Adjudication Update

In Oakley and Anr v Airclear Environmental Ltd and Anr, Etherton J had to consider an application to set aside a statutory demand. Although the parties had intended to enter into to the NAM/T form of contract, no formal contract was ever concluded. Oakley paid Airclear after deducting various sums for delay costs and other items. Airclear did not agree with this.

A dispute arose. At first both parties sought to appoint arbitrators but under different contracts, or at least from different appointing bodies. Airclear then referred the dispute to adjudication. Oakley took no part in that adjudication save to write to the RIBA, the appointing body saying that prior to any appointment various issues needed to be addressed including whether a contract existed and who was the correct appointing body. The adjudicator was appointed and decided that Oakley should pay Airclear. Oakley did not pay. Airclear issued a Statutory Demand. Oakley applied to set that aside arguing that as there was no contract, the adjudicator did not have jurisdiction, having been appointed pursuant to a contract or that if there was a contract it was not in writing, as required by Section 107 and so the debt was disputed.

Etherton J held that the judge was entitled to find that the parties shared an assumption that the agreement was governed by NAM contracts. However, although Oakley could have been estopped from resiling from that assumption, there was insufficient evidence to show that it was unconscionable for Oakley to do so. Thus the adjudicator had not been validly appointed and his decision was a nullity. As a result the Statutory Demand could not be based on a debt and so the Demand was set aside.

In Re A Company 5606 of 2001, Mr Justice Hart had to consider an argument that the requirements of Section 111 of the HGCRA were fulfilled where the paying party first gave notice of defective work in one letter but said they would quantify the damages later and second subsequently quantified those damages. Perhaps unsurprisingly, the Judge dismissed such a claim as "bold but impossible".

Cases From The TCC

In Bellefield Computer Services Limited and Anr v E Turner and Sons Ltd, Forbes J applied Baxall Securities Ltd v SWP (see Dispatch Issue 5) namely that an architect might owe a duty of care in tort and be liable to a subsequent occupier of a building where the architect had designed or supervised the construction of that building, and where there were latent defects of which there was no reasonable possibility of inspection.

Here a dispute had arisen in relation to fire prevention measures. However, as a result of the limited nature of the architect's retainer it was held not to be under any obligation to subsequent purchasers.

The architect had produced basic construction drawings for the dairy. It was not involved in the supervision of the works. To obtain building regulation approval, the architect revised the design of certain fire prevention measures. The drawing gave details of the level of fire prevention specified and noted that the fire protection measures were to comply with the appropriate building regulations. No one requested any further design details. The contractor went into liquidation when the fire prevention work was 45% complete. It was ultimately discovered that the fire protection measures had not been installed as specified by the architect. This was not sufficient for there to be any liability.

In Horace Holman Group Ltd v Sherwood International Group Ltd, HHJ Bowsher QC had to consider an assessment of damages for breach of contract following the failure of a computer software package.

HHG claimed damages, inter alia, for monies paid for the wasted time of staff and directors. While the defendant recognised that time had been wasted, it sought to distinguish between profit making employees and non-profit making employees, suggesting that the salaries of the non-profit making employees would have been paid if they were usefully employed or not. There were no or only limited records. This was not in itself a bar to recovery. HHG was paying for time, which was intended to be of benefit to it, and HHG had lost the benefit of that time. Therefore, it was unrealistic here to distinguish between profit makers and non-profit makers. HHG were entitled to recover damages for wasted time.

In Aqua Design & Play International Ltd and Anr v Kier Regional Ltd, HHJ Seymour QC had to consider the question of the incorporation of sub-contract conditions. When the sub-contract was issued, it referred to the incorporation of the DOM sub-contract conditions as then published. At relevant time, the Construction Confederation had published a series of corrections to the DOM/1 contract.

HHJ Seymour QC agreed that the corrections as published at the date the sub-contract was made were incorporated into the sub-contract and that it was incorrect to suggest that the corrections published by the Construction Confederation were only suggestions.

In Cottage Co (East Anglia) Ltd v Northwood and Anr, HHJ Havery QC had to consider the payment of damages for distress and/or inconvenience in respect of delay in the completion of the construction of a cottage.

The claim failed, despite the fact that the defendant had to live in an incomplete house. This was accepted to be distressing and/or inconvenient. However, the delay had not been caused by the breaches of contract for which the claimant was found liable. The contract had not specified a date for completion of the works and there had not been any unreasonable delay.

Other Cases of Interest

In Delaware Mansions and Flecksun v Westminster CC, the HL gave judgement in a case in relation to the costs of remedying damage caused by root action of plane trees. Flecksun had purchased the freehold of a number of flats. Prior to that date, cracking appeared caused by the tree roots. The council was informed but refused to remove the tree. Flecksun therefore had to carry out the works.

The HL agreed that Flecksun could recover damages on the basis that there was a continuing nuisance. The defendant knew or ought to have known about it. Thus any reasonable expenditure was recoverable by Flecksun, as the landowner who had to incur it. Not only had Westminster had two years notice to do something about the problem (and so it had had a reasonable opportunity of abatement) but also given the proximity of the trees to the blocks of flats, the risk of damage was clearly foreseeable.

In Etam Plc v Barker Almond, HHJ Weeks QC confirmed that if a surveyor's valuation of a property was within 10% of its true value, then it could not, in usual circumstances, be said to be negligent.

In Invensys Plc and Anr v Automotive Sealing Systems Ltd, the claimant brought summary proceedings to enforce the decision of an expert following an expert determination.

The expert determination agreement said that the decision was to be binding except in cases of manifest error and that the expert should give reasons. The expert had clarified his reasons in later correspondence.

Thomas J said that it would not be right when considering whether there had been a manifest error in the determination and where further reasons had been given by way of clarification of the original reason, for the court merely to look at the terms of reference. The court should look at the totality of the reasoning. It was also allowable to examine additional material that formed any essential part of the reasoning. However here, applying those principles, the court found that the expert had reached a view that had been open to him on an ordinary reading of the submissions. The decision was not shown to be clearly wrong. Summary judgement was allowed. Whilst finality was an important factor, it was not enough that the expert had made a mistake. That error had to be manifest and/or plain.

Expert Evidence

In Re Bank of Credit Commerce International SA, Mr Justice Hart considered expert evidence. The expert reports had been exchanged at an early stage in the litigation, prior to general disclosure. The applicant sought an order requiring the respondent to disclose any documents relating to the facts and assumptions relied on by the respondent's expert in preparation of his report.

By CPR 35.10, expert reports are required to state the substance of all material instructions whether there are written or oral which form the basis upon which the report was written. The report here was defective since it did not contain such a statement. Accordingly, it was open to the court to order a disclosure of the instructions given to the expert to assist in the preparation of that report.

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