New technology, old problems

Undoubtedly one of the most significant recent technological developments in construction has been building information modelling (BIM). 

Unlike BIM, some aspects of the construction industry are not so new. What happens when new technology collides with an age-old problem: what to do when there has been non-payment of fees?

To paraphrase the saying, information is power. In the recent court case of Trant Engineering Limited v Mott MacDonald Ltd [2017] EWCH 2061, the Technology and Construction Court (TCC) had to determine whether an interim application for an injunction restoring client access to the project model should be granted, where there had been non-payment of fees and no executed contract existed.

Although only an interim decision, the case is interesting as it is the first judicial consideration of BIM and also because the TCC considered whether a limit of liability would have provided an adequate remedy in damages when deciding whether an injunction should be granted.

The case concerned the construction of a £55m power facility at a Ministry of Defence (MoD) base in the Falkland Islands. The MoD engaged Trant as main contractor; Mott MacDonald had tendered to provide design consultancy and BIM support.

Following award of the project, Mott MacDonald provided a draft contract to Trant. The draft contained a £1m limit of liability for breach but was never finalised or executed.

The TCC considered whether a limit of liability would have provided an adequate remedy in damages

As is not unusual, work commenced and Mott MacDonald issued several interim invoices to Trant. While the invoices were not issued in accordance with the draft contract, they were paid. In April 2016, Mott MacDonald issued an invoice in the sum of £475,000. Trant failed to issue a pay less notice or make payment. 

Following this, Mott MacDonald exercised its right to suspend services. This included blocking access to the BIM model, which included all project design information. This left, it was claimed, Trant unable to proceed with the project.

Mott MacDonald was of the view that, although there was no executed contract, it was entitled to payment for the work done. Trant considered that there was an enforceable contract, Trant was contractually entitled to access the model and that Mott MacDonald had repudiated the contract.

Trant subsequently issued proceedings for a declaration that there was a contract and for an interim injunction restoring access to the model.

In deciding whether to grant the injunction, the TCC applied the American Cyanamid guidelines that: (i) there must be a serious question to be tried; (ii) that damages would be an inadequate remedy and (iii) if damages were not an adequate remedy, the balance of convenience lay in granting the injunction. 

The TCC decided there was a serious issue to be tried. As to the second point, the TCC determined that a £1m limit of liability on a £55m project, coupled with the nature of the site’s activities being military and hard to measure financially, meant that damages would not be an adequate remedy. 

As to the third point, the TCC considered that without access to the project model, Trant would have to restart the project from scratch. In reaching a decision, the TCC made reference to the fact Trant had access to the model before Mott MacDonald suspended services. 

Satisfied that the balance of convenience lay with granting the injunction, the TCC ordered Mott MacDonald to restore access to the model, subject to Trant making a payment of £475,000 into court. 

Without access to the model, Trant would have to restart the project

Whether it would have made a difference if the client had not had access to the BIM model originally, if access had only been suspended to Mott MacDonald’s information, if the limitation of liability had been higher or if the project was a commercial one remains to be seen. 

We will have to wait until the courts have had an opportunity to consider all the facts and evidence at a full hearing, either in this case or another, for a definitive view on whether or in what circumstance it would be possible to suspend access to the model and for any other potential legal implications of BIM. 

Suspension of services remains a powerful tool for construction professionals. However, in an industry more dependent on technology, exercising suspension must be considered carefully if it includes access to BIM. Who owns or hosts design information, where or how it is stored and in what circumstances access may be suspended are just some of the factors for determination on a project-by-project basis. However, it is important to give consideration to these at the outset and to record them in contract documents, if possible. 

The case also highlights some factors the courts are currently considering in assessing whether caps on liability may be appropriate in relation to the size and value of construction projects.

Sheena Sood leads the construction team at Beale & Company Solicitors. This article was written with Nathan Modell, a partner in the same firm