Vinden Jan 2018

COVER STORY

GOING IT ALONE PAGE 6

RIP IT UP AND START AGAIN PAGE 4

SUPREME SHOCK WAVES PAGE 8

WWW.VINDEN.CO.UK

VINDEN HAS CELEBRATED OVER 22 YEARS OF WORKING FOR CLIENTS IN THE CONSTRUCTION AND PROPERTY MARKETPLACE AND CONTINUES TO GO FROM STRENGTH TO STRENGTH.

THE VINDEN PARTNERSHIP

Working with an extensive range of clients within both the public and private sectors, The Vinden Partnership (Vinden) offers the construction industry a huge variety of services, delivered by an exceptionally talented and experienced team.

Here we present some of the highlights from articles The Vinden Partnership has produced this year to date.

From its offices in Greater Manchester, Nottingham and central London the company undertakes education, residential, industrial, affordable housing, office, retail and health sector projects delivered to a wide range of clients and project stakeholders.

Vinden has celebrated over 22 years of working for clients in the construction and property marketplace and continues to go from strength to strength.

All clients are treated as “life time� clients and its priority, regardless of which of the many services are being provided, remains the same; that is to ensure the highest levels of client service and satisfaction are achieved at all times.

WWW.VINDEN.CO.UK

RIP IT UP T R A T S D N A AGAIN Regent House, Folds Point, Folds Road, Bolton BL1 2RZ t. 01204 362888 f. 01204362808

tvp@vinden.co.uk www.vinden.co.uk

4

In 1983 Orange Juice (the band) had a hit called “Rip it Up”. It was a good song and it got to 42 in the UK singles chart before fading into history. For some reason this song popped into my head as I was reading a case called Jacobs UK Limited and Skanska Construction Ltd [2017] EWHC 2395 (TCC), which was handed down on 28th July 2017. The case is interesting and addresses the question of whether a Referring Party to an adjudication is entitled to withdraw a dispute from adjudication and then refer the same, or substantially the same, dispute to a second adjudication at a later point in time.

Background From 2008, Skanska engaged Jacobs to provide design services on a PFI contract for the replacement of street lighting in Lewisham and Croydon. It appears that things did not go completely to plan throughout the life of the project and in February 2017 Skanska sent a Notice of Adjudication to Jacobs to recover losses which Skanska considered Jacobs was responsible for due to delays and poor design.

Patrick Waterhouse was appointed as Adjudicator and the parties agreed a timetable for the service of the Referral, Response and Reply in an exchange of emails on 13 February 2017. The Referral and Response were served on time but unfortunately, when it was Skanska’s turn to submit a Reply on 7 April 2017, its Counsel became unavailable. Skanska requested an amendment to the timetable but this was refused. As a consequence, Skanska withdrew its reference to adjudication and invited the Adjudicator to resign. Mr Waterhouse resigned on 11 April 2017.

On 21 June 2017, Skanska commenced a second adjudication with ostensibly the same claim against Jacobs. Jacobs issued Part 8 proceedings in Court seeking a declaration that Skanska’s action in commencing a second adjudication on the same dispute was unlawful, an order to restrain Skanska from pursuing the second adjudication and recovery of its costs incurred in the first adjudication.

The Decision In an interesting judgement it was concluded that there is no express or implied restriction in the Housing Grants Construction and Regeneration Act 1996, or the amended Scheme for Construction Contracts, that precludes a party from withdrawing a disputed claim which has

already been referred to adjudication and then pursuing the same claim at a later date.

It should be noted that the Court did say that there might be occasions where it might be appropriate to intervene and prevent a party from pursuing a claim in adjudication but that it would only do so where it could be shown that the actions of the claimant amounted to unreasonable and oppressive behaviour. It is a question of fact in each case as to whether the behaviour of the party to adjudication is found, on an objective basis, to be unreasonable and oppressive.

In the present case, although Skanska’s withdrawal of its claim due to the unavailability of its Counsel was unreasonable, its behaviour was not oppressive. The court will only intervene where the actions of a party are both unreasonable and oppressive.

Interestingly, the court also formed the view that the agreement of a timetable for submissions which Skanska breached meant that Skanska was then liable to a claim for any abortive costs incurred in adjudication number one and/or additional costs incurred by Jacobs in adjudication number two.

justifying the exercise of the court’s discretion in granting injunctive relief. iv) Jacobs is entitled to its wasted and/ or additional costs, if any, caused by Skanska’s failure to comply with the agreement of 13 February 2017.

So, it would appear that the lyrics in Oranges Juice’s song are quite apt and it is okay to “rip it up and start again”.

Now all I have to do is get the blasted song out of my head!

Peter Vinden is a practising Arbitrator, Adjudicator, Mediator and Expert. He is Managing Director of The Vinden Partnership and can be contacted by email at pvinden@vinden.co.uk.

For similar articles please visit: www.vinden.co.uk.

Conclusion The following conclusions are quoted directly from the judgement. i) A party to an adjudication is entitled to withdraw unilaterally a dispute referred to adjudication and commence a further adjudication in respect of the same, or substantially the same, dispute. ii) In such circumstances, the court has the power to grant an injunction to restrain pursuit of the further adjudication if the further adjudication is unreasonable and oppressive. iii) On the facts of this case, the second adjudication does not amount to unreasonable and oppressive behaviour,

Regent House, Folds Point, Folds Road, Bolton BL1 2RZ t. 01204 362888 f. 01204362808

tvp@vinden.co.uk www.vinden.co.uk

5

E N O L A T I GOING Regent House, Folds Point, Folds Road, Bolton BL1 2RZ t. 01204 362888 f. 01204362808

tvp@vinden.co.uk www.vinden.co.uk

6

There are times when, for one reason or another, a party to an adjudication decides that it is not going to participate in the proceedings or co-operate with the adjudicator. This has happened to me on at least four occasions I can recall and, coincidentally, I have just issued an adjudication decision where one of the parties in a second adjudication between the same parties concerning a second dispute between them on the same contract, elected, as it did in the first adjudication, not to participate. I can tell you it is quite a strange feeling being ignored by a party in a dispute that you are presiding over. So, when you are faced with such a situation, how should you proceed and is there a risk that your decision might not be enforced?

In answer to the first question, the first thing you must do is to make sure that you make every effort to contact the reluctant party and be careful to record your attempts by email and letter. I would even resort to getting your PA to telephone the reluctant party to make sure they have received your communications. Again, record both your efforts and your PA’s efforts in writing.

OK, so let’s assume that it has been made crystal clear to you that a party is aware of your appointment and it has, for whatever reason, decided to ignore your directions, how should you approach the adjudication?

Is it appropriate to proceed on an “exparte” basis? How much investigation into the referral should you make? Should you have a meeting? What should you say in your Decision? All very important questions, the answers to which very much depend on the quality of the Notice of Adjudication and the Referral put before you by the claimant.

Put simply, if the Notice and Referral are well drafted, crystal clear and evidenced then you are probably safe to proceed on a “documents only” basis and, if you are convinced, grant the redress requested by the Referring Party in its Notice, taking care to confirm your attempts to engage the reluctant party and your approach to deciding the dispute based on the claimant’s submissions.

The problems arise when there are issues with the quality of the Notice and/or the Referral and you consider that questions need to be asked of the claimant in order to explain a point or provide missing evidence in order to substantiate an unsupported assertion. How far should you go with this approach?

Remember that you have been appointed to make a decision. You are expected to fulfil your duties without incurring unnecessary expense. You must decide what the relevant facts and law are and if there is conflicting evidence decide on

the balance of probabilities which position is more convincing and why? Finally, you must produce a written decision explaining your approach, what matters you have considered and how you have reached your Decision. In reality, these functions should be capable of being discharged without the need for a meeting with only one party.

Keep in mind that meeting with one party would incur added cost and could provide problems for you at a later date if your reluctant party then decides to enter the stage and suggests that you might have heard something at the meeting, at which it was not present, which it has not heard or been given the opportunity to comment upon. These are the sorts of problem that might become an issue at a future enforcement hearing and why I have, thus far, never met one party alone during the life of an adjudication.

Speaking of enforcement, will the courts enforce a decision where a Respondent has refused to participate? The answer is yes, demonstrated very clearly in two published decisions of the Technology and Construction Court TCC in cases between Mr Emile Lobo -and- Mr Robert Corich ([HT-2-16-000359] and [HT-2017-000076]) Mr Lobo had obtained an Adjudicator’s decision in a case against Mr Corich. Mr Corich hadn’t taken part in the proceedings and the adjudicator had decided that a sum of £630,022.66 was due from Mr Corich to Mr Lobo. The decision was enforced against Mr Corich and Mr Lobo had obtained a charging order over a substantial property owned by Mr Corich. Mr Corich had then commenced his own proceedings to have the adjudicator’s decision set aside, the enforcement judgement set aside and the charging order on his property removed. It is apparent that much of Mr Corich’s case was based on the premise that he was unaware of the original adjudication. The adjudicator had proceeded on an ex-parte basis, which Mr Corich claimed was in breach of the rules of natural justice and

as a consequence Mr Lobo had unfairly received a decision in his favour. All very, very serious stuff.

The judgement handed down by Mr Justice Stuart-Smith makes clear that the court took the view that Mr Corich had ignored the adjudication proceedings and had in reality elected not to take part.

The consequences for Mr Corich do not make easy reading as it was decided that there could be no challenge to either the adjudicator’s decision, the subsequent enforcement judgement or the charging order granted on Mr Corich’s property.

If this case doesn’t serve as a stark warning to parties not to ignore an adjudication and the Adjudicator’s directions, I don’t know what will. As for my fellow adjudicators, out there in the construction jungle, it is OK to proceed on an “ex-parte basis” if you have to, but be careful!

Peter Vinden is a practising Arbitrator, Adjudicator, Mediator and Expert. He is Managing Director of The Vinden Partnership and can be contacted by email at pvinden@vinden.co.uk. For similar articles please visit www.vinden.co.uk.

Regent House, Folds Point, Folds Road, Bolton BL1 2RZ t. 01204 362888 f. 01204362808

tvp@vinden.co.uk www.vinden.co.uk

7

SUPREME SHOCK WAVES

The ultimate legal authority in our UK court system is our Supreme Court.

By the time a dispute reaches this particular Court the dispute in question will already have been heard in the High Court and then by the Court of Appeal. In short, a lot of very clever people will have looked at the law related to the dispute in question.

Any judgement handed down by our Supreme Court is in effect the final word on the subject and is intended to clear up any uncertainty regarding a particular point of law.

Regent House, Folds Point, Folds Road, Bolton BL1 2RZ t. 01204 362888 f. 01204362808

tvp@vinden.co.uk www.vinden.co.uk

8

The Supreme Court has just issued a judgement in a long-running dispute concerning liability for the failure of foundations to Robin Rigg offshore wind farm.

The judgement has taken many by surprise and is set to send shock waves through the UK construction industry and boardrooms of many insurance companies.

The case concerns a wind farm in the Solway Firth. E.ON Climate and Renewables had contracted with MHT in 2006 to design, fabricate and construct 60 wind turbine foundations at a site known as Robin Rigg. MHT had in turn sublet the design to Ramboll Engineers who prepared a design based on J101, an international specification used throughout the windfarm industry for such purposes. Unfortunately, unbeknown to all, J101 contained a serious error which meant that one of the loads used for designing grouted connections was underestimated by a factor of 10. In 2009, movement was discovered in these connections when the error in J101 came to light. The subsequent remedial costs were agreed at some E26 million. What wasn’t agreed, however, was who would bear liability for these costs.

The problem and the cause of all the ensuing litigation, was that the contract between E.ON and MHT appeared to contain conflicting obligations in relation to design responsibility. Although the contract expressly required MHT to design the foundations in accordance with J101 the specification incorporated in the contract also required MHT to ensure that the foundations had a minimum life of 20 years. Clearly, given the error in J101, there was an apparent conflict between these two contractual requirements and the question before the courts was who had to bear responsibility for the costs associated with the

remedial works to the foundations?

If the answer to this question was straightforward there would not have been the need to go through three tiers of courts to establish the correct position.

In the High Court action, Mr Justice Edwards Stuart held that although MHT had contracted with E.ON to use reasonable skill and care in designing the foundations in compliance with the requirements in J101, MHT was simultaneously in breach of its obligation to provide foundations with a 20-year service life as a consequence of the error in J101. MHT was thus held liable for the subsequent remedial costs.

The Court of Appeal adopted a different approach finding that the contract contained differing obligations in loose wording and that, on balance, MHT had not given a warranty of 20 years’ service life for the foundations and had fulfilled its obligation to undertake its design using reasonable skill and care by adopting the industry recognised J101 standard in fulfilment of this obligation.

Although an appeal to the Supreme Court was initially refused, permission was finally granted and the judgement was handed down on 3 August 2017 reversing the decision of the Court of Appeal and upholding the first instance decision of the High Court. Although the Supreme Court recognised that there was a difference between two competing obligations regarding design it decided that the J101 and 20-year lifetime warranty terms were expressed as a minimum requirement of MHT’s obligations and the correct approach was to adopt the “more rigorous or demanding” requirement which it said “must prevail” over the “less rigorous” J101 provision which “can properly be treated as a minimum requirement”. It was deemed

irrelevant that the 20-year minimum lifetime warranty was buried in a technical document.

MHT was aware of its existence and contracted to comply with this minimum requirement.

So, where does this Supreme Court judgement leave us. Firstly, it is now more important than ever to ensure that contracts are properly vetted and understood. If there are conflicting obligations in a contract on the same point it must be correct to assume that the Courts will apply the more onerous obligation if this issue comes before them.

Accordingly, ignoring conflicting obligations on the same point is not such a smart move and resolving any such conflicts before executing the contract would be a prudent and sensible approach. As for existing contracts that have conflicting provisions it would seem sensible to undertake a risk assessment in order to ensure that you are complying with the most onerous interpretation and make sure that your insurance premiums are being paid up to date.

Peter Vinden is a practising Arbitrator, Adjudicator, Mediator and Expert. He is Managing Director of The Vinden Partnership and can be contacted by email at pvinden@ vinden.co.uk. For similar articles please visit www.vinden.co.uk.

Regent House, Folds Point, Folds Road, Bolton BL1 2RZ t. 01204 362888 f. 01204362808

tvp@vinden.co.uk www.vinden.co.uk

9

• • • • • •

QUANTITY SURVEYING & PROJECT MANAGEMENT BUILDING SURVEYING & PARTY WALL CORPORATE RECOVERY, RE-STRUCTURING & FUNDING SOLUTIONS CONSTRUCTION INSURANCE DISPUTE RESOLUTION SUSTAINABILITY (CODE ASSESSORS, SAPs / EPCs)

WWW.VINDEN.CO.UK