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SETTING OFF DURING AND AFTER THE ADJUDICATION What happens when the Employer raises for the first time a set off defence during the Adjudication to try and reduce the sum claimed or to rebut the claim? What happens when the paying party raises a set off defence after the Adjudicator’s decision is made? Adjudicator’s duty to consider set off claims In CC Construction Limited -v- Raffaele Mincione [2021] EWHC 2502 (TCC) it was decided that if the Adjudicator fails to properly consider the Employer’s defences of set off against the Contractor’s claim for unpaid monies owed to them by the building Employer, the Adjudicator’s decision will not be enforced by the TCC. In Downs Road Development Limited LLP -v- Laxmanbhai Construction (U.K.) Limited [2021] EWHC 2441 (TCC) the Adjudicator’s decision was unenforceable because the Adjudicator had refused to consider a set off cross defence of the Employer on the grounds ...
Down the ages powerful voices have warned that the pen is mightier than the sword. In the 1930’s the legendary folk singer Woody Guthrie sang prophetically “….I’ve seen lots of funny men…Some will rob you with a six gun – And some with a fountain pen” Then why is that Contractors, Developers and Consultants so often fail to put a written contract in place before construction works start on site, sometimes with disastrous results for them? The recent decision of the Technology and Construction Court Stephen Hirst and Mountain Developments Company Limited and others v Michael Paul Dunbar and others [2022] EWHC 41 (TCC) illustrates what can go wrong if a written contract is not in place. Developers, Contractors and Consultants should leave no doubt as to whether or not payment is to be made for works to be carried out or alternatively whether they are to be undertaken at ...
The expiry of PFI contracts What will happen on expiry of the PFI contracts in the UK and what will the fall out of their coming to an end look like? The National Audit Office Report of last year warned and recommended that planning for PFI expiry should commence seven years before the exit date. Local Partnerships (a Joint Venture between Local Government Association, HM Treasury and the Welsh Government) in their report “Preparing for the Expiry of Private Finance Initiative observes as follows: “One of the most important decisions that needs to be taken is whether the public authority intends to continue to use and operate the assets, or whether it intends to vacate and dispose of them. Within this decision-making process is the consideration of an extension of the existing arrangements or a re-procurement, to look for someone else to manage and maintain the assets into a future ...
Insolvent Building Contractors continue to face huge difficulties in enforcing an Adjudicator’s decision in the Technology and Construction Court (TCC). If they have an Arbitration clause in their building contact, would they be better off commencing an Arbitration to pursue monies owed to them, rather than to follow the tried and trusted method of Adjudication? Insolvent Building Contractors could ask the Arbitrator to “open up, review and revise” the matters in dispute in a final determination. They would not be faced with the insurmountable hurdle of having to “ringfence” and safeguard the sum awarded, unlike in the enforcement of an Adjudicator’s decision made in favour of the insolvent contractor in the TCC. Obstacles to enforcement for insolvent Contractors in the TCC Insolvent Contractors who begin and win an Adjudication must “ringfence” the amount awarded to protect it against being swallowed up and distributed in the administration of the Claimant insolvent ...
After having have gone through and won an arduous Adjudication and enforcement of the Adjudicator’s decision in the TCC, Contractors often bemoan the fact that they have ended up empty handed because the non-paying Employer has since become insolvent and is unable to pay its debts. A building Contractor can take steps of prevention against the Employer’s non-payment under the building contract by obtaining a payment guarantee or bond from them, at the time when the building contract is made. This “up front” security for payment under the contract before starting the work on site, is better protection for the Contractor than the attempted cure of Adjudication and enforcement in the Technology and Construction Court (TCC), if the Employer later becomes insolvent and is unable to pay the debt claimed. When an Employer gets cross on service of a Statutory Demand A Contractor that suspects the Employer is on the ...
The term “smash and grab” conjures up images of a masked thief, with brick in hand, smashing a shop window to grab a handful of jewellery before making off into the night, never to be seen again. It is a term describes what is seen by those on the receiving end of an Adjudication claim, as an opportunistic and unjust attempt by unpaid contractors and sub-contractors to claim a windfall payment, when the paying party has failed to serve the appropriate notices required by the “Construction Act”. The Court of Appeal in S&T (UK) Limited -v- Grove Developments [2018] EWCA Civ 2448 tempered the apparent injustice of “smash and grab” claims that take advantage of this procedural breach by the paying party. The Court of Appeal decided that even if the Employer, Developer or Contractor is compelled to pay the sum awarded by the Adjudicator, this does not prevent the ...
Anthony Philpott an authorised litigator has scored a number of wins in the last two years in court and in an Arbitration, as a Direct Public Access Barrister in construction disputes. He successfully represented a Claimant builder in an Arbitration related to the construction of a house in which the Arbitrator awarded a significant sum claimed plus costs after a standard form of contract had been put in place and signed by the parties, and which contained an Arbitration clause. In the reported case of Lane End Developments Construction -v- Kingstone Civil Engineering [2020] 1BLR Part 9 at page 599 November 2020, he conducted the litigation and he appeared as Direct Public Access Counsel as advocate for Kingstone Civil Engineering in a claim for enforcement of the Adjudicator’s decision. The Technology and Construction Court decided that this technical breach had the effect of depriving the Adjudicator from having jurisdiction to ...
Having recently won a contractual dispute for a Contractor in the Royal Courts of Justice as a Direct Public Access Barrister that was hard fought over many years, I am reminded of the importance of having a robust written contract in place for construction projects before the start of the work. It is well known by Contractors that in a lump sum contract if work is included in the original contract the Contractor cannot claim extra payment for it. They have to show that it is extra work that was not agreed before the work was commenced but was later agreed as a variation. In the case in which I represented the Contractor in court, the use of an appropriate standard form of construction contract or bespoke contract with standard variation clauses would have avoided the need for a trial, cross examination of witnesses and the examination of evidence in ...
THWARTING THE ENFORCEMENT OF THE ADJUDICATOR'S DECISION The TCC decision of Gosvenor -v- Aygun Aluminium UK Limited [2018] EWHC 227 has enlarged the circumstances in which the court will stay the enforcement of an adjudication. This is where the winning party to the adjudication organises its financial affairs with the purpose of dissipating or disposing of the adjudication sum, so that it will not be repaid on a final determination of the dispute by the courts in later successful proceeding brought by the losing party. The case also considered whether allegations of fraud were enough to persuade the court not to enforce the adjudicator’s decision. When will the court order a stay? The underlying principle of adjudication is that the decision of the adjudicator is temporarily binding until the dispute leading to the adjudication is finally determined by the courts. This has led the TCC to ordering a stay of ...
HE WHO PAYS THE PIPER – THE INDEPENDENCE OF EXPERTS IN CONSTRUCTION DISPUTES The overriding truth of experts in construction disputes He who pays the piper does not call the tune in the Technology and Construction Court when it comes to the giving of expert evidence. This is because although experts owe a duty of care to those instructing them the Civil Procedure Rules make it clear that they have an overriding duty to the court to assist it in matters within the expert’s expertise. They must provide independent evidence of their opinion. The Civil Justice’s Protocol for the Instruction of Experts to give evidence in Civil Claims says that a useful test of independence is whether the expert would express the same opinion if given the same instructions by an opposing party. Paragraph 4.3 of the Protocol says experts should not take it upon themselves to promote the point ...
Quantum Meruit – Contractors, claim for work done where no contract If the court finds that a contract has not come into existence because the price is not agreed or because essential terms are not agreed or if work was carried out outside of the terms of the contract then unpaid Contractors can claim an entitlement to be paid a reasonable sum by way of Quantum meruit for the work carried out. The term Quantum Meruit broadly means a reasonable remuneration for work done or goods supplied where there is no agreement as to price or where a contract never becomes binding or is later discovered to be void. Where a Defendant has been unjustly enriched by receiving a benefit in a case where there is no contractual agreement between the parties or where a contract has been frustrated, avoided or it has become unenforceable, the claim to be brought is ...
BLOWING YOUR CHANCE TO RESERVE YOUR POSITION IN ADJUDICATION A party must reserve its position to challenge the Adjudicator’s decision on jurisdiction or natural justice if it acts in such as a way that could be construed as an acceptance of the decision. If a party through its conduct decides to accept that decision and then changes its position in the adjudication process it may be find itself accused of “blowing hot and cold” by choosing to adopt opposite positions at the same time. This is known as "approbating and reprobating" or "blowing hot and cold". The recent Technology and Construction Court decision of Dawnus Construction Holdings Limited -v- Marsh Limited [2017] EWHC 1066 (TCC) reasserts this long established principle that a party cannot “approbate and reprobate”, by simultaneously challenging and accepting the Adjudicator’s decision. In Dawnus, on an application to the TCC for summary judgment to enforce the Adjudicator’s ...
THE FALLOUT FROM CARILLION - PRIVATE V PUBLIC FUNDING WHAT NOW FOR THE FINANCING OF INFRASTRUCTURE WORKS? The fallout from the collapse of Carillion has led to a heightening of the debate among politicians over how public works such, as the building of schools and hospitals, should be funded in the future. Since the Thatcher years, successive government have embraced the mantra of the need for low taxation and the avoidance of high public expenditure. The Private Finance Initiative (PFI) was introduced by Norman Lamont the Chancellor Exchequer in the John Major Conservative Government in 1992. This marked a move away from Government investment in the NHS, Education and other public services. The argument for it being introduced was that because of the economic climate, fiscal planning and pressure to increase the scope and quality of public services, high public funding for public works could not continue. After the John ...
Construction companies, you should be vigilant in removing fitness for purpose obligations from your building contracts following the judgment of the Supreme Court that overturned the Court of Appeal decision in MT Hojgaard A/S -v- E.ON Climate and Renewables UK Robin Rigg East Limited [2015] EWCA Civ 407 and upheld the decision of Mr Justice Edward Stewart in the Technology and Construction Court, who decided that a “fitness for purpose” obligation was contained in the contract documents and the Contractor was bound by it. C ontractors, top of your list of unacceptable risks should be the “fitness for purpose” obligation, which is an absolute obligation that is not limited to the exercise of the lower standard of reasonable skill and care. The Supreme Court has decided that the Court of Appeal in MT Hojgaard A/S -v- E.ON Climate and Renewables UK Robin Rigg East Limited was wrong to overturn the ...
The decision of Judge Coulson in the Technology and Construction Court (TCC) of Alexander & Law Ltd -v- Coveside [2013] EWHC 3949 is an illustration of the principle that the awards in construction Adjudications are no more than interim and it is always open for the losing party in an Adjudication to challenge the Adjudicator’s decision by going to back court to say that the Adjudicator got it wrong and that his decision should not stand. F or the poor Contractor on the verge of insolvency it will mean that they risk having a summary judgment ordered by the court, in enforcement of the Adjudicator’s decision, stayed for the reason that they will not be able to pay the money back if the Adjudicator’s decision is later found to have been wrong. Even though the TCC decided in this case that Alexander Law (AL) had brought and justifiably won Adjudication ...
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