This article is from the Australian Property Journal archive
Fifteen witnesses, four weeks and more than 500,000 words of evidence later, the trial in the London High Court between Multiplex and Cleveland Bridge United Kingdom over the $1.12 billion Wembley Stadium project came to a close this week.
Multiplex is suing CBUK for £32.66 million and CBUK is countersuing Multiplex for £22 million, both are alleging a Repudiatory Breach of Contract.
In his closing statement, Hugh Tomlinson, QC, counsel for CBUK alleged Multiplex of conducting “hardnosed” and “unlawful” commercial practices.
Tomlinson, QC, said Multiplex had an “over-aggressive” programme for the completion of Wembley stadium and the ongoing need to finalise the design, which was not ready “as for construction” at the time that Multiplex had contracted with CBUK that it would be.
“Multiplex knew that the design had not been finalised but did not make proper allowance for this in its contract with CBUK.
“The result of this was that the drawings which CBUK required for fabricating the steel were delivered many months late and CBUK expended substantial sums on “acceleration measures”.
“One year into the project, CBUK had a claim for a one year extension of time, no variations had been approved and there were no agreed payments for acceleration. As a result, CBUK faced a serious cash crisis,” he added.
Tomlinson also said that Multiplex secretly planned and executed “Armageddon plan”, which saw Multiplex make arbitrary deductions from CBUK’s account in order to maximise the impact of the revaluation in the hope of pressurizing CBUK, hoping that it would “fall over”.
“The motivation for this conduct was not some kind of malice or animus towards CBUK.
“It is not a “complicated and malicious conspiracy to drive [CBUK] out of business” as suggested by Multiplex.
“It was piece of hardnosed commercial calculation: Multiplex knew that the only way it could curb its steelwork spend was by making claims against CBUK and that it could only realistically do this if CBUK was off site.
“However, in advancing its perceived commercial interests by dealing with CBUK in this way Multiplex “crossed the line” and acted unlawfully,” Tomlinson added.
Cleveland quit the project in August 2004 and as a result Multiplex hired a new contractor, Hollandier to finish the steelworks.
Multiplex’s Counsel Roger Stewart, QC, said the “Armageddon Plan” was a contingency plan in the event that CBUK would walk out on the contract adding that it was Plan B and not Plan A.
Stewart said the contingency plan was part of the normal "rough and tumble" of sub-contractor negotiations.
"The court is examining a building contract, not a garden party.
"Insensitivity is not repudiation,” he added.
Stewart said CBUK convinced itself that a conspiracy existed when it did not, adding that CBUK “sought to show-horn the documents to support the theory, glossing over the inherent improbability that Multiplex would want to conduct themselves in the way alleged,”
Stewart said what further come out of the evidence is that CBUK had no real financial control over project costings, and seemed to have relied exclusively on passing all of its costs to Multiplex.
He added CBUK underestimated the costs of the project and found itself in a very difficult financial situation as early as mid-2003.
“The decision was made by CBUK not to build up claims against Multiplex but to negotiate a cost plus agreement and upon notice on 28 June 2004, CBUK assessed that, the costs to complete its offsite activities being greater than anticipated payments, it would walk out of its obligations entirely,” Stewart concluded.
Tomlinson said there was nothing to prevent Multiplex refusing to reach agreement on the grounds of commercial self-interest.
“CBUK does not dispute that Multiplex was entitled to protect its own commercial interests. But this entitlement is subject to its contractual obligations to CBUK in particular the obligation in clause 7, itself subject to the further obligation to cooperate.
“Having entered into this agreement, Multiplex was not entitled to contract with a third party as part of a pre-determined plan to do so. Yet that is exactly what Multiplex did. Indeed, entering into the SA was just one limb of the same plan. It was inevitable, once Multiplex had decided to enter into the SA, that it would not contract with CBUK and would contract with Hollandia.
“There can be no doubt that this was a breach. All that remains therefore is causation and quantum,” Tomlinson alleged.
Justice Jackson is expected to deliver the verdict in early next month.
Meanwhile, the Wembley Stadium Project has so far cost Multiplex $484 million.
Multiplex is also considering suing Wembley National Stadium Limited, the stadium’s owner, for £150 million. Multiplex claims WNSL made 500 changes to their brief, contributing to the delay in completion.
Meanwhile, England’s World Cup squad took to Wembley yesterday.
However, the 90,000 seat stadium will not stage an English match until February next year, Multiplex is due to hand over a substantially completed stadium in September this year.
By Nelson Yap
