Thursday, October 30, 2008

Builder accused of scamming ВЈ800,000 by lying about his qualifications

A builder who failed a practical carpentry exam has rejected claims that he was unqualified to carry out building projects.

Martin Gumbrell, 53, of Bournemouth, said his experience working for large companies gave him the confidence to carry out building work.

The builder has pleaded not guilty to three charges of deception and one of obtaining a money transfer by deception following complaints by three customers.

In the Bournemouth Crown Court he has been accused of scamming ВЈ800,000 from customers by lying about his qualifications.

Customers claim his work was faulty and in one case it is alleged a home he worked on in Poole, Dorset, had defects that would have cost ВЈ450,000 to fix.

This week Gumbrell admitted to the court he had failed an Institute of Carpenters practical exam because he “wasn’t feeling well that day”.


Builder accused of scamming ВЈ800,000 by lying about his qualifications


He said he didn’t redo the exam because he had just bought his first property and wanted to move on and earn some money.

He claimed he had worked on projects including airport buildings and runways in Saudi Arabia and as a site supervisor in Iraq, reported the Daily Echo.

He also claimed he had never told customers he had a university degree.

The trial continues.

Written proposals are critical to success

Wednesday, October 29, 2008

Creditors chase DGT Steel and Cladding, despite administration

Deane and Amos Aluminium Systems is pursuing DGT Steel and Cladding, now in administration, through the High Court in a bid to recover almost ВЈ300,000.

In a writ filed at the Technology and Construction Court, Deane and Amos claims it is owed ВЈ299, 457.76 for a series of oral contracts agreed between 2005 and 2008.

It wants to recover the money and ВЈ77,237.64 in interest.

DGT Steel and Cladding appointed PricewaterhouseCoopers as administrators last month after suffering cash flow problems.

A PricewaterhouseCoopers spokeswoman said administrators would try to pay creditors if any money remained, but that Deane and Amos would rank equally alongside other creditors seeking payment.

Wells Fargo makes bid for Wachovia

Thousands of workers have wrong skills cards

Thousands of site workers are holding the wrong skills cards under the CSCS scheme.

CJ understands that the industry is awash with workers carrying out skilled trades when they only hold green labourers' cards.

One union source estimated there are currently four times as many green cards in circulation as there are labourers' jobs. He added that half of all Eastern European carpenters working on UK sites only have green cards.

Backers of the CSCS scheme have been concentrating on establishing a fully-carded workforce. But many now believe the emphasis should change to ensuring workers have the right cards.

Workers only have to pass a basic safety test to get a green card. But other cards for skilled trades involve sterner checks for the proper qualifications.


Thousands of workers have wrong skills cards


One industry source said: "The card is really just acting as a passport to site at the moment. Foreign workers in particular just get a green card then carry out skilled work they used to do back in their own countries.

"Contractors turn a blind eye because they can get skilled workers to start straight away just by issuing them a labourers' card."

There are currently more than 1.3m CSCS cards in circulation. Chief executive Brian Adams said: "There are more green cards in circulation than we would expect.

"The next step is to ensure that everyone has the appropriate card. It is not something that we can police. It is up to management at site level to check that people have the appropriate cards."

Be wary of medical discount cards

Pay loophole leaves subcontractors short of cash

Main contractors are flouting fair payment regulations by exploiting a loophole to delay handing over cash to subbies.

Big construction companies are using the dodge to give the appearance of complying with the Office of Government Commerce's (OGC) Fair Payment Charter while holding on to their money for as long as possible.

The charter requires contractors on public sector projects to ensure that the period between the date bills are due and the final payment date does not exceed 30 days.

But main contractors are getting around this by delaying subbies' applications for payment to push back the point at which a due date is set.

Firms are using any ruse to spin-out the payment process. Dodges include asking subbies to resubmit documents supporting their bills.


Pay loophole leaves subcontractors short of cash


Prof Rudi Klein, chief executive of the Specialist Engineering Contractors Group, said: "All the focus now is putting off the due date and that really is a concern at the moment.

"The 30-day expectation has been undermined because they are setting the due date later and later from the date at which you asked for your money. So the 30 days is frankly hollow."

Klein claimed that the main culprits were the smaller national main contractors, while the biggest names in the industry were largely playing by the rules.

An OGC spokesman said: "We would urge suppliers to refer any evidence of malpractice of the Fair Payment in construction initiative directly to the OGC, as without evidence it is difficult to follow up and rectify any alleged issues between firms.

"One mechanism available is OGC's Supplier Feedback Service, which suppliers can use to raise concerns about public procurement practice when attempts at resolving issues with a contracting authority have failed."

Lord Mandelson pledged to look into ending the practice of retentions during a debate on small businesses in the House of Lords last week.

BizCoach: Start with partnership agreement

Tuesday, October 28, 2008

Ricky Tomlinson in new appeal over 1972 construction strike convictions

New evidence is being presented in a bid to overturn the convictions of three building workers jailed for conspiracy charges in 1972. One of the men, actor Ricky Tomlinson, tells John D'Arcy he was a political prisoner and is determined to clear his name.

Ricky Tomlinson in new appeal over 1972 construction strike convictions

Above: Tomlinson leaving Leicester Prison on parole after serving 15 months of a two-year sentence for plotting to intimidate workers during the 1972 construction strike.

Some 35 years after three building workers were jailed on conspiracy charges following events during the 1972 national construction strike, new evidence is to be put before the Criminal Cases Review Commission in a bid to overturn the convictions.

The men sentenced at Shrewsbury Crown Court were Des Warren, Ricky Tomlinson - now better known as the star of programmes such as Brookside and The Royle Family - and John McKinsie Jones. They were jailed for three years, two years, and nine months respectively.


Ricky Tomlinson in new appeal over 1972 construction strike convictions


Now a campaign to reverse an alleged miscarriage of justice is gathering pace. Last year's TUC conference unanimously called for a public inquiry into the circumstances surrounding the prosecution of the 1972 building strike pickets. It was claimed that the trial was the result of collusion between the building employers, the then Conservative government, and the police.

"The charges and the sentences were absolutely ridiculous," says Tomlinson. "At the time, the government had just suffered defeats at the hands of the miners and the dockers. Our union was seen to be not very strong. So we were made the whipping boys."

He adds: "I am still classed as a subversive. They won't release all the files on the case. But I want to know who said what and why.

"I was a political prisoner. I am absolutely convinced there was political interference in the case. I want my name cleared. I have suffered. My wife has suffered. My children have suffered. I don't want people pointing at my grandchildren and saying I was some kind of terrorist."

The 1972 strike resulted in substantial gains by the workforce. Subsequently, however, the employers presented the Home Secretary with a dossier - largely newspaper cuttings - which purported to show widespread violence and intimidation. There were suspicions that particular pressure was put on the government by the unofficial but powerful lobby of top contractors known as the Dorchester Group.

"We have tried to get information released through the Freedom of Information Act about which contractors were involved," says Tomlinson. But parts of what is available are still blanked out."

What made the case of the "Shrewsbury Three" a particular cause celebre was the fact that charges were brought under the 1875 Conspiracy and Protection of Property Act. In the wake of the strike, a total of 24 men were convicted for alleged picketing offences mainly on sites in the North West and North Wales. Most faced lesser charges of affray and received suspended sentences. Prior to the Shrewsbury trial, a number had already been acquitted.

Conspiracy was seen as a catch-all charge that was difficult to defend against. As was famously pointed out by the trial prosecutor, it was not necessary to show that the "conspirators" had ever met to agree a common purpose. It could be done "with a nod and a wink". Yet, as the defence noted, police were present at all but one of the sites where the picketing offences were said to have occurred and still no arrests were made at the time.

The convictions came amid mounting government alarm over what it saw as excessive union power especially through the use of "flying pickets". Some union leaders were equally disturbed at the growth of internal left wing and rank and file factions (the then Ucatt general secretary used the employers' house journal to attack Communist influence in his own union). Hence the anger of supporters of the Shrewsbury pickets at an apparent lack of support from the TUC.

In the event, of course, Tomlinson has gone on to make his mark elsewhere. Des Warren was not so fortunate. The treatment he received in jail is said to have broken his health and accelerated his death in 2004.

Successive Labour administrations have shied away from re-opening the case. As Tomlinson says: "We actually spent more time in jail under a Labour government. I would have thought this Labour government would welcome the chance to right a wrong."

Ucatt backing

Such is the direction the Shrewsbury campaign is currently taking, it is now wholeheartedly backed by Ucatt and spearheaded by Mick Dooley, previously a candidate for election as the union's general secretary.

Dooley comments: "A public inquiry into the Shrewsbury affair can restore faith in our legal institutions and vindicate these men. We want to know if there was MI5 involvement in their prosecution. My view is that the state should not be involved in the judiciary."

The last word goes to Tomlinson. Back in 1972 he told the court: "I have heard the judge say that this was not a political trial, but just an ordinary criminal case. I refute that with every fibre of my being."

Key questions the appeal will ask:To what extent was this a political trial?Why were conspiracy charges brought? After appeal, this was the only conviction that stood and the men were never charged with committing violence.What influence did the employers exert in bringing the prosecutions?What role, if any, has MI5 played?Did the trials proceed against police advice?Were some pickets approached before the trials to act as prosecuting witnesses only to be charged when they refused?Did the government send a message to the prosecuting Counsel saying that under no circumstances should there be any jail sentences?

Picketers doubt Vought can keep up

Kier fraud investigation in Harrow set to drag

An investigation into a potential fraud on a housing maintenance project Kier is delivering for Harrow Council could drag on for "some months", a source has told CJ.

It is thought that Kier has already suspended a contracts manager and a surveyor as part of its investigations into potential fraud on the 'responsive landlord repairs element' of Harrow's housing repairs budget, worth ВЈ2.5m a year.

The work forms part of Kier's ВЈ125m, five-year contract to repair and maintain 6,000 council houses, schools and other council buildings.

Kier and Harrow Council have been conducting the joint investigation into allegations of fraudulent invoices and kickbacks since July, when subcontractors complained to the council.

In a statement, a Kier spokeswoman said: "Up to this time, these allegations remain uncorroborated and it would be irresponsible to make any comment until all investigations are complete."

‘Green’ program could bring new jobs to Tennessee

Determination provisions: Reinwood Limited -v- L Brown & Sons

The use of determination provisions in construction contracts.

Summing upThe case: Reinwood Limited -v- L Brown & Sons Limited [2008] EWCA Civ 1090.The issue: Whether or not a determination notice was valid when it referred to a second notice of default that was invalid.The implication: Determination notices are likely to be valid where a previously valid default notice had been given, even where the notice of determination had referred to a second notice of default that was invalid.

Construction contracts invariably contain determination provisions, permitting either party to determine the contract on the occurrence of a specified cause identified in such provisions. A notice of default is often required before the right to determine arises under a contract and the validity of such notices under a JCT 98 Contract was considered in the case of Reinwood Limited-v-L Brown & Sons Limited.


Determination provisions: Reinwood Limited -v- L Brown & Sons


Reinwood engaged Brown to construct commercial and residential premises. Because the works were a mix of residential and commercial, the residential work was zero rated and the commercial work was subject to VAT at the standard rate. The contract sum was exclusive of VAT and interim certificates were for sums exclusive of VAT.

Separate assessments

Special provision was made in the contract for dealing with VAT, requiring Brown to make and serve on Reinwood separate provisional assessments of VAT and that amount of VAT became payable by Reinwood, unless it objected to the assessment.

On 11 April 2005, Reinwood issued its first provisional assessment and on 14 April 2005 Reinwood responded via email by asking the sum to be verified by a quantity surveyor. Reinwood did not pay the VAT that was the subject of the first provisional assessment and Brown gave notice of a specified default on 12 May 2005. On 26 January 2006, Brown issued a second notice of default following Reinwood's failure to pay an amount due under an interim certificate, followed by a notice of determination relying on the second notice of default. The second notice of default was held to be invalid, but Brown claimed that its notice of determination was valid on the basis of the first notice of default.

Notice of determination

Reinwood argued that: (i) the notice of determination was invalid as the notice of default was not based on a valid provisional assessment as it did not set out the basis of the calculation (ii) its email response to the provisional assessment was a valid objection (iii) Brown had waived its right to rely on the first notice of default by giving a second notice of default rather than a notice of determination or by relying on the second notice of default in its notice of determination.

As to these issues, the Court of Appeal unanimously decided that:

Under the VAT agreement the provisional assessment had to do no more than state what the relevant figure was, a precise and detailed calculation was not required. Brown's provisional assessment was therefore valid. Reinwood's email did not amount to a valid objection as it lacked any clear indication that Reinwood did object to the provisional assessment. There was no use of the word 'objection' or any similar related words in the email, and it did not set out any grounds of objection. It was considered that for the email to qualify as a notice of objection, Reinwood would have had to have used the word 'object' or 'objection' or some other language making it clear that it refused to accept the assessment as correct, and it would have had to indicate why it objected or refused Brown had not waived its right to rely on the earlier default by serving the second notice of default or by referring to the second notice when serving its notice of determination. The contract at clause 28.2.4 stated: " the employer repeats (whether previously repeated or not) a specified default". This allowed Brown to use the contractual procedure cumulatively, not just once, entitling it to rely on the earlier notice of default to give notice of determination of the contract under clause 28.2.4. Specified default

Accordingly, the first notice of default was valid as Reinwood had committed a specified default in April 2005 and its default in June 2006 was a repetition of specified default, entitling Brown to determine the contract.

Finally, where notices are required to object to a claim, such notices to be valid should use clear, unequivocal language stating that it is an objection to the claim and setting out the reason(s) for that objection. It is likely that the failure to do so could render such notices invalid.

Lehman’s bond insurers to take a financial bath
Home foreclosures oust faithful renters

Tuesday, October 21, 2008

Redrow Homes loses battle over workers' holiday pay

Redrow Homes has suffered a fresh defeat in its legal battle against a court ruling that operatives engaged as self-employed labour-only subcontractors are "workers" under the Working Time Regulations and entitled to holiday pay.

The Employment Appeal Tribunal has upheld an earlier Hull tribunal finding, which said the Redrow contract was a "sham" because it "did not seriously reflect the relationship between the parties".

The case was brought by Ucatt on behalf of two bricklayers who had been engaged by Redrow Homes (Yorkshire) under its subcontract for labour-only workers.

The appeal tribunal confirmed the original finding that "Redrow in effect wanted workers, but did not want to incur the legal obligation to pay holiday pay".


Redrow Homes loses battle over workers holiday pay


Ucatt general secretary Alan Ritchie said: "I hope this case marks the end of companies building ever more detailed stratagems in the bid to avoid paying holiday pay.

"It has been repeatedly shown that once these contracts are exposed to legal scrutiny, they collapse faster than a house of cards."

Gustav has Gulf hotels on edge
Home sales continue to slide

Mandelson confirms 10-day payment to small businesses

The government is set to announce a series of measures to help small businesses today, including confirming plans for Whitehall to pay bills within 10 days.

The Daily Telegraph reported that Business Secretary Lord Mandelson will unveil plans to offer more help and swifter access to government funding and faster payment of bills. He will also tell MPs that banks were being pressured to restore lending to small businesses back to 2007 levels.

He is also reported to want a commitment for Whitehall departments to pay bills within 10 days to extend further down the chain.

Meanwhile Skills Secretary John Denham will present a ВЈ350m package to help small businesses improve training.

Thursday, October 16, 2008

'Inexperienced' builder accused of scamming £800,000

An “unqualified and inexperienced jobbing builder” scammed customers out of almost £800,000 by lying about his qualifications, a court has heard.

Martin Gumbrell, 53, of Bournemouth, is facing three charges of deception and one of obtaining a money transfer by deception following complaints by three customers.

He has pleaded not guilty to the charges, which stem from dates between August 15, 2001 and December 14, 2005, in the Bournemouth Crown Court.

The court heard yesterday Gumbrell was “deliberately dishonest” obtaining building jobs for his firm by telling customers he was a qualified builder with qualifications in building design and had won awards for his modern building systems.

Prosecutor Tim Bradbury said Gumbrell also claimed he employed the same workforce for a number of years and was a member of the National House Building Council.


Inexperienced builder accused of scamming £800,000


None of the claims were true, Bradbury said.

“Far from being a professional builder, it became apparent that the defendant lacked the ability to perform or manage the building projects,” Bradbury said.

The Daily Telegraph reported Gumbrell is alleged to have received ВЈ417,000 to build a home in Poole, Dorset that had defects that would have cost ВЈ450,000 to correct.

He is also claimed to have been paid £350,000 to build a home at Sturminster Newton, Dorset that allegedly “dragged on”.

A third couple near Blandford, Dorset paid £28,000 for a garage and extension but the “site was abandoned” after a mistake, the court heard.

The trial continues.

Banks save their best rates for electronic accounts

Wednesday, October 15, 2008

Kier and Harrow Council confirm joint fraud probe

Kier and Harrow Council have both confirmed that they have launched a joint corruption investigation following claims of fraud on contracts the contractor is delivering for the council.

A number of subcontractors are understood to have approached the council with allegations of fraudulent invoices and kickbacks on projects for the council, but neither Kier nor Harrow Council will confirm which projects are involved.

The claims are thought to have been made in late June, and an investigation has been running for three months. A council spokesman could not indicate when the investigation might be concluded.

Harrow Council named Kier Building Maintenance as the preferred bidder in a ВЈ125m five-year contract to repair and maintain 6,000 council houses, schools and other council buildings. It is not known whether any of the allegations relate to this project.


Kier and Harrow Council confirm joint fraud probe


In a statement a Kier spokesman said: "Kier takes such allegations very seriously and a joint investigation, with Harrow Council, is already in process. Up to this time these allegations are uncorroborated and it would be irresponsible to make any further comment until all investigations are complete."

Harrow Council leader Councillor David Ashton said: "Harrow Council launched an investigation after several sub-contractors brought allegations of corruption to the attention of a council officer.

"In the course of the council's own investigation which followed, it spoke to two other sub contractors.

"A joint investigation between Harrow Council and Kier is under way. It is important to stress that at present, while serious, these allegations remain unproven.

"However, Harrow Council expects the highest standards of probity from its commercial partners. If any money is found to be owed as a result of these allegations, the authority will look to recoup those losses."

Tuesday, October 14, 2008

No second chances: Birmingham City Council -v- Paddison Construction

Adjudication of disputes - can you have a second bite at the cherry?

Summing upThe case: Birmingham City Council -v- Paddison Construction Limited [2008] EWHC 2254 (TCC).The issue: The extent to which a party may adjudicate a dispute that has already been the subject of an adjudicator's decision.The implication: It is not possible to refer to adjudication for a second time a dispute that is based on the same grounds and is supported by material that is essentially the same.

Section 108(3) of the Housing Grants Act provides that the decision of an adjudicator in respect of the dispute referred is binding until the dispute is finally determined by legal proceedings, by arbitration or by agreement. This means that once an adjudicator has reached a decision in relation to a dispute, it cannot be referred to adjudication for a second time.


No second chances: Birmingham City Council -v- Paddison Construction


The recent TCC case of Birmingham City Council (BCC)-v-Paddison Construction Limited (Paddison) considered an application to prevent a second adjudication on the basis that it was to consider the same, or substantially the same, dispute as had previously been referred and decided in an earlier adjudication.

In February 2008, Paddison brought adjudication proceedings against BCC in respect of delays and loss and/or expense incurred on a community centre project that it had completed some 18 months earlier.

The adjudicator awarded a full extension of time, but in respect of the loss and expense element, he said that he was not prepared to grant any further monies. Furthermore (and rather unfortunately in the Court's opinion, as he had no power to do so), he proposed in his decision that Paddison would be able to pursue its loss and expense claim via a further adjudication having stated that, in view of the tight timescales associated with adjudication, he believed that a dedicated adjudication would be required to consider that element of the claim.

Accordingly, Paddison commenced a second adjudication against BCC before a different adjudicator, seeking reimbursement of its loss and expense BCC sought to prevent this via Part 8 court proceedings on the basis that the first adjudication had already decided the matter.

The Court took account of BCC's adjudication scheme that applied to the first adjudication, which stated that "an adjudicator shall resign where a dispute arises that is the same or substantially the same as one that has previously been referred to adjudication and a decision has been taken in that adjudication".

Primary case

Paddison's primary case was that (without calling into question the fact that the first adjudicator had actually made a decision) he had made "no decision" in relation to the loss and expense and that it was therefore able to pursue this via a second adjudication. Its secondary case was that if the Court found a decision had been made on the issue, the dispute now being adjudicated was "not the same or substantially the same" as had been previously referred.

The judge concluded that the first adjudicator had made a decision in respect of Paddison's loss and expense claim.

With respect to its secondary case, Paddison sought to differentiate the present claim for loss and expense from that contained in the first adjudication. It was argued that the amount claimed was different, including the fact that overheads and profit were calculated differently and there was also a revised report prepared by a firm of quantity surveyors. Furthermore, included within the dispute was BCC's refusal to re-assess the loss and expense, following the increased extension of time awarded in the first adjudication.

However the Court's position was that there was no real difference in the matters being considered they were for loss and expense consequent upon delayed completion and were rooted in precisely the same contractual conditions. Both adjudications were made on precisely the same grounds and the material being relied upon was essentially the same. Also BCC's refusal to reconsider such a claim could not give rise to a dispute capable of reference to a fresh adjudication either.

The judge considered that to arrive at a conclusion that there was a difference between the two disputes would "permit Paddison to have a second bite at precisely the same cherry" and that this would amount to an abuse of process greater than that which might occur in litigation, as in the case of adjudication there was commonly no provision for recovery of costs.

The message is clearly that referring parties need to ensure that they put their best foot forward and properly prepare their claims before considering adjudication. The words of the first adjudicator who considered the contractor's claims to be "extravagant and exaggerated" and "nothing other than an attempt to claim as much as possible on the proviso that they may achieve some success if not all their claim", illustrate the inherent danger of failing to do so.

Defence official accused of corruption over £6,000 wall construction

A defence official in charge of a ВЈ4.5m construction project has been accused of corruption after allegedly forcing a contractor build a ВЈ6,000 wall at his home for free.

Malcolm Spurrell, 56, was overseeing the construction of a new supply depot at Plymouth’s Devonport Dockyard when he apparently asked builders CH Pearce to build the wall.

Costing £6,000, the wall was erected in 2004 at Spurrell’s converted barn at St Johns near Torpoint in east Cornwall.

Spurrell denies corruption, saying he built the wall over a year with his builder brother.

But the Plymouth Crown Court was told this week by prosecutor Nick Lewin there was a “wealth of information to show the company paid for the work on his behalf”.


Defence official accused of corruption over £6,000 wall construction


Lewin said documents showed CH Pearce paid for subcontractors and deliveries that were invoiced to them and sent to Spurrell’s address, reported the BBC.

Spurrell even signed for deliveries, he claimed.

The court also heard that Spurrell had direct control on staged payments made to the building firm for its dockyard work, and could influence future contracts.

Prosecutor Nick Lewin told the court: “His position was very important indeed to them.”

The case continues.

Sunday, October 12, 2008

Roofer fined £6,000 for work at height failings

A north-east roofing company has been fined ВЈ6,000 after it failed to ensure that its employees were working at height safely.

Abercorn Homes of Hobson Industrial Estate, Burnopfield, Tyne & Wear, was found guilty of two breaches of the Work at Height Regulations (2005), following an inspection by the Health and Safety Executive (HSE).

HSE inspector Michael Brown said: "Three workers were observed by a HSE inspector carrying out additional cladding work on the roof of the building, about four metres from ground level.

"Edge protection had not been provided for the eaves of the building, which were approximately 50 metres long, although it had been provided on the gable ends of the building.

"In addition, a scissor lift had been inappropriately used to gain access to the roof and modified to carry materials."


FSA refuses to extend short-selling ban to housebuilding

Financial watchdogs have dashed housebuilders' hopes of their shares being protected from short-selling.

Leaders of the Financial Services Authority (FSA) acted last month to ban short-selling in finance stocks following the recent meltdown in the markets.

The FSA vowed to "extend this approach to other sectors if it judges it to be necessary".

Housebuilders had been hoping that the authority would look at their case in the wake of the decimation of the share price of major players such as Barratt and Persimmon.

But an FSA spokeswoman told CJ: "At the moment, our position is that these restrictions will only apply to shares in financial institutions like banks, insurance companies and conglomerates with a finance component."


FSA refuses to extend short-selling ban to housebuilding


Short-selling is dominated by hedge funds. Speculators borrow stock then hope to buy it back cheaper at a later date when the price falls.

They profit from falling share prices and have been blamed for spreading market rumours to drive down prices.

The finance and housing sectors have been hardest hit by share price falls, but analysts do not believe housebuilders need the same protection from short-selling as banking giants.

Rachel Waring, a housebuilding analyst at stockbrokers Panmure Gordon, said: "I would assume the government is very concerned about the impact of shorting on the banking sector. If a housebuilder went bust it wouldn't affect the economy in the same way as if HBOS went bust.

"I don't know how much stock is out on loan in the housebuilding sector at the moment. The housebuilders have been affected really badly recently, but a lot of short positions have been closed in the housebuilding sector and many shares have recovered apart from Taylor Wimpey."

Steve Turner of the Home Builders Federation said: "We would welcome any measures that improve financial stability in the markets at the moment."

Scottish government could save £1bn a year with project bank accounts

Supporters of project bank accounts hope to persuade the Scottish government to adopt the payment method on all public sector jobs worth more than ВЈ3m.

Specialist Engineering Contractors (SEC) Group chief executive Rudi Klein told CJ he hoped that Scottish ministers would adopt the scheme by 2010.

The focus on Scotland comes after a muted response to project bank accounts south of the Border.

Rider Levett Bucknall, Barclays and Bank of Scotland Corporate held a conference promoting the accounts at the House of Commons in April this year. It was rescheduled after the original conference, planned for November 2007, was postponed because too few clients signed up.

Now a new conference at the Scottish Parliament to promote the payment scheme, at which a prominent Scottish minister will speak, is planned for January 2009.


Scottish government could save £1bn a year with project bank accounts


Klein said: "There are a number of reasons why this would work better in Scotland than it would elsewhere - when you think there are two major elements to policy in Scottish government which are to promote SME interests through the procurement process and secondly to realise cost savings."

He estimated that project bank accounts could save the Scottish government between ВЈ500m and ВЈ1bn a year, as well as helping to safeguard the future of SME construction firms in the country.

He said: "We've had dialogue with ministers, which we got underway about a year ago, as well as civil servants in the Scottish Procurement Office, and there is certainly a willingness to listen."

A Scottish government spokesman said: "We are liaising with OGC and industry groups to assess the impact of project bank accounts elsewhere in UK before considering implications for Scotland."

Construction firm fined £33,000 for illegal waste dumping

Magistrates have fined Hampshire-based Swanwick Construction Group ВЈ33,000 after it was prosecuted by the Environment Agency for illegal waste dumping.

Swanwick pleaded not guilty to dumping a lorry-load of waste on land within the New Forest National Park boundary on 28 September 2006.

Agency officers visited the site and found that the landowner of the site in Pollards Lane, Copythorne, had employed J&W Demolition to raise levels on the land.

J&W was found to be using waste material including wood, soils, concrete, bricks, plastic and tarmac without being properly licensed to do so.

Swanwick Construction argued that it had not been in control of the vehicle which tipped the waste onto the land. But the court heard that both Swanwick and J&W have the same director - Christopher Collins - and rejected the claim.

Swanwick was also ordered to pay ВЈ1,800 in costs.

Fife steel fabricators reject pay offer

An all-out strike at Burntisland Fabrications yard in Fife, Scotland, is running into its fourth week as workers demand pay-parity with industry-standard rates set out in the Naeci agreement.

About 80 permanent site workers are involved, plus a similar number of agency workers. They are members of the GMB and Unite unions. The site is not covered by the Naeci agreement.

GMB local official Brian Negus said: "It has come down to a trial of strength. The process of working out a pay deal took seven months. There wasn't a bad offer from the employers. It was worth 6.25% and I felt able to recommend it.

"But the men voted overwhelmingly against it. They are adamant that they want what they perceive to be the union rate. They are doing Naeci work. And that is the rate they want. I want to see my members back at work, but there is no movement. There has been a conciliation approach from ACAS. However, the workers are just not interested."

Burntisland Fabrications declined to comment.

Pothole payouts top road repair bills

Council payouts for pothole accidents have topped how much is spent fixing the annoying road faults.

The Local Government Association (LGA) claims ВЈ53m has been paid to victims of pothole accidents, plus ВЈ12m in court costs, against the ВЈ52.3m spent on repairs.

It claims the ВЈ53m could have fixed 946,429 of the 3.5m potholes around the country.

It wants a change in the law to address the “compensation culture” driven by no-win no-fee lawyers, reported the BBC.

“These figures show the extent to which our efforts are being hampered by the compensation culture that exists nowadays,” said LGA spokesman David Sparks.

“Since no-win, no-fee was introduced, almost all councils have seen an increase in compensation claims.”

Wednesday, October 8, 2008

Kent sues architects Snohetta over scrapped Turner gallery

Kent County Council is battling to recoup almost £6m in design fees from Snohetta after having to scrap the Norwegian firm’s designs for an art gallery when costs soared.

The architectural firm, currently working on New York’s 11 September museum, was kicked off the job to design the Margate Art Gallery after three years of design work.

It won the contract in conjunction with Spence Associates to design the JMW Turner gallery in 2001 with a vision to build a timber clad concrete structure in the sea and link it to Margate by a steel bridge.

It had promised the council it could work within a ВЈ7m budget for building work or ВЈ12.6m exclusive of agreed client charges.

But as designs progressed after Snohetta’s formal appointment in December 2003, the estimated construction costs soared.
In February 2004 Snohetta decided to change the building to a steel structure with a steel shell after concerns timber would not withstand the marine environment.

Following a tender that put construction work at ВЈ28.4m and ВЈ12m for work to be carried out by a subcontractor, Kent County Council scrapped the project in February 2006.

It appointed David Chipperfield Architects to redesign the building, which received planning permission earlier this year and will cost ВЈ17m.

In a writ filed at the Technology and Construction Court, the council is seeking ВЈ5,943,815 plus interest from Snohetta over the failed design.

It claims the firm failed to appreciate the actual cost of changing the design to steel, did not properly design or appreciate the cost of the gallery’s foundations and failed to realise how much achieving a smooth steel surface – as promised – would cost.

The council also alleges Snohetta did not consider how the 2,000 tonne structure would be installed – particularly since there were no mobile cranes that could lift more than 1,200 tonnes in the UK at the time.

A contractor to build the revised art gallery is yet to be announced. 

Tuesday, October 7, 2008

Contract interpretation: Clough Engineering -v- Oil and Natural Gas

The basis on which a call on an 'on demand' performance bond may be resisted.

Summing upThe case: Clough Engineering Limited-v-Oil and Natural Gas Corporation Limited [2008] FCA FC 136 (22 July 2008).The issue: The basis on which a call on an 'on demand' performance bond may be resisted.The implication: Normally courts will interpret 'on demand' bonds as the equivalent of cash in hand. 'On demand' bonds can be resisted only if it can be shown that the employer had acted fraudulently by calling in the bond. It is sufficient for the employer to show that it had a 'bona fide belief' that the contractor was in breach of contract or had failed to perform.

For some employers, performance bonds can play an important role in construction projects by providing financial security in the event of a contractor's failure to perform.
Performance bonds can be characterised as either conditional or unconditional. Conditional bonds may be 'called in' only if and when the contractor is shown to be in breach of contract or has failed to perform. Unconditional bonds, sometimes better known as 'on demand' bonds, can be 'called in' irrespective of the employer having to prove any failing on the part of the contractor.

The law in England relating to 'on demand' bonds was clarified in the 1999 case of Balfour Beatty -v- Technical and General Guarantee Company, where it was held that an 'on demand' bond would be the equivalent of a letter of credit or cash-in-hand unless the surety had clear evidence of fraud on the part of the employer in calling in the bond.

A similar case has recently come before the Federal Court of Australia. In this case, an Australian contractor, Clough Engineering, undertook to provide services to an Indian energy exploration company, Oil and Natural Gas Corporation Limited (ONGC), in connection with the development of oil and gas fields off the coast of India.

Disputes arose between Clough and ONGC over extensions of time for the performance of the contract and the resultant failure of Clough to extend the validity of the performance bond and insurance cover required by the contract. On the day that ONGC terminated the contract, it also made a demand on the banks under the performance bond provided by them.

Clough sought injunctive relief from the Courts restraining ONGC from calling in the performance bond and preventing the banks from paying out against the guarantees issued by them. The issues to be decided by the Court at first instance concerned the interpretation and interaction of the wording of the performance bond and the underlying provisions in the parties' contract.

The contract obliged Clough to furnish ONGC with an unconditional and irrevocable performance bond within two weeks of signing of the contract. Of some importance was clause 3.3.3, which stated that ONGC would have the right under the bond to claim up to the amount of 10% of the value of the contract "in the event of the contractor failing to honour any of the commitments entered into under this contract".

Bond guarantee

The wording of the performance bond guarantee was not unusual. It required the guaranteeing bank(s) to pay immediately on first demand in writing the moneys demanded to the extent of the limit of the bond "on breach of contract by the contractor without any demur, reservation, contest or protest or without reference to the contractor".

Clough argued that the contract wording, properly construed, prohibited a demand being made on the bond. It contended that the wording of clause 3.3.3 placed an onus on ONGC to show that Clough was in breach of contract before the bond could be called in.

The judge at first instance held that upon the proper construction of the provisions of the contract, ONGC was entitled to call upon the performance bond where it had a 'bona fide belief' in its claim that Clough was in breach of the contract.

Judge's reasoning

The judge reasoned that the contract, as well as the wording of the performance bond, should be considered in totality. He found that there were powerful indicators in the wording to show that a mere claimed breach of contract, not fraudulently asserted, was sufficient to trigger an entitlement to call on the guarantees provided by the bond.

The judge also stated that the commercial objective of a performance bond under a contract was to allocate the risk of a party being out of pocket pending the resolution of a dispute and that ONGC was entitled to call upon the bond even where a genuine dispute existed as to whether or not Clough was in breach and whether or not damage had been suffered by ONGC.

Clough obtained leave to appeal this decision. The Appeal Court agreed with the Court at first instance and, in doing so, stated that if the commercial purpose of unconditional 'on demand' bonds was that they were the equivalent of cash, the introduction of a qualification on the entitlement of ONGC to call upon the performance bond "would be to deprive them of the quality which gives them commercial currency".