The long running dispute of Imperial Chemical Industries Limited (ICI) v Merit Merrell Technology Limited (MMT) received its latest instalment in June this year. The dispute arose out of works carried out by MMT at a new paint manufacturing plant owned by ICI between 2012 and 2015.
Imperial Chemical Industries Limited v Merit Merrell Technology Limited
Case History
Relations between the parties began to sour towards the end of 2014, with ICI requiring MMT to stop work and failing to make payment under two applications for payment. MMT therefore commenced the first adjudication in January 2015 for payment of approximately £8 million which had been applied for in November 2014. ICI had failed to issue a pay less notice and the adjudication was therefore successful, without the need to consider the merits of the valuation; commonly referred to as a “smash and grab” adjudication.
In the meantime, ICI had written to MMT purporting to accept its conduct as “repudiatory breach”; thereby bringing an end to the contract. Three further adjudications followed:
- Adjudication 2 – ICI unsuccessfully sought an order for delivery of project documents;
- Adjudication 3 – MMT successfully sought a declaration that ICI had improperly ended the contract; and
- Adjudication 4 – MMT successfully sought an order for a further interim payment.
In late 2015, both parties issued legal proceedings against each other, covering much of the same ground that had been decided within the adjudications. The liability trial was heard last year and it is fair to say that it went very badly for ICI. They faced considerable criticism and their case was almost entirely dismissed by Mr Justice Fraser.
The quantum trial remained to determine the value of the works that had been carried out by MMT, and the damages that MMT could claim for, due to the way in which ICI ended the contract.
The eventual quantum trial lasted 8 days and involved expert evidence from two quantity surveyors and two forensic accountants. Mr Justice Fraser was clearly frustrated by the parties’ inability to reach agreement on almost any of the issues in advance of the trial. This resulted in a painstaking review of almost every aspect of the value of hundreds of items of work; something which he described as a:
“massively expensive and wholly disproportionate exercise”.
Mr Justice Fraser’s judgment resulted in a valuation only £200,000 different to that which had been allowed for and paid following adjudication. This represented approximately 1% of the total value of the works. In the meantime, the Judge commented on the fact that millions had been spent on the litigation. Mr Justice Fraser concluded at paragraph 428 of his lengthy judgment that this litigation…
“stands as something of an advertisement for adjudication”.
Comment
Adjudication offers a streamlined and specialist alternative to litigation, which can offer a much quicker and cheaper resolution to disputes, particularly those arising out of construction contracts.
How Can Nelsons Help?
At Nelsons, we can provide specialist advice and representation to parties throughout the adjudication process. For further information, please call a member of our Dispute Resolution team on 0800 024 1976 or contact us via our online form.