Manual of Construction Agreements


Issue 30
November 2019

You may notice some changes to the look and numbering system of the pages of your latest looseleaf release, and the issue may be larger than an average update. We are in the process of standardising the look and feel of Jordan Publishing titles to align with other publications in the LexisNexis portfolio and will be releasing larger chunks of content until the entire looseleaf has been published in this new format. Rest assured, issues will remain comprehensive and up to date during this standardisation process and the cost of any increase in extent as a result of the transition will not be passed on to you.

In this issue, we have made update amendments to reflect the recent Court of Appeal judgment in M Davenport Builders Ltd v Greer where the court considered the unanswered issues in Grove Developments Ltd v S&T (UK) Ltd with respect to so-called 'smash and grab' adjudications: can a payer even commence a true-value adjudication without having paid first? If so, can he later rely on the decision in the true-value adjudication without having paid first? The court held that an employer who is subject to an immediate obligation to discharge the order of an adjudicator based upon the failure of the employer to serve either a payment notice or a pay less notice must discharge that immediate obligation before he will be entitled to rely on a subsequent decision in a true-value adjudication. We also look at Bennett (Construction) Ltd v CMC MBS Ltd where, while obiter, the Court of Appeal noted that the right replacement option when there was a conflict between the provisions of the Construction Act and the payments in a construction contract was one that 'does the least violence to the agreement between the parties' rather than wholesale replacement.

Moving away from statutory adjudication to arbitration, we consider several cases looking at s 68 of the Arbitration Act 1996 challenging an award on the grounds of serious irregularity. In Celtic Bioenergy Ltd v Knowles Ltd, the court set aside an arbitration award on the grounds that one party had deliberately failed to draw to the attention of the arbitrator correspondence that was adverse to that party's case. In P (A Company Incorporated in County A) v D (A Company Incorporated in Country B) P said that the arbitrators did not 'act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent', because in relation to an important point there was no cross-examination of a vital witness by counsel for D. It was accepted that s 68 imposes a high hurdle but it was contended that this case was an 'extreme' one. The application was successful. In contrast, in K v S, the court stated that the tribunal was plainly right and rejected the s 68 application. K v S was a challenge of a procedural decision and thus sought to violate the 'procedural judgment rule' (which is that municipal courts do not normally second guess a tribunal's exercise of its procedural judgment).

In the wider context of ADR, we look at multi-tier dispute resolution systems. In Ohpen Operations UK Ltd v Invesco Fund Managers Ltd, the court had to consider here whether the claim had been issued in breach of a contractually agreed tiered dispute resolution procedure and, if so, whether the proceedings should be stayed, pending referral of the dispute to mediation. The court collated and updated principles for where a party seeks to enforce an ADR provision.

We have updated the sections dealing with supervision. In Herons Court, the Lessees and Management Company of v Heronslea Ltd, the Court of Appeal had to decide whether approved inspectors owe a duty under s 1 of the Defective Premises Act 1972 in the performance of their statutory function under Part II of the Building Act 1984, which involves inspection and certification in order to ensure compliance with building regulations. The Court of Appeal considered that the approved inspector has no statutory power to influence the design or construction of a building in any way, save to stipulate that it must comply with the law. In certifying, or refusing to certify, plans and works, the approved inspector is not engaged in the positive role of the provision or creation of the relevant building, but performs the essentially negative regulatory role of checking for compliance against prescribed criteria.

We have also made updates dealing with substantive contract law; making a compliant demand under an on-demand bond or guarantee; and the impact of 'Building information modelling (BIM) according to the ISO 19650 series'. We will continue to monitor this important area and issue updates accordingly.


 Hamish Lal B Eng, BA (Oxon), PhD, Partner, Akin Gump Strauss Hauer & Feld, Adjunct Professor, University College Dublin (UCD) Sutherland School of Law Author
 Jane Stubbs LLB Hons, Solicitor of the Senior Courts of England and Wales; Consultant, Addleshaw Goddard Author