There is a whopping size shopping and leisure centre going up in Glasgow. It is a design-and-construct contract by Bovis Lend Lease. The employer is Braehead Glasgow. The contract sum was £184m. So far, Braehead has paid out £216m and the forecasted final account is £242m. That hurts. And it’s late; that hurts, too.
When a building contract has a cost overrun, to say nothing of a time overrun, relationships fray. They have here. Braehead says a substantial measure of responsibility for this overrun lies with Bovis. Bovis says the zooming costs are largely because of the additional requirements of Braehead. Familiar stuff.
The story goes to the inevitable result that Braehead has decided to withhold about £9m in liquidated damages for delay; it also says, for good measure, that it has another claim in the cupboard for a further £16m for other breaches of contract. Bovis says that these claims for damages are wholly without foundation; so, too, is most of the claim for liquidated damages.
In an odd way, you might find this comforting – even one of our biggest and best design-and-construct contractors can get into a pickle. It highlights the fact that cost and time overruns, claims in damages and quarrels about extensions of time can happen on all size jobs. I bet you have one or two projects like this, too; the same facts but different numbers next to the pound sign. Well, you can take a little more comfort from the fact that Bovis got into a further pickle when it went to the law for a remedy.
It tried to go for court-style adjudication. It issued proceedings in the High Court in January. Then, before Braehead’s defences came in, it decided to try a knock-out blow. Bovis went for summary judgment. The idea was to by-pass the expense, delay and complications of a full-blown trial. Bovis said to the court that it should dispose of Braehead summarily rather than go through this expensive, time-consuming process because the employer had no real prospect of putting up a defence and was bound to fail at trial. Unlike new adjudication, which is a 28-day investigation by a referee, summary judgment involves the parties spending an hour or so each putting their cases to the judge.
I bet you can picture all this: the gladiators are wielding their swords, the lions are snarling, the crowd is roaring …
Bovis had convinced itself that its position was unassailable. As for the opponent, it had to show that it had a chance of succeeding at a full trial, or that the issues were so complex, so full of arguments both ways and so in need of witnesses to be cross examined that it should be allowed to defend. The judge had to be satisfied in this one-hour canter that Braehead was “bound to fail”.
Just to make matters a tad more exciting, Braehead told the judge that it had a counterclaim that was so convincing that Bovis would not stand a chance of winning. I bet you can picture all this: the gladiators are wielding their swords, the lions are snarling, the crowd is roaring and everyone is waiting for the emperor to give the thumbs up or down.
Bovis said it had been clearly given an extension of time that would swipe away a chunk of the damages. It said it was in writing. No wonder it looked like a thumbs-up. But Braehead said that nothing of the sort was agreed, as it was all to do with negotiating a deal. The judge found that this was arguable and could not give a thumbs-up to Bovis. Braehead put up arguments on other matters about which Bovis had said “no chance”. No thumbs-up for Bovis. As for Braehead’s counterclaim, Bovis said it was so absurd it should be dismissed as a waste of court time. But the judge could not agree; Braehead’s case is arguable. So, Braehead succeeded in showing that it was worth having a full-blown trial.
Then the judge gave Bovis a telling-off. First he said that, once Braehead had served its defence, it should have been apparent that summary judgment would fail. Instead, Bovis had pressed on with what was in effect a “mini-trial”, including 13 massive lever-arch files bulging with documents and witness statements exceeding 50 pages in length. As the judge said: “This is not promising territory for an application for summary judgment or an application for interim payment.” He concluded: “Far from saving expense, Bovis has substantially added to the cost of this litigation.”
Earlier, I said this sort of dispute is ordinary. And when sums like this are involved, it strikes me that the best approach is to appoint a dispute inquiry board with three experienced outsiders authorised to investigate and make binding decisions. Call it expert determination, arbitration or adjudication, if you like, but it wouldn’t take two years. Give it two months – and the gladiators can stay at home.
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or e-mail him on firstname.lastname@example.org.