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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Geoquip Marine Operations AG v Tower Resources Cameroon SA & Anor [2022] EWHC 531 (Comm) (16 March 2022) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2022/531.html Cite as: [2022] EWHC 531 (Comm) |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
____________________
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Claimant |
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- and - |
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(1) TOWER RESOURCES CAMEROON SA (2) TOWER RESOURCES PLC |
Defendant |
____________________
SJ Phillips QC and Rebecca Jacobs (instructed by Richard Slade & Company) for the Defendants
Hearing dates: 13th to 16th December 2021
____________________
Crown Copyright ©
Peter MacDonald Eggers QC:
Introduction
The Contract
"WHEREAS:
1) the COMPANY wishes that certain WORK shall be carried out, all as described in the CONTRACT; and
2) the CONTRACTOR wishes to carry out the WORK in accordance with the terms of this CONTRACT; and
3) the GUARANTOR wishes to guarantee the obligations of the COMPANY under the CONTRACT
NOW:
The parties hereby agree as follows:
1) In this CONTRACT all capitalised words and expressions shall have the meanings assigned to them in this FORM OF AGREEMENT or elsewhere in the CONTRACT.
2) The following Sections shall be deemed to form and be read and construed as part of the CONTRACT: [there followed a description of the four sections of the Contract] …
The Sections shall be read as one document, the contents of which, in the event of ambiguity or contradiction between Sections, shall be given precedence in the order listed, with the exception that the Special Conditions of Contract shall take precedence over the General Conditions of Contract.
3) In accordance with the terms and conditions of the CONTRACT, the CONTRACTOR shall perform and complete the WORK and the COMPANY shall pay the CONTRACT PRICE.
4) The terms and conditions of the CONTRACT shall apply from the date specified in Appendix 1 to this Section I - Form of Agreement which date shall be the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT [30th October 2019].
5) The duration of the CONTRACT shall be as set out in Appendix 1 to this Section I - Form of Agreement [two months]
6) The GUARANTOR hereby guarantees the payment obligations of the COMPANY in respect of this CONTRACT …"
"1. DEFINITIONS
…
1.4 "CONTRACT" shall have the meaning described in Section I - Form of Agreement.
1.5 "CONTRACT PRICE" shall mean the price for the WORK calculated in accordance with Section III - Remuneration, exclusive of Value Added Tax …
1.13 "WORK" shall mean all the work that the CONTRACTOR is required to carry out in accordance with the provisions of the CONTRACT, including the provision of all materials, services and equipment to be rendered in accordance with the CONTRACT …
4. CONTRACTOR'S GENERAL OBLIGATIONS
4.1 The CONTRACTOR shall provide all management, supervision, personnel, materials and equipment, (except materials and equipment specified to be provided by the COMPANY), plant, consumables, facilities and all other things whether of a temporary or permanent nature, so far as the necessity for providing the same is specified in or reasonably to be inferred from the CONTRACT.
4.2 The CONTRACTOR shall carry out all of its obligations under the CONTRACT and shall execute the WORK with all due care and diligence and with the skill to be expected of a reputable contractor experienced in the types of work to be carried out under the CONTRACT …
4.4 Equipment used to provide the service need not be new, without prejudice to the requirement that it shall be of good quality and fit for purpose.
4.5 In order to ensure that performance and completion of the WORK are not delayed or impeded the CONTRACTOR shall be responsible for the timely provision of all matters referred to in Clauses 4.1 and 4.4 and, where provided for elsewhere in the CONTRACT, for the timely request of COMPANY-provided materials, services and facilities. However, CONTRACTOR cannot be responsible for the timely delivery of Company-provided materials, services and facilities. If such are delivery late and cause delay in the performance and downtime of the CONTRACTOR's equipment, COMPANY shall pay Standby time for such downtime …
5. OFFSHORE TRANSPORTATION
…
5.2 The CONTRACTOR shall provide vessel transportation, vessel accommodation and vessel subsistence for up to 2 COMPANY VESSEL REPRESENTATIVE(S) for the duration of the offshore phase of the WORK at the cost of the CONTRACTOR and all such items shall be deemed to be included in the CONTRACT.
COMPANY VESSEL REPRESENTATIVE(S) shall embark / disembark in the port of mobilisation / demobilisation in accordance with the schedule provided by CONTRACTOR. Delays to schedule due to non-availability of COMPANY VESSEL REPRESENTATIVE(S) that delay sailing shall be deemed Standby events and be charged at the applicable Standby Rates.
If the COMPANY requires more than 2 COMPANY VESSEL REPRESENTATIVE on board, the cost for the additional persons will be agreed between Parties.
6. CONTRACTOR TO INFORM ITSELF
…
6.2 Any failure by the CONTRACTOR to take account of matters which affect the WORK will not relieve the CONTRACTOR from its obligations under the CONTRACT. CONTRACTOR can't be made responsible for extra work or time or damage that occurs solely because of a fault in the data or that of personnel supplied by the COMPANY, including loss of time during mobilisation of the vessel caused by COMPANY. If extra work, loss of time or damage is the consequence of a fault or omission by the COMPANY, CONTRACTOR will be entitled to file a VARIATION for extra work or charge Standby Time …
10. EXAMINATION AND DEFECTS CORRECTION
…
10.2 Defects Correction
…
(b) It is the COMPANY'S duty to accept or reject the quality and completeness of data and/or samples as it is acquired and to record such in the Daily Project Report. In the event that data or samples are rejected for reasonable and acceptable reasons to both Parties, CONTRACTOR shall make all reasonable endeavours to re-acquire such data prior to leaving the WORKSITE. In the event data/samples cannot be re-acquired due to factors beyond CONTRACTOR'S direct control, CONTRACTOR and COMPANY VESSEL REPRESENTATIVES shall agree the appropriate course of action.
The times detailed in the Daily Project Report as agreed between COMPANY and CONTRACTOR VESSEL REPRESENTATIVES, are the basis for invoicing. Any disputed times are to be noted as such in the Daily Project Report and are to be agreed between COMPANY and CONTRACTOR prior to completion of demobilisation.
Notwithstanding the foregoing, nothing in this clause shall relieve the CONTRACTOR of its obligation to perform the WORK in accordance with the CONTRACT …
12. FORCE MAJEURE
…
12.6 In the event that a Force Majeure occurrence exceeds 7 days, the COMPANY has the sole option to (i) retain CONTRACTOR on stand-by from first day of Force Majeure event until the Force Majeure event ceases at which point the CONTRACTOR shall recommence the WORK or (ii) terminate the CONTRACT. In the event of (i) above, the time on stand-by shall be paid at the relevant stand-by rate as set out in Section III – Remuneration. In the event of (ii) above, the time on stand-by and in transit to port shall be paid at the relevant stand-by or transit rate as set out in Section III – Remuneration. Additionally, in the event of (ii) above, the CONTRACTOR shall immediately de-mobilise and the de-mobilisation fee shall be paid plus any termination fees as set out in Section III – Remuneration and the COMPANY shall have no further liability to the CONTRACTOR of whatever nature.
For the avoidance of doubt, the CONTRACTOR shall be entitled to payment at the Standby Rate during the first seven (7) days of Force Majeure.
13. SUSPENSION
13.1 The COMPANY shall have the right, by notice to the CONTRACTOR, to suspend the WORK or any part thereof to the extent detailed in the notice, for any of the following reasons;
(a) subject only to Clause 13.3, in the event of some default on the part of the CONTRACTOR; or
(b) in the event that suspension is necessary for the proper execution or safety of the WORK, or persons; or
(c) to suit the convenience of the COMPANY …
13.4 Unless the suspension arises as a result of default on the part of the CONTRACTOR, the CONTRACTOR shall be reimbursed in accordance with the relevant provisions of Section III - Remuneration or, in the absence of such provisions, in accordance with Clause 11. In such case, the CONTRACTOR is entitled to receive at least Standby Rates during the term of suspension and any additional costs incurred due to this suspension …
14. TERMS OF PAYMENT
14.1 For the performance and completion of the WORK, the COMPANY shall pay or cause to be paid to the CONTRACTOR the amounts provided in Section III - Remuneration at the times and in the manner specified in Section III and in this Clause …
14.3 The CONTRACTOR shall submit to the COMPANY an invoice within thirty (30) days after the end of each calendar month or according to the schedule foreseen in Section III - Remuneration.
Following completion of the whole of the WORK, the CONTRACTOR shall not be entitled to receive any payment on any invoice received by the COMPANY after the time specified in Appendix 1 to Section I – Form of Agreement as the latest time for receipt of invoices. Nevertheless the COMPANY may, at its sole discretion, make payment against any such invoice …
14.6 COMPANY shall make payment of each invoice received as foreseen in the Section III – Remuneration. If no specific terms are foreseen in this Section, then each invoice should be paid within 30 days from date of receipt. Payment shall be done into the bank account of the CONTRACTOR as specified on the invoice.
14.7 If the COMPANY disputes any items on any invoice in whole or in part or if the invoice is prepared or submitted incorrectly in any respect, the COMPANY shall notify the CONTRACTOR of the reasons and request the CONTRACTOR to issue a credit note for the unaccepted part or whole of the invoice as applicable. Upon receipt of such credit note the COMPANY shall be obliged to pay the undisputed part of a disputed invoice.
If any other dispute connected with the CONTRACT exists between the parties the COMPANY may withhold from any money which becomes payable under the CONTRACT the amount which is the subject of the dispute. The COMPANY shall not be entitled to withhold monies due to the CONTRACTOR under any other contracts with the COMPANY as set off against disputes under the CONTRACT, nor shall it be entitled to withhold monies due under the CONTRACT as set off against disputes under any other contract.
On settlement of any dispute the CONTRACTOR shall submit an invoice for sums due and the COMPANY shall make the appropriate payment in accordance with the provisions of Clause 14.6 and Clause 14.9 where applicable.
14.8 Neither the presentation nor payment or non-payment of an individual invoice shall constitute a settlement of a dispute, an accord and satisfaction, a remedy of account stated, or otherwise waive or affect the rights of the parties hereunder.
In particular the COMPANY may correct or modify any sum previously paid in any or all of the following circumstances:
(a) any such sum was incorrect;
(b) any such sum was not properly payable to the CONTRACTOR;
(c) any work in respect of which payment has been made and which does not comply with the terms of the CONTRACT.
14.9 Interest shall be payable for late payment of correctly prepared and adequately supported invoices. The amount of interest payable shall be based on the then current annual Bank of England 'Base Rate' plus the annual percentage stated in Appendix 1 to Section I – Form of Agreement and shall be calculated pro rata on a daily basis. In the absence of such percentage, the amount of interest shall be based on the then current annual Bank of England 'Base Rate' plus three percent (3%) per annum and shall be calculated pro rata on a daily basis. Interest shall run from the date on which the sum in question becomes due for payment in accordance with the provisions of Clause 14.6 until the date on which actual payment is made. Any such interest to be claimed by the CONTRACTOR shall be invoiced separately and within ten (10) working days of payment of the invoice to which the interest relates. Payment of the invoice claiming the interest shall be in accordance with the provisions of Clause 14.6 hereof …
18. LAWS AND REGULATION
18.1 The CONTRACTOR shall comply with all applicable laws, rules and regulations of any governmental or regulatory body having jurisdiction over the WORK and/or the WORKSITE.
18.2 The CONTRACTOR shall obtain all licences, permits, temporary permits and authorisations required by the applicable laws, rules and regulations for the performance of the WORK, save to the extent the same can only be legally obtained by the COMPANY …
28. GENERAL LEGAL PROVISIONS
…
28.6 Notices
All notices in respect of the CONTRACT shall be given in writing and delivered by hand, by telefax by email or by first class post to the relevant address specified in Appendix 1 to Section I - Form of Agreement and copied to such other office or offices of the parties as shall from time to time be nominated by them in writing to the other.
Such notices shall be effective:
(a) if delivered by hand, at the time of delivery;
(b) if sent by telefax or by email, on the first working day at the recipient address following the date of sending;
(c) if sent by first class post, 48 hours after the time of posting …
28.8 Entire Agreement
The CONTRACT constitutes the entire agreement between the parties hereto with respect to the WORK and supersedes all prior negotiations, representations or agreements related to the CONTRACT, either written or oral. No amendments to the CONTRACT shall be effective unless evidenced in writing and signed by the parties to the CONTRACT …
34. PERMISSION AND PERMITS
Company will be responsible for obtaining all necessary permissions to enable survey work to be carried out, including but not limited to, permits from the appropriate authorities for the vessel to operate in National waters of the country or operations, and for ensuring safe access within the area of survey operations …"
Item | Description | UNIT | QUANTITY | UNIT RATE (USD) | Amount (USD) |
1 | Mobilisation | ||||
1.1 | Mobilisation* | LS | 1 | 400,000 | 400,000 |
1.2 | Demobilisation* | LS | 1 | 89,000 | 89,000 |
2 | Field Work | ||||
2.1 | 80m Continuous PCPT borehole | Each | 3 | 96,740 | 290,220 |
3 | Reporting | Per site | 1 | 19,300 | 19,300 |
Lump Sum for the Firm Scope | 798,520 | 798,520 | 798,520 | 798,520 | 798,520 |
4 | Rates for Standby Time and Optional Work | ||||
… | |||||
4.6 | Operating Rate | Day | rate only | 77,200 | rate only |
4.7 | Standby at Sea | Day | rate only | 72,500 | rate only |
4.8 | Standby at Port | Day | rate only | 70,150 | rate only |
4.9 | Transit Rate (if additional to mob/demob) | Day | rate only | 79,560 | rate only |
… |
"Please refer to the LOGIC General Conditions of Contract for On- and Off-shore Services (Edition 2 - October, 2003) withGeoquip's
Exceptions on which these prices are based.
The rates are exclusive any local taxes.
It is understood security vessels will be provided from entry into Cameroon waters, during mobilisation, throughout fieldworks, through demobilisation and exit from Cameroon waters.
The offer is subject to the Investigator arriving in Cameroon between 15th November and the 31st December 2019, and the contract is also contingent on the permits and license extension required for the site survey having been delivered prior to departure of the vessel to Cameroon.
The offer is subject to contract signing by 15th November 2019 and advanced payment of $250,000 to arrive inGeoquip's
Swiss bank account prior to departure of the vessel to Cameroon. Invoices will be generated and submitted by email on completion of each milestone (remainder mob, fieldwork, demob, reporting) to be applied first against the deposit and then to be paid within 30 days of delivery of preliminary report.
In the event other work is commissioned for the Investigator in direct continuity with this work a reduction of 25% is offered on the mob/mob fee."
"3 SCOPE OF WORK
The client intends to carry out an offshore geotechnical site investigation to assess ground conditions for development of a jack-up rig, located offshore Victoria, Cameroon. The data obtained will be utilised to progress the design of a viable foundation, enabling the installation of a COSL jack up rig.
Geoquip
understands that the base scope of work for the Geotechnical Site Investigation comprises the following geotechnical sampling and testing operations;
- 3 x 80m Boreholes with continuous PCPT
- 1 x 80 m Boreholes continuous sampling as an option.
The sample boreholes comprise composite push/piston sampling. In situ testing includes piezocone penetration tests (PCPTs) performed in downhole mode. The scope includes offshore and onshore laboratory testing, factual reporting and jack up penetration analysis.
The water depth at the proposed location is approximately 35 metres …
"8 REPORTING AND DELIVERABLES
The following report and deliverables are forecasted. Additional modifications can be included at award of project in agreement with Tower Resources.
8.1 Pre-Project Documentation
On receipt of a Letter of Award (LOA) and prior to commencement on siteGeoquip
will appoint a PM who will produce the following detailed site-specific documentation:
- Project Safety Plan (PSP)
- Project Execution Plan (PEP)
- Emergency Response Plan (ERP)
- Any other documentation required by Tower Resources
8.2 Daily Operations Reports
A Daily Operations Report (DOR) will be prepared by the OPM and provided to the on board Tower Resources representative for approval. This report will contain the following information:
- Summary of previous 24 hours operations
- Time summary breakdown for previous 24 hours and to date
- Work completed in previous 24 hours and to date
- Observed weather conditions and weather forecast summary
- Work planned for the next 24 hours
- Lost and damaged equipment details
- Number of personnel on board
- Health safety and environmental events
This report will be signed by the OPM and the on board Tower Resources representative and distributed accordingly via electronic mail.
8.3 Field Report
At the end of the fieldwork a preliminary field report will be supplied to Tower Resources representative on board the vessel. In addition to the laboratory testing performed offshore a schedule of onshore laboratory testing will be produced at this time for approval. A final version of the field report will be produced within one week fromGeoquip's
Geotechnical office.
The field report will contain the following information as appropriate:
…
- Preliminary engineering assessments
8.4 Laboratory Testing and Reporting
Laboratory Testing will be performed at one ofGeoquip's
accredited laboratories followed by assessment of soil parameters for the materials encountered and final engineering assessment.
Geoquip
Standard Laboratory rates are presented in Appendix D.
Following the results of the onshore laboratory testing and further engineering analyses a final Report will be issued. This final report will be presented approximately six weeks following approval of the laboratory testing schedule.
Reporting evaluation and presentation of the geotechnical parameters, shall comply with Tower Resources requirements.
All details on these reports will be agreed with Tower Resources upon contract award. Higher level reporting can be offered if required."
The Vessel's arrival in Cameroon
The delay in awaiting approval for the Vessel to proceed to the Work Site
"… In the month since you promised to support Tower with the extension to conduct the geotechnical survey and finalise the drilling of the well, we have done a great deal to ensure we meet our commitment … However, we are still waiting for the extension itself to be signed by the Minister, which is now threatening the project itself.
Following our meeting a contract was quickly signed withGeoquip
Marine for their geotechnical vessel (MV Investigator) …
We have been granted a Normal Temporary Admission (ATN) by the customs office to clear the vessel, and the Rapid Intervention Battalion (BIR) has secured the vessel and the crew to avoid any security incident while in Cameroon water territory …
Your Excellency, Tower has kept it[s] word and has accelerated the arrival of the vessel into Cameroon as soon as we left your office. The vessel has been performing maintenance activity in Douala while waiting for the extension letter to be delivered so that it can commence work. But this maintenance work has been completed some days ago, and we are now facing the risk of the vessel leaving Cameroon to undertake other work elsewhere if the promised extension is not received this week.
If the vessel leaves Cameroon without conducting the survey, this will have a very negative impact on the project. It may be difficult to persuadeGeoquip
to return without extraordinary assurances, which may be costly. In the meantime, the stand-by rate to keep the vessel doing nothing at the port is between 70,000 to 80,000 US dollar per day, and this is simply not sustainable.
As we have explained to you, Tower has already spent 12 million US dollars on this project, and is about to invest 15 million more in the coming months with the drilling of the Njonji Marine 003 well, and tens of millions of dollars after that on the subsequent development if all goes well …
The one (1) year extension will allow us to complete the current work in progress in the First Exploration Period …
We are still waiting for the extension letter this week, as promised by the Minister of Mines, Industry and Technological Development …
Your Excellency, may we ask for your full support for getting the extension letter signed and delivered to us this week, to allow us to keep the Survey vessel in Cameroon. Otherwise we may lose this unique opportunity, which will delay all the work and increase costs …"
"… Presently, the crew is on board the vessel and waiting for the BIR to accompany the vessel for security purpose as usual, and as previously agreed with the BIR.
Unfortunately, at the last minute the National Hydrocarbons Corporation interrupted the security measures put in place with the BIR for the escort and patrol during the offshore operation … and the vessel cannot operate without the security escort of the BIR. The cost to keep this survey vessel idle at port is over $80,000/day …
Your Excellency Mr President, this is an important project for Cameroon and for Tower and blocking the operation is … an existential threat to our project …
On behalf of Tower Resources plc, I humbly ask your highest authority of your urgent assistance to ensure the continuation of this activity, as approved by both your Minister … and your Prime Minister …"
The Extension Contract
WHEREAS:
- Parties signed a CONTRACT on 30th October for the execution of a geotechnical investigation offshore Cameroon.
- This CONTRACT referred to the Effective Date of Commencement of 30th October 2019 and mentioned a duration of 2 months.
- CONTRACTOR was ready to mobilise the VESSEL and crew within the validity of the CONTRACT, and VESSEL and crew mobilisation took place in the period up to 17:00 on 8th January, 2020; and since that time up to end of 23rd January 2020 VESSEL has accrued 316.75 standby hours in port and 34.75 standby hours at sea, as documented in CONTRACTOR's weekly reports to OPERATOR;
- The VESSEL continues to accrue standby hours since 23rd January 2020, and OPERATOR and CONTRACTOR wish to confirm the continuation and extension of the contract to cover the longer duration of the operations.
THEREFORE, IT IS NOW DECIDED:
1. Duration of the CONTRACT
The PARTIES agree to extend the Duration of the CONTRACT by 2 months bringing it to 4 months from the Effective Date of Commencement of the CONTRACT which is 30th October 2019.
2. General
All other terms and conditions of the CONTRACT remain unchanged and valid for the whole Duration of the CONTRACT."
The carrying out of the Works
The issues in dispute
(1) IsGeoquip
entitled to payment of the balance of the lumpsums claimed for the work done under the Contract either pursuant to the Contract or on a quantum meruit basis?
(2) IsGeoquip
entitled to recovery of the Standby Costs pursuant to the terms of the Contract?
(3) IfGeoquip
is not entitled to the recovery of the Standby Costs pursuant to the Contract, is it entitled to such recovery on the basis of an estoppel by convention?
(4) IfGeoquip
is not entitled to the recovery of the Standby Costs pursuant to the Contract, is it entitled to such recovery on the basis of an estoppel by contract?
(5) If Tower Cameroon is liable in respect of either or both ofGeoquip's
claims, is Tower plc liable as guarantor?
Issue (1): The claim for the balance of the Contract price for the Work
(1)Geoquip
carried out the work required by the Contract and the Extension Contract, and supplied the data required by Tower Cameroon on board the Vessel, in real time as the survey work was being carried out, in a preliminary field report sent on 14th February 2020, and in a further field report (which included the spud can analysis) on 9th April 2020.
(2) Assuming that the 14th February 2020 preliminary report was insufficient to trigger payment under the Contract, the late provision of the 9th April 2020 preliminary field report was at most a technical breach of the Contract, which caused Tower Cameroon no loss (and indeed no claim for damages is made for any such breach).
(3) Accordingly, Tower Cameroon has no basis on which to refuse to pay the balance of the lumpsum claimed.
(1) By sections 8.3 and 10.2 of the TCP, the trigger for payment under the Contract was the delivery ofGeoquip's
preliminary report and that report had to contain certain information, in particular the preliminary spud can penetration analysis and that report had to be produced "At the end of the fieldwork".
(2) The contractual requirement in section 10.2 of the TCP that invoices be submitted within 30 days of the delivery of the preliminary report meant a report with the information included as specified in the Contract.
(3) The specified condition for payment was not met within the lifetime of the Contract.
(4) The fact that a report containing the relevant spudcan analysis was produced on 9th April 2020 is contractually irrelevant, because: (a) that was not a preliminary report within the meaning of the Contract, and (b) the report was not produced within the lifetime of the Contract (which expired at the end of February 2020) and was not produced "At the end of the fieldwork", as required by section 8.3 of the TCP.
(1) There was no requirement in the Contract that the provision of the preliminary report must have taken place before the end of the duration of the Contract. The duration of the Contract was relevant only to the mobilisation of the Vessel (clause 5 of Section II of the Contract). Accordingly, if the Vessel's operations were concluded on the final day of the Contract period, no reasonable person would have assumed that the preliminary report would have to be provided that day. There are a number of provisions in the Contract which continue in effect after the end of the Contract period.
(2) There is no express term in the Contract, or indeed any indication in the factual background to the Contract, that the time for the delivery of the preliminary report was of the essence.
(3) Even if time were of the essence, the result would be that any breach ofGeoquip's
obligation in this respect entitled Tower Cameroon to terminate the Contract prospectively and the Contract was not terminated, certainly not before the compliant preliminary report was provided on 9th April 2020.
(4) If there is no contractual entitlement to the balance of the lumpsum due under the Contract,Geoquip
is entitled to a quantum meruit for the work done in respect of the survey and the production of the report.
(1) Clause 13.1 allowed Tower Cameroon to suspend the Work or any part thereof by notice in the event of a default on the part ofGeoquip.
However, there was no intimation by Tower Cameroon that there would be such a suspension. This is no doubt because the spudcan analysis data were of importance to Tower Cameroon and a suspension would have kept the information out of its hands.
(2) Clause 14.1 required Tower Cameroon to payGeoquip
the amounts set out in Section III of the Contract, namely within 30 days of production of the preliminary report (section 10.2 of the TCP).
(3) Clause 14.3 permitted Tower Cameroon not to pay an invoice issued after the time specified in Appendix 1 to Section I of the Contract, i.e. "two months", which, with the amendment introduced by the Extension Contract, meant that any invoice issued after 29th February 2020 did not have to be paid.
(4) Clause 14.7 contained a procedure for the parties to follow in the event that there was a dispute about invoices.
Issue (2): the claim for the Standby Costs under the Contract
(1)Geoquip
suffered significant periods of wasted time giving rise to standby charges under the Contract and the Extension Contract. Such delays arose by reason of the time spent waiting for the provision of the licence extension to Tower Cameroon and the governmental approvals for the Vessel to operate at the Work Site offshore Cameroon.
(2) The Standby Costs were incurred and properly invoiced in accordance with the Contract and the Extension Contract.
(3) The table in section 10.1 of the TCP sets out the pricing for the work to be performed: the remuneration for this particular piece of work was divided into two parts, namely (a) a lumpsum for the firm scope of the work (mobilisation, demobilisation, fieldwork and reporting) and (b) further fixed or day rates payable for services which might or might not be required outside the firm scope of work, such as standby at sea or in port.
(4) Even if that is wrong, all the standby charges claimed here fall squarely in any event within the scope of express contractual provisions.
(5) Under clause 4.5 of Section II of the Contract, Tower Cameroon was responsible for the timely provision of their "materials, services and facilities". Clause 4.5 is not limited to matters falling within clauses 4.1 and 4.4 but includes materials, services and facilities provided for elsewhere in the Contract, in particular the responsibility of Tower Cameroon under clause 34 to obtain "all necessary permissions to enable survey work to be carried out, including but not limited to permits from the appropriate authorities for the vessel to operate in National waters of the country or operations, and for ensuring safe access within the area of survey operations". These matters are "facilities" required for the performance of the work. Tower Cameroon must therefore pay the claimed standby charges.
(6) Clauses 13.1(b) and/or (c) and clause 13.4 of Section II of the Contract provide forGeoquip
to be reimbursed for Standby Costs during the period of suspension of the Contract. The reference to "WORK" in clause 13 is broad enough to encompass everything
Geoquip
was required to do, including mobilisation and so any delays necessary for the proper execution or safety of the work are for Tower Cameroon's account. Every time that Tower Cameroon informed
Geoquip
that the Vessel could not proceed or that work could not commence because they had not obtained the requisite permits and licences, or when
Geoquip
asked for an update and was told by Tower Cameroon that the requisite permits and licences had not been obtained, or when Tower Cameroon signed a Daily Operations Report acknowledging that Standby Costs were being incurred for Tower Cameroon's account, there was in effect a notice of suspension under clause 13.1
(7) By clause 14.6 of Section II of the Contract, Tower Cameroon was obliged to pay each invoice within 30 days and, by clause 14.7, if Tower Cameroon wished to dispute any item on any invoice, they had to notifyGeoquip
of the reasons for the objection, upon receipt of which
Geoquip
would be required to issue a credit note. Absent any objection to an invoice submitted by
Geoquip
in accordance with clause 14.7, those invoices were necessarily undisputed.
(1) The Contract contains specific provisions dealing withGeoquip's
right to charge Standby Costs, namely clauses 4.5, 5.2, 6.2 and 12.6 of Section II of the Contract, but these provisions are not applicable. By contrast, the provisions relied on by
Geoquip,
namely clauses 14.6 and 34 of Section II and section 10.1 of Section III, do not create any equivalent right.
(2) Clause 4.5 is inapplicable because the licence extension or other government approvals are not "materials, services and facilities". This provision is concerned with the physical, not the legal, aspects of the survey to be carried out under the Contract.
(3) Clause 6.2 is inapplicable because it is concerned only with any fault on the part of Tower Cameroon in providing data or personnel.
(4) Clause 13.4 is of no assistance toGeoquip,
because it is concerned with an express right of Tower Cameroon to suspend the work and so such suspension can be brought into effect only once the work has commenced. No notice of suspension was tendered by Tower Cameroon.
(5)Geoquip's
reliance on clause 14.6 is misplaced, because it is concerned with the obligation and timing of payment of an invoice, but not with
Geoquip's
entitlement to issue an invoice for a particular item. The reference to Section III of the Contract does not detract from this. Clause 14.6 does not of itself create an entitlement to payment of an invoice.
(6)Geoquip's
delay costs were the result of its own decision to bring the Vessel to Cameroon when it was under no obligation to do so in accordance with the Contract, because the Contract provided in section 10.2 of Section III that "the contract is also contingent on the permits and license extension required for the site survey having been delivered prior to departure of the vessel to Cameroon". Mr Phillips QC however made it clear during oral submissions that he was not submitting that there was no effective Contract in January 2020.
Issue (3): The claim for the Standby Costs by reason of estoppel by convention
The parties' submissions
(1) Throughout January and February 2020, Tower Cameroon represented to the Cameroon authorities, including the President and Prime Minister, and to the British High Commissioner that the Vessel was incurring Standby Costs by reason of the delay and that this was a cost which in the first instance must be borne by Tower Cameroon. This evidences the assumption which Tower Cameroon made at the relevant time. Moreover, Tower Cameroon's assumption in this respect is reflected in the minutes of Tower plc's board meeting dated 22nd January 2020.
(2) Tower Cameroon also acknowledged that this was its assumption in its dealings withGeoquip,
in particular in correspondence and in Tower Cameroon's signature of Daily Operation Reports and the submitted Weekly Client Project Reports. The Daily Operation Reports identified the standby time and marked the entry with the code "STB". Tower Cameroon did not dispute the Daily Operation Reports as required by clause 10.2(b) of Section II of the Contract.
(3) Tower Cameroon expressly acknowledged in the preamble to the Extension Contract that Standby Costs had accrued under the Contract (for which it would be liable) and by virtue of that acknowledgement and/or its conduct is now estopped from alleging otherwise.
(4) At no point of time did Tower Cameroon suggest toGeoquip
that standby charges were not accruing or dispute any invoices issued by
Geoquip
in respect of Standby Costs.
(5)Geoquip
would not have agreed to extend the Contract unless Tower Cameroon acknowledged that it was liable to pay for the Vessel's idle time. In that event,
Geoquip
would have undertaken work for another client.
(6) It is no answer toGeoquip's
case on estoppel by convention that
Geoquip
is relying on the estoppel to create a right where none otherwise existed, because there are provisions in the Contract dealing with Standby Costs and the estoppel relied on prevents Tower Cameroon from disputing that the reasons for the Vessel's delay at Douala fall within the scope of contractual provisions dealing with Standby Costs.
(1) As a matter of general principle, an estoppel cannot be relied on to create contractual rights where no such rights existed. Given that the Contract made no provision for Standby Costs by reason of the delay in obtaining the licence extension and the relevant permits, an estoppel cannot be relied on.
(2) There was no common assumption shared by or acquiesced in by Tower Cameroon. Mr Asher's evidence was that he gave no real thought to whether standby charges were payable and regarded this as a matter to be resolved at a later date.
(3) No unequivocal communication crossed the line.
(4)Geoquip's
reliance on the Daily Operation Reports signed on behalf of Tower Cameroon provide no support for the alleged estoppel, because all the Daily Operation Reports did was to record the activity carried out by the Vessel and the time period associated with that activity. This was all that was required in the Daily Operation Reports in section 8.2 of Section IV of the Contract. Clause 10.2(b) of Section II of the Contract made provision only for disputing the time taken for the relevant activity.
(5)Geoquip
did not determine its dealings with Tower Cameroon in reliance upon any common assumption. This is because
Geoquip
had decided to stay in Cameroon irrespective of whether Tower Cameroon paid the Standby Charges, as evident from
Geoquip's
internal email exchange on 14th January 2020. Moreover,
Geoquip
did not want to lose this profitable contract and gave an ultimatum to Tower Cameroon that it would have to leave by the end of January 2020 to meet alternative employment.
(6) The date by whichGeoquip
said that the Vessel would have to leave Cameroon unless the permits were obtained - 31st January 2020 - undermined the suggestion that the Vessel was being left in Cameroon in reliance upon a shared assumption as to Tower Cameroon's liability to pay Standby Costs.
(7) There is no evidence of future employment opportunities for the Vessel.
The law of estoppel by convention
"It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption … It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention."
"As is clear from the seminal speech of Lord Steyn in Republic of India … an estoppel by convention can arise either where parties to a transaction act on a shared assumed state of facts or law or where one party to a transaction has made an assumption as to the state of facts or law and the other party acquiesces in that assumption."
"52. In my judgment, the principles applicable to the assertion of an estoppel by convention arising out of non-contractual dealings, to be derived from Keen v. Holland, and the cases which comment upon it, are as follows: (i) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly shared between them. (ii) The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely upon it. (iii) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter. (iv) That reliance must have occurred in connection with some subsequent mutual dealing between the parties. (v) Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position."
"51. It may be helpful if I explain in my own words the important ideas that lie behind the first three principles of Benchdollar. Those ideas are as follows. The person raising the estoppel (who I shall refer to as "C") must know that the person against whom the estoppel is raised (who I shall refer to as "D") shares the common assumption and must be strengthened, or influenced, in its reliance on that common assumption by that knowledge; and D must (objectively) intend, or expect, that that will be the effect on C of its conduct crossing the line so that one can say that D has assumed some element of responsibility for C's reliance on the common assumption.
52. It will be apparent from that explanation of the ideas underpinning the first three Benchdollar principles that C must rely to some extent on D's affirmation of the common assumption and D must (objectively) intend or expect that reliance. This is in line with the paragraph from Spencer Bower, The Law Relating to Estoppel by Representation, 4th ed (2004) p 189, which was cited by Briggs J just before his statement of principles:
"In the context of estoppel by convention, the question here is whether the party estopped actually (or as reasonably understood by the estoppel raiser) intended the estoppel raiser to rely on the subscription of the party estopped to their common view (as opposed to each, keeping his own counsel, being responsible for his own view)."
For a similar statement, using the same wording of C's reliance on "the subscription" of D to the common assumption, see the present edition of that work, Spencer Bower: Reliance-Based Estoppel, 5th ed (2017), para 8.26. But this is not to suggest that C must be relying solely on D's affirmation of, or subscription to, the common assumption as opposed to C relying on its own mistaken assumption. It is sufficient that, as D intended or expected, D's affirmation of, or subscription to, the common assumption strengthened, or influenced, C in thereafter relying on the common assumption.
53. As I have already said, both counsel submitted that the Benchdollar principles, subject to the Blindley Heath amendment to the first principle, applied in this case. I agree. This judgment therefore affirms that those principles, as amended by Blindley Heath, are a correct statement of the law on estoppel by convention in the context of non-contractual dealings. What I have also sought to do is to explain the ideas underpinning the first three principles which may provide assistance in the understanding and application of those principles."
"… While it is possible that there may be some differences required by the relevant contractual or non-contractual context …, it would appear that the Benchdollar principles are being viewed as general principles applicable to estoppel by convention. It is significant in this respect, that the present edition of Spencer Bower: Reliance-Based Estoppel, 5th ed (2017), chapter 8, centres its whole analysis of estoppel by convention on the Benchdollar principles. Although it is unnecessary to decide this in this case - and we heard no submissions on it - there appears to be no good reason to confine them to non-contractual dealings. In my view, the five Benchdollar principles, with the Blindley Heath amendment to the first principle, comprise a correct statement of the law on estoppel by convention for contractual, as well as non-contractual, dealings."
"114. In order to found an estoppel (whether by convention or by representation), Mr Parker submitted, relying upon what Jacob LJ had to say in SmithKline Beecham plc v Apotex Europe Ltd [2007] Ch 71 at [102], that the assumption (in the case of the former) or the representation (in the case of the latter) must be "unambiguous and unequivocal" since that "is inherent in the very nature of an estoppel". Mr Parker submitted that this requirement stands notwithstanding that in ING Bank NV v Ros Rosa SA [2011] EWCA Civ 353, [2012] 1 WLR 472, when considering a submission to the effect that the shared common assumption must be sufficiently certain, Carnwath LJ (as he then was) described there being a qualification as far as estoppel by convention is concerned. Specifically, explaining that the submission under consideration arose out of a passage in the judgment of Ralph Gibson LJ in Troop v Gibson [1986] 1 EGLR 1 at page 6D-F, Carnwath LJ stated as follows at [64(ii)]:
"… With respect, I find more persuasive the way in which the point was expressed in the leading judgment of Sir John Arnold P. After referring to the extensive argument on the need for a 'representation' to be clear and unequivocal to found an estoppel, he said that the same question did not arise in relation to estoppel by convention:
'Since this is of a consensual character and the terms of the convention, just as those of a contract once the language is established by the evidence, must be interpreted by the court and the only true meaning is that decided upon by the court.' …".
115. Mr Parker submitted that this apparent conflict between two decisions of the Court of Appeal (three, if Troop is itself included) ought to be resolved by the Court favouring SmithKline Beecham, an authority which it appears was not cited to the Court of Appeal in ING Bank. His submission was that the analogy with a contract favoured by Sir John Arnold P in Troop (and approved by Carnwath LJ in ING Bank) is inapposite in an estoppel by convention case where the inquiry is as to the parties' conduct (or assumption) rather than as to what the language used in a contract means. Whether there is, indeed, a conflict, however, as suggested by Mr Parker is something about which I am not convinced since it seems to me that, in truth, what is required (consistent with all three authorities) is that there is clarity over what comprises the common assumption (if there is such a common assumption) as determined by the Court and not by the parties. If there is no such clarity, then, there will be no relevant convention and so no operable estoppel. In any event, as Mr Valentin acknowledged, the present case is not a case which turns on such subtleties."
(1) There must have been an assumption of fact or law made by and shared between both parties (a shared or common assumption) or an assumption made by one party and acquiesced in by the other.
(2) The assumption must be clear in its meaning, in its scope and in its impact on the legal relationship between the parties.
(3) Something - whether words spoken or in writing or conduct - must have crossed the line between the parties which manifested an assent to the assumption.
(4) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his or her own independent view of the matter. However, that reliance need not be exclusive in that the assumption may have strengthened or influenced the party raising the estoppel in his or her reliance. Reliance must be established by the evidence. I do not consider that it is inevitable that there will be such reliance (cf. Mears Ltd v Shoreline Housing Partnership Ltd [2015] EWHC 1396 (TCC), para. 51(d)).
(5) That reliance must have occurred in connection with some subsequent mutual dealing between the parties.
(6) It must be unjust or unconscionable for the person alleged to be estopped to be permitted to resile from the assumption and to assert a legal or factual position contrary to that assumed. Such injustice or unconscionability is generally manifested by detrimental reliance by the person raising the estoppel or the accrual of a benefit by reason of the assumption by the person alleged to be estopped.
(7) The expression of the assumption by the party alleged to be estopped must be such that he or she may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he or she objectively expected or intended the other party to rely upon it.
"How far an estoppel may assist in bringing about a cause of action, without standing alone as 'a cause of action in itself', has remained a matter of dispute over subsequent years. It may enlarge the effect of an agreement, by binding parties to an interpretation which would not otherwise be correct: see e.g. De Tchihatchef v Salerni Coupling Ltd [1932] 1 Ch 330; The Karen Oltmann [1976] 2 Ll Rep 708; and per Robert Goff J in Amalgamated Investment at p. 106A. In the Amalgamated Investment case itself, Lord Denning MR and, on the view I would prefer, Brandon LJ held that both the company and the bank were bound by their Conventional treatment of the company's guarantee of its subsidiary's indebtedness to the bank as extending to such subsidiary's indebtedness to the bank's subsidiary ('Portsoken'), thus entitling the bank to set up sums due under the guarantee, read in this extended sense, against the obligation that it otherwise had to account to the company for realisations which it had made."
"74. I have considered whether this submission about the scope of estoppel by convention relates to the question whether estoppel by convention can create a cause of action (acting as a "sword") or, in contrast, can operate only as a defence (acting as a "shield"). In Amalgamated Investment Brandon LJ examined this question in the context of estoppel by convention and said, at pp 131-132:
"while a party cannot in terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on that estoppel, he would necessarily have failed. That, in my view, is, in substance, the situation of the bank in the present case."
75. As a general proposition about the law on estoppel, Brandon LJ's comment is too sweeping because it is clear that while, for example, promissory estoppel cannot create a cause of action (Combe v Combe [1951] 2 KB 215, Baird Textiles Holdings Ltd v Marks & Spencer plc [2002] 1 All ER (Comm) 737), proprietary estoppel can (Crabb v Arun District Council [1976] Ch 179).
76. The particular concern about allowing promissory estoppel and estoppel by convention to create a cause of action is that this might undermine the requirement of consideration for the validity of a contract. However, that concern is not relevant to the facts of this case which do not concern contractual dealings. In any event, in the context with which we are concerned, even if one were to insist that the estoppel by convention can support, but must not create, a cause of action in relation to the mutual dealings between HMRC and a taxpayer, it would appear that that restriction is satisfied. The underlying duty to pay tax is imposed by statute and the estoppel relates merely to the dealings between HMRC and the taxpayer in connection with the procedure by which HMRC determine the correct amount of tax to be paid under the statute."
Analysis
(1) During his evidence, by reference to paragraph 47 of his witness statement, Mr Harmon accepted that there were limited, if any, occasions in which Mr Asher accepted that Tower Cameroon was responsible for Standby Costs (transcript, day 3, pages 2-3):
"Q. It's not correct, is it, that there were numerous occasions on which Mr Asher accepted that standby charges were payable by Tower Resources?
A. Not in email correspondence, no.
Q. So why did you write that sentence?
A. I believe that I was probably referring to actual oral correspondence as well over the telephone, as detailed 2 also within the statement. We got telephone calls on 15th, 22nd and also 24 January, where myself and Mr Asher corresponded regarding the standby charges and this is sort of all related to when we were talking about the extension agreement.
Q. What you're saying in paragraph 47 is that there were numerous occasions in email correspondence that Mr Asher accepted that and that's not right, is it?
A. No, I accept that's not completely correct, in hindsight."
(2) Later, during his oral evidence, Mr Harmon accepted that by 14th January 2020, when he was corresponding with Mr Hanse, Mr Asher had not by then accepted that Tower Cameroon was responsible for Standby Costs (transcript, day 3, pages 9-10) and again, by reference to para. 42 of Mr Asher's witness statement:
"Just pausing there. That's consistent with what he told you in these telephone conversations, isn't it?
A. He didn't say that he didn't believe they were due at all.
Q. But as you've already told us, he didn't say that -- that Tower were accepting that they were due. He never said that, did he?
A. Not directly
Q. He never said it, did he, Mr Harmon?
A. No."
(3) On 22nd January 2020, Mr Harmon had proposed to Mr Asher that there ought to be an extension of the Contract agreed. During his evidence, Mr Harmon stated that:
Q. And that was the main concern on your part at this point, that the contract had actually come to an end; is that right?
A. Absolutely, yes.
Q. Because you'd received no assurance from Tower that the, at this point, standby charges were going to be paid, had you?
A. No.
Q. You never received such an assurance from Tower, did you, Mr Harmon?
A. You believe in the signing of this contract extension it gave us a level of assurance that Tower Resources were at least aligned withGeoquip
on where we stood at the project to date.
Q. The level of assurance that you're talking about is an assurance that your own interpretation of the contract was correct; that's what you were talking about, isn't it?
A. Yes, it has to be ofGeoquip's
interpretation of the contract, yes, of course."
(4) Towards the end of his evidence, Mr Harmon said further as follows (transcript, day 3, page 69):
"Q. … I want to ask you this, please: throughout January 2020 -- in fact, at all stages, you and everybody else withinGeoquip
believed that Tower was liable under the contract that you'd signed for standby charges, correct?
A. Correct.
Q. You were never told by Mr Asher, were you, thatGeoquip
was entitled to levy those charges under the contract?
A. Other than the points I've already directed you to, not a direct email stating those exact words, no."
"Q. And Mr Asher goes on to say: "Whilst I did not wish to treatGeoquip's
views disrespectfully, I did not believe that standby hire should be due under the contract because we had agreed lump sums for mobilisation, the field work and the demobilisation and the structure of the agreement had been that mobilisation could not take place until everything was ready for the survey to take place." Just pausing there. That's consistent with what he told you in these telephone conversations, isn't it?
A. He didn't say that he didn't believe they were due at all.
Q. But as you've already told us, he didn't say that -- that Tower were accepting that they were due. He never said that, did he?
A. Not directly.
Q. He never said it, did he, Mr Harmon?
A. No."
Issue (4): Estoppel by contract
"- CONTRACTOR was ready to mobilise the VESSEL and crew within the validity of the CONTRACT, and VESSEL and crew mobilisation took place in the period up to 17:00 on 8th January, 2020; and since that time up to end of 23rd January 2020 VESSEL has accrued 316.75 standby hours in port and 34.75 standby hours at sea, as documented in CONTRACTOR's weekly reports to OPERATOR;
- The VESSEL continues to accrue standby hours since 23rd January 2020, and OPERATOR and CONTRACTOR wish to confirm the continuation and extension of the contract to cover the longer duration of the operations.
230. Parties to a contract may agree that a particular state of affairs is to be the basis upon which they are contracting, regardless of whether or not that state of affairs is true. A line of authority establishes that such an agreement may give rise to a contractual estoppel, precluding the assertion of facts inconsistent with those that have been agreed to form the basis of the contract …
250. The authorities to which I have referred, other than Lowe v Lombank [1960] 1 WLR 196, show that parties can agree that their dealings shall be conducted on a particular basis of fact (including as to what has or has not occurred) even if the true facts are different and that, if they do, a contractual estoppel will arise. It is not easy to reconcile that position with the apparently absolute statement in Lowe v Lombank that a statement as to past facts known to be untrue cannot be converted into a contractual obligation and is not a contractual promise. If Lowe v Lombank means that an agreement that something has not happened is incapable of being a contractual obligation or promise, and is no more than a representation, which is ineffective unless the three Lowe v Lombank conditions have been fulfilled, then it cannot found a contractual estoppel."
"An estoppel will only arise where the recital recites a statement of present fact. It will not arise where the recital purports to state the legal effect of the document. In CP Holdings Ltd v Dugdale, Park J said:
"X and Y enter into an agreement: 'Whereas we believe that the effect of the new agreement will be MNO, we now agree as follows.' X later wants to argue that the effect of the new agreement on its true construction is not MNO, but is PQR instead. He is not estopped from doing so. He may have an uphill struggle in his arguments on construction, but he is not estopped from putting them forward. In a case like that it is rectification or nothing."
This is a reflection of the principle that although the parties are free to contract in whatever terms they please, the legal effect of what they have agreed is a question of law for the court."
Issue (5): Tower plc's liability as guarantor
Conclusion
(1)Geoquip
succeeds in its claim for the balance of the lumpsums due under the Contract in the sum of US$610,091.68.
(2)Geoquip's
claim for Standby Costs fails.
(3) Tower plc is liable as guarantor for the sums owing by Tower Cameroon toGeoquip. Its liability as guarantor was not discharged by the conclusion of the Extension Contract.