Main contractor Inglen placed an order for labour with Actionstrength on a project to build a float glass factory for St Gobain in Eggbrough, East Yorkshire. The monthly invoices were to be paid in 30 days. If not, Actionstrength could terminate.
Six months later £500,000 was owing Actionstrength. After only £300,000 was then paid, Actionstrength's Craig Sutcliffe visited site to pull his labour off unless all the arrears were cleared.
Cue flurry of meetings with all three parties. St. Gobain even phoned Actionstrength's MD. The upshot was that Actionstrength thought St. Gobain would guarantee payments, so it stayed on site.
Eventually, Actionstrength successfully sued Inglen for £1.3m. Inglen went bust.
St. Gobain refused to pay up. It hadn't made an agreement it said and anyway the Statute of Frauds insisted that a guarantee must be in writing and signed. Otherwise it was unenforceable.
Although Actionstrength had kept on working, the House of Lords reluctantly agreed with St Gobain, saying Actionstrength's case was hopeless.
Moral: Promises, like glass, can be broken
Case: Actionstrength t/l Vital Resources v International Glass Engineering In.Gl.En. SpA and others, April 2003
Now you see it… now you don't
Following an adjudication, client ADI had to pay Harvey £174,000 for refurbishing flats at 22 Cornwall Gardens, London, SW7. ADI refused and a court case resulted.
The original contract price was £339,895. With the architect's informal extension of time, the job should have been completed on October 28, 1998. Instead it was completed in January 1999.
Harvey and the architect negotiated the account at £352,456. Before certifying, the architect asked ADI for its comments, which reduced the account by £27,693.
In the lead-up to court, Harvey acknowledged that the agreed final account included some double counting and reduced its claim to £344,541.
ADI resisted Harvey's extension of time and loss and expense claims on the grounds it had not given the proper notices. The judge held that this was not fatal under the form of contract, IFC98 but that Harvey's claims were unclear.
The judge only awarded an extension to November 20, 1999 and disallowed a substantial part of the money claim. The net sum due? £66,527. Much less than the £174,000 decided by the adjudicator.
Moral: Get your story straight before you zoom off to court
Case: Harvey Shopfitters Limited v ADI Limited, TCC March 2003
Default and defence
Contractor Pegram and client Tally Weijl disagreed over what the contract terms were. Pegram had started work for Tally Weijl before a contract had been issued. They agreed at the initial meeting that a schedule of work would be prepared and a letter of intent issued.
Tally Weijl did not send the letter of intent but wrote Pegram that the contract would be the PCC 98 form. Pegram did not accept and offered its own conditions.
Tally Weijl issued a letter of appointment including PCC 98 and excluding Pegram's conditions. Pegram did not sign.
An adjudicator was appointed under the Scheme for Construction Contracts. Tally Weijl argued this was invalid as he should have been appointed under JCT rules.
In the subsequent enforcement proceedings, Tally Weijl tried to argue that no contract had been in place, so adjudication did not apply. The judge disagreed. Tally Weijl had argued there was a PCC 98 contract and could not change its mind. The fallback Statutory Scheme must apply or Pegram would lose its statutory right to a quick adjudication. Pegram won.
Moral: Stick to your arguments
Case: Pegram Shopfitters limited v Tally Weijl (UK) Limited. TCC Feb 2003
Out of the frying pan...
In 1998 chilled food manufacturer Sahib's factory burnt down. The fire started in a Zanussi-made gas-fired brat pan. The instructions specified only 1mm to 2mm of oil in the pan, but it had been filled to 100mm.
The operative, a non English-speaking asylum seeker ending a 14-hour shift, had left the pan on unattended with a broken thermostat, no override cut-out and no maintenance agreement. The supervisor had not checked. So who pays?
Answer: Paskin Kyriakides Sands (PKS), the architect for the factory refurbishment four years earlier.
PKS had designed the room around the continuous fat fryers properly with non-combustible mineral wool panels. However, the walls around the veg prep area were steel-faced EPS panels that could de-laminate in a fire. PKS's defence was that it had complied with the building regulations and had thought all the brat pans were steam-powered.
The judge disagreed. He noted that the room-loading sheet indicated a gas brat pan. He ordered PKS to pay the difference between the costs (including Sahib's trading losses) of a properly insulated room burning and the whole factory burning down.
Moral: If you can't stand the heat...
Case: Sahib Foods and Co-operative Insurance Society Limited v Paskin Kyriakides Sands TCC March 2003
Source
Construction Manager
Postscript
Ann Wright, LLB, is an adjudicator and quantity surveyor. Tel 0121 333 6781
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