Welcome to the December 2021 issue of the DAC Beachcroft Construction Risks Newsletter.
As with previous editions, this newsletter highlights some useful and practical guidance from the latest case law. It is perhaps unsurprising that adjudication case law is still generating plenty of case law, especially given the issues arising from COVID-19, Brexit and the economy.
There have been a number of interesting decisions in the Courts recently involving liquidated damages, payment notices and when to adjudicate.
We review two decisions concerning liquidated damages; the first looking at whether an agreement made over the telephone will demonstrate that the parties have agreed to forego liquidated damages, and the second looking at the rate of LADs due when the Employer takes possession of part of the development.
There has been some useful guidance on the standard form contracts in recent decisions. The Courts have made clear that the usual dispute resolution clauses in the NEC suite of contracts means that a dispute must be referred to adjudication before it can go before the Court. Another decision considered the effects of the Final Statement under the JCT D&B contracts and whether a party must adjudicate in order to prevent the statement from becoming “conclusive”.
A recent decision also provides important guidance on the form and content of payment notices. In a nutshell, the paying party must have an genuine belief in its valuation and the sum stated to be due otherwise the payment notice will be invalid.
Finally, we look at the latest on adjudication enforcement. The Court of Appeal has now considered the relationship between insolvent companies and the right to enforce an adjudicator’s decision, effectively putting a lid on any insolvent company’s ambitions to enforce an adjudication award by way of summary judgement.
We wish everyone a Merry Christmas and Happy New Year.
The effect of a Final Statement under the JCT D&B 2011 and when to adjudicate
In CC Construction Limited v Mincione [2021] EWHC 2502 (TCC), the Court was asked to consider the enforceability of an adjudicator’s decision and whether the adjudicator had breached the requirements of natural justice.
Full rate of LADs applicable even when employer takes possession of part
In Eco World – Ballymore Embassy Gardens Company Limited v Dobler UK Ltd [2021] EWHC 2207 (TCC) the court was asked to make declarations as to the proper construction and effect of the liquidated damages provisions in a construction contract between the Claimant ("EWB") and the Defendant ("Dobler"), in circumstances where EWB had taken over part of the works as complete.
Requirement to adjudicate first under the NEC contracts
A recent decision of the Scottish Courts in Greater Glasgow Health Board v Multiplex Construction Europe Ltd & Ors [2021] CSOH 115 provides a useful reminder of the effect of clause W2 on dispute resolution under the NEC suite of contracts.
Payment Notices – a “genuine belief” in the valuation - Downs Road Development LLP v Laxmanbhai Construction (UK) Ltd [2021] EWHC 2441 (TCC)
This decision highlights the danger of issuing a Payment Notice without a genuine belief in the sum stated to be due.
Three into one: multiple payment applications deemed a single dispute
Under the Housing Grants, Construction and Regeneration Act 1996 (“Construction Act”), a party may refer “a dispute” that arises under a construction contract to adjudication.
John Doyle Construction Limited (In Liquidation) v Erith Contractors Limited [2021] WLR(D) 516]
This Court of Appeal case follows the much reported Bresco, Meadowside and the first instance John Doyle cases.
Mansion Place Ltd v Fox Industrial Services Ltd - Parties are bound by “hands free” verbal agreement to forego liquidated damages
In a recent judgment on 12 November 2021, Mr Justice Eyre held that under a JCT Design and Build Contract, 2016 Edition (“DB 2016”) an oral agreement between the parties to forego liquidated damages (“LDs”) was binding.
Construction (Retentions Abolition) Bill 2021-22
It is widely considered that withholding money owed to a contractor, until all work is completed to a client’s satisfaction, is outdated and open to abuse.
