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Lessons from the Wembley

litigation
David Thomas QC
Keating Chambers, London

or over 75 years, the Empire Stadium


(its original name) was the centre of
Englands sporting life, spanning every FA
Cup Final since the white horse final of 1923
(when a policeman on a white horse achieved
immortality by trying to control vast crowds
of supporters), through the 1948 London
Olympics, Englands 1966 World Cup victory
and Manchester Uniteds emotional 1968
European Cup win. The original stadium, built
from 25,000 tons of ferro concrete and 1,000
tons of steel by Sir Robert McAlpine, took just
300 days to complete, at a cost of 750,000.
In 2000, the old stadium was closed, to be
replaced by a structure of 212,000 tons of
concrete and 23,000 tons of structural steel.
The client, Wembley National Stadium Ltd,
awarded the main contract to Australian
contractor Multiplex Constructions Ltd.
Contracts and subcontracts were awarded in
2002 and the old stadium was demolished in
2003. The new stadium was scheduled to be
open for the FA Cup Final in May 2006 but
that had to be moved to the National
Stadium in Cardiff. The Football Association
received the keys of the 90,000 capacity
stadium in March 2007. It is claimed that,
with the total cost of the project estimated
to exceed 1 billion, it is the most expensive
stadium in history.
In the legal world, Wembley Stadium has
acquired different connotations. As early as
the autumn of 2004, Multiplex was engaged
in litigation with Cleveland Bridge, its
steelwork subcontractor. The four years
which followed have seen litigation
concerning the project on an unprecedented
scale. During that time, Multiplex has been
engaged in litigation with Cleveland Bridge,
with
communications
subcontractor
Honeywell Control Systems, with concrete
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subcontractor PC Harrington and with


Wembleys engineering consultant, Mott
Macdonald which was partially novated to
Multiplex.
The Australian Broadcasting Corporation
entered the fray at one point in 2005 with an
application to the Technology and
Construction Court (TCC) for an order
permitting them to see and copy the
pleadings of the parties in the Multiplex v
Cleveland Bridge litigation (which they
obtained despite resistance by Multiplex).
Perhaps not surprisingly, the popular press
and construction journals have focused
attention on the scale and cost of the
litigation. Comments by Mr Justice Jackson
in Multiplex Constructions (UK) Ltd v Cleveland
Bridge (No 6) [2008] EWHC 2220 (TCC) at
the end of September 2008 received
widespread coverage, notably his references
to the 550 ring-binders of documents, the 1
million photocopying bill and some 22
million of costs overall. His conclusion was
that this was expenditure which far exceeds
the sums which (after stripping out the froth)
are seriously in dispute between the parties.
His criticisms of the parties for having
thrown away golden opportunities to settle
this litigation upon favourable terms were
given added piquancy when, in November
2008, both parties lodged applications to
appeal to the Court of Appeal against aspects
of the judgment.
It is not the purpose of this article to rebut
or endorse these criticisms or to comment
upon the history of the relationships between
the various parties beyond agreeing that it is
factually correct, as Jackson J (as he then
was) stated, that the aspects he had criticised
were in no way typical of litigation in the
Technology and Construction Court.
Construction Law International Volume 4 No 1 March 2009

For legal commentators, the Wembley


Stadium litigation has another, more lasting,
importance, as a rich fund of discussion and
decision of a range of points of law of
significance to the construction industry.
Although it was the first element of the
litigation and perhaps the highest-profile
aspect of it, it may be that the Multiplex
Constructions v Cleveland Bridge case is not the
most important in terms of legal analysis. Of
the number of points of issue which obliged
Jackson J to give a 79-page judgment ([2006]
107 Con LR 1) including the effect of a
supplemental agreement made between the
parties concerning valuation of variations,
the subcontracts entire agreement and the
employers entitlement to a defence of
abatement, probably the only one of major
import was that on repudiatory breach.
Multiplex and Cleveland Bridge had
accused each other of repudiation entitling
them to terminate the contract. The judges
finding was that, while Multiplex was in
breach of contract, the breach was not
repudiatory. So far as its Armageddon
strategy was concerned, by which Cleveland
Bridge was to be forced out of the subcontract,
this was a strategy which, although ruthless,
was lawful. What Multiplex was doing was to
issue certificates in the lowest sums it felt
were defensible in adjudication. Cleveland
Bridge accordingly gave notice that it would
stop work and did so, but in doing so it
repudiated the contract itself.
Cleveland Bridge applied for leave to
appeal to the Court of Appeal on several
points ([2006] EWCA Civ 1834). Lord Justice
May rejected most of these and warned that
the first instance judgment was unlikely to
be susceptible to factual appeal.
Multiplex had succeeded in the ten
preliminary points of its claim, although
Cleveland Bridge experienced some success
in Multiplex Constructions (UK) Ltd v Cleveland
Bridge UK Ltd (No 2) (2007) 111 Con LR 48,
where it was held that temporary roof works
designed to support the roof during
construction did not form part of the works
covered by the fixed lump sum agreed. The
Court applied the test of what the meaning
of the relevant clause in the contract would
convey to a reasonable person having the
background knowledge which was available
to the parties at the time.
In Multiplex Constructions (UK) Ltd v
Cleveland Bridge UK Ltd (No 3) [2007] Adj LR
03/12 the rule that costs would normally be
reserved where an unsuccessful party had
Construction Law International Volume 4 No 1 March 2009

made an offer or payment into court was


varied. Here, an immediate costs order would
be made because Multiplex had made a new
claim without legal basis. However, the
decision in (No 2) was reversed in part in
favour of Multiplex by the Court of Appeal in
Multiplex Constructions v Cleveland Bridge
[2007] EWCA Civ 1371 on interpretation of
the provisions of the scope of the agreement.
The Court of Appeal in Multiplex Constructions
Ltd v Cleveland Bridge Ltd [2008] EWCA Civ
133 had to decide whether Cleveland Bridge
had been successful in resisting the appeal,
because it had retained its position on more
than it had lost, but in the result Multiplex
succeeded on costs because the Court of
Appeal had moved significantly in their
favour away from the first instance decision.
Multiplex Constructions (UK) Ltd v Cleveland
Bridge (No 4) [2008] EWHC 231 was an
application by Cleveland Bridge to re-re-reamend part of the Scott Schedule, which was
rejected because of substantial prejudice to
Multiplex and notable only for the colourful
metaphor of Jackson J, who compared his
task in managing the litigation to the labours
of Hercules and specifically the slaying of the
Lernaean Hydra. Multiplex Constructions (UK)
Ltd v Cleveland Bridge (No 5) [2008] EWHC
569 was an application to amend by Multiplex
which only partially succeeded.
Much of the lengthy judgment by Mr
Justice Jackson in Multiplex Constructions (UK)
Ltd v Cleveland Bridge (No 6), referred to
above, concerned the extent to which
Multiplex should be able to recover for
Cleveland Bridges repudiation of the
contract. Overall, the effect was that Multiplex
had benefited and should only obtain
nominal damages, although it did obtain
damages in respect of defective work by
Cleveland Bridge, which would not be
deducted from its windfalls arising from the
replacement subcontractor proving cheaper
than Cleveland Bridge. The net effect was
that Multiplex was to be paid 6.1 million.
On the same day, Mr Justice Jackson gave
judgment on costs in Multiplex Constructions
(UK) Ltd v Cleveland Bridge (No 7). He set out
basic principles, starting with the premise
that the party receiving payment should be
regarded as the winner, where both parties
assert that a balance is due to them. The
successful party is entitled to the order for
costs. Judges should beware issue-based costs
orders but can and should reflect the relative
success of the parties through a proportionate
costs order. Approach to negotiations and
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general conduct of litigation on both sides


should be taken into account.
The litigation between Multiplex and the
clients consultant engineers novated (in
part) to Multiplex (Multiplex Constructions Ltd
v Mott Macdonald [2007] EWHC 20) is of
interest because of its concentration on the
issue of crystallisation and scope of a dispute.
It arose from an adjudication between the
parties in which Multiplex had been
successful. Mott contended in the
adjudication and in court that the adjudicator
had no jurisdiction to decide the meaning of
pertinent records under the novation
agreement because no such general question
had been referred to him; he could not
widen the scope of the dispute.
The Court, using inter-party correspondence
to interpret the dispute, held that it did include
the definition in question and so would give
the adjudicator jurisdiction over that point.
Multiplex thus obtained a declaration to that
effect which they could utilise in enforcing the
decision in their favour. PC Harrington
Contractors Ltd v Multiplex Constructions (UK)
Ltd [2007] EWHC 2833 was also an adjudication
case arising out of the concrete works
subcontract. Multiplex referred to adjudication
of a dispute arising out of the subcontract
provisions for interim payments.
Harrington claimed a declaration to the
effect that it could establish an entitlement
to sums on figures which it claimed were
agreed. It should therefore commence the
adjudication with a balance in its favour of
2.3 million, reflecting those sums. This
would have led to no monetary recovery by
Multiplex. The Court refused the claim for
the declaration, following Rupert Morgan
Building Services v Servis [2003] EWCA Civ
1563, to the effect that the provisions
comprised a scheme for making interim
payments, not for establishing the ultimate
position between the parties.
Probably the most significant Wembley
proceedings in terms of legal principle were
those between Multiplex Construction (UK)
Ltd and Honeywell. An application had been
made in a hearing reported at [2007] BLR
167 in the TCC for leave to appeal against
the refusal of the court to order disclosure of
certain documents relating to an agreement
between Multiplex and the client, Wembley
National Stadium Ltd. The Court was
satisfied that it had jurisdiction to entertain
the application for leave to appeal but on the
facts refused permission as having no real
prospect of success.
30

A further procedural point was heard in


Honeywell Control Systems Ltd v Multiplex
Constructions UK Ltd [2007] EWHC 390.
The
claimant
Honeywell
(the
communications system subcontractor)
sought a declaration against Multiplex that it
was entitled to view a settlement agreement
between Multiplex and Wembley which had
varied some of the terms of the main contract.
Multiplex argued unsuccessfully that
Honeywell was only entitled to view the main
contract in its original unamended form.
Multiplex Constructions (UK) Ltd v Honeywell
Control Systems Ltd [2007] BLR 195 [see the
authors Keating Chambers column at (2007)
2(2) CLInt 18] contains a number of
important points on delay and, even more
important, substantial discussion of them. It
was held by Jackson J that, under the
prevention principle, legitimate actions of
the employer (or in this case, the main
contractor) could still constitute acts of
prevention. So, here, the issue of directions
causing delay could be relied upon by the
subcontractor as acts of prevention.
There was also significant discussion of the
so-called Gaymark principle, deriving from
Gaymark Investments Pty Ltd v Walter Construction
Group [1999] NTSC 143; (2005) 21 Const LJ
71. Gaymark held, in respect of the modified
standard form contract considered in that
case, that if acts of prevention justified
extension of time, but the contractor (here,
subcontractor) failed to claim an extension of
time by noncompliance with the contractual
machinery, the effect would be to put time at
large and prevent the recovery of liquidated
damages. Jackson J, in common with the late
Ian Duncan Wallace QC and other Australian
cases, doubted the correctness of Gaymark as a
generally-applicable principle, despite noting
support for it from Keating on Construction
Contracts (8th edition 2006) in the absence of
decisive English authority. In the result,
however, Gaymark was held to be readily
distinguishable from the Honeywell case, where
there were no automatic consequences for
the subcontractor in noncompliance with the
contractual machinery. Multiplex would only
be able to recover for delay caused by
Honeywell, not delay caused by itself.
The Wembley litigation has fascinated and
troubled many observers in the construction
industry and legal profession. The purpose of
this article has been to note the substance of
what has been decided in the extensive reported
judgments, which together comprise an
important addition to construction case law.
Construction Law International Volume 4 No 1 March 2009