North firm to pay £6m in Wembley damages
Sep 30 2008 by Iain Laing, The Journal
THE North East company which erected the huge steel arch at Wembley Stadium has been ordered to pay more than £6m damages after losing a lengthy and bitterly fought legal case with the giant Australian company which hired it for the job.
But although developer Multiplex won a legal victory in the case against Darlington-based sub-contractor Cleveland Bridge UK it also faces a £10m bill for costs because the judge found against them on some issues.
Multiplex, which launched the action, was attempting to recoup about £25m plus damages, which were capped at £6m, from the £58m it said it paid the firm before repudiation.
The High Court decision follows four years of litigation between the two firms which arose from Cleveland Bridge’s £60m subcontract with Multiplex, now known as Brookfield Europe, to erect steelwork for Wembley stadium.
Multiplex claimed CBUK was in breach because of defective works, delays, failing to raise the arch in accordance with heads of agreement and by giving notice that it would no longer carry out any further work.
In turn CBUK alleged Multiplex was in breach by revaluing the agreed gross valuation, deducting various payments and failing to agree on a new programme for completion following a series of design changes. CBUK was forced to make 200 staff redundant and indicated it would take legal action on the matter.
Total legal costs of the long-running dispute are estimated at £22m, and Mr Justice Jackson slammed both sides for failing to reach a sensible settlement.
“That level of expenditure far exceeds the sums which (after stripping out the froth) are seriously in dispute between the parties,” he said. “The result of this litigation is such that, when costs are taken into account, neither party has gained any financial benefit.”
He added: “The lesson for the future which may be drawn from this litigation is that parties would be well advised to use the dispute resolution service offered by the Technology and Construction Court in a more conventional and commercial manner than has been adopted in this case.”
Costs had reached £8m two years ago when the judge hoped the warring parties might reach agreement through mediation. But since then a further £14m has been added to the legal bill – including at least £1m on photocopying alone.
Multiplex had alleged Cleveland was in breach of contract when it walked out of further development at the stadium in August 2004.
The Wembley stadium project was hit by delays and rising costs before it finally opened last year. The original cost of the project was put at £440m in 2001. When it opened, costs had almost doubled to £800m.
