(i) Declaration no. 1 is pleaded as follows:
“Upon a proper construction [of the Sub-Contract] CDL is entitled to a Variation instruction, and in principle to an adjustment to the Sub-Contract Sum under clause 5, where CDL encounters any one or more of the following whilst carrying out the Sub-Contract Works:
(a) Ground conditions which do not permit CDL to use mechanical plant and which instead require hand-digging (save where hand-digging has been provided for in the Bill of Quantities);
(b) Mains and services which obstruct E.ON’s as-designed pipe route and given the presence of which CDL cannot carry out the Sub-Contract Works in accordance with E.ON’s design, and which mains or services E.ON do not have diverted by the relevant statutory undertaker;
(c) Obstructions in the trench (including rock) which need to be broken out/ removed to permit CDL to carry out the Sub-Contract Works, other than the breaking out of the existing road surfaces (ie concrete and tarmac only);
(d) Soft spots;
(e) Unavailability of a clear and unrestricted corridor in which to carry out the Sub-Contract Works (including for the avoidance of doubt, the lack of a clear and unrestricted corridor for those works when CDL is working below ground level).
These five matters (a) to (e) were referred to as the five matters or the five circumstances.
(ii) Declaration no. 2 related to the rectification of the contract to give effect to what CDl said was the common intention of the parties, by the insertion of words into clause 2.1.7 (which appears below). The two suggested insertions, before the start of clause 2.1.7, were:
(a) words to the effect of “In relation to the scope of works agreed by the parties in the Numbered Documents (including the exclusions set out therein) the parties hereby further agree as follows” ; or
(b) words to the effect of “Subject to the exclusions agreed by the parties in the Numbered Documents the parties hereby further agree as follows” .
(iii) Declaration no. 3 was framed as follows:
“Each such Variation instruction as CDL is entitled to as above on either the proper construction of the Sub-Contract or upon its rectification is, in principle and subject to all other terms of the Sub-Contract save for clauses 2.1.7 – 2.1.9:
(a) A Relevant Sub-Contract Event within the meaning of clause 2.19; and
(b) A Relevant Sub-Contract Matter within the meaning of clause 4.20.”
(iv) Declaration no. 4 was in the following terms:
“Clauses 2.1.7 – 2.1.9 of the Sub-Contract do not debar CDL’s entitlement to claim such adjustment of the contractual date for completion and/or such adjustment of the Sub-Contract Sum as CDL may otherwise be entitled to for such Variations.”
(v) Declaration no. 5 was, in summary, in terms that, where mains or services obstructed the as-designed route or had to be diverted, CDL were entitled to directions from E.ON; an adjustment of the date for completion and the Sub-Contract Sum; and a Variation under clause 5. Declaration no. 6 was to the effect that clauses 2.1.7 to 2.1.9 did not debar CDL’s entitlement to an adjustment of the contractual date for completion or the Sub-Contract Sum as a result of an instruction to stop works during diversion of mains or services by a statutory undertaker.
(i) Louis Walshe, at the relevant time a member of CDL’s bid team
(ii) Richard Venison, at the time CDL’s Bid Manager
(iii) Brendan Anderson, and Associate Director of CDL and the head of the Civils Business Unit.
(iv) James Harris, E.ON’s Senior Project Delivery Manager
(v) Thomas Price, E.ON’s Senior Quantity Surveyor
(vi) Brett Smith, E.ON’s Senior Category Manager in its Procurements Team.
“We have been successful in securing the above contract; you are invited to tender for the supply, delivery/transport, offloading, storage, site logistics, positioning, installation, protection, testing and commissioning and all civil related aspects of the above mentioned Sub-Contract Works in accordance with documents and information listed and/or referenced herein.
1. Your offer must be strictly in accordance with the documents enclosed or referred to herein. You should allow for everything necessary, except where specifically detailed as being by others, to carry out and complete the Sub-Contract works as detailed within this enquiry. Any deviations must be brought to our attention. Unless such deviations are specifically identified in your Form of Tender for Sub-Contract Works, your offer will be deemed to be in strict compliance with this enquiry.
….
7. You will be given reasonable opportunity to visit the site and ascertain the nature of the site, access thereto, and all local conditions and restrictions likely to affect the execution of the works. You will be deemed to have made allowance for such conditions whether or not you have visited the site.
….
9. No claims arising from lack of knowledge or understanding of any of the above or of any kind will be considered following receipt of your quotation.
….”
(i) Tenderers were invited to:
“… prepare a tender for the following, using the price breakdown schedule within these documents:
All civil works associated with the installation of network pipes and ducts, including break out, excavations, sand beds, reinstatement, traffic management, licences, authorisations etc.”
(ii) Tenderers were instructed that they:
“…. should clearly indicate the inclusions/ exclusions for each type of work and the risk element associated and included within the build up” of the price.
In due course, the Tender Enquiry, including the Scope of Works, became Numbered Document 3 in the Sub-Contract, and the Scope of Works also formed Numbered Document 6.
(a) “… the understanding that [EON] have initiated a feasibility study, which has been undertaken by others and that [EON] have confirmed that there is a clear and un-restricted corridor to lay the proposed DHN system as per the route identified on the drawings.”
(b) “For clarity purposes we have included within our submission a bill of quantities identifying what we have allowed for within our bid ….”
(c) “We have based all the works using mechanical plant and have made no provision for hand digging other than those areas where we specifically mention hand digging within our prepared Bill of Quantities.”
(d) “We have made no allowance for diversion of mains and services, nor have we made any allowance for dealing with contaminated material (all excavated assumed to be of a dry, stable and inert nature, no allowance has been made for rock within our bid) and any delays that may occur as a result other than those specifically measured as contaminated in our Bills of Quantities.”
(i) Against the line “Moving of existing services”, this was coloured in as “Unclear” followed by the query: “confirm that you have allowed for the adjustment/ re-alignment of services to facilitate the installation”.
(ii) Against the line “Underground obstructions/breakout”, this was also coloured in as “Unclear” and followed by the query: “confirm that you have allowed for the removal/breakout of obstructions in the trench”.
(iii) Against the line “Removal of soft spots”, the “Unclear” column was coloured in and followed by the query: “confirm that you have allowed for removal of soft spots”.
So far as Carey and McNicholas were concerned, the same lines were coloured in as “Excluded”.
(i) “Confirm that you have allowed for the removal of soft spots
This item is quite onerous and as discussed we would recommend that a m 3 rate be agreed between all parties.”
(ii) “Confirm that you have allowed for the adjustment/diversion of 3 rd party services to facilitate the UDHN installation.
As discussed and clarified we have allowed a provisional sum for modifications to gully runs, gully pots and channels only – refer to CDL clarifications 17 August 2015.”
The e-mail and its attachments became part of Numbered Document 7.
(i) The Post-Tender Minutes included a “Brief Description and Scope of Sub-Contract Works”:
“All civil related works ….
The Sub-Contract Works shall be as detailed within The Company enquiry document dated [26th July 2015] reference [SBC/DHN/TP] Revised Submission 4 th September 2015. The Sub-Contract Works shall be further defined on the Sub-Contract Documentation scheduled in Appendix 2 and other relevant information.”
(ii) Appendix 2 was left blank.
(iii) The Post Tender Minutes concluded with “AOB”. Under this heading, there was a section which stated “Clancy have specifically excluded:
· Sections 2 & 3 of the works package
...
· Disposal of contaminated/ hazardous materials
· Removal of soft spots
· Breaking out of rock
…..
· Any provision for entering private land or premises
· Any provision for 3 rd party compensation
· Any form of design other than temporary works
· Costs associated with diversion of other services
...”
(i) The Articles of Agreement described the Sub-Contract as being between E.ON, as the Contractor, and CDL, as the Sub-Contractor:
“FOR (Underground District Heat Network enabling Works (the “Sub-Contract Works”, more particularly described in the Numbered Documents), supply of the district heating and cooling energy pipe infrastructure to serve the Barts Square development, London ……”
(ii) Recital 4 provided:
“the Contractor has provided documents (included in the Numbered Documents) showing and describing or otherwise stating the requirements of the Contractor (the “Contractor’s Requirements”).”
(iii) Recital 6 provided:
“the Sub-Contractor has examined the Contractor’s Requirement and the Sub-Contractor’s Proposals and is satisfied that the Sub-Contractor’s Proposals meet the Contractor’s Requirements.”
(iv) Article 1 provided as follows:
“ Sub-Contract
This Sub-Contract consists of:
1.1 this Agreement and the Sub-Contract Particulars;
1.2 the documents referred to in the Schedule of Information;
1.3 the JCT Standard Building Sub-Contract with sub-contractor’s design Conditions (SBCSub/D/C) 2011 Edition incorporating the standard JCT Amendments referred to in the Sub-Contract Particulars, and modified in accordance with the Schedule of Amendments contained in Schedule 2 of the Agreement (together the “ Sub-Contract Conditions ”);
1.4 the Sub-Contract Payment Schedule …;
1.5 to the extent not set out above, the Numbered Documents.”
(v) Article 2 provided:
“ Sub-Contractor’s Obligations
The Sub-contractor shall carry out and complete the Sub-Contract works in accordance with this Sub-Contract …..”
“The Numbered Documents, for the purposes of this Sub-Contract, are those listed below, a copy of each of which has for identification been numbered sequentially, signed or initialled by or on behalf of each party and annexed to this Agreement:
1. Schedule of Amendments – to the Standard Building Sub-Contract with sub-contractor’s design Conditions 2011 Edition (SBCSub/D/C 2011)
…..
5. Bill of Quantities
6. Contractor’s Requirements
7. Sub-Contractor’s Proposals dated 9 th July 2015 as amplified by revised submission dated 17 th August 2015 and 4 th September 2015.
8. E.ON post tender clarifications numbered 1-3 as dated 3 rd August 2015, 19 th August 2015 and the 14 th September 2015 and Clancy Docwra respective responses.
9. Sub-Contract Post Tender Interview Minutes as dated 22 nd September and signed 26 th October.”
The Schedule of Amendments (Numbered Document 1) deleted the standard definition of the Numbered Documents and inserted “the documents annexed to this Sub-Contract Agreement and/or listed in the Sub-Contract Particulars (item 18)”.
“1.3 This Sub-Contract is to be read as a whole, provided that:
1.3.1 the Sub-Contract Agreement shall prevail over any other provisions of the Sub-Contract;
…
1.3.3 if the Numbered Documents include any standard terms and conditions of the Sub-Contractor such standard terms and conditions shall be of no contractual effect whatsoever.
1.3.4 if there is any inconsistency between the Sub-Contract Agreement and these Conditions, the Sub-Contract Agreement shall prevail;
1.3.5 if there is any inconsistency between the Sub-Contract Documents (other than the Numbered Documents) and the Numbered Documents (excluding the Schedule of Modifications (if any)), those Sub-Contract Documents shall prevail;
…..
1.3.9 In the event of any such inconsistency referred to in this clause 1.3 being discovered the Contractor shall be entitled, in its absolute discretion, to determine and direct the Sub-Contractor as to which of the provisions or documents (or parts of documents) are to prevail. The Sub-Contractor shall comply with whatever documents (or parts of documents) he is directed are to prevail and shall be excused compliance with the documents (or parts of documents) which he is directed are to be disregarded. ….”
“2.1.1 The Sub-Contractor shall carry out and complete the Sub-Contract Works in a proper and workmanlike manner, in compliance with the Sub-Contract Documents, the Construction Phase Plan and Statutory Requirements and in conformity with directions given in accordance with clause 3.4 and all other reasonable requirements of the Contractor…..
…..
2.1.7 The Sub-Contractor shall be deemed to have inspected and examined the site and its surroundings and to have satisfied himself before the date of the Sub-Contract as to the nature of the ground, the sub-surface and sub-soil; the form and nature of the site; the extent, nature and difficulty of the Sub-Contract Works; …. and in general to have obtained for himself all necessary information as to risks, contingencies and all other circumstances influencing of (sic) affecting the Sub-Contract Works.
2.1.8 Notwithstanding any other provision of this Sub-Contract, the Sub-Contractor shall not be entitled to any extension of time or to any additional payment, damages, or direct loss and/or expense on the grounds of any misunderstanding or misinterpretation of any matter set out in clause 2.1.7, or his failure to discover or foresee any risk, contingency or other circumstance (including, without limitation, the existence of any adverse physical conditions or artificial obstructions) influencing or affecting the Sub-Contract Works.
2.1.9 The Sub-Contractor shall not be released from any of the risks accepted or obligations undertaken by him under the Sub-Contract on the ground that he did not or could not have foreseen any matter which might affect or have affected the execution of the Sub-Contract Works.
2.1.10 Any information, survey, report or other document which may have been provided by or on behalf of the Employer or Contractor in connection with the site is provided by way of information only without warranty or representation as to its accuracy, reliability or completeness.”
(i) Numbered Document 3: the original Sub-Contract Tender Enquiry including the Scope of Works
(ii) Numbered Document 5: the (re-drafted) Bill of Quantities
(iii) Numbered Document 6: also the Scope of Works document
(iv) Numbered Document 7: CDL’s original tender and the revised submissions dated 17 August 2015 and 4 September 2015
(v) Numbered Document 8: E.ON’s requests for post-tender clarifications and CDL’s responses.
(vi) Numbered Document 9: the Post-Tender Minutes (amended and signed)
The dispute
(i) E.ON argued that the declarations sought were too vague or hypothetical. That was either a reason why, in the exercise of my discretion, I should not grant the declarations sought or an element of the argument on construction. The more difficult it was to define or understand what it was CDL said was not within their scope of works, particularly having regard to what might be anticipated on a job such as this, the more difficult it was to accept their construction of the Sub-Contract.
(ii) E.ON described the Numbered Documents as “a diffuse collection of documents relating to a wide range of matters” and including drawings, e-mails, procedures, meeting notes and so on. E.ON argued that the Numbered Documents would not be the place where a reasonable recipient of the Sub-Contract would expect to find CDL’s rights to extra time and money. The key elements of the Numbered Document were the Scope of Works in Numbered Document 3 and Numbered Document 6 (itself the Contractor’s Proposals) and not the collection of documents in Numbered Documents 7, 8 and 9.
(iii) The order of precedence of contractual documents in clause 1.3 as amended also supported E.ON’s case.
Discussion
The Sub-Contract Works and the Numbered Documents
(i) The series of Buro Happold drawings that have sections at 10m intervals for part of the route with “confidence ratings”.
(ii) PJ Carey’s drawings showing services superimposed on the pipe route.
(iii) The UK Power Networks drawing which bore the notes:
“1. The position of the apparatus shown on this drawing is believed to be correct but the original landmarks may have been altered since the apparatus was installed.
2. The exact position of the apparatus should be verified - use approved cable avoidance tools prior to excavation by using suitable hand tools.
3. It is essential that trial holes are carefully made avoiding the use of mechanical tools or picks until the exact location of all cables have been determined.”
(i) “The Sub-Contractor is deemed to have visited the site and ascertained the nature of the site, access thereto, and all local conditions and restrictions likely to affect the execution of the works.”
That repeats what is found in the invitation to tender. It is, of course, a provision that seeks to place on the Sub-Contractor the risk of adverse site conditions “likely to affect the execution of the works.” But it seems to me that it must be read in the context of what the works are. If, for example, the Sub-Contract Works expressly exclude dealing with soft spots, to say that a provision such as this places the risk of soft spots on the Sub-Contractor has the effect of expanding the scope of the agreed Sub-Contract Works. That is not risk allocation: it is ignoring the definition of the Sub-Contract Works.
(ii) “The Sub-Contract Works shall be as detailed within The Company enquiry document dated 26 th July 2015 … The Sub-Contract Works shall be further defined in the Sub-Contract Documentation scheduled in Appendix 2 and other relevant information.”
That seems to me to add little or nothing to the definition of the Sub-Contract Works.
(iii) Numbered Document 9 reflects, it is said, the lump sum nature of the Sub-Contract where it states that “the rates contained within the Bill of Quantities … are deemed to include for all works necessary in carrying out the Sub-Contract scope of works. ….” . But that again adds nothing to the identification or definition of the Sub-Contract Works.
(iv) “The Sub-Contractor confirms that the Tender is Fully Compliant with the Project Requirements.” As E.ON say, “Project Requirements” is not a defined term but I agree that it is most likely to refer to the Contractor’s Requirements. To construe this statement as meaning that the Sub-Contract Works included all possible works despite the express exclusions would, however, firstly render them pointless and, in any event, ignore the fact that the Tender Enquiry itself anticipated departures from the requirements.
(v) The specific exclusions on which CDL relies are, E.ON points out, a small number in a lengthy list and many of the other items, it is argued, are expressly concerned with pricing, such as, “any provision for 3 rd party compensation” or “any provision for entering private land or premises”. The fact that the items CDL relies on are a small number in a long list (and it not a particularly long list) would merely seem to reflect the matters that have become contentious on this project. It is not at all clear that other matters are expressly concerned with pricing as it is put but, even if they are, that does not change the meaning of other items.
(i) there is no inconsistency in CDL’s construction. If, for example, the Sub-Contract Works do not include the breaking out of obstructions, the effect of clause 2.1.7 is not then to allocate to CDL the risk that there are obstructions because any inspection or examination cannot be for the purposes of satisfying oneself as to the conditions for carrying out works that CDL have not contracted to carry out. There would similarly be no question of CDL being released from any risk or obligation undertaken because CDL had not contracted on the basis that they would break out obstructions.
(ii) To construe clauses 2.1.7 to 2.1.9 or the Numbered Documents otherwise would not give effect to what the parties had agreed was the scope of the Sub-Contract Works.
(iii) E.ON placed little reliance on the order of precedence in clause 1.3.5 (also referring to clauses 1.3.3 and 1.3.9) but submitted that all these clauses show the intention of the parties to be that the Numbered Documents should be read subject to the Agreement and the Conditions. I agree but, for the reasons I have explained, I do not consider that CDL’s construction involves giving precedence to the Numbered Documents over the Agreement or the Conditions.
The five matters
(i) E.ON places emphasis on the addition of the words “ground conditions” which do not appear in the relevant bullet point in the tender submissions in Numbered Document 7. I cannot see the relevance in this emphasis. Hand digging by definition occurs in ground. CDL’s case is that hand digging is not within the scope of the Sub-Contract Works (save where specifically mentioned in the Bill of Quantities) and that if it is instructed to carry out hand digging, that is a variation. Such an instruction is likely only to be given where ground conditions are encountered that do not permit the use of mechanical plant.
(ii) E.ON established both by reference to the Bill of Quantities and the factual evidence that there is, in fact, no express reference to hand digging in the Bill of Quantities but that takes things no further.
(iii) E.ON further submit:
(a) that the declaration is vague: it is not clear what ground conditions are referred to; whether that would include mains and services (where hand digging is required); and whether vacuum excavation is included within mechanical plant; and
(b) that if hand digging around mains and services were excluded that would be a surprising thing for the parties to have agreed given that the works involved the excavation of trenches in central London and the consequences would be far reaching.
(iv) Each of those arguments is a reason for submitting that what the parties agreed may be surprising or to some extent lacking in clarity but I come back to the point that CDL was at pains to set out what was not included in the Sub-Contract Works and that, on the face of the contractual documents, that was agreed as part of the definition of the scope of those Works.
(v) As an operational matter, it would be for CDL in the first instance to decide whether they could and should use mechanical plant. There may be a dispute between the parties as to whether hand digging was necessary. But these are operational issues and do not mean that the clear exclusions should be ignored.
(i) Although I have addressed this above, for completeness, I repeat E.ON’s submission in this context that they were asking CDL to confirm that they had allowed for breaking out obstructions in the trench; that that request evidenced a belief on E.ON’s part that CDL had made such allowance; and that CDL’s response did not challenge that belief. The request for “confirmation” is equally capable, and in this case probably was, an attempt to get CDL to confirm something that E.ON did not think was the case. CDL’s response, on its natural reading, was the opposite of the confirmation E.ON sought. As a subjective matter that appears to have been interpreted by E.ON and then included in Numbered Document 9 as the specific exclusion of breaking out of rock.
(ii) E.ON further submits that the declaration lacks clarity because it is unclear how “obstructions” are to be distinguished from other material that needed to be removed in the digging of a trench and how “rock” is to be defined. Any lack of clarity is a function of the exclusion (which it has to be observed E.ON did not seek to clarify further). It is not a matter which persuades me that I should not grant any declaration.
(i) Was it the common intention of the parties that the Sub-Contract Conditions be qualified in one of the ways set out in the Particulars of Claim (and set out at paragraph 7 above) that is by the addition of words to clauses 2.1.7.
(ii) Was there an outward expression of accord in respect of either of the qualifications set out in the Particulars of Claim.
(iii) Did any such intention continue up to and including the time when the Sub-contract was entered into.
(iv) By mistake, do the terms of the Sub-Contract fail to reflect the common intention.
(v) Do CDL’s proposed qualifications give effect to the common intention. If not, what wording is required to express the common intention.