Resources

Introduction

For the first time since 2020, the highly anticipated Annual Construction Law Update was held in person on 31 January 2023. It was a full house with 174 people in attendance and it was heartening to see the warm smile on everyone’s faces as we gathered with friends old and new within our community – post pandemic networking is definitely back with a vengeance.

The Event

The SCL(S) Annual Construction Law Update is a perennial highlight for all construction practitioners as it allows us to stay updated with the latest legal developments. The session was led by our SCL(S) Chair, Ms Moon Kua (Associate Director, Driver Trett), who extended warm lunar new year greetings to all in attendance and introduced the two eminent speakers – Mr Edwin Lee (Senior Accredited Specialist (Building & Construction), Partner, Eldan Law LLP) and Mr Daniel Waldek (Partner, Herbert Smith Freehills LLP). 

Singapore law updates

Mr Edwin Lee kicked off with the recent developments in Singapore and covered 5 topics:

1. Variations – A Gentleman’s Word is his Bond?
   • Vim Engineering Ltd v Deluge Fire Protection (SEA) Pte Ltd [2023] SGHC(A) 2
2. LDs – Do they still run after termination?
   • Diamond Glass Enterprise v Zhong Kai Construction Co Pte Ltd [2022] SGHC(A) 44
3. Retention sums – should they be released after termination?
   • ICOP Construction v Tiong Seng Civil Engineering [2022] SGHC 257
4. Concurrent delays
   • ICOP Construction v Tiong Seng Civil Engineering [2022] SGHC 275; Ser Kim Koi v GTMS Construction [2022] SGHC(A) 34
5. Other highlights include: (i) what constitutes Force Majeure; (ii) differences between Completion Certificate, TOP and CSC; (iii) standard of care and skill expected of Architects (all discussed in Ser Kim Koi v GTMS Construction [2022] SGHC(A) 34)

English law updates

Mr Daniel Waldek gave us an update on the latest cases from the UK, covering 8 topics:

1. LD Clauses
   • Buckingham Group Contracting Ltd v Peel L&P Investments and Property Ltd [2022] EWHC 1842 (TCC)
2. Force Majeure and termination
   • Optimares S.p.A v Qatar Airways Group Q.C.S.C. [2022] EWHC 2461 (Comm)
3. Concurrent delay and expert analysis
   • Thomas Barnes & Sons PLC (In Administration) v Blackburn with Darwen Borough Council [2022] EWHC 2598 (TCC)
4. Defective cladding and building/fire safety
   • Martlet Homes Limited v Mulalley & Co. Limited [2022] EWHC 1813 (TCC)
5. Assessment of damages for loss of profits/overheads
   • Mallino Development Limited v Essex Demolition Contractors Limited [2022] EWHC 1418 (TCC)
6. Scope of reliance-based damages
   • Havila Kystruten A.S. v Abarca Companhia de Seguros S.A. [2022] EWHC 3196 (Comm)
7. Relational contracts and good faith
   • Perrucci v Orlean Invest Holding Limited [2022] EWHC 2038 (Comm)
8. ‘No loss’/remoteness of loss under collateral warranties
   • Orchard Plaza Management Co Ltd v Belfour Beatty Regional Construction Ltd [2022] EWHC 1490 (TCC)

Closing remarks

There were common threads in the development of jurisprudence in both jurisdictions:

• For instance, the Singapore court in Diamond Glass Enterprise v Zhong Kai Construction Co Pte Ltd [2022] SGHC(A) 44 followed the English law position in Triple Point Technology v PTT [2021] UKSC in finding that LDs are generally only applicable up to the termination of the contract, unless there are special conditions to the contrary.
• In Ser Kim Koi v GTMS Construction [2022] SGHC(A) 34, the Singapore court accepted the English court’s definition of concurrent delays in Adyard Aby Dhabi v SD Marine Services [2011] EWHC 848 as “a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency”. The Singapore court also accepted the proposition in Keating (10^th Ed) that even if a contractor is in culpably delay, if during that same period there is an employer-caused delay, the contractor is still entitled to an extension of time. This proposition was similarly applied in Thomas Barnes & Sons PLC (In Administration) v Blackburn with Darwen Borough Council [2022] EWHC 2598 (TCC).

There were plenty of other interesting takeaways shared by both speakers and the talk was followed by a lively Q&A session moderated by Ms Moon Kua. The attendees then gathered for dinner and drinks in what was the first major get together in the construction law calendar. This year’s Annual Construction Law Update did not disappoint. 

Click HERE to view more seminar photos. 

Contributed by:

Mark Lee - Associate, Hogan Lovells Lee & Lee

Background to dispute boards

For the uninitiated, dispute boards involve an independent panel of individual(s) that assist parties to avoid or resolve disputes in a timely, cost efficient manner (without resorting to formal resolution methods like arbitration or litigation).

Experienced players in the construction industry would be no stranger to dispute boards which have been present since the 1960s.^[1]

Over the last few decades, dispute boards have gained wider international acceptance following their introduction by the International Federation of Consulting Engineers ("FIDIC") in the Design-Build and Turnkey 1st Ed (1995 Orange Book) forms of contract. The FIDIC suite of contracts has evolved over time to include the now iconic dispute (adjudication) boards across the entire suite culminating in its new forms in the 2017 edition.

Even the International Chamber of Commerce (the "ICC"), typically known for administering arbitrations, recognises the key role dispute boards play as a dispute resolution mechanism. In 2004, the ICC established a set of Dispute Board Rules,^[2] aimed at assisting parties in setting up and operating dispute boards.

Compared to the rest of the world, however, dispute boards have not been fully embraced in South East Asia. However, there is significant potential for the tide to shift in the near future.

The growing prominence of dispute boards in South East Asia

Dispute boards have a number of notable similarities to expert determination (which has received wide acceptance in the construction industry):

• Decisions may be either binding or non-binding depending on the agreement reached between the parties.

• Dispute board members and experts are appointed for their legal and/or technical expertise.
• Depending on whether the dispute at hand involves legal and/or technical issues, the dispute board and panel of experts can be from a range of disciplines and not just legal professionals.

• Both involve a fast-tracked decision.

• Usually involving written submissions only and no oral evidence.

The key difference between the forms of resolution is the timing of when dispute board members and experts are appointed. Dispute board members can be appointed from the inception of the project, and therefore require less background briefing documents when a dispute arises. They will therefore also deal with all disputes irrespective of subject matter.  In contrast, experts are only appointed when parties decide to proceed with an expert determination to resolve a dispute, which means that the parties are afforded greater flexibility to select an expert with relevant expertise based on the subject matter of the dispute.

Given the number of similarities involved, there is no reason why dispute boards cannot be similarly well received in South East Asia. The flexibility of the dispute board procedure provides good reason to expect dispute boards gaining prominence in South East Asia – There is no "one size fits all" form of dispute board, which, as a creature of contract, is adaptable to suit the needs of a specific project and/or jurisdiction.

Notably, in 2018, Singapore introduced a new variant of dispute board via the Singapore Infrastructure Dispute-Management Protocol (the "SIDP"). Under this protocol, a dispute board is appointed from project inception and composed of up to three professionals who are experts in relevant fields such as engineering, quantity surveying and law. Unlike the original idea of a dispute board, the SIDP is more expansive, empowered to hold site visits and meetings, order the production of documents, and carries the extra weight by being supported by the Singapore International Mediation Centre and Singapore Mediation Centre.

A bright future for dispute boards

Dispute boards are one of the best ways to resolve disputes. The procedure is cost and time efficient, less damaging to relationships and is reputable for producing high quality outcomes (with a good chance of being accepted by the parties and thus bringing the dispute to an end).  

Further, on the practical front, parties can agree for decisions made by a dispute board to be contractually binding (and therefore enforceable) unless overturned by a final court or arbitral award.  In the event the parties proceed to litigation or arbitration, parties ought be aware that arbitrators and judges are likely to be guided (though not bound) by the decision of a dispute board. A (well-reasoned) dispute board decision thus provides the parties with some indication of the final outcome of the dispute, which they can then use to (re)consider their respective positions and arrive at a realistic settlement in a timely manner.

The future appears bright for the adoption of dispute boards in South East Asia. There is an expected uptick in large and complex projects with the Asian Development Bank predicting that Asia will need more than US$1.7 trillion of infrastructure per year between 2016 and 2030. Combined with the factors above, we expect to see a growing prominence of dispute boards in the region.

Contributed by:

Chau Ee, Lee - Partner, Addleshaw Goddard LLP (Singapore)

Ashley Ang - Associate, Addleshaw Goddard LLP (Singapore)

Ana Lameda - Trainee, Addleshaw Goddard LLP (Singapore)

^[1] The earliest reported use of a dispute board was on Boundary Dam in Washington in the 1960s (the dispute board in this case was known as the "Joint Consulting Board").

^[2] The latest edition is the 2015 Dispute Board Rules.

Thomas Barnes & Sons Plc (In Administration) v Blackburn with Darwen Borough Council [2022] EWHC 2598 (TCC) (“Thomas Barnes”) is the latest English case which held that in the event of concurrent causes of delays, one of which is the contractor’s responsibility, and the other is the employer’s responsibility, the contractor should be granted an extension of time.

The Background

1. Thomas Barnes concerned the construction of a bus station that was subject to significant cost increases and delay. The bus station consisted of, amongst other structures, a hub area on one end which was the subject of the dispute. The defendant employer alleged that the claimant contractor had defaulted on its obligations and terminated the contract. Subsequently, the contractor claimed for loss and expense on the basis of wrongful termination.
2. The contractor’s case was that the erection of the structural steelwork was delayed by the hub steel deflection issue because of the hub’s structural steelwork’s design (the “employer’s delay”), which was on the critical path. The contractor alleged that the structural steelwork’s design was the employer’s responsibility and the contractor was entitled to an extension of time.
3. The employer’s case was that the initial delays in commencement had justified an extension of time. But at the same time of the employer's delay, the critical path was delayed by a separate delay due to issues with the roof coverings (the “contractor’s delay”) which were the contractor’s responsibility.

The Ruling on Concurrent Delays

4. The judge held that the contractor was entitled to an extension of time.
5. He found that both the employer’s delay and the contractor’s delay were both on the critical path at the same time. This was thus a case where both the employer’s and the contractor’s delay were concurrent.
6. With respect to the law on concurrent delays, the judge held that the position was settled^[1]. The judge approved the summary of the law by the editors of Keating on Construction Contracts 11^th Edition as follows:
   1. Depending on the precise wording of the contract, a contractor is probably entitled to an extension of time if the event relied upon was an effective cause of delay even if there was another concurrent delay for which the contractor was contractually responsible; and
   2. Depending on the precise wording of the contract, the contractor is only entitled to recover loss and expense if it satisfies the “but for” test. Thus, even if the event relied upon was the dominant cause of the loss, the contractor will fail if there was another cause of that loss for which the contractor was contractually responsible.
7. The relevant contractual clause which governed EOT was clause 2.29A, amended from the JCT terms. Clause 2.29A states that the entitlement of the contractor to an extension of time shall not arise “on account of any circumstance arising by reason of any error, omission, negligence or default of the Contractor…”.
8. In the judge’s view, the contractor’s delay (e., the issues with the roof coverings), was a critical delay. The judge also found that the employer’s delay (i.e., the hub steel deflection issue) was due to the employer not providing the necessary designs in time.
9. Both of these work times were on the critical path and causing delay over the same period. In other words, both the contractor’s delay and the employer’s delay were concurrent causes of delay. However, due to the contractor’s own delay, the contractor was not able to satisfy the “but for” test. Applying the principles under English law, the judge held that the contractor was entitled to the extension of time but not to a claim for loss and expense

Significance

10. Thomas Barnes follows the approach taken in a series of English decisions on concurrent delays, such as De Beers v Atos Origin IT Services UK Ltd [2011] BLR 274 at [177]; Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 Comm at [277]; Walter Lilly & Company Ltd v Mckay [2012] EWHC 1773 (TCC) at [370].
11. Under English law, subject to the provisions of the contract, the position regarding concurrent delays is that while the contractor is likely to be entitled to an extension of time, the contractor would not be entitled to recover loss and expense. In short, the contractor is entitled to the “time” consequence but not the “cost” consequence.
12. This “all or nothing” approach stands in contradistinction to the Scottish position on concurrent delays in City Inn Ltd v Shepherd Construction Ltd [2010] BLR 473 (“City Inn”), where the Scottish Court of Session held that an apportionment exercise may be undertaken where concurrent delays occur. This exercise involves apportioning the subsequent delay between the contractor and the employer and granting a corresponding apportioned extension of time.
13. What then is the position under Singapore law? In Ser Kim Koi v GTMS Construction Pte Ltd [2022] SGHC(A) 34 (“GTMS”), the Appellate Division endorsed the English approach^[2] and held that the main contractor in that case was relieved of liability for liquidated damages as it was entitled to an extension of time for additional works during a period of concurrent delay.^[3] Given that the issue of concurrent delays was not pleaded and the parties have only briefly mentioned the law in relation to concurrent delays, the Appellate Division observed that “[t]here should have been more detailed submissions made on the legal position as none of the other key texts or cases like City Inn Ltd v Shepherd Construction Ltd [2010] BLR 473 … have been dealt with by the Singapore Courts.” Therefore, it appears that the door is still open for the Scottish position to be adopted in Singapore.
14. Apart from the issue of concurrent delay, the judge in Thomas Barnes also made certain interesting observations on the SCL Protocol.^[4]
15. He observed that “it would be wrong to attach too much importance to a close analysis of whether each had properly chosen or loyally followed the particular method selected”. The judge further cautioned that it would be wrong to find that an expert is only allowed to choose one out of the six commonly used methods of delay analysis as identified in the SCL Protocol and any deviation from the stated approach renders the expert’s opinion unreliable. Instead, the common objective of each method of delay analysis is to “enable the assessment of the impact of any delay to practical completion caused by particular items on the critical path to completion.”
16. That said, the judge accepts that if an expert selects a method which is manifestly inappropriate, or deviates materially from the method which he purports to follow without any proper explanation, the court may take that into consideration in deciding how much weight to place on the expert’s opinion.

Contributed by:

Ngo Wei Shing - Counsel, Providence Law Asia; Liu Enning - Trainee, Providence Law Asia

^[1] Thomas Barnes at [118].

^[2] GTMS at [171].

^[3] GTMS at [355].

^[4] Thomas Barnes at [108] – [110].