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Highlands and lows
The Highland Council employed Construction Centre Group (CCG) to carry out work on the Small Isles and Inverie Ferry Scheme. Following a dispute, CCG was awarded £245,469 in adjudication. Highland did not pay and in August 2002 the court awarded CCG a summary decree. Highland still did not pay.

The project was not going well. The engineer had only granted CCG extensions until December 2001. In October 2002 Highland expelled CCG from the works. In November CCG appointed a Receiver.

Highland felt it was entitled to damages of £638,400 and in April 2003 tried to cancel the £245K it owed CCG. The court refused.

Highland then went to adjudication for the full £638,400, allowing sums it had withheld of £3,500 plus £29,375 and the still unpaid £245,469.24. CCG argued it thought the adjudication was a means of Highland continuing to withhold the sum ordered by the court. In July 2003 the adjudicator decided that CCG was liable to pay Highland £360,305.76.

Highland trotted back to court to extinguish its liability to pay the £245K but the court was less than impressed with an authority that failed to respond to a court order. The court insisted that Highland must discharge its original debt to CCG.

Moral: Court orders are hard to overturn

Case: The Highland Council V The Construction Centre Group Ltd. Outer House, Court of Session, August 1, 2003

Problem in Pimlico
In 1984, Westminster City Council employed HDA to manage site supervision and contractors payments on the refurbishment of Churchill Gardens Estate in Pimlico for an estimated five-year period. Later, a higher fee was negotiated to include structural engineering fees. In 1986, Westminster wanted to formalise the contract and produced a revised version, signed in 1987. It included a clause that allowed Westminster to terminate the contract at month’s notice, without having to give a reason.

In 1996, Westminster issued a one month notice of HDA’s termination. HDA then tried to recover damages arguing that as HDA was not in default in any way, the termination was unreasonable. HDA thought the clause was unfair as defined in the Unfair Contract Terms Act 1977.

The court thought that the termination was perfectly proper. HDA was wrong to assume Westminster could only terminate for specific reasons and had not made its belief known.

Moral: Make the word reflect negotiation

Case: Hadley Design Associates Ltd. V Mayor and Citizens of the City of Westminster. TCC July 9, 2003

Out of gear
In August 1998 the gearbox main drive of Hindalco’s aluminium rolling mill failed catastrophically. Specialist contractor Davy had installed the equipment 14 months earlier at the mills in Renkoort, India.

Davy had purchased gearboxes, couplings and lubrication systems from Bostock & Bramley Transmissions. Warranty conditions were that equipment would be free from defects of design, materials and workmanship for two years; a guarantee for 12 months from the replacement of any defective part and any latent defects found within three years would be repaired free.

Bostock agreed to repair the broken parts free of charge but the unit suffered more failures. It could not be made safe and Hindalco had to replace it.

In 2002 Davy claimed damages. Bostock argued that since the fault was down to design, it had occurred outside the six-year period covered under the Limitation Act 1980. Bostock had delivered the equipment to the packers for shipping in July 1995, before February 1996.

The court disagreed, deciding claims under warranty clauses could still be made.

Moral: Guarantees can outlast goods

Case: VAI Industries (UK) v Bostock & Bramley & Ors. CA, July 2003

Down the pan
As construction manager on Merrill Lynch’s new European HQ in central London, Mace placed a £2.4m contract for extensive toilet fit-outs with Hurst. Hurst’s work should have all taken place in 2000 but extensive variations and delays kept it on site until October 2001. In November 2001 Hurst submitted its ‘Final Account’ totalling nearly £6.5m including claims for ‘loss and expense’.

Mace rejected this account the same day with a covering letter that said that Hurst’s project manager Mr Mell had already agreed and signed a final statement of account for all works up to April 2001. Mell conceded he had negotiated the value of labour, plant and materials in accordance with Construction Manager’s Instructions 1-399 with Mace’s Mr Rumsey. But he had not read the final document properly and failed to notice the words which said: ‘In full and final settlement of all Hurst’s claims arising to April 27, 2001.’ Mace had not drawn his attention to that clause. Hurst argued the document had been signed under a mistaken belief and that it was not binding.

The Adjudicator agreed with Mace but the judge disagreed, saying the document was an attempt to vary the Trade Contract.

Moral: Amendments can backfire

Case: Hurst Stores and Interiors Limited V M L Europe Property Limited. TCC June 25, 2003