A selection of five legal cases that changed the course of the construction industry
Thorn vs London Corporation – 1976
This was a dispute about a replacement Blackfriars Bridge for the Corporation of London. The job was based on a specification from the council’s engineer which specified caissons for the foundations. When Thorn started work the caissons kept floating away and the bridge was built in a completely different way.
When the case went to the House of Lords Thorn lost as it was stated that when a builder relies on specifications it is not possible to state halfway through a job that it cannot be built in the required manner.
This landmark case is a reminder to all builders that their basic job is build and not design and any contractor must ensure the given design will work before pitching for any job.
Murphy vs Brentwood District Council – 1991
This was the case that spawned a breed of construction lawyers and the reason for the launch of collateral warranties.
This case focused on a faulty house in Brentwood. The local council passed plans, following external advice from a consulting engineer. The plans failed to take into consideration calculation mistakes in the foundation design and the walls and pipes of the house ended up being seriously damaged. Mr Murphy, the builder and home owner had to sell his home for £35,000 less than the market valuation and attempted to recover his losses from the local council.
The decision by the House of Lords meant Mr Murphy did not win the case as the faults were discovered prior to the property damage, although it was held the builder and local council should take reasonable care to avoid damage via design defects.
The consequences of this case meant anybody with an interest in a building – like funders, purchasers or tenants were no longer covered under tort law, irrespective of whether or not there was a direct contractual arrangement in place. Once this case had been resolved the building industry had to find some other way of giving third party rights in order to market their developments. The collateral warranty came into place as a result of this.
Forsyth v Ruxley Electronics & Construction – 1996
Ruxley were contracted to build a swimming pool in Forsyth’s garden. The pool was supposed to be seven feet six inches deep but was only built to a depth of six feet.
Forsyth took the builder to court claiming for £23,000 to remedy this matter, although the court agreed he had a claim the builder was only ordered to pay £2,500 in damages as it was felt the pool could still be used. The case went to appeal and to the House of Lords and it was finally decided Forsyth was not entitled to the full £23,000 cost for rebuilding the pool as it was a technical defect which did not affect the use of the swimming pool or the overall value of the property.
This case illustrated that although breach of contract had taken place, the property owner was not entitled to recoup the full costs of the building works.
Macob Civil Engineering vs Morrison – 1999
This case was between Morrison the main contractor building the Greyfriars Centre in Carmarthen. They hired Macob Civil Engineering for ground works and came to dispute over a valuation, Macob demanded an adjudicator for the case. It was decided that Morrison had to pay Macob £302,000, but they refused. Macob then took Morrison to court in an attempt to enforce the adjudicator’s decision. The Judge ruled that the adjudicator’s decision was binding, irrespective of whether or not errors had been made in the decision.
This case was significant in heralding in adjudication and marked the decision that the Courts would support the adjudicator’s decision. The decision confirmed the terms of the new buildings legislation which introduced adjudication as a quick mechanism to solve disputes.
Great Eastern Hotel vs John Laing – 2005
This case was taken to court by Great Eastern Hotel when their construction managers, John Laing, charged almost double for a hotel upgrade which had overrun by a year. This was the first time a CM case had been taken to court, as prior to this it was assumed clients would pay the bill no matter how long a job took or how much extra was charged. The hotel won the case and Laing were ordered to pay £10m to their client company.
This case highlighted the dangers of CM jobs and caused funders to become more wary.
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