Brant Associates introduces a new service in the form of a commercial health check. We offer this mini commercial risk audit for free until 01 April 2010. Please see the article below for further details.

This month also sees the launch of our first quarterly e-newsletter (Winter 2010 edition). The intention of our newsletters is to provide informative articles about current issues we have encountered, as well as updating our clients on developments within Brant Associates. If you have not received a copy of the e-newsletter and would like to receive future editions please click here.

To view a PDF copy of our e-newsletter please click here

ARTICLES FROM WINTER 2010 E-NEWSLETTER

Late or non payment problems

In contracting is there anything that can be done to improve the payment periods and certainty of amount, the amount to be paid and the payment date?

The answer is a qualified yes, since no one can guarantee same.

It all starts with the Contract terms and Conditions. Get these wrong and you will be swimming against the tide.

The next stage is to comply with the requirements of the Contract in terms of making applications for payment, the submission of appropriate notices and the preparation and maintenance of adequate records to support the aforementioned.

No rocket science there then! It is quite remarkable however, in our experience, how many companies do not deploy and/or police adequate systems to address these basics.

Prevention in our experience is less expensive than cure and by putting sound procedures in place and policing them it can lead to increased cash flow and profitability.

In an attempt to assist our clients and potential clients in reviewing how effective their policies and procedures are, we are introducing a new service as detailed below.

Mini Commercial Risk Audit

A number of recent cases we have been involved in have highlighted the importance of implementing and policing sound commercial systems and processes. This predominantly relates to small and medium sized Sub-Contractors, but could equally relate to small Contractors.

It is apparent that there are common weaknesses within the policies and procedures used by many organisations which fall into the above categories. We have therefore devised an audit to help to identify and reduce these weaknesses and hence the potential exposure to risk.

We have introduced this process to be a concise method to help companies either develop and implement new or to update existing procedures. It will only take an hour for one of your members of staff and we are offering this service free of charge to all enquiries received before 01 April 2010.

The audit considers the main elements of a project, from tendering through to post-contract as well as the Contractual relationship with Sub-Sub-Contractors and suppliers. It comprises a questionnaire which is to be completed in conjunction with your commercial staff. This is then followed up by a bespoke report which will identify any areas which need improvement and if appropriate makes recommendations.

For further information on this service please click here

When is a ‘Slip’ Not a ‘Slip’

No this is not an article about cricket.

I refer to Adjudicator’s slips (accidental errors or omissions or ambiguities), the fair use of the Slip Rule by an Adjudicator and enforcement of Adjudicators decisions in the Courts.

What is the ‘Slip Rule’?

For the purpose of adjudication, and in the absence of express terms in the adjudication agreement, which prescribes an Adjudicator’s powers to correct a ‘slip’, a term will be implied to permit the Adjudicator to correct an accidental error or omission or to clarify an ambiguity.

Recent Cases

There have been two recent cases decided in the Technology and Construction Court, both dealing with different aspects of the Slip Rule in Adjudication. Both cases involved the enforcement of Adjudicators Decisions.

The first of these cases is O’Donnell Developments Ltd (O’Donnell) and Build Ability Limited (BAL), which involved the enforcement of two Adjudication Decisions.

The second of the cases is Rok Building Limited (ROK) and Celtic Composting Systems Limited (No 2) (Celtic).

The two cases noted above raise interesting and important questions in respect of the use of the slip rule.

In O’Donnell Mr Justice Ramsey had to consider

‘how far a court can interfere with an Adjudicator’s exercise of his power under the Slip Rule’

In Rok, Mr Justice Akenhead had to consider

‘the extent to which one can infer an unfairness on the part of an Adjudicator where he or she may have gone seriously wrong and in the circumstances in which an agreed Slip Rule may be used by an Adjudicator with or without an appropriate level of fairness’.

The issue in the O’Donnell case followed nine adjudications between the parties involving disputes in relation to interim valuations, extensions of time and loss and/or expense. In essence, in arriving at his decision in Adjudication 8A the Adjudicator had asked the parties for the total sum O’Donnell had been paid up to valuation No 25. The parties both provided a figure which but for a few pence were the same figure. The Adjudicator used the figure to calculate the net amount to be paid by BAL to O’Donnell.

The problem arose due to the fact that within the figure for payments made was a figure of £148,468.67 which BAL had paid to O’Donnell as a result of the Adjudicator’s Decision in Adjudication No 7. That sum did not relate to Valuation No 25 and should not have been taken into account. The Adjudicator therefore inadvertently reduced the amount he intended to award O’Donnell by £148,468.87.

O’Donnell pointed out the slip to the Adjudicator who corrected his decision under the ‘Slip Rule’. BAL refused to pay that sum in particular.

BAL argued that ‘it was only if the parties in effect agreed on the slip that the Slip Rule could be applied and BAL also argued that the Adjudicator had not made a slip at all because he had acted on the information supplied by O’Donnell which mistakenly included the sum paid in respect of the decision in Adjudication No 7.

Mr Justice Ramsey did not find favour with either of BAL’s arguments and awarded O’Donnell the £148,468.87 to be paid by BAL, together with costs.

The issue in the ROK case is that Celtic refused to pay ROK the sums decided by the Adjudicator, on the grounds that the Adjudicator had ‘ ..acted unfairly and contrary to the rules of natural justice .. insofar as he .... did not operate the Slip Rule properly or so as to allow ‘natural justice and due process’.

In essence Celtic claimed that ROK had misled the Adjudicator in relation to the sums which Celtic had previously paid to ROK. Celtic drew the errors in ROK’s figures to the attention of the Adjudicator following issue of his decision. Celtic argued that the Adjudicator could and should have used the ‘Slip Rule’ to correct his decision taking into account the amount which had actually been paid to ROK.

The Adjudicator declined to consider Celtic’s representations on the basis he did not consider the point raised by Celtic to be a clarification of a simple mistake or ambiguity.

Mr Justice Akenhead decided that even if there had been a glaring and serious error in the decision on the part of the Adjudicator, he had not acted contrary to the rules of natural justice in declining to use the Slip Rule to correct same.

Mr Justice Akenhead also stated ‘It is not necessary for Adjudicators in their decisions to give reasons as to why they found some evidence compelling and other evidence not’.

Summary

In summary, it is advisable to inform Adjudicators of the correct payment position. In circumstances where further interim payments are made during the course of an Adjudication it is advisable to make the Adjudicator aware of same.

The Courts appear to be taking a narrow view of claims for ‘unfairness’ and ‘lack of natural justice’ when dealing with enforcement of Adjudicators decisions. It is unwise to seek to rely upon such claims in trying to avoid making payment of such decisions.

This month sees the launch of our inaugural Newsletter. This one off issue will be replaced with a quarterly e-newsletter. Please view a copy of our Newsletter here >>>> Click here

The Newsletter includes articles relating to devlopments in our business, Charity events and our forthcoming e-newsletters. There is also a feature on an issue which is becoming more and more prevalent in today's economic climate, namely the onerous use of withholding notices.

To view old articles from our News section including an article relating to 'Letters of Intent and Quantum Meruit' please follow the link>>> Click here