ARC7051: Construction Law – Dispute Resolution
Adjudication Report
Group 14
Wei Hao Su
Austin Byrne
Khurram Shahzad
DISPUTE IN RELATION TO CONSTRUCTION PROJECT
LEADING TO ADJUDICATION BETWEEN
Clear Cladding Ltd.
Referring Party
-and -
CPM Developments
Responding Party
THE ADJUDICATORS DECISION
Dated 21st June 2013
Overview
The referring party Clear Cladding Ltd. have been employed by CPM Developments
to undertake the design, manufacture and installation of cladding to the newly
developed Manor Shopping Complex situated on the Malone Road, Belfast. CPM
Developments requires the works to be completed by the 3rd of May 2013 in time for
the grand opening. A tender price of £140,000 plus VAT was agreed between the
two parties.
A contract was drawn up on the 27th of March 2013 to agree the terms of the tender
submission and an instruction issued to Clear Cladding to proceed with the design,
manufacture and installation of the cladding. Clear Cladding was notified on the 1st of
April 2013 that authorisation had been given to proceed on site for the purpose of
obtaining measurements with installation to proceed from the 15th of April 2013. CPM
Developments requested the cladding installation to be completed by Friday the 26 th
of April, one week before the grand opening on the 3rd of May 2013.
On the 19th of April Clear Cladding issued correspondence to CPM Developments
outlining the problems they encountered when they arrived on site on the 15 Th April
2013. Clear Cladding arrived on site equipped with a large crew of workers and the
necessary resources and equipment to commence installation of the external
cladding panels. However, due to the construction of a footpath adjacent to the area
of cladding, they were unable to gain access to commence installation. Clear
Cladding also outlined a problem in the steel support system provided by CPM
Developments. The design provided for the steel support system as highlighted is
correspondence from Clear Cladding Ltd dated 8 th May 2013, was in contrast to that
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which was detailed at the tender stage. In order to suit the changes in the steel
support system, Clear Cladding had to refabricate a number of the panels to suit the
layout of the joints in the structure. The cost of this remanufacture was £35,000 plus
VAT of additional costs that Clear Cladding would have to pass on to the client CPM
Developments. CPM Developments refute the additional claim of £35,000 as they
believe this alteration is the responsibility of Clear Cladding Ltd.
Due to the delays and required alterations, Clear Cladding was unable to complete
the work by 26th April. This resulted in the grand opening date being postponed by
one week until 10th May with a cost of £10,000 plus VAT to cover the cost of readvertising. CPM Developments claim in their correspondence of 10th May 2013 that
the delay is the responsibility of Clear Cladding Ltd. Clear Cladding Ltd submitted a
claim to cover the cost of the delay of £5,000 plus VAT and a further £35,000 plus
VAT for the remanufacturing of the cladding panels. In total, the cost invoiced to
CPM Developments by Clear Cladding Ltd is £180,000 plus VAT. CPM
Developments Ltd agree to pay for the cladding works undertaken at Manor
Shopping Complex minus the deduction of costs incurred for re-advertising of
£10,000 plus VAT, leaving a closing balance of £130,000 plus VAT. Clear Cladding
Ltd refuses to accept any reduction in settlement. As a result of this disagreement in
final payment, both parties agreed to proceed with adjudication.
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Introduction
The two parties in dispute are:

Clear Cladding Ltd, of New Forge Lane, Belfast, Northern Ireland (the
Referring Party)

CPM Developments of 21 Stranmillis Road, Belfast, Northern Ireland (the
Responding Party).
2. The Parties referred to above entered into a contract on the 27 th March 2013 with
an agreed price of £140,000 plus VAT for the design, manufacture and installation of
external cladding works to be undertaken at Manor Shopping Complex, Malone
Road, Belfast, Northern Ireland (“the Works”).
3. An invitation to tender for the proposed contract was offered by CPM
Developments to Clear Cladding Ltd on 11th March 2013 and responded to by
correspondence dated 22nd march 2013. CPM Developments subsequently accepted
the tender price of £140,000 plus VAT in correspondence issued to Clear Cladding
Ltd dated 27th March 2013.
4. Clear Cladding notified CPM Developments of their intention to refer the matter to
adjudication if payment is not forthcoming in correspondence dated 28 th May 2013.
5. A Notice of Adjudication was issued by Clear Cladding Ltd to CPM Developments
dated 10th June 2013.
6. Peter Stevens of 51 Malone Road, Belfast was appointed as adjudicator by
agreement of Clear Cladding Ltd and CPM Developments dated 12th June 2013.
This document represents the decision of Peter Stevens in relation to the dispute.
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Conduct of the Adjudication
6. A written contract was entered into by both parties. As this was dated after 1 st
June 1999, the Housing Grants, Construction and Regeneration Act, 1996
(Construction Contract NI Order 1997) and the Scheme for Construction Contracts in
Northern Ireland Regulations (NI) 1999 apply.
7. Clause 3.1 (a) under the Construction Contract NI Order 1997 applies as the
contract involves construction operations.
8. Clause 5.1, which relates to agreements with residential occupiers will not apply
as the contract is between a developer and contractor.
9. Clear Cladding Ltd issued a notice of adjudication on 10th June 2013.
10. I agreed to act as adjudicator and notified both parties on 12th June 2013.
11. I received a response from Clear Cladding Ltd, the referring party on 14 th June
2013 together with further information relevant to the dispute.
12. The 21st of June was set for the Adjudication session with both parties having to
sign an agreement to proceed.
13. The matters that are in dispute are outlined in this document.
14. I understand that the matters in dispute are outlined and referred to in the Notice
of Adjudication dated 10th June 2013.
15. The Referring Party are also claiming for additional works and loss of time.
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16. Having carried out a review of the information provided, I believe the dispute to
be “what sum, if any is due to the Referring Party in relation to additional works
carried out between 27th March 2013 and 8th May 2013”.
17. In order to resolve the dispute, there are a number of issues that must be
agreed. These issues as derived from the notice of adjudication submitted by the
referring party.
1. Has the referring party received payment for the amount stated in the
contract?
2. Is the responding party liable for the cost of delay on site of £5,000 plus
VAT?
3. Whose responsibility is the design of the steel support?
4. Is the sum of £35,000 plus VAT a realistic cost for the issue with the design
of the steel support or the sum of £10,000 plus VAT a realistic cost of delay?
5. The costs for the adjudication.
Issue 1: Has the referring party received payment for the amount stated in the
contract?
18. In light of documents provided, there was no payment made by CDM developers
to referring party as both parties were not agreed on a final sum.
19. The responding party stated that from the works completed a closing balance of
£130,000 plus VAT will be paid.
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20. This closing balance is in comparison to the initial agreed fee £140,000 minus a
deduction of £10,000 plus VAT for re-advertising and breach of contract as
requested by the responding party.
Issue 2: Is the responding party liable for the cost of delay on site of £5,000
plus VAT?
21. The contract documents indicated that referring party (Clear Cladding Ltd)
proceeded on site on 15th April to start installation of the cladding.
22. On arrival on site it was evident that footpath construction was in progress
adjacent to the location of the cladding works. For this reason Clear Cladding Ltd
were unable to begin the cladding works and left the site.
23. Responding party (CPM Developments) claimed that according to their site
manager, Clear Cladding could have gained access by squeezing through the
footpath works..
24. The responding party (CPM Developments) site manager’s duty was to check
the site at a prior date and to be aware of the issue before the referring party (Clear
Cladding Ltd) arrived on-site
25. Perusal of the contract would indicate that it would be reasonable for Clear
Cladding to expect a clear uninterrupted access to the site on the 15th April 2013.
Issue 3: Whose responsibility is the design of the steel support?
26. It was clearly stated in the contract documents provided that the referring party
(Clear Cladding Ltd) would undertake the design, manufacture and installation of the
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cladding. The responding party (CPM Developments) stated within the contract that
they would provide the steel support system to facilitate external cladding on site.
27. Referring party (Clear Cladding) identified a problem in the design of the steel
support which caused an issue in the joints of the cladding whilst on site on the 15th
April 2013, stating that this differed from that detailed at the tender stage.
28. The responding party (CPM Developments) failed to accept the suggestion of the
referring party (Clear Cladding) stating that they neglected to consider the jointing
detail in the structural steel system. No evidence was provided to support these
rejections.
Issue 4: Is the sum of £35,000 plus VAT a realistic cost for the issue with the
design of the steel support or the sum of £10,000 plus VAT a realistic cost of
delay?
29. A design flaw in the steel support was identified by Clear Cladding Ltd which
resulted in the joints being incompatible with the steel cladding.
30. The responding party (CPM Developments) claimed that the referring party
(Clear Cladding) overlooked the jointing detail which resulted in the refabricating of a
number of panels. The referring party (Clear cladding) proceeded to undertake the
work without providing the client with an early warning and an indication of the
associated costs submitted through invoices and records.
31. There was no amendment to the contract to cover the additional costs. The
referring party completed the works on the presumption that fair valuation would be
recoverable.
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32. In consultation with a number of experts from the industry, a “Reasonable
Persons Test” was carried out. The value of £20,000 was agreed to be a fair price for
the works completed.
Issue 5: The costs of adjudication.
33. I have spent 30 working hours on this case at a cost of £375.00 plus VAT per
hour. A total of £11,250 exclusive of VAT is due in respect of costs.
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Adjudicators’ decision
34. Therefore, I as adjudicator conclude the following:
1. It was the negligence of the responding party (CPM Developments) to alter
the steel support system without notifying the referring party (Clear Cladding
Ltd.). Therefore the responding party (CPM Developments) shall pay the sum
of £20,000 plus VAT to the referring party (Clear Cladding Ltd.) for the
prefabrication of the panels.
2. The responding party (CPM Developments) shall pay £5000 plus VAT to
referring party (Clear Cladding Ltd.) for the time delayed on site.
3. The referring party (Clear Cladding Ltd.) are not liable to pay £10,000 plus
VAT to responding party (CPM Developments) for re-advertising costs.
4. The responding party (CPM Developments) shall pay the interest on all
outstanding monies at the appropriate rate, to the referring party (Clear
Cladding Ltd).
5. I am allowing the responding party (CPM Developments) 21 working days to
make financial arrangements for above payments to be made to the referring
party (Clear Cladding Ltd).
6. Both parties shall pay my fees in equal share (50:50) as agreed upon
appointment.
I hereby give my permission to both parties if they wish to apply to the court for an
order requiring compliance with this decision as agreed on appointment.
Signed: _____________________
Mr Peter Stevens
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Date: 21st June 2013.
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