DISPROPORTIONATE LEGAL COSTS
Mott MacDonald vs Multiplex is a game of two halves – first there’s the disputing, then there’s coughing up the legal costs. Alas, these are so high, neither wants to call it a draw
What is all this money being spent on? Multiplex’s pre-action protocol costs came to £8.5m. That device is designed to get an early settlement …
Some say that Wembley stadium was finished on 9 March 2007, 14 months late. It wasn’t. It’s still going on. The expected completion date is late 2011 or perhaps 2012. Most of the games are having to be played away … on the Technology and Construction Court turf just off Fleet Street in London. It’s said that the match between Multiplex (now known as Brookfield Construction UK) and Mott MacDonald will be the last. I have a feeling that’s what was said about Multiplex and steelwork firm Cleveland Bridge. Their match netted Multiplex £3.1m, which was a disaster because the un-recovered legal costs came to many millions more than the winnings. Multiplex is now suing Mott MacDonald for £200m. The first trial, which will begin next year, is expected to take six months. Oh, and one other thing: Multiplex forecasts that its legal costs at half-time, July 2011, will be £46m.
“Just hang on a minute,” said the judge, when he got them into court for a chat. “In the 25 years that I’ve been involved in construction cases, I have never seen cost figures at such a level.”
Now then, let me tell you a little bit about deciding a dispute. The “deciding” part is not the difficult bit. The difficult bit is case management. By the time this High Court judge gets to do some deciding in June next year, he will have spent a shedload of time arguing, coaxing, guiding, huffing, puffing and shepherding the parties into organising their coming match. What’s he up to? He’s trying to save the parties money. Even at this pre-trial stage he has warned: “I’m presently unable to see how such costs could be described as reasonable and proportionate”. Between October 2009 and December 2009, one side was incurring costs at the rate of slightly less than £1m a month. Wow!
Let’s give you some background. Mott MacDonald was appointed consulting engineer for the structural steel on the stadium by the employer. Then the deal was novated to Multiplex when it became main contractor. At tender stage, Multiplex relied on the consulting engineer’s design. Multiplex now says that the design was inadequate, which meant that Multiplex’s bid was too low. Worse, says Multiplex, the design errors “made it vulnerable to substantial claims” from Cleveland Bridge, the steelwork subcontractor. Worse yet, Multiplex says, it was delayed and disrupted – and so too were a line of subcontractors following behind the delayed steelwork. And of course, Multiplex was thumped for liquidated damages and more besides by the employer, Wembley Stadium. So, says Multiplex, we are demanding all this in compensation from Mott MacDonald.
‘Just hang on a minute’, said the judge, ‘in the 25 years i’ve been involved in construction, i’ve never seen cost figures at such a level’
The judge says: “My stated aim is to try and ensure this dispute does not go the same way as the Cleveland Bridge-Multiplex litigation … and that there is a sensible cost-benefit ratio for both parties.” So he insists that this, that and the other is done by set times.
But what is all this money being spent on? Multiplex’s pre-action protocol costs came to £8.5m. That device is designed to get an early settlement! The judge said: “I am confident this is the biggest sum ever expended on the pre-action protocol process in the TCC.” The amount spent by Mott MacDonald is not known. Even at this stage the judge gave his general impressions: “Potentially unreasonable and disproportionate”. He used the same comment about the costs already expended by one side on experts: £5m of the £8.5m in the pre-action protocol went on them. “Astonishingly high”, said the judge. Another £7m has gone on expert opinion since then.
I bet these experts are analysing every aspect of the delay claims. I do wonder if experts sometimes go miles over the top. There is a remark by the judge here you delay experts might take on board: “Every delay claim should be capable of being summarised on one sheet of paper”. Wrong. You lot can get home with half a piece of paper.
Right now Mr Justice Coulson is trying to get the parties to see the strengths and weaknesses of their cases so that the whole matter can be settled well before the trial. The problem is that the legal costs are becoming so high that the prospects of settlement are fading by the month – £1m for each click of the calendar
This article first appeared in Building Magazine on 16th April 2010
With full credit to Mr Tony Bingham
BDAS specialise in: providing contract advice, resolving construction disputes, managing construction claims & adjudications and will give you competitive, independent advice tailored to your specific construction problems. If you could benefit from this please call Jon now on 07795 231 231 or email:Jon@BDASweb.com