| Date | 18 January 2006 |
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| Judgment | Various |
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| The Issue | Cases of significance or interest over the past 10 years. |
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| Implication |
Trends in construction dispute resolution generally, alternative dispute resolution, global claims and the use of bills of quantities. |
printHaving written 500 case summaries for Contract Journal over the past 10 years, it seemed appropriate to mark the occasion with a digest of the most important or interesting cases I have covered in that time. Preparing a short-list such as this will of course always present considerable difficulties. Cases of the utmost importance to one sector of the industry may be of less interest to a wider audience. The vast number of cases borne out of the Construction Act may also provide an essential framework for interpretation of the Act, but a summary of those cases would hardly provide compelling reading. In the end I have weeded out four cases, only one of which flowed from the Construction Act; the 1999 decision of Mr Justice Dyson, as he then was, in the case of Macob v Morrison. Having waited a number of years for the Construction Act to be brought into force, it was with considerable uncertainty that the industry waited for the first adjudicator’s decision to be brought to the court for enforcement. There were many reasons to suggest that the court might send the whole process into a tail spin. Would the enforcement proceedings be halted applying Section 9 of the Arbitration Act forcing the parties to refer the whole business to an arbitrator? Would the requirement for a decision to be made within 28 days offend the rules of natural justice? What about where it could readily be shown that the adjudicator had made an error in arriving at his decision, such as in his interpretation of the payment provisions of the Act. Justice Dyson robustly rejected all of these concerns and confirmed that the adjudicator’s decision was binding upon the parties until the dispute was finally determined by arbitration, litigation or by agreement. In so doing he changed the landscape of UK construction industry dispute resolution practice irrevocably. My second choice is the Inner House decision of the Court of Session in Scotland in the case of John Doyle Construction v Laing Management (Scotland) where the court was asked to give guidance on the manner in which global claims for loss and expense may be made. Disputes over a contractor’s delay and disruption claims invariably arise from a complex interaction of multiple causes. The courts have tended to avoid giving guidance on how this should be approached. In John Doyle, the court went some way to provide better clarity. As a starting point Lord Drummond Young noted that it was unacceptable to suggest that a contractor’s claim would fail iin its entirety if it was unable to eliminate from the causes of its loss any causes that were not the responsibility of the employer. Instead, the court should try to narrow the enquiry by identifying where possible the dominant cause of an item of loss, in which case other concurrent events could safely be ignored. Where the dominant cause could not readily be identified, an apportionment of loss would be appropriate, even if that represented something of a rough and ready result. My third case of interest is the case of Hurst v Leeming in May 2002. This is one of a series of cases in which the courts have shown a willingness to place increased pressure upon the parties to adopt alternative dispute resolution procedures. Curiously in this case the court accepted that the defendant had been justified in refusing to commit to mediation as there was no prospect of a successful outcome. This case demonstrated however that the courts would only in exceptional circumstances accept justification for a refusal to attempt mediation. As a result of guidance from the courts in this case and others, and following the Civil Procedure Rules, mediation is now regarded as a mandatory step in the conduct of all construction legal proceedings. My final case, more for its curiosity value, is a decision of the Court of Appeal in June 2000 in the case between Henry Boot Construction v Alstom Combined Cycles. The case concerned a common enough problem as to whether a bill of quantity unit rate could properly be applied to work which had considerably increased in quantity. The Court of Appeal decided the issue by a majority of two to one, which in itself showed how difficult these matters can be. On the face of it at least, the contract rules are fairly simple. Where varied work is not of a similar character, or is not executed under similar conditions to work priced in the bills of quantities, the BQ rates are to be used as the basis for valuation so far as this is reasonable. The problem here was that the BQ rate in question was immensely favourable to the contractor and the employer disputed that this rate should be applied to the increased scope of work. By a majority, the Court of Appeal agreed that the basic consideration was that the contractor had agreed to do all work within the contract, original and varied, on the basis of his bill rates. In assessing the reasonableness of a rate or price in the BQ, attention therefore had to be paid to whether the work was similar in character or condition to the specified contract work. Such an exercise did not enable the engineer to open up or disregard the rates on the grounds that they were intrinsically overpriced or mistaken. In a dissenting judgment, Lord Justice Ward was clearly unhappy that such an analysis might lead to a substantial windfall for one party. In his view, the engineer should be entitled to take into account the end result in judging whether or not the BQ rates were reasonable or unreasonable. As a result of this case however, that view does not represent the prevailing law.
CJ-0602
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