Think you know about delay analysis? Think you know about concurrency? Think again!

The Society of Construction Law’s Delay and Disruption Protocol defines concurrency as “True concurrent delay is the occurrence of two or more delay events at the same time, one an Employer Risk Event, the other a Contractor Risk Event and the effects of which are felt at the same time. The term ‘concurrent delay’ is often used to describe the situation where two or more delay events arise at different times, but the effects of them are felt (in whole or in part) at the same time. To avoid confusion, this is more correctly termed the ‘concurrent effect’ of sequential delay events” Any wiser? Read on.

In order to have a thorough grasp on concurrency and thus to see whether a Contractor is entitled to an extension of time regardless of there being events for which the Contractor is culpable for, three cases must be examined in sequence in order to apply the principle of concurrency:

• Henry Boot Construction (UK) Ltd –v– Malmaison Hotel (Manchester) Limited [1999] 70 Con LR 32 (“Henry Boot”).
• The Royal Brompton Hospital NHS Trust –v– Hammond & Others (No. 7) [2000] 76 Con LR (“Royal Brompton”).
• City Inn Limited –v– Shepherd Construction Limited [2007] CSOH 190 (“City Inn”).

The term ‘concurrency’ is generic as there are connotations like for example, concurrency of causes and concurrency of events. However, for there to be concurrent delays in the sense that one event is a Relevant Event and the other is not, both events must necessarily be shown to be on the critical path of the programme.

The Henry Boot judgement refers to where 2 events, one being a Relevant Event and the other being a Contractor culpability, are concurrent in the respective causes. In that case, Mr Justice Dyson provides a simple example (paragraph 13), whereby both delaying events (one being a Relevant Event and the other not), starting and ending simultaneously, but both are necessarily on the critical path of the programme, which by definition would be likely to affect the date for completion. This is known as true concurrency.

Where a Relevant Event occurs after a Contractor Risk Event but runs concurrently on the critical path, this is referred to as net concurrency. But for either true or net concurrency to occur, the events must be shown to be on the critical path of the programme. Paragraph 32 of Royal Brompton, His Honour Judge Seymour QC stated: “…In order to make an assessment of whether a particular occurrence has affected the ultimate completion of the work, rather than just a particular operation it is desirable to consider what operations, at the time the event with one is concerned happens, are critical to the forward progress of the work as a whole.” In other words, an event complained of must be shown to have been on the critical path as opposed to one that is merely concurrent with the critical path. If an event is not on the critical path, it cannot affect completion and hence there is no entitlement to time.

Applying the principle of Henry Boot to concurrency therefore, where there are two concurrency of causes, one being a Relevant Event and the other being a Contractor culpability, and the Relevant Event is likely to delay the Works beyond the Completion Date, then providing the Architect / Contract Administrator considers it fair and reasonable to do so, an extension of time should be granted.

Following on from Henry Boot, Judge Seymour QC at paragraph 31 of his judgement in Royal Brompton provided a further explanation of what is meant by events operating concurrently. In that judgement, he considered that Mr Justice Dyson in Henry Boot had only been concerned with true concurrency as opposed to a where a Relevant Event occurred post an event that the Contractor was culpable for and hence, the Relevant Event had no effect upon the Completion Date. Judge Seymour QC concluded that where a Relevant Event occurred post an event that the Contractor was culpable for, the Contractor would not be entitled to an extension of time.

In City Inn, the Court had difficulty in agreeing with the conclusion of Judge Seymour QC and held that even where a Relevant Event occurred post an event that the Contractor was culpable for, this should not bar the Contractor from being entitled to an extension of time, if it was fair and reasonable to do so.

However, the decision in City Inn does not relieve the Contractor from the burden of proving that the event was a Relevant Event and was on the critical path of the programme as opposed to being merely an operational activity which happened to be concurrent with the critical path. The difficulty that City Inn found in the distinction of concurrency as laid out in Royal Brompton was that where a Relevant Event occurred after the date of a Contractor culpability, it would be treated differently to that of a Relevant Event that had occurred simultaneously to a Contractor culpability, with no entitlement to an extension of time.

In summary therefore, and in the context of entitlement to an extension of time:

• Concurrency of an event, whether a Relevant Event or Contractor culpability, must necessarily be shown to be on the programmes critical path, the completion of the Works of which is likely to be delayed thereby beyond the Completion Date.
• A Relevant Event can occur either simultaneously or post of a Contractor culpable event, both of which fall to be considered for an extension of time providing the event is proved on balance to be on the critical path.

© Michael Gerard Consulting Limited
August 2008

© Michael Gerard Consulting Limited
February 2008

Have you ever �entered� into a contract without giving the sum quoted for delay damages much thought until the time that the damages were deducted from a payment? It has happened to the best of them!

In this briefing, we examine the possibility of challenging the level of damages even where the culpability for the delay is incontrovertibly your fault!

The JCT suite of contracts refers to damages for delay as Liquidated and Ascertained Damages whilst the NEC refers to them as Delay Damages. But in either case, a party on the receiving end will feel the pain! However, if you are unfortunate enough to be faced with such a claim, you could plead �penalty� in an attempt to make the clause unenforceable.

A sum is deemed a penalty and unenforceable where there has been no genuine attempt by the party relying on the clause to pre-estimate the likely level of loss that it would be likely to suffer. Chitty on Contracts, 29th Edition, paragraph 26-109, states that: ��the sum fixed may be classified by the courts either as a penalty (which is irrecoverable) or as liquidated damages (which are recoverable). The clause is enforceable if it does not exceed a genuine attempt to estimate in advance the loss which the claimant would be likely to suffer from a breach of the obligation in question�� Therefore, damages for delay must be a genuine pre-estimate of the likely loss which the party would have suffered if the contractor had failed to complete on time.

In Alfred McAlpine Capital Projects Limited v Tilebox Limited [2005] EWHC (TCC), Jackson J at paragraph 48 (4) said: �Looking at the bundle of authorities provided in this case, I note only four cases where the relevant clause has been struck down as a penalty. These are Commissioner of Public Works v Hills [1906] AC 368, Bridge v Campbell Discount Co Limited [1962] AC 600, Workers Trust and Merchant Bank Limited v Dojap Investments Limited [1993] AC 573, and Ariston SRL v Charly Records (Court of Appeal 13th March 1990). In each of these four cases there was, in fact, a very wide gulf between (a) the level of damages likely to be suffered, and (b) the level of damages stipulated in the contract�

Therefore, if it was not possible for the Claimant, at the time that the Contract was entered into, to actually incur anywhere near the level of damages that it has stipulated in the Contract for delay, the damages are not enforceable.

Chitty on Contracts, 29th Edition, paragraph 26-110, has referred to the case of Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, 86-88, and lists various tests to assist with the task of whether or not damages are a penalty: �It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss which could conceivably be proved to have followed from the breach.�

Where the Claimant has clearly made no genuine pre-estimate of the Delay Damages, then there is a strong possibility that the sum will be held to be a penalty and be unenforceable.

However, do not be drawn into a false sense of security. Where the contractor is culpable for the delay on a contract, there is nothing stopping the Claimant from recovering his proven losses.

© Michael Gerard Consulting Limited
October 2007

• Representation in Adjudication proceedings on behalf of the Referring Party main contractor during the second quarter 2007, successfully arguing that the Practical Completion Certificate issued under the JCT MW 1998 remained valid despite its purported ‘cancellation’ by the Contract Administrator (see our Autumn 2007 briefings).
• Successful representation in Adjudication proceedings on a final account dispute on behalf of the Referring Party main contractor during the third quarter 2007 on a £573,000 business Park development in Leicestershire.

Expert Roles…

• Submission of an Expert Report, prepared on the instruction of a London Borough Council for several matters on a ‘live’ project including, whether the main contractor was proceeding regularly and diligently under the principle of West Faulkner Associates v London Borough of Newham [1994], analysing the cause/s of delay and forecasting the time to complete and whether the Contract Administrator had used reasonable skill and care whilst administrating the Contract.

Contractual Advice…

• Assisting a regional painting sub-contractor, procured under the JCT Dom 2 sub-contract on a large new-build project in Rutland, to secure payment from a national main contractor whose, JCT 1998 head contract had been determined by the Employer under clause 27.2.1.2. Using the power of clause 30.3 and threat of adjudication proceedings, the matter was settled within 21 days of our involvement with full payment including release of retention plus interest agreed to be paid by the main contractor.
• Providing advice and assisting a nominated sub-contractor procured under the JCT NSC 1998 on a large new-build project in Rutland, to compile its account Statement and secure payment under clause 7.10.3 from a national main contractor whose, JCT 1998 head contract had been determined by the Employer under clause 27.2.1.2. This resulted in the sub-contractor receiving its full entitlement including release of retention.

Loss and Expense…

• Compilation, presentation and successful negotiation of a claim for loss and expense on behalf of a principal contractor on a refurbishment project in Essex.

Lease Disputes…

• Response on behalf of the tenant to the landlord’s expert’s schedule of dilapidations asserting a sum due of £69,656 for repairs under an expired lease. Our involvement resulted in a reduction of the sum sought to £1,661.

© Michael Gerard Consulting Limited
October 2007

Article by Michael P. Gerard MSc, PGDipLaw, PGDipBar, FCIOB, MCIArb, MAE
Barrister, Chartered Builder, Registered Adjudicator & Accredited Expert

Case: Melville Dundas Ltd and Others v George Wimpey UK Ltd and Others [2007] UKHL 18Before Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe, Lord Mance and Lord Neuberger of Abbotsbury

After nearly 10 years of statutory adjudication, at least we know that in the absence of a timeous Section 111 ‘withholding notice’, there is nothing an Employer can do but to pay up, after all, we have authorities such as SL Timber Systems Ltd v Carrillion Construction Ltd [2001] and Rupert Morgan Building Services (LLC) Ltd v David Jervis and Harriet Jervis [2003] to rely on. But then came the decision in Melville Dundas Ltd and Others v George Wimpey UK Ltd and Others, which is the first House of Lords decision under the Construction Act, which allowed an Employer to retain the amount previously stated as due.

The Facts

Melville Dundas was employed by Wimpey under a JCT Standard Form of Building Contract with Contractor’s Design (1998 edition) which provided for monthly applications for interim payments. Under clause 30.3.6, the final date for payment of the amount due in an interim payment was 14 days after receipt by the employer of the application.

Melville applied for an interim payment of approximately £400,000 on 2 May 2003 making the final date for payment 16 May 2003.

Clause 30.3 of the Contract provided for the following:

30.3.3 Payment notice was to be issued within five days of the receipt of an application specifying the amount which the employer proposed to pay, together with the basis upon which that amount was assessed (a ‘Section 110’ notice).
30.3.4 Not later than five days before the final date for payment, the Employer could give notice of any amount proposed to be withheld and to be deducted from the sum otherwise payable under Clause 30.3.3 together with the ground/s for such withholding or deduction (a ‘Section 111’ notice).
30.3.5 In the absence of an Employer’s [withholding] notice under Clauses 30.3.3 and/or 30.3.4 the amount sought in the application for interim payment should be paid in effect within 14 days.

Wimpey did not make payment by the final date or issue a payment or withholding notice (under Sections 110 & 111 of the HGCRA). The absence of a withholding notice ‘should’ therefore have entitled the Contractor to payment of its claim.

On 22 May 2003 administrative receivers of Melville Dundas were appointed by its bank (Mr Colin Peter Dempster and Mr Thomas Merchant Burton), and on 30 May 2003 Wimpey exercised its right under Clause 27.3.4 to determine the employment of Melville Dundas, thus Clause 27.6.5.1 came into play:

“Subject to Clauses 27.5.3 and 27.6.5.2 the provisions of this Contract which require any further payment or any release or further release of retention to the Contractor shall not apply; provided that Clause 27.6.5.1 shall not be construed so as to prevent the enforcement by the Contractor of any rights under this Contract in respect of amounts properly due to be paid by the employer to the Contractor which the employer has unreasonably not paid and which, where Clause 27.3.4 applies, have accrued 28 days or more before the [22 May 2003] date when under Clause 27.3.4 the employer could first give notice to determine the employment of the Contractor ….” Emphasis added.

It was common ground between the parties that the final date for payment (16 May 2003), was less (not more) than 28 days before the appointment of a receiver (22 May 2003), so the proviso did not apply.

Proceedings

Melville Dundas instigated proceedings for recovery of the amount it had applied for and at first instance, Lord Clarke’s judgement found in favour of Wimpey where he held that it could not have been intended that the HGCRA would operate to prevent Wimpey from withholding payment in these circumstances.

Melville Dundas successfully appealed the decision in the Inner House of the Scottish Court of Session. The Court said that Clause 27.6 of the JCT Contract could not be construed in the light of the HGCRA as altering retrospectively the final date for payment established by Clause 30.3. The Inner House emphasised the importance of the Act’s intention of cash flow being the life blood of the construction industry.

The House of Lords decided however, by a majority of three to two, to allow the appeal and thus gave effect to Lord Clarke’s judgement in favour of George Wimpey.

Contract v Statute

Melville Dundas had unsuccessfully argued that the phrase “…the provisions of this Contract which require any further payment or any release or further release of retention to the Contractor shall not apply…” meant further liability and did not apply to a liability that had already arisen (on 16 May 2003) prior to the determination (on 30 May 2003). It was held that the Contract meant that Melville Dundas was to be paid nothing more on an interim basis.

Hence, the key issue of the parties is the wording between the Contract (at Clause 27.6.5.1, which allowed the Employer not to pay the interim application that was otherwise due), and the HGCRA 1996 (at Section 111(1), where “A party to a construction contract may not withhold payment after the final date for payment of the sum due under the contract unless he has given an effective notice of intention to withhold payment.”). The House of Lords held that in these circumstances it was the Contract that prevailed over the statute.

Lord Hoffman’s view was that Wimpey could not have served a Section 111 notice by 11 May 2003 (i.e. 5 days before the final date for payment), simply due to the fact that it was not aware that Melville Dundas had entered administration until 22 May 2003. At paragraph 22 of the judgement, Lord Hoffman stated that he very much doubted whether Parliament ever had in mind a ground for withholding payment which might arise after the final date for payment:

“…I would prefer simply to say lex non cogit ad impossibilia and that on this ground Section 111(1) should be construed as not applying to a lawful ground for withholding payment of which it was in the nature of things not possible for notice to have been given within the statutory timeframe…”

The views of Lords Walker, Hoffman and Hope relied on insolvency legislation as a basis of their reasoning which allows a creditor to set-off a debt owed to an insolvent company against any sum it is owed, thus just leaving the balance as a debt to the creditor, as justification for keeping the debtor out of the money.

Should Wimpey, as the Employer, be required to pay over the money, it would not have been possible for it to recover the same and thus Wimpey would have simply become an unsecured debtor and having to prove its cross-claim in the liquidation process. Conversely, with Wimpey retaining the money, it could under Clause 27.6.5.1 of the Contract, set it off against its cross-claim for non-completion. Upon insolvency, liability to make an interim payment therefore became a matter which related not to cash flow but to the substantive rights of the Employer on the one hand and the contractor’s secured or unsecured creditors on the other.

The Employer had a [limited] right to retain money under Clause 27.6.5.1 of the Contract, which was intended as security for its cross-claims and this seemed a reasonable compromise between the Employer retaining the money as against a potential insolvent Contractor, which would otherwise allow the insolvent Contractor’s creditors to use the Employer’s money to improve its position.

Lord Walker agreed with Lord Hoffman. Lord Hope, at paragraph 41 of the judgement, gave a “purposive construction to Section 111(1) although it did not contain any obvious ambiguity”. He said that the mischief that Section 111(1) addresses:

“…is that of the withholding payment without notice of stage payments or other periodic payments (see Section 109(1)), not the withholding of payment of sums already due in the event of the determination of the contractor’s employment pending the making up of an account to identify the balance, if any, due to either party once the loss and damaged caused to the employer as a result of the determination has been taken into account. The parties’ freedom of contract as to the circumstances in which the contractor’s employment may be terminated and, if so, with what consequences, has not been affected.”

The two dissenting Lord Mance and Lord Neuberger, stated that once the sum had become finally due and there were no requisite cross or withholding notices, it was payable. The parties could not legislate by the determination provision (as in the present Contract) to make what was a finally payable sum into something which was not then payable.

Lord Neuberger at paragraph 64 said:

“It is also an approach that commends itself to me, at least as a matter of simple statutory interpretation. On the face of it at any rate, if a statute provides that a person “may not withhold payment” after a specified date has passed, it appears to me that a contractual provision that he may do so must be ineffective. That conclusion is supported, in my view, by the fact that sections 110 and 111…appear to have the aims of (a) providing a clear and simple system to ensure that parties to construction contracts know where they are with regard to payments, and (b) ensuring that contractors and sub-contractors can be confident about their cash-flow.”

The current position according to Melville Dundas therefore, is that it allows the Employer to retain a sum that would otherwise be due where a subsequent event occurs, despite the failure to serve a withholding notice, providing that it was not possible to issue the withholding notice within the statutory time frame, thus enabling the statute to be inoperable in such circumstances.

It remains to see whether this principle that circumvents the Act will be applied in similar circumstances of insolvency or whether advocates in the future will present more persuasive arguments over other lawful intervening grounds, although Melville Dundas is law and has already been followed by HHJ Peter Coulson QC in the TCC in Pierce Design International Limited v Mark Johnston [2007].

Certainly it can now be seen that Section 111 can be undermined and perhaps Contracts in the future can be drafted which makes an interim payment which has become due to be legally avoided, by means of an event not known or considered at the material time: “The parties are free to agree the amounts of the payments and the…circumstances in which, they become due”. This House of Lords decision allows [limited] circumstances to operate retrospectively and thus to circumvent the previously considered mandatory issuing of a timeous (and valid) withholding notice, in circumstances where it was not possible to comply.

© Michael Gerard Consulting Limited
August 2007

All standard forms of contract provide for the issuing of a notification when practical completion has been achieved. The JCT 2005 suite of contracts provide for the certification of practical completion of the Works when in the opinion of the Architect or Contract Administrator it has been achieved. But once issued under the Contract, can the Certificate of Practical Completion be withdrawn? This was a recent dilemma faced by one of our clients.

In essence, an Architect or Contract Administrator (�CA�) must act within the Terms and Conditions of the Contract and hence, if a contract does not include any provisions to revoke the Certificate of Practical Completion once issued, then the CA has no power to revoke the Certificate. Chitty on Contracts, Volume II, 29th Edition, at paragraph 37-107, provides a reasoning for this: �Completion. Standard Form contracts will usually be found to stipulate the degree of completion required to bring the construction period to an end. This may be referred to as �practical� completion360 or �substantial� completion which may also be subject to passing any final testing or commissioning prescribed by the contract.361 There may also be provisions entitling the contractor to achieve completion notwithstanding outstanding work.362. Footnote 361 refers to the ICE 7th Edition, Clause 48(1), which provides for �Notification of substantial completion� and inter alia states that: �…Such notice shall be accompanied by an undertaking to finish any outstanding work in accordance with the provisions of Clause 49(1).� The JCT does not contain such wording as the ICE 7th Edition and hence, without amendment, the JCT is even more strict on the powers of the CA post certification of practical completion.

It is established authority that once the Certificate of Practical Completion has been issued, it remains final and binding on the Employer and cannot be revoked. Keating on Building Contracts, 6th Edition, page 114, states that: �When is a certificate binding and conclusive? It is a question of construction in each case to determine whether it was intended that a particular certificate should be conclusive upon the matter with which it purports to deal. Beyond this, it is not possible to formulate a comprehensive test to determine whether a certificate is binding and conclusive. Express words are frequently used such as, for example, that �the certificate of the engineer�shall be binding and conclusive on both parties�. It seems that prima facie a final certificate which is condition precedent to payment is conclusive.� Hudson�s Building and Engineering Contracts, 11th Edition, at paragraph 6-169, states that: �If the effect of the contract is to confer finality upon the certificate, it has been held that a certificate validly issued cannot, in the absence of a contractual provision to the contrary, or agreement or waiver by the parties, be withdrawn in order to correct mistakes of fact or value in it. Having issued the certificate, the certifier has on this theory discharged his function, and unless an arbitration or other clause empowers him to decide a dispute arising upon the certificate, or to amend it, he has no jurisdiction to alter it or issue another�.

Under the JCT, release and payment of half of the retention monies and the issue of the Penultimate Certificate for Payment, is condition precedent to the issue of the Certificate of Practical Completion; hence, the Certificate of Practical Completion is condition precedent for payment of half of the retention fund and the issue of the Penultimate Certificate for Payment, thus the intention of the Certificate of Practical Completion is finality and binding.

There is no contractual provision under the JCT Contract that allows a contract administrator to issue a certificate of practical completion and then withdraw the same: the Certificate is either issued under the relevant clause in the Contract or it is not � there is no �half-way house�.

Once the Certificate of Practical Completion has been issued under the Contract, it cannot simply be withdrawn or revoked as there are contractual procedures that are condition precedent upon the issue of the Certificate and these cannot be reversed:
1. The contractor�s liability for liquidated damages ceases
2. The Defects Liability Period begins
3. The Contractor�s licence to occupy the site ceases
4. The Employer takes possession of the Works
5. The Employer takes over the insurances
6. The limitation period begins
7. The Penultimate Certificate for Payment is issued and hence the payment procedures under the Contract are commenced including contractual notification periods
8. Half of the retention is money is released

In addition, once the Certificate of Practical Completion has been issued, the contractor�s obligations are terminated subject only to the maintenance period provisions (Ata Ul Haq v. City Council of Nairobi [1962] 28 BLR 76 at 96 [PC]) and the Contract Administrator�s powers come to an end, save for matters relating to the Defects Liability Period: �(3) The issue by the Engineer of a certificate under clause 7(iv), certifying both that the work complied with the specification and that it had been completed to his satisfaction, terminated the Contractor’s liability subject only to the maintenance period provisions.� Emdens Construction Law, Part II, Chapter 5, paragraphs 507 and 508 states that:
�[507]
Time
A contract may restrict the stages of the works at which variations can be instructed, or stipulate different provisions depending upon when variations are instructed. ICE 7th edition, cl 51(1) expressly provides that variations may be ordered during the Defects Correction Period. ICE 7th edition, cl 47(6) makes provision for variations being instructed after liquidated damages have become payable.�
�[508]
In contrast it appears unlikely that variations can be instructed under JCT 98 after practical completion. There is no express provision to that effect. Further, cl 30.6.1.1 provides a maximum period of six months after practical completion in which the contractor can submit all documents necessary for the final adjustment of the contract sum. The combined effect of IFC 84 and the RIBA standard conditions of engagement has been held to be that the architect is empowered to issue variation instructions up to practical completion1.
1 New Islington and Hackney Housing Association v Pollard Thomas and Edwards Ltd [2001] BLR 74, Dyson J (IFC 84).�

It can be seen therefore, that under the standard form of the JCT Forms of Contract, once the Certificate of Practical Completion has been issued, the Architect or Contract Administrator�s duties under the Contract are restricted (for example, the CA can no longer issue instructions under the Contract) and further, the Certificate of Practical Completion triggers completion of the Works in respect of the licence to occupy the site, it enables the Employer to take beneficial occupation of the site, it stops liquidated damages being levied, it defines the date when, 6/12 months on, defects liability ceases. It also brings to an end the special insurance requirements. Certainty is therefore required for such important circumstances and the Certificate of Practical Completion, which is merely an opinion of the CA at the moment of giving that certificate, cannot be rescinded. The reason for that is the Certificate of Practical Completion alters the parties� positions to an extent that cannot readily be contemplated for reversal, merely on a change of mind or for some mistake.

If you are an Architect or Contract Administrator somewhere out there, make sure that the project has indeed reached practical completion, as there is no going back!

© Michael Gerard Consulting Limited
July 2007

Measure of damages
The normal measure of damages protects the contractor�s expectations under the contract, which should entitle it to receive payment under the contract for work done and its loss of profit on work not done. In other words, the damages will generally be measured as the loss of profits on the unfinished balance, but this must be subject to proof. The object of damages is always to compensate the innocent party, not to punish the wrongdoer, and a high level of evidence is required.

Does the contract still exist?
The authority is Heyman v Darwins [1942] 1 All ER 337 HL. Where a repudiatory breach of contract occurs and the innocent party accepts the repudiation, it is the performance of the contract which comes to an end, but the contract still exists and any rights arising under the contract remain to be enforced. It was held in Johnson v Agnew [1979] 1 All WR 883 HL: ��that acceptance of a repudiatory breach does not bring about rescission an initio.� The contract is therefore rescinded ab futuro (insofar that the future performance of the contract comes to an end) and not ab initio. This is important to remember as under section 108 of the Housing Grants, Construction and Regeneration Act 1996, a party to a construction contract only has the right to refer a dispute arising under the contract � hence damages sought as a result of a repudiatory breach arise under the contract.

© Michael Gerard Consulting Limited
July 2006

Adjudication is an extremely effective dispute resolution process � but it is vital for a party to adjudication to have a thorough understanding of both the process and the key ingredients that are required in order to minimise the risk of receiving an adverse decision. There is nothing worse than knowing you have an excellent case, but because of a lack of evidence that is material to the matter referred or, you or your professional adviser are unfamiliar with the adjudication process and fail to identify flawed procedures, the adjudication is decided in favour of your opponent � in other words, you are unsuccessful as a result of your own shortcomings! Such a situation was highlighted in the recent High Court case of All in One Building and Refurbishments Ltd. v Makers UK Ltd. [2005] EWHC 2943 (TCC), Makers, who were refurbishing a tower block in Northampton, repudiated the contract with its sub-contractor, All in One, resulting in All in One referring the dispute to adjudication. The Adjudicator�s Decision awarded All in One ?91,811 for works executed and materials supplied up to the date of repudiation and a further ?38,326 by way of damages for Makers� repudiation of the contract. Due to non-payment, All in One instigated enforcement proceedings of the Adjudicator�s Decision in the TCC. Makers argued, inter alia, that All in One had failed to provide any evidence in support of the damage claim for repudiation. In his judgement, His Honour Judge David Wilcox said at paragraph 29: ��I am satisfied the adjudicator had jurisdiction as to that claim and AIO accepted his belated invitation to pursue this aspect of the claim by providing the appropriate detail in evidence rendering it evidentially viable and Makers sought further time to respond to the late particularised claim.� The Judge enforced the Adjudicator�s Decision and refused to grant a stay. All in One should have adduced the necessary evidence in support of its case before referring the matter to adjudication but, because Makers had agreed to respond to the new evidence during the adjudication, they had effectively barred any right to challenge the Adjudicators Decision � an error which cost Makers an additional ?38,000.

© Michael Gerard Consulting Limited
April 2006

Whatever the method�
It was held in Henry Boot Construction (UK) Limited v Malmaison Hotel (Manchester) Limited (1999) 70 Con.L.R. 32, that in order to establish that an event has affected the completion date, it must be shown that it falls on the critical path. In John Barker Construction Ltd v London Portman Hotel Ltd (1996) 83 BLR 31, the conclusion was that a logical and methodical approach is required when assessing contractors entitlement to an Extension of Time so that delays to the completion date caused by the employer can be identified.

Concurrency�
When it comes to assessing entitlement to Extensions of Time in cases of concurrency, the most important point to bear in mind is that it is always ultimately a question of fact as to what is actually causing delay to completion. If a party cannot demonstrate that a relevant event will actually cause delay to completion of the works, there is no entitlement to an Extension of Time. The first step will therefore always be to assess, where there is apparently more than one cause of delay, which event is in fact causing the delay to completion. In the judgment of HHJ Fay QC in Henry Boot Construction v Central Lancashire New Town Development Corporation (1980) 15 B.L.R. 1, he held that if a delay had two or more causes, one of which gave the contractor an entitlement to an extension of time, then an extension of time should be granted.

© Michael Gerard Consulting Limited
January 2005

The Housing Grants, Construction and Regeneration Act 1996, was brought in essentially to aid confidence of payment in construction contracts. The Construction Act introduced a quick, easy and cheap provisional answer to disputes. Quoting Lord Denning in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd (1973) 3 All ER 195: �There must be a cash flow in the building trade. It is the life blood of the enterprise�. Adjudication has been an outstanding success in redressing the balance of power between the payer and payee.

As Sir Michael Latham reviews the Housing Grants, Construction and Regeneration Act 1996, the UK statutory adjudication is the model that is now being adopted overseas, which must be a testament of its success. Legislation has been brought into New Zealand (Construction Contracts Act 2002), and the states of NSW and Victoria in Australia (Building Industry Security of Payment Act 1999 and Building and Construction Industry Security of Payment Act 2002 respectively). There are also interests in parts of Europe and the West Indies. The features of the NZ and Australian Acts are similar to that of the HGCR, although there are some notable differences. For example, the NZ Act applies to residential as well as commercial construction contracts and under certain circumstances that are set out in s 56, the Adjudicator can award party costs. Under s 25 of the NSW Act, one remedy for non-compliance of an adjudicator�s determination is that the adjudication certificate can be filed �as a judgement for debt in any court�.

© Michael Gerard Consulting Limited
October 2004