In Tombs v Wilson Connolly Limited 2004 AER 342, the Court considered the question of whether non payment under a contract justified a withdrawal of performance by a contractor. In this case the Court decided that a subcontractor’s withdrawal on the grounds that the main contractor failed to make an interim payment was not justified and amounted to an unlawful repudiation of the subcontract. The Court stated that a failure to make one instalment is ordinarily insufficient to constitute a repudiation which the payee can then accept.
Westminster City Council v Ocean Leisure Limited 2004 BLR 393 is a case which illustrates the potential liabilities a local authority or an employer or a contractor can face in using hoardings. The right to erect hoardings does not displace the general rule that substantial interference with the right of the public to use the highway constitutes a public nuisance. The case concerned building works for the golden jubilee bridges in .
Statutory powers may confer the right to erect hoardings and provide for compensation to anyone who suffers special damage or loss as a result. Under that statutory regime the claimant seeking compensation may have to show that apart from the statute he had a claim for damages for public or private nuisance. In this case the Court rejected the argument that hoardings erected for no longer than, nor a greater extent than, was necessary to protect the highway from building works do not amount to unlawful obstruction. The hoardings did obstruct the highway and compensation was payable to a shop owner adjacent to the building works.
Solicitors have always warned their contractor clients about letters of intent which carry a financial limit. The case of Mowlem plc v Stena Line Ports Limited 2004 EWHC 2206 justifies this warning.
In this case, there were a series of letters of intent issued by Stena Line to Mowlem. The letter in question was the last in the series. It confirmed Stena’s commitment to expenditure of up to £10 million and enabled Mowlem to proceed with its works under its programme up to . Mowlem carried on beyond 18 July and beyond £10 million in value.
The Court decided that the letter of intent imposed a cap of £10 million, beyond which Mowlem were at risk of not getting paid. Mowlem argued that the letter of intent only applied in respect of work done before 18 July. However the Judge said that the effect of the letter continued to apply unless it was rescinded and the promise of payment was therefore capped at £10 million, to include work after 18 July.
In Collins (Contractors) Limited v Baltic Quay Ocean Management (1994) Limited 2004 WECA – Building Law Monthly, March 2004, the Court of Appeal confirmed that where parties have entered into an arbitration clause, they are obliged to arbitrate, rather than go to Court.
Collins started proceedings in the Court and applied for Summary Judgment on the grounds that their employer had failed to pay an architect’s certificate without serving a valid timely notice of withholding.
The employer sought a stay of proceedings and that the dispute be arbitrated, pursuant to Section 9 of the Arbitration Act 1996.
Collins argued that where a certificate had been issued and there was no notice of withholding there was no defence and therefore nothing to stay to arbitration.
However the Court of Appeal decided that wherever there was a dispute, that itself was sufficient to carry the right to arbitrate regardless of the merits of the party’s arguments. Further, the dispute did not have to be sufficiently strong to defeat an application for Summary Judgment. Section 111 of the Housing Grants Construction and Regeneration Act 1996 does not deprive a party to a contract of his right to arbitration.
Of course if the claimant had adjudicated and obtained a Peremptory Order from the adjudicator, the Court would have had to enforce it. Furthermore adjudicator’s decisions made under JCT contracts can be enforced through the Courts, without having to arbitrate.
First published in Construction News, Summer 2005.
