Scenario
Iris is the chief executive of MegaBuild plc. Megabuild are a large property development company based in London. They have recently purchased a small airfield in the south east of England. It has some private traffic with small one and two seater planes but can also cope with small private jets. Iris considered that Megabuild could increase the value of the airfield and ensure a greater return on its investment by adding a small terminal building. Iris was also keen that the airfield has a “statement” building which would attract high net worth customers. Megabuild therefore engaged Draco Newton, a well known architect to design it – along with his company “glidesign”. This company has experience of implementing Draco’s designs, to widespread acclaim. Megabuild engaged Copolo to be the main contractor. Copolo is experienced in building leisure units and shopping centres but this is their first airport terminal. The airport will continue to operate while the work is ongoing: it covers a relatively low volume of flights and its existing office building will remain in use until the terminal opens.
The work is procured under a traditional route using a JCT SBC/XQ 2016 contract, with the general JCT amendments since 2016 but without any party agreed changes (beyond those noted below). The principal parties are those noted, with glidesign as the architect/contract administrator.
Iris meets you and tells you how things are going.
She says that Copolo knew that they would be working alongside a live runway but that they have been complaining about it ever since they came to site. Iris says that the fact of the runway being used was included in the contract. She knows that Copolo say that the number of flights has increased significantly since work started but Iris does not believe that it should be causing any particular issues. She is concerned, however, that Copolo are using this increase in traffic as an excuse to add costs into their payment applications.
She has demanded that glidesign let Megabuild review the payment applications from Copolo and that Megabuild sign these off before they are paid. However, she knows that Megabuild are struggling to turn this review around within the contractual timescales and are often late. She had understood that this meant that they could not then seek deductions from Copolo’s payment applications; they could only look for repayments to cover damage done and so on. Iris wonders whether she could issue a “holding” payment notice. By this she has in mind a notice which contains estimates and makes clear that further information will be provided.
You should advise on the following issues. This should be written and submitted in line with the instructions below. Each issue is given equivalent weight in the assessment and should take up around 1000 words each. The word count of the answers for each issue is not relevant to the Assessment Word Limit (see below) – rather it indicates the relative weighting of the particular answers.
- How does the ongoing use of the airfield impact on Megabuild’s rights and obligations? Evaluate what steps could be taken – or should have been taken – to resolve this.
- Critically evaluate the approach which Iris is taking to payment here. Is this sensible and has she correctly interpreted the requirements of the contract?
- How ought the health and safety aspects of the project be dealt with (including particular reference to the sort of issues which arise from this scenario). This should identify both the particular risks and how they would be addressed by the legal framework and what responsibilities the parties would have in respect of those particular risks.
Sample Solution