Court of Appeal

Recently history was made in the Court of Appeal when for the first time three women made up the panel. Fenwick Elliott successfully acted in the first case to come up before them.

The question which arose in Interlink Express Parcels v Night Trunkers Ltd was whether a driver employed by an agency (in this case Night Trunkers) could be subject to a temporary transfer of employment to the company for which he was driving (in this case Interlink). The CA held that a temporary transfer of employment could take place and in overturning the decision at first instance, held that although the trial judge had identified the correct test in determining whether or not drivers supplied by Night Trunkers could be employees of Interlink, (namely that the employer was the person who was entitled to and actually did control the work and the way in which it was carried out by the "employees") he had in fact not applied that test to the factual matrix of the case here, particularly the way in which Interlink had the right to control the drivers.

Adjudication Update

Rainford House Ltd (in administrative receivership) v Cadogan Ltd is the first instance of the TCC applying the comments made in the Herschel v Breen cases that summary judgment will be stayed where there is a serious doubt about the ability of the claimant to re-pay monies awarded by an adjudicator once the matter has been finally determined. Here, Rainford plainly fell into such a category by the fact of their administrative receivership.

HHJ Seymour QC set out guidelines as to how the Court will approach such applications. Vague fears or rumours of insolvency are not sufficient. The Court will look for credible evidence that the claimant is (or may soon be) insolvent. The judge suggested that it is only necessary to put before the Court evidence of the present financial position of the claimant. The Court will also bear in mind the usual procedures in an application for security for costs.

Thus, it will be for the claimant to contradict any valid evidence adduced on behalf of an applicant for a stay. Nevertheless, those who apply for a stay should be aware of the likelihood that they will be asked to pay the sum in dispute into Court.

In Glencot Development & Design Co Limited v. Ben Barrett & Son (Contractors) Limited, HHJ LLoyd QC held that summary judgment would not be automatically given where an adjudicator had also acted in a mediation role between the parties, even where he did so with the agreement of the parties.

The reason for this was that there could be an arguable case of perceived (not actual) bias on the part of the adjudicator. The judgment included a lengthy discussion on the current position of the law in relation to bias. In accordance with the Taylor case (see Edition 8), HHJ LLoyd QC said that the relevant test was whether the circumstances of the case would lead a fair-minded and informed observer to conclude that there was a real possibility or danger that the Tribunal was biased. This is an objective test. An adjudicator must conduct proceedings in accordance with the rules of natural justice.

Whilst in an adjudication it is permissible to make inquiries and receive submissions from one party alone, there is a clear obligation on the adjudicator to give any absent party a complete and accurate account of what has taken place. Here the adjudicator during the mediation process, went to and fro between the parties. It was not known what he heard or learned. He was under no obligation to report it, nor given that the content was "without prejudice" and confidential ought there to be any inquiry as to what happened. Those private discussions could have conveyed material which subsequently influenced his decision.

In fact the discussions were heated; thus it would have been understandable if some view had been formed about some people or a party, especially as the adjudicator was asked to decide points about which there was no documentary evidence, or in other words to form a view about the credibility of the applicant's case.

Finally, in Holt Insulation Ltd v Colt International Ltd, HHJ Mackay in Liverpool considered whether the claimant was entitled to set aside a decision on the grounds that the dispute was substantially the same as an earlier adjudication between the parties. Paragraph 9 of the Scheme provides that an adjudicator must resign if a dispute is substantially the same as one, which has been previously referred.

Both adjudications related to interim application for payment 10. However the judge found that whilst the references to the adjudicator related to the same matters arising out of the contractual relations between the parties, there was nothing similar about the actual disputes.

As usual copies of the full transcripts of these cases can be found at

News From the Scottish Courts

In Beechwood Development v Stuart Mitchell, Lord Hamilton considered the use of Hudson's formula in a delay claim for damages based on a reduction to the contribution to overheads and profit. This is a rare example of the Hudson formula actually being considered by the Courts.

Once the Judge had agreed that there was a delay to the project, Beechwood submitted that all they needed to do was to provide factual evidence of the losses. These could then be applied to the formula. They did not introduce any expert evidence. The judge agreed that it was appropriate to use the Hudson formula subject to slight modifications. There was a need to establish a pattern of ordinary trading and that a loss had been sustained by reason of the inability to generate income through the carrying out of construction works. The Court could do this with relevant information about the finances of the company. As there were fluctuations in the annual figures the court chose to take an average of three not two years' results.

Here, Beechwood were able to do this relatively easily since they were, in the relevant period, acting almost exclusively for the defender.

Fenwick Elliott News

We are pleased to announce that Matthew Needham-Laing, formerly of Berrymans Lace Mawer joined us on 19 March 2001. Prior to becoming a solicitor he practised as an architect for 5 years. Matthew is also an accredited adjudicator with the CIOB and is a member of the Architects Legal Forum.

Other Cases of Interest

In Anglian Water Services v Crawshaw Robbins & Co Ltd, Bunton J considered what heads of loss might be recoverable following damage caused by Crawshaw to a water main which had in turn lead to an escape of water through gas mains.

Anglian had made a number of voluntary compensation payments, totalling over £900k to those households, which were affected. Some had lost their gas supply for up to 12 days. These were held to be unrecoverable. The inconvenience of not having a gas supply was not physical damage and such payments could not have been said to have been in the contemplation of the parties. However Crawshaw were liable for actual damage to gas appliances.

Health & Safety

In the light of comments made by John Prescott at the recent Safety Summit that the current statutory framework is not as effective as it might be, two recent significant prosecutions by the HSE are of note. In the first, 3 companies were fined a total of £120,000 (plus £16,000 in costs) following an accident where a man lost his leg after being hit by a reversing chipper spreader during road surfacing. The Employer was fined £50,000 for failing to ensure the safety of its employee, whilst the owners of the chipper were fined £40,000 since someone not in their employment had been exposed to risk, whilst the third company were fined £30,000 since they had failed to notify existing customers of important safety provisions.

In a more serious case, Doncaster Council were fined £400,000 (plus costs of £30,000) for the death of an electrician who had been called in to repair a heating unit in a false ceiling. He came into contact with some exposed wires and was electrocuted. The Council were found to have failed to discharge their duty to ensure the safety of people working on their property, particularly where managers had been aware of the potential danger for some time but had failed to take steps to do anything about it.

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