Certifiers hold a key role in construction contracts. Certificates, statements and decisions issued by certifiers can have a huge impact on cash flow. Their actions can also provide a recipe for disputes where the certifier is viewed as, or is, one-sided or biased. So, what are the basic laws governing certification and what can be done when something goes wrong in the process?
An application was recently made to restrain notice being given of a winding-up petition which sought payment of some £820,000 following an adjudicator's decision in respect of goods supplied and services rendered for the development and conversion of Victory House. The adjudicator had rejected Victory House's argument that it was not liable to pay the sum identified in the interim application because the parties had entered into a memorandum of understanding which provided for other payments to be made.
CBUK and Sarens recently sought a determination, following an adjudicator's decision, of a dispute over the terms and interpretation of a subcontract. Sarens had been engaged by CBUK to provide cranes and other equipment for the installation of six bridges along the M6 link road. CBUK had been engaged as subcontractor to Costain under a modified NEC3 contract. The dispute was about what, if anything, CBUK and Sarens had agreed about the provision of liquidated damages.
After Gosvenor agreed to perform certain cladding works for Aygun, disputes arose and Gosvenor applied to enforce an adjudicator's decision. Aygun accepted that adjudicators' decisions will be enforced by the courts, regardless of errors of fact or law, but alleged fraud on the part of Gosvenor, stating that "a substantial proportion" of the adjudication award had been based on sums which were fraudulently invoiced. However, no allegations of fraud had been raised in the adjudication proceedings.
In 2014 OSI and Lagan entered into a contract for the design and construction of a new production facility. During the course of the contract, OSI's agent issued certain instructions and in July 2016 OSI gave notice to Lagan that it was in default in failing to comply with four of these instructions. OSI said that Lagan did not remedy the default and accordingly gave notice of termination. In a preliminary hearing, Lagan held that two of the contract instructions had been invalid.
In a recent judgment in an ongoing dispute about the quality of steel monopiles at an offshore wind farm, a judge had to consider claims for overhead and profit. The plaintiff had claimed a percentage for overheads at a rate of 4%, which the judge was reluctant to accept. While the judge suspected that the plaintiff may well have incurred increased overhead costs as a result of breaches of contract, he was not prepared "to pluck a figure out of the air".
The insolvency of Carillion has placed into sharp relief the difficulties faced by those both up and down the contractual chain for a construction project when one part of that chain becomes insolvent and the ultimate supplier of goods and materials on site has not been paid. There are a number of key considerations parties need to bear in mind if they are unfortunate enough to be faced with a Carillion-type situation and need an answer to the question: who owns those goods?
A recent judgment has provided an important clarification in relation to the issue of 'smash and grab' adjudications and will likely be welcomed by the construction industry. Contrary to previous judgments, the court held that it is possible for a paying party to adjudicate on the 'true value' of an interim application in circumstances where no payment or pay less notices were given and there has been a successful smash and grab adjudication.