Building information modelling (BIM) has been steadily gaining traction in the construction industry over the past few years and the prediction back in 2011 from the UK Government’s Chief Construction Adviser, that professions which failed to adopt BIM risked being “Betamaxed out” is ringing eerily true. And it’s not only centrally procured projects that are using Level 2 BIM in line with the government edict. Certainly, on many of the commercial developments that are coming across my desk, BIM tends to be part and parcel of the contract.
We all know that BIM raises various legal issues, particularly around design access and ownership. While the technology is still in its relative infancy at Level 2, these fledgling points can normally be dealt with by tweaks to drafting and the incorporation of a BIM protocol. Of course, with the potential of a further jump to BIM Level 3 in the not too distant future, true integration may raise a whole new host of legal issues.
The problem of designers potentially making ransom demands of course isn’t unique to BIM. It can arise wherever a designer seeks to demand full payment as a pre-condition of a licence to use (for example, in the JCT Design and Build Contract or the RIBA, ACE or RICS forms of appointment). BIM has once again brought this to the forefront and hopefully will act as reminder to those of us drafting contracts to tackle this issue head on.
Robust drafting can take account of most of these issues, whether dealing with BIM or otherwise. But what is looked for in these murky waters is guidance from the courts. In construction, when new innovations come into play (for example third party rights or a new suite of contracts like NEC), it can take years (if not decades) for the courts to provide signposting on the issues they raise. It is therefore really welcome that the first case on BIM, Trant Engineering LTd v Mott MacDonald Ltd, has already come before the courts.
Trant was engaged by the MoD as the main contractor on the £55 million Mid Atlantic Power Project in the Falkland Islands. Trant engaged Mott to provide design services and to act as BIM co-ordinator, so Mott controlled access to the BIM database.
A dispute arose, not from a disagreement over the arrangements surrounding BIM, but rather from that old chestnut that seems to dog construction projects: the failure of the parties to execute a contract.
Mott had issued a draft contract to Trant that was never executed, but as we know, that doesn’t necessarily mean that it hadn’t taken effect. The draft contract included a liability cap of £1 million, and provision for payment in instalments of a lump sum fee of £780,000, payment in full of which would entitle Trant to an irrevocable non-exclusive copyright licence. While the contract works were to be carried out outside the UK and so the Construction Act 1996 would not ordinarily bite, and parts of the works might have been excluded as they related to a power plant, the draft contract included a Construction Act-prescribed payment regime.
Works commenced but the parties failed to reach agreement on the full scope of the works and nor did Mott issue invoices in respect of the payment instalments the draft contract envisaged. Trant did, however, pay Mott two separate instalments of £250,000. In April 2017, Mott issued an invoice for £475,000 that Trant did not pay, and nor did it issue a pay less notice.
A dispute arose and Mott withdrew Trant’s access to the BIM database, including to the design works carried out to date. Mott asserted that there was no enforceable contract between the parties and it was simply entitled to be paid for works done.
Trant purported to terminate the contract on the grounds that Mott was in repudiatory breach. It issued proceedings seeking a declaration as to the terms of the contract, and sought an interim injunction allowing access to the design data held in the BIM database.
By the time the relationship had broken down, Mott had been providing design services for a little over a year, the output of which was stored on the BIM database. If Mott withheld access to this design data, and if the dispute couldn’t be resolved so as to allow access, Trant would have to go back to the drawing board, which would cost it a significant sum of money and an estimated year of additional work, likely to be in excess of the £1 million liability cap.
Applying the American Cyanamid test as to whether an interim application should be granted, the court granted the injunction. There was undoubtedly a serious question to be tried. Damages would not be an adequate remedy for Trant because the likely losses on a project of this nature would far exceed the £1 million cap on damages recoverable from Mott (assuming that the cap was held to apply). Furthermore, there was little risk in granting the injunction to provide access to design data that it had previously produced and provided to Trant. The court went further to say that even if it was decided that there was no contract, Mott had already been paid for the design data.
What can we take from this?
Obvious comments aside (that if only the parties had signed the contract, the dispute could have been avoided), the case aptly illustrates the very real dangers when using BIM of not executing the contract. Even with only level 2 access, without the protection of the design access and copyright provisions, the ability of the consultant to hold the project to ransom by blocking access to the BIM database is very real.
Here, Trant and the MoD were lucky. As well as considering the legal aspects of the dispute I would hazard a guess that the court had careful regard to policy, including the need to make BIM workable, the importance of the project to the Falklands and the security issues involved. But, what if the project had not had these particular characteristics? Would the result have been the same? Possibly, but why leave it to chance?
The lessons are clear: if you are using BIM, you need to conclude a contract that sets out clearly who is responsible for access to the data stored on the BIM model. Drafting points include:
- Who is going to manage/host the data on the BIM model? Would it be better to keep it with the employer or hand it over to a consultant who may have more technical expertise/capability?
- Where is the data stored? Is it on a project server or in a cloud based system?
- Will the employer be able to extract the data regularly? Regular extraction may lead to less of an impact if access is suddenly removed.
- What are the circumstances in which access can be denied (for example, non-payment or termination)?
The fundamental point is that when using BIM, you need to engage fully with the concept and agree as much of the governance as possible at the outset. So while this looks to me like an old problem in new clothes, it only reinforces the need for clients to consider their ability to use designs, drawings and so on (and to ensure that contracts are signed that include a clear, unqualified licence to use). This will be good practice for parties as they gear up for BIM3!
This blog post first appeared on PLC Construction Blog on 18 October 2017.