multiplex counter-sues contractor Multiplex counter-sues...

multiplex counter-sues contractor Multiplex counter-sues contractor
From: By Paddy Manning
January 21, 2006

MULTIPLEX has filed an amended counter-claim in the High Court in London in its pound stg. 50million-plus ($117.5 million-plus) dispute with Cleveland Bridge, the former steel contractor on the disastrous Wembley National Stadium project.

The claim responds to allegations made in court filings last week by Cleveland Bridge, which was supposed to erect the famous steel arch over the stadium, that Multiplex had withheld payments and prepared for legal action as part of an "Armageddon Plan" to ruin the company.
Cleveland Bridge also alleged that supply of the wrong grade of concrete for arch footings by another Multiplex subcontractor, P.C. Harrington, was the cause of delays to the arch in 2004.

The steel subcontract, taken over by Hollandia on a cost-plus rather than fixed-price basis after Cleveland Bridge walked off the job in 2004, has been Multiplex's major headache at Wembley.

Multiplex has already incurred writedowns of more than $283 million on the project, including $165 million announced last month when Multiplex downgraded its 2005-06 profit forecast from $215 million to between $111 million and $10 million.

The final number will depend on the outcome of the High Court case, due to be heard in April. Cleveland Bridge has claimed more than pound stg. 56 million in payments and damages.


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The value of Multiplex's counter-claim is not clear and the company would not comment on the case yesterday.
In the document filed yesterday, Multiplex said it used the term Armageddon not as a plan, but in preparing for the worst-case scenario that Cleveland Bridge abandoned the site.

Multiplex also claimed that Cleveland had its own fall-back plan, codenamed "Project Trafalgar", to stop work at Wembley, blame Multiplex for repudiating the subcontract, and launch a publicity and lobbying campaign.

Multiplex also said Cleveland executive John Fletcher had approached it in December 2003 to suggest Multiplex buy the firm.

Multiplex alleged Cleveland Bridge was incompetent in its performance of the subcontract and was itself responsible for numerous delays and defects. In an email cited by Multiplex, one Cleveland Bridge employee described the steel delivery as a "f...ing shambles".

Multiplex claimed Cleveland Bridge's incompetence made it harder to secure a replacement contractor on a fixed price.

According to the Multiplex claim: "Once Hollandia commenced on-site erection and discovered the full extent of the disarray left by (Cleveland), Hollandia was unwilling to agree to a fixed-price arrangement."

A Sydney-based analyst said the market was now focused on Multiplex's 2006-07 profit forecast and the latest court documents would not have a financial impact. Multiplex shares closed up 1c to $3.22 yesterday.