Leighton, Downer cleared in dispute

Two contractors have won a legal dispute against a piling business for work on a Manukau project.

Justice Raynor Asher ruled in favour of Downer EDI Works and Leighton Contractors in the case heard last month in the High Court at Auckland, brought unsuccessfully by civil construction subcontracting specialist GHP Piling.

Downer and Leighton denied any preliminary contract had ever been created with GHP for the Manukau work or that they were bound to follow any particular procedure.

The judge said the matter dated back to 2006 when Leighton Works, a Downer/Leighton joint venture, was contracted by Transit New Zealand to build a four-lane motorway in Manukau to link State Highway 1 to State Highway 20.

That included the Manukau rail link enabling works, the judge said, for a railway track to be laid parallel to the new motorway in the future.

Piling works and construction of pile walls was to be undertaken to provide for foundations and retaining, the judge said.

In 2009, Leighton Works sought prices and information from GHP about different piling options and GHP quoted on both ground anchor design and sheet pile design. But Leighton Works instead decided on a secant piling solution, the judge said.

The job was eventually awarded to Fletcher Construction Co's Brian Perry, a competitor of both partners in Leighton Works in New Zealand and Australia, the judge said.

GHP had tendered $9.4 million for a two-rig 22-week option and $9.8 million for a three-rig 15-week option. Brian Perry tendered $7.4 million.

GHP complained about what it saw as breaches of contract and said it suffered a loss of profit after not getting the job, but Leighton Works said the request for tenders document was no more or less than an invitation to submit a quote without any contractual obligations arising.

The judge decided GHP had failed to prove any preliminary contract was formed.

John Yonge, managing director of GHP, yesterday expressed disillusionment at the outcome.

"What this now means for the construction industry is that anyone tendering for work in New Zealand, where the documents do not fully comply with the comprehensive High Court criteria, can have no assurance or expectation that their tender will be treated with fairness or confidentiality, or that late tenders will not be sought.

"GHP is disappointed in the decision and its implications for the future of subcontracting in New Zealand. It is reviewing the decision and its options," Yonge said.

"In many years of subcontract tendering in New Zealand, GHP has not seen a subcontract tender where the documents and process resemble the formality that would be experienced in a main contractor/client tender. Typically the subcontract tender process is much less formal," he said.

GHP had unsuccessfully argued that the less formal tender process for subcontractors should still have the protection of the law.

"On the court's analysis, the great majority of subcontract tender processes are unenforceable, leaving subcontractors exposed to abuses of process by head contractors," Yonge said.