TCC Protocol (The Construction & Engineering Protocol)

As from 2 October 2000, the Pre-Action Protocol for Construction and Engineering Disputes has been adopted by the TCC. With a few limited exceptions (including the making of an application for the enforcement of an adjudicator's decision) the Protocol should be used for all claims that are likely to be brought before the TCC.

Non-compliance with the Protocol may lead to the imposition of costs sanctions. The aim of the Protocol is to promote an early exchange of information and encourage the parties to reach a settlement or at least to agree the most efficient way to manage any proceedings that may be necessary.

Key features of the Protocol include the sending of a formal claim letter and, once a response has been received, the holding of at least one Pre-Action Meeting. One of the items to be discussed at this meeting is whether the dispute could be more appropriately settled by way of some form of alternative dispute resolution.

If you would like a copy of the Protocol or any more information about it, please feel free to contact anyone at Fenwick Elliott.

Adjudication Update

Discain Project Services Ltd v Opecprime Developments Ltd, a decision of HHJ Bowsher QC, is, we believe, the first time that the TCC has considered the application of the rules of Natural Justice to adjudication. Indeed having considered the facts, HHJ Bowsher declined to summarily enforce the Adjudicator's decision.

The action complained of was the Adjudicator's failure to consult with one of the parties on important submissions that were made by the other party. Given the importance of the decision it is worth quoting the learned Judge as follows:

"If the rules of natural justice had been complied with, the Adjudicator might have reached a different decision. If he had reached his decision, different or not, after complying with the rules of natural justice, I would have enforced it. Since the Adjudicator did not comply with the rules of natural justice, and since compliance with those rules might have produced a different decision on his part, I decline to enforce his decision."

HHJ Bowsher QC stressed that he fully understood the difficulties imposed on every Adjudicator by the strict time limits in adjudication. Further he also cautioned against parties "searching around" for breaches of the rules of natural justice. Each case is to be judged on its own facts. However, here the Adjudicator "overstretched the rules".

In Universal Music Operations Ltd v Flairnote & Others, Universal sought a declaration from HHJ Wilcox that the HGCRA did not apply to a dispute between it and Flairnote since there was no contract. Universal's argument was that it had appointed Sulzer as project manager to the works and that the terms of that appointment meant that Sulzer was responsible for the provision of the executed works and would therefore enter into any contract as principal and not agent for Universal.

On the facts before him, HHJ Wilcox found that Sulzer was the duly appointed agent of Universal and that Sulzer had entered into the contract with Flairnote in exactly that capacity so that the provisions of the HGCRA were held to apply to the dispute in question.

In Shepherd Construction v Mecright Ltd, Shepherd sought a declaration that no right to adjudicate arose in a situation where the parties had agreed a full and final settlement of the disputes between them. Mecright argued that the settlement had only been made under duress since it needed (and Shepherd knew that it needed) cash quickly. HHJ LLoyd QC agreed with Shepherd. Adjudication is only available for disputes under a particular contract and not those in connection with or arising out of it.

Other TCC Cases

In Cape Industrial Services Ltd v Ledwood Construction Ltd, Mr Recorder Mauleverer QC was called upon to decide a number of disputed issues between the parties arising out of the provision by Cape of scaffolding. In a lengthy judgement largely turning on the facts, the importance of site paperwork stood out as a key issue.

Ledwood were estopped from denying Cape's entitlement to sums, which were derived from the signed Daywork forms. By signing these, Ledwood had accepted the information, measurement and pricing submitted by Cape. The Court was only prepared to consider overpayment where there had been a mathematical error.

This applies to any site documentation. For example, if you disagree with site minutes you really do need to record that disagreement at the time. If you do not, it will be very difficult to downplay their significance in any subsequent dispute.

Secretary of State for the Environment v The Darroll Harrison Partnership & Anr illustrates the risks in replacing a defective product with a superior system.

Although HHJ Wilcox found that both Defendants were in breach of their contract with the Claimant, he held that the Claimant had suffered no pleaded loss. First the Claimant chose to replace the defective window system (which cost £300,000) with a far more expensive and sophisticated one (costing over £1million.). Second the over-riding consideration for the remedial scheme was the need to remedy an inherent structural weakness. Thus the cost of the new system reflected betterment as represented by the enhanced performance and sophistication of the replacement.

Other Cases of Interest

In Stent Foundations Ltd v Carillion Construction Ltd, the CA upheld an earlier decision of Mr Justice Dyson that a valid contract had been formed, notwithstanding the fact that a formal sub-contract had not been signed. The parties had agreed all the essential terms of the sub-contract, including that it was intended to come into existence once the main contract had been concluded.

The management contract was duly executed and all parties consequently acted as if the sub-contract was indeed in place. Thus a binding sub-contract was held to have come into existence.

Human Rights

As you cannot fail to have noticed by now, the Human Rights Act came into force on 2 October 2000.

Whilst the first decisions of the courts are still awaited, it is worthy of note that HHJ Bowsher QC in the Discain judgment concluded by saying that although he had been writing about the rules of natural justice, the same principles would apply to the Human Rights Act.

Health & Safety

The Health & Safety Commission's health and safety initiative launched together with the construction industry has proven to be a great success in heightening levels of awareness on safety issues. The Working Well Together website - http://wwt.uk.com - has been receiving over 1000 hits a day. The website provides free downloads and action plans and is well worth visiting to gain further ideas and information.

The WWT campaign is a further example of the Government's determination that health and safety standards across every industry must improve.

Indeed HSE inspectors were planning to carry out a three-day blitz of construction sites in London from 27-29 September with the intention of promoting better working practises. Last year 13 people died and 2031 people were injured in construction accidents in London alone.

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