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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 >> Walter Lilly & Company Ltd v Mackay & Anor  EWHC 1773 (TCC) (11 July 2012)
Cite as:  EWHC 1773 (TCC),  BLR 503
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| WALTER LILLY & COMPANY LIMITED
|- and -
|(1) GILES PATRICK CYRIL MACKAY
(2) DMW DEVLOPMENTS LIMITED
David Sears QC, Serena Cheng and David Johnson (instructed by Nabarros LLP) for the Defendants
Hearing dates: 12-15, 19-22, 26-29 March, 2-4 April and 3 May 2012
Crown Copyright ©
Mr Justice Akenhead:
A. General Chronology.
B. Assessment of Witnesses.
C. The Contract.
D. The Proceedings and the Pleadings
E. Analysis of Major Causes of Delays and Major Defects.
F. Extension of Time.
G. Quantum Delay.
H. Other Defects.
I. Other Quantum.
In the General Chronology which follows, I will not set out in detail the history relating to the Light Wall, the ABW, the Courtyard Sliding Doors, the lift, the Barrisol Ceilings, the Stingray Doors, Leather in the Library, snagging or plaster defects which will be dealt with in the Analysis of Major Causes of Delays and Major Defects.
Architect: Barrett Lloyd Davis Associates ("BLDA")
Interior Designer: Initially Fox Linton and later Janine Stone Interior and Architectural Design ("JSI")
Structural Engineer: Cameron Taylor Bedford
Services Consultants: Chapman Bathurst Partnership ("CBP")
Lighting Consultants: Equation Lighting ("Equation")
Quantity Surveyor: Gardiner & Theobald ("G&T")
Project Manager: Second London Wall ("SLW")
Fit-out Manager: Rider Levett Bucknall ("RLB").
BLDA was re-placed as architect by Navigant Consulting in about March 2008, which was itself placed by a Mr Mulhearn in about March 2009. A firm called Malishev Wilson Engineers was retained in late 2004 by DMW or possibly BLDA on DMW's behalf to design the lift shaft.
"Within the preliminaries section A13-Description of Work, of the contract documents, there is a list of trades that 'may be designed by the Contractor'. In our Tender submission we excluded any Professional Indemnity Insurance or any designer/coordinator input associated with Contractor Designed works.
We have published our understanding of the current CDP requirements and have reported our preference that Employer's Requirements be developed for inclusion in tender packages…
We therefore enclose herewith our updated list of the current state of CDP packages on this project. We would be grateful if you could check the status and advise us whether any further packages need to be added. We would also be grateful if you could indicate when Employers Requirements for the noted trades/ packages will be available.
This will help us to identify the design implications and responsibilities, in order that we can include a sufficient level of PI cover and also assess the required level of design and coordination the mobilisation at the appropriate stage of the procurement process. Clearly, the cost of the PI cover and any resources required to facilitate design management and coordination will need to be assessed and incorporated within the comparisons to each relevant package. It is therefore important that an exhaustive list of all Contractor Designed Works is identified at the earliest opportunity in order that PQS can be notified of any additional costs".
The attached list identified the packages then envisaged with many of the items indicating no design responsibility but some such as the courtyard sliding doors to be subject to "full design - Subject to [Sub-Contract]". This was followed by similar letters dated 13 May 2005 and 10 August 2005 which also elicited no substantive response. There is no evidence that BLDA ever raised this important issue with their clients. That DMW's Design Team were aware of the need to formalise arrangements about who was to be responsible for design is clear from such correspondence as is available to the Court relating to the piling in relation to which Mr Elliott of G&T e-mailed Mr McMorrow of WLC on 11 November 2004 confirming that "a set of documents can be gathered to pass back to the Clients' solicitors" going on to say that "this will be necessary for all of those packages so that design responsibility is passed down to Water Lilly".
"…so wrong in terms of your numbers, budgets and procurements and I think you owe me an answer to my question and to least have the good grace to start doing something about this other than trying to make me look like I'm an idiot. That I may be but only in the context of employing you to look after the costs plans on the job".
These tensions highlighted the fact that many tenders had come in over budget, as reported in a number of meetings in 2004 and 2005.
"The view of [BLDA] was that the main causes of delay to date were late instructions and design information…the splitting of packages into a smaller packages, poor coordination of services, the lifts and the substation. [WLC] were also claiming time and money due to there being only one staircase, but two was included in the original specification, which resulted in delay and disruption to the works owing to congestion.
[BLDA] also said that another problem was that [WLC] would not take on any design liability and this was causing delay…The building contract was checked and it set out a number of packages that may be [Contractor Designed Portion] packages. CF [of BLDA] said that he thought a list of such packages had been agreed early on…JA said that no work had been procured as a CPD package. [BLDA] confirmed that the mechanical and electrical services were fully designed by Chapman Bathurst.
…It was also noted that [WLC] had not been acting aggressively in respect of their claim and that generally [WLC] are keen to avoid disputes; that was one of the reasons they were selected for this contract."
The correspondence overall supports the general truth of these observations. Very few of the extension of time notifications were challenged by BLDA, albeit BLDA did occasionally do so (such as on 1 June 2006 in relation to ceiling details). At this stage, the causes of delay were primarily the late provision of instructions and information to WLC and poor coordination by DMW's Design Team. There had been little or no complaint that WLC was responsible for any of the overall delay. Documentary evidence and indeed the evidence of WLC, which I accept, confirms that virtually no work (the piling package being an exception) had been procured by the Design Team as a Contractor Designed Portion package. What was not correct was the note that WLC was not prepared to take on any design liability. There had been a number of letters written by it unequivocally seeking clarification and instructions as to what design responsibility it should take on; those letters had been studiously ignored principally by BLDA and G&T for no obviously good reason other than they believed that the imposition of design responsibility on WLC carried with it an additional financial burden for DMW. It is clear that there was and continued to be serious ill feeling between DMW and the Design Team about the escalating costs of the project.
"We would like to create a situation whereby direct work is not delaying [Practical Completion] – i.e. PC is solely delayed by WL's works. WL works can be omitted to achieve this if possible."
The problems relating to the ABW and the Light Wall were identified as being attributable to design breaches by BLDA and the problems with the Barrisol ceiling as being caused by design breaches by Equation. Knowles advised that it would be "prudent to dismiss BLDA on or about 26 October". Part of the strategy included Mr Mackay sending a Knowles drafted letter instructing G&T to issue no further recommendations for Interim Certificates, as was confirmed by G&T in its letter to WLC, albeit copied to a number of other parties. G&T clearly felt very embarrassed and apologised to WLC as recorded in a WLC e-mail of 2 October 2007. This course of action was persisted in notwithstanding BLDA's correct advice for instance on 19 October 2007 to Mr Mackay that it was inappropriate and a breach of contract. Further aggressive interference in the administration of contract was the direction from Knowles to G&T (Mr Whidborne) that Adams Joinery should not have any preliminary costs on variations ordered after the extended date for completion; this was confirmed in an internal G&T e-mail dated 25 October 2007; although Mr Whidborne thought that this was wrong and bizarre, he followed this direction. Knowles representatives told Mr Mackay that BLDA was the worst architect whom they had ever come across (as later referred to in an email of about 4 February 2008).
"…you have three major defects notices outstanding…
Guess what when I have forgotten about you in a years time enjoying my £100 million home or sailing on one of my 40 meter yachts – you'll still be trying to wind up some other poor unsuspecting customer with your brand of mediocrity - a sad loser - gaining your kicks and being irritating. Suggest a new career as a traffic warden might be ideal at least it wouldn't involve lying.
Ps I'm sure your brokers aren't interested in this. Perhaps the press would be though…
Oh no, little guy like you - throws his weight around - big chip on your shoulder - you were definitely bullied at school!!!!
…or is it the fact that your little victorian 1800 sq ft cottage in pulborough can fit into my dining room…Or perhaps the fact when you bought it in 2003 the cost was the same as my defective veneer. I'll bet you will lord it in the pub over those neighbours of yours in the cheap semi's.
What is it that makes you so chippy little man.
Well whatever it is you're costing your company of fortune. I reckon around £1.5 million so far. Sent a note to your bosses last night saying your way isn't working and asking when they might fire you….
You're such a loser. I'm going to enjoy finishing you off over the summer. But don't worry you'll be reading the contract I'll be on the beach.
…Semis was talking about your neighbours over the road not you -sorry reading isn't a strong point for you…
Sorry about the pub - you probably bored them into closing down too.
50 this year - midlife crisis as well - nearest to a Ferrari you'll ever get is a toy one…
…What I find so difficult about you and WL is that you're really in the crap. You don't do anything about it apart from trying to jam me the whole time. I really want you all out of my life - it has been a sad chapter. I will not however allow you to continue to take the piss…
My middle name is relentless. I have the money and anger at this point to push on and make sure that you have to deliver or get punished for not delivering. I don't want to have to fight for that, but trust me I will NEVER give up if you don't start to change your attitude it will cost WL time and money - it may eventually cost you your job. Who knows. Never underestimate me.
So we can decide to have a change of attitude or we can continue like this I have three counsel's opinions that tell me I'm in the right on the contract. Is this a risk you all want to carry on with. Over the summer I am away - unless we sorted out it will cost you another £120k in LAD's. That will be nearly £1.5 million."
Assessment of Witnesses
(a) Graham Corless: he is and was a director of WLC who gave evidence about initial tendering, contract negotiations, continuing high level discussions during the project and certain aspects of the loss claimed. I found him to be a decent, straightforward person and a reliable witness. He answered questions directly and to the point.
(b) Sean McMorrow: he was involved with this project from the start and has been involved in the collation of the WLC claims. I formed the view that he was decent, sensible and "on the ball". He was well researched and was very straight in the giving of his answers. He seemed to be thoroughly reliable and I have no difficulty in finding him believable.
(c) John Joyce: he was the contract manageryed by WLC. Although occasionally unsettled by the cross-examination, mostly in relation to questions about matters about which he had no direct knowledge, he stood his ground and was consistent in the giving of his evidence. He seemed to be a wholly genuine person and came over as a conscientious man. Again, I found him to be wholly credible and reliable.
(d) John Howie: he was the director brought in to the job at the time (early 2007) when it had become irretrievably obvious that the project was going badly. He was essentially a trouble-shooter whose job it was to get the Works completed. He was not always conciliatory and (with some justification) mistrusted particularly Mr Mackay and his motivation. He did not get on well with the Mackays, although I strongly suspect that, by the time that he came on the scene the relationship between them and WLC was rocky at best. He was undoubtedly faced with unpleasant verbal abuse from Mr Mackay and I formed the view that, although he found it difficult, he retained a level of restraint and politeness which was not reciprocated. He was slightly combative under cross-examination and he was clear and emphatic in answering what was often stern cross-examination. He was well prepared and he came over as believable and, as a witness, reliable.
(a) Giles Mackay: he was the key factual witness for the Defendant and as much turns on the extent to which, on contested matters, I accept his evidence, I set out below my impressions:
(i) He qualified initially as a barrister in 1984 but never practised. Since then, he has become an extremely wealthy man, now worth, he said, over £100 million. The business, which he has set up by all accounts extremely successfully, is a focused well financed property investment company, run from offices in Chelsea Harbour. He is clearly an astute but very forceful man. He has been and is obviously very busy primarily at his business but he enjoys sailing, owning several substantial yachts; at various, possibly important stages, he had to leave the country to participate in sailing races or the like. I strongly formed the view that he is a person who is used to getting his own way.
(ii) It is clear that, although he had passed the bar finals and had run for some 20 years (before this development) his substantial property investment business, he had never experienced either building contracts or direct involvement in construction projects. He unsurprisingly believed that his consultants, and in particular his architects, should act only in his interests but he seems to have been unaware throughout most of the project at least that, by agreeing to the standard JCT contract terms, he was leaving with the Architect an independent function of certifying sums due and of awarding, when appropriate, extensions of time.
(iii) He is a person who, virtually, from the start of the project up to this litigation, considered and considers that it is appropriate to apply very substantial sums of money and whatever it takes to getting what he believes he wants. He has spent some £17 - £18 million so far on the construction and, he told me, over £6 million on the costs of this case. His introduction of Knowles, as claims consultant, at a total cost of some £900,000 for 17 to 18 months work, in effect mostly to keep an eye on the other consultants and to dictate to them how they should do their jobs is an example. Save for some of their work in connection with the adjudications, much of this expenditure was substantially wasted.
(iv) He was and became increasingly frustrated as the project stumbled into substantial delay, rising costs and confusion as to who was responsible for what. I find it difficult to determine comprehensively whether it was the original architects, or other consultants, who were, so to speak, to blame or whether they gave appropriate advice at relevant stages to their client which was not followed.
(v) Whatever the cause of his increasing frustration, his behaviour towards the Architects, some WLC employees and other consultants was not simply coarse (for which he apologised on a number of occasions when giving evidence); it was combative, bullying and aggressive and contributed very substantially to the problems on this project. He was particularly critical of the Architect's meeting minutes and, although on occasions he did point out to them criticism of some of the minute taking (see for example emails dated 4 and 27 February, 8 March, 19 July and 25 September 2007), this was usually done in a very aggressive way; however, for some critical meeting minutes, he did not come back to the Architect.
(vi) I have formed the view that he is and has been for a long time angry. This seems to have started as 2006 went on and was originally directed primarily against the Architect. He has sued many of the parties involved in the development (the Architect, the Services Engineer, the lighting consultants and the interior designer); he has been sued by his second architect for fees, by Knowles and by several firms of solicitors for fees also. He has tried to wind up WLC (unsuccessfully in the summer of 2008), he sought through his solicitors in mid-2008 to suggest that WLC had "rigged" sub-contract tenders (an allegation not pursued in these proceedings), he has set up a website to attract additional complaints against WLC and to publicise complaints against WLC ("Beware of Walter Lilly") and has sought to interfere with an acquisition by WLC's parent company. Much of his anger has originated in his mounting frustration when matters did not go as he had hoped.
(vii) I found him to be an unsatisfactory witness. From my observations, I have formed the view that he has lost nearly all sense of objectivity in relation to this development and I consider that he simply does not understand why, given the amount of money which he has spent, the house is not perfect or exactly as he and his wife wanted. His attitude has almost become in the nature of a vendetta against WLC. Although I did not find him to be dishonest, he was at least careless with the truth in a number of respects. An example was his Third Witness Statement in which he stated that he believed that two representatives of Knowles were practising barristers or solicitors; he must have known on any account that they were not solicitors, practising or otherwise and, having taken the Bar exams himself, must have been conscious broadly of what was required to be a practising barrister; there was little if anything to suggest that they were practising barristers, albeit that they too, like him, had passed the Bar exams. Another example was his evidence in court that shortly before BLDA was dismissed he did not believe that BLDA would grant another extension of time to WLC; that was directly countered by contemporaneous documents which showed that he clearly had this in mind. His evidence that he could not remember issuing a direction to G&T not to issue further valuation recommendations was expressly countered by the documentary evidence with which he had personally been involved at the time.
(viii) Having initially directed his ire against BLDA, he turned his attention also to WLC. I found him a most unconvincing witness. His objectivity having gone, I think that he has now convinced himself of the truth of certain matters such as those relating to the ABW issues such that, although he believes that he is right, he is obviously not.
(b) Caroline Mackay: she is a person who clearly knew what she believed she wanted in relation to this development. She had carried out extensive research before and even during the project as to what was required for the house. She was guileless and stood up well to cross-examination. She was also upset in the latter 12 to 18 months of the project as defects and delays began to emerge. She was clearly particularly upset about the way in which the ABW was eventually left by WLC, as it was she who had chosen the particular wood and, as she saw it, its appearance changed from what in her mind's eye it should have been. Until she told the Court at the end of her evidence that she had a law degree and had practised as a solicitor in two well-known London firms for some 8 years, it had not been wholly obvious that she was well qualified to deal with people and business affairs in a businesslike fashion. She was frank and I had no reason to doubt her honesty.
(c) Gavin Bartlett: he was an assistant project manager employed by RLB who were appointed to oversee the construction works which were omitted from the Contract between DMW and WLC. He was brought in to replace a Mr Bardsley who had been in charge of this operation prior to September 2007. Although he only worked on the project for 11 months and had no further contact until late 2011 for the purposes of giving a witness statement, he remembered what had happened at a key meeting in September 2007, the minutes of which he must have seen at the time but did not challenge; his memory was that, contrary to what the minutes said, no general instructions were given to WLC to stain cupboards and skirtings. I found him wholly unconvincing in this context not only because he did not challenge the minutes but because this work was not his area of responsibility and he would have had no reason to have any specific memory about it.
(d) David Cane: I formed the view that he was reasonably straightforward and open in the giving of his evidence. Some of his recollection was faded; for instance, he had forgotten that WLC had invited G&T to verify certain aspects of the quantum.
(e) Richard Whidborne: he took over from Mr Cane as the acting quantity surveyor for the project in about March 2007; he was effectively sub-contracted by G&T. His evidence was largely uncontroversial but for instance, he had forgotten (and with it was clearly a surprise even to him) that he had been directed by Knowles to do things which he did not agree with and which he almost at least accepted would have been unprofessional. I was not impressed with his memory.
"the work referred to in the First recital includes the construction of certain works as notified by the Employer to the Contractor in writing"
"The Employer has caused the following documents to be prepared, sharing and describing the work to be done:
the Contract Drawings numbered [sic] the drawings listed at Appendix A of the Architectural Specification (together with drawing number 0119 P300 Site Layout…and at Appendix A of the Structural Service Specification…
and the following documents:
1. The specification dated March 2004 reference 18100…
3. The Tender Submission by Walter Lilly & Company Limited dated March 2004 reference 04023 [subject to some exclusions and amendments]…
together hereinafter referred to as "the Specification/that Schedule of Work"
together with other documents showing or describing or otherwise stating the requirements of the Employer for the design and construction of the Contractor's Designed Portion (hereinafter referred to as the ' Employer's Requirements')"
"For the consideration hereinafter mentioned the Contractor will upon and subject to the Contract Documents…carry out and complete the Works shown upon, described by or referred to in those Documents and for that purpose will complete such design of the Contractor's Designed Portion… as may be necessary in accordance with the directions which the Architect…shall give for the integration of the design for the Contractor's Designed Portion with the design for the Works as a whole subject to the provisions of clause 2.7."
"2.1.1 The Contractor shall upon and subject to the Conditions carry out and complete the Works in compliance with the Contract Documents.
2.1.2 For the purposes of so carrying out and completing the Works the Contractor shall, in accordance with the Contract Drawings and the Specification/Schedules of Works where and to the extent that the same are relevant, complete the design for the Contractor's Designed Portion including the selection of any specifications for any kinds and standards of the materials and goods and workmanship to be used in the construction of that Portion so far as not described or stated in the Employer's Requirements…, and the Contractor shall comply with the directions which the Architect…shall give for the integration of the design for the Contractor's Designed Portion with the design for the Works as a whole, subject to the provisions of clause 2.8…
2.1.3 Where and to the extent that approval of the quality of materials or the standards of workmanship is a matter for the opinion of the Architect…such quality and standards shall be to the reasonable satisfaction of the Architect…"
2.7.1 Insofar as the design of the Contractor's Designed Portion is comprised in the Contractor's Proposals and in what the Contractor is to complete under clause 2.1.2 and in accordance with the Employer's Requirements and the Conditions (including any further design which has to be carried out by the Contractor as a result of a Variation) the Contractor shall have in respect of any defect or insufficiency in such design the like liability to the Employer, whether under statute or otherwise, as would an architect or, as the case may be, other appropriate professional designer holding himself out of as competent to take on work for such design who, acting independently under a separate contract with the Employer, had supplied such design for or in connection with works to be carried out in completed by a building contractor not being the supplier of the design.
2.10 An extension of time shall not be given under clause 25.3, and clauses 26.1 and 28.2.2 shall not affect, where and to the extent that the cause of the progress of the Works having been delayed, affected or suspended is:
2.10.1 any error, divergence, omission or discrepancy in the Contractor's Proposals…
2.10.2 failure by the Contractor to provide in due time necessary drawings, details, specifications, calculation or information concerning the Contractor's Designed Portion as required by clause 2.6.2, or
2.10.3 the Architect…not having received in due time necessary drawings, details, specifications, calculations or information concerning the Contractor's Designed Portion from the Contractor for which he specifically applied in writing…"
"Employer's Requirements" were in the Supplementary Appendix "to be agreed". These documents would spell out what the Employer required the Contractor to achieve through any design process which was to be assumed by the Contractor.
"19.2.1 A person to whom the Contractor sub-lets any portion of the Works is in this Contract referred to as a 'Domestic Sub-Contractor'.
19.2.2 The Contractor shall not without the written consent of the Architect (which consent shall not be unreasonably delayed or withheld) sub-let any portion of the Works. The Contractor shall remain wholly responsible for carrying out and completing the Works in all respects in accordance with clause 2.1 notwithstanding the sub-letting of any portion of the Works.
19.2.3 The Contractor shall not without the written consent of the Architect (which consent shall not be unreasonably delayed or withheld) sub-let the design for the Contractor's Designed Portion of the Works. Where the Employer consents to any such sub-letting such consent shall not affect in any way the obligations of the Contractor under clause 2.7 or any other provision of this Contract.
220.127.116.11 In respect of the Works to be undertaken by the Domestic Sub-Contractor pursuant to the sub contract ("the Sub-Contract Works"), insofar as the design of the Sub-Contract Works has been or will be carried out by or on behalf of the Domestic Sub-Contractor, the Domestic Sub-Contractor has exercised and will continue to exercise the skill, care and diligence to be expected of a professionally qualified and competent designer who is experienced in carrying out such work of a similar scope, complexity, nature and size to the Sub-Contract Works."
"The following works may be designed by the Contractor:
Mechanical & Electrical"
This list did not include any finishings, joinery or glazing.
"Certain Sub-contractors as defined in the Contract will be required to provide design, coordination, fabrication, installation and or builders were drawings, design calculations, fixing details, specifications and other information as appropriate during the course of the Contract. Certain Sub-contractors will be required to obtain all local authority building control approvals and any other statutory approvals that may be necessary for their detailed design and works, and shall be responsible for the provision of all necessary information to enable such approval to be obtained in time to meet the programme. Those Sub-contractors to which this paragraph applies shall include (but shall not be limited to) those associated with the following words:
Nowhere was it specified or defined that there were to be Sub-Contractors to provide design or other related design work for the pool hall glazing, courtyard doors or joinery.
"Although there are a number of elements of the works that may be let as Contractor Design Portions, we have not included the costs of any Professional Indemnity Insurance or any designer/coordinator input that may be required, should all any of the stated elements be let in this way. As an indication with regard to PI cover, we usually add 0.75% to the value of any CDP package."
"18.104.22.168 If and whenever it becomes reasonably apparent that the progress of the Works is being or is likely to be delayed the Contractor shall forthwith give written notice to the Architect of the material circumstances including the cause or causes of the delay and identify in such notice any event which in his opinion is a Relevant Event…
25.2.2 In respect of each and every Relevant Event identified in the notice given in accordance with clause 22.214.171.124 the Contractor shall, if practicable in such notice, or otherwise in writing as soon as possible after such notice:
.2 .1 give particulars of the expected effects thereof; and
.2.2 estimate the extent, if any, of the expected delay in the completion of the Works beyond the Completion Date resulting therefrom whether or not concurrently with delay resulting from any other Relevant Event…
25.3.1 If, in the opinion of the Architect, upon receipt of any notice, particulars and estimate under clauses 25.2.1 [and] 25.2.2
.1.1 any of the events which are stated by the Contractor to be the cause of the delay is a Relevant Event and
.1.2 the completion of the Works is likely to be delayed thereby beyond the Completion Date
the Architect shall in writing to the Contractor give an extension of time by fixing such later date as the Completion Date as he then estimates to be fair and reasonable. The Architect shall, in fixing such new Completion Date, state:
.1.3 which other Relevant Events he has taken into account and…
and shall, if reasonably practicable having regard to the sufficiency of the aforesaid notice, particulars and estimate, fix such new Completion Date not later than 12 weeks from receipt of the notice and of reasonably sufficient particulars and estimate or, where the period between receipt thereof and the Completion Date is less than 12 weeks, not later than the Completion Date…
25.3.3 After the Completion Date, if this occurs before the date of Practical Completion, the Architect may, and not later than the expiry of 12 weeks after the date of Practical Completion shall, in writing to the Contractor either
.3.1 fix the Completion Date later than that previously fixed if in his opinion the fixing of such later Completion Date is fair and reasonable having regard to any of the Relevant Events, whether upon reviewing a previous decision or otherwise and whether or not the Relevant Event has been specifically notified by the Contractor under clause 126.96.36.199…
25.3.4 Provided always that:
.4.1 the Contractor shall use constantly his best endeavours to prevent delay in the progress of the Works, howsoever caused, and to prevent the completion of the Works being delayed or further delayed beyond the Completion Date…"
(a) To secure an extension of time before Practical Completion, the Contractor has to give notice if the Works are being delayed or are likely to be delayed. This notice can relate therefore to actual delays being experienced or to future likely delays.
(b) The notice should be accompanied or be followed as soon as practicable by particulars of expected effects and an estimate of the expected delay.
(c) What is at least initially envisaged is that the Architect will carry out a prospective exercise; this is because the Contractor can give notice when progress is likely to be delayed and the Architect has to assess what the likely delay will be. This makes sense so that the parties and the Architect can plan for the rest of the job. Of course, notice can be given when the Works have actually been delayed but actual overall delay will not happen until after the original Date for Completion has passed. How the Architect does this prospective exercise of working out how much future delay will result from the Relevant Events in question is not prescribed but he or she will simply have to do the best that he or she can; this may well be assisted by programming exercises done by the Contractor.
(d) Once the notice, particulars and estimate under Clauses 25.2.1 and 25.2.2 are given, the Architect is required to grant the appropriate extension of time. This is not an optional exercise: the word "shall" is clearly and intended to be mandatory.
(e) No later than 12 weeks after Practical Completion, the Architect must carry out the final extension of time exercise, irrespective of whether notices and the particulars have been provided. This will necessarily be a retrospective exercise because Practical Completion will have passed and all the delays (whatever the causes) will have occurred. Again, the way in which this exercise is to be done is not defined.
The Proceedings and the Pleadings
Analysis of Major Causes of Delays and Major Defects
"102c DESIGN AND PRODUCTION RESPONSIBILITIES
The Subcontractor shall be responsible for the following:
- Completing the design/detailing and provide complete fabrication/installation drawings, full sized rods/shop drawings as appropriate for approval by the Architect…
220a WOOD VENEERED BOARDS/PANELS…
- Setting out: Veneer features is and grain pattern aligned regularly and symmetrically unless instructed otherwise…
- Veneer edges: Tight butted and flush, with no gaps…"
"French polished sample Door to Guest Suite – The clients both agreed stained sample is now a much better colour, closer to the expected colour. KF stated that the French polishers used a coloured stain.
GM showed DLD a photo of the back of the walnut sample they approved in [the interior designer's] offices. The photo showed a sample without a disclaimer label from Adams Joinery (AJ). DLD showed GM a typical Adams Joinery timber sample with their standard disclaimer sticker. This sticker states that the colour of the timber may fade in time. CM stated that even with this information it was not clear enough, they were never informed that the timber would change colour. She asked whether the colour would fade further. SH confirmed that it may fade and might need a re-application. JJ asked whether WL are to proceed with the French polishing works to all walnut veneers. GM said yes and asked about whether various shades of stain are available…"
"The sample colour and finish to the guest entrance door has been accepted by the client.
We therefore need to address all the Walnut Danish oil finished joinery to match the sample."
"As a general note GM expressed strong concern regarding the staining works Adams are undertaking to the American Black Walnut; highlighting how there is significant colour variation from room to room and often the staining is very blotchy. The joints are also darker. GM considered that all these points make the timber unacceptable. WL confirm that the oil seal had not been applied. GM and CM confirm that the samples [sic] doors on the top floor were accepted. CM suggested that Adams makes a sample based on the acceptance which can be referred to within each room which would highlight the variation, and should assist with addressing the issue. JJ to arrange a meeting with French polisher foreman to resolve the issues."
These minutes strongly suggest that Mr and Mrs Mackay were not objecting to the fact that the staining work was being done throughout the house but more to it being done in a way which was unacceptable. There is also a confirmation that the sample being observed was on the doors on the top floor.
"Adams were staining Her Study joinery at the time of the meeting. The four drawers in the centre had received the sealer oil. WL would like acceptance in terms of the oiled wood before proceeding further. CM confirmed acceptance of the drawers stating that they looked great. The staining of the wood generally was much improved also. Adams showed CM a sample that had been made and was reported to be based on the approved doors on the top floor. CM confirmed acceptance of the sample."
"GM stated that they are not in acceptance any [sic] of the staining works and are anticipating an imminent arrival of report from Trada. GM reported dissatisfaction with variation between the staining which is noticeable within runs. In addition the shadow gaps are too dark relative to the rest of the wood, and the butt joints are too dark. GM reported that grain had been lost in the timber because of the excessive staining and it does not look like a American Black Walnut originally approved. RB [of WLC] reminded GM that WL has undertaken the staining work at GMs request. CF [of BLDA] referred to the previous meeting where CM approved the drawers to Her Study and other samples including the door on the top floor (C.D3.04) and the hand held sample. CM reported that they had subsequently become darker because the French polisher has gone over them again. GM stated that WL are trying to make the best of a bad situation by staining the wood, and are not aware of what is going to occur to the finish long term. GM expressed dissatisfaction with the staining and explained that it has resulted in something which is unacceptable."
There were no challenges to these parts of the minutes of these October meetings.
(a) I found Mr Joyce to be a wholly believable witness generally but particularly on this topic.
(b) The minutes of the meeting are reasonably clear and records this.
(c) Within a very short time after the meeting (on the same morning), Mr Fairweather who was at the meeting was instructing Adams to stain throughout the house. With a client who was known to be difficult and before the minutes had come out, he must have been absolutely clear on what had been said. It is unrealistic to believe that he would have made it up.
(d) The minute was not challenged by either Mr or Mrs Mackay. Since the ABW was something which was close to their hearts, and because they had been concerned in the past about the accuracy of minutes, it is not credible that they did not challenge these minutes if they were inaccurate in this particular regard. BLDA never withdrew or revised the minute.
(e) The later minutes, particularly in October 2007, do not hint at any complaint that staining was being done throughout the house. Again, it is simply not credible that WLC had not been instructed to stain throughout the house. If there was any issue about that, I would have expected it to have been raised in these later October meetings or at the very least in some contemporaneous documents; this did not occur.
(f) Simply, I did not find the evidence particularly of Mr Mackay on this topic credible; he was extremely faltering under cross-examination on the topic, unsurprisingly in one sense because almost all of the contemporaneous documentation, unchallenged by him, undermined what he was saying. Although Mrs Mackay was in some respects a "better" witness than Mr Mackay, I found her evidence on this area of the case particularly unconvincing. It is interesting that on several copies of the October meeting minutes she wrote various notes qualifying what had been minuted. She also did not challenge the 19 September 2007 meeting minutes and her solicitor background would have warned her of the need to challenge the minutes on a topic such as this, close as it was to her heart, if the minute did not clearly recall what was said.
Courtyard Sliding Doors
"Complete the detailed design, in all respects, of the structural Glass assembly (including automated sliding doors) and in accordance with the preliminary design drawings and this specification.
Coordinate detailed design with that for all related work.
Provide complete fabrication drawings/installation drawings for approval."
"Further to previous requests, we would appreciate your clarification and definition of those packages that you will require to be undertaken as CDP.
We would also request that you separately identify those packages that are not CDP would require design and development and design coordination by Walter Lilly or their subcontractor(s).
We require your response urgently and by return in order that we can conclude information that has been requested by Gardiner & Theobald in respect of cost recovery".
There was no response. Mr Joyce, whose evidence I accept, said there was no agreement on the part of WLC to accept responsibility for any discussions which Firman had with BLDA.
(a) There is no evidence that the Employer authorised, consciously, by implication or otherwise, BLDA to notify WLC that the CDP provisions should apply to the Courtyard Sliding doors. If anything, there is evidence that BLDA did not either seek or secure such authority, that evidence being the repeated attempts by WLC to obtain clarification from BLDA as to what were or were not to be treated as CDP packages. It is logical to assume that BLDA either raised the issue with DMW or did not raise it. If it raised the issue with DMW and secured approval for the Courtyard Sliding doors package to be treated as a CDP one, I infer that BLDA would have informed WLC; if it did not raise the issue, there is no reason why DMW would have thought that it was necessary to do anything about it.
(b) Certain it is that DMW itself did not notify WLC that the Courtyard Sliding doors package was to be treated as a CDP package.
(c) There was a strong disincentive to BLDA, G&T and DMW not to have notified WLC that the Courtyard Sliding doors and indeed the other packages were to be treated as CDP packages, which was the clear and indeed correct perception that DMW would have to pay additional monies to WLC for the privilege. These sums would have included allowances for additional PI cover as well as specific design co-ordination and design and supervision of the particular sub-contractors, in this case Firman. Throughout 2005, 2006 and indeed 2007, there was a serious pre-occupation on the part of BLDA, G&T and DMW to keep costs down if at all possible, with costs just for Unit C perceived almost to have doubled from the early budgets.
(d) The giving by BLDA of the specification to WLC at the end of May 2005 did not of itself amount to some sort of notification that the Courtyard Sliding doors or "Structural Glass Assembly" document was to be treated as a CDP notification. There is nothing on the face of the document telling WLC that this was to be the case: at best, the specification was simply to be used by WLC to secure tenders from potential sub-contractors.
(e) The specification on any account does not seek to transfer an overall design obligation onto the successful tendering sub-contractor. It requires only "completion" of the "detailed design" but this must be in accordance with BLDA's design drawings and the specification itself. Thus, the sub-contractor can not for example choose to use a framing material other than wood and it cannot deviate from the detailed dimensions set out on those design drawings. There is a very real practical and engineering difference between completing the detailed design, which simply involves finishing off what has already been (at least in relation to the Courtyard Sliding doors) substantially designed by BLDA, and assuming a full design responsibility for everything associated with such doors. The completion of the detailed design essentially means providing such design detail as is not already contained within BLDA's design drawings and the specification. BLDA was to retain overall control in any event by the approvals process, which in this case involved active decision taking such as in relation to the glazing beads.
(f) The requirement for a specialist supplier or sub-contractor to provide fabrication or installation drawings is not an overall design function. Such drawings are always taken to mean drawings which enable the supplier or sub-contractor to fabricate or install. An IKEA flat-pack for, say a cupboard (usually) contains an installation drawing which shows how the cupboard can be put together and then fixed to the wall. A fabrication drawing will show the people in the workshop or factory the individual components and for instance their dimensions and how to put the components together.
"Glass screen wall made up of 12 mm white laminated glass, 20 mm void, 10 mm Prismex and 10 mm white laminated glass to rear, all sandwiched into concealed aluminium U-Channel, frameless with concealed fibre optic lighting to top and bottom of screen. Bottom and top U- channel to be drilled with 8mm holes at approximately 800 mm (sic) centres to line with Prismex glass to detail."
It was to "incorporate "Fibre Optic lighting to Lighting consultants specification" and the "Finish" was to be "White Laminated glass". It is clear that Prismex was specified or selected by Equation as appears from BLDA's later e-mail dated 24 October 2007 to Equation.
"Completing the design and detailing of the works and to provide complete fabrication/installation drawings, full size rod/shop drawings as appropriate for approval by the Architect...
Obtain specialist calculations as part of the completion of the design/detailing, e.g. for submission to other parties and to ensure elements are fit for their purpose. Inform the Architect immediately of any non-conformity...
'The supplier and/or installer, as appropriate, shall be required to verify the glass specification; including size, thickness, rebate size and edge cover, aspect ratio and mechanical strength in relation to supported edges to ensure fit for purpose..."
"I discussed these screens with the interior designer yesterday and we are trying to arrange a meeting with Equation Lighting on site with Firmans. The earlier that Equation can make is 10 am on 22nd February so I have set it provisionally for their. Can you get Firmans to attend…
It is not clear at the moment how this screen can be supported, and still allow the fibre optics to be placed under the glass. We are looking at possible solutions now, as we are aware that the screening of the pool is imminent."
"With reference to Architect's Instruction 208C and the appointment of FA Firmans, they have provided a programme for the works…[that] would give a completion date of 1st September 2006. As this extends beyond the extension of time already granted, we require a further extension of time to cover his work.
We confirm that the Architect's Instruction is for the supply and fitting of the screens, and we would wish to confirm for the avoidance of doubt, that neither Firmans nor Walter Lilly are responsible for the design element of this work…"
There was no reply of any sort to this letter, which suggests that BLDA agreed. That is confirmed by the Manches' attendance note dated 29 June 2006 at which it was generally accepted "that no work had been procured as a CPD package" (see General Chronology). It is further confirmed by the BLDA handwritten comments on their copy of the letter, which states "scheme still being designed".
"With reference to our drg's P1136X-930 and 931, sent to you for approvals/comments…which were returned marked up with various comments…
Although these drg's have been given 'B' status, not all of the issues/information had been resolved, some in fact may be impossible to achieve, for example the gap of 2 mm indicated to the top & bottom of the floors, this has already been pointed out several times verbally, doors cannot be loaded onto the floor springs with these tolerances, doors of this type of multiple construction cannot be manufactured within these tolerances, we would also very much doubt, from years of experience within the associated building trades, that the stone finished flooring to these areas can be laid to within 2 mm, bearing in mind this would still only achieve Zero tolerance if it were possible, we therefore feel this problem will need to be resolved by your fibre optic subcontractors, some of the other issues that need answering before we can fully amend our drg's for construction, manufacture & installation or further approval are as follows:-
1) Confirmation of the RAL colour?
2) Door handles, full details required, these would not be able to be bonded to the edge of the doors as indicated?
3) Metal cover strips to taped edges to the Prismex, this needs to be checked out, if the tape is suitable to accept this idea, etc, not very practical?
4) Full details of the shower controls, that need to be housed in the S/S section that we are to provide, this information was requested verbally several weeks possibly months ago.
5) Finalising the actual fibre optic situation, adaptation etc?
All of the above may not be all of the issues, but are the main ones that come to mind immediately & must be resolved before we can finalise our drg's & even think of putting into full manufacture, therefore feel that there is not any point in re-issuing our drg's until we have all the facts resolved, in fact we need the drg's returned as more a 'C' than a 'B' status…"
Without witness evidence from BLDA or Firman, it is difficult positively to find that any of the matters complained of by DMW either historically or in the Light Wall as it was left at Practical Completion was the "fault" of BLDA or Firman or both.
(a) I repeat (mutatis mutandis) what I said in relation to the Courtyard Sliding doors on the comparable issue. Thus, there was no notification by DMW to WLC about CDP for the Light Wall.
(b) There can on any proper factual analysis be no reliance on WLC's lists sent to BLDA in February and March 2005 about the status of the packages because at that stage the package which was to become the one under which the Light Wall was to be procured at that stage did not even relate to Light Wall but to a Glass Walkway; the Light Wall does not appear to have been considered then either by WLC or BLDA as something which was or was necessarily to be provided. That came later.
(c) The only oblique way in which it is argued by DMW that a notification of CDP status being transferred was made is on analysis by the reference in the Elemental Description Schedule dated 31 August 2005 issued by BLDA to "L40/250". It is common ground that there is no part of Paragraph 250 of L40 which is of any material relevance. The argument therefore goes that, as a matter of proper construction of the Elemental Description Schedule, BLDA must have been referring to L40 generally and references to the completion of the detailed design by the sub-contractor. The Elemental Description Schedule was not issued as some sort of instruction or indeed, obviously or at all, as a CDP notification under the Contract. The fact that WLC sought to incorporate L40 in its sub-contract with Firman does not mean that the Elemental Description Schedule is to be treated as a CDP notification.
(d) The need for a clear CDP notification should not be considered to be satisfied if one has to try to scrabble around to find it in documents issued by BLDA, particularly without any evidence from BLDA as to what was intended, and in a document in particular which does not obviously identify the requirement that L40 was to apply as a whole. The Elemental Description is not an instruction, let alone a CDP notification; it is at best a document in which BLDA merely tried to describe the elements which it had in mind for the swimming pool area.
(e) The only real evidence of what BLDA intended is that it did not intend to provide any CDP notification in relation to the Light Wall. Its repeated and what must have been deliberate ignoring of a series of letters from WLC seeking clarification as to design responsibility both in relation to all known packages and specifically to the Light Wall points strongly by inference to BLDA taking a conscious decision not to provide any such notification. The positive knowledge that no such notifications had been made is in the Manches attendance note later in June 2006.
(f) The fact that as such Firman actually did actively participate in the development of the design both before and after AI208C was issued or even that WLC sub-contractually retained Firman to complete or develop the design does not infer or mean that there was an effective or indeed any CDP notification from DMW to WLC. One must therefore not confuse Firman's active participation in the design process with WLC's contractual responsibility to DMW. That active participation is comprehensible simply as a direct and partial direct delegation by BLDA to Firman of a design responsibility which, in contractual terms, completely by-passed WLC.
"We write concerning the Prismex and glass composition for the above.
As you are aware, there have been several panels that have been broken while stored on site that have been subsequently removed…
These breakages however have brought to light a problem which we feel needs to be addressed and that is important from a safety point of view.
Currently the white laminated glass is only adhered to the Prismex by means of a high bond acrylic edged tape to the perimeter; therefore it is not physically laminated to the Prismex material. The glass has no structural strength, its interlayer being the only safety feature therefore acting independently and not as a single component.
In our effort to reach the desired aesthetic appearance this important criteria has been overlooked. We have therefore put a hold on the production of replacements for these panels. There are several options at the moment which we are investigating, one of these involves the direct laminating as mentioned above, and another is the possibility of changing the type of glass being used.…"
"JJ [Mr Joyce of WLC] advised that they are experiencing problems with these special glass sandwich panels forming the edge lit screen wall at the rear face of the pool area in Plot C. The glass was proving to be more fragile than expected and some units had broken while being handled the delivery to the site. JJ stated that Firmans were not ultimately responsible for the design of the glass sandwich - its design being mostly driven by the requirements of the lighting designer. He stated that there may have to be extra payment to cover the cost of developing the design further. A meeting has been arranged between BLDA/Firmans/WL on Thursday 11th to resolve this issue. BLDA may want the glass element of the design checked by Malishev Wilson when an alternative solution is available…"
Malishev Wilson were the designers retained by DMW to design the glass lift. These minutes were drafted by BLDA and there was no challenge to the assertion that Firman was not responsible ultimately for the design. Indeed, when on 14 December 2006 when WLC submitted to BLDA an extension notification in relation to the consequences of resolving the problems with breakages, BLDA did not respond in any way to the effect that the breakages problems were the fault of WLC.
"We have agreed to remove the glass units from site and return them to the factory to undertake additional works to the screens by introducing a Perspex interlayer [without a film] all in accordance with approved sample GS 412. There was a suggestion that these works should be undertaken on site and although this is possible for reasons of quality, availability of space and expediency they must be undertaken in their factory. We have however been asked, and have instructed Firmans accordingly, to undertake a full-size sample on site which will be available for inspection for 25 April 2007."
The full size sample was installed on site on 25 April 2007 and on 26 April 2007. BLDA issued its AI441C instructing WLC/Firman to proceed with the rectification works to the pool screens. Although the AI was initially issued in accordance with Clause 8 of the Contract, it was subsequently re-issued (as AI455C) on 11 May 2007 under Clause 13 (as a variation) after complaint was made by WLC. This strongly suggests that BLDA did not believe that WLC was in any way to blame. Another instruction, AI452C, instructed the installation of stainless steel angles to cover holding the glass screens.
"Another disaster is the specially designed lift. It is also poorly finished, with rubber showing through unevenly, the stainless steel edges have been filed down to get them to meet, rather ineptly, you can see the fabric of the building through the lift glass and right down the shaft of the unfinished bottom. How could these issues be dealt with?…"
"… In our specification we asked for bow in glass tolerances of + or - 2 mm. Some of the glass panels observed were not complying with this requirement. We believe that the bow is not due to the loading but fabrication or installation fault. Strictly speaking these panels should be replaced.
We have observed that some of the csk bolts were not done properly which may compromise the strength or rigidity of the steel frame especially under temporary conditions (when the glass panel is being replaced).…
Structural silicone application around the perimeter of the panels appears to be of low visual quality and is subject to Architect's approval…"
i) A 2m straight edge laid against the side of the corner stainless steel box sections indicated that the corner RHS could be as much as 2-3 mm out of vertical;
ii) There was misalignment of some junctions and the linishing (grinding/polishing) had led to a noticeable dip on some of the joints;
iii) Several glass panels were found to have a "pronounced bow outwards". BLDA recorded 4 mm of outwards bow as a difference of level compared to the adjacent RHS box section;
iv) Large runs of the sealant on most of the panels were exhibiting silver streaking visible through the edge of the glass, indicating that the black sealant was not fully contacting the edges of the glass nor penetrating the V of the edge of the PVB interlayer. The result was that the edge of the panel was made to look uneven thereby detracting from the visual effect of the shaft;
v) Scratches on the inside and outside of the glass panels; and
vi) Loose screws and a problem with the bulkhead at the top of the lift shaft.
"WLC confirmed that the bowed glazed panels have been replaced and that the scratches on the outside of the shaft had been polished. GM stated he is interested in pursuing the bronze capping option as now that the interior design of the house has progressed there is more bronze than stainless steel.…"
The reference to the "bronze capping option" was a reference to a proposal which WLC had made to over-clad the corners of the lift so as to conceal both the joints and also the mastic. WLC had commissioned further samples of over-cladding for the box sections so as to conceal the mastic joint. At that stage, WLC was seeking a formal instruction acknowledging the time and cost implications of executing the works and the proposal was not therefore pursued.
"The glazing, alloy trims, joint couplers and mastic seals are defective. The glazed shaft has been valued by the QS at nil in the present Valuation and their recommendation for payment is nil, hence there are no monies withheld again in this notice but emphasise, for clarity, herein that the lift shaft is considered defective by your employer and no monies be paid to you in respect of this element."
It is clear that, as DMW and BLDA knew even if not Knowles, much of these complaints had been attended to effectively by WLC. Another similar notice was served on 1 June 2007. On 6 June 2007, there was a Client Site Walk Around meeting at which Mr Mackay is reported to have said that "he had had the lift shaft surveyed for verticality and it was found to be within tolerance". He said that he would accept bronze capping. WLC subsequently wrote to BLDA on 11 June 2007 stating that, in response to the notice of withholding, it "had carried out a detailed dimensional survey, which had proved that the Lift Enclosure was fully compliant with the Contract Specifications" and that the survey had been copied to BLDA by e-mail on 4 May 2007 but no response had been forthcoming. It must have become apparent by then if not before that the total replacement of the lift and lift shaft was simply not going to be required.
The Stingray Doors
"Drawing Room & Kitchen main doors client free issue bronze ironmongery and features are still awaited; delivery was expected 21st May. The Works production slot has been missed, and a new time reservation will need to be made but will be longer than that currently advised".
This was not challenged but someone obviously chased up DMW's suppliers because some of the ironmongery was delivered by courier on 8 June 2007. Eight of the angles supplied were too short and the bronze division strips were flat and twisted and not what was required by the drawings issued to Adams. The back plates were only delivered to site on 26 July 2007 and the correct brass angles on 16 August 2007. Some changes to the design and shape of the MDF finished panels were instructed by DMW through Janine Stone in July 2007. Whilst the Stingray doors had been designed by BLDA to open in one direction only, Mr Mackay made it clear in mid August that he wished to consider the doors opening both ways; it was only on 22 August 2007 that he indicated that he was prepared to accept the original design intention. Between mid-August and the third week in September 2007, Adams marked up and cut the MDF panels which were to be fixed adjacent to the back plates; these had to be fixed to the door blanks.
"14.1 The bronze finish to the stingray door handles and faceplates is poor and uneven. It is understood that this ironmongery was free issued by DMW to WLC.
14.2 The cause is unclear, but it appears to have occurred prior to Practical Completion.
14.3 The remedial works in relation to the doors will involve taking the doors down and sending down to a patinator/finisher to have the faceplates and handles made good …[and]to have the handles and faceplates removed and sent to a patinator for re-patination."
A protective film was applied to the units during the works. When the film was removed, it was found that it had contaminated or damaged the bronzed finish of the ironmongery. An unsuccessful attempt was made to clean and re-finish the surface.
Leather in the Library
"1. LIBRARY…re leather costs…DLD [BLDA] explained that the initial costs of the leather, had failed to take into account that the leather was on all internal sites. The subsequent amendment to suit the issued design details, resulted in a cost increase. It was agreed that to resolve this that [sic] the vertical shelf providers would be lacquered, finish to suit the agreed dark grey RAL colour"
2. LIBRARY… Adams are currently trying to source a cheaper leather, as a further attempt to reduce costs. JSD (Bev) will do the same. We have however a 'liquid' leather (man made) which is a good match to the leather, and will be considerably cheaper."
"The ID asked for a sample of the library to be manufactured. Adams did this, it is now in Janine Stone's offices, and they have charged for it. G&T should confirm that this price is correct.
After tender the library was redesigned by the ID omitting joinery, and extending the use of leather. Adams re-priced the whole room and the price of the joinery was reduced [from] £35k to £25k approximately.
The leather coverings, which now covered all the faces of shelves, carcass and backs but was stuck not stitched, were priced by Adams as an additional £46k. Adams had investigated cheaper leathers and should have budget prices this week.
Client and ID discussed reducing the amount of leather. Instructions awaited."
ID is an acronym for Interior Designer.
"We are still awaiting your comments on any impact the change of leather specifications may have on the programme. As you are aware from our meeting on the site, both the client and the Interior Designer working to use the alternative that you table for the library. However it was agreed that due to the fact that it would have to be specially dyed in Italy, Adams would investigate its viability.
Once this information has been received, we will hopefully be in a position to place the order for the leather. In the interim it would be useful to use this time to agree the aesthetic of the stitching and joining details.
Please can you confirm if this is acceptable and when we will receive this outstanding information?"
"Unfortunately, it would be almost impossible to have accurately sewn stitching lines on the horizontal surfaces of the shelves to mirror those on the vertical surfaces (as sample). Upholstery is not always an even thickness and certain parts of the hide are softer, therefore you get inconsistency of how much it may stretch, so with the number of datum lines involved it would be virtually impossible to keep those stitch lines straight and parallel."
It then goes on to offer a further price for supplying and applying an interliner to wall shelves and back boards. It is a reasonable inference that any sample was provided to Bev and the reservations highlighted in this letter passed on to him. It is unclear if Mrs Mackay attended the meeting.
"Apologies for the delay in getting back to you all…
As far as the sample is concerned I am afraid that the stitching that joins two pieces of the leather together on the vertical is still not acceptable.
Please refer to attached photo as it shows the leather tearing slightly at the stitch. I understand that this is a difficult detail but we must find a better way to achieve this. I am at pains to show this to Giles and Caroline as it is less than perfect.
There are also potential issues with what exactly is expected by Giles and this illustrates the quality that he is expecting. Note that via Caroline, Giles is expecting stitching details that are similar to the leather upholstered room within say an Aston Martin. I think that due to the budgetary constraints that this item at this level was never achievable, and is a discussion that will need to be had with Giles and Caroline when I present the sample".
This followed a follow up e-mail on 18 December 2006 from Adams referring to another sample sent to site the previous week. The meeting planned for 5 January 2007 was postponed by several days.
"Can you please give me an update or confirm that we are still on track to receive the revised leather shell sample with the following alterations by the end of this week.
1. Amended stitching to the leather joins.
2. Stitching removed off from face and replaced by line detail.
3. Implications of alterations"
This e-mail was passed on to Adams by BLDA. Mr Joyce said, and I accept, that the stitch detail was changed by Mr Mackay so that it would run horizontally across the joints instead of in line with the joints in the leather. Mr Hawks of Adams Joinery e-mailed BLDA on 17 January 2007 to say that he and Courtney was "not having much luck with producing the stitching detail"; he had even visited a car showroom without success and asked for a photo to be taken as to what was required so that they could understand the detail better.
"Adams made a large sample of the leather clad library unit and delivered it directly to your Interior Designer on 20th May 2006.
There were discussions both about the design and quality until Adams arranged the visit to the upholsterers on 15th October 2006 to view what was thought to be the final agreed sample.
At this meeting the Interior Designer asked for the leather to be padded and the stitching to be straighter and more uniform.
Adams produced a second sample which was seen by the Interior Designer on 14 December. He was unhappy with the stitching.
On 10th January the Interior designer explained in detail what the client wanted with the upholsterer, Adams & BLDA (i.e. horizontally across the joints instead of in line with the joints).
At present, Adams are waiting for a photograph of the type of stitching required by the Interior Designer. They have sent their upholsterer to look at car seat stitching but need more guidance."
"The Library is waiting for confirmation on the leather stitching, [BLDA] reported that the meeting took place 5 February 2007 with [Bev] and…Adams. [Adams] presented 10 samples of stitching including hand stitching. [Bev] will confirm a sample with the client 6 Feb 2007. This is urgent as it affects installation of the Library joinery, the door and the large panels in the Lower Hall. [Mr Joyce] stated that none of the Library joinery can be fixed because it is dependent on the upper sections being covered in leather first and these are in abeyance until the leather stitching has been agreed."
Mr Mackay was sent a copy of these minutes and said in relation to this note:
"We have been waiting for these stitching samples for months and months – why has it taken so long to arrive? We signed off this design in early summer 2006".
These comments were eventually passed on to WLC on 27 February 2007 whose response was:
"Rejection of samples offered complying with the specification by reference to 'Range Rover' and 'Aston Martin' upholstery (see Interior Designer's e-mails) is the case up to now. A further 10 samples of differing specification were offered, with pricing implications but no instructions yet received."
Appearance of finished surfaces: Even and consistent. Free from rippling, hollows, reduce, cracks and crazing
Accuracy: "Finish to a true plane, to correct line and level, with angles and corners to a right angle unless specified otherwise, and with walls and reveals plumb and square."
"Deviation of plaster surface: measure from underside of a straight edge placed anywhere on surface – permissible deviation (maximum) for plaster not less than 13 mm thick: 3 mm in any consecutive length of 1.8 m".
A series of clauses specify the particular requirements for certain locations and backgrounds. So far as the finish is concerned, the requirement is (with one exception) stated to be: "Smooth as clause 777a" which provides that:
"Appearance: A tight, matt, smooth surface with no hollows, abrupt changes of level or trowel marks. Avoid water brush, excessive trowelling and over polishing."
For one particular location, namely concrete walls around service stairs, Paragraph 210c also provided that:
"Extreme care is to be taken to ensure that all surfaces reflect the design intent with smooth and accurate transition between any adjacent radius dimensions and surfaces are perfectly flat and vertical."
"...Apart from David Andrews do we have a plastering sub-contractor who can provide the quality required on this project along with the workforce to cope with these three houses?"
In his reply dated 23 September 2005, Mr Crispin said:
"Given the quality required and the output/volume required, I maintain we can only propose one subcontractor – David Andrews. I suggest you email the whole Client team advising them that we are only aware of one plasterer who can achieve the quality required, given the volume, sequence and time restraints. Ask them to put forward names within 2 working days who we can talk to and obtain references on.
Failing that we tender to one contractor!"
"Further to my walk around with Giles earlier today I would like to confirm and comment on the following:
1. Sub standard plastering to the drawing room. I gather that Walter Lilly were already aware of this and are proposing to re-skim. However does this have any knock-on effect in time. Can we room by room (rooms where the spray coat has been applied) have a walk about with the lighting on to check the quality of the plaster. This will enable us to cross check that WL are aware of such issues?..."
BLDA responded on 28 November 2006 stating that the plastering in question had been observed and had already been condemned. They said that the repair work was being delayed in order to avoid delaying completion of the flooring.
"I understand that some rooms are to be handed over for snagging next week. I cannot see the point in this whilst as far as I can see every room in the house has defective plastering. The corner/angles are not straight or square and the walls are not flat.
The coffers are not true and in some cases the ceiling details are lower on end from another – all of this is not acceptable and will be rejected."
"The clients have expressed grave concerns about the quality of the plaster finish to walls and ceilings, they have made it clear that they are dissatisfied with the current standard of workmanship, and remedial work is necessary."
Mr Bates forwarded the email to the WLC team the same day saying that 'it needed their action, mindful of the specification we are working to achieve.'
"3.04 We visited the site on 10.02.07 last week – the house was a complete mess – with joinery still being cut in several of the rooms and plaster being mixed in various areas – I had a conversation with the site manager about it and sent an e-mail. The house is nowhere near complete – amongst other things – the plasterwork in every area is defective for a job of this quality and "price"…"
By letter dated March 2007 to WLC, Knowles stated that the employer would deduct some £104,000 in respect of defective plaster throughout the house.
"...both sides of the wall to the studies are not acceptable due to excessive making good (patches), excessive undulations (despite perhaps being within tolerances) and the loss of bond to the plaster (hollowness).
Ian (Symes) (BLDA) and I spent a considerable time yesterday checking most of the walls in Plot C and he is to send me a note today of those that were outside tolerance or otherwise defective and therefore not acceptable....
The schedule of defects should be sent directly to WLC for their immediate attention."
The results of Mr Symes' inspection were contained in a report dated 7 March 2007 and he found defects in the rooms surveyed. The survey was discussed at a Client Meeting on 14 March 2007. It was recorded that:
"5.02 David Lloyd-Davis confirmed a snagging list for the majority of the plaster walls in Plot C had been issued. Vernon Bardsley and BLDA had examined these walls together. VB was concerned that BLDA were not using a straight edge. DLD did not agree and said that he himself had used a straight edge in one session.
5.03 Giles Mackay was concerned that the piecemeal way WLC were trying to patch up the plaster was not working and was only delaying more effective remedial work. DLD confirmed that he had warned WL that the method they were using to repair small areas of undulation was not helping and creating more problems.
5.04 DLD explained that the Architect could not dictate how remedial work should be done, but could only say if it was acceptable or not acceptable."
"…Can we meet at Lots Road and have a practical session as to how you intend to complete the houses.
At the moment we have no clear idea of your programme and need certainty. I also need to understand how you intend to put right the defects in the lift shafts and the plastering being the most difficult to resolve"
"As you may know I met on site in Plot C drawing room with John Howie, David Lloyd Davis and others today primarily to establish if we could come to agreement on the quality issues in respect of the plastering.
I was disappointed that John was not prepared to engage in positive discussion and relied on the empirical test of tolerance contained in the specification without apparently taking note of the visual criteria. John's suggestion that the specification provided for no greater quality than that found in commercial premises was particularly worrying.
Whilst it was pointed out that some of the plaster repairs still did not meet the tolerance John simply noted that snags were not complete and not ready to be offered for re-inspection. When asked when the snags would be complete and ready for re-inspection John was unwilling or unable to advise a timeframe. John was also unable to advise when the reports on the plaster quality commissioned by you weeks ago would be available.
Further, in response to my question as to when all the WLC works would be complete in Plot C, apart from those areas/items awaiting information, John was again unwilling to commit. Indeed he went on to say why should WLC "bust a gut" to finish the works when information remained to be provided and we should wait until WLC have completed all their work before critiquing it
My suggestion, repeated many times before the WLC should mitigate some of the delays by fully completing all the work they are able and "locking the doors" again appeared to fall on deaf ears..."
"The visual quality of the plaster is referred to in our specification as well as a qualitative requirement for flatness. The specification is not that for "commercial premises". In addition to the specification, at tender interview, WLC were made very aware by Second London Wall and BLDA of the quality expected on the project…"
This was however in response to an e-mail from Mr Mackay which complained that the specification put forward by BLDA was deficient.
Extension of Time
"Fundamental to this exercise is an assessment of whether the relevant event occurring during a period of culpable delay has caused delay to the completion of the Works and, if so, how much delay."
This is consistent with the wording of Clause 25 in this case.
"Second, it is agreed that if there are two concurrent causes of delay, one of which is a relevant event, and the other is not, then the contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other event. Thus, to take a simple example, if no work is possible on a site for a week not only because of the exceptionally inclement weather (a relevant event), and if the failure to work during that week is likely to delay the Works beyond the completion date by one week, and then if he considers it fair and reasonable to do so, the architect is required to grant an extension of time of one week. He cannot refuse to do so on the grounds that the delay would have occurred in any event by reason of the shortage of labour."
It could thus be said that the learned judge was simply repeating the common ground between the parties rather than reach a considered decision on the issue. That said, the judge seems to have "run with the ball" in his second and third sentences and appears to have endorsed that common ground.
"177. The general rule in construction and engineering cases is that where there is concurrent delay to completion caused by matters for which both employer and contractor are responsible, the contractor is entitled to an extension of time but he cannot recover in respect of the loss caused by the delay. In the case of the former, this is because the rule where delay is caused by the employer is that not only must the contractor complete within a reasonable time but also the contractor must have a reasonable time within which to complete. It therefore does not matter if the contractor would have been unable to complete by the contractual completion date if there had been no breaches of contract by the employer (or other events which entitled the contractor to an extension of time), because he is entitled to have the time within which to complete which the contract allows or which the employer's conduct has made reasonably necessary."
"277. It is to be noted that this example involves a relevant event which caused a period of actual delay to the progress of the works – no work could be done for a week due to the weather. If that is established then the contractor is entitled to his extension of time even if there is another concurrent cause of that same delay. A useful working definition of concurrent delay in this context is "a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency" – see the article Concurrent Delay by John Marrin QC (2002) 18 Const LJ No. 6 436.
"4. It is necessary to analyse events primarily in the period after 16 February 2007 in order to assess the parties' respective contentions…as to the causes of delay during that period. However, in so far as events prior to 16 February 2007 also need to be examined in order to set the parties' contentions in their proper factual context then those matters will also be considered relevant.
5. It is important to have regard to the actual context in the period after February 2007, as opposed to examining events in isolation.
6. Very few programmes were formally issued by WLC after 16 February 2007. In particular there is no programme of all the works outstanding at that date which could sensibly be used as a baseline in a retrospective programme analysis. It is therefore not possible to carry out a "traditional" delay analysis which uses the Claimant's programmes to identify the critical path during the period after 16 February 2007 in the way one might normally expect. It will instead be necessary for the experts to form a view as to what were the critical (or driving) delays in the period after 16 February 2007 without the assistance which would normally be available from contemporaneously produced programmes.
7. Despite the lack of programmes in the post 16 February 2007 period, it ought nevertheless to be possible to form conclusions on criticality during this period, based on an objective view of the available evidence."
A note to Paragraph 6 refers to the fact that in May 2007 WLC produced a programme (revised from time to time thereafter) entitled "Target Programme for Recently Instructed Works" which did not identify other works going on or outstanding at the time. The experts considered that this programme did not provide sufficient foundation for a "traditional" programme-based delay analysis but Mr Robinson considered that it was nevertheless of some evidential value.
(a) He tried to assert that the Lift problems were "significant" because by about March 2007 there was a possibility (and no more) that a 6 to 9 month operation of replacement might be required; this was clearly dependent on at the very least the lift shaft being materially out of vertical, which it never was and replacement was never done.
(b) He based his view in part on "significance" in effect on the strength of his clients' views at the time about how serious a problem it was. The reality is that WLC actually did a significant amount of remedial work and the eventual re-cladding work was in the overall context of the job minor work. The clients' views, leaving aside the fact that I have found them to be coloured (at least in the case of Mr Mackay), were found by the adjudicator at the time (whose view has not really been departed from in this case) to be grossly exaggerated and there had been a wrongful but substantial retention of money against this item.
(c) His view was also based in part on the physical impact on the upper floors of the work being done particularly in October and November 2007 on the re-cladding. He asserted, without any real factual basis, that this work would effectively have prevented completion of work on the upper floors. This was undermined by the facts that there was little work to be done in those upper floors by WLC at or after that time (the bulk remaining to be completed in the basement) and that directly employed contractors and some workmen were able to and did get access whilst the re-cladding work was being done. Indeed, meeting minutes indicate that those attending the Client Site Walk Around meetings were able with reasonable impunity to get access to all floors throughout September, October and November.
End of February 2007
End of March 2007
End of April 2007
End of May 2007
End of June 2007
End of July 2007
End of August 2007
End of September 2007
End of October 2007.
End of November 2007
End of December 2007
January and February 2008
March to August 2008
"We refer to our letter of 5 March 2008 where we noted that the areas/rooms, which you consider have not been snagged, have in fact been completed for many months. It seems to us that the reason why you feel you cannot snag these rooms is because of the presence of DMW's artists & tradesmen. We confirm that the artists & tradesmen are working under the direct supervision of DMW and its site based project manager, therefore, we consider it wrong for you to imply that we are preventing you from snagging these areas. Had we been aware of this situation sooner we would have put steps in place to ensure that you had unimpeded access to these areas.
…With adequate prior notice, we can make arrangements with Gavin Bartlett for DMW's artists and tradesmen to vacate these areas. We will also remove all protection and carry out a modest clean.
We point out that the protection is only in place because of the presence of DMW'S artists and tradesmen. Also, the condition of the site, as we have mentioned to you on numerous occasions, is a direct result of DMW's artists and tradesmen…"
This letter highlights the hiatus which was occurring on site. Apart from the Light Wall and the ABW problems, WLC could not effectively do the final operations which were the removal of the extensive protection (for instance packing and plastic sheeting) and the final clean because the numerous operations being carried out by the directly employed contractors were going on. This was confirmed in an e-mail dated 5 May 2008 from Mr Bartlett of RLB to the Mackays in which he agreed at least "in part" that the majority of the dust had been "generated by the out of contract trades".
Conclusion on Extension of Time
(a) February to July 2007: Leather in the Library from 16 February 2007 to 21 October 2007 (late instructions and variations).
(b) August 2007: Barrisol ceilings from 21 October to 11 November 2007 (late instructions and variations).
(c) September 2007: Stingray Doors and Barrisol ceilings from 11 November 2007 to 7 December 2007 (late instructions and variations).
(d) October 2007: None.
(e) November 2007: Stingray Doors and Light Wall from 7 to 21 December 2007 (late instructions and variations).
(f) December 2007: Light Wall from 21 December 2007 to 11 January 2008 (late instructions and variations).
(g) January to February 2008: Light Wall from 11 January to 29 February 2008 (late instructions and variations).
(h) March to 7 July 2008: ABW, Light Wall, Courtyard Sliding Doors and delays by artists tradesmen and others from 29 February to 7 July 2008 (late instructions and variations and artists and tradesmen delays).
Quantum - Delay
"26.1 If the Contractor makes written application to the Architect that he has incurred or is likely to incur direct loss and/or expense (of which the Contractor may give his quantification) in the execution of this Contract for which he would not be reimbursed by a payment under any other provision in this Contract…because the regular progress of the Works or of any part thereof has been or is likely to be materially affected by any one or more of the matters referred to in clause 26.2; and if and as soon as the Architect is of the opinion that…the regular progress of the Works or of any part thereof has been or is likely to be so materially affected as set out in the application of the Contractor then the Architect from time to time thereafter shall ascertain, or shall instruct the Quantity Surveyor to ascertain, the amount of such loss and/or expense which has been or is being incurred by the Contractor; provided always that:
26.1.1 the Contractor's application shall be made as soon as it has become, or should reasonably have become, apparent to him that the regular progress of the Works or of any part thereof has been or was likely to be affected as aforesaid; and
26.1.2 the Contractor shall in support of his application submit to the Architect such information as should reasonably enable the Architect to form an opinion as aforesaid; and
26.1.3 the Contractor shall submit to the Architect or to the Quantity Surveyor such details of such loss and/or expense as are reasonably necessary for such ascertainment as aforesaid.
26.1.4 in the reasonable opinion of the Architect the Contractor has complied with the provision of clause 26.1.1 to 26.1.3 inclusive.
26.2 The following are the matters referred to in clause 26.1:
…188.8.131.52 failure of the Architect to comply with clause 5.4.2…
26.2.7 Architect's instructions issued
under clause 13.2 or clause 13A.4.1 requiring a Variation…
under clause 13.3 in regard to the expenditure of provisional sums…"
"a) Staff allocations and actual costs.
b) Labour allocations and actual costs.
c) Scaffold, utilities, expense and other materials/sundry expenses scheduled with copy invoices and explanations for the items in question.
d) Subcontract accounts having already discounted, if appropriate, the matters which were not the Employer's responsibility.
e) Such other data as is necessary to enable the actual costs incurred to be vouched as correct and relevant to the matter(s) the subject of the notice."
"…we enclose our revised assessment of Loss & Expense in respect of Extension of Time claims EoT 2/4.
A detailed evaluation of Walter Lilly's direct costs associated with this event has been carried out totalling £134,805.85 [total includes Plots A, B & C and provisional sums totalling £11,000.00 in respect of potential subcontract the claim is the delay and disruption arising out of this event, but excludes overheads and profit] and this is attached for your consideration.
We trust the above is satisfactory and look forward to your response."
What is attached is a listing of all the preliminary activities (site staffing, temporary accommodation and so on) as set out in the original tender with a number of weeks, percentage of resource being applied and rate, against which in a box headed "Loss & Expense Due to Delay" there is then set out against the individual activity how many weeks (and from and to which particular week) that particular resource is said to have been deployed multiplied by the tender preliminary rate. At the end there are added the provisional figures in relation to particular subcontractors for potential claims. Later claims had a "Comments" column which provided additional explanations. These were revised and supplemented on a monthly basis.
(a) Item 1: thickening costs up to March 2006 (the original contract period); £92,428 (total of £118,528 less the £26,100 allowed for by DMW).
(b) Item 2: preliminaries costs up to 16 February 2007 (the point to which DMW/ Mr Mackay do not dispute that WLC is entitled to an extension of time); £9,206 (total of £304,965 less £295,759 allowed for by DMW).
(c) Item 3 – thickening up to 16 February 2007; £157,315 (£243,183 less £85,868 allowed for by G&T).
(d) Item 4 – prolongation up to 6 February 2008 (the point to which on WLC's pleaded case Practical Completion was achieved); £297,046.
(e) Item 5 – thickening up to 6 February 2008; £297,910.
(f) Item 6: prolongation beyond 6 February 2008; £164,383.
(g) Item 7: cleaning; £6,750.
"Thickening" in this context means the provision of additional resources over and above the anticipated preliminaries said to have been necessary to deal with or overcome the consequences of variations and late instructions and information.
"The claimants disavow any intention of founding a claim under clause 52(4) or upon clause 66 of the contract. They say that where you have a series of events which can be categorised as denial of possession of part of the site, suspension of work, and variations, the result is, or may be, that the contractor incurs the extra costs by way of overhead expenses and loss of productivity; these extra costs are all recoverable directly under clause 40 or clause 42 or indirectly under clauses 51 and 52. I say 'indirectly because any revised rate or price and the scheduled day work rates must include a large cost element even if they go further than this and also cover profit. Since, however, the extent of the extra cost incurred depends upon an extremely complex interaction between the consequences of the various denials, suspensions and variations, it may well be difficult or even impossible to make an accurate apportionment of the total extra cost between the several causative events. An artificial appointment could of course have been made; and why, they ask, should the arbitrator make such an apportionment which has no basis in reality?
I can see no answer to this question. Extra costs are a factor common to all these clauses, and so long as the arbitrator does not make any award which contains a profit element, this being permissible under clauses 51 and 52 but not under clauses 41 and 42, and provided he ensures that there is no duplication, I can see no reason why he should not recognise the realities of the situation and make individual awards in respect of those parts of individual items of the claim which can be dealt with in isolation and a supplementary award in respect of the remainder of those claims as a composite whole. This is what the arbitrator has done…He has further ensured that there is no duplication…and there is no profit element in this particular award…"
"The position in the instant case is, I think as follows. If application is made (under clause 11(6) or 24(1) or under both sub-clauses) for reimbursement of direct loss or expense attributable to more than one head of claim and at the time when the loss or expense comes to be ascertained it is impracticable to disentangle or disintegrate the part directly attributable to each head of claim, then, provided of course that the contractor has not unreasonably delayed in making the claim and so has himself created the difficulty the architect must ascertain the global loss directly attributable to the two causes, disregarding, as in Crosby, any loss or expense which would have been recoverable if the claim had been made under one head in isolation and which would not have been recoverable under the other head taken in isolation. To this extent the law supplements the contractual machinery which no longer works in the way in which it was intended to work so as to ensure that the contractor is not unfairly deprived of the benefit which the party is clearly intended he should have.
…I think I should nonetheless say that it is implicit in the reasoning of Donaldson J, first, that a rolled up award can only be made in the case where the loss or expense attributable to each head of claim cannot in reality be separated and secondly as a rolled up award can only be made where apart from the practical impossibility the conditions which have to be satisfied but before an award can be made have been satisfied in relation to each head of claim."
"Certainly there are portions of the pleading which ought quite properly to be struck out as failing to establish any relationship at all between what is alleged and the damages claim which could not be cured even by the delivery of the particulars claimed…But their Lordships do not feel able to say that the statement of claim discloses no reasonable cause of action…It has been observed on many occasions that the power to strike out a pleading as disclosing no reasonable cause of action is one that should be observed for "plain and obvious" cases. "'Reasonable cause of action" means a cause of action with some chance of success when (as required by rule 192 () only the allegations in the pleading are considered" (per Lord Pearson in Drummond Jackson v British Medical Association 1970 1 All ER 1094 at page 1101).
However, the Privy Council upheld the Court of Appeal's judgement on the basis that the pleading was "hopelessly embarrassing". The Crosby and Merton cases were referred to in argument. Lord Oliver who gave the judgement said this at Page 20-21:
"Those cases establish no more than this, that in cases where the full extent of extra costs incurred through delay depends upon a complex interaction between the consequences of various events, so that it may be difficult to make an accurate apportionment of the total extra costs, it may be proper for an arbitrator to make individual financial awards in respect of claim which can conveniently be dealt with in isolation and a supplementary award in respect of the financial consequences of the remainder as a composite whole. This has, however, no bearing upon the obligation of a plaintiff to plead his case with such particularity as is sufficient to alert the opposite party to the case which is going to be made against him at the trial"
"In my opinion, the court should approach a total cost claim with a great deal of caution, even distrust. I would not, however, elevate the suspicion to the level of concluding that such a claim should be treated as prima facie bad: British Airways Pension Trustees Ltd v Sir Robert McAlpine & Sons Ltd (1994) 72 BL are 26 at page 34, per Saville J, Beldam Neill LJJ concurring. Compare Hudson's Building and Engineering Contracts (11th edn, 1995), paragraph 8-204. Nevertheless, the point of logical weakness inherent in such claims, the causal nexus between the wrongful acts or omissions of the defendant and the loss of the plaintiff, must be addressed. I put to one side and straightforward case where each aspect of the nexus is apparent from the nature of the breach and loss as alleged. In such a case the objectives of the pleading may be achieved by a short statement of the facts giving rise to the causal nexus. If it is necessary for the given case that it is to be supported by particulars, this should be done. But, in other cases, each aspect of the nexus must be fully set out in the pleading. Moreover, the court should be assiduous in pressing the plaintiff to set out this nexus with sufficient particularity to enable the defendant to know exactly what is the case it is required to meet and to enable the defendant to direct its discovery and its attention generally to the case. And it should not be overlooked that an important means of achieving the result that, once it starts, the trial should be conducted without undue prejudice, embarrassment and delay, is by ensuring that, when it begins, the issues between the parties including this nexus is defined with sufficient particularity to enable the trial judge to address the issues, to rule on relevance and generally to contain the parties to those issues…And if, in such a case, the plaintiff fails to demonstrate this causal nexus in sufficient detail because it is unable or unwilling to do so, then this may provide the occasion for the court to relieve the defendant of the unreasonable burden which the plaintiff would impose on it: Wharf…"
"A global claim can take a variety of forms. Where it described a pleaded claim it has pejorative overtones as it is usually intended to describe a claim where the causal connection between the matters complained of and their consequences, whether in terms of time or money, are not fully spelt out, but, implicitly, could and should be spelled out. It is to be contrasted with the use of the term where an arbitrator has made an award of a sum which the arbitrator cannot apportion between the various events. This may be permissible but as Lord Oliver made clear in Wharf…there is a clear distinction between that situation and the pleading of claim…
In other words a global claim in the sense used in argument is the antithesis of the claim where the causal nexus between the wrongful act or omission of the defendant and the loss of the plaintiff has been clearly and intelligently pleaded. However that nexus need not always be expressed since it may be inferred…" (pages 73-4)
"This case is not concerned with whether a global claim for loss and expense may relevantly be advanced by a contractor under a construction contract. The debate proceeded on the basis that it was common ground that such a claim could in principle relevantly be made (London Borough of Merton v Stanley Hugh Leach Ltd; Wharf Properties Ltd v Eric Cumine Associates (1991) 52 BLR 8; Holland v Kvaerner). Nor is it in issue in this case at this stage whether the circumstances are such as to permit a claim to be made in that form. The pursuers aver (at page 32 of the Closed Record):
"Despite the Pursuers' best efforts, it is not possible to identify causal links between each such cause of delay and disruption, and the cost consequences thereof".
That averment having been made, the defenders accept that the pursuers are in principle entitled to advance a global claim. I prefer to reserve my opinion on whether such an averment is essential to the relevancy of a global claim, on what the pursuers need do to establish that averment, and on what the consequences would be if they failed to do so."
"35. Ordinarily, in order to make a relevant claim for contractual loss and expense under a construction contract (or a common law claim for damages) the pursuer must aver (1) the occurrence of an event for which the defender bears legal responsibility, (2) that he has suffered loss or incurred expense, and (3) that the loss or expense was caused by the event. In some circumstances, relatively commonly in the context of construction contracts, a whole series of events occur which individually would form the basis of a claim for loss and expense. These events may inter-react with each other in very complex ways, so that it becomes very difficult, if not impossible, to identify what loss and expense each event has caused. The emergence of such a difficulty does not, however, absolve the pursuer from the need to aver and prove the causal connections between the events and the loss and expense. However, if all the events are events for which the defender is legally responsible, it is unnecessary to insist on proof of which loss has been caused by each event. In such circumstances, it will suffice for the pursuer to aver and prove that he has suffered a global loss to the causation of which each of the events for which the defenders is responsible has contributed. Thus far, provided the pursuer is able to give adequate specification of the events, of the basis of the defender's responsibility for each of them, of the fact of the defender's involvement in causing his global loss, and of the method of computation of that loss, there is no difficulty in principle in permitting a claim to be advanced in that way.
36. The logic of a global claim demands, however, that all the events which contribute to causing the global loss be events for which the defender is liable. If the causal events include events for which the defender bears no liability, the effect of upholding the global claim is to impose on the defender a liability which, in part, is not legally his. That is unjustified. A global claim, as such, must therefore fail if any material contribution to the causation of the global loss is made by a factor or factors for which the defender bears no legal liability. That point has been noted in Keating at paragraph 17-18, in Hudson at paragraph 8-210, more clearly in Emden at paragraph , in the American cases, and most clearly by Byrne J in Holland v Kvaerner at 85H and 86D (see paragraph  above). The point has on occasions been expressed in terms of a requirement that the pursuer should not himself have been responsible for any factor contributing materially to the global loss, but it is in my view clearly more accurate to say that there must be no material causative factor for which the defender is not liable.
37. Advancing a claim for loss and expense in global form is therefore a risky enterprise. Failure to prove that a particular event for which the defender was liable played a part in causing the global loss will not have any adverse effect on the claim, provided the remaining events for which the defender was liable are proved to have caused the global loss. On the other hand, proof that an event played a material part in causing the global loss, combined with failure to prove that that event was one for which the defender was responsible, will undermine the logic of the global claim. Moreover, the defender may set out to prove that, in addition to the factors for which he is liable founded on by the pursuer, a material contribution to the causation of the global loss has been made by another factor or other factors for which he has no liability. If he succeeds in proving that, again the global claim will be undermined.
38. The rigour of that analysis is in my view mitigated by two considerations. The first of these is that while, in the circumstances outlined, the global claim as such will fail, it does not follow that no claim will succeed. The fact that a pursuer has been driven (or chosen) to advance a global claim because of the difficulty of relating each causative event to an individual sum of loss or expense does not mean that after evidence has been led it will remain impossible to attribute individual sums of loss or expense to individual causative events. The point is illustrated in certain of the American cases. The global claim may fail, but there may be in the evidence a sufficient basis to find causal connections between individual losses and individual events, or to make a rational apportionment of part of the global loss to the causative events for which the defender has been held responsible.
40. The second factor mitigating the rigour of the logic of global claims is that causation must be treated as a common sense matter (Holland v Kvaerner, per Byrne J at 84I). That is particularly important, in my view, where averments are made attributing, for example, the same period of delay to more than one cause.
"12.2 In the case of any further alterations or changes instructed by Brasoil pursuant to Clause 10 hereof, Brasoil agrees:
(i) to pay to Petromec the reasonable costs (if any) incurred by Petromec and its contractors in progressing the engineering in accordance with such Specification as was agreed before the alteration or change;
(ii) to pay to Petromec an amount equal to the reasonable extra costs (if any) to Petromec of Upgrading the Vessel in accordance with the Specification as altered or amended; and
(iii) to extend the date by which Petromec must complete the Upgrade.
12.3 The additional costs referred to in Clauses 12.1 and 12.2 above will become due and payable on the production by Petromec of evidence of expenditure satisfactory to Brasoil and Brasoil being satisfied that such costs were reasonable and properly incurred…"
"27. In summary, therefore, the judge held in paragraph 48 of his judgment, that, on the proper construction of the Supervision Agreement, the sum due to Petromec under clauses 12.1 and 12.2 cannot be ascertained by calculating the difference in the manner which Petromec proposed. Petromec must specify the instructions, the work required to comply with those instructions (or with the Amended Specification under clause 11), and the cost attributable to that work. The changes and causal nexus must be pleaded. Petromec can contend that the work done and the cost is reasonable. By one means or another, it must plead with sufficient particularity the work done and its cost by reference to the Amended Specification or the instructions given. The judge, however, said, in paragraph 49 of his judgment, that it was not necessary to ascertain separately sums due under clauses 12.1 and 12.2. All that was necessary was to establish the total of the additional costs referred to in clauses 12.1 and 12.2. What mattered was the total reasonable extra cost payable in consequence of complying with Petrobras' instructions under clause 10, as reflected in clauses 11.1 and 12.1 or 12.2…
36. Clause 12.2 concerns further alterations or changes instructed by Petrobras, that is changes to the Clause 11 Roncador Specification. Clause 12.2(ii) entitles Petromec to the reasonable extra cost resulting from these changes, that is in concept the cost caused by the changes. That in theory might require a comparison between the work content and cost of the Clause 11 Roncador Specification (or part of it) and the work content of the instructed changes. Conventional particulars of this would require Petromec to identify the change order instructions, and to give sufficient particulars of the work content and reasonable cost of each. The judge in effect so decided in paragraph 48 of his judgment. As a matter of the abstract construction of clause 12.2 alone coupled with an orthodox approach to pleading and case management, I think he was correct. But there are two further considerations. First, Petromec are entitled to assert as their case that the Clause 11 Roncador Specification was not a document which defined work content and that the design only emerged and became buildable as it went along. Second, Petromec's entitlement to "reasonable extra cost" of upgrading in clause 12.1 is the same measure of cost as the "reasonable extra costs" of upgrading in clause 12.2(ii). This means – and Mr Hancock was inclined to accept – that the sum of the reasonable extra costs under clauses 12.1 and 12.2(ii) taken separately ought to be the same as Petromec's reasonable extra costs of upgrading the vessel in accordance with the Roncador Specification as eventually instructed, including the further alterations and changes to be paid for under clause 12.2. For these reasons, I do not consider that the court would strike out a formulation of Petromec's claim which sought to deduct the costs that Petromec might reasonably have incurred in achieving the Original South Marlim Specification (properly particularised) from the reasonable costs (properly particularised) of achieving the eventually instructed Roncador Specification. This is no doubt what the judge had in mind when he held in paragraph 49 of his judgment that it was not necessary for there to be a separate ascertainment of the sums due under clause 12.1 and 12.2. There does not therefore have to be a pointless separate costing of the works notionally required to achieve the Clause 11 Roncador Specification, which was never executed in that form, even if that were possible. That does not, however, let Petromec off the hook of having to give proper particulars.
(a) Ultimately, claims by contractors for delay or disruption related loss and expense must be proved as a matter of fact. Thus, the Contractor has to demonstrate on a balance of probabilities that, first, events occurred which entitle it to loss and expense, secondly, that those events caused delay and/or disruption and thirdly that such delay or disruption caused it to incur loss and/or expense (or loss and damage as the case may be). I do not accept that, as a matter of principle, it has to be shown by a claimant contractor that it is impossible to plead and prove cause and effect in the normal way or that such impossibility is not the fault of the party seeking to advance the global claim. One needs to see of course what the contractual clause relied upon says to see if there are contractual restrictions on global cost or loss claims. Absent and subject to such restrictions, the claimant contractor simply has to prove its case on a balance of probabilities.
(b) Clause 26 in this case lays down conditions precedent which, if not complied with, will bar to that extent claims under that clause. If and to the extent that those conditions are satisfied, there is nothing in Clause 26 which states that the direct loss and/or expense cannot be ascertained by appropriate assessments.
(c) It is open to contractors to prove these three elements with whatever evidence will satisfy the tribunal and the requisite standard of proof. There is no set way for contractors to prove these three elements. For instance, such a claim may be supported or even established by admission evidence or by detailed factual evidence which precisely links reimbursable events with individual days or weeks of delay or with individual instances of disruption and which then demonstrates with precision to the nearest penny what that delay or disruption actually cost.
(d) There is nothing in principle "wrong" with a "total" or "global" cost claim. However, there are added evidential difficulties (in many but not necessarily all cases) which a claimant contractor has to overcome. It will generally have to establish (on a balance of probabilities) that the loss which it has incurred (namely the difference between what it has cost the contractor and what it has been paid) would not have been incurred in any event. Thus, it will need to demonstrate that its accepted tender was sufficiently well priced that it would have made some net return. It will need to demonstrate in effect that there are no other matters which actually occurred (other than those relied upon in its pleaded case and which it has proved are likely to have caused the loss). It is wrong, as Counsel suggested, that the burden of proof in some way transfers to the defending party. It is of course open to that defending party to raise issues or adduce evidence that suggest or even show that the accepted tender was so low that the loss would have always occurred irrespective of the events relied upon by the claimant contractor or that other events (which are not relied upon by the claimant as causing or contributing to the loss or which are the "fault" or "risk" of the claimant contractor) occurred may have caused or did cause all or part of the loss.
(e) The fact that one or a series of events or factors (unpleaded or which are the risk or fault of the claimant contractor) caused or contributed (or cannot be proved not to have caused or contributed) to the total or global loss does not necessarily mean that the claimant contractor can recover nothing. It depends on what the impact of those events or factors is. An example would be where, say, a contractor's global loss is £1 million and it can prove that but for one overlooked and unpriced £50,000 item in its accepted tender it would probably have made a net return; the global loss claim does not fail simply because the tender was underpriced by £50,000; the consequence would simply be that the global loss is reduced by £50,000 because the claimant contractor has not been able to prove that £50,000 of the global loss would not have been incurred in any event. Similarly, taking the same example but there being events during the course of the contract which are the fault or risk of the claimant contractor which caused or cannot be demonstrated not to cause some loss, the overall claim will not be rejected save to the extent that those events caused some loss. An example might be (as in this case) time spent by WLC's management in dealing with some of the lift problems (in particular the over-cladding); assuming that this time can be quantified either precisely or at least by way of assessment, that amount would be deducted from the global loss. This is not inconsistent with the judge's reasoning in the Merton case that "a rolled up award can only be made in the case where the loss or expense attributable to each head of claim cannot in reality be separated", because, where the tribunal can take out of the "rolled up award" or "total" or "global" loss elements for which the contractor cannot recover loss in the proceedings, it will generally be left with the loss attributable to the events which the contractor is entitled to recover loss.
(f) Obviously, there is no need for the Court to go down the global or total cost route if the actual cost attributable to individual loss causing events can be readily or practicably determined. I do not consider that Vinelott J was saying in the Merton case (at page 102 last paragraph) that a contractor should be debarred from pursuing what he called a "rolled up award" if it could otherwise seek to prove its loss in another way. It may be that the tribunal will be more sceptical about the global cost claim if the direct linkage approach is readily available but is not deployed. That does not mean that the global cost claim should be rejected out of hand.
(g) DMW's Counsel's argument that a global award should not be allowed where the contractor has himself created the impossibility of disentanglement (relying on Merton per Vinelott J at 102, penultimate paragraph and John Holland per Byrne J at page 85) is not on analysis supported by those authorities and is wrong. Vinelott J was referring to unreasonable delay by the contractor in making its loss and/or expense claim; that delay would have led to their being non-compliance with the condition precedent but all that he was saying otherwise was that, if such delay created difficulty, the claim may not be allowed. He certainly was not saying that a global cost claim would be barred necessarily or at all if there was such delay. Byrne J relied on Vinelott J's observations and he was not saying that a global cost claim would be barred but simply that such a claim "has been held to be permissible in the case where it is impractical to disentangle that part of the loss which is attributable to each head of claim, and this situation has not been brought about by delay or other conduct of the claimant". In principle, unless the contract dictates that a global cost claim is not permissible if certain hurdles are not overcome, such a claim may be permissible on the facts and subject to proof.
Item 1: Thickening costs up to March 2006
|ITEM||COMMENTS||AMOUNT ALLOWED £|
|Professional fees||£2,661 is claimed for bringing in a Mr Brattle. However part of his time was spent in dealing with piling groundwork and frames sub-contractors which was part of WLC's responsibility. However, he also had to deal with variations to the piling which were substantial and significant. Half of this cost is a reasonable minimum allowance||1,330|
|Temporary accommodation||A total of £994 is claimed. I am satisfied that an additional container was required to accommodate additional staff. This claim is established as additional staff were required.||994|
|£177 is claimed but there seems to be little or no evidence about this; this claim is rejected.||Nil|
|Scaffolding||£19,810 is claimed of which £19,229 relates to sub-contractor scaffolding. Part of this had to do with the need for adaptations to site compound scaffolding needed to accommodate additional cabins for additional staff. An appropriate minimum allowance equates to about 2/3 to reflect not only the delays and the need to maintain scaffolding longer than might otherwise have been the case but also to accommodate variations and the site compound scaffolding.||12,819|
|Plant/pumping||£318 is claimed. There is little or no reliable evidence about this.||Nil|
|£7,649 is claimed for this which relates to variations, late instructions and additional site establishment facilities. This has been proved in full.||7,649|
|Signboards||£65 is claimed. It has not been proved.||Nil|
|£1,687 is claimed and is primarily relates to the increase in number of work packages and is therefore not allowable||Nil|
|Sundries||£100 is claimed. It has not been proved||Nil|
|Travel/subsistence||These costs (£1564) are related to additional staff required. It is a legitimate head of claim and an allowance of one third is a reasonable minimum assessment||520|
|Entertaining||£52 is claimed. It has not been proved.||Nil|
|Other Expenses||£35 is claimed. It has not been proved.|
|Additional Staff time||£64,061 is claimed. The minimum additional time attributable to the matters and events established is one half of the extra time and cost claimed for Messrs Joyce, McMorrow, Lambarth, Whatling, Wakeman, Hamilton, and Hill and Ms Chamberlain (£21,666). Nothing is allowed for Ms Hazelton or for Mr Givings as most of their time appears to have been addressing the increased level of procurement. Two thirds of Mr Zanali's time should be allowed (£5,990).||27,656|
|Site Staff salaries and cars re-charge||This is related to the additional staff time and a reasonable minimum allowance is one third of the £6495 claimed.||2,165|
|Additional site labour||£12,860 is claimed for additional site labour which was primarily concerned with variations, late information and delays during this period. A reasonable minimum allowance is three quarters of this sum.||9,645|
Preliminaries costs up to 16 February 2007
Item 3 – Thickening up to 16 February 2007
|ITEM||COMMENTS||AMOUNT ALLOWED £|
|Professional fees||£2,459 is claimed for the continuing use of Mr Brattle in relation to design co-ordination for additional and extended piling work as well as in relation to external works and bringing Mr Parnham to assist in the commercial management and extension of time applications. I have formed the view that a reasonable minimum attributable to factors which do attracts reimbursement is half.||1,229|
|Temporary accommodation||A total of £1,269 is claimed. I am satisfied that an additional container was required to accommodate additional staff. This claim is established as additional staff were required.||1,269|
|Telephone, fax Computer equipment||£1,902 is claimed and there is evidence that due to the increase in staff and labour resources there is likely to have been an increase in the use of these facilities. I agree. A reasonable minimum allowance is half||951|
|Scaffolding||£32,444 is claimed of which £31,365 relates to sub-contractor scaffolding. I am not satisfied that the evidence establishes any linkage between the need for scaffolding provided by WLC and the matters complained of. Part of the sub-contractor scaffolding had to do with the need for adaptations to site compound scaffolding needed to accommodate additional cabins for additional staff. An appropriate minimum allowance equates to ½ of what is claimed for the sub-contractor scaffolding to reflect not only the delays and the need to maintain scaffolding longer than might otherwise have been the case but also to accommodate variations and the site compound scaffolding.||15,682|
|Cranes/Hoist||£2,852 is claimed because following the removal of the tower crane in October 2006 Mobile Cranes had to be deployed to remove temporary accommodation by reason of the amount of staff on site and work still remaining to be completed. This is directly attributable to the overall delay and is recoverable in full||2,852|
|Clean and clear||£8,497 is claimed relating to the provision of additional domestic and work packages waste removal attributable to the increase in the number of work packages and the extent and timing of variations which increased the number of subcontractors on site. Due to the construction of the new substation at the front of Plot C method of waste removal had to be changed from skips to wheelie bins and refuse collection lorries, this method of removal being more expensive than skips. Disallowing the maximum attributable to the increase in the number of work packages, a reasonable minimum allowance is two thirds.||5,664|
|Temporary plumbing/ electrics||£11,840 is claimed for this which relates to variations, late instructions and additional site establishment facilities. This has been proved in full.||11,840|
|£4,669 primarily relates to the increase in the number of work packages. Nothing is allowed.||Nil|
|Travel/subsistence||These costs (£4,441) are related to additional staff required for the staff required to service the variations and late information and instructions. It is a legitimate head of claim and a minimum allowance of one third is a reasonable assessment||1,480|
|Entertaining||£1,479 is claimed. It has not been proved.||Nil|
|Other Expenses||£335 is claimed. It has not been proved.||Nil|
|Additional Staff time||£64,061 is claimed. The minimum additional time attributable to the matters and events established is one half of the extra time and cost claimed for Messrs Joyce, McMorrow, Wakeman, Hamilton, Zanali and Hill and Ms Chamberlain and Ms Chapman (£33,140). One quarter of Mr Giddings time is allowed as dealing with variations (£1,886).Nothing is allowed for Ms Hazelton, Mr Battley, Mr Scott or for Mr O'Brien as most of their time appears to have been addressing the increased level of procurement and non-claim related matters otherwise not proved.||35,026|
|Staff salaries and cars recharge||This is related to the additional staff time and a reasonable minimum allowance is one half of the £16,512 claimed.||8,256|
|Additional site labour||£46,353 is claimed for additional site labour which was primarily concerned with variations, late information and delays during this period. A reasonable minimum allowance is half of this sum.||23,176|
|Less allowance for only 1/3 allocation for last two weeks||[2,800]|
Item 4 – Prolongation up to 6 February 2008
Item 5 – Thickening up to 6 February 2008
|ITEM||COMMENTS||AMOUNT ALLOWED £|
|Professional fees||£10,609 is claimed for the continuing use of Mr Brattle albeit in this period in relation to complaints about plastering, pool screens and the glass lift shaft. Given what I have said above, the minimum allowable is 20% of this (£2,121). No less than £46,448 is claimed for the continued use of Mr Parnham to assist in the commercial management and extension of time applications. This has not been fully or adequately explained but it is clear that he was deployed and some time and resources were applied by him in preparing extension of time claims in respect of matters upon which as a matter of liability WLC has succeeded. A minimum of £10,000 has been established, as a matter of best assessment. The total allowable therefore is £12,121.||12,121|
|Temporary accommodation||A total of £2,777 is claimed. I am satisfied that an additional container was required to accommodate additional staff. This claim is established as additional staff were required.||2,777|
|Telephone, fax Computer equipment||£1,043 is claimed and there is evidence that due to the increase in staff and labour resources there is likely to have been an increase in the use of these facilities. I agree. A reasonable minimum allowance is half||521|
|Scaffolding||£678 is claimed but little or no evidence has been provided which supports this and nothing is allowed||Nil|
|Cranes/Hoist||£2,305 is claimed because following the removal of the tower crane in October 2006 Mobile Cranes had to be deployed to remove temporary accommodation by reason of the amount of staff on site and work still remaining to be completed. This is directly attributable to the overall delay and is recoverable in full||2,305|
|Clean and clear||£5,619 is claimed relating to the provision of additional domestic and works package waste and rubbish clearance attributable to the extent and timing of variations. A reasonable minimum allowance is half of this.||2,809|
|Temporary plumbing/ electrics||£5,039 is claimed for this which relates to variations, late instructions and additional site establishment facilities. This has been proved in full.||5,039|
|Watching and lighting||£2,956 is claimed for this which is not referred to in the Voluntary Particulars at all. Nothing is allowed||Nil|
|£1,671 is claimed and primarily relates to printing and photocopying costs attributable to the increase in the number of procurement packages albeit that some relates to documentation requested by BLDA in relation to extension of time applications. 10% of this is the minimum which can have been incurred and which is recoverable.||167|
|Travel/subsistence||These costs (£5,099) are related to additional staff required for the staff required to service the variations and late information and instructions. It is a legitimate head of claim and a minimum allowance of one third is a reasonable assessment||1,700|
|Entertaining||£1,479 is claimed. It has not been proved.||Nil|
|Other Expenses||£285 is claimed. It has not been proved.||Nil|
|Additional Staff time||£115,758 is claimed. The minimum additional time attributable to the matters and events established is one half of the extra time and cost claimed for Messrs McMorrow, Hamilton, Holford and Wells is and Ms Hazelton and Ms Chapman (£57,203). Nothing is allowed for Mr Scott or for Mr Hicks as this has otherwise not been proved.||57,203|
|Staff salaries and cars recharge||This is related to the additional staff time and a reasonable minimum allowance is one half of the £2,535 claimed.||1,267|
|Additional site labour||£93,752 is claimed for additional site labour which was primarily concerned with variations, late information and delays during this period. A reasonable minimum allowance is half of this sum.||46,876|
|Less allowance for 40% allocation until 28 September 2007 and 80% allocation thereafter
And less allowance for factors which were the risk and responsibility of WLC
Item 6- Preliminary Costs incurred after 6 February 2008
|ITEM||COMMENTS||AMOUNT ALLOWED £|
|Professional fees||£2,204 is claimed for the continuing use of Mr Brattle albeit in this period in relation to complaints about the Light Wall, the Courtyard Sliding doors, the ABW, lift shaft, roof works, swimming pool watertightness, chimneys/flues and alleged water penetration elsewhere. It is clear from Mr Joyce's evidence that much of his time related to the first three items; the other matters do not obviously give rise to any entitlement. A realistic minimum cost is half of this figure (£1,102). A sum of £33,680 relates to other charges incurred from professional organisations in relation into investigations into the Light Wall, the lift enclosure and the Courtyard Sliding Doors as well as the chimneys and flues. In my judgement these are not caused by the matters complained of as giving rise to delay and disruption but more to WLC wholly understandably wishing to protect itself against what were mostly unjustified complaints. Therefore nothing is allowed in this context.||1,102|
|Temporary accommodation||A total of £ 4,060 is claimed. I am satisfied that a temporary accommodation and related costs were incurred during the period up to the end of August 2008. I discount this figure however by 10% to reflect the few items of additional cost which extended beyond August into October and November 2008 This claim is established as additional staff were required.||3,654|
|Telephone, fax Computer equipment||£376 is claimed and there is likely to have been an extended use of these facilities. I agree. A reasonable minimum allowance is 90%||338|
|Scaffolding||£591 is claimed but little or no evidence has been provided which supports this and nothing is allowed||Nil|
|£1,026 is claimed; by reason of the delay an additional pallet truck had to be brought in to handle deliveries. Part of the cost relates to the provision of a small battery operated drill. A realistic minimum attributable to the delay until mid-August 2000 and there is half of this figure||513|
|Clean and clear||£495 is claimed relating to the provision of additional domestic and works package waste and rubbish clearance attributable to the extent and timing of variations. A reasonable minimum allowance is half of this.||247|
|Drying out||£646 is claimed. There is little or no evidence to support this.||Nil|
|Hoardings||£2,295 was incurred to secure all the front and neighbouring boundaries. This is directly related to the delay and was maintained until the end of July 2008. It is recoverable in full.||2,295|
|Setting out and fire precautions.||£455 is claimed for these items which are not referred to in the Voluntary Particulars at all and Mr Joyce does not address them. Nothing is allowed||Nil|
|£7,498 is claimed and primarily relates to printing and photocopying costs attributable to the need to update Operating and Maintenance Manual information by reason of variations as well as dealing with the increase in the number of work packages. Some photocopying was done to issue numerous documents to the new Architect, Navigant; this is not attributable to delay or disruption. 25% of this is the minimum which can have been incurred and which is recoverable.||1,874|
|£382 is claimed and it is inevitable that by reason of the delay up to mid-August 2008 some further cost was incurred. Half of this is a realistic minimum.||191|
|Travel/subsistence||These costs (£5,417) are related to the extended staff requirements It is a legitimate head of claim and a minimum allowance of one third is a reasonable assessment||1,805|
|Entertaining||£640 is claimed. It has not been proved.||Nil|
|Other Expenses||£1,104 is claimed. It has not been proved.||Nil|
|Additional Staff time||£84,016 is claimed. I am satisfied that half of Messrs Joyce's and Spiers time is recoverable as attributable to the delay until mid-August 2008 3/4 of the time of Mr Gad and Mr Fairweather (£45,576). I allow nothing for the time spent by Messrs Scott, Hicks, Davies, Groves, Kerrigan, Dennis, Rose, De Souza or Boyssen. These of either simply not been proved or they relate to investigation into a variety of defects in 2009 which irrespective of the matter is complained of is causing delay and disruption in these proceedings would have been incurred in any event||35,026|
|Additional site labour||£17,743 is claimed for additional site labour which was primarily concerned with continuing distribution resources around the site. This involves one ganger between February and August 2008 and one general labourer in March, April, June and July. This is directly concerned with the delay and the continuing need to service the site. A realistic minimum is 75%||13,307|
|Less allowance of 10% on additional staff time||[3,502]|
Item 7- Cleaning
Summary of Recoverable Preliminaries Costs
Item 1: 62,778
Item 2: 304,695
Item 3: 104,625
Item 4: 232,929
Item 5: 98,837
Item 6: 56,850
Item 7: Nil
Head Office Overhead and Profit
"…the Emden formula…is one of a number of methods conventionally applied in an attempt to arrive at an approximation of the damages supposedly incurred by a contractor where there has been delay to the progress of the works whereby completion is similarly delayed. The theory is that because the period of delay is uncertain and as the contractor can take no steps to reduce its head office expenditure and other overhead costs and cannot obtain additional work there are no means whereby the contractor can avoid incurring the continuing head office expenditure, notwithstanding the reduction in turnover as a result of the suspension of delay to the progress of the work. The reduced activity no longer therefore pays its share towards the overhead costs. This type of loss (sometimes called a claim for "unabsorbed overheads") is however to be contrasted with the loss that may occur if there is a prolongation of the contract period which results in the contractor allocating more overhead expenditure to the project than was to have been contemplated at the date of the contract. The latter might perhaps be best described as "additional overheads" and will, of course, be subject to prove that additional expenditure was in fact incurred.
Furthermore the Emden formula, in common with the Hudson formula…and with its American counterpart the Eichleay formula, is dependent on various assumptions which are not always present and which, if not present, will not justify the use of a formula. For example the Hudson formula makes it clear that an element of constraint is required…ie in relation to profit, that there was profit capable of being earned elsewhere and there was no change in the market thereafter affecting profitability of the work. It must also be established that the contractor was unable to deploy resources elsewhere and had no possibility of recovering costs of the overheads from other sources, e.g. from an increased volume of the work. Thus such formulae are likely only to be of value if the event is causing delay is (or has the characteristics of) a breach of contract…"
(a) A contractor can recover head office overheads and profit lost as a result of delay on a construction project caused by factors which entitle it to loss and expense.
(b) It is necessary for the contractor to prove on a balance of probabilities that if the delay had not occurred it would have secured work or projects which would have produced a return (over and above costs) representing a profit and/or a contribution to head office overheads.
(c) The use of a formula, such as Emden or Hudson, is a legitimate and indeed helpful way of ascertaining, on a balance of probabilities, what that return can be calculated to be.
(d) The "ascertainment" process under Clause 26 does not mean that the Architect/Quantity Surveyor or indeed the ultimate dispute resolution tribunal must be certain (that is sure beyond reasonable doubt) that the overheads and profit have been lost. HHJ Lloyd QC was not saying that assessment could not be part of the ascertainment process. What one has to do is to be able to be confident that the loss or expense being allowed had actually been incurred as a result of the Clause 26 delay or disruption causing factors.
Sub-Contractor Loss and Expense
Measured Works £522,038.00
Additional Preliminaries/plant £433,247.88
Additional labour costs (reduced productivity) £489,649.36
Less allowance for preliminaries recovered [£5000.00]
Under recovery of overheads £56,460.09
Funding cost on above £11,719.54
Additional funding cost due to under-valuations £155,934.20
Cost escalation £70,144.27
G&T included the sum of £113,912.75 in Valuation and 47 in relation to Norstead's loss and expense.
|Additional labour costs (reduced productivity)||£122,412/163,216|
|Less allowance for preliminaries recovered||[£5000.00]|
|Under recovery of overheads||Nil/£56,460.09|
|Funding cost on above||Nil/£11,719.54|
|Additional funding cost due to under-valuationsNil/£55,543|
"In my judgment the following principles can, in summary, be derived from the authorities:
(1) For C to be liable to A in respect of A's liability to B which was the subject of a settlement it is not necessary for A to prove on the balance of probabilities that A was or would have been liable to B or that A was or would have been liable for the amount of the settlement.
(2) For C to be liable to A in respect of the settlement, A must show that the specified eventuality (in the case of an indemnity given by C to A) or the breach of contract (in the case of a breach of contract between C and A) has caused the loss incurred in satisfying the settlement in the manner set out in the indemnity or as required for causation of damages and that the loss was within the loss covered by the indemnity or the damages were not too remote.
(3) Unless the claim is of sufficient strength reasonably to justify a settlement and the amount paid in settlement is reasonable having regard to the strength of the claim, it cannot be shown that the loss has been caused by the relevant eventuality or breach of contract. In assessing the strength of the claim, unless the claim is so weak that no reasonable party would take it sufficiently seriously to negotiate any settlement involving payment, it cannot be said that the loss attributable to a reasonable settlement was not caused by the eventuality or the breach.
(4) In general if, when a party is in breach of contract, a claim by a third party is in the reasonable contemplation of the parties as a probable result of the breach, then it will generally also be in the reasonable contemplation of the parties that there might be a reasonable settlement of any such claim by the other party.
(5) The test of whether the amount paid in settlement was reasonable is whether the settlement was, in all the circumstances, within the range of settlements which reasonable people in the position of the settling party might have made. Such circumstances will generally include:
(a) The strength of the claim;
(b) Whether the settlement was the result of legal advice;
(c) The uncertainties and expenses of litigation;
(d) The benefits of settling the case rather than disputing it.
(6) The question of whether a settlement was reasonable is to be assessed at the date of the settlement when necessarily the issues between A and B remained unresolved."
"I draw from that case and the cases quoted with approval in it that:
(a) if there is no effective causal link between the breaches of duty of the defendant and the need for the claimant to enter into the settlement with a third party or the payment of the sums pursuant to the settlement agreement, there will be no liability to pay the settlement sums irrespective of whether the settlement was reasonable.
(b) The onus of proof in establishing the reasonableness of the settlement is upon the claimant. Thus, there must be some reliable evidence for the court to conclude that it was a reasonable settlement.
(c) The mere fact that the claimant is not liable to the third party either at all or for all the sums payable pursuant to the settlement is not necessarily a bar to recovery or to the establishment of the reasonableness of the settlement. However, the fact that the claimant was not liable to the third party either at all or for anything approaching the sums payable may be a factor in determining that the settlement was unreasonable.
(d) Where a settlement is not established as reasonable, it is still open to the claimant to recover from the culpable defendant elements of the sums paid pursuant to the settlement to the third party to the extent that it can be proved that there is an effective causal link between the payment of those sums and the established breaches of duty. In those circumstances, it is legitimate for the court to consider and establish what was likely to have been payable as a matter of fact and law to the third party as the foreseeable result of the defendant's breaches."
It is open to the Court in appropriate circumstances to make an apportionment of the settlement sum if and to the extent that it can be confident that the sum allowed represents a realistic and reasonable allowance which can safely be attributed to the matters for which the defending party is liable.
|Supervision/travelling costs (£48,468.21- £7,505)||£40,963.21|
|Drawing office staff and management||£5,171.00|
|Travel costs/expenses of labour||£5,000.00|
|Less Mr Hunter's allowances||£11,770.91|
|Add pro rata financing charges (59% x £12,260) £7,233.40|
Claim Preparation Costs
"DMW wish to record their view as to how the Settlement should be further broken down (its inclusion does not reflect an agreement by the third parties in that regard) which is as follows".
There then follows a breakdown of the mechanical and electrical and architectural defects totalling £624,786.50. Almost none of them overlap with the defects pleaded against WLC.
(a) ABW, where £289,961.79 and £214.62 is claimed, was prior to settlement, claimed from BLDA and JSI;
(b) External Joinery where £46,659.21 is claimed, £46,659.21 was, prior to settlement, claimed from BLDA;
(c) Light Wall, where £269,278.02 is claimed, £46,659.21 was, prior to settlement, claimed from BLDA;
(d) Courtyard Sliding Doors, where £95,276.80 is claimed and was, prior to settlement, claimed from BLDA; and
(e) Stingray Doors, where £18,068.12 was, prior to settlement, claimed from BLDA and JSI;
"…in a case where a claimant has concurrent claims against more than one defendant, the whole amount recovered under a settlement with one must be brought into account in any claim against another".
Further, even if it is thought appropriate in any case to seek to apportion an amount received in settlement between the various claims advanced by a claimant, as Foskett states at paragraph 6-57:
"…the onus is on the claimant to put forward material in support of the apportionment for which he contends. See Townsend v Stone Toms & Partners (1984) 27 BLR 26 CA".
"Where that party provides no material to show how apportionment should be made the judge has to do the best he can with the material that he has. What he has to do is ascertain what the plaintiff had lost, to what extent that loss had been mitigated was satisfied by what had been received."
(a) That schedule is somewhat hard to believe, given the central importance of the defects alleged against all the parties including WLC, and the Court would clearly need to have clear and compelling evidence to begin to believe that that was truly the basis of the settlement.
(b) However, without any evidence as to the motivation for and accuracy of that Schedule, particularly without any evidence that it was intended to reflect any of DMW or Mr Mackay's genuine or considered views of how the sums should be allocated, it is literally useless. There is no supporting evidence that the defects claims against which the allocations were nominally made had any prospect of success. Put another way, Mr Mackay was not prepared to proffer any evidence under oath that it represented his or anyone else's genuine views about apportionment.
(c) The relevant question is not: how would the Defendant like to allocate the Settlement monies? The right question is: what on a balance of probabilities in fact is a proper allocation of the sums paid over? DMW and Mr Mackay could seek to demonstrate this by giving disclosure about, and explanation of, the negotiations and advice which led to the Settlement Agreement. They have chosen not to. On a balance of probabilities the most likely "driver" of the settlement sums paid were the "core" alleged defects which form the heart of the case (about which the Court has heard extensive evidence), and therefore one must allocate the settlement monies to those defects accordingly.
"My middle name is relentless. I have the money and anger at this point to push on and make sure that you have to deliver or get punished for not delivering".
(a) The Court must apply the whole of the settlement sum against any and all claims which DMW had, prior to the Settlement, made concurrently against any of the professional team and WLC
(b) As a result, insofar as the Court takes the view that WLC would otherwise be liable or is liable to DMW and Mr Mackay in respect of the following elements of the claim, it can recover damages from WLC only insofar as those damages exceed the £624,786.50 received from the professional team, namely ABW, External Joinery, the Light Wall, the Courtyard Sliding doors and the Stingray Doors..
Mechanical and Electrical Defects
Party Wall Waterproofing
Entrance Hall Roof (Water Penetration)
Third Floor Landing (Water Penetration)
"We confirm that it is our requirement that Design Co-Ordination and Professional Indemnity Insurance be instructed in addition to and specifically due to the instructions already received to appoint the following sub-contractors:
…AI 029 - Wallis Joinery [Windows]…
We are currently evaluating the cost of the necessary Design Co-ordination function both in respect of the above packages and future requirements indicated in the procurement report…"
Design Element - Development of design"
The sub-contract was dated 26 January 2005.
Wall Grout Crumbling in Bathrooms
Lacquer Paint Finish
Failed Roof Membrane
Conclusion on Other Defects
The Doppler Lift Deposit
"4. Without prejudice to the issues between the parties as to whether or not Doppler was performing its subcontract, it has been agreed:-
(1) that Walter Lilly will accept an instruction from the Architect to omit the lift package from its Work;
(2) that the Employer will engage another lift contractor, Odyssey Glass Ltd and Creative Lifts Ltd as contractors directly employed by the Employer;
(3) Water Lilly will cooperate with Odyssey Glass Ltd and Creative Ltd in the installation is of the lift on the site…
6. Pending resolution of the issues between the parties, the parties agree that each will assist in mitigating any additional costs claimed by Doppler and/or in recovering any overpayments to Doppler"
|Group Safety Recharge||16,452.92|
|Less allowed in QS's Valuation No. 47||-37,904.26|
I will proceed on the basis that these adjusted figures are correct.
|Group Safety Recharge|
|Less allowed in QS's Valuation No. 47||- £32,015.34*|
*£37,904.26 less £5,888.92 allowed for previously by the QS
** Does not include overheads and profit (added later)
"1 (1) It is an implied term in a contract to which this Act applies that any qualifying debt created by the contract carries simple interest subject to and in accordance with this Part.
(2) Interest carried under that implied term (in this Act referred to as "statutory interest") shall be treated, for the purposes of any rule of law or enactment (other than this Act) relating to interest on debts, in the same way as interest carried under an express contract term.
2 (1) This Act applies to a contract for the supply of goods or services where the purchaser and the supplier are each acting in the course of a business, other than an excepted contract…
4 (1) Statutory interest runs in relation to a qualifying debt in accordance with this section (unless section 5 applies).
(2) Statutory interest starts to run on the day after the relevant day for the debt, at the rate prevailing under section 6 at the end of the relevant day.
(3) Where the supplier and the purchaser agree a date for payment of the debt (that is, the day on which the debt is to be created by the contract), that is the relevant day unless the debt relates to an obligation to make an advance payment.
A date so agreed may be a fixed one or may depend on the happening of an event or the failure of an event to happen…
(5)In any other case, the relevant day is the last day of the period of 30 days beginning with—
(a) the day on which the obligation of the supplier to which the debt relates is performed; or
(b) the day on which the purchaser has notice of the amount of the debt or (where that amount is unascertained) the sum which the supplier claims is the amount of the debt,
whichever is the later…
(7) Statutory interest ceases to run when the interest would cease to run if it were carried under an express contract term.
5 (1) This section applies where, by reason of any conduct of the supplier, the interests of justice require that statutory interest should be remitted in whole or part in respect of a period for which it would otherwise run in relation to a qualifying debt.
(2) If the interests of justice require that the supplier should receive no statutory interest for a period, statutory interest shall not run for that period.
(3) If the interests of justice require that the supplier should receive statutory interest at a reduced rate for a period, statutory interest shall run at such rate as meets the justice of the case for that period.
(4) Remission of statutory interest under this section may be required—
(a) by reason of conduct at any time (whether before or after the time at which the debt is created); and
(b) for the whole period for which statutory interest would otherwise run or for one or more parts of that period.
7 (1)This Part deals with the extent to which the parties to a contract to which this Act applies may by reference to contract terms oust or vary the right to statutory interest that would otherwise apply when a qualifying debt created by the contract (in this Part referred to as "the debt") is not paid.
(2)This Part applies to contract terms agreed before the debt is created; after that time the parties are free to agree terms dealing with the debt.
8 (1) Any contract terms are void to the extent that they purport to exclude the right to statutory interest in relation to the debt, unless there is a substantial contractual remedy for late payment of the debt.
(2) Where the parties agree a contractual remedy for late payment of the debt that is a substantial remedy, statutory interest is not carried by the debt (unless they agree otherwise).
(3) The parties may not agree to vary the right to statutory interest in relation to the debt unless either the right to statutory interest as varied or the overall remedy for late payment of the debt is a substantial remedy.
(4)Any contract terms are void to the extent that they purport to—
(a) confer a contractual right to interest that is not a substantial remedy for late payment of the debt, or
(b) vary the right to statutory interest so as to provide for a right to statutory interest that is not a substantial remedy for late payment of the debt, unless the overall remedy for late payment of the debt is a substantial remedy.
(5) Subject to this section, the parties are free to agree contract terms which deal with the consequences of late payment of the debt."
"If the Employer fails properly to pay the amount, or any part thereof, due to the Contractor under the Conditions by the final date for its payment, the Employer shall pay to the Contractor in addition to the amount is not properly paid simple interest thereon for the period until such payment is made. Payment of such simple interest shall be treated as a debt due to the Contractor by the Employer. The rate of interest payable shall be 5 per cent over the Base Rate of the Bank of England which is current at the date the payment by the Employer becomes overdue"
Thus, late payment of sums due attract a significant rate of interest which in practice for most contractors (at least) will more than compensate them for the late payment.
|WLC ENTITLEMENT||AMOUNT ALLOWED|
|SHELL WORKS (inc Valuations and reinstated defects and Doppler Lift)||3,585,652.68|
|NPO (weekend working)||25,059.57|
|LESS UNINSTRUCED WORKS||[33,121.08]|
|ADD PERCENTAGE ADJUSTMENTS 1.06% on the above and the loss and expense (£8,913,842.67 [total above], + £860,714 + £505,002.69 - £32,015.34)||76,947.99|
|OVERHEADS AND PROFIT ON ABOVE 4.5%, less £4,561,37 which WLC indicated that it would not charge on Static Security||400,024.21|
|DEFERRED START COSTS||7,290.67|
|SUNDRY LOSS AND EXPENSE||Nil|
|ADDITIONAL HEAD OFFICE AND PROFIT||274,965.12|
|SUB-CONTRACTOR LOSS AND EXPENSE||505,002.69|
|CLAIM PREPARATION COSTS||Nil|
|LESS OTHER [AGREED] ADJUSTMENTS]||[6,666.67]|
|FINANCE CHARGES (INTEREST)||To be the subject of further representations or agreement between the parties|
|FINANCE CHARGES (CONTRACTUAL INTEREST)||4,969.09|
|LESS (i) PAYMENTS MADE||8,768,360.15|
|(ii) LIQUIDATED DAMAGES||Nil|
|(iii) DEFECTS FOR WHICH WLC IS LIABLE||[36,050]|
|TOTAL NET SUM DUE TO WLC (exclusive of contractual interest)||£2,330,666.26|