Articles

What Is a Penalty In A Building Contract? – The Legitimate Interests of Developers, Employers and Contractors in Enforcing Liquidated Damages in Building Contracts

“It’s a stone wall penalty. How the ref didn’t see it beats me……..” so Alan Shearer regularly exclaims on Match of the Day. W hen will a Liquidated and Ascertained Damages (“LADs) clause be a penalty in a Building Contract? The answer now is whether it is in the “legitimate interests” of the Developer, Employer or Contractor that imposes and sets the level of LADs in the Building Contract. The courts have decided that only where they are “penal” in nature will they be struck down as a penalty and the question of whether LADs are a genuine pre-estimate of loss is no longer the question the courts should be asked in considering whether the LADs clause can be challenged or not. This is because of the earth shattering Supreme Court decision of Cavendish Square Holdings -v- Talal El Makdessi and Parking Eye -v- Beavis [2015] UKSC67 that LADs clauses ...


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Making It Stick - Setting Aside the Judgment and Relief from Sanctions and the Civil Procedure Rules 3.9

If you are a Claimant in the High Court or County Court you should be aware that a fast and easy way of getting your money from a Defendant that you are claiming against is for you to get from the court a judgment in default of Defence or Acknowledgment of Service. T he Defendant has to comply with strict time limits to file and send their Defence and Acknowledgment of Service of the claim to you. If they do not comply with these time limits the Claimant has the chance to use an element of surprise by getting judgment without the Defendant having the opportunity of defending the claim. The Defendant that is caught out in this way can apply to have the judgment in default of Defence or Acknowledgment of Service set aside in certain circumstances. These are described below. CPR 13.3 (1) permits the court to set ...


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Pay Back Time for the Poor “Insolvent” Contractor

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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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 ...


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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 ...


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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 ...


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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 ...


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