news: court case update AAP News Multiplex accused of...

news: court case update AAP News


Multiplex accused of illegality

Wednesday May 24, 2006, 6:25 am



Australian company Multiplex has been accused of "hard-nosed" business practices that became unlawful in its troubled Wembley Stadium redevelopment.

Closing argument was delivered on Tuesday on a High Court dispute between Multiplex and its initial steel sub-contractor on the project, Cleveland Bridge UK (CBUK).

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At the heart of the dispute is whether an agreed sum of 32.66 million pounds ($A81.86 million) for CBUK's steelwork was an interim or final figure.

That amount was agreed in February 2004, but the valuation altered by May 2004 after a series of design changes, triggering a dispute that led to CBUK being replaced as the steel sub-contractor.

CBUK said Multiplex had a secret "Armageddon Plan" to renege on the agreed price and replace CBUK as the sub-contractor.

Multiplex said this was a contingency plan and part of the normal "rough and tumble" of sub-contractor negotiations.

"The court is examining a building contract, not a garden party," Multiplex said in its closing argument.

"Insensitivity is not repudiation."

But CBUK argued this was more than a back-up plan.

"What (Multiplex) in fact did went beyond contingency planning or commercial hardball, crossing the line into unlawful conduct," CBUK said.

"It was piece of hard-nosed 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.

"In advancing its perceived commercial interests by dealing with CBUK in this way Multiplex crossed the line and acted unlawfully."

Multiplex argued CBUK's aggressive pursuit of non-existent entitlements and strategy of brinkmanship was designed to extricate itself from a loss-making contract.

"CBUK must have been aware that there was a high degree of risk that their slim profit would quickly be eroded, placing them in a loss-making situation," Multiplex said.

"Although design problems were causing CBUK difficulty, they never submitted to Multiplex a properly substantiated claim - whether for time or money - because they knew that proper substantiation would reveal to Multiplex the inadequacy of their own tender."

The Wembley redevelopment has run over time and over budget, forcing the 2006 FA Cup final, England's pre-World Cup friendlies and other sporting events and concerts to be moved.

A ruling in this case is expected early next month.

Multiplex faces another potential court case against the English Football Association's subsidiary Wembley National Stadiums Ltd (WNSL) over late fees the Australian company is due to pay for over-runs on the project.

In a shadow preparation for that potential legal challenge, the two parties had publicly argued that the other was responsible for the over-runs, with Multiplex suggesting WNSL's frequent design change demands caused the problem.