Layngross
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Dr Derek Ross has recently updated his website at LayngRoss.com, and is intending to take a more active interest in Facebook, Linkedin and Twitter in the coming year.

Derek is a Past Master of the Worshipful Company of Arbitrators.  He is on the FIDIC President’s List of Adjudicators and the Irish Government's Panel of Construction Contract Adjudicators, amongst other panels.  He is a Chartered Arbitrator, Accredited Mediator & Conciliator, Registered Adjudicator and Dispute Board Member, who accepts domestic and international appointments as the neutral person in each of these construction dispute resolution disciplines.  He is also a Chartered Civil Engineer, well versed in resolving technical, contractual and quantum disputes in the construction industry.  

If you feel Dr Ross can assist you, please call him for a no obligation discussion on +44 1932 856463, or simply reply to this email with your details.

Below is an article he has written, which he hopes you will find of interest.

MUTUAL TRUST AND COOPERATION 

The NEC3 family of construction contracts imposes obligations on participants to act as stated in the contract and in a spirit of mutual trust and cooperation.  Whilst a failure to act as stated in the contract can be assessed objectively quite easily, the boundaries of the obligation to act in a spirit of mutual trust and cooperation have until recently been less well defined.  Thus the recent judicial guidance given by Mr Justice Coulson on this topic in his judgment in Costain Limited v. Tarmac Holdings Limited [2017] EWHC 319(TCC) is most welcome.

Mr Justice Coulson is clear that the obligation to act in a spirit of mutual trust and cooperation does not require a party to act against its own self interest.  He agrees with the author of Keating on NEC3 that the obligation requires a party to act honestly and reasonably having regard to the legitimate interests of both parties.  He disagrees with the suggestion in Keating on NEC3 that the clause imposes an obligation to act fairly, as that is too subjective a concept.  However it does embrace an obligation not to mislead or improperly exploit the other party.  Indeed, Coulson J goes so far as to suggest that the obligation to act in the spirit of mutual trust and cooperation requires a party to correct any known misconceptions of the other, more especially if it has contributed to the other holding such misconceptions.   

Coulson J also agrees with the analysis in The Law of Waiver, Variation and Estoppel (OUP 2012) that the parties are not expected to 'nursemaid' each other.  Thus Party A has no obligation to point out to Party B that Party B is failing to protect its own best interests, if to do so would adversely affect Party A's best interests.  Thus, acting in a spirit of mutual trust and cooperation does not require the paying party to warn the working party that its entitlement to make a claim in respect of a particular event is about to expire for want of a valid compensation event notice within the time limits stipulated by NEC3 contracts.  However, if the paying party knows the working party is labouring under the misconception that, for instance, the time limit clause will not be enforced, when it will be enforced, the paying party is required, in a spirit of mutual trust and cooperation, to disabuse the working party of its known misconception.

The usefulness of mutual trust and cooperation clauses has been questioned in the past on the basis of previous judicial comment that they do not prevent either party from relying on any express term of a contract freely entered into.  Nor should they.  Such clause are primarily intended to harness the benefits in site efficiency that project participants acting in a spirit of mutual trust and cooperation invariably bring.  Thus, in pursuit of greater site efficiency, it is to be hoped that this latest judicial guidance will foster their more widespread use.

Dr Derek Ross

11 April 2017


Please Note: The foregoing article has been prepared by Dr Derek Ross for the general interest and benefit of readers.  It is not intended to be a definitive analysis of the law or of other matters discussed.  Neither does it create a client relationship between the recipient and Dr Ross.  Thus no liability is accepted in respect of any reliance placed on any statements made in the foregoing article.  Proper advice ought always to be taken before deciding to take, or not to take, action in respect of a specific issue.

 

© 2017 Dr Derek Ross & Layng Ross Construction Disputes Resolution.

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