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In
A&D Maintenance and Construction Ltd
v Pagehurst Construction Services Ltd (June 99) TCC it was held that
if the subcontract was terminated that the matters referred to the
adjudicator remained disputes under the contract. The adjudication
provisions remained operative in the same way as an arbitration clause
remained operative by analogy with the decision in Heyman v Darwin (1942).
It was also held that the Adjudicator had the general power to deal with
matters such as set-off or abatement and whether or not an invoice was due
for payment. The Court would not review the Adjudicator’s decision. The
correctness of the Adjudicator’s decision was not a matter to be
considered in deciding whether the decision was enforceable. Matters of
abatement and claims for damages for breach of contract could have been
canvassed before the Adjudicator, and it seems they were, but they were
matters to be dealt with in subsequent arbitration proceedings or legal
proceedings or by agreement.
Daniel Atkinson explains the decision.
The case of The Administrators of Coslett (Contractors) Limited -v- Mid Glamorgan County Council (1995) was concerned with the interpretation of Clause 53 of the ICE 5 Edition and in particular whether the Employer had legal title to the Contractor's plant or if not whether and what type of proprietary interest the Employer had in the plant. The decision is explained by Daniel Atkinson. Anglian Water Authority -v- RDL Contracting (1988) was a case under ICE 5th Edition. The letter was drafted by someone else but signed by Engineer. This was held to be an Engineer's Decision. The distinction between a variation and a change to the scope of the Works is demonstrated by the case of Blue Circle Industries Plc - v - Holland Dredging Company (UK) Ltd (1987) 37 BLR 40, (CA). The contract was under the ICE form and involved dredging works. The parties agreed that dredge material would be used to create an artificial island as a bird sanctuary. It was held that this additional work was not of a kind contemplated by the contract and therefore was not a variation of the original contract. The work was indeed the subject of a separate contract. This was not a case where the work had to be carried out under the contract so that the Tender rates did not apply. In British Fermentation Products Limited v Compair Reavell Limited (June 1999) TCC a limitation clause prevented the Purchaser making any recovery for the effects of defective equipment.In Christiani & Nielsen Ltd -v- Birmingham City Council (1994) the contract was under an ICE form containing the arbitration agreement at Clause 66. It was not argued that the notice did not comply with Clause 66(3)(b). It was admitted that the notice did not comply with Rule 1.2 of the ICE Procedure which required that the notice should state the date when the matters listed were referred to the Engineer under Clause 66(1) and the date on which the Engineer gave his decision or failed to do so. The central issue was therefore whether Rule 1.2of the ICE Procedure had to be complied with. Taking a commonsense approach, his honour Judge Hicks QC agreed that since the contract was a practical document to be put into effect by practical people, and not by lawyers searching through documentation afterwards, that the person administering the contract would expect to look at Clause 66(3) to find out what to do to initiate arbitration and start looking at the ICE Procedure once the arbitration was afoot. It was held therefore that a notice which complied with Clause 66(3)(b) and was not invalidated by the fact that it failed to include all matters required by Rule 1.2 of the ICE Procedure. Many standard forms name an Engineer or Architect to act under the main contract. He decides both technical and contractual matters. Importantly, he can define the obligations and liabilities between the parties. The arrangement has the benefit of creating certainty in a complex process, but allows the necessary flexibility. It is commonly passed into subcontracts, so that the Architects certificates and decisions under the main contract are binding and definitive under the subcontract. ECC Queames Ltd -v- Merriman Ltd was a case under ICE 5th Edition. The Engineer failed to give decision within 3 months of request. The contractor was too late in giving notice to refer, and therefore it was held could no pursue his claim in arbitration. In English Industrial Estates Corporation -v- Kier Construction Ltd (1991) 56 BLR 98 the question arose whether the restriction on a contractor's option in the manner in which he carried out the work was a variation under the ICE 5th Edition. The Contractor was free to decide how to provide suitable fill material, including crushing hard arising from demolition and excavation on site. It was held that an instruction requiring all hard arising to be crushed was a variation since it removed the contractor's option not to crush arising which were uneconomic to crush. The definition of "suitable arising" in the Contract meant suitable for crushing from a technical and economic point of view. In Hall & Tawse Construction Ltd -v- Strathclyde Regional Council (1990) under the ICE 5th Edition the Engineer ordered certain tests to be carried out by an independent laboratory, and a dispute arose as to who should pay for the cost of the tests. It was held that the power to order tests was limited in two ways: firstly, with reference to the locations at which the testing might take place and, secondly, the contractor's liability for their costs. The cost of tests which were not intended by or provided for in the contract but which were ordered by the Engineer under Clause36(1) was to be borne by the contractor according to their result. However, all other tests which the Engineer might order must be paid for by the employer, no matter what their result, since they were outside the scope of Clause 36. The decision is explained by Daniel Atkinson. In Henry Boot Construction Limited v Alsthom Combined Cycles Limited (1999) TCC it was held that in exceptional circumstances fair valuation could be used for valuing variations under Clause 52(1) but certainly not to remedy an unrealistic rate. Fair valuation could be used for valuation of other work affected by varied work under Clause 52(2) and in valuation of increase or decrease in the original billed quantities under Clause 51(4) and therefore Clause 52(1) since the change is a variation. It was not available Clause 55(2) to value the correction of errors or omissions in the measure, but it is not clear why this restriction in Henry Boot should apply. It was also not available under Clause 56(2) to value the change in quantities. In Hersent Offshore S.A. -v- Burmah Oil Tankers Ltd. (1978) 10BLR 1 QBD the Contract was the ICE 4th Edition. The Engineer had ordered a variation in the quality and quantity of the Contract Works. It was held that unless the contractor could excuse failure of compliance on the ground of waiver, they had to conform with the requirements of the final proviso of clause 52 as to giving of notice of intention to claim extra payment. The giving of notice was therefore a condition precedent to the entitlement to have the rate fixed by the Engineer. It was held that notice of intention given after completion of the work could not be said to have been given as soon after the commencement of the work as was practicable. In Humber Oil Terminals Trustees Ltd -v- Harbour And General Works (Stein) Ltd (1991) CA the Court of Appeal considered the relationship between Clause 8(2) of ICE 5th Edition (Clause 8(3) under the ICE 6th) and Clause 12. The decision is explained by Daniel Atkinson. In Humber Oils Terminal Trustees Ltd -v- Hersent Offshore Ltd, 20 BLR 22 (1981), the conditions of contract were the ICE Conditions 4th Edition. The question was what notice was required by the Clause? The decision is explained by Daniel Atkinson. In Monmouth City Council -v- Costelloe & Kemp Ltd (1965) the contract was ICE 4th Edition and the issue related to a Clause66 decision. It was held that the Engineer's letter was not a decision since it must be construed against the person putting it forward who is trying to shut out the ordinary citizens right to go to the courts. It was held that it would require very clear words and a very clear decision by the Engineer, to shut the defendant out of his rights. In Norwest Holst Construction Limited -v- Renfrewshire Council (1996) Court of Sessions the division of design responsibility was explained and the relationship between Clauses 8 and 13 explained. The decision is one on its particular facts. The decision is explained by Daniel Atkinson. In Outwing Construction Limited v H Randell & Son Limited (1999) TCC 100 it was hekd that the Courts will not hesitate to abridge the normal time limits for an Order 14 application, hearing them in two to three weeks as opposed to the more normal two to three months. In Palmers Limited v ABB Power Construction Limited (Aug 1999) TCC it was held that held that it was clearly envisaged that the assembly and fixing to the land of industrial plant and similar features was included within the definition of both "construction operations" and "construction" in the Act. The fact that much of the plant was assembled away from its permanent resting place then lifted into position did not affect the above interpretation. It was also held that some of the operations described in Section 105(1) were excluded from being "construction operations" by Section 105(2), but they were still operations for the purpose of Section 105(1)(e). It was held further that since the final date for payment had passed, no effective notice of withholding could now be served. It was held that the sum applied for should be paid and that it could not now be the subject of any set-off by ABB. It was also held that the adjudication scheme under the Act related only to disputes arising under a construction contract and that this did not include a dispute as to whether there was a construction contract at all, which was a dispute as to jurisdiction. The adjudicator had no statutory power to resolve disputes about his jurisdiction. It was held that in that case it was more appropriate for the court to intervene. In The Project Consultancy Group v The Trustees of the Gray Trust (July 1999) TCC it was held as a matter of statutory interpretation that a decision in respect of a contract which is not a construction contract at all, or which is a construction contract entered into before 1st May 1998 is not a Statutory Adjudication decision and is not binding on the parties. It is open to a defendant in enforcement proceedings to challenge the decision of an adjudicator on the grounds that he was not empowered to make a Statutory Adjudicator’s Decision. In Rentokil Ailsa Envirnmental v Eastend Civil Engineering Ltd Sherriff Court 12 March 1999 it was held that arrestment in Scotland could not be used to defeat the adjudicator’s decision nor to remedy the shortcoming in not giving the required statutory notice for an intention to withhold payment by ensuring the funds do not reach the other party.In The Secretary of State for Transport -v- Birse Farr Joint Venture (1994) CA the contractor under an ICE 5th Edition claimed interest on the sum awarded by the arbitrator under clause 60(6), plus interest in respect of under-certification on other matters which were resolved without the need to refer them to arbitration. It was held that a contractor who is asserting that there has been a failure to certify must demonstrate some misapplication or misunderstanding of the contract by the Engineer. It does not suffice that the contractor should merely point to a later certification by the Engineer of a sum which had been earlier claimed and not then certified. The decision is explained by Daniel Atkinson. In Shanks & McEwan -v- Strathclyde Regional Council (1994) the sewer was constructed as a precast reinforced concrete bolted segmental ring tunnel. The segments cracked. The Engineer was of the view that the structural failure of the tunnel segments was the fault of the contractor and accepted as a concession repaired cracked segments, provided they were made reasonably watertight in order to allow the construction of the in-situ lining. It was held that whatever may have been subjectively in the mind of the Engineer when he wrote the concession, its effect was to change the quality of the specification for tunnel segments from segments which would withstand loads without cracking to segments which had cracked and were repaired to make them watertight. The Engineer's "concession" was therefore a variation order. It was also held that if the conclusion was not correct that there was a plain variation in terms of Clause 51, the Engineer’s "concession" could be construed as an instruction or direction by the Engineer which required a variation to part of the Works and accordingly there was a deemed variation by virtue of Clause 13(3). The decision is explained by Daniel Atkinson. In A Straume (UK) Ltd v Bradlor Developments Ltd (1999) it was held that if there was a valid set-off, then this could be determined in the HGCR Act adjudication already commenced. It was unnecessary for two adjudications raising the same point. If on the other hand there is no valid set-off, then this will be because the contract terms excluded a valid set-off. In that case there may be a counterclaim for liquidated damages, rectification work and damages for associated delays but these could not be defences to the claims for payment. It was held that the attempt to start the second adjudication was simply an attempt, by a side door, to get round the fact that there was a contractual bar to set-off. In Tersons Ltd -v- Stevenage Development Corporation (1963) 5BLR 54 CA the issue arose whether the Contractor had complied with the notice provisions in Clause 52(2) of the ICE 2nd Edition. It was held that the Contractor had to be given a reasonable time in which to make up their mind to claim. It was held in effect that the giving of notice was a condition precedent to the entitlement to have the rate fixed by the Engineer. In TinghamGrange Ltd (T A Gryphonn Concrete Ltd) -v- Dew and North West Water (1995) the Engineer properly ordered omission of works under the terms of the contract which was ICE 5 Edition. The Court of Appeal held in a majority decision that the Engineer should have allowed for the loss of profit claimed by a supplier in evaluating a fair valuation under Clause 52.1. The decision is explained by Daniel Atkinson. In Trafalgar House Construction Limited v General Surety Gurantee Company Limited (1994) the Court of Appeal decided that a bond similar to the ICE bond was in effect an on demand bond. This came as some surprise to the construction industry and has prompted a re-examination of the drafting of such bonds, particularly in view of the adverse comments by the Court of Appeal on the style of drafting. The House of Lords have recently considered the matter The essential question was whether the bond was in the form of a guarantee which would allow the surety to take into account unpaid sums due for work done and cross claims for set off. The decision is explained by Daniel Atkinson. In Turriff Limited -v- The Welsh Water Development Authority (1979) the contract involved the manufacture, laying and jointing of rectangular precast concrete culvert units. The units were designed by the Employer. The Contractor contended that the culvert units were physically impossible to joint in accordance with the Contract specification. Accordingly the Contractor contended that by virtue of Clause 13 of the Contract, he was entitled to cease work on the Contract, as indeed he eventually did. It was held that the design and specification required Turriff in effect to order the units from the specified supplier in a form in which it was impossible to comply from a practical commercial point of view. As such Turriff were not bound to execute or complete that part of the works. The decision is explained by Daniel Atkinson. In Yorkshire Water Authority -v- Sir Alfred McAlpine & Son (Northern) Ltd (1985) the Contractor`s method statement proposed at tender stage, became a contract document. It was held that Clause 8 did not apply to specified method statements. The risks inherent in a method statement submitted by the Contractor after award of Contract would have been the Contractor`s. Having become a specified method statement the Contractor`s obligation was only to follow it save in so far as it was legally or physically impossible. The decision is explained by Daniel Atkinson.
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