|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd & Anor  EWHC 2220 (TCC) (29 September 2008)
Cite as:  EWHC 2220 (TCC)
[New search] [Context] [View without highlighting] [Printable PDF version] [Help]
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| Multiplex Constructions (UK) Limited
|- and -
|(1) Cleveland Bridge UK Limited
(2) Cleveland Bridge Dorman Long Engineering Limited
Mr Adrian Williamson QC, Mr Simon Hargreaves and Miss Lucy Garrett (instructed by McGrigors LLP) for the Defendants
Hearing dates: 10th March 2008 to 16th September 2008
Crown Copyright ©
Mr. Justice Jackson:
This judgment, which contains an important lesson for court users in chapter 37, is divided into five parts and 38 chapters as follows:
|PART 1 GENERAL|
|Chapter 2||The claimant's factual evidence|
|Chapter 3||The defendant's factual evidence|
|Chapter 4||The admissibility of Mr Taylor's evidence|
|PART 2 - SCOTT SCHEDULE 1|
|Chapter 5||Schedule 1A|
|Chapter 6||Schedule 1B|
|Chapter 7||Schedule 1D|
|Chapter 8||Schedule 1E|
|Chapter 9||Conclusion re schedule 1|
|PART 3 - SCOTT SCHEDULE 2|
|Chapter 10||Preliminaries up to 15th February 2004|
|Chapter 11||Go Data|
|Chapter 12||The variations comprised in variation notice SV399|
|Chapter 13||The side letter|
|Chapter 14||How much black steel was required
in order to construct the bowl as originally specified?
|Chapter 15||How should work in progress be valued?|
|Chapter 16||Bowl steel quantities to be valued as at 15th February|
|Chapter 17||Other pre-15th February valuation issues|
|Chapter 18||The saga of China steel and the purchase order|
|Chapter 19||Certification date|
|Chapter 20||How much bowl steel was CB required to fabricate
under the lump sum provision of the Supplemental Agreement?
|Chapter 21||How much bowl steel did CB in fact fabricate
under the lump sum provision of the Supplemental Agreement?
|Chapter 22||Reimbursable costs|
|Chapter 23||Steel purchase costs under schedule 1 (f)|
|Chapter 24||Design and drafting after 15th February|
|Chapter 25||CB's claim for variation instructions after 15th February|
|Chapter 26||CB's claim for temporary steel not returned by Multiplex|
|Chapter 27||Other post 15th February valuation issues|
|Chapter 28||Conclusion re schedule 2|
|PART 4 SCOTT SCHEDULE 4|
|Chapter 29||Schedule 4A|
|Chapter 30||Schedule 4C|
|Chapter 31||Schedule 4D|
|Chapter 32||The three migrated claims|
|Chapter 33||Did CB's repudiation cause delayed erection in August?|
|Chapter 34||Schedule 4E|
|Chapter 35||Schedule 4F|
|Chapter 36||Conclusion re schedule 4|
|PART 5. CONCLUSION|
|Chapter 37||The lesson to be drawn from this litigation|
|Chapter 38||The overall result|
i) The principal obligation which CB repudiated was the obligation to fabricate certain steel for the bowl of the stadium. This steel (referred to by all counsel as "the repudiated steel") was fabricated by ZNS at much lower cost. It is therefore common ground that Multiplex made a substantial gain as a result of CB's repudiation of its principal obligation. In their written closing submissions Multiplex quantified this gain at about £2 million (as demonstrated by Mr Williamson at day 36, pages 98 99). CB contend that Multiplex's gain is substantially higher.
ii) Multiplex's original position was that, because the subcontract was so attenuated by 2nd August 2004, damages for repudiation would be modest. Multiplex's claim for damages for repudiation (after giving appropriate credit) was only some £3 million. However, that position changed dramatically following Multiplex's victory on the repudiation issue. In schedules 4A to 4F served in August 2006 Multiplex claimed to have suffered losses totalling no less than £25 million as a result of CB's repudiation.
iii) After two rounds of preliminary issues (both of which have gone to the Court of Appeal) to determine questions of principle, the parties have been unable to agree quantum. Instead, at considerable cost (and, I suspect, contrary to sensible legal advice on both sides), the parties are asking the court to value almost every aspect of the steelwork, apart from the arch.
"Acecad" means Acecad Software Ltd.
"Babtie" means Babtie Group Ltd (which was acquired by Jacobs Engineering in or around August 2004).
"Black steel" means raw steel, which has not entered the fabrication process.
"Bridon" means Bridon International Ltd.
"Buyouts" means materials, items or services which CB purchased from third parties.
"Carve-out steel" means steel fabrication which was removed from CB's subcontract by the Heads of Agreement and the Supplemental Agreement.
"Cleveland Group" means the group of companies of which CB forms part.
"CMHS" means Coloured Modified High Solids (a type of paint)
"CN" means "change notice".
"CVI" means confirmation of verbal instruction.
"DLT" means Dorman Long Technology Ltd.
"East Lane" is the name of a storage yard near to Wembley.
"Enob" means Enob Fire Ltd.
"Fast Track" means Fast Track Site Services Ltd.
"Go Data" means the software system of that name, which was created by Acecad and is discussed in chapter 11 below.
"Interregnum" means the period between the date when the Heads of Agreement were executed and the date when the Supplemental Agreement was executed. (During this period the parties operated under the regime of the Heads of Agreement, but in anticipation that that would be superseded by a Supplemental Agreement then under negotiation.)
"Leave-out steel" means steel which could not be erected until after the arch had been raised in June 2004.
"Lump sum" means a defined sum for which work and materials are to be provided. (Two lump sums are of principal relevance in this litigation, namely (i) the original subcontract price and (ii) the sum of £12 million specified in the Supplemental Agreement.)
"Lump sum risk" means the risk that the actual quantity of steel required to construct the bowl as originally specified would exceed the allowance made in CB's tender. That allowance is set out in the subcontract documents at D2/289.
"Lump sum risk factor" means the factor by which rates of payment in respect of the bowl must be reduced, once the actual steel quantities are known, in order to reflect the lump sum risk.
"Lump sum works" means the works which, under the Supplemental Agreement, CB agreed to carry out for £12 million.
"Migrated claims" means those claims which were originally within Scott schedule 4D, but have been transferred to Scott schedule 4C.
"Mott" means Mott MacDonald Ltd and its related companies.
"NDT" means non-destructive testing.
"Oakwood" means Oakwood Engineering Services Ltd.
"Palace of Industries" is the name of a storage yard near to Wembley.
"PC Harrington" or "PCH" means PC Harrington Contractors Ltd.
"Phoenix" means Phoenix Electrical Company Ltd.
"PMS" means piece monitoring system (one function of Go Data).
"PISA" or "Permasteelisa" means Permasteelisa (UK) Ltd and related companies.
"Purchase order" is a reference to Multiplex's purchase order no. 74010, which was sent to CB on 26th May 2004.
"Pyramid" means Pyramid Builders Ltd.
"Retrofit" means work done to correct or amend (a) steelwork drawings or (b) pieces of fabricated steel (a process explained by Mr Hutchinson, whose evidence is summarised in chapter 3 below).
"RFI" means "request for information".
"Runway girders" means those girders upon which the moving roof of the stadium slides, when opening or closing.
"Sandbergs" means Sandberg LLP.
"SGT" means Shanghai Grand Tower (a steel fabrication company in China).
"Side letter" means the letter from Multiplex to CB dated 20th August 2002, which CB rely upon as entitling them to additional remuneration.
"SMM" means the Standard of Measurement.
"Supplementals" mean the numerous written submissions which counsel lodged during the trial, by way of supplements to their opening and closing written submissions.
"Tighe" means Jack Tighe Ltd.
"Toblerones" means the triangular trusses which formed the middle sections of turning struts used to raise the Wembley arch.
CROSS-EXAMINATION AND RE-EXAMINATION
CROSS-EXAMINATION AND RE-EXAMINATION
WITNESS STATEMENT AND EVIDENCE IN CHIEF
Information from CB
Design and detailing work
Schedule 4C: claim 3: completion of bowl connection design
February to July 2004
Events after 2nd August 2004
CROSS-EXAMINATION AND RE-EXAMINATION
JOHANNES DE MEIJER
WITNESS STATEMENT AND ORAL EVIDENCE IN CHIEF
CROSS-EXAMINATION AND RE-EXAMINATION
CROSS-EXAMINATION AND RE-EXAMINATION
INITIAL CROSS-EXAMINATION AND RE-EXAMINATION
CROSS-EXAMINATION AND RE-EXAMINATION
Deliveries of steel
Wrongly painted steel
The twenty change notices
Schedule 1B: items JT 1 376
Schedule 1B: item JT 377
Schedule 1B: item JT 378
Schedule 1B: JT 380
CROSS-EXAMINATION AND RE-EXAMINATION
CROSS-EXAMINATION AND RE-EXAMINATION
PHILIPPUS VAN GILS
Transport of steel
Receiving, sorting and storage
Reviewing the status of part fabricated steel
Fabrication and coating
Non-destructive testing ("NDT")
CROSS-EXAMINATION AND RE-EXAMINATION
Schedule 4A: Head 1: Transport
Schedule 4A: Head 2: Receiving, sorting and storing steel
Schedule 4A: Head 3: Reviewing Status of Part-fabricated Steel
Schedule 4A: Head 4: Steel Materials
Schedule 4A: Head 5: Fabrication and Coating
Schedule 4A: Head 6: Additional Fabrication Works
MULTIPLEX WITNESSES WHOSE STATEMENTS WERE READ
Scott Schedule 1A
Scott Schedule 1B
Scott Schedule 1D
Scott Schedule 1E
Scott Schedule 4A
Scott Schedules 4C and 4D
Scott Schedule 4E
Scott Schedule 4F
KEES VAN ROOIJEN
i) Contract WP 2755, made on 11th May 2004: fabrication of bowl and PPT steel for which Multiplex were responsible under the Supplemental Agreement.
ii) Contract WP 9050, made in March 2004: roof audit.
iii) Contract WP 2755-1, made on about 12th August: fabrication of repudiated steel and outstanding China steel, following CB's repudiation.
iv) Contract WP 2765, made on 8th November 2004: fabrication, painting and delivery of steel for fixed roof.
v) Contract WP 2756, made on 30th November 2004: fabrication, painting and delivery of steel for moving roof.
vi) Memorandum of understanding ("MOU") or contract WP 2760, made on 24th August 2005: erection.
CROSS-EXAMINATION AND RE-EXAMINATION
Work on site
Mr Green's visits to stockyards managed by Multiplex
Temporary Steel left behind by CB for Multiplex
CROSS-EXAMINATION AND RE-EXAMINATION
WITNESS STATEMENTS AND ORAL EVIDENCE-IN-CHIEF
CROSS-EXAMINATION AND RE-EXAMINATION
Work done by CB after 15th February 2004
Damage to paintwork
Events after 28th July
Connection designs not A status
Roof design as at 2nd August 2004
The Hollandia period
(i) Revised loading information
(ii) Changes by Hollandia to erection methodology
CROSS-EXAMINATION AND RE-EXAMINATION
State of design as at 2nd August
Work done by Hollandia after 2nd August
Retrofit work to drawings
Retrofit work to steel pieces
CROSS-EXAMINATION AND RE-EXAMINATION
Mr Hutchinson's period with CB
Mr Hutchinson's period with Hollandia
DR ALAN MANN
The work of CB and Hollandia
Multiplex's claims in paragraphs 30 55 of schedule 4C
State of design work as at 2nd August
Meeting on 2nd August
Models and the need for liaison between CB and Hollandia
CROSS-EXAMINATION AND RE-EXAMINATION
Supply of information to Multiplex
Claim 4 of schedule 4C and the linked claims in schedule 1D.
Amount of roof design work carried out between 15th February and 2nd August 2004.
CROSS-EXAMINATION AND RE-EXAMINATION
CROSS-EXAMINATION AND RE-EXAMINATION
Period up to 2nd August 2004
Period after 2nd August 2004
CROSS-EXAMINATION AND RE-EXAMINATION
Late 2003 to August 2004
Degree of completion of PPT and roof design as at 15th February 2004
Degree of completion of roof design as at August 2004
Provision of design information after 2nd August
CB WITNESS WHOSE STATEMENT WAS READ
" 25. It very often happens in professional negligence cases that a defendant will give evidence to a judge which constitutes the reason why he considers that his conduct did not fall below the standard of care reasonably to be expected of him. He may do this by reference to the professional literature that was reasonably available to him as a busy practitioner or be reference to reasonable limits of his professional experience; or he may seek to rebut, as one professional man against another, the criticisms made of him by the claimant's expert(s). Such evidence is common, and it is certainly admissible. Mr Phillips, who appeared for the claimant at the trial, did not believe he had told the judge that Mr Moreland's evidence on matters of this kind was inadmissible, and neither of the very experienced leading counsel who appeared in this counsel who appeared in this court was willing to support the judge's view of the matter.
"26. Of course a defendant's evidence on matters of this kind may lack the objectivity to be accorded to the evidence of an independent expert, but this consideration goes to the cogency of the evidence, not to its admissibility. That such evidence was in principle admissible should have been reasonably apparent from the judgments in this court in ES v Chesterfield and North Derbyshire Royal Hospital NHS Trust  EWCA Civ 1284 at , ]- and ,  Lloyd's Rep Med 90."
Group 1: Enob 1 the cluster of claims re steelwork at East Lane stockyard.
Group 2: Enob 2, 3, 5, 7, 9-20, 22, 24-28.
Group 3: Enob 6, 8, 21, 23
Group 4: Enob 30, 54, 60, 71, 72, 82, 90.
Group 5: Enob 31-44, 46-53, 56-59, 61-70, 74-81, 83-89.
Group 6: Enob 45, 55, 73.
Issues of principle
"The Upper Section of the upper tier rakers (from Level S6 to PPT) will be delivered to site in two sections classified as the Raker Upper Section and the Raker Top Tapered Section. These two sections are then to be site welded to form the Upper Section of the Upper Tier Raker. It is the intention of CBUK to weld these splice connections at ground level to reduce the amount of work required whilst the pieces are in the air and thus reducing the risks associated with working at height."
"In essence paragraph (b) was for fabrication work and paragraph (c) was for erection and site works. Fabrication work would not cease to be fabrication work only because fabrication work was transferred to and done on site."
Categorisation of Schedule 1D claims
Category 1: Hol 41 57, 61 143, 151.
Category 2: Hol 10 13, 34, 35, 146.
Category 3: Hol 37, 189.
Category 4: Hol 1.
Category 5: Hol 195, 237
Category 6: Hol 23, 209.
Category 7: Hol 213, 221, 223, 225 231.
Category 8: Hol 201.
Category 9: Hol 196 199, 208, 234, 241.
Category 10: Hol 2, 6, 8, 9, 16 18, 24, 25, 27 31, 36, 38 40, 144, 146 149, 152, 153, 157, 162, 163, 170, 180, 185, 186, 194, 212, 219, 224, 235, 236, 238, 239, 241 244, 248, 251, 253.
Category 11: Hol 160, 161, 165, 168, 203, 210, 220, 250.
Category 12: Hol 172 179.
Category 13: Hol 26, 150, 156, 164, 200, 202, 206.
Category 14: Hol 14, 15, 32, 33, 222, 254 259.
Category 15: Hol 211, 233, 245, 246.
i) Failed to complete the welding of rakers.
ii) Failed to weld closure brackets.
iii) Failed to weld stools.
iv) Failed to weld louvres.
Schedule 1A Nil Schedule 1B £ 49,119.39 Schedule 1D £ 42,109.50 Schedule 1E £60,076.50 Total £151,305.39
Relevant contractual provisions
"21.3 Applications for Payment(1) "Within five (5) Business Days of a Progress Inspection having taken place pursuant to clause 21.2.2, the Sub-Contractor shall be entitled to make applications for payment (each an "Application for Payment") in respect of the previous month (in this clause 21.3, and clause 21.4 the "Relevant Month")."(2) Each Application for Payment shall be submitted with 3 (three) hard copies (three) electronic copies, and shall specify the total amount claimed up to and including the Relevant Month by reference to:i) the value of the works properly completed;ii) the total value of work properly completed to which clauses 4.6 and 4.7A refer;iii) any amounts due pursuant to clause 45.2;iv) any additional payments to which the Sub-Contractor is entitled under the Sub-Contract during the Relevant Month;v) Less except where the Sub-Contractor has made the election pursuant to clause 39, the Retention referred to in clause 21.12 for all the amounts referred to above (except the payments referred to in clause 18.104.22.168); andvi) all previous payments made to the Sub-Contractor under the Sub-Contract.(3) The Sub-Contractor shall submit with its Application for Payment any Off-Site Materials Bonds required to the procured pursuant to clause 45.2.
21.4 Valuation(1) The Gross Valuation shall be lesser of;i) the amount specified for the relevant month in the Maximum Cumulative Monthly Amount column as shown in the Payment Profile;Andii) the gross value of the works claimed in accordance with clause 22.214.171.124) For the purpose of paragraph 126.96.36.199 the value of the works properly completed shall be ascertained by allocating to each activity bar in the Payment Programme a monetary value equal to the same percentage of the total amount attributed to the whole of that activity bar in the Payment Programme as the percentage of the total work represented by the said bar as has been properly completed on Site and in accordance with the Sub-Contract prior to the end of the Relevant Month, and aggregating the said monetary values for all activity bars.(3) For avoidance of doubt and notwithstanding any other provision of the Sub-Contract, the Sub-Contractor shall not be entitled to claim or request payment in respect of any Sub-Contract Works if the amount of such claim or request would on the date when payable result in the aggregate amount of Gross Valuation, then paid or payable to the Sub-Contractor exceeding the amount specified in the Cumulative Monthly Amount column as shown in the Payment Profile.
21.5 Supporting Data
Each application shall, to the extent relevant, be accompanied by;i) The Sub-Contractor's valuation of the work completed at the end of the Relevant Month, to be set out by allocations to activity bars in the Payment Programme in accordance with clause 21.4.2.ii) Reasonable substantiation of the amount claimed under clauses 188.8.131.52 and 184.108.40.206 in accordance with the requirements of the Sub-Contract.iii) Such other details justifying payment as the Contractor may reasonably require.
21.6 The Contractor and Sub-Contractor shall from time to time (but at least once every calendar month), carry out a detailed examination and review of the Payment Profile and the Payment Programme and an assessment of the extent to which the Execution of the works and/or the performance of the Design Obligations have been carried and the Sub-Contract Sum has been amended in accordance with the Sub-contract up to the date of such review and the Contractor shall, if he is of the opinion that revisions ought to be made, revise the Payment Profile and the Payment Programme. Such changes will take effect in the Valuation that becomes due three (3) months after the meeting, or earlier if mutually agreed.
21.7 Review of Sub-Contractor's Application for Interim Payment Certificate
The Contractor and the Sub-Contractor shall jointly review each Application for Payment and endeavour to agree the amount due to the Sub-Contractor. If no such agreement can be reached the Sub-Contractor shall issue its Application for Payment as it sees fit pursuant to clause 21.3 and the Contractor shall issue a Certificate of Payment in accordance with clause 21.9 for such amount as the Contractor considers to be due. Any outstanding disagreement between the Contractor and the Sub-Contractor shall be determined in accordance with clauses 38A and/or 38C.
21.8 Amounts Due to the Contractor
In preparing each Application for Payment, the Sub-Contractor shall deduct all amounts due to the Contractor pursuant to the provisions of the Sub-Contract, except sums already so deducted in a previous Certificate of Payment or paid to the Contractor pursuant to clause 21.10.
21.9 Issue of Interim Payment Certificates
(1) Within twelve (12) Business Days after the receipt of the Application for Payment under clause 21.3, the Contractor shall issue a certificate (a "Certificate of Payment") certifying what amounts are due to the Sub-Contractor pursuant to this clause 21.9, less any amounts which are to be deducted pursuant to clause 21.10 or are the subject of a notice under clause 21.11.1.
(2) All Certificates of Payment shall specify the amount which the Contractor proposes to pay to the Sub-Contractor and basis on which that amount was calculated. Such amount shall become due on the date of issue of the Certificate for Payment and final date for payment shall arise ten (10) business days after the date of issue of the said Certificate for Payment.
21.10 Sums Due to Contractor
(1) Where by virtue of any provision in the Sub-Contract, the Sub-Contractor becomes liable to pay sums to the Contractor or the Contractor becomes entitled to abate amounts against sums due to the Sub-Contractor, the Contractor may:
i) deduct such sums in computing the amount in any Certificate of Payment;
ii) issue an invoice to the Sub-Contractor for such sum identifying the amount and the grounds for the Contractor's claim; or
iii) do a combination of Clauses 220.127.116.11 and 18.104.22.168.
(2) The amounts specified in such Certificate of Payment and / or invoice shall become due and the final date for payment shall arise ten (10) Business Days after the date of issue of such Certificate of Payment and/or invoice as applicable."
"1.0 PAYMENT PROGRAMME:
1.1 The purpose of the Payment Programme is to show the values of the various elements of the Works for the purpose of valuation and payment pursuant to Clause 21 of the Sub-Contract Conditions.
1.2 The amounts entered by the Sub-Contractor against each of the items shall be complete and are deemed to include for all associated work including labour, material, delivery, plant, tools, equipment, etc and based of the Agreed Pricing Schedule.
1.3 Not Used
1.4 The risk and responsibility for estimating the value of each item remains with the Sub-Contactor. All items are deemed to be included in the Contractor Sum whether or not any amount is shown against them unless otherwise noted as not included.
1.5 Where elements are provisional they are described as such in the Payment Programme and the provisional quantity or provisional sum given.
1.6 The Sub-Contractor shall include any additional items known or agreed it considers necessary to comply with the requirements of the Sub-Contract.
1.7 The total value of all items listed has been carried forward to the Sub-Contract Sum.
1.8 The sums included within the Payment Programme are to be dealt with in accordance with the Sub-Contract Conditions, refer Clause 21.6."
Project management £6,035,207
Site management £1,194,753
Design and engineering £2,880,918
General site preliminaries £6,939,977
Project management £2,601,713
Site management £ 245,112
Design and engineering £1,729,871
General site preliminaries £2,623,620
"Q. You have had some communications with AceCad, who are effectively the inventors of GO Data -- A. Yes, I have.
Q. -- and you have no reason, have you, to suppose that GO Data, as a software package, is in any way deficient? A. No, not at all.
Q. So if we then look at the criticisms, for example (i), (iii), (iv) and (v), that is essentially making the point, isn't it, that GO Data can only be as good as the information put into it? A. Yes.
Q. That is not a criticism of GO Data as a system; that is a function of any computer or database system? A. That is correct.
Q. Now a point is made at (iv) and (v) effectively that there could be mistakes made in inputting the data. A. Yes
Q. I wonder if we could just turn up what Mr O'Neil says about that. That is bundle B4/2 at page 297. While I find the bundle, the relevant passage is paragraphs 390-392, if you would just like to refresh your memory of those. (Pause) A. Yes.
Q. So what Mr O'Neil says is that effectively you would only have an error of any significance at the last stage of the process, ie the erection stage. A. Through the manufacturing process, yes. There are checks within the system which sort of relate back to the earlier stage as a cross-check against the next stage.
Q. Yes. Your answer effectively is summarising what Mr O'Neil says in that passage in his witness statement? A. Yes, subject to what it is that goes into the process, ie the manufacturing process, the quantities of material, the nature of the materials, that is correct
Q. Now if you want to put away Mr O'Neil's statement for the time being, can you then go back to the further information at page 457? A. Yes.
Q. At (iii) there is reference to late updating of the database prior to valuations being prepared. Yes? A. Yes.
Q. Now what one imagines might happen there is this, isn't it, that a piece of steel has, for example, reached a particular stage in the process, but the person who is inputting the data has not yet caught up with the steel? A. Yes.
Q. That could happen? A. Yes.
Q. The effect of that, in relation to valuation, would be that CBUK would be underpaid, wouldn't they? A. I believe that is right, yes.
Q. Then so far as -- A. You would have inaccuracy, but it would lead to that result, yes."
"Q. So far as (ii) is concerned, on the Multiplex list there is reference to manipulation of the information within the database. It is right, isn't it, Dr Mastrandrea, that as part of the interim payment application process, CBUK provided to Multiplex printouts both of the stock-in reports and the PMS reports on a monthly basis? A. I believe that is so, yes, although I've only, I think, seen a limited number of those. But I believe that is so.
Q. Let's just see what is in the documents that we have got. Could you be given file E9? Now, Dr Mastrandrea, we are dealing here with the application for the payment, as it happens, to February 2004. Do you follow? So this is pre-15 February. A. Yes.
Q. Could you go to E9/62? A. Yes.
Q. There we have a section which is headed "UK and China materials offsite". Do you have that? A. Yes, I do.
Q. Then go forward to page 67. There we have the stock-in phase breakdown printed on 15 February 2004. That is the arch and then the bowl is at page 68. Yes? A. Yes, that is right.
Q. Then if you go behind the next tab at page 221, we have "measured works on-site". A. Yes.
Q. If you go by way of example to page 235 -- A. Yes.
Q. -- this is now the material in the PMS system here at planning and then going forward to fabrication and so on. A. Yes, that is right, yes.
Q. So just pausing there, first of all it would be possible, wouldn't it, for Multiplex, as the paying party, to check this information as to whether they were, so to speak, getting what they were paying for? A. Yes.
Q. Secondly, there would be no way, would there, of manipulating these hard copy records, hard copy reports? A. Manipulating them?
Q. Manipulating them. A. No, but I don't think that removes the problem of between documents. It doesn't follow that there are no errors or inconsistencies in these documents. That is the problem, I think. Whether or not you are able to satisfy yourself about the adequacy of these documents depends on how much of an expert you are with this sort of system. You know, if you are not, then you are very likely to take it at face value, I suggest. That is perhaps not a good thing. If I could just give you an example of what I think are inconsistencies within this bundle. If we look for example at E9/68, which is the stock-in phase breakdown for the bowl we were looking at, and we compare it with page 192, what we see in relation to the list at 192 is that phases 51-54 are not represented in that listing. You see 55, 56, 57, but 51-54 is not represented in that system. MR JUSTICE JACKSON: Are they phases 51-54? A. It is phases, my Lord, yes. I beg your pardon. It is 61-64. 61-64 is -- MR JUSTICE JACKSON: That is the south roof, isn't it? A. Yes, these are the roofs. MR WILLIAMSON: No, this is the bowl we are looking at. Page 68 is the bowl, Dr Mastrandrea. A. I beg your pardon. 69, I mean.
Q. Just take it in stages. The particular allegation that is made by Multiplex is manipulation of the information within the database. A. Yes.
Q. I'm suggesting to you that it is not possible to manipulate -- that is the word which is used -- information within these hard copy documents which are supplied as part of the payment applications. A. Not when you are within the fabrication process. I agree with that."
"Dr Mastrandrea, after that false start, the question I was asking you was whether you were familiar with this documentation which, on my instructions, was used to support the post 15 February application. A. Yes, I am.
Q. Just to see what we get out of it, if we go to tab 2 -- A. Yes.
Q. -- that supplies the stock-in reports and we can see, at page 12, it identifies the contract numbers; yes? A.Yes.
Q. Then, at page 16, for example, one can see when this information is printed out; on this occasion on 23 August 2004. A. Yes.
Q. Then, at tab 3, this is now the fabrication part of the process, with the GO Data reports. If you look, for example, at page 154, one has a list of material at planning and so on. A. Yes.
Q. Dr Mastrandrea, again so far as this information is concerned, the hard copy information, it was capable of being checked by Multiplex? A. Yes.
Q. It is not capable of manipulation? A. In relation to the fabrication process, I agree."
"1.8.1 The Sub-Contract constitutes the entire agreement between the Parties and supersedes all prior negotiations, commitments, representations, communications and agreements relating to the Sub-Contract either oral or in writing except to the extent they are expressly incorporated herein. The Sub-Contractor confirms that it has not relied upon any representation inducing it to enter into the Sub-Contract (whether or not such representation has been incorporated as a term of the Sub-Contract) and agrees to waive any right which it might otherwise have to bring any action in respect of such representation. The Sub-Contractor further confirms that there is not in existence at the date of the Sub-Contract any collateral contract or warranty of which the Sub-Contractor is the beneficiary which might impose upon the Contractor obligations which are in addition to or vary the obligations expressly contained in the Sub-Contract and which relate in any way to the subject matter of the Sub-Contract. The Sub-Contractor's only rights arising out of, or in connection with, any act, matter or thing said, written or done or omitted to be said, written or done, by or on behalf of the Contractor (or any agent, employee or sub-contractor of the Contractor) in negotiations leading up to the Sub-Contract or in the performance or purported performance of the Sub-Contract or otherwise in relation to the Sub-Contract are the rights to enforce the express obligations of the Contractor contained in the Sub-Contract and to bring an action for breach thereof. Nothing in this clause 1.8 is intended to exclude liability of the Contractor for fraud or fraudulent misrepresentation."
i) In the valuation of work done up to 15th February 2004, CB is not entitled to additional payment in respect of the side letter.
ii) In considering what sum Multiplex had agreed to pay in respect of bowl steel, I must take the figure of £16,634,657 as set out in the subcontract breakdown, rather than that figure plus £400,000.
iii) In considering how much steel CB had agreed to erect for the sum of £16,634,657, I must take the quantity of 13,586 tonnes as set out in the subcontract breakdown. I should not add to that quantity either 347.59 tonnes or 434.005 tonnes in respect of the side letter.
(b) Variations (compromised)
(c) Ledger angles
(d) Floor steel in unlisted fittings
(e) Steel provided by ZNS
(f) Material sent to site by sub-contractors
(g) Materials ordered but not delivered
(h) Materials transferred to contracts other than Wembley
(i) The 20 change notices post 15th February 2004
(j) Replacement steel left in China
New item suggested by Dr Mastrandrea on day 25
The parties' contentions
(i) Valuation as at 15th February
"(a) the gross valuation as at 15th February 2004 of work properly completed on Site and goods and materials brought onto Site by the Subcontractor and Off-Site Materials in accordance with the provisions of the Subcontract ".
I shall refer to this provision as "schedule 1 (a)".
"The purpose of the Payment Programme is to show the values of the various elements of the Works for the purpose of valuations and payment pursuant to Clause 21 of the Subcontract Conditions."
i) Materials procurement
iv) Materials on site unfixed
(ii) Valuation of Steel Fabricated pursuant to Schedule 1 (b) of the Supplemental Agreement
(iii) Valuation of steel fabricated pursuant to the Purchase Order
i) Materials procurement
iv) Materials on site unfixed
Steel procured 7,394.96 tonnes
Steel fabricated 2,890.94 tonnes
Steel painted 1,489.82 tonnes
Steel on site unfixed 561.50 tonnes
Steel erected 2,485.05 tonnes
Total 14,822.27 tonnes
"(All costs associated with the painting for which a provisional sum was included in the Sub-Contract are deemed to be included in the lump sum referred to at paragraph (b) above. For the avoidance of doubt all costs associated with the expenditure of the Provisional Sum for Fire Protection is not included in the lump sum referred to at paragraph (b) above. Such expenditure will be recovered by the Sub-Contractor monthly and in addition to the draw down on the lump sum at paragraph (b))".
i) It was Multiplex's duty to value "works properly completed" during the relevant month: see clauses 21.3 (2) (4) and 21.4 (2). ii) It appears from Enob's invoice dated 30th June and (received by CB on 30th June) that work to the value of £1,122,753.22 had been completed by Enob by the end of June.
iii) In paragraph 4.59 of his schedule 2 report Dr Mastrandrea notes that the starting point for calculation of fire protection costs is £1,122,753.22.
Black steel for the Roof
How China steel was dealt with
Assessment of what is due to CB under item 1 of the purchase order
Lump sum work
"An Application for Payment in respect of the items referred to at paragraph (c) above may be made in accordance with clause 21.3 of the Sub-Contract at two week intervals and clause 21of the Sub-Contract shall be construed accordingly with the necessary changes made."
Costs of purchasing steel
"CBUK Darlington Office was visited 1 2 July 2004 and CBUK payroll, timekeeping, bookkeeping and personal staff were interviewed. CBUK staff had no difficulty in producing any paperwork, justification, or explanation for any verification query posed. The staff responded efficiently and in an open manner despite the circumstances."
(i) Multiplex's calculation takes no account of the other erection undertaken by CB, in particular pre-cast planks. Erection of pre-cast planks was a substantial operation.
(ii) Multiplex's calculation takes no account of delays caused by lack of crane availability and bad weather.
(iii) Multiplex's calculation takes no account of work undertaken by CB other than erection, in particular raising the arch, removing the turning struts, assembling and erecting the PPT.
(iv) Hollandia subsequently used similar resources to CB and achieved broadly similar outputs: see defendants' supplemental 6.
Fabrication work done on site
Retrofit work on site
Damage to paintwork
Inefficiencies on site and wrong deliveries
Claims for men who were not working
Scaffolding for work completed before 15th February £60,860
Credit notes £ 8,398
Scaffolding re arch repairs £30,000
Duplicated invoice £ 750
Credit note £ 325
Consumables for arch repairs £2,000
i) Whether the rate allowed should include (a) fabrication shop handling charges and (b) overheads and profit.
ii) Whether CB are entitled to recover the cost of 96.11 tonnes of steel purchased for the arch.
|Less: China steel||-1,300.00|
|Less: Internal transfer||-6.00|
|Less: adjustment for arch steel||-124.75|
|Cost||£ per tonne||Quantity||Value|
|Agreed rate per tonne||495.08||4,450.54||£2,203,373.34|
|Fabrication shop rate||22.96||4,450.54||£102,184.40|
The issues between the parties
(i) The design and drafting of bowl steelwork were 90% complete on 15th February and 95% complete by 2nd August 2004.
(ii) The design and drafting of erection engineering and temporary works for the bowl steelwork were 90% complete on 15th February and 95% complete by 2nd August 2004.
(iii) The design and drafting of PPT steelwork were 87% complete on 15th February and 95% complete by 2nd August 2004.
(iv) The design and drafting of erection engineering and temporary works for the PPT steelwork were 87% complete on 15th February and 95% complete by 2nd August 2004.
(v) The design of the fixed roof permanent works was 55% complete on 15th February and 90% complete on 2nd August 2004.
(vi) The drafting of the fixed roof permanent works was 25% complete on 15th February and 90% complete on 2nd August.
(vii) The design and drafting of erection engineering and temporary works for the fixed roof were 25% complete on 15th February and 85% complete on 2nd August.
(viii) The design and drafting of permanent works for the moving roof had not started on 15th February. By 2nd August this work was 5% complete, in that some work had been done in relation to the buffers.
(ix) The design and drafting of erection engineering and temporary works for the moving roof had not been started on 15th February. By 2nd August this work was 5% complete.
"9. In the event that the unperformed reimbursable costs items (referred to in schedule 1, paragraph (c)) are removed from the subcontract works in accordance with clause 8, it is agreed that:
"9.1 the parties will liaise during the 28 day notice period with a view to securing alternative employment for as many of the Sub-Contractor's Site employees as possible and ensuring an orderly handover of the works with due respect for consultation and notice requirements."
"9.3 the Contractor and/or his sub-contractors and/or his or their agents may enter upon the Sub-Contract Works and use for a consideration of £500,000 all temporary buildings, plant, tools, equipment and temporary works necessary for the carrying out and completion of the unperformed reimbursable cost items provided that where the aforesaid temporary buildings, plant, tools, equipment and temporary works are not owned by the Sub-Contractor, the Sub-Contractor shall use all reasonable endeavours to ensure that the benefits of all hire agreements and the like in respect of such temporary buildings, plant, tools, equipment and temporary works are fully assigned to the Contractor for the completion of the unperformed reimbursable cost items. The aforesaid consideration will be paid within 14 days of the Sub-Contractor complying with the Clause 9 and leaving the Site."
What steel did CB leave on site?
|Equipment as asset register||£ 585,732|
|Cable reeler/unreeler||£ 24,000|
|2,000 tonnes of steel valued at £1,500 per tonne||£3,000,000|
|Temporary works as asset register||£2,307,187|
Valuation of temporary steel
Category 1 buyouts
E. Roof castings (£261,100).
F. PPT truss and roof pins (£45,000).
S. Cable and strand handling temporary works (£70,000).
These three items are identified in paragraph 23 of Multiplex's re-re-amended additional particulars and explanations of Scott schedule 2. Dr Mastrandrea deals with these items at paragraphs 4.43 to 4.45 of his schedule 2 report. Mr Hart reviews them at paragraphs 645 to 650 of his report. The essential issue is one of fact, namely whether CB had supplied the items in question by 30th June. That factual question is addressed by Mr Underwood on behalf of CB and Mr Muldoon on behalf of Multiplex.
On-costs, bonds and insurance
|Valuation up to 15 February 2004|
|1.3||Design and Engineering||£1,729,871.00|
|1.4||General Site Preliminaries||£2,623,620.00|
|2.1||Valuation of Arch||£5,553,390.72|
|2.2||Valuation of Roof steel||£1,606,713.05|
|2.3||Valuation of Bowl steel||£8,987,708.16|
|2.4||Pre Cast Erection||£241,008.33|
|2.5||Metal Decking Erection||£166,608.00|
|4.3||Arch access system||£285,000.00|
|4.4||MPX deduction for over recovery on treatment of steel||-£228,641.88|
|4.5||Sub total provisional sums||£935,259.02|
|5.0||Total on valuation up to 15 Feb||£27,061,731.28|
|Valuation post 15 February 2004|
|6.0||Schedule 1(f) black steel||£2,305,557.74|
|7.0||Valuation of work done £12m|
|7.6||Sub total £12m scope||£6,962,584.72|
|8.3||MPX deduction for over recovery of steel treatment costs||-£181,530.15|
|8.4||Sub total provisional sums||£584,570.65|
|9.0||Variations post 15 Feb||£101,700.00|
|10.0||Site costs: Schedule 1(c)|
|10.2||Off site admin and overheads||£403,156.00|
|10.0||Sub total site costs||£8,359,665.00|
|12.0||Total on valuation post 15 Feb||£19,594,777.94|
|18.0||VALUATION OF WORKS||£46,656,509.22|
i) 1,798.1 tonnes of black steel were sent back from China to the UK.
ii) CB fabricated 305.5 tonnes of that black steel pursuant to item 1 of the purchase order before repudiation.
iii) As at the date of repudiation 394.24 tonnes of steel emanating from China were in planning and 53.68 tonnes of steel emanating from China were in fabrication.
Quantity of steel fabricated and painted by ZNS
Whether a deduction should be made for intumescent painting
"The fabricator is not responsible for the application of intumescent painting."
How much of the steel fabricated by ZNS is recoverable against CB?
ii) Fabricated and delivered by CB
iii) Louvre steel post 15th February variation
iv) New items post CB
v) Post CB variations
vi) Part of Hollandia scope
vii) Stated on database 4/11/2004 as being refab.
"both parties, Multiplex and Hollandia, were well aware that by bringing such an enormous amount of fabricated steel to East Lane and all steel that was in fabrication to ZNS in Holland, that at the end of the project there would be quite some steel left over."
i) Mr McGregor conceded in his oral evidence that Multiplex and Hollandia did not have any real difficulty in identifying steel which was stored on site or at East Lane; they could go and look at it; also most of the steel stored on site and at East lane had tags.
ii) Although I do not accept that East Lane was as well ordered as Multiplex maintain, I am satisfied that the steel pieces which went to Wembley following the instruction of 22nd June were capable of being identified. It was not CB's fault if they were not so identified.
iii) I accept CB's evidence that there was considerable confusion in the way that Multiplex dealt with steel pieces after their decision of 22nd June.
iv) Multiplex's claim made in good faith against Hollandia rested on the premise that steel pieces which were present in East Lane but not used were readily capable of being identified.
Multiplex's design and drafting claims
Contract WP 9050
Inconsistency with Multiplex's claim against Mott
"56. At a fundamental level, Mott MacDonald's design of the steelwork for the Wembley Stadium Project was: (i) not constructible; (ii) not correct; (iii) not complete; and/or (iv) not co-ordinated."
"391. Further changes to the T7 truss were made after Revision H. Changes to the T7 end reactions occurred on 10 February 2004 and 21 September 2004 (Revision J of the FC drawings)."
"392. Mott MacDonald made a further and highly significant change to the design of the T7 truss during December 2004 and January 2005. Mott MacDonald changed all of the connection forces in the T7 truss and also made significant revisions to the member sizes of the principle members in the truss. This design change was particularly disruptive as, at the time the change was introduced, Hollandia had just completed the drafting work on the T7 truss and had commenced fabricating the T7 truss sections."
"393. Mott Macdonald has previously attempted to attribute this revision to changes of the weight of the Moving Roof advised by Hollandia, however, as set out in Section F4 of this letter, Mott MacDonalds estimate of the Moving Roof dead load was incorrect and appropriate load contingencies were not used in Mott MacDonald's design. Further, Mott MacDonald failed to notify Multiplex that it was undertaking a re-design of the T7 truss in December 2004 and January 2005 despite the fact that an engineer from Mott MacDonald was resident in Hollandia's office and would have been aware that fabrication of the T7 truss had already commenced. Mott MacDonald's failure to notify Multiplex of these very late changes to the design of the T7 truss falls well below the standard of reasonable skill, care and diligence as may be expected of a qualified, experienced and competent structural design engineer on a project of this nature."
"492. Mott MacDonald's estimated Moving Roof dead load was incorrect and appropriate load contingencies were not used in Mott MacDonald's design. The final weight of the Moving Roof was approximately 200 tonnes heavier than the self-weight calculated by Mott MacDonald, representing approximately a 25% increase in its self weight."
"642. From the period on or around 8 November 2004 onwards, Hollandia completed the remaining design, fabrication and erection of the steelwork. They continued to be beset by changes and deficiencies in the design of the steelwork and in particular, design deficiencies in connection with the PPT and the moving and fixed roofs (as is discussed in more detail in section E and F of this Letter of Claim)."
"643. Throughout this period, Multiplex reprogrammed its work on several occasions to overcome the impact of Mott MacDonald's design breaches."
"977. Multiplex has ultimately settled claims made by Hollandia for amounts payable in relation to the design and drafting of the steelwork (under Order 9050) and the on-site erection of the steelwork (under Order 2760). Multiplex and Hollandia have settled Hollandia's claim for design and drafting of the steelwork for a total of £10,000,000. However £5,709,106.01 is currently being sought from CBUK in relation to the design and drafting of the steelwork associated to the Bowl performed by Hollandia. The balance of those costs are, in part, costs incurred by Hollandia in the period surrounding CBUK's repudiation on 2 August 2004 and the resulting 'learning curve' from Hollandia BV and this portion of the costs amounts to £1,625,520.63."
"978. Notwithstanding that cost, Multiplex asserts that an additional £2,665,373.36 of design and drafting work was caused by variations to the design of the steelwork which were introduced by Mott MacDonald and Multiplex seeks the sum of £2,665,373 from Mott MacDonald as a result of those variations (and those variations are discussed, in part, in Sections E and F of this letter and Multiplex will provide further particularisation in due course)."
The paragraph numbering of Scott schedule 4C
CB's deliberate policy of withholding information
The design and drafting costs which Hollandia incurred in August and September 2004 and charged to Multiplex
"We are currently reviewing and returning roof fabrication drawings. Following our meeting with MPX and Hollandia on 29 July 2004, it is apparent that Hollandia have differing views to CBUK with respect to the provision of length adjustment and tolerance during construction of the roof. Particular elements include CTs, bracing, purlins and the underslung rafters.
Our review of the roof fabrication drawings is for general compliance with our contract documents (which describe the structure in its permanent condition). Our review does not encompass provisions that the contractor may feel are necessary for their erection requirements. On the recently returned Phase 66 drawings, we have highlighted this point with respect to the bracing and CT elements by annotating the appropriate drawings. However, this is relevant to all roof fabrication drawings.
Before Hollandia commence fabrication, they should review the drawings and confirm or otherwise that the drawings provide the necessary provisions they require for their erection methods and sequence."
Completing the connection designs for the bowl;
Understanding the status of retro squad work, following the disbanding of CB's retro squad;
Completing the retro squad drawings;
Completing the steelwork drawings for the bowl.
A. Work to cater for the flexibility and tolerances required to construct the roof members.
B. Work to achieve an adequately shaped and functional roof.
C. Work to provide a design capable of fabrication and erection by the relevant completion date.
Item 54 reads "runway girder re-modelled and infills added".
Item 108 reads "Pre-set of 70 mm added to box girder".
Item 122 reads "vertical camber added to node points of horizontal vees".
Item 127 reads "width of top flange to box girders revised."
Further comment on categories A, B and C
Claim 1 £ 225,188
Claim 2 £ 23,174
Claim 3 £ 47,887
Claim 4 £ 31,709
Claim 5 £100,000
"Q.So the position was this, was it not, by 14th May, that scenario 1 had fallen away and scenario 2 was the scenario with which you and Hollandia were moving forward?
A.Yes. There were three scenarios, though. Scenario 1 is that CBUK continue, scenario 2 is that Hollandia take over in accordance with CBUK's methodology and scenario 3 is Hollandia with Hollandia's methodology. By this stage, yes, scenario 3 is they are looking to
take over it, if they do take over it, in accordance with their own methodology. There was finetuning of the erection that was -- which was coming forward from Hollandia, which could have been to the benefit of us.
Q. Mr Muldoon, you are quite correct to pick me up and say there are three scenarios and let us just for the transcript -- you have correctly identified them.
Scenario 1; CBUK continue with a new fixed price for erection, yes?
A. Stay as it is, yes. At that stage I think CBUK had made it clear that they were not going to give us a new fixed price for erection, they were only ever going to proceed on a cost plus basis. I forget the time at which that happened.
Q. It may not happen for these purposes. Scenario 1, CBUK continue with erection. A. Correct.
Q. Scenario 2; CBUK are given notice, Hollandia take over erection but on the basis of CBUK's temporary works, erection engineering, methodology and so on and so forth. A. Yes.
Q. Scenario 3; Multiplex give to Hollandia the whole erection responsibility, including temporary works, erection engineering and so on. A. Yes.
Q. What I am putting to you, Mr Muldoon, is that by 14th May as between yourselves and Hollandia it was scenario 3, and scenario 3 only, which was in contemplation. A. That would be fair to say. Although scenario 1 was obviously still in the picture."
"Q. At that stage, the schedule 1(c) works had been removed from CBUK, as we have seen? A. The schedule 1?
Q. Supplementary agreement schedule 1(c) has some cost plus works which are described, for shorthand, as erection. A. Yes.
Q. And the notice that we have just looked at removed those from CBUK, did it not? A. Correct, yes.
Q. But the schedule 1(b) works remained with CBUK. A. Yes, being the 12 million scope.
Q. The fixed price 12 million. What Hollandia were to carry out included the provision of erection engineering.
A. That was what we had to do at that point in time. That was not envisaged at the heads of agreement but that is what we had to do at that point in time.
Q. That is what you engaged Hollandia to do? A. Yes.
Q. Erection methodology, if that is different? A. Yes.
Q. Design of temporary works? A. Yes.
Q. Provision of temporary works? A. Yes.
Q. And that is what they then set out to do. A. That is what we had to set out to do, yes.
Q. Just a small point if we may on the -- I am sorry, Mr Muldoon, you wanted to refer us I think to a document in file C5? A. C5/10.
Q. I did not get the reference, did you say page 10? A. Page 10.
Q. So just before we leave this particular topic, perhaps we should turn that up. A. This document solidified from my perspective the fact that we could no longer leave the erection engineering and temporary works as contemplated by the supplementary agreement with CBUK, because CBUK were at this point in time refusing to take responsibility for any of that work. So they said, basically: if you are going to use another erection contractor then everything we have done under our current 12 million in relation to the temporary works and erection engineering methodology goes by the wayside.
Q. But this letter is dated 27th July, is it not? A. Correct, just before they left site.
Q. Just before CBUK left site and substantially after you had engaged Hollandia. A. Correct"
"Q. The agreement so far as erection was concerned was that the schedule 1(c) works could be taken from CBUK and given to another party. A. Correct.
Q. This document was prepared before CBUK had left site. A. Correct.
Q. And at that stage you contemplated that CBUK would continue to perform their schedule 1(b) works. A. Yes.
Q. And you are setting out, are you not, as you say in the attached schedule, which matters have gone to Hollandia and which matters have remained with CBUK?
A. Yes, but that does not mean there will not be a variation to the 12 million.
Q. And the matters that have moved to Hollandia are essentially the whole of erection, are they not, not merely the provision of labour to carry out erection?
A. Yes, hence there may have been required a variation. There was nothing that restricted the 12 million from being varied, as CBUK attempted to do as well.
Q. But Mr Muldoon, save for the provisions of schedules 1(b) and 1(c) of the supplemental agreement there had been no agreement, had there, to take away erection works from CBUK?
A. Sorry, you have to repeat that.
Q. Save for the provisions of the supplemental agreement and previously the heads of agreement, there had been no agreement to take erection works from CBUK, had there? A. Such as temporary works?
Q. No. There had not, had there? A. There had been discussions that they would have to be the responsibility of the erection contractor.
MR JUSTICE JACKSON: Sorry, there had been discussions that what would have to be the responsibility of the erection contractor?
A. Because if Hollandia was going to take over the erection methodology, there were adjustments that they wanted to make and they wanted to do it their way, so therefore the most practical way was for them to take over some of the temporary works in relation to that.
MR WILLIAMSON: But what certainly had not been agreed with CBUK was that the cost of Hollandia taking over the temporary works, preparing their own erection engineering methodology, designing the temporary works, fabricating the temporary works and erecting the temporary works would be carved out of the 12 million. A. No, that opportunity never came forth"
"Q. would it be fair to say that by 6th July you were quite well advanced in relation to planning for erection engineering?
A. Yes, I was very busy setting up the team and the organisation for that"
"As far as I am concerned, from the moment Hollandia took over erection, we also took over responsibility for the design and fabrication of the temporary works"
"Seeing that the renunciation itself is the breach, the damages must be measured by compensating the injured party for the loss he has suffered by reason of renunciation. You must take into account all contingencies which might have reduced or extinguished the loss. That is made clear by the very first case in which that doctrine of anticipatory breach was established, in Hochester v. De la Tour itself (1853) 2 E. & B. 678, 686-687. It follows that if the defendant has under the contract an option which would reduce or extinguish the loss, it will be assumed that he would exercise it. Again, if it is reasonable for him to take steps to mitigate his loss, he must do it. And so forth. In short, the plaintiff must be compensated for such loss as he would have suffered if there had been no renunciation: but not if he would have lost nothing."
"But the true test in a case of anticipatory breach is: 'What would the position of the parties have been if the defendant had not wrongly announced his refusal to fulfil his part of the contract when the time for performance arrived?' One must look at the contract as a whole, and if it is clear that the innocent party has lost nothing, he should recover no more than nominal damages for the loss of his right to have the whole contract completed. The assumption has to be made that, had there been no anticipatory breach, the defendant would have performed his legal obligation and no more. 'A defendant is not liable in damages for not doing that which he is not bound to do': Scrutton L.J in Abrahams v. Herbert Reiach Ltd.  1 K.B. 477, 482, cited with approval by Diplock L.J. in Lavarack v. Woods of Colchester Ltd.  1 QB 278, 293."
"In my view, where there is an anticipatory breach of contract, the breach is the repudiation once it has been accepted, and the other party is entitled to recover by way of damages the true value of the contractual rights which he has thereby lost; subject to his duty to mitigate. If the contractual rights which he has lost were capable by the terms of the contract of being rendered either less valuable or valueless in certain events, and if it can be shown that those events were, at the date of acceptance of the repudiation, predestined to happen, then in my view the damages which he can recover are not more than the true value, if any, of the rights which he has lost, not having regard to those predestined events."
"The true question here is whether the appellant's failure to respond to the letter of 21 January 1997 ought to absolve the respondents of what would plainly otherwise be their responsibility for the fire. For my part, I think it plain that the risk of a fire of this kind was, on the face, well within the scope of outcomes which the respondent's contractual duties were intended to avoid. So much appears, I think, from the catalogue of obligations cited by the judge at paragraph 38 which I have set out. Accordingly, even if the letter of 21 January 1997 and the enclosed fax did not constitute a warning of a risk of fire of the kind which occurred on 9 March 1997, a question to which I will come in a moment, it was a warning of an outcome which the respondents themselves should have prevented from happening . I find it very difficult to see how the giving of such a warning ought to transpose the burden of avoiding that very outcome, from the respondents, who owed a duty in effect to prevent it, to the appellants who were the beneficiaries of that duty."
"If a contract for performance over a period has come to an end by reason of a repudiatory breach but might, if it had remained on foot, have terminated early on the occurrence of a particular event, the chance of that event happening must, it is agreed, be taken into account in an assessment of the damages payable for the breach. And if it is certain that the event will happen, the damages must be assessed on that footing."
"Another way of putting the point being made by Megaw LJ is that the claimant is entitled to the benefit, expressed in money, of the contractual rights he has lost, but not to the benefit of more valuable contractual rights than those he has lost."
"The same would, in my opinion, be true of any anticipatory breach the acceptance of which had terminated an executory contract. The contractual benefit for the loss of which the victim of the breach can seek compensation cannot escape the uncertainties of the future. If, at the time the assessment of damages takes place, there were nothing to suggest that the expected benefit of the executory contract would not, if the contract had remained on foot, have duly accrued, then the quantum of damages would be unaffected by uncertainties that would be no more than conceptual. If there were a real possibility that an event would happen terminating the contract, or in some way reducing the contractual benefit to which the damages claimant would, if the contract had remained on foot, have become entitled, then the quantum of damages might need, in order to reflect the extent of the chance that that possibility might materialise, to be reduced proportionately. The lodestar is that the damages should represent the value of the contractual benefits of which the claimant had been deprived by the breach of contract, no less but also no more. But if terminating event had happened, speculation would not be needed, an estimate of the extent of the chance of such a happening would no longer be necessary and, in relation to the period during which the contract would have remained executory had it not been for the terminating event, it would be apparent that the earlier anticipatory breach of contract had deprived the victim of the breach of nothing."
"It is in my opinion important to read this statement in the context of the case which the Court of Appeal was deciding. It was completely certain, or predestined, that the contingency on which the charterers were entitled to cancel the contract would occur, since it was physically impossible for the ship to reach Haiphong by 20 July, the date on which she was to be ready to load at that port and the date on which the charterers could cancel if she was not so ready. Megaw LJ's statement was entirely correct, for the event was predestined to happen and the consequence which he set out in the passage which I have quoted had to be regarded as following. It might be doubted whether Megaw LJ intended to enunciate a general rule limiting consideration of subsequent events to those predestined to happen, seen from the date of acceptance of repudiation, and it may be observed that neither Lord Denning MR nor Edmund Davies LJ went so far as to tie the consideration of subsequent events to those which could be seen at the date of repudiation as certain to happen. If, however, the meaning to be taken from Megaw LJ's statement is that only events predestined to happen will qualify to bring the exception into operation, then I must decline to accept that as correct, for the reasons which I shall set out."
"It was an all or nothing case. The voyage either would or would not have taken place. Not so here: the question rather was whether and if so when the charterparty would have been ended under clause 33 before the completion of its nominal term. Even had war not broken out by the time damages came to be assessed I can see no reason why that question should not have been addressed in the conventional way, i.e by making the best possible assessment of the likely course of future events as at the date of assessment. As Lord Denning MR said in The Mihalis Angelos  1 QB 164, 169: 'You must take into account all contingencies which might have reduced or extinguished the loss.' It was hardly a novel proposition."
Review of authorities
"So Fairchild is an exceptional case in which the House of Lords, in particular circumstances, enabled a claimant to finesse what would otherwise have been an insuperable evidential problem and Gregg v Scott exemplifies the general rule that insuperable evidential problems are the claimant's hard luck."
i) The court must value what Multiplex lost on 2nd August 2004.
ii) What Multiplex lost on that date was a fixed price contract, requiring CB to undertake work including "all the temporary works and erection engineering design for Wembley Stadium" page 24, lines 16 22).
iii) The fixed price contract was advantageous to Multiplex by reason of clause 2.1 of the Supplemental Agreement.
iv) As at 2nd August 2004 Multiplex had not lost its rights against CB, even if the court finds that Multiplex had by then engaged Hollandia to do "the precise same job". A man may employ two architects to design his house. If one architect repudiates, it is no answer for the second to say: "you didn't need to have me doing it, you had already engaged another architect do the same job" (pages 25 26).
v) The best way to measure Multiplex's loss would be to look at the cost of engaging someone else to undertake the fixed price contract with the constraint imposed by clause 2.1. However, this course was not available. The opportunity to negotiate a fixed price contract with Hollandia was lost because of CB's repudiation. Multiplex was obliged to enter into a costs plus contract with Hollandia in respect of engineering and design work. The benchmark should be what CB thought it would cost them to complete, as revealed by their July board minutes. The measure of damages is what Multiplex paid to Hollandia for performing the obligations which CB repudiated.
i) Once erection had been removed from their responsibilities, CB had no wish to do erection engineering. They would have been unperturbed to hear that they were not doing it.
ii) At the material time CB believed that they had no responsibility for erection engineering. Although, as revealed by the Court of Appeal in judgment 2, that belief was wrong, it was not an unreasonable one to hold.
iii) CB would have had no reason to take legal advice in order to ascertain the true interpretation of the Supplemental Agreement on this point. They would have been entirely content to be told that they were not doing erection engineering.
iv) If for any reason CB had taken advice, they would have come to realise (a) that erection engineering was part of their contractual responsibilities and (b) that Multiplex had no legal right to deprive them of that work, even though self-evidently Multiplex were not going to let them do it. CB would have thus realised that they were in a strong bargaining position.
v) Mr Muldoon had reached a firm decision that CB would not do erection engineering. He may have desired to obtain some reduction in the lump sum on that account, but he was in no position to achieve that. If he had decided to press his claim for a reduction, he would have taken legal advice and he would have been told that he had no contractual right to omit erection engineering from the subcontract and that clause 4.6 of the subcontract had no application to that situation. This meant that Multiplex were in a hopeless bargaining position. They could not threaten to change tack and force CB to do the erection engineering, because by August self-evidently that was not feasible and would not be acceptable to Hollandia.
Claim 6 of schedule 4C (formerly claim 5 of schedule 4D): E3: Tolerances/ survey/ pre-cambers/ pre-sets
Claim 7 of schedule 4C (formerly claim 8 of schedule 4D): E6: assembly and installation of parts
"It is work that happens it is preparation of work that happens on site"
Claim 8 of schedule 4C (formerly claim 19 of schedule 4d): E18: Stressing horizontal cable net
Week Monday 2nd to Sunday 8th August: 214.5 tonnes
Week Monday 9th to Sunday 15th August: 124.3 tonnes
Week Monday 16th to Sunday 22nd August: 46.8 tonnes.
Thereafter steel erection came to a halt because the workmen were on strike. Thus it can be seen that during August only 385.6 tonnes of steel were erected.
i) Hollandia as new erectors were mobilising on site.
ii) Hollandia were going through a learning curve, as they became involved in a highly complex part-completed project.
iii) The turning struts which had been used for erecting the arch were lying across the football pitch and were obstructing areas required for construction activities. Hollandia had to dismantle these struts (a time consuming operation) before they could proceed with erection. See Mr Stam's statement paragraph 100 (ii).
iv) The workforce were resentful of the dismissal of CB as erectors and uncooperative.
v) There was an incident on Friday 13th August, when a raker was dropped and the site was largely sterilised for about ten days.
"That was my experience of strikes. When there is a strike, it in my experience it rarely starts on one day, trouble brews over a matter of days or weeks before it ends up in a strike. So when I looked at the fact there was a five-week strike, I looked at the production
figures and saw the production figures falling, in my experience a likely cause of that was industrial relations problems leading up to the strike and I believe, having read the transcripts, that was, in fact, one of the causes at that time of the delays."
"With regard to the completion of the work, Multiplex confirms that there is a considerable amount of steel stored at the site, so there will be no delay in on-site production." (V16/233)
"Hollandia must bring in replacement labour in sufficient numbers to ensure erection of steel and precast are brought back to maximum production asap"
"I am saying that there is a lot of talk of missing steel. There is very little in the way of specifics as to what actually was missing. As far as I am aware there are not any detailed programmes at that time which would show the erection sequence and identify which pieces they needed to draw off and at what point. So I can well imagine that in those circumstances, if they suddenly find that there is a piece missing, it may well cause problems. What does surprise me is that, with a lot of steel like this, there isn't a detailed call-off schedule saying which pieces are needed and when, and from that schedule you could identify then are there any particular critical pieces that we need to get fabricated straightaway. I have not seen any of that information. All I see is a general statement saying there were missing pieces of steel."
(a) CB's breach of the "orderly handover" obligation contained in clause 9 of the Supplemental Agreement;
(b) CB's breach of the obligation under clause (b) of schedule 1 to the Supplemental Agreement to identify where steel was located and assist Hollandia in finding it;
(c) CB's repudiation;
(d) Defective fabrication and erection as set out in Scott schedule 1D.
See paragraphs 5 11 of Scott schedule 4E.
"For these reasons, it is Multiplex's case that in the period 2nd August to 7th November 2004, the bowl steelwork erection was delayed by 79 days (or 11.3 weeks) as a result of CBUK's repudiation".
i) There was never an obligation on Hollandia or indeed CB (see judgment 1, paragraphs 548 550) to erect steel at the rate of 445 tonnes per week. No-one ever achieved anything approaching that erection rate either before, during or after the repudiation period.
ii) Although Hollandia had been appointed as erectors on 28th July, they were not required to comply with programme WS05-V3 or indeed with any programme at all.
iii) As set out in chapter 33, there were powerful causes of delay in August which were unrelated to CB's repudiation.
iv) The proposition that a five week strike falling in the middle of the relevant period "had no impact on Hollandia's progress" is (with all due respect to Multiplex's ingenious arguments) untenable.
v) In the last part of the relevant period (i.e. after the end of the strike) Hollandia made generally good progress.
"the parties will liaise during the 28 day notice period with a view to securing alternative employment for as many of the Sub-Contractor's site employees as possible and ensuring an orderly handover of the works with due respect for consultation and notice requirements."
1. Survey Bowl
a. CBUK to provide a register of all surveys that have been submitted to date.
b. CBUK to provide (i) electronic and (ii) hard copy of all survey information for the project to date both (a) completed and (b) partially complete.
2. Survey Arch
CBUK has already provided all survey information for Arch. CBUK to provide a register.
3. Terrace Survey
CBUK to provide all terrace surveys.
4. Upper Rakers + PPT
CBUK to provide all survey information for the (a) upper rakers and (b) PPT including information relating to the modules which are being assembled in the arena.
5. Embedment Plate
CBUK to supply all survey information relating to core embedment plates.
6. Asset Register of CBUK owned items
CBUK to provide Asset Register of all goods which are owned by CBUK by 16.07.04. CBUK will provide a draft register today 13.07.04. MPX and Hollandia to review and comment.
7. Temporary Works
(a) Raker support steel and lifting equipment associated with it.
(b) Roof towers. Toblerone sections.
(c) Ex-stillage material for the Arch which CBUK had planned to Resident-use for the roof.
(d) Stools for the PPT.
(e) Lifting Beams.
(f) CBUK will provide a register of all temporary works.
8. Lifting Gear
a. CBUK to provide (i) lift certificates for all lifting gear and (ii) a register of all lifting equipment.
b. CBUK to also provide all associated procedures.
9. Hire Equipment and Plant
CBUK have updated the list which summarises all plant and equipment on site. (a) CBUK submitted a draft during meeting as attached. (b) MPX/Hollandia will review this list and advise which items are required to be assigned. (c) CBUK to provide all schedule of rates, hire agreements and the like, relating to all items which are to be assigned MPX.
10. Audit on Status of Project at the Time of Handover
a. CBUK to provide marked up plans indicating what steel has been erected.
b. A separate meeting needs to be held between Sigma and Ameron and MPX/ CBUK/Hollandia. CBUK to organise for this meeting to occur this week.
c. All QA information relating to steel erected on site to be submitted as part of the handover audit.
d. An audit team made up of CBUK/MPX and Hollandia will go through the building starting Monday 19.07.04 to agree on the status of all works.
e. MPX note that after the date of handover there will be items of work which remain incomplete. Further discussions as required to agree on how these items will be dealt with. Meeting noted that CBUK may need to have representatives on site to review these items as they arise.
f. CBUK agree to provide copies of all delivery schedules, go data lists, toilet roll lists, etc. as they currently stand.
g. CBUK to advise MPX status of all site works.
11. Sundry Items
CBUK to submit a list of all sundry items.
In the original minutes of the meeting (QC 40/74 76) the items were not numbered. For ease of reference, I have added in the numbering which was used by counsel during the trial.
"As I said yesterday, steel that was erected on the job, you could see there was no problem with that, it was easy for somebody to go out and check it was there.
Similarly, steel at East Lane, I acknowledge we have got delivery schedule here. Again, that wasn't a problem, you could go down to East Lane and you could identify the steel. The problem was with all of the information relating to the offsite steel. We were provided information by Cleveland Bridge, but in the coming weeks and months, it became very clear that that information was incorrect and inaccurate."
"As soon as CBUK left the project at the end of July 2004 there was a large commotion on site with a lot of steel being moved by Fastrack, the labour supplier employed by Hollandia for erection works. Steel seemed to be being moved in all directions between the pitch, the outer perimeter and East Lane. This lasted for several months."
"656. However, as the preceding sections demonstrate, the many thousands of breaches by Mott MacDonald of its obligations in the provision of civil and structural engineering services, and the wholly deficient nature of the design of the steelwork, meant that Multiplex's contingency was eroded due to the general delays and disruption experienced as a result and, ultimately, the Project was critically delayed.
"657. As is set out in the preceding chronology Multiplex made numerous attempts to re-programme the works, change the construction logic and thereby ameliorate the affect of any ongoing delay. In particular, Multiplex had devised a 32 month programme in or around late 2003 to complete the works and made several material changes to the construction methodology, including the change to the method of erection of the roof, in an attempt to mitigate the effect of the delay and accelerate the works.
"658. Ultimately, these attempts failed in or around mid to late 2005 when it became impossible for Multiplex to complete the works by January 2006.
"659. In fact, as has been well documented, the stadium did not achieve practical completion until March 2007 and therefore the project was thus critically delayed by approximately 1 year and 2 months, when measured against the client programme of completion by 30 January 2006.
"660. Multiplex acknowledges that critical delay such as that which occurred at Wembley is invariably caused by a range of factors. At Wembley, critical delays to the project was partly caused by, inter alia, the repudiation of CBUK of their contractual obligations and leaving site on 2 August 2004 for a period of approximately 2 months (during which very little steel erection activity occurred) and CBUK's poor performance generally.
"661. However, having acknowledged the role of some other factors in the critical delay to the Wembley stadium project, Multiplex is firmly of a view that by far the largest cause of ultimate critical delay to the project was the defective design of the steelwork and/or the defective performance by Mott MacDonald of its obligations to provide civil and structural engineering services."
i) It is common ground in this litigation that Mott's defective design and repeated design changes delayed and disrupted production at all stages of the project. This factor must, therefore, have affected the erection rate during the repudiation period (as well as at all other times).
ii) In the context of their claim against Mott, Multiplex allege that CB's repudiation exerted a delaying effect for a period of approximately two months (i.e. 2nd August 2nd October). That is contrary to Multiplex's present claim, namely that CB's repudiation exerted a delaying effect for 3 months 6 days.
|Week ending 3rd October||214 tonnes|
|Week ending 10th October||382 tonnes|
|Week ending 17th October||264 tonnes|
|Week ending 24th October||172 tonnes|
|Week ending 31st October||72 tonnes|
|Week ending 7th November||175 tonnes|
|Receiving, sorting and storage||£163,929.75|
|Reviewing status of part fabricated steel||£76,698.10|
|Fabrication and coating||£786,241.56|
|Additional fabrication works||£108,363.74|
|Credit for currency exchange rate difference||£11,432.99|
"666. Finally I wish to say something directly to the parties. It has been obvious to me that no settlement could be achieved whilst certain fundamental issues were unresolved. The present set of preliminary issues was drafted by counsel precisely in order to break that deadlock. Both parties have had a measure of success on the preliminary issues. Neither party has won an outright victory. With the assistance of this court's decision on the ten preliminary issues, it may now be possible for both parties to arrive at an overall settlement of their disputes, either through negotiation or else with the help of a mediator, who is unconnected with this court."
"667. I commend this course to the parties, if only as a means of saving costs and management time. If, however, the parties would prefer the court to resolve all remaining issues, then so be it. This court encourages sensible commercial settlements, but nevertheless stands ready to determine every issue which the parties wish to litigate"
"In the event that the Subcontractor elects the option to provide to the Contractor a Retention Bond in lieu of the Retention, the Sub-Contractor shall procure and deliver to the contractor a Retention Bond for an amount equivalent to 5% of the Sub-Contract Sum, reducing to 2.5% of the Sub-Contract Sum at Practical Completion and following receipt of the Retention Bond the Retention deducted by the Contractor from payments shall be paid to the Sub-Contractor."
"Now that the Project is complete, CB accepts that CBUK are entitled to the release of the retention levied against the valuations under Schedule 2. However, it is Multiplex's case that the retention monies withheld can be applied to reduce the sums due to Multiplex by way of damages under Scott Schedule 4."
"The Sub-contract Documents provide for retention at 5%. In fact, the parties agreed that CBUK would provide a retention Bond in the amount of £1.515 million and no retention would be deducted from CBUK's interim valuations up to the amount of the Bond, then 5% retention thereafter. In fact retention is a complete irrelevance to the valuation exercise which the court had to undertake. Retention is obviously applicable in relation to interim valuations as work progresses. Since, however, this is effectively a Final Account calculation, retention is irrelevant."
| Appendix 1
|SW No.||Category||% Success||1D Claim||FM Value||1B/JT No.||1B Claim||FM Value|
|Hol 125||231||Cat 1||100||600.86||439.22|
|Hol 126||232||Cat 1||50||1393.66||509.38|
|Hol 131||237||Cat 1||100||394.99||288.74|
|Hol 132||238||Cat 1||50||1209.68||301.21||136-137||1179.68||542.65|
|Hol 133||239||Cat 1||100||934.53||465.4||138, 139||1169.43||1075.88|
|Hol 151||267||Cat 1||50||985.28||462.44||169, 170||1182.63||544|
|Hol 158||279||Cat 16||100||643.89||569.2||180, 181||788.17||725.12|
|Hol 165||366||Cat 11||100||543||380.1||191, 192||788.17||725.12|
|Hol 169||384||Cat 16||100||855.96||756.67||198, 199||790.17||726.96|
|Hol 184||429||Cat 16||100||489.06||432.33|
|Hol 198||510||Cat 9||100||345.65||336.31||260, 261||1293.08||1189.63|
|Hol 199||511||Cat 9||100||691.3||672.93||262||0|
|Hol 201||514||Cat 8||100||2494||2463.82|
|Hol 250||729||Cat 11||100||10796||7557.2||369||744.6||685.03|