According to a survey by RICS, a lack of demand from clients is preventing the industry-wide adoption of Building Information Modelling (BIM). The survey revealed that 46% of those who replied claimed that minimal client demand for BIM was hindering its use on projects. The survey also found that while 100% of respondents reported that they are now using or considering using BIM, 49% have not actually implemented a BIM strategy.
A current absence of standards (17%) and insufficient IT and technology systems (15%) were also stated to be barriers to the use of BIM by those surveyed. The survey also revealed that while 75% of those who responded to the survey have had some involvement with BIM, less than half those who replied have worked on a project where BIM was used in the past 12 months. Despite this, 50% are already investing in BIM training.
These results appear to indicate that RICS, government and other industry bodies need to take collaborative action to support the construction industry in its adoption of BIM.
Many construction and engineering disputes in the courts, especially those relating to smaller or less sophisticated projects, are issued outside of the Technology and Construction Court (known as the 'TCC’ for short) and never get transferred.
This is despite the judge in the case of Robinson v PE Jones saying:
"I should at this point mention that cases of this nature should be commenced in the Technology and Construction Court. If they are not so commenced, then the action should be transferred as soon as possible after issue to the Technology and Construction Court, so that the action can have the benefit of case management by a judge with specialist expertise in this field. I deplore the fact that this litigation ran on for 2 ½ years before it was transferred to the Technology and Construction Court and placed before a judge with appropriate expertise."
The ambit of the TCC is really rather wide and is set by rule 60 of the Civil Procedure Rules. As well as construction, building and engineering disputes, it is also the right place to determine disputes involving claims by and against construction consultants, local authority building matters, information technology, construction/engineering goods and materials, landlord and tenant repairing covenant disputes, through to even certain procurement, trespass, nuisance and environmental matters.
It has its own procedures and guide and the judges are specialists in the field with a broad range of relevant experience.
The TCC is more likely to provide appropriate and efficient directions to its target cases than the general court would and the judges are far more likely to understand the issues and what it will take to resolve them.
It is straightforward to commence matters in the TCC but also easy, especially thanks to the above case, to have appropriate cases transferred into it.
The cry of ‘more than one dispute!’ is often heard in adjudications. It’s a saber rattler. A ‘mettle’ detector. An attempt to derail the process. Two recent cases have considered whether the cry is likely to succeed. Both cases involve housing associations. Both cases involve the ACA Standard Form of Contract for Term Partnering. Both cases involve the CIC Rules.
In the Willmott Dixon case, Willmott Dixon served two separate notices of intention to refer a dispute to adjudication. It made two separate applications to the CIC. It paid two sets of fees. The CIC appointed same adjudicator for both disputes. The adjudicator issued two separate timetables. He ran the adjudications in parallel. There were two sets of documents and the adjudicator reached a decision in each adjudication. He found in favour of Willmott Dixon. Newlon refused to pay. Newlon cried foul: more than one dispute!
Newlon argued that section 108(1) of the Housing Grants, Construction and Regeneration Act 1996 (the “Act”) allows the adjudicator to determine only one dispute at any one time. The Act, therefore, prevents the adjudicator from running simultaneous adjudications. The judge disagreed. He said that parallel adjudications were permitted. This seems sensible, particularly when you consider that in large infrastructure contracts the parties often name the adjudicator and it is common for the adjudicator to deal with more than one dispute at any one time. The same is true for NEC contracts where the intention is that the same adjudicator will decide each dispute. This can save time and money as the adjudicator develops a good understanding of the contract, the facts and the parties.
In the TSG case, TSG served one notice and one referral. TSG referred three issues to the adjudicator. Each issue related to the way in which South Anglia had terminated the contract. The adjudicator found in TSG’s favour. South Anglia cried foul: more than one dispute!
South Anglia argued that TSG had referred three distinct disputes to the adjudicator. TSG disagreed. It said that it had referred one dispute that had three sub-issues. The judge preferred TSG’s argument and he made the following comments:
1. a dispute can in time change;
2. a dispute can have any number of issues within it;
3. a dispute is a question of fact and the courts should not adopt an over legalistic analysis;
4. the notice and the referral are not always determinative of what the dispute is. The background facts are also important; and
5. a rule of thumb is: if issue 1 cannot be decided without deciding all or parts of issue 2, that points to there being only one dispute.
A dispute has been compared to a snowball rolling downhill. It attracts more issues and nuances as it rumbles on. But, even though it attracts more issues, it remains a single dispute. It seems, therefore, that unless the case is very clear, the courts and adjudicators are unlikely to be persuaded by the cry of ‘more than one dispute!’.
Willmott Dixon Housing Ltd v Newlon Housing Trust [2013] EWHC 798 (TCC)
TSG Building Services Plc v South Anglia Housing Ltd [2013] EWHC 1151 (TCC)
Parties often include a precedence clause in contracts to make sure that, in the case of discrepancies between the various documents which comprise the contract, the contract can be interpreted to resolve the discrepancy.
Akenhead J looked at just such a clause recently in relation to an NEC3 Engineering and Construction Contract, where the Contract Data Part One was said to take precedence over the Works Information. He remarked that the order of precedence clause in the contract was not the first place to look to understand a contract's meaning. The contract should be "construed in the usual way by reference to all the documents forming part of the Contract. It is only if there is an ambiguity or discrepancy between two or more contract documents that one needs to have regard" to the order of precedence clause.
So beware of assuming a document higher up the order of precedence will necessarily apply instead of other documents which form the contract. If your contract is similar to the one in this case, and the documents can be read together, then the order of precedence clause may not assist.
RWE Npower Renewables Limited v JN Bentley Limited [2013] EWHC 978
On the 25 April 2013, the Chartered Institute of Building (CIOB) launched its new CIOB Contract for Complex Projects.
Its full title is the “CIOB Contracts for use with Complex Projects, First Edition 2013”. It can also be known as the Complex Projects Contract 2013 or more simply “CPC 2013”.
I recommend those who have not seen the complete set of documents to have a look at it. With the terms and conditions are other documents. These include the Agreement to be signed by the parties; Appendices and a set of User Notes.
My initial impression is that the authors have tried to combine elements of the NEC but with the clauses kept together; aspects of JCT and there is even a nod possibly towards FIDIC.
To give you a “taste” only of the contract - look out for the incorporation of BIM; the nod towards the Society of Construction Law Delay and Disruption Protocol on programming and extensions of time; the role of a Project Time Manager and the enforcement process.
There are plenty of interesting ideas worth considering in the document. It is meant to be capable of being used in the UK and internationally. If it is to be used internationally though the dispute process is likely to need to be reassessed.
This blog is about a Scottish case and so is only of persuasive authority in England, but it is worth noting.
The Scottish court held that in certain circumstances an adjudicator's decision may not be enforced if to do so would violate the European Convention on Human Rights and Fundamental Freedoms.
The defendants were consulting engineers who had designed a new bottling plant. The owners commenced an adjudication against the defendants claiming that they had failed to use reasonable skill, care and diligence in their design. The adjudicator decided in favour of the owners.
But when it came to enforcing the adjudicator's award the court held that enforcing the decision would amount to an unlawful interference with the defendant's entitlement to peaceful enjoyment of its possessions.
The court's reasoning was based on the fact that a large part of the amount awarded by the adjudicator would not be incurred until 2035 (upon the expiry of a lease) and that therefore there was no need for a speedy, provisional decision and enforcement would place an unreasonable and unfair burden on the defendants.
West and another v Ian Finlay & Associates (A Firm) ([2013] EWHC 868 (TCC)) addressed the meaning of a net contribution clause in a contract between an architect and his home-owning clients. The clause in the architect’s appointment stated that the architect’s “liability for loss or damage will be limited to the amount that it is reasonable for [the architect] to pay in relation to the contractual responsibilities of other consultants, contractors and specialists appointed by [the homeowners]”.
The main contractor in this case had become insolvent, and a key question was whether the architect would be liable for loss or damage caused by that contractor. The architect had design and inspection responsibilities in relation to the main contractor’s work and had received a percentage fee. The architect sought to limit his liability to the homeowners under the net contribution clause, stating that it excluded liability for all other parties. The homeowners disputed the meaning of the clause, contending that the clause did not exclude of liability of the main contractor.
Edwards-Stuart J said that there was “doubt” as to the true meaning of the clause, but that under the Unfair Contract Terms legislation, he was required to give the interpretation most favourable to the consumer (here the homeowners). He decided that the architect would be liable for the loss and damage caused by the main contractor. The Judge emphasised that the clause needed to be construed in its context. The homeowners had employed a number of other contractors themselves, outside the arrangement with the architect, and the Judge felt that correspondence between the parties revealed an agreement as to a distinction between the main contract and these “other” contracts where the architect had a limited role. With regard to the wider implication of this case, Edwards-Stuart J gave this opinion:
“In these circumstances, it is not necessary for me to decide whether or not on its true construction the net contribution clause is to be given the meaning that I consider the parties were attributing to it. But if I had to do so, I would hold that, in the context of the factual background to this agreement, the clause means what I consider the parties thought it meant, namely that it does not apply so as to limit [the architect’s] liability to [the homeowners] in a situation where the other party liable is [the main contractor].”
A “Part 36 offer” is an offer under Part 36 of the Civil Procedure Rules to settle a claim. Part 36 offers carry specific costs consequences which make them tactically a very significant tool in settling disputes.
It is not widely known, but Part 36 offers can be made before proceedings are commenced and can indeed be a useful tool to prevent formal proceedings altogether.
If as a claimant you are thinking of making a Part 36 offer, or as a defendant you are in receipt of one, you should bear in mind that the consequences have changed for offers made by claimants on or after 1 April 2013.
Where a claimant makes a Part 36 offer which relates to a claim for money and the defendant does not accept and fails to 'beat' in court, the defendant can be made by the court to pay what is in effect a 'penalty' equal to 10% of the claimant's damages (subject to a limit of £75,000). This is in addition to the existing sanction of having to pay the claimant's costs of proceedings on an indemnity, rather than standard, basis plus interest of up to 10% above base rate.
This new penalty is designed to encourage claimants to make Part 36 offers, and will mean that defendants will have to carefully consider the risk of having to pay a potentially significant additional sum if they do not accept the offer and are subsequently unsuccessful in court.
If as a claimant (or potential claimant) you are thinking of making a Part 36 offer, or as a defendant (or potential defendant) you are in receipt of one, you should read Part 36 carefully and seek legal advice.
NEC has issued the NEC 3 April 2013 edition complete family of contracts which comprises 39 documents including guidance notes and flow charts. For more information click here.
The retention of a proportion of the contractor's fee is common practice in construction contracts. The parties sometimes agree (usually in unamended industry standard building contracts) that the retention amount is held on trust by the employer in a separate bank account. But what happens if there is no such express provision and the employer becomes insolvent?
The position is not altogether clear. Previous case law has stated that no trust exists where retention money has not been set aside and that to imply a trust would give the contractor an unfair advantage over other unsecured creditors. By contrast, in another non-construction case it was held that money does not have to be set aside in a trust bank account for a trust to exist.
A recent decision of the Malaysian Court of Appeal (Qimonda Malaysia v Sediabena BLR [March 2012], part 2, 65) has taken a fresh look at the situation. The court tried to reflect the commercial reality, stating that the retention money was held on trust even though there were no express provisions to that effect. The court gave the following reasons for its decision:
Clearly, this decision is not binding in England, but its (arguably) common sense approach may influence the English courts in the future. Contractors would no doubt welcome a degree of certainty on this issue, especially in the current economic climate.