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Wembley judgement 'lets contractors screw subbies'

Construction is heading back to the bad old days of confrontation following the outcome of the Wembley stadium steelwork court case, fabricator Cleveland Bridge Group said this week.
Cleveland Bridge president Jon Dale said the judgement, which went against his firm, increased contractors' power over their suppliers.

'Multiplex engaged in over-commercial management, in which it forced its subcontractors into a master-servant relationship,' he said. 'The judgement gives more power again to main contractors. This has the potential to take us back to the bad old days.'

Dale spoke exclusively to NCE following the Wembley court case which ended earlier this month.

Judge Justice Jackson ruled that Cleveland Bridge had breached its contract with Multiplex when it decided to walk off the job (NCE 8 June).

He ordered Cleveland Bridge to pay Multiplex's legal costs plus damages.

But the judge criticised Multiplex for its 'ruthless' commercial behaviour, but ruled that the main contractor had acted lawfully.

Cleveland Bridge is appealing against the ruling, claiming that Multiplex breached a supplemental agreement drawn up after project costs had begun to escalate.

Dale said that Justice Jackson had not properly understood the purpose and status of this agreement. He claimed the judge had seen it as an interim agreement, which is not the same.

'An interim agreement is reached while two firms are negotiating claims. It's liable to change.

'But a supplemental agreement is about securing funds. It fixes costs, and there should be no going back on it.'

In reaching his verdict, Justice Jackson viewed the supplemental agreement as something open to ongoing discussion and change.

Cleveland Bridge argued that Multiplex breached this arrangement by refusing to pay the steelwork firm.

'The industry has worked hard at getting contracts on which the subcontractors don't get screwed, and where everybody can make a living.

'But this judgement gives the message that you can screw subcontractors and get away with it.

'That'll put everybody on edge when they're out negotiating contracts. You should be able to negotiate and stand by your word.

Cleveland Bridge and Multiplex have been ordered to 'get in a room together' and agree damages, Dale said. It is understood that Multiplex wants up to £38M and Cleveland Bridge £15M.

If no agreement has been reached by the end of the year the court will sit again in January to settle this part of the dispute.

It will be at least four weeks before Cleveland Bridge knows whether its application for an appeal has been accepted.

The firm has hired new legal advisors Reid Minty, to work alongside its advisors Walker Morris, to provide a 'fresh pair of eyes'.

Andrew Mylius

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