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Pilkington meets its Waterloo
The sky fell in on Eurostar's palatial new terminal in Waterloo station when 13 out of the 3000 roof glass panels started cracking. Tests showed that this was caused by nickel sulphide introduced during the manufacturing process. No one was hurt, however, and the only damage was to the panels themselves.

As a precaution, Eurostar closed the terminal and carried out a thorough investigation. It chose not to replace the panels but to install a transparent material with metallic channels underneath to prevent glass from falling into the terminal's public areas.

In November 1999 Eurostar sued Tarmac, the architect and construction manager, for £5.93 million. On 2 February 2000 Tarmac told the manufacturer, Pilkington, that it would claim against it. Pilkington notified its product liability insurer, CGU, who formally denied liability. Eurostar's claim was settled by mediation: Pilkington's share was £330,000 plus £709,435.71 legal costs and 18,746.50 Swiss Francs.

After Pilkington's Professional Indemnity insurers had picked up the tab for the bulk of the money, Pilkington sued CGU as its product liability insurers for £495,506.63 plus 20,081.50 in Swiss francs. The product liability insurance only covered the cost of physical damage or injury to items other than the product itself. Pilkington argued that by installing faulty glass panels (its product) there was physical damage to Eurostar's roof. In an initial case the judge's ruling came down on the side of CGU, and the court of appeal agreed with the judge that CGU had no liability. The appeal was dismissed.

MORAL: check your cover
Case: Pilkington United Kingdom Ltd. v CGU Insurance Plc. Court of Appeal - January 2004.

No spring break for Hawke
When Hawke Engineering Exhaust Components went bust, director Malcolm Keeling bought some of the firm's assets from the liquidator and set up a firm called Initial. He wanted to renegotiate a lease purchase agreement on two Kyle vertical machine tools with State Securities. Keeling met with State's sales executive Ralph Robertson on 9 November 1999 and agreed new terms involving reduced payments for the first three months.

Although the agreement was clear, somebody made a mistake on the standing order mandate, omitting the February 2001 payment. The terms for non-payment were harsh, allowing State to cancel the contract, physically recover the machines and charge Initial with the recovery costs and difference between the rental payable and the net value of the secondhand machines.

Initial failed to pay in February, Keeling arguing that the standing order showed a rent holiday on that month. State issued a notice charging interest, but Robertson contacted Keeling to say that if the late payment were made by the end of March, the charge would be waived. The normal monthly payment was made on 24 March but, with the February one still outstanding, State foreclosed, billing Initial £136,812 for liquidated damages.

Keeling argued that either State had agreed to a rent holiday in February and/or, by offering accepting Initial's March payment, had waived its right to terminate. The court disagreed. State's other paperwork showed Keeling's contention was wrong and accepting the March payment was not a waiver.

MORAL: Keep records of conversations
Case: State Securities Plc. v Initial Industry Ltd. and Another. Chanceries Division (Birmingham District Registry) January 2004.

Which adjudicator?
On 12 September 2003 IDE contacted the adjudicator named in the subcontract between Carter and itself, saying that he couldn't accept the appointment because he had commitments abroad. On 29 September IDE issued a formal Notice of Adjudication saying that as the named adjudicator, Stephen Pratt, was not available, it would request the Chartered Institute of Arbitrators to nominate an adjudicator in accordance with the contract.

In response Carter named two alternative adjudicators but IDE declined both to wait for the CIArb nomination. On 6 October, CIArb appointed a Mr Smalley; Carter objected to the choice, as Smalley had previously worked for a sub-contractor who had been in dispute with Carter. In addition, Carter found that Pratt would be available from November 2 and said that he couldn't recall the September telephone conversation with IDE's consultant QS.

After consideration, Smalley confirmed his appointment was valid. However, Carter decided to withdraw from the adjudication completely. Eventually, Smalley decided Carter should pay IDE £161,229.61 including VAT.

The court refused to enforce this decision on the grounds that Carter suffered prejudice because IDE had not shown that Pratt would not be available. There was no reason why the dispute could not proceed to a full trial.

MORAL: Adjudication starts when you issue the Notice - not before
Case: IDE Contracting Ltd v R.G. Carter Cambridge Ltd. Technology and Construction Court - January 2004 Initial Error

DEFRA foots the bill
When Foot and Mouth broke out in 2001, contractor JDM joined the fight. From March 2001 JDM provided civil engineering services on a 24/7 basis, supplying operatives, plant and gravel. The bill quickly reached some £32 million.

The contingency planning at the Ministry of Agriculture Fisheries and Food (now the Department of the Environment, Food and Rural Affairs, or DEFRA) had been woefully inadequate. It could not provide sufficient administrative staff to verify the timesheets of JDM and its sub-contractors which were used as the basis of JDM's invoices.

Initially this did not cause any worries, but the Prime Minister was expressing concerns over the mounting cost of the epidemic. DEFRA then employed an army of 80 quantity surveyors and forensic accountants, checking and authorising invoices from June. Payments slowed and by August had ceased altogether, with a total of £5 million being held back from JDM's bills.

The court held that since JDM's timesheets were written soon after the work had been carried out, they could be considered an accurate and reliable account of the hours worked. H ours could only be reduced if significant evidence could be produced to disprove them - and that burden lay with DEFRA.

MORAL: Beware of uncontrolled daywork
Case: JDM Accord v DEFRA Technology and Construction Court. January 2004