The recent decision of the court in the dispute between the steelwork sub-contractors for the Shard (Cleveland Bridge UK Limited -v- Severfield-Rowen Structures Limited1) does not break any new legal ground but it does provide a useful reminder of the need for any party making a claim to prove its case and to do so logically.
The fabrication sub-sub-contractor, Cleveland Bridge (CB), argued that it had been delayed by a variation, late instructions and late release of free issue material. While the judge admitted that the job of proving such delay was “arguably tedious“, it was not a difficult one, he said. What CB had to do was show that it had actually been delayed by those matters, with evidence that fabrication at its shop had been delayed. What it could not do was simply assert that variations were issued and that information and/or material was late and then rely upon an inference that it must have been delayed by these matters. That was “not anywhere near enough”. It does not follow as a matter of logic or practice that simply because a variation is issued or that information is provided later than programmed, the claimant is actually delayed. If the real cause of the delay is something else, the fact that there have been variations or late instructions or materials is simply coincidental. In this case, the real cause of delay was indeed something else – an “extraordinary overload” of work that CB had on this and other projects.
Likewise the sub-contractor, Severfield-Rowen (SR), in its counterclaim for costs associated with the delay caused by CB’s late deliveries of steel, had to prove its case convincingly. While it was clear that some steelwork had to be in place before follow-on trades (such as concrete flooring and glazing or curtain walling) could be started, it was not the case that all steelwork needed to be in place for follow-on trades to get going. This meant that the fact that steelwork was finished late did not necessarily mean that the overall project would be delayed. SR needed to prove its case via the critical path.
Because of the overall delay (56 days, 42 of which were found to have been caused by CB), SR instituted a recovery programme of night-time and weekend work and extended hours (faced, as it was, by a very substantial liquidated damages liability to the main contractor, Mace). In fact, the measures were not ultimately successful but this did not prevent SR recovering these costs from CB – the measures taken had been reasonable. However, the overall figure had to be discounted by 25 per cent to reflect the fact that 14 days of the delay had not been caused by CB. Additionally, there must also have come a point in time – a “tipping point“, said the judge – when the acceleration measures were not being deployed to overcome the delay caused by CB’s breaches but to prevent the delay becoming worse. The costs of the acceleration after this tipping point could not be said to be attributable to CB.
The final issue in the case was VAT – the rate had changed from 17.5 per cent to 20 per cent while the works had been carried out. So which rate would apply if there were a net sum due to CB following the final resolution of all the issues? The answer was 20 per cent since the tax point is the earlier of receipt of payment or the issue of a VAT invoice and CB had not yet issued a tax invoice nor received payment.
This article was originally written and published on the internet by Ashurst in January 2013.
This article is intended to provide general information about legal topics. Nothing in this article or in the documents available through it, is intended to provide legal advice. You should not rely on any information contained in this article, or in the documents available through it, as if it were legal advice.
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