Welcome to the latest edition of 'Building Blocks', Charles Russell's quarterly on-line update focused on the Construction and Engineering industries. The update is produced by Charles Russell's specialist Construction and Engineering Team. Building Blocks aims to profile legal developments and case law that may affect your business.

In this edition, we look at two topics currently concerning the construction industry, the terrible weather and the reoccurring issue of Japanese Knotweed which has been found on one of the Olympic sites. We also consider the first case about the Housing Grants Construction & Regeneration Act 1996 to be heard by the House of Lords, a recent adjudication case and a landmark House of Lords decision on the right to recover interest.






FIRST HGCRA 1996 CASE IN THE HOUSE OF LORDS
 The case of Melville Dundas Limited (in receivership) and others v George Wimpey UK Limited and others is the first time that the House of Lords has considered the provisions of the Housing Grants Construction and Regeneration Act 1996. The case did not unfortunately address the many criticisms of the Act, but it did highlight some of the issues which Parliament will need to consider in its current review.


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CHANGES TO THE JAPANESE KNOTWEED CODE OF PRACTICE
Recent reports have indicated that the cost of dealing with Japanese Knotweed on the Olympic site in east London could be around £70 million. The plant is an increasing problem for many developers, who until recently have been given little clear guidance on the techniques for dealing with it and their potential liabilities for failing to do so. However, a new Japanese Knotweed Code of Practice was produced by the Environment Agency towards the end of 2006, which provides significantly more advice on dealing with the invasive alien plant.


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"RAIN, RAIN GO AWAY…"
The Met Office is in the process of confirming its data, but it is thought that this summer was the wettest since records began in 1776. The overall cost to the insurance industry is in the region of £4 billion. But what is the cost to the construction industry? Kimberley Eyssell considers how the risk of weather events impacting on progress is dealt with in standard form contracts and the contrasting approaches of the JCT and NEC.


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BINDING AGREEMENT TO ADJUDICATE
In the recent case of DGT Steel & Cladding v Cubitt Building & Interiors Ltd (4 July 2007) Judge Coulson confirmed that binding agreements to adjudicate were just that "binding". The sub-contractor, Cubitt commenced court proceedings against the main contractor, DGT despite a clause in the sub-contract which provided:

"Any dispute, question or difference arising under or in connection with the subcontract shall, in the first instance, be submitted to adjudication…"

The Court found that the existence of the words "shall" and "in the first instance" had the effect that adjudication was mandatory and therefore the Court had an inherent jurisdiction to stay court proceedings issued in breach of the agreement to adjudicate.


COMPOUND INTEREST A COMMON LAW RIGHT
The recent House of Lords case of Sempra Metals Ltd (Formerly Metallgesellschaft LTD) v (1) Inland Revenue Commissioners (2) HM Attorney-General (18 July 2007) was concerned with corporation tax on dividends - a topic of little interest to the construction industry. However the decision has significant implications. The Court concluded that it had a common law jurisdiction to award compound (and not just simple interest) as damages on claims for the non-payment of debts as well as on other claims for breach of contract and in tort. This decision is to bring the Courts in line with the reality of borrowing in the open market to ensure that claimants are adequately compensated.






CHANGES TO THE T&CC COURT GUIDE
The Second Edition of the Technology and Construction Court Guide is to be revised with effect from 1 October 2007. The guide is intended to provide practical guidance to the conduct of litigation in the court. There have been minor amendments to correct inconsistencies regarding time limits in the guide. The more substantive changes are to reflect amendments to the Pre-action Protocol on 1 April 2007, to view please click here, and a restating of the provisions regarding lodging of documents which are generally to be in hard copy only and not email. There is also a clarification of the documents to be provided to the Court on the hearing of an appeal to reflect the recent decision of Kershaw Mechanical Services v Kendrick Construction Ltd [2006].


For more information on Charles Russell's Construction & Engineering Team click here or contact David Savage (Partner, Head of the Construction & Engineering Team) at david.savage@charlesrussell.co.uk or on 01483 252614

Previous Editions:
June 2007 >>more>>