauses in the building contract entitle the employer to be immediately provided with information private to the contractor, especially his internal documentation

My guess is that Thales has it in mind to bring its £42m claim to 28-day adjudication soon. It has presented 19-lever arch files in support of its claim for that £42m. The employer gets twitchy (wouldn’t you?) because he hasn’t time to get to grip with those files, find holes, and find exaggerations. He wants time too to talk strategy, especially in a public authority like Greater Manchester, crammed with politicians and a press pressing to take the mickey. But as soon as a claim like this arrives it’s only a few moments later that the contractor can call for the adjudicator.

The dispute crystallises ever so quickly; the contractual rule is that you can call for the adjudicator “at any time”. Manchester, if it has any sense at all will call in its lawyers. It did.Those lawyers have plugged into a relatively unusual but useful clause in the Tramways Contract. And if they get what they say is due to them from Thales, they will stand in much better shape to deal with the claim and any adjudication threat.

Two clauses in the building contract entitle the employer to call for and be immediately provided with information that would usually be private to the contractor, especially his internal documentation. The lawyer might want to characterise this as “pre-action disclosure”; it’s not that at all. It is a contractual clause. It’s smart.

Thales refused to cough up, so Greater Manchester sought specific performance.Manchester’s lawyers came to the Technology and Construction Court calling for an order of specific performance against the contractor. In other words the judge is told Thales won’t obey a clause in the contract. That is a breach of contract but it’s no use suing for damages. Manchester wants to get its hands and eyes on what you and I would regard as the ordinary contractor’s private parts. And the judge completely agreed.

It is four years into the project and Manchester is claiming £36m from Thales for being late. Thales is claiming £42m from Manchester for being late

Thales is now ordered to hand over high level internal reports as to what’s gone wrong within Thales. Also give over internal audit reports; an external audit report about the project problems; cost reports, time loss reports; sub-contract and supplier reports and disputes; reveal all orders placed and then invoices and if paid. The list is massive. And remember, this is merely an order by the court for the contractor to comply with a contractual promise made at the outset to let the employer have all this usually private stuff if asked for. And they did.

Can you see why Manchester wants all this information? They want to cross-check the internal files of the contractor with the 19 lever arch files in the contractor’s delay claim. Mind you, if Manchester does do a cross check it might be that they wish they hadn’t; especially if it all supports the claim. And it will assist the adjudicator enormously to receive not 19 files … but 91 files instead.

Tony Bingham is a barrister and arbitrator at 3 Paper Building, Temple