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Defects claim on a major refurbishment project

Facts

Client: Mechanical and electrical subcontractor

Country: UK

Industry: Construction

Issues

A mechanical and electrical subcontractor had been commissioned to install an electrical transistor or bus bar system in the head office of a major client in the south-east of England.

Problems arose because the system appeared to be defective and needed replacing.

The employer made a claim against the main contractor and our client who faced having to defend claims from both the employer (under a collateral warranty) and the main contractor, while also bringing a claim against its own subcontractor and the manufacturer of the transistor system.

Solutions

Our client faced a complex situation of claims, defences, counterclaims and responses, all of which were part of the pre-action protocol process, a precursor to formal litigation.

Complying with the pre-action protocol process promoted the use of mediation as a tool for resolving the dispute. We prepared for and attended a multi-party mediation supported by the client, a quantum expert and advice from an equipment expert. That mediation, led to a full settlement between all the parties.

Benefits

The key benefit to the client of the solution through mediation was the removal of the litigation risk and the significant reduction in the potential financial loss of fighting the court proceedings. The early settlement, also led to a saving of substantial amounts of future management time, which the client could then use to run their business.

Amongst the lessons learnt for the future were that there was a need for more vigorous control over subcontractors and, in particular, control and co-ordination over the design work and product selection made by subcontractors.