How stuff works, behind the scenes

These emails, obtained in the UK under freedom of information provisions, offer an interesting insight into how the administration of law is handed at the top level.

It is notable that they are not averse to a spot of backdating, when that is seen to be convenient!

 

Emails relating to Lord Sumption’s resignation from the supplementary panel:

Email from Lord Sumption to Lord Reed, 30/1/2021:

Dear Robert,

I am, as you know, still on the supplementary list of justices available to hear cases in the Supreme Court. I have not sat since the spring of 2019 and in September 2019 I asked Brenda not to be listed to hear appeals in view of public criticisms which I was making of the government. I very much doubt whether it will be appropriate for me to sit again at any time in the next three years which remain before I reach the age of 75. Unless you disagree, I think that the time has come for me to withdraw from the supplementary list.

(Line removed from email because it does not relate to this FOI request)

Jonathan

Response from Lord Reed to Lord Sumption, 30/1/2021:

Dear Jonathan,

I think that is the right decision, given your high public profile in relation to controversial questions of public policy.

(Several sentences removed from email as they do not relate to the FOI request).

Best wishes,

Robert

Email forwarded by Lord Reed to Vicky Fox, Chief Executive and Lord Hodge, Deputy President on 30/1/2021: Continue reading

More on Prevention as a A Rule of Law

I mentioned the other day the pending application for leave to appeal from Bensons Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69, due to be heard shortly.

Until the Benson decision, the law as to whether the prevention principle is a rule of law, or a mere implied term (susceptible to be trampled over by casual express provision) had been usefully summarised in Hera Project Pty Ltd v Bisognin (No3) [2017] VSC 268, affirmed by the Victorian Court of Appeal as Bisognin v Hera at [2108] VSCA 93. I set out that summary below, as extracted for my book Extra-Contractual Recoveries for Construction and Engineering Work (now with the publishers).[1] In short, the answer was that it is a rule of law, and not merely an implied term. Benson, ignoring much authority, came to the opposite conclusion.

Meanwhile, Tony Marshall has kindly made available his further discussion of this vital issue, which had been excised from his paper in ICLR for reasons of length. So, with his further kind permission, I set out that further discussion below.[2]

The importance of the point can be bluntly stated: consider the position where an owner (or head contractor) prevents the contractor (or subcontractor) from doing the contracted work on time, by ordering extra work, or by not giving possession of the site, or some other act of prevention. The prevention might or might not be permitted by the contract, or a breach of contract. The contractor (or subcontractor) is not, for one reason or another, entitled to an extension of time, and so is inevitably in breach of the obligation to complete by the stipulated date, by no fault of his own.  The contract contains some weasel words which say there are no implied terms. Is the owner (or head contractor) entitled to liquidated or other damages for the failure of the contractor (or subcontractor) to complete on time? Even more starkly, does the law permit, “I Delay, You Pay” arrangements? If so, what, if any, are the constraints?[3]

Continue reading

Prevention And All That

In late March of this year[1], the Court of Appeal in Victoria handed down its decision in Bensons Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69.  The principal interest in the case lies in what the court had to say about the prevention principle. There is considerable authority at the highest level that the prevention principle is a rule of law, but nevertheless the Court of Appeal of Victoria considered that it was merely a matter of implication, which gives way to the express terms of the contract. The key passage is perhaps at paragraph 114:

Given that the prevention principle is commonly a reflection of the obligation on the parties to a contract not to hinder or prevent one another from enjoying the benefit of the contract, and generally the source of the obligation is an implied term that is found in most contracts, it is unsurprising that little time was spent analysing the jurisprudential nature of the obligation.  The prevalence of the obligation means that generally the focus will be on the consequences of the impugned conduct for the performance of the contract.  That is what occurred here.  It might also be thought that where the consequence is established (one party has prevented the other from enjoying the bargain) there will inevitably be an antecedent breach.  In our opinion, however, it is an error to consider the prevention principle divorced from the terms of the contract and it is a breach of a contractual term that gives rise to the potential application of the principle.

The implications of this approach to the construction industry are profound.  If this approach is to be followed, it means that an owner (or head contractor), if savvy enough with its conditions of contract, can prevent the contractor (or subcontractor) from executing the work for lengthy periods, and then claim damages from the head contractor (or subcontractor) for failing to complete the work on time. On any sensible, or even half sensible, commercial approach to the law, this should be an anathema. Arguably, on this approach, a mere “entire agreement” clause is sufficient to prevent time being set at large, however much owner (or head contractor) has been the cause of the preventing delay.

Unsurprisingly, KIA is seeking to appeal that decision to the High Court, and the special leave application is due to be heard in just over a month’s time, on 5th November.

Relatively little authority was referred to by the Victorian Court of Appeal on this point.  But there is in fact a great deal of authority on it, and it is carefully and convincingly marshalled[2] in Tony Marshall’s pair of articles The Prevention Principle and Making the Contractor pay for Employer Delay:  is  English Law departing from its Roots? published in the International Construction Law Review[3], but which perhaps have not obtained the attention that they deserve. With the kind permission of Tony Marshall[4], I set out the paper below. It is to be hoped that the High Court will be persuaded of its essence, which is that:

  • it is very firmly established by the highest authority that the prevention principle is a principle of law, not a mere matter of implied term and,
  • that there are very good reasons why it should remain so.

 

 

 

 

The Prevention Principle and Making the Contractor pay for Employer Delay:  is  English Law departing from its Roots?

(Part 1)

“If the failure to complete on time is due to the fault of the employer and the contractor, in my view the (liquidated damages) clause does not bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled”[5]

  1. Introduction

It has been understood in English law for centuries that, where a contractor undertaking work is prevented by his employer from completing his work by the agreed completion date, the agreed completion date ceases to apply and, the date having “gone”, an obligation to complete within a reasonable time is substituted. Any right on the part of the employer to damages for failure to achieve the original date also falls away; the employer is left to his remedy in general damages for any failure to complete within a reasonable time.

The expression which came to be used to describe this situation, in the early nineteenth century cases, was that the contractor was, as a result, “left at large”, both as to the time for completion and as to any damages payable (time and damages were “at large” in the sense of   being “no longer fixed; unconfined”).  Hence the expression so often on the lips of the construction lawyer (not to mention the enthusiastic claims consultant) – “time is at large”.

Those consequences flow from the application of the time-hallowed “prevention principle” of the common law. According to that principle, he who prevents the performance of his contractual counterparty cannot seek recompense for the resulting failure of the counterparty to perform. Continue reading

Building and Construction Industry Security of Payment (Review Recommendations) Amendment Bill 2021

There is a Bill presently before the House of Assembly here in South Australia to amend the security of payment legislation. Here is a note of the proposed changes, showing the original Act in black, the amendments in red and some comments in green.

Building and Construction Industry Security of Payment Act 2009 proposed amendments Aug 2021

Day Off

Some days I work really hard at the law. But not today. The manuscript for my new book is with the publishers. Instead of working at the law today, and since it was sunny for a change, I

  • mowed the lawns;
  • pulled some weeds;
  • planted out some elaeagnus, which has been coming on in small pots in the greenhouse;
  • planted out some myoporum. Ditto;
  • cleared the blocked drainage line from the greenhouse, using the water pressure blowback method;
  • restored a section of swale;
  • restaked the cage around the magnolia;
  • ordered some steel for the new studio;
  • trimmed the wisteria (new buds now coming through), and retrained it a bit around the straining wires on the pergola;
  • took some wisteria cuttings, and planted them in small pots in the greenhouse (probably a bit early in the year, but hey ho, you never know);
  • fixed one of the garden benches (glued and clamped, then inserted some dowels);
  • rescued a baby rabbit from the cat.  This might have been the best bit of the day. I know rabbits are said to be a pest.  But this little one was a sweetie. I locked the cat indoors, put on some gloves so as not to make the rabbit smell of human, and carried her (the rabbit, not the cat) in my hands to near where I reckon the burrow is (under the dam wall). She looked up at me as if to say, “Will this be OK?”.  I said yes. When I put her down, she paused for a moment, then hopped off.

If the law demands, I will do law tomorrow. Otherwise I plan to fix the irrigation leak next to the croquet law, spray the lawns to control broadleaf weeds and start learning how to apply American cherry veneer (for a plinth for my Quad 77; the big thing is how to do the staining of the MDF substrate in conjunction with the corner routing). Oh, and I should post some stuff about the Security of Payment reforms. Yeah, yeah.

Remote

Until Covid, I used regularly to fly around the country, and sometimes overseas, in order to appear in court, or arbitrations, or for dispute review board meetings, or mediations, or to speak at conferences.  In the last few months, I have not left South Australia at all.

Remote hearings, appearing by audiovisual link, have proved to be more effective than might have been expected, and for hearings that are largely administrative – directions hearings and the like – remote appearances are probably here to stay.  But where there is an argument to be had, they are not as effective as where counsel appears in person.

I am due to appear in the High Court shortly, on a special leave application.  The court has written to the parties to say: Continue reading

A Road less Travelled to Security of Payment?

On what is hopefully the last lap in completing the manuscript For Extra-Contractual Recoveries For Construction And Engineering Work, I am largely sticking to areas which have been considered by the courts. There are many of these. And they show that contractors often have routes to recovery which are not apparent from the express wording of the contract. But there are some routes which seem to be open, which has not been considered by the courts at all. Perhaps because nobody has ever tried them?

One of them concerns security of payment under the East Coast model. Is there any reason why the contractor should not seek to enforce its right to a progress payment by way of litigation or arbitration, i.e. outside the procedures established by the legislation? For the purpose of canvassing the point here, I refer to the sections in the South Australian Building and Construction Industry Security of Payment Act 2009, although the same point is available under other East Coast State regimes.

There are a number of reasons why a claim to a progress payment under section 8 of the Act[1] might be more attractive than a claim for interim payment pursuant to the terms of the contract. It is well established that the statutory right to a progress payment is parallel to and separate from the contractual right. A feature of the statutory right to a progress payment is, was the amount of the progress payment is prima facie calculated in accordance with the terms of the contract,[2] that it is not restricted by contractual mechanisms. Thus, whilst a contractual right might be limited by what has been certified, the statutory right is not so tethered. See for example Transgrid v Siemens Ltd [2004] NSWCA 395(2004) 61 NSWLR 521 at [35],  John Holland Pty Ltd v Roads and Traffic Authority of NSW [2007] NSWCA 140 at [37] and [38], Plaza West Pty Limited v Simon’s Earthworks (NSW) Pty Limited [2008] NSWCA 279 at [54].  At least arguably, such contractual mechanisms also include notice provisions, such that a particular claim might, if the contractual notice has not been provided, be barred as a contractual claim for interim payment, but permissible as a statutory claim to a progress payment under section 8 of the Act. Put another way, the amount of the statutory progress payment is to be calculated according to the underlying terms of the contract, and not according to the way that any contractual mechanisms have been administered. Continue reading

Bedrock Mud

The still new Court of Appeal in South Australia has handed down its judgment in Bedrock Construction and Development v Crea [2021] SASCA 66. In short, it was a win for the contractor.

The short story is that the contract contained a defects liability provision. The Court of Appeal adopted (at least in part) the authority in Turner Corporation v Austotel (1994) 13 BCL 378 and Britannia v Parkline [2009] NSWSC 1302 to the effect that:

  • the standard clause obliging the contractor to carry out rectification work notified to it by the architect carried with it, as a matter of implication, an entitlement to carry out that work and that
  • if the owner denies the contractor the opportunity to rectify, then the owner loses his right to claim damages in respect of those defects.

The idea, perhaps somewhat harsh on owners, and contrary to English High Court authority[1], is that the defects liability arrangement constitutes a complete code dealing with the contractor’s liability for such defects, and there is no room for an additional common law right to recover damages.

Unhappily, however, the Court of Appeal’s decision fails to give us a satisfactory or definitive answer in this interesting area of the law.

The decision says nothing about Continue reading

Seminar Today

Interest is high for the Keating Chambers Webinar for the Society of Construction Law Australia taking place later today. 150 or so attendees are registered so far.

Members of my chambers will be talking about the Secretariat case, and related topics of dirty/clean experts etc. I will be talking about a number of Australian cases, including the recent decision in Apex v Cross River Rail about Chinese Walls.

The Once and Future King

 

I have mentioned on these pages before the decision of the UK Supreme Court in Cavendish v El Makdessi, Beavis v ParkingEye.[1] It seems to me that the more interesting aspect of the decision is not so much in relation to liquidated damages, but rather what the court had to say about the doctrine of relief from forfeiture. Many (including me) had assumed that the doctrine had been essentially subsumed into legislative provisions dealing with mortgages and leases, but the court breathed new life into the doctrine, suggesting that – although very largely unused – it is applicable in a wide variety of situations.

In some respects, of course, black letter law has been in the ascendancy in recent years, the courts apparently being willing to accept the fiction that the terms of lengthy commercial contracts reflect what has freely been agreed. In many cases, this concept of “party autonomy” rides roughshod over the reality. In particular, few if any contractors or subcontractors have any real understanding of the full legal effect of an entire agreement clause, and even if they inwardly shudder a little when they read a Queen of Hearts clause in tender documentation, they are unlikely to have any real choice but to sign if they are to continue to do business.

The point about what the court said in Cavendish is that the application of the doctrine of relief from forfeiture does not involve rewriting contracts. Parties remain free to sign up to contracts containing onerous, even absurdly onerous, conditions. What the court can do is to restrain the unconscionable use of those conditions. This approach – splitting the concept of the enforceability of a right from the right itself – is not new in English law. It is inherent in the concept of laches and its statutory successor, limitation of actions. It is a concept widely applied in civil law.

As yet, litigants have not been pleading relief from forfeiture in English construction cases, and I am one of the few to plead it in Australian cases (none of which have yet reached trial). It may be that in Australia there is a more potent weapon: section 21 of the Australian Consumer Law[2], which is a “beefed up” re-enactment of section 51AC of the Trade Practices Act.

Sometimes, it takes a surprisingly long time for Continue reading