Had the construction manager delayed the opening of a luxury hotel?

Facts

Client: Major hotel

Region: UK

Industry: Leisure

Services provided:

• Dispute resolution
• UK litigation and arbitration

Issues

The dispute related to the £35million refurbishment of a hotel. The project was beset by difficulty and delay: the hotel re-opening almost a year late and costing more than 50% over budget.

We advised the client to take action against the construction manager. One problem for the client was that until this case, it was thought that making a claim against a construction manager was difficult and had never been done successfully before. The nature of the contracting arrangement is that the employer contracts directly with the trade contractors and so is said to retain the risk of their poor performance.

The construction manager essentially stood back and ran a “prove it” defence.

Solutions

Although we tried to resolve the dispute through mediation, this was unsuccessful.

We therefore worked with the client to establish a dedicated project team, including experts to review the individual trade contract packages and demonstrate that the construction manager by its conduct had caused additional costs and delayed completion of the project.

The only solution was to set about prosecuting our client’s claim from the pre-action protocol stage through to the full hearing. There were a number of contested applications along the way’ in particular in relation to disclosure and the experts.

At the trial, we were able to establish a number of breaches of contract on the part of the construction manager which had led to delay. The construction manager was also found to have submitted incorrect information with regard to the delays to the project and was consequently in breach of its contractual obligation to report accurately. In addition the management contractor was found to have failed to investigate the work fully. Our client was also able to recover the losses suffered as a result of having to pay increased sums to trade contractors to cover additional work which should have been more economically included in the original trade contractor packages. Finally, the client was able to claim loss of profit as the opening of the hotel was delayed due to the breaches of the construction management contract.

Benefits

Although the case proceeded to a six-week trial, the Judge found in the hotel’s favour in almost every aspect of the case, resulting in a significant award of damages to our client.