Multiplex Constructions v Honeywell Control Systems

MULTIPLEX CONSTRUCTIONS (UK) LTD v HONEYWELL CONTROL SYSTEMS LTD

England and Wales High Court (Technology and Construction Court)

FACTS:

Multiplex were the contractors engaged to construct the Wembley Stadium in Wembley, England and Honeywell were responsible for the security and communication installations on that project.

A dispute arose between Multiplex and Honeywell as to the completion date, where Honeywell contended that time had become at large, i.e. that Honeywell were only obliged to complete within a reasonable time rather than in accordance with the time stipulated by the contact due to the conduct of Multiplex.

Multiplex argued that Honeywell failed to comply with the notice provisions for the granting of extensions of time but the mechanism for granting extensions of time was still functioning.

ISSUES:

Whether Honeywell was precluded from being granted extensions of time for practical completion because Honeywell had not made their claim within the time provided by the contract?

FINDING:

The Court found that Honeywell would be prevented from claiming extensions of time due to the failure whether or not deliberate to notify a claim for extension of time within the period required by the contract and accepted the reasoning in Turner Corporation Limited (Receiver and Manager Appointed) v Austotel Pty Limited (2nd June 1994)1997 13 BCL 378.

QUOTE:

Jackson J [at 99] and [101] saw considerable force in the comments of Cole J in Turner’s Case which are as follows

“…If the Builder, having a right to claim an extension of time fails to do so, it cannot claim that act of prevention which would have entitled it to an extension of time for Practical Completion resulted in its inability to complete by that time. A party to a contract cannot rely upon preventing the contract of the other party where it failed to exercise a contractual right which would have negated the effect of that preventing conduct…”

IMPACT:

The case illustrates that contractors should ensure that claims for delay and extensions of time are made promptly and strictly within the period which is required by the contract. Otherwise a valid claim may be completely denied.

Brooklyn Lane v MIC Australia

BROOKLYN LANE PTY LTD V MIC AUSTRALIA PTY LTD [2000] VSC 33

Supreme Court of Victoria – 21 February 2001

FACTS

MIC was an insurance broker engaged by Brooklyn Lane, a real estate agent, to procure a series of insurance policies from Mercantile Mutual Insurance (MMI).

Although MIC was experienced in the insurance industry, it always depended on its clients’ information and instructions before procuring any insurance on their behalf.

When Brooklyn’s business premises was destroyed by a fire it claimed from MMI for the loss incurred but MMI denied liability because it alleged that the fire was deliberately caused. Brooklyn issued a proceeding (“initial proceeding”) against MMI. The parties settled the matter without proceeding to a hearing with MMI expressly denying liability.

Brooklyn claimed that as a result of MIC’s breach of contract and negligence to procure adequate insurance policies it was forced to settle with MMI for less than the amount it should have received.

ISSUE

Whether the duty of an insurance broker extends to ensuring that its clients’ business is protected from all aspects of loss.

FINDINGS

MIC had always advised Brooklyn based on the information provided to it. However Brooklyn had failed to specify that it had trade debtors. It was therefore reasonable for MIC, which had extensive experience and knowledge in the insurance industry, to proceed on the basis that insurance of accounts receivable was not appropriate for Brooklyn.

In the absence of any instruction from Brooklyn to procure insurance for its accounts receivable MIC did not have any obligation to procure such policies or inform Brooklyn that it had no cover for that aspect of its business.

QUOTE

Balmford J said:

“MIC was at the time, and still is, of the view that insurance of accounts receivable is not appropriate for real estate business. If MIC had been instructed generally to procure a policy covering the full gamut of Brooklyn’s business it would not have been under a duty to include cover for loss of accounts receivable…

Since Brooklyn did not tell MIC that there were trade debtors MIC could not have been expected to know of the existence of the debtors and it was reasonable for it to proceed on the basis that insurance of accounts receivable was not appropriate for Brooklyn.”

IMPACT

An insurance broker must exercise reasonable care and skill in the performance of its duties including carrying out its clients’ instructions.

However a broker is not obligated to ensure that its client is impervious to loss or risk of loss through the absence of insurance and to explain the effect of each term of a contract of insurance.

In the absence of any instructions from a client, a broker is not under a duty to ensure that the clients’ business is protected from every aspect or to inform the client that no such cover had been obtained.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com