Adjudication Update

In Millers Specialist Joinery Company Ltd v. Nobles Construction Ltd, the claimant sought summary judgment in respect of 10 unpaid invoices for work done at the Triangle, Manchester. Nobles had not provided valid withholding notices pursuant to Section 111 of the HGCRA.

HHJ Gilliland QC said that "the effect of Section 111 is to prevent the paying party if he does not give appropriate notice from exercising his right to retain or withhold payment of monies which would otherwise be due and payable, but for the existence of some right to withhold payment. Section 111 refers to "withholding" payment generally. It must have been intended to include situations where the paying party was legitimately entitled under the general law under the terms of the contract to withhold monies which were otherwise payable".

Although the Judge concluded that the claimant would not have been entitled to summary judgment on the merits of the claim, he did give summary judgment because no valid withholding notice had been given under Section 111. Section 111 does not only apply for the purposes of adjudication.

If followed this case could quite clearly have significant ramifications, and may even see a movement away from adjudication in cases where no notice has been served.

In Gibson Lea Retail Interiors Ltd v. MAKRO Self-Service Wholesalers Ltd, Gibson Lea sought a declaration that the work that formed the subject of contracts entered into between the parties was construction operations for the purposes of Section 105 of the HGCRA. The work involved shop fitting. HHJ Seymour QC thought it clear that shop-fitting did not amount to construction operations unless it consisted of the construction of "structures forming, or to form, part of the land (whether permanent or not)" or "installation in any building or structure of fittings forming part of the land", as per sections (105)(1)(a) and (c) of the HGCRA.

Here it was decided that none of the items supplied by Gibson Lea were, and insofar as installed, fixtures. Therefore the works done were not construction operations. In Section 105(3) of the HGCRA to "fittings forming part of the land" was a reference to fixtures.

In City Inn Ltd v Shepherd Construction Ltd, Lord MacFadyen confirmed that court proceedings are not an appeal against the decision of an adjudicator. The defendant had argued that the effect of the adjudicator's award of a five-week extension of time was that City Inn had to demonstrate that the award was not justified. Lord MacFadyen confirmed that adjudication provided for an interim determination of the issues between the parties. Should the dispute ultimately go to litigation or arbitration then the matters will be decided afresh as if there had been no adjudication.

Expert Evidence

In Liverpool Roman Catholic Archdiocesan Trust v Goldberg, Mr Justice Evans-Lombe had to consider whether expert evidence given on behalf of the defendant was admissible. Here, the expert was a friend of the defendant. The Judge held that, however unbiased the conclusions of the expert might be, if it could be demonstrated that there was a relationship between the expert and the party calling him, which the reasonable observer might think was capable of affecting the views of the expert, then that evidence, as a matter of public policy, should not be admitted.

Cases From the TCC

In Nordic Holdings Ltd v. Mott McDonald Ltd, HHJ Seymour QC had to consider whether the defendant was in breach of contract in respect of cracking in a floor.

The initial contract was to investigate, report and provide design advice following the failure "of a new floor". This was not the same as undertaking a full review of the design of the floor and in any event the examination was confined to the surface layers of the underlying ground. If a defendant in a professional negligence case has not agreed to provide a particular service, then that defendant cannot be liable for not providing it.

In Belgravia Property Company Ltd v. S & R (London) Ltd, HHJ LLoyd QC had to consider name borrowing under a management contract.

Here, the works contractor sought to bring arbitration proceedings against the employer directly. The contract incorporated the JCT form of management contract 1987 edition.

Clause 1.11 of that contract provides that "the management contractor will as far as he lawfully can request the works contractor to obtain for him any rights or benefits of the provisions of the management contractÖany action taken by the management contractor in compliance with any aforesaid request shall be at the cost of the works contractor and may include the provision by the works contractor of such indemnity and security as the management contractor may reasonably require".

Clause 4.27 of the works contract provides that: "Subject to clause 1.11, the management contractor shall allow the works contractor to use the management contractor's name and if necessary will join with the works contractor in arbitration proceedingsÖ".

The defendant gave notice of arbitration and sought confirmation that the management contractor would, in accordance with clause 4.27, join in such proceedings. The management contractor took the view that it was entitled to security first.

Notwithstanding this refusal, the defendant applied to have an arbitrator appointed. The claimant objected to jurisdiction of the arbitrator.

HHJ LLoyd QC held that the defendant was not entitled to bring proceedings itself. The defendant had to bring proceedings in the name of the management contractor pursuant to clause 4.27. Before a works contractor could start proceedings via clause 4.27 it had to observe clause 1.11 and inform the management contractor of its intention. Only then and once the works contractor had satisfied any reasonable requirements as to an indemnity, would the authority given by clause 4.27 would come into operation.

The management contractor is entitled to require that the works contractor indemnify and provide security for any liability it might incur.

HHJ Lloyd QC also suggested that Section 726 of the Companies Act 1985 (in other words the equivalent of making an application for security of cost) provided a useful model in relation to establishing the extent of any indemnity.

Health & Safety

In the year to April 2001, 106 workers and 8 members of the public have been killed in construction-related accidents. This is a rise of some 20% on the previous year and is the highest rate for 10 years.

Inevitably, this will lead to increased pressure on the HSE to increase investigations and prosecutions generally. The recent blitz on sites in the London Borough of Camden is likely to be repeated. This unannounced inspection concentrated on the protection of the public during scaffolding work, lifting operations, falls from height and fire risks during refurbishment work. 44 sites were inspected and 12 Prohibition Notices were served.

The HSE, is of course, being especially vigilant in relation in relation to falls from height which is one of the three most common causes of fatal injury within the Construction Industry.

Costain Ltd have been fined £200,000 plus costs of £12,423 for breaching Section 3 of the Health & Safety at Work Act 1974. A labourer had died when he became trapped between the end of a wall and a hydraulic excavator. Costain had pleaded guilty to the offence.

English Brothers Ltd, have been convicted of causing the death of a gang foreman, who fell 8 metres through fragile insulation material whilst erecting a store on a farm. The company was fined £30,000 plus £12,500 costs after pleading guilty to both breaching health and safety regulations (namely that they failed to conduct their work in such a way to ensure that people not employed by them were not exposed to risks to their safety) and corporate manslaughter. As a result of the company pleading guilty, the CPS decided not to proceed on a separate indictment against one of the directors of that company.

This is the first time a construction company has been convicted of corporate manslaughter.

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