Post-match analysis

The Cleveland Bridge and Multiplex litigation is a stark reminder of one of the worst periods for construction - the early 1990s, when adversarial anarchy reigned and construction became the primary consumer of the High Court's services. This, as we all know, led to the Latham report in 1994.

This litigation is also a reminder that poor practice in procurement, contracts and payment persists. There are those who would have us believe that the industry has fallen into a lovey-dovey stupor in which teamworking has replaced subby-bashing.

As far as Wembley is concerned, "partnering" might have been the name of a crater on Mars.

Essentially, the dispute stemmed from what Cleveland Bridge perceived to be persistent under-valuation, spurious counterclaims and non-payment or late payment by Multiplex. Many of the problems were to do with the valuation of variations and the cost and time consequences of carrying out varied works. Coupled with talk of an "armageddon plan" to destroy the company, Cleveland Bridge felt justified in removing itself from the site.

Mr Justice Jackson was dismissive of Multiplex's attempt to make a meal out of "project Trafalgar", a strategy by Cleveland Bridge to justify its withdrawal from the site. The question was whether Multiplex's conduct amounted to a repudiatory breach of contract; if it did, that would have enabled Cleveland Bridge to withdraw from site. A repudiatory breach means a party must have demonstrated by its actions that it no longer wishes to be bound by its contract.

Although Mr Justice Jackson deplored elements of Multiplex's conduct, he said it did not amount to a repudiatory breach. Indeed, its willingness to take disputes through the subcontract dispute procedures showed that Multiplex still intended to be bound by the contract. Furthermore, making incorrect deductions from payment applications was not repudiation. Therefore, it was Cleveland Bridge, in withdrawing from the site, that had signalled its intent not be bound by its subcontract.

Even so, Multiplex does not come out of this smelling of roses. The judge was taken aback by its aggressive tactics, particularly in issuing certificates at the lowest valuations it could defend. Multiplex had committed one breach of contract, which was not, in itself, repudiatory.

The judge urged the parties to resolve their differences in mediation. The mediator will need supernatural powers

Mr Justice Jackson concluded that neither party had won an outright victory and urged them to resolve their differences in mediation. Anybody mediating this contest will need supernatural powers.

The seeds of this litigation were sown even before Multiplex came into the picture. All design risks were passed down the supply chain, and the design that supply chain inherited had to be changed to make it work, hence the variations. Multiplex had alleged that there were shortcomings in Cleveland Bridge's design work; Cleveland Bridge complained about late design information. Also, initial programmes became unrealistic and had to be changed. Multiplex went in on a lowest price contract, expecting its supply chain to accept the risks relating inherent in that.

The facts of this dispute are highly relevant to the review of the Construction Act. Yet again, we have a situation where the payer has been able to say: "I've got the money - catch me if you can!"

There simply isn't the means for the payee to establish, by the date of payment, that a certain amount is owing. The payer is able to tell the payee, "This is what I will pay", without having to provide any detailed justification for paying less than the sum claimed. The payee is forced to go to adjudication or cease work. Perhaps, Cleveland Bridge may have had a stronger case for exercising its statutory right to suspend its contract under the Construction Act.

Let's hope we learn from this sorry saga. The critical lesson is early buy-in to the design from the delivery team. At that stage, design risks and risks that bear on time and cost can be effectively managed.

Olympic Delivery Authority, are you taking note?