Case Study: This Looks Simple — But Is It?
Here’s an example of a construction dispute that, on the face of it, appeared simple and straightforward. But for our clients it turned out to be far from simple, for our client and other parties
A main contractor entered into a traditional contract to build a factory with office accommodation, a large automated manufacturing floor and chilled warehouse facilities. The project was contracted to be completed in 14 months. The mechanical and electrical installation was to be carried out by nominated sub-contractors selected by the Architect. The project was completed eight months late by the contractor, and the employer suffered loss and expense as a result.
The Employer blames the Contractor and is seeking to recover his losses. The Contractor is claiming his loss and expense from the Employer.
The Contractor and the Employer are preparing for conciliation.
The Architect assessed that the main contractor was culpable for 6 ½ months of the delay and is thus liable for damages to the Employer.
There was no signed contract between the parties, only a letter of intent incorporating conditions of contract.
The Employer has been prevented from commencing manufacture of his product, and is now being sued for breach of contract by one of his customers for failing to deliver key orders for his company.
There were no weekly liquidated and ascertained damages set in the Appendix to conditions of contract and thus damages for late completion are claimed on actual loss incurred by the Employer. There was also no time for completion stated in the Appendix to the Contract and it is suggested by the Employers Solicitor that in fact ‘time may be at large'.
The sub-structure was disrupted by the discovery of uncharted live utilities which were not represented correctly on the general layout drawings of existing utilities which were transposed from a number of statutory body drawings.
There was unforeseen ground water and periods of inclement weather which hindered progress of wet trades due to cold temperatures and excessive flooding. There were allegedly periods of what the Contractor has claimed as exceptionally inclement weather which delayed the works, but the Architect decided that such a claim did not pass his interpretation of what is deemed ‘exceptionally inclement' weather and deemed it merely 'inclement' weather.
The purported site investigation report was ‘borrowed’ from another site one kilometre up the road in good dry ground.
The employer's Quantity Surveyor has over-measured all sub-structure quantities by between 14.5% and 15.5% in his Bill of Quantities. He is claiming an ‘error’ and re-measuring the items accordingly. The Contractor is claiming the full quantity of each item alleging there was ‘fat’ purposely inserted into the Bill — thus not an ‘error’ and thus no entitlement to re-measure by the PQS.
The Main Contractor rejected the Architect’s assessment on extension of time and culpability, claiming inter alia that the critical cause for delay was due to unforeseen ground conditions and artificial obstructions, late and fragmented design from the design team and a failure on behalf of the Mechanical Contractor to commission the building’s systems.
The Architect provided five times the number of detailed drawings than those provided for in the contract, and issued them intermittently in a manner that the contractor alleged hindered the efficient progress of work on site. The Architect has rejected this claim, asserting that he was issuing his design as works proceeded and did not cause delay.
The Contractor has claimed that, if he had been issued with the full design, he could have mitigated his own culpable delay by accelerating the works.
Two Domestic Sub-contractors went into liquidation during the contract. One of them had damaged completed works undertaken by the Nominated Electrical sub-contractor for which the Contractor refused to pay and the electrical sub-contractor ceased work on site. The Contractor determined the electrical sub-contractor's contract and completed the works himself. The electrical works remain uncertified.
The Mechanical Sub-contractor claims that the mechanical design was not coordinated with the architectural and structural envelope and thus did not fit in the building as designed.
The Mechanical Sub-contractor installed specified pumps and fans that were undersized and thus commissioning was delayed until the pumps were increased in size.
The Mechanical Consulting Engineer claims that the responsibility for completing the design, including the sizing of fans and pumps, remains with the Nominated Mechanical Sub-contractor for which the Main Contractor is responsible.
The Mechanical Sub-contractor is in receivership and the Receiver is looking for payment of work that was not certified.
The Contractor took an action in the Commercial Court against the Employer.
The Employer successfully stayed the court proceedings pending arbitration.
There was a mandatory conciliation step, taken prior to Arbitration.
Latent defects have appeared as progressive cracking in the reinforced concrete structural frame, either the result of a design defect by the structural engineer or as a construction defect by the contractor.
The parties are preparing for conciliation. It certainly won’t be easy.