Last updateTue, 24 Feb 2015 5pm

John Starr

John Starr

John Starr focuses on three cases that highlight pitfalls for the construction law practitioner

In this article I examine three recent cases of interest: Dawnus Construction Holdings Ltd v Marsh Life Ltd [2017], RCS Contractors Ltd v Conway [2017] and Thakkar v Patel [2017].

As a professional the offer of gratis services should be made with care. John Starr explains

About a year ago, I wrote about a case that had made it to the Technology and Construction Court on the question of whether a professional could owe a duty of care in the provision of services even where there was no contract in existence and no payment had been made.

Letters of intent can lead to uncertainty and costly disputes. John Starr discusses recent cases

Letters of intent are widely used in the construction industry as a means of allowing work to start on site (or at least for the procurement of long-lead items) before the formal construction contract has been negotiated. They will usually allow the contractor to get on with certain tasks up to a certain stage or maximum fee cap.

John Starr considers the amount of detail required in an interim payment application

There has been a considerable amount of case law recently concerning the degree of openness and transparency required in a payment application or default interim payment notice under the payment regime in the Housing Grants, Construction and Regeneration Act 1996 (as amended) (the Act). Only last month, I wrote about the case of Surrey and Sussex Healthcare NHS Trust v Logan Construction (South East) Ltd [2017], where a distinction was drawn between the amount of transparency required in an interim payment notice (which must be unambiguous) and that required in a pay less notice (where some degree of ambiguity appears to be permitted).

John Starr examines the form and content of notices

It is well known that construction contracts in this country are required by the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009) to contain an adequate mechanism for interim payments to the contractor. The JCT standard form building contracts all contain payment provisions that comply with the Act and, broadly speaking, have the following effects:

John Starr discusses the lessons to be learned from forming oral contracts

I wrote recently about a case where the need for a properly documented construction contract was compelling (‘A minor matter?’, PLJ346, November 2016, p21). It was the case of Goldsworthy v Harrison [2016], where the parties’ failure properly to agree the terms of the contract between them meant that it was not clear what those terms were and, specifically, whether they included an adjudication clause. Without an adjudication clause, the contract fell within the residential occupier exception in s106 of the Housing Grants, Construction and Regeneration Act 1996 and adjudication was not available. As such, Goldsworthy’s attempt to enforce an adjudicator’s decision in its favour failed.

The co-ordination of adjudications on multi-tier projects can lead to conflicts. John Starr reports

The universal availability of adjudication as a means of dispute resolution in the construction industry can have potentially serious implications on multi-tier projects. For example, inconsistent decisions in adjudications between employer and contractor and between contractor and sub-contractor can leave the contractor with a loss which it cannot pass down the supply chain without recourse to the courts.

John Starr makes the case for a properly documented construction contract

The case for a properly documented contract of any kind is fairly compelling when it is well known that contractual uncertainty leads to disagreements, disputes and ultimately expense. All the more so, one might think, when that uncertainty might strike at the very heart of the dispute resolution process available to the parties.

John Starr analyses a case that may widen the scope of construction adjudication

As will be well known to readers of this column, s108 of the Housing Grants, Construction and Regeneration Act 1996 says that a party to a construction contract has the right to refer a dispute arising under the contract for adjudication. The words ‘arising under’ are sometimes expanded in the contract itself, or by amendment, to include disputes arising under ‘or in connection with’ the contract. So what do the words ‘arising under’ actually mean? In a recent case described by the judge as raising an ‘arguably important area of construction law’, it was argued that a dispute about the terms on which a construction dispute had been settled was a dispute arising under the settlement agreement, rather than under the construction contract itself, and that it therefore could not be referred to adjudication under the provisions of the Act.

John Starr outlines the court’s stance on anti-oral variation clauses

After several years without a decision on ‘no oral variation’ or ‘anti-oral variation’ clauses, two have come along at once. Such a clause in a contract purports to prevent any variation of the terms of that contract unless such variation is in writing and signed by the parties. The idea of such clauses is to promote certainty and avoid false or frivolous claims of an oral agreement, and arguably they could also usefully prevent a person in a large organisation producing a document which unwittingly and unintentionally is inconsistent with a provision in a contract between the organisation and a counterparty.

In the second of two articles focusing on mediation, John Starr considers confidentiality and privilege

In last month’s column, I looked at the question of whether the enthusiasm of the courts for mediation as a means of dispute resolution in the UK construction industry was affecting access to justice. I came to the conclusion that the benefit to society as a whole of removing low-value construction disputes from the court system probably outweighed any perceived injustice to the participants in those disputes, even if it meant that, as a result, they were denied the opportunity for public vindication.

John Starr investigates the use of mediation in construction disputes and debates its effect on individual access to justice

Mediation has evolved, over the decades since its arrival from the US in the 1970s, into a popular means of dispute resolution in the UK construction industry, particularly in low-value disputes. Its ‘popularity’ has been ‘encouraged’ by the Technology and Construction Court (TCC) through the use of cost sanctions.

John Starr investigates whether ‘smash and grab’ adjudications relating to a final account should be reconsidered by another adjudicator

I have mentioned in previous articles in this column the current trend for what are fast becoming known as ‘smash and grab’ adjudications. They arise as a consequence, possibly unintended, of the amendments made to the payment provisions of the Housing Grants, Construction and Regeneration Act 1996 (the Act) by the Local Democracy, Economic Development and Construction Act 2009, which came into force on 1 October 2011.

John Starr analyses the current position on payment notices

Towards the end of 2015, in PLJ335 (‘Clarity in all things’, October 2015, p26) I spoke about the case of Henia Investments Inc v Beck Interiors Ltd [2015]. Specifically, I spoke about the need for payment applications to be clear and unambiguous if contractors are to be able to rely on the provisions of the Housing Grants, Construction and Regeneration Act 1996 (as amended) (the Act), which say that such applications are deemed to identify the sum due in the absence of a valid interim payment certificate.

John Starr highlights the dangers that come with professionals, such as an architect, providing free advice to friends and neighbours

All professionals are tempted, from time to time, to lend a helping hand to friends and neighbours. Most of the time, it is not intended that any liability should attach to them in respect of it – it is just a matter of doing someone a favour. What happens, however, when the favour goes wrong and the friend or neighbour suffers loss as a result? In a recent case in the Technology and Construction Court, the judge decided that a professional can owe a duty of care even where there is no contract in existence and no remuneration is paid.

John Starr assesses the enforceability of informal agreements in the context of recent case law

Parties to construction contracts frequently reach a series of informal agreements with each other during the course of a project. Those agreements might be over small matters like the amount to be paid for some extras or over larger issues such as the amount due under a disputed interim payment application. However, what is clear is that those agreements are not prevented from being enforceable just because they are not recorded in any formal way. Specifically, individual items in a larger negotiation can be agreed along the way and in advance of the final documentation of the wider agreement. This is a simple matter of the application of basic contract law. If the parties appear to have agreed in the same terms on the same subject matter, usually through offer and acceptance, a binding contract will have been formed. This is so even if a formal document recording the agreed terms is subsequently to be executed.

John Starr provides a case update on adjudication and the issues that can arise when a project goes wrong and a claim is brought against a construction professional

John Starr reviews recent cases highlighting that the courts will only interfere with irrevocable obligations, such as bonds, in exceptional cases

Traditionally, on-demand bonds have been seen as just that: payable on demand, whatever the underlying dispute.

John Starr outlines a case highlighting the need for unambiguous interim payment applications in order to attract the provisions of the 1996 Construction Act

In last month’s column, ‘Challenging perceptions’ (PLJ334, September 2015, p20), one of the cases I looked at was the recent case of Caledonian Modular Ltd v Mar City Developments Ltd [2015]. What was most interesting about that case, in the context of challenging perceptions, was the fact that the court had refused to enforce an adjudicator’s decision on the ground that the adjudicator had got it wrong. What the adjudicator had got wrong was his classification of an amended payment application as a separate, valid application for payment in its own right, which required service of a separate payless notice not to be payable in full. This was an interesting example of the court taking a distinct, self-contained point and deciding on it in the context of an enforcement hearing.

John Starr highlights two cases which have reconsidered adjudication and the role of the court

It is well known to those involved in dispute resolution in the construction sector that an adjudicator’s decision has a temporarily binding quality. What that means is that it is binding on the parties, in the sense that they must comply with it, and the court will enforce it, regardless of any complaints about its correctness or other matters which the losing party may wish to raise, unless and until the dispute is finally resolved, which may be by legal proceedings, arbitration (where applicable) or agreement.

Is an engineer liable if a contractor is doing a job incorrectly? A recent case suggests not, as John Starr finds out

If you are having works done to your house and the engineer who has designed the structural elements of the works can see that the contractor is doing a bad job, should they be obliged to warn you or the contractor? As usual, it all depends on what the engineer has contracted to do.

A recent case has held that a parking charge was commercially justifiable, and not a penalty. John Starr outlines the case and how it affects liquidated damages clauses in construction contracts

The Court of Appeal has finally reached its long-awaited decision in the case of the motorist who overstayed his welcome in a car park and was charged a fee of £85 for the privilege.

John Starr examines collaborative working in the context of the Latham report, and the realities of the construction industry

Collaborative working (sometimes referred to as ‘partnering’) has been described as a system of agreed activities, processes and relationships intended to support and improve the delivery of a project. It can also of course relate to longer-term relationships, such as frameworks, joint ventures and term contracts.

John Starr reviews the courts’ stance on such challenges, and considers the case law

No one likes to lose, which is why so many awards and decisions are challenged. This column has, on several occasions, looked at challenges to the decisions of adjudicators appointed pursuant to the Housing Grants, Construction and Regeneration Act 1996. See, for example, ‘Enforceability of adjudicators’ decisions’ (PLJ329, p18). Most of those challenges have been unsuccessful, because, although the 1996 Act gives no guidance on the enforcement of, or challenge to, adjudicators’ decisions, the Technology and Construction Court (TCC) has decided (initially in the case of Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] and consistently thereafter) that it must be taken to have been the will of Parliament that such decisions should be enforced. Few challenges have been successful, and then only where the adjudicator has lacked jurisdiction or there has been a serious breach of the rules of natural justice. Partly this can be explained by the fact that (as the TCC often reminds parties) adjudication produces a decision that is only temporarily binding, pending final resolution in court proceedings, in arbitration (if there is an arbitration clause in the construction contract) or by agreement.

John Starr reviews two cases where adjudicators were alleged to have produced unenforceable decisions by reason of lack of jurisdiction or a failure to comply with the rules of natural justice

When can an adjudicator’s decision be challenged? Two recent cases indicate that attempts to argue for a lack of jurisdiction or otherwise are likely to fail.

Should a window for ADR be built into a dispute referred to the TCC? John Starr analyses the findings of a recent case

In ‘An unreasonable refusal’ PLJ326, November 2014, p6, I wrote about the recent case of Northrop Grumman Mission Systems Europe Ltd v BAE Systems (Al Diriyah C41) Ltd [2014], where the Technology and Construction Court (TCC), despite finding that BAE had unreasonably refused an offer by Northrop to mediate, made no costs sanction against it. This seemed to me to fly in the face of the wealth of case law in the Court of Appeal on this point, all of which has seemed to support the use of costs sanctions to encourage mediation, even to the point where it has almost become compulsory to mediate disputes before bringing them before the Court of Appeal for trial. I posed the question of whether this case might find its way before the Court of Appeal in due course.

John Starr summarises a case concerning a dispute adjudication board, where the court required the parties to be bound to their contractually agreed terms for resolving a dispute

Construction contracts, like most other commercial contracts, generally contain dispute resolution clauses, that is to say clauses that govern how disputes arising under the contract are to be resolved. Usually, this involves a choice between arbitration and litigation as the preferred means of final resolution. Also, specific to construction contracts is the provision for adjudication as a temporary measure. Indeed, the Housing Grants, Construction and Regeneration Act 1996 (as amended) says that such contracts must include provision for adjudication or the provisions of the Scheme for Construction Contracts (England and Wales) Regulations 1998 will be imported.

John Starr considers a case where no costs sanctions were imposed despite an unreasonable refusal to mediate

In ‘Mediation retains its appeal’ PLJ295, September 2012, p12, I wrote about the continuing popularity of mediation with the Court of Appeal. I spoke about two then recent cases (Hameed Faidi v Elliott Corporation [2012] and Ali Ghaith v Indesit Company UK Ltd [2012]) where the Court of Appeal had pronounced at length on the virtues of mediation, and the importance of not refusing an offer to mediate. Reference was made in the judgments to the Court of Appeal Mediation Scheme and the then new pilot scheme under which mediation was made almost compulsory in certain types of claim.

John Starr reviews recent case law relating to reliance on certificates provided on development completion and challenging the enforcement of an award

John Starr evaluates the obligation to mitigate and warns of the possibility that there may be no recovery of costs from the original contractor

Most standard forms of building contract contain the concept of a defects liability period (now referred to in the JCT suite of contracts as the ‘rectification period’), during which the contractor is obliged to return to site and remedy any defects that have arisen following practical completion.

John Starr provides an overview of two recent construction cases

John Starr reviews a Court of Appeal decision throwing further light on net contribution clauses

Almost a year ago, this column reported on the first instance decision in West v Ian Finlay & Associates (A Firm) [2013] relating to the enforceability of net contribution clauses.

John Starr reviews a case highlighting the importance of complying with any court procedures in construction cases

The opening words in the recent Technology and Construction Court decision in Lincolnshire County Council v Mouchel Business Services Ltd [2014] were:

John Starr examines a case where one of the parties to the dispute sought to use a letter of intent to start adjudication proceedings

It has often been said that clarity is at the heart of the requirements for a well-drafted construction contract, and that clarity brings certainty, and that certainty is the most important attribute for both parties.

John Starr discusses the various outside influences that make up a construction contract

A building contract, like any other contract, is, to an extent, whatever the parties to it want it to be. It is a ‘whole’ contract in the sense that the contractor has an obligation to complete the works in accordance with the terms of the contract, but that is not to say that it is complete. There are many outside influences that shape and direct the terms of the contract and affect the parties’ agreement. Indeed, a building contract is not even complete and self-contained in accordance with its own express terms.

John Starr reviews the problems that can be encountered on termination, as well as a detailed look at repudiation in the context of recent case law

There are various means of terminating a construction contract; it does not have to be a matter of an innocent party accepting a repudiation of contract by the other party (see 'Repudiation of contract – the search for a cure' below). There can be express terms in the contract allowing for termination in certain circumstances, such that the entitlement to terminate can simply be a contractual mechanism for dealing with certain eventualities, rather than a remedy for breach of contract.

John Starr discusses a case where a challenge to the adjudicator’s jurisdiction was held to have been made too late

Adjudication, as we know, is rough justice. The issues in dispute are often not fully analysed because the limited time available precludes detailed analysis. Parties will often bring up ‘new’ points in the course of the adjudication that arguably did not form part of the original dispute. When the winning party goes off to court to enforce the decision in its favour, the losing party may say that there has been some failure in the adjudication procedure, that means that the adjudicator’s decision is not a valid decision at all. In the case of ‘new’ points brought up by the winning party during the adjudication, the losing party might argue that, because they did not form part of the original dispute that was referred to adjudication, the adjudicator does not have jurisdiction to decide on them or to include them in the rationale for his decision.

John Starr looks at a case where the 1996 Construction Act was held to apply to a collateral warranty, and an unusual case involving arguments as to the financial stability of a winning party to an adjudication

John Starr reviews a case in which set off against an adjudicator’s decision was sought but ultimately not granted

The question often arises in construction adjudication whether the losing party can set off against the adjudicator’s decision sums of money that it feels it is owed by the winning party. This is particularly the case where the construction project is ongoing and different amounts are becoming due from time to time, as certified by the contract administrator in interim certificates.

John Starr highlights some recent instances where natural justice was found to have been breached, as well as cases where it wasn’t

In ‘Justifiable doubts and the fair-minded observer’, PLJ278, 24 October 2011, p19 I looked at the issue of bias in arbitration proceedings. Similar issues arise in adjudication and can determine whether an adjudicator’s decision is enforceable.

John Starr reviews a case where arguments concerning the adjudicator’s jurisdiction failed and common sense prevailed

Section 108(1) of the Housing Grants, Construction and Regeneration Act 1996 says that a party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure that complies with that section. The procedure must, among other things, provide for referral ‘at any time’ and must provide that the decision of the adjudicator is binding on the parties until the dispute is finally determined by legal proceedings, by arbitration or by agreement. In other words, the parties must comply with the adjudicator’s decision.

John Starr looks at recent case law on calculating limitation periods in construction claims

Once a limitation period expires, it is no longer possible to bring claims for loss or damage caused by the actions of others. There are good public policy reasons why these periods exist: memories fade over time and it is simply not fair for a potential defendant to have a claim hanging over its head forever.

John Starr looks at a case that highlights the effect of net contribution clauses in contracts

Increasingly, either as a requirement of their insurers or otherwise, consultants are seeking to include net contribution clauses in their appointments and warranties, but do they always work?

Cuts to legal aid encourage wasteful actions by litigants in person over boundary and other disputes. John Starr discusses

A colleague of mine once had a cartoon pinned to a corkboard above his desk. The first panel showed the head and shoulders of a man saying ‘Of course I’m going to represent myself in court’. In the next panel, the perspective has panned back to show that he is sitting on the edge of his bed, a knife in one hand and a mirror in the other, saying ‘… right after I’ve finished this open heart surgery’.

John Starr contemplates whether legal privilege applies to a claims consultant, and the assignment of causes of action

Westfields Construction Ltd v Lewis clarifies when and how statutory exemptions should be used. John Starr examines the case.

The answer to the question posed in the headline is that a residential occupier is not a residential occupier when they have moved out of their house to allow refurbishment works to be undertaken with a view to letting it out. That was the finding of the Hon Mr Justice Coulson in the recent case of Westfields Construction Ltd v Lewis [2013].

In John Grimes Partnership Ltd v Gubbins a consulting engineer was held liable for a fall in the housing market. John Starr discusses

In our continuing look into the potential liabilities of professionals in the construction industry, we examine a case where a firm of consulting engineers was found liable for the diminution in value of a development that had been held up by their failure to get their job done on time. This seems, at first sight, to be stretching the concept of remoteness somewhat, but is it really any different to any other sort of delay in completing something known to be affected by movements in the market?

When is a contractor under an obligation to warn of a dangerous or defective design? John Starr examines recent case law on the issue

In ‘A word of warning for project managers’ by Lauren Thomson (PLJ299, 5 November 2012, p10), we saw how, in the case of The Trustees of Ampleforth Abbey Trust v Turner & Townsend Project Management Ltd [2012], a project manager was found to be liable to the client in damages for his failure to procure an executed building contract from the contractor. The striking thing in that case was that, from commencement to completion, the works were carried out by the contractor under letters of intent that the project manager arranged for the client to issue from time to time. The intended building contract mentioned in the letters of intent was only executed long after the works had been completed and, even then, on terms agreed at mediation that excluded any entitlement on the part of the client to liquidated damages for delay. The client claimed against the project manager damages for professional negligence. It alleged that, if the project manager had acted with the care and skill reasonably to be expected, it would have procured the contractor’s execution of the building contract before the works were completed and that, in those circumstances, the contractor would have been liable to pay liquidated damages for delay and the client would have achieved a more advantageous outcome of the dispute with the contractor. The court found the project manager liable for considerable damages.

John Starr analyses the Court of Appeal’s approach to mediation and a new Court-run scheme

For some years now, the Court of Appeal has been waging war on those who refuse to mediate. Two recent Court of Appeal cases demonstrate its continuing strong commitment to mediation. For the first time being, albeit as a pilot, some Court of Appeal cases will automatically be recommended for mediation before the appeal is heard.

John Starr reviews some recent cases where the court was asked to consider the consequences of failing to comply with the Pre-action Protocol for Construction Disputes

Everyone likes a bit of certainty in life, not least the lawyers and clients involved in construction disputes. Like every game, litigation needs rules. Parliament makes the rules and, so the theory goes, the judges interpret them. One judge’s decision is binding on the next (at least until it gets appealed) and we all know where we stand.

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