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ARMAGEDDON TIME

LEGAL

'Armageddon' - now there's a word for a columnist to conjure with, evoking as it does unsettling images of the end of the world, writes Kim Franklin. The reference to Armageddon in the Book of Revelation is, in fact, to the more prosaic 'hill of Megiddo' which, popular perception has it, will be the site of the last, climactic battle between the forces of good and evil to be fought at the time of Christ's return.

It is hard to imagine that such powerful imagery could possibly be evoked in the name of construction law. But the 'Armageddon scenario' was a central element in the recent case of Scheldebouw BV v St James Homes (Grosvenor Dock) Ltd (Judgment 16.1.2006). What could have so concerned the parties that the court agreed it could be likened to doomsday?

The claimant, a cladding contractor, carried out work on the defendant's Grosvenor Waterside development. It was engaged under trade management contracts with Mace acting as the construction manager. Mid-contract the developer and Mace parted company by mutual agreement.

Rather than appoint a replacement, the defendant decided to take on the mantle of construction manager itself.

Scheldebouw cried foul, saying this amounted to a fundamental breach, entitling it to determine the contract and claim consequential losses.

The judge distilled the duties of a construction manager into two main functions. The -rst was to act as the developer's agent and implement its instructions.

The second was quite different, as it required the construction manager to act as 'decision maker' on matters where the contractor and employer have opposing interests. When making decisions, the construction manager is required to be independent, impartial, fair and honest.

Decision-makers use their professional skills to reach the right decision, not one which favours the interests of the employer.

The judge in this case gave several reasons as to why the developer was not entitled to appoint itself as construction manager:

it was unusual for the employer to act as certi-er.

It could only be done if the contract provided for it;

the contractual structure required the employer and construction manager to act as separate entities. Endless anomalies arose if they became one and the same;

while it was not impossible for the employer to make decisions contrary to its own interests, it is easier for a professional person to put their employer's interests to one side;

while it is in both parties' interests for the construction manager to make the right decision, property developers are in business to make pro-t and do not always welcome large -nancial awards to contractors, however well merited; and in previous cases where the certi-er was a direct employee of the employer, the contractor knew of the situation beforehand and went in with open eyes.

Ultimately, if the developer could appoint itself as contract manager it could also dismiss the entire professional team and act not only as construction manager but also architect and cost consultant. This, the judge acknowledged, could amount to Armageddon for Scheldebouw, utterly transforming the contract it entered into.

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