… but steel contractor denies allegations it will go out of business after losing Wembley High Court battle

Wembley steel contractor Cleveland Bridge could be forced into insolvency after it lost the major points at issue in its High Court battle with Multiplex, lawyers for the Australian firm alleged this week. CBUK dismissed the claim as "speculation".

That claim was made as part of a dispute over the payment of legal costs, and it followed Mr Justice Jackson's ruling that CBUK were guilty of a serious breach of contract at Wembley.

The judge's key findings were that:

  • CBUK made a "repudiatory" breach of its contract by walking off site in August 2004. This meant that Multiplex was able to claim damages of £3m, and CBUK's principal claims were void.
  • Multiplex was not guilty of forcing CBUK off site as part of an "armageddon" plan
  • CBUK's claim that the valuation of £32.66m for its work to February 2004 was final and binding was rejected
  • However, CBUK was not obliged to meet its original programme after renegotiations in February 2004.
The settlement between the parties will be decided next January, unless it is settled out of court. On the basis of this week's finding, Multiplex will be able to claim £20-25m.

This could be offset by a counterclaim of about £12m from CBUK.

After the ruling Stewart, the counsel for Multiplex, asked the judge to order CBUK to pay some of Multiplex's legal costs. Stewart put forward a number of arguments, including an allegation that there was "a realistic possibility" CBUK would not exist as a company in January next year, when the next part of the claims could be heard.

Stewart told the judge: "You know CBUK is dependent on the financial support of its major shareholder [Sheikh Abdullah Al-Rushaid] …

[By January] it must be a realistic possibility Cleveland Bridge will not be around."

CBUK admitted during the trial that it had been brought to the brink of insolvency in December 2003 by costs incurred at Wembley. However, Hugh Tomlinson, counsel for CBUK, said the court had "no evidence as to CBUK's current financial position" and that Stewart's comments were "pure speculation".

The judge ruled that the Darlington steelwork specialist must pay Multiplex 80% of its costs, which are believed to be about £2m, including a £700,000 upfront payment. However, he did not give specific reasons for the award, and did not comment on the allegation that CBUK faced possible insolvency.

Orders of this type are usual where one party has won most of the arguments.

Jackson refused CBUK leave to appeal his decision, although the firm is permitted to make an application to the Court of Appeal for a further hearing. CBUK is expected to do this within the next three weeks.

In a statement to the Australian stock exchange after the verdict Multiplex said: "Multiplex will now pursue damages and other remedies against CBUK."

A CBUK spokesperson denied the company was facing insolvency. She said: "Mr Stewart's assertions are incorrect. Through its shareholders Cleveland Bridge has ringfenced the situation it faces as a result of its issues with Multiplex."