LAWBUILD Newsletter No. 5

Thursday 14 November 2002

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

Dear Reader

He won it

I promised the winner of the difficult puzzle in our last issue not only a £15 book token but also "a prominent mention" in Lawbuild Newsletter No. 5. I am therefore delighted to announce that the first (and only) reader to submit the correct answer was quantity surveyor Simon Frost of Hipkins Associates in Dunmow, Essex. The solution, and how it is calculated, are given below.

Wembley, past and future

The magazine Building, Trade & Industry (BTI) led its October issue with a piece on the escalating costs of the rebuilding of Wembley Stadium. The story, and the evocative photograph accompanying it, reminded me of my first sight of the iconic pitch, on 16 July 1966, when I watched England play Mexico in the group stage of the World Cup; and of my last visit, 34 years later to the day, on 16 July 2000, together with my wife and tens of thousands of aging rockers, to enjoy Tina Turner's last UK concert before her retirement.

The BTI story, by editor Dan Gilkes, explained how the total cost of rebuilding the stadium (including the land purchase) had risen from an estimated £185m in 1995 to its current figure of £750, thereby putting it (in Gilkes's words) "on a worrying par with the troubled Millennium Dome". (I note, in passing, that design, legal and financing fees are said to have exceeded £80m.)

This report made me think about human nature, and the strong urge to give and receive only good news. To understand what I mean, ask yourself what the reaction of Wembley decision-makers would have been if an adviser had told them, back in 1995, "Our official estimate of the total cost is £185 million, but you do realise, don't you, that by 2002, what with one thing and another, the estimated cost will probably have quadrupled to around £750 million."

Not only is it difficult to imagine anyone in their right mind saying that, but if they had said it the reaction from those in power would probably have been shock, horror and disbelief, followed swiftly by the dismissal of the imprudent adviser.

These thoughts led me to ask myself a number of questions which have often arisen during my career in the law. Can it ever be right to tell a client what they want to hear, instead of the truth? Should "bad news" be delivered "neat" to the client, or should it be packaged so as to soften the blow? Is it better to communicate bad news informally to one person rather than collectively to a group of people? Should a lawyer strive at all costs to circumvent the bad news, even to the extent of advising a client to adopt a course of action which is legally unsound and unlikely to work?

I hope that most lawyers and professionals would act honestly and ethically, and in the best interests of their clients, when faced with such questions as these. But in any event the BTI article did make me think, in a way probably not intended by its author. And that is the effect which I hope Lawbuild Newsletter No. 5 will have on you.

With kind regards.

Principal of Lawbuild, solicitors
Editor of the Lawbuild Newsletter

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Contents

Beware the expert witness in conservation cases: Part II
Performance bonds: securing the contractor's performance
A glossary of construction law expressions: E is for .
A puzzle solved
Letters
Business Network International®
About Lawbuild
They liked it
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

Back issues
BNI (Business Network International)
Bonds, performance
Burton, David Richard
Business Network International
Campbell, Dr James (Finch Forman)
Conservation
Contact information
Disclaimers, legal
Employer
Employer/subcontractor agreement
Employer's Agent
Employer's Requirements
Expert witnesses
Extensions of time
Feedback
Forman, Andrew (Finch Forman)
Frost, Simon (Hipkins Associates)
Glossary of construction law expressions (E is for ...)
Hipkins, Trevor (Hipkins Associates)
Kennedy, Ben
Lawbuild, About
Legal disclaimers
Letters
Passfield, Roger (Adeo Associates)
Performance bonds
Puzzle, solution to last issue's
Scott, Peter (Peter Scott & Associates)
Smetham, Graham (TRAK Construction Ltd)
Solution to last issue's puzzle
Stimson, Lancelot (Telecom Plus)
Stone, Roger (Alight Ltd)
Unsubscribe
Warnings, legal
Winner of last issue's puzzle competition
Wireball, The (puzzle)

Beware the expert witness in conservation cases: Part II

The concluding part of an article by Dr James Campbell

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In Part I Dr James Campbell examined the problems in finding experts to decide on the architectural significance of a particular building. This concluding part of his article - as forthright as the first instalment - looks at the techniques for dating buildings and who is best qualified to speak on the subject.

Dr Campbell is Director of Conservation at Finch Forman Architects. He is an architect and an architectural historian.

How do you date a building?

The question of whether to save or demolish part of a building can often hinge on how old it is. Yet it is not widely appreciated that this apparently simple and straightforward question is one of the most difficult to solve in architectural history. The field is full of so-called experts who claim to be able to wander around a house and call out the dates of the various parts like an expert identifying pottery at the Antiques Roadshow. Television has done little to help the situation, various programmes making it look deceptively easy and others presented by people who are frankly charlatans making it up as they go along. The truth is that in most cases it is very difficult to date buildings with any accuracy and in most cases we would like to believe that things are older than they are. The fact that most people who think they have moved into a medieval timber-framed house are living in nothing older than the seventeenth century is symptomatic of that problem.

There are many reasons why it is difficult to date a building. Firstly, buildings are never survivals of a single period. The first problem is knowing what to date. Very often a building will have been extended and adapted again and again so that the oldest part may be buried deep within the fabric.

Next, there is actually surprisingly little information published to provide reliable stylistic comparisons. That is, there are relatively few data sources for comparing, say, one baluster with another and finding a matching one with a known date. Too often people just guess. Moreover, even when a baluster, for instance, does match another example, styles in different areas developed at different rates, so just because a certain baluster was popular in Suffolk in the 1620s does not mean that it would not be found in the 1690s in Yorkshire or vice versa. Structural elements are equally unreliable. Structural innovations tended to be made on major houses first and then appear later in minor ones. So what was a structural innovation in 1400 in a manor house becomes a feature of every seventeenth century cottage. Again, there are few reliable chronologies to work from.

Scientific evidence is also sadly not terribly reliable. Carbon-dating works only on organic materials and is more reliable the further back you go. Most buildings that survive are too recent to be dated accurately using carbon-dating.

Dendrochronology is perhaps the most reliable method. It is used to date timber. The rings in timber vary in width according how severe or mild the weather was. As patterns of hot and cold years over decades are unique it is possible to build up reliable chronologies based on the spacing of tree rings accurate to the nearest year. Yet the method can only be used on wood, is difficult to carry out in practice, and involves removing cores from the samples, which may be unacceptable. Also it only gives the date the tree was felled, so an old timber re-used will suggest that a part of a building is older than it really is.

Lastly, there is documentary evidence. This is usually the most important but rarely plentiful. Maps may survive that show a particular building but not in sufficient detail to establish that it is the same one that is there today. It is rare for many documents to survive for older buildings.

Who can best decide on the date of a building?

The dating of building is thus a difficult task and may not be possible with any reliability. Great caution should be exercised when considering the advice of so-called experts in the field who offer overall interpretations based on their "extensive experience". An accurate estimate of the dates of the various parts of a building in all but the very simplest of cases can only be carried out by someone with a number of skills. Firstly, they must have experience in archaeological methods of survey and recording. No interpretation can be made until a detailed drawing of the building has been made, for all interpretation begins with the plan. Secondly, they must have an in-depth knowledge of scientific methods used in archaeology. Thirdly, unlike most archaeologists, they must have an in-depth knowledge of architectural history and particularly the development of building in the local area. Fourthly, they must be experienced in the handling and reading of documents. If the building is old this may include the reading of Latin and familiarity with handwriting conventions (palaeography). Fifthly, they must understand how building are put together; that is, they must have a technical knowledge of building construction, including specialist knowledge of carpentry, brickwork, stonework, window design, joinery, ironwork and the analysis of paint and decorative finishes. The first two tasks require an archaeologist, the third an architectural historian, the fourth a documentary historian and the fifth a historian of building construction.

Who then is qualified to carry out the dating of buildings? The truth is, no one individual can provide expertise in all the fields covering all periods. Any claims to the contrary should be treated with extreme caution. To build a strong case for an interpretation it is necessary to draw together a number of experts from different fields. Most importantly it should always be remembered that dating buildings is not an exact science. Those who pretend it is do not know what they are talking about.

Dr Campbell is a Fellow of Queens' College, Cambridge where he is Director of Studies in both Architecture and History of Art and publishes widely on the history of building construction. He can be contacted by emailing drjamescampbell@finchforman.com.

Performance bonds: securing the contractor's performance

By David Lewis

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Performance bonds have long been used in the construction industry to protect building owners or developers ("employers") from the consequences if the main contractor becomes insolvent, or (a much less frequent occurrence) if the contractor remains solvent but fails to carry out and complete the works. In a performance bond a surety - usually a bank or insurance company - effectively gives the employer a guarantee of the contractor's performance.

This article focuses on the conditional performance bonds which are widely used in the UK construction industry.

To obtain a bond the contractor must pay the surety a premium, which is invariably passed on to the employer. Typically, for a contract of (say) £2,000,000, the premium might be around 0.5% of the contract sum.

Experience has shown that, when a contractor becomes insolvent during the construction period, the additional cost of completing the works is unlikely to exceed 10% of the original contract sum. For this reason performance bonds place a monetary limit of (usually) this amount on the surety's liability.

Performance bonds, like most legal documents, may contain traps for the unwary. Frequently a contractor will offer an employer the standard form of bond used by the proposed surety. Bearing in mind that sureties will usually agree to reasonable amendments, the employer should make certain that -

• liquidation or any other insolvency affecting the contractor is automatically a breach of contract by the contractor.
  
  Otherwise liquidation or insolvency, instead of being a breach which triggers the surety's liability under the bond, may simply be a no-fault event (even though it may result in automatic termination of the contractor's employment), as the Court of Appeal held in the 1994 case of Perar BV v. The General Surety & Guarantee Co. Ltd.

• alterations to the works and to the terms of the building contract are permitted without nullifying the bond.

Normal variations to the works under a building contract won't nullify the bond, but amendments to the contract and extra-contractual variations to the works may do so (unless the bond permits them) because they can increase the surety's liability (which is after all dependent on the terms of the building contract) in ways which - unlike normal variations - require the agreement of both contracting parties.

A conditional bond does not require the surety to pay any sum until the employer's loss has been ascertained. This normally cannot be done until the works have been completed and their cost has been fully ascertained. At this point the employer's loss crystallises and can be calculated by adding together the cost of completing the works and the employer's direct loss and/or damage, and subtracting from it the "notional final account" of the original contractor (i.e. the sum which he would have been paid, including all pre- and post-termination variations, had he remained solvent and completed the contract properly).

It is not uncommon, when a contractor goes into liquidation, for the surety to become fairly proactive with a view to minimising his liability. He may for example demand that the employer should invite tenders for completion of the works from one or more contractors proposed by the surety, even though the employer's preference might be to employ the next lowest tenderer for the original works.

The employer's duty to the liquidator following the determination of a contractor's employment through insolvency is to act reasonably and to do what he can to mitigate his loss. It seems likely that the employer owes a similar duty to the surety under a performance bond, and therefore a well advised employer should co-operate with the surety so far as it is reasonable to do so.

An employer should seriously consider requiring the contractor to obtain a performance bond if there is any doubt about the contractor's solvency and the employer cannot afford the prospective losses.

It only remains to say that, having decided that a performance bond is desirable, the employer should make sure that it is worded adequately so that it provides the security which the employer is seeking.

A glossary of construction law expressions: E is for .

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We continue our alphabetical definitions of common expressions used in construction law.

Employer

The person commissioning the work. Usually so called in a building contract. The same as the developer or the client.

Employer/subcontractor agreement

A collateral warranty and/or design agreement between an employer and a subcontractor. Provides security for the employer, either as "insurance" against the contractor becoming insolvent or because the subcontractor may have a design responsibility not shared with the contractor.

Employer's Agent

The equivalent of a contract administrator under design and build. Usually a quantity surveyor.

Employer's Requirements

In design and build procurement, the primary contract document which describes for the contractor the development which the employer wants him to design and build. The designers contribute to it, and the consultant acting as Employer's Agent usually puts it together.

Extensions of time

Time which is added on to the contractual date for completion of the works, allowing the contractor to complete at a later date without being in breach of the contract or (more significantly) incurring liquidated and ascertained damages.

The contract administrator must give a fair and reasonable extension of time for any "Relevant Event" listed in the contract. These are events which are either the employer's fault or neither party's fault, but a contractor gets no extension of time for events which are his own fault.

A puzzle solved

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In Lawbuild Newsletter No. 4 we invited you to try your hand at a puzzle which had intrigued us, and we promised. a £15 book token and "a prominent mention in Lawbuild Newsletter No. 5" to the sender of the first email we received with the correct answer.

The puzzle

A wire 0.25mm in diameter is tightly wound into a ball with a diameter of 60cm. The wire is bound so tightly that there is no air gap. What is the length of the wire?

The answer

2,304km.

First find the volume of the sphere, which is 4/3πr³ or 113,097,335.53mm. (r = 300mm.)

Consider the wire as a very long cylinder. The volume of a cylinder is πr²L, where L is the length of the cylinder. (r = 0.125mm. πr² = 0.049087385mm².)

The question is, how long must the cylinder (wire) be in order to fill the sphere completely? Simple algebra gives us the answer:

It seems to be a coincidence (if that word means anything in mathematics) that the answer comes to an exact number of kilometres. Other diameters we tried do not result in even an exact number of millimetres.

The winner

The only correct answer was from Simon Frost, a quantity surveyor with Dunmow-based consultants Hipkins Associates. His email asked, "Am I close?" Simon, you couldn't have been closer. A £15 book token is on its way to you.

Letters

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From Peter Scott, chartered building surveyors, Potters Bar.

Thanks for your newsletter. It's always informative.

I noted an error in your section on avoiding "builders from hell". You suggest retaining a project manager or quantity surveyor. In terms of the normal designations of skills used within surveying, project management and architecture, neither are likely to be interested in residential projects. Both have skills more suited to large projects, usually non-residential.

Most architects working in the residential field would be OK for this sort of work (you rightly suggest checking with the consultant before making assumptions) and building surveyors or perhaps general practice surveyors are more likely to be interested in running residential repair / extension / refurbishment projects.

Business Network International^®

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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 2001 the 50,000 members of BNI worldwide passed 2,100,000 referrals generating over £500 million of business. Currently, there are more than 2,300 groups, of which 330 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 fit-out contractor, an architect, a quantity surveyor, a supplier of blinds and curtains, an IT support company, a web designer, a telecommunications company, a printer, or an accountant, before picking up the Yellow Pages it may 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 website.

About Lawbuild

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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.

They liked it

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Some comments we received on Lawbuild Newsletter No. 4.

"Thanks for the newsletter which as usual is a mine of information." Andrew Forman, Finch Forman, architects, London.

"Thank you for your e-mail, your future communications are more than welcome." Graham Smetham, managing director, TRAK Construction Ltd, Hemel Hempstead.

"Thank you very much for your e mail Newsletter - there are some very interesting articles/items in it." Roger Passfield, Adeo Associates, quantity surveyors, Horsham.

"Wow! Very impressed by your newsletter." Ben Kennedy, wine consultant, London SE15.

"Thank you very much for your very interesting Newsletter which I have read with great interest. I will contact you in more detail." David Richard Burton, architect, London NW3.

"Thank you . for sending me your extremely informative newsletter." Roger Stone, Alight Ltd.

"Congratulations. I have not seen newsletters 1 - 3 but I'm impressed with No 4! Please add my reply to your List of testimonials." Lancelot Stimson, cost savings consultant, Telecom Plus.

Newsletter stuff

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Contact information

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Here's how to get in touch with us:

Email

newsletter@lawbuild.co.uk (better than replying to the email enclosing this newsletter because when we print your reply we sometimes end up printing the entire newsletter with it!)

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

Legal disclaimers and warnings relating to this newsletter: please read

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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.

Intellectual property

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. 5. We hope you've enjoyed reading it, and we look forward to hearing from you at any time.