Peter McHugh*

mediation

Specialist in commercial contract disputes

Case Study 1

A three party dispute involving a cricket club, a contractor and an architectural practice.

The problem
The cricket club had developed a cricket pitch. The firm of architects had been contracted to create designs for the building and the layout of the grounds. The architects, in addition to providing designs, were required to prepare drawings to instruct building contractors working for the property developer. The architects had specified that nets be erected to prevent balls from being hit over the boundary of the cricket pitch and into neighbouring property.

Next door to the cricket pitch was a prestigious office development. The car park that serviced these offices was directly adjacent to the cricket pitch nets. Once the club was in use, it became apparent that cricket balls were being hit over the nets and damaging cars parked in the office car park. On one occasion expensive cars had been severely marked, including a Porsche and a Range Rover. The car owners claimed damages from the Cricket Club, who in turn made a claim against their insurance policy. The Cricket Club considered issuing proceedings against (1) the architect, for damages caused by breach of contract and professional negligence, and (2) the contractor for breach of contract.

Peter McHugh was asked to mediate to find a solution and prevent a situation where excessive court and legal fees would be incurred. The architects claimed that the contractor had installed the netting in the incorrect place and not as instructed by their drawings. The contractor claimed that they had put up the netting exactly as instructed. The relevant drawings and photographs were brought to the mediation session by both the architects and the contractors to support their claims, but inspection of the drawings did not facilitate the apportionment of blame.

It became apparent that should the property developer try to claim against the contractor, a successful outcome would be unlikely because the contractor did not have the funds to pay, even if a court found that they were at fault. The architects had the benefit of professional indemnity insurance but they did not want to claim against it as future premiums would be increased and a black mark would be made upon their professional record.

The solution
The dispute was settled on the basis that the architects carried out work on another project for the property developer free of charge, thus indirectly reimbursing the property developer for the cost of moving the netting, albeit that repayment was paid in terms of labour and deferred until the property developer called on that work.

The benefit
The architects did not suffer a black mark on their professional record or suffer increased insurance costs; and the property developer, through the waiving of professional fees, was reimbursed for insurance excesses (from the damaged cars) and the moving of the netting system. Peter was able to resolve this matter through mediation in a commercial and flexible manner, which could not have been achieved at court due to the limited remedies available for a Judge to award.