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The Week That Was - 5 August 2022

Published on 05 August 2022

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

FCA issues decision notices on Carillion and former directors

On 24 July 2022, the FCA issued Decision Notices to Carillion Plc (in Liquidation) (Carillion) and three former directors in connection with the reckless publication of announcements on 7 December 2016, 1 March 2017, and 3 May 2017.  The FCA say that the announcements were misleading and did not accurately or fully disclose the true financial performance of Carillion.

The FCA imposed a public censure on Carillion, rather than a financial penalty, as it is in liquidation.  Otherwise, the FCA would have imposed a financial penalty of £37,910,000. The FCA also fined former CEO, Richard Howson, £397,000; former Finance Director, Richard Adam, £318,000; and former Finance Director, Zafar Khan, £154,000.

Click to read the decisions notices for Carillion, Richard Howson, Richard Adam and Zafar Khan.

Nottingham Forest Stadium Expansion

Nottingham City Council has approved plans to redevelop the Main Stand of Nottingham Forest Football Club's stadium to increase capacity to 35,000.  Nottingham Forest has also applied for permission to build a 13-storey apartment building next to the stadium to help fund the project.

A spokesperson for the football club said: “We believe that the development of the site is crucial to maintaining the club’s status in the Premier League and all of the benefits to the local community and economy which this status brings”.

Read more here.

RICS levelling up and sustainable placemaking Report

The Royal Institution of Chartered Surveyors (RICS) has published its 'Levelling Up and Sustainable placemaking' report.

Amongst other things, RICS states that greater understanding and utilisation of alternative dispute resolution by local authorities, developers and consumers would significantly reduce time and costs.  It also highlights that construction output is currently being hampered by steep price rises, and shortages of material and labour.  It recommends that the Government take active steps to encourage more people into the construction sector.  

Read the full report here.
FTH Ltd v Varis Developments Ltd (2022)

In FTH Ltd v Varis Developments Ltd, Varis engaged FTH under a design and build contract.  Matters deteriorated between the parties and payment was withheld pursuant to a pay less notice.  Varis purported to terminate the contract.  

The parties entered into three adjudications.  In the third adjudication, it was decided that FTH was entitled to payment of circa. £757,000.  However, FTH had entered a company voluntary arrangement (CVA) following the second adjudication and Varis did not pay the amount awarded in decision 3, stating it would resist enforcement, referring to a cross claim of £1.7m flowing from the termination that was issued to the CVA supervisors after the adjudication.  

The question was whether FTH was entitled to summary judgment and able to enforce the payment due under decision 3.  The Court concluded there was a real risk that summary enforcement would deprive Varis of its security for its cross claim and, as such, summary judgment was refused.

The Court considered the nature and purpose of the CVA, the Respondent party's legitimate interest and the financial position of the company.  However, whether a Court will summarily enforce adjudication decisions where the claimant is subject to a CVA will ultimately be determined on a case-by-case basis.

Read the full case here.

M+W directors sued by company for losses

A subsidiary of engineering contractor M+W is suing three of its former directors after a trio of energy-from-waste projects ran up losses of £320m. The projects were all gasification facilities designed to process municipal waste, in which final EPC contracts were signed off in 2015.

The former director, Peter Greenhalgh, managing director, Spencer Baber and chief financial officer, John Taylor, all contest the allegations and are defending proceedings in the High Court.  

MW High Tech Projects UK (MW) contends that the former directors entered into contracts without engaging adequate and suitably experienced personnel, without satisfactory investigation into new technologies and without adequate design or information.  The allegations against the directors are that they failed to take proper account of the project risks, failed properly to examine profitability and used tender prices that were far too low. MW contends that it otherwise would not have entered into contracts for any of the projects or would have exercised its right to disengage from them. The case is ongoing in the High Court.

You can read more here.

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.
Authors for this week's edition: Zack Gould-Wilson, Ellen Ryan and Dominic Collier