This year was a relatively quiet one for King Kong vs Godzilla contests. But there were a few … so here’s six of the longest, bitterest and most important to brighten your Christmas. Unless, of course, you were actually in them
We have not seen many big fights over the past year – has peace and goodwill broken out in the industry? Given the credit crunch, perhaps there’ll be a return to form next year. Meanwhile here’s a selection of 2007’s key cases.
Mirant-Asia Pacific vs Arup
When boiler foundations at a power station failed during construction, it meant that everything on top of them had to be dismantled. Arup faced a claim of about £25m for the resulting delay. Judge Toulmin went back to basics. The link between Arup’s breach and the losses claimed had not been proved, so no recovery.
Message? You can’t hide from cause and effect
Rhodia vs Huntsman
What does a “reasonable endeavour” look like – is it a token effort or should you move heaven and earth? Is “best endeavours” the same thing? When Rhodia successfully sued Huntsman for failing to use reasonable endeavours to get a novation agreement signed these terms were scrutinised. For “best endeavours” you have to exhaust every option; for a “reasonable endeavour” you only have to take a reasonable course without sacrificing your own interests.
Message? If you can’t be on your best behaviour this Christmas, try for reasonable behaviour.
Multiplex vs Honeywell (No 2)
Honeywell was the £13.4m communications subcontractor at Wembley. At adjudication Honeywell successfully argued that its time was “at large”. “Not so,” said Multiplex and took it to court. Mr Justice Jackson was caught between a rock and a hard place. If he agreed with the adjudicator, he would be giving the green light to contractors to ignore notice requirements in contracts. If he agreed with Multiplex, then subcontractors might find themselves on the receiving end of a claim for liquidated damages with no get out. In the end Jackson overturned the adjudicator.
Message? Will “time at large” arguments ever succeed? Don’t bank on it.
John F Hunt Demolition vs ASME Engineering
Hunt’s subcontractor, ASME, got into a bit of bother on site. Allegedly, one of its welder set light to the facade. Hunt settled with Kier for the losses, but also paid Whitehall, the ultimate developer. Hunt tried to claw back the sum from ASME, which replied, “wait a minute you didn’t have to pay Whitehall and nor did Kier”. Everyone agreed. Judge Coulson did not consider this made the settlement unreasonable per se; that was a matter of fact and so reserved for trial.
Message? Recoverable losses may include irrecoverable losses if in the circumstances the settlement sum was reasonable.
Melville Dundas vs Wimpey
In the first House of Lords decision on the Construction Act the fight between the act and the contract came to town. Wimpey owed Melville Dundas (MD) £396,630 but, without a withholding notice, did not pay. MD went bust. Wimpey terminated its employment upon which the contract provided no further sums were due for payment until the works were complete. MD was having none of it and took the matter to court. The Lords upheld the original (Scottish) decision.
Message? Some view this as victory for contractual freedom. Others (that is, insolvency practitioners) are less enamoured of it. It is high up on the agenda for changes to the act.
Sydenhams v CHG
How often does the client do a deal with the specialist subcontractor agreeing practically everything and then turn round to the main contractor saying “over to you”?
Here the developer, CHG, signed off orders for Sydenhams, a joinery contractor. CHG had intended that Rybarn, its main contractor, would take on Sydenhams. Rybarn did make payments to Sydenhams but not promptly. Sydenhams, having walked off site, then had their direct payment arrangement with CHG reinstated. When Rybarn went into administration CHG said it couldn’t pay Sydenhams, direct payment to subcontractors being forbidden when the middle man goes bust.
On ordering CHG to pay Sydenhams, the court found they had been in a direct contract.
Message? For owners who fancy doing the deal but not having the liability – look out!
Lindy Patterson is a partner in Dundas & Wilson. You can find full discussions on all these cases online at www.building.co.uk/archive