A largely dispute-free Olympics Games were the triumph of the year but elsewhere construction lawyers had plenty to keep them occupied

Rupert Choat

No review of 2012 can avoid mentioning the Olympics. One of its successes is less well known because it was so successful: we seem to have avoided the host of disputes that have blighted recent Games. Hopefully the private triumphs of the Independent Dispute Avoidance Panel will be properly reported upon for the greater good of all - in the spirit of the Olympic movement.

One other dispute that London 2012 seems to have largely avoided - for now - concerns blacklisted workers. In November the Olympic Delivery Authority said it had seen no evidence of blacklisting on its projects; something that union officials have disputed. Nevertheless, away from the Olympics the blacklisting scandal has escalated, with claims made and litigation pursued by scores of people against major contractors.

Elsewhere there was more Greek tragedy.

As the amount of publicly procured projects reduced, the number of challenges seemingly rose. Tenders appear more open to attack than before, as the courts widen the scope for challenges by way of judicial review of public authorities’ decisions. Furthermore authorities are now required to automatically suspend a contract award if it is challenged by litigation in the 10-day standstill period. This obliges authorities to get court clearance of the suspension or re-run the tender (if not cancel the project).

The government took the gold medal in shooting (one’s foot - procurement class) for the West Coast Mainline franchise debacle. It cancelled the contract award to FirstGroup due to “significant technical flaws” in its procurement process before Virgin’s judicial review was heard. Smarting from this and the Court of Appeal judgment that the government acted illegally when cutting the feed-in tariff on solar panel installations, the PM proposed a clampdown on judicial review. Meanwhile the judicial review of HS2 rumbles on.

The government took the gold medal in shooting (one’s foot - procurement class) for the West Coast Mainline franchise debacle

A different PM was at the centre of the Ampleforth case. A project manager was held negligent for not procuring in a timely way a contract (specifying liquidated damages for delay) between its client and the contractor. As a result when the works were late the client was prejudiced. The PM had at least put a proper contract in place with its client but the liability cap for its negligence (based upon its fees) failed for unreasonableness - the PM had been obliged to maintain £10m of PI cover. Consultants (and insurers) take note.

Conversely, in Inframatrix the courts showed their ongoing support for time bar provisions. The contract said that no proceedings could be brought against the contractor more than one year after it last performed services in relation to the project. The contractor got off a defects claim because a site meeting and report provided by it on the defects did not count as “services”, with the result that the claim was too late.

The past 12 months brought other interesting legal gymnastics. The bronze medal goes to Mr Justice Coulson for confirming (in Leander vs Mulalley) that the courts are reluctant to imply into construction contracts terms requiring contractors to proceed regularly and diligently.
The silver medal, on behalf of NEC users, goes to Mr Justice Cranston for clarifying (in Compass vs Mid Essex) what an express duty of good faith means and applying it.

The gold medal goes to Mr Justice Akenhead for helpfully clarifying in Walter Lilly vs Mackay the rules governing delay and disruption claims that are advanced without fully showing cause and effect. The same judge this year bolstered the enforceability of adjudicators’ decisions. He held that where an adjudicator lacked jurisdiction on part of the dispute decided by him, that part of the decision can be severed and the good bit enforced.

Despite that, it was not a vintage year for the Construction Act. April’s judgment in Leadbitter vs Hygrove showed the difficulties of making project bank accounts compliant with the act’s ban on conditional payment provisions. Autumn saw a quiet first birthday for the revised Construction Act. Its benefits will probably be outweighed by the cost to the industry of overhauling its payment practices and resolving its uncertainties.

Next April will bring improvements to the cost effectiveness of litigation in England and Wales. One notable change will permit parties to pay their lawyers a share of any damages recovered in court or arbitration proceedings. The TCC is piloting more active management of cases by cost budgeting in which the court engages with the parties over their estimated costs for the various stages of the litigation.

With the TCC now under the same roof as the Commercial Court, the former may soon share the latter’s rejection of pre-action protocol requirements before a case is brought. It is hard to get worked up over such a move. There will be more serious issues to contend with next year, but hopefully - even without the Olympics - there will be plenty of reasons to be cheerful.

Rupert Choat is head of construction disputes at CMS Cameron McKenna