Dispute resolution and ADR highlights (UK construction focus)

August 30, 2024

Our pick of dispute resolution practice points that have emerged in recent construction cases

• A reminder of litigators' limited role when instructing experts
• Drafting all-encompassing settlement terms
• Adjudication focus: a reminder of how the slip rule works
• Mediation's star continues to rise

A reminder of litigators' limited role when instructing experts

In Glover v. Fluid Structural Engineers & Technical Designers Ltd and others [2024] EWHC 1257, the Technology and Construction Court (TCC) reminded litigators of their very limited role when instructing experts on behalf of their clients. The claimants had "admitted interference in the expert process". In particular, significant changes had been made to drafts of the experts' joint statement. Concerns were raised by the solicitors of the remaining defendant (defendant) that "there appeared to have been involvement from the claimant's lawyers" in preparing expert evidence. Correspondence between the parties followed, culminating in the claimant's solicitors admitting that they "did not comply with the applicable rules and guidance" and apologising to the court.

Based on the facts, including that the new evidence could "be accommodated without imperilling the …trial date", the claimant (who had not been involved in discussions with the first expert) was given leave to rely on the evidence of the new expert. While this must have been a relief, this permission came with a sting in the tail - an order that the claimant pay not only the costs thrown away by having to replace the expert and repeat the process, but also an additional order that the claimants pay some of the defendant's costs of reviewing the new expert evidence.

In effect, the judge decided not to penalise the claimants for the actions of their solicitors, but it was clearly understood that the claimant would be indemnified by its solicitors for the extra costs incurred.

Glover is a stark reminder for construction litigators of the requirement in paragraph 13.6.3 of the TCC Guide: "Whilst the parties' legal advisors may assist in identifying issues which the [expert's] statement should address, those legal advisors must not be involved in either negotiating or drafting the experts' joint statement. Legal advisors should only invite the experts to consider amending any draft joint statement in exceptional circumstances where there are serious concerns that the court may misunderstand or be misled by the terms of that joint statement. Any such concerns should be raised with all experts involved in the joint statement."

In brief: "The principles that govern expert evidence must be carefully adhered to, both by the experts themselves, and the legal advisers who instruct them" (Fraser J in Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2018] EWHC 1577 (TCC) as quoted by the judge in Glover).

Drafting all-encompassing settlement terms

In Dawnvale Cafe Components Ltd v. Hylgar Properties Ltd [2024] EWHC 1199 (TCC), the parties had been in a contractual relationship for the design, supply and installation of mechanical works at premises on the Wirral. That relationship had broken down and led to an adjudication decision, further arguments at the enforcement stage and eventual resolution by means of a Tomlin Order (a form of consent order).

Subsequently, Hylgar gave notice of intention to refer a further issue arising from the same contract to a second adjudication. Dawnvale, however, believed that the second issue had been covered by the earlier Tomlin Order and, on that basis, issued Part 8 proceedings to prevent Hylgar from referring the second claim to adjudication.

Dawnvale's application was unsuccessful. The court held that the subject matter of Hylgar's claim in the second adjudication was not the same or substantially the same dispute as that settled in the first - and the terms of the Tomlin Order resolving the first adjudication had not settled the claim being referred to a second. The second claim could therefore be referred to adjudication - leaving Dawnvale to face a fresh claim on an issue it thought long settled.

The tip seems obvious - ensure that all relevant/potential claims are included in the terms when drafting settlement agreements/Tomlin Orders. Failure to do so could mean your/your client's business is at risk of further proceedings being issued in the future on claims thought to be settled - with all the associated additional costs, lost management time and disruption.

However, for those accustomed to negotiating business deals on a daily basis, there can seem little difference between negotiating a good rate for, say, the concrete for your next pour and negotiating a settlement deal. No doubt, sometimes the scenario will be straightforward, but even simple settlement agreements can be relatively complex from a legal perspective and, without legal advice, could trigger costly ramifications if the fine detail is not included. If in doubt, seek legal advice - preferably before you conclude the deal.

Adjudication focus: a reminder of how the slip rule works

Paragraph 22A (1) of the Scheme for Construction Contracts 1998 provides that [where the Scheme applies]: "The adjudicator may on his own initiative or on the application of a party correct his decision so as to remove a clerical error or typographical error arising by accident or omission". Such corrections must be made within five days of the adjudicator's delivery of the decision to the parties.

In McLaughlin and Harvey Ltd v LJJ Ltd [2024] EWHC 1032 (TCC), the adjudicator was aware that his power under paragraph 22A (1) was limited to the correction of clerical or typographical errors but concluded that he was entitled to revise his decision by correcting a matter of substance he had not adequately addressed. Adrian Williamson KC, sitting as a High Court Deputy Judge, found that the adjudicator's conclusion in this case was wrong - his correction was neither clerical nor typographical. Applying Lesotho Highlands v. Impregilo SpA [2006] 1AC 221 and focusing on whether the adjudicator had the particular power (i.e. to correct the award in the way he did), the judge found "that the Adjudicator was here seeking to clarify or qualify his decision, i.e. to exercise a power which he did not have. He was not, in truth, attempting to remove a clerical error or typographical error arising by accident or omission, the power which he did have". The adjudicator's error was outside his jurisdiction and his original (unamended) decision stood.

In brief: where the Scheme for Construction Contracts applies, adjudicators can correct clerical or typographical "slips" in their decisions but not matters of substance.

Mediation's star continues to rise

In our July ADR column for Construction Law, we summarised the work underway to embed mediation in the dispute resolution process. Key points to note include:

• the introduction of The Small Claims Track Automatic Referral to Mediation Pilot Scheme under Practice Direction 51ZE: a two-year pilot integrating mediation as a required, free step in most small claims money disputes valued at £10,000 filed after 22 May 2024; and
• the judiciary's continuing support of the mediation process and willingness to sanction parties who refuse to engage in mediation unreasonably. By way of example, the Court of Appeal in Northamber PLC v. Genee World Limited and others [2024] EWCA Civ 428 imposed a costs sanction on the second defendant as a penalty for its failure to respond to an offer to mediate.

Read the full summary here: Mediation's star continues to rise.

By way of addendum to that summary, note also that, pursuant to The Civil Procedure (Amendment No. 3) Rules 2024, changes are due to be made to Civil Procedure Rule 1 (the overriding objective) to reflect the Court of Appeal decision in Churchill v. Merthyr Tydfil CBC [2023] EWCA Civ 1416. From 1 October 2024, under CPR 1.4, "the court must further the overriding objective by actively managing cases…" where "active management" includes…"(e) ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution".

For further information on any of the above, please get in touch with one of the Key Contacts.