LAWBUILD Newsletter No. 6

Tuesday 5 March 2003

Lawbuild provides construction law expertise to save clients time and money. A personal message from Lawbuild's Principal David Lewis

Dear Reader

The Lawbuild website has just been updated.The look and feel remain the same, and the main innovation is that past Lawbuild Newsletters are now published on the site. Visit www.lawbuild.co.uk and click on the "ARTICLES" tab at the top, or go direct to the page with www.lawbuild.co.uk/articles.htm. Lawbuild Newsletters Nos.1 to 5 are now available to read. This newsletter and future ones will be added to the site shortly after circulation.

Many readers enjoyed the puzzle in Lawbuild Newsletter No. 4, whose solution (ascertaining the length of a wire wound into a tight ball) required O? level geometry and algebra, plus a degree of insight.Not surprisingly, the solution was found by a quantity surveyor.The puzzle in this issue requires similar skills, in order to calculate from the scant information provided the total volume of Finchley Central's finest office building, Lawbuild House.

Read and enjoy Lawbuild Newsletter No.6!

With kind regards.

Principal of Lawbuild, solicitors
Editor of the Lawbuild Newsletter

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Contents

Commended: David Lewis
Completing the design
A glossary of construction law expressions: F is for …
Letters
Expansion of Lawbuild House (another puzzle)
Newsletter from Montenegro
Business Network International®
About Lawbuild
Newsletter stuff
Contact information
Legal disclaimers and warnings relating to this newsletter: please read
You've come to the end

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Index

Alight Ltd
BNI
Brainteaser
Burling, Ingrid
Business Network International®
Contact information
Contents
Co-operative Insurance Society Ltd v.Henry Boot (Scotland) Ltd
Design and build
Disclaimers and warnings, legal
Fund, funder
Fee proposal
Final certificate
Fluctuations
Gellately-Smith, Robin
Howard Schneider Spiro Steele, solicitors
Index
Kotor
Lawbuild
Lawbuild Newsletter
Legal disclaimers and warnings
Letters
Montenegro
Moscisker, Arnold
Newsletter
Puzzle
SCL Hudson Prize 2002
Society of Construction Law
Stone, Roger
Unsubscribe
Warnings and disclaimers, legal
Wembley Stadium

Commended: David Lewis

The Society of Construction Law, which administers the prestigious SCL Hudson Prize, has announced the results for the 2002 competition.

Among those whose papers were formally "Commended" by the judging panel was Lawbuild's principal, David Lewis, whose essay is titled The Consensus Principle.

The paper features three decisions by the Court of Appeal during a six-month period in 1994, relating to bonds and final certificates, which overturned the current consensus among construction lawyers on the issues before the court.Reviewing these cases, David Lewis emphasises the enormous adverse consequences that such "contrarian" decisions, even if legally justified, can have for those who have entered into contracts in reliance on the pre-existing consensus.

He argues that judges should develop a "consensus principle", calling on expert witnesses - practising construction lawyers - to explain to the court the current consensus and the consequences of overturning it.He suggests legal principles of interpretation of contracts which the judiciary could use in support of the consensus principle.Finally he addresses the difficult question of how judges can change a consensus which they consider to be simply wrong in law without causing damage to people who've already signed contracts based on the consensus.

The paper will shortly be published on the website of the Society of Construction Law (www.scl.org.uk), where it will be available free of charge to registered users who are either members of the Society or students or teachers at a recognised academic institution; and to others for a small fee (£2.50 per paper, which can be paid online by debit or credit card).It will also appear on the Lawbuild website as soon as this can be arranged.

In the meantime we shall be happy to email the paper to any readers on request. (It's not light reading though: 16 pages, and around 5,000 words including footnotes.)

The first prize was won by Philip Britton, Director of the Centre of Construction Law at King's College, London.His paper is titled Oxalic Acid and the applicable law: the Rome Convention and construction.

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Completing the design

Here's a story with an unexpected ending.

A contractor agreed to "complete the design" of certain works which had been partially designed by a structural engineer.The contractor didn't think this meant he had to check the engineer's design.

But a judge in the Technology and Construction Court told the contractor he should have examined the design at the point where he was taking it over, assessed the assumptions on which it was based, and formed an opinion as to whether they were appropriate.

In other words, if you agree to complete a design started by someone else, you are also agreeing that the end result will meet the normal standard of reasonable skill and care, however much of the design was done before you took over. So said Judge Seymour in the 2002 case of Co-operative Insurance Society Ltd v Henry Boot (Scotland) Ltd.

Surprising result.You're a contractor, you agree to complete someone else's design, and you find yourself having to second-guess the original designer.

The previous view was that "complete the design" in JCT design and build contracts (the Co-operative Insurance Society case involved JCT 80 incorporating the Contractor's Designed Portion Supplement, but the principle is the same) meant what it said, which is why a lot of employers have been in the habit of amending the standard design and build forms to give the contractor single-point responsibility for all the design.

Design and build contractors in future should either amend the standard contract to expressly exonerate themselves from having to review the employer's consultants' design; or they should accept the added responsibility, price for it, and insure against it.

On a personal note, we find an analogy here with legal work.Sometimes a client will give a solicitor a form of contract which the client thinks is the bee's knees, and will ask the solicitor to use it for a particular project. The client's view, typically, is that it's only a form-filling exercise, shouldn't take the solicitor more than a few minutes, and shouldn't cost the client more than a few pounds.On examination the client's form of contract may turn out to be inadequate and defective, and the solicitor has to spend quite a lot of time putting it into legal shape before he can think of adapting it to the client's project.Would the solicitor be protected in an action for negligence if he accepted at face value the client's rosy view of his own pet form of contract and simply did the legal equivalent of "completing the design"? We think not.

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A glossary of construction law expressions: F is for …

We continue our dictionary of common terms used in construction law.

Fund or Funder

A bank, insurance company, pension fund or other institution with money to invest in property.

Funding agreement

A development agreement with a funder as landowner, under which the funder provides interim finance (or "forward-funding") for the development.

Fee proposal

A letter from a consultant to the client, setting out the services which the consultant will perform and his fee for those services.

Final certificate

A certificate issued by the contract administrator following completion of making good defects.It states the outstanding money owed by the employer to the contractor (or, sometimes, by the contractor to the employer).

The final certificate is generally conclusive as to financial matters between the parties, but doesn't under JCT contracts prevent the employer from subsequently suing the contractor for defective work or materials (though it has had that effect in the past).

The equivalent in design and build is the final account and final statement.

Fluctuations

A contractor who tenders at a fixed price runs the risk that he may later have to pay more for materials and labour than the prices and wages current at the time of his tender.(Conversely he may benefit if those prices and wages go down.)

Market forces may persuade an employer, especially during times of high inflation, to accept or share this risk by including fluctuation clauses in the contract.JCT contracts include three optional fluctuation clauses under which the contract price is varied up or down according to (a) tax changes, (b) changes in wages and prices, and (c) changes in the relevant building cost indices.

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Letters

From Roger Stone, Alight Ltd, specialist contractors

Thank you for your extensive Newsletter.

I do think it is a remarkable document - I wish I had seen the competition in the last one.With the pressures I have, I did not read it through to see it.First, the £15 would have helped (joke) but more important, maths used to be my favourite subject before becoming an engineer and losing the pure-maths feel for things.What a good test this was and well done putting it in.

I hope to read more, before long.

From Arnold Moscisker, Howard Schneider Spiro Steele, solicitors, Finchley

Thanks for your newsletter, it is very interesting.

From Ingrid Burling, performance coach, Gillingham

This is a great read, I always read it from beginning to end!

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Expansion of Lawbuild House

Lawbuild House, Finchley's second most famous landmark (after the statue of the Naked Lady near Henley's Corner), is shown blue and has 100m² total area.The bottom corner B is square.

Our landlord has offered us the yellow plot C.This would give us two square office sites A+C and B.The height of the two offices would be the same as their respective lengths.

What is the total capacity of the two offices (A+C and B), which are cubes with flat roofs?

No prizes, just an honourable mention in Lawbuild Newsletter No.7.

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Newsletter from Montenegro

Message from the Slakan Head of State, Comrade-General I.Vulcani
Comrade Tourists!!!
[…] The land you wellcome to is a nation proud of its socialistik emulations.You will find our peoples marching bravely forward with their eyes ficked on the horizon of the future, their hands meanwhile baldly undertaking the works needed to achieve it.Everywhere you will find great and startling projets.We do not mind to make a criticism.In the past mistakes have been made, but we do not mention them.Certain errors have been committed, but now we correct them.In Slaka today, not all is perfet, but allmost.You will find here a land of noble achievements and fantastikal promises.And remember, for us even your vacancy is a contribution! Last year a toto of 400,000 turstiis visited Slaka.This year our heroic travel-workers have pledged a new target: 500,000 plus turstii!! We know you like to help them brake their records!! Malcolm Bradbury, Why Come to Slaka? (Arrow Books Ltd, 1986).

Things have changed - happily for the better - since 1986, not only in Slaka but also in its Balkan near-neighbour Montenegro, where building surveyor and project manager Robin Gellately-Smith, a friend and business associate of Lawbuild, is firmly settled for the time being, seeking and promoting local business opportunities.

Until comparatively recently it was unthinkable that Montenegro would ever march out of step with her Serbian big sister. But the fall of Slobodan Milosovic, and the introduction of proper democracy in Serbia, has given the smaller nation the opportunity of true independence and sovereignty.Meanwhile, Montenegro's political renaissance is matched by a new economic beginning.

Every few weeks Robin circulates an interesting and instructive newsletter.Here is the latest one, datelined Kotor, 17 February 2003.

I promised to include some details of local festivals and cultural events in this newsletter and so I will, but first you will realise from your media there have been some political changes here over the past few weeks and I would like to expand on them from the Montenegrin viewpoint.

We are now a new country, Serbia and Montenegro.The former Yugoslavia no longer exists.The majority of Montenegrins wanted and still want to be independent, but Europe and America have put a three-year block on this to protect Serbia's interests, so we now exist in what is colloquially called a "loose arrangement".It is a "new model" that does not exist anywhere [else] in the world and as such none of the politicians can exactly explain what it means.

When politicians and pundits alike are asked, what are the practical arrangements of many aspects of this "loose arrangement", there follows at best a fielded answer but mostly blank faces and shrugged shoulders in both Serbia and Montenegro.We are now supposed to be one country but many differences already exist, such as different currencies (Serbia has the dina and Montenegro has the euro), established borders, different internal laws, different tax policies and most of all different political aims.For example the Montenegrin government wishes to align itself to European ways and standards and set up a trading base between East and Western Europe. The Serbians wish to keep as much control over their former regions as they can and to align themselves with, as yet, an unknown group of countries.

I heard recently the Montenegrin government may be in negotiation with America for a Navy base at Bar and the price of this will be to speed up the opportunity to be independent within one year.Serbia is not without its own independence problems as it is divided into several regions such as Vojvodina in the north, Sandzak in the South East, Sumadiya in the South West and of course Kosovo in the South.Kosovo is widely known to want independence and now Vojvodina is making pressure on Belgrade for a similar "loose arrangement".The other two, Sandzak and Sumadiya, are rumoured to want to follow suit.In practical terms this would leave only Belgrade and some surrounding areas as a reduced Serbia.

This "new model" calls for a new National Parliament made up of members from the Serbian and Montenegrin governments and proposes a six-month turn [term? Ed.] of presidency from each country.The Presidency and parliamentary members will not be given much power but will act more in the role of a steering committee, the real power bases remaining with the Serbian and Montenegrin prime ministers, Mr Duinduic and Mr Dukanovic.Both countries have yet to elect their Presidents, as their constitutions need more than 50% of the electoral vote.Hence both countries have had at least two elections, which have failed!

One thing I can be certain of is that there will be no more fighting, and Montenegro has gone too far down the road to align itself with Europe to turn back.

I now have a draft copy of the proposed development plan for the coast of Montenegro prepared by the Germans, and for those of you who are interested I have scanned it to my computer and am currently having it translated into English.Please let me know if you want a copy?

The following are details of the festivals in Kotor, which is renowned to be the cultural centre of Montenegro:

Bye for now

Robin Gellately-Smith
Montenegro Enterprises
PC Skaljari
85330 Kotor, Montenegro
Serbia & Montenegro

t: +381 (082) 322249
m: +381 (069) 444895
e: robin@cg.yu

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Business Network International^®

Lawbuild and David Lewis are a member of the Victoria (London) Chapter of Business Network International (BNI).

BNI is a business and professional networking organisation whose purpose is to generate quality referred business for its members.BNI can claim to be the most successful organisation of its kind in the world, as it records the business transacted on a weekly basis.In 2002 the 54,000 members of BNI worldwide passed 2,500,000 referrals generating over €1 billion of business.Currently, there are more than 2,700 active groups, of which several hundred are in the UK and Ireland.

BNI groups limit membership to one person per business, so members have an opportunity to lock out their competition.

BNI insists on references before a member can be accepted, and requires members to sign up to a code of ethics.These safeguards, together with testimonials from other members, promote confidence in the products and services offered by members.So if you need a refurbishment contractor, an independent windows broker, an architect, a quantity surveyor, a building surveyor, an air-conditioning contractor, a supplier of blinds and curtains, an IT support company, or a telecommunications company, before picking up the Yellow Pages it might be worth having a word with us.

You can also contact us to ask about the benefits of becoming a BNI member, and we can arrange for you to attend one or two meetings as a visitor and without obligation.

To learn more, visit the BNI Europe and BNI Victoria.

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About Lawbuild

Lawbuild is a specialist construction law practice offering expert advice and services to anyone carrying out or lending money for construction, and to any buyer, seller, landlord or tenant of recently built or refurbished property.  We are experienced, thorough and professional.  Our aim is to save clients time and money, and our charges are very reasonable.

Lawbuild is equally at home with contracts for services and with many other kinds of non-specialist agreement.

Lawbuild's principal, David Lewis, has more than 25 years' experience in contracts and construction law.

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Contact information

Here's how to get in touch with us:

Email

newsletter@lawbuild.co.uk

Phone

020 8346 6424

Fax

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Mobile

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David Lewis
Lawbuild, solicitors
37 The Grove
LONDON
N3 1QT

Website

www.lawbuild.co.uk

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Legal disclaimers and warnings relating to this newsletter: please read

Disclaimers

Lawbuild is providing this newsletter on an "as is" basis and makes no representations or warranties of any kind with respect to this newsletter or its index and disclaims all such representations and warranties.

In addition, Lawbuild makes no representations or warranties about the accuracy, completeness, or suitability for any purpose of the information published in this newsletter.The information contained in this newsletter may contain technical inaccuracies or typographical errors.All liability of Lawbuild howsoever arising for any such inaccuracies or errors is expressly excluded to the fullest extent permitted by law.

Neither Lawbuild nor any of its employees or other representatives will be liable for loss or damage arising out of or in connection with the use of this newsletter.This is a comprehensive limitation of liability that applies to all damages of any kind, including (without limitation) compensatory, direct, indirect or consequential damages, loss of data, income or profit, loss of or damage to property and claims of third parties.

Notwithstanding the foregoing, none of the preceding exclusions and limitations is intended to limit any rights you may have as a consumer under local law or other statutory rights which may not be excluded or in any way to exclude or limit Lawbuild's liability to you for death or personal injury resulting from our negligence or that of our employees or agents.

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The Lawbuild trade mark has been registered under the Trade Marks Act 1994 of the United Kingdom of Great Britain and Northern Ireland in respect of Classes 16, 41 and 42.All other trade marks, brand names, product names and titles and copyrights used in this newsletter are trade marks, brand names, product names or copyrights of their respective holders. No permission is given by Lawbuild in respect of the use of any of them and such use may constitute an infringement of the holder's rights.

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You've now reached the end of Lawbuild Newsletter No.6.We hope you've enjoyed reading it, and we look forward to hearing from you at any time.