Skanska Construction UK Ltd v Egger (Barony) Ltd., Court of Appeal - Technology and Construction Court, July 30, 2004, [2004] EWHC 1748 (TCC)

Resolution Date:July 30, 2004
Issuing Organization:Technology and Construction Court
Actores:Skanska Construction UK Ltd v Egger (Barony) Ltd.
 
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Case No: HT 99 59

Neutral Citation Number: [2004] EWHC 1748 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 30 July 2004

Before :

HIS HONOUR JUDGE DAVID WILCOX

Between :

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Adrian Williamson QC and Anna Laney (instructed by Skanska Legal Department)

for the Claimant

Richard Davies QC and Kate Grange (instructed by Mackrell, Turner Garrett)

for the Defendant

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Judgment118

His Honour Judge David Wilcox:

  1. This judgment is to be read in conjunction with the liability judgment delivered on the 1st May 2002 in this action.

  2. At the outset of this trial there were many hundreds of quantum issues left in dispute. By and large those of value of less than £1,000 have been settled as a result of the indefatigable efforts of junior counsel in this case. Many items of complexity and value have been considered by the Quantum experts Mr Ian Wishart for S.C.L. and Mr Simper for Egger. They have agreed the values of many items in dispute with the assistance of the structural engineering experts Professor Masterton for S.C.L. and Mr Walsh for Egger. The industry of all the experts both before and throughout the Quantum hearing has been commendable. They have served the court and the parties well in seeking to narrow issues and thereby save costs.

  3. The GMP Contract was between Egger (Barony) Limited and Kvaerner Limited, whose successor was Skanska Construction UK Limited (SCL). In early correspondence references to Kvaerner and Skanska are almost inter changeable. Kvaerner Cleveland Bridge Limited (KCBL) was the sub-contractor who undertook the steel erection work. The principal mechanical and engineering sub-contractor was NG Bailey Limited (NGB).

  4. I will deal with the main Quantum issues that remain in dispute in the order followed by Counsel in making their detailed submissions to me.

    CLAIM H1: REMOVAL OF SPOIL

  5. SCL's pleaded case as to this claim is in the sum of £801,734. Mr Wishart, SCL's quantum expert values it at £438,357. Mr Simper, Egger's quantum expert puts the claim at £91,838.

  6. During part of July and in August and September, the South site was not available for the disposal of soil from the North site. The spoil within the GMP contract, `the contract spoil', had to be removed from the site at SCL's expense unless its final destination was agreed to be on site, such as in the West Bund, otherwise it was at SCL's risk. The availability of the South site is somewhat of a red herring. The indulgence granted by Egger for SCL to save costs and dispose of contract spoil on the South site is misrepresented as an instruction-giving rise to expense to SCL. The Southern site must be the nearest site to the North site for the deposition of spoil. Furthermore, no landfill tax is payable on spoil deposited there. There is no evidence from SCL as to what other sites they contemplated using and what the costs of these alternatives would have been.

    REMOVAL OF THE OVERBURDEN

  7. Mr Simper and Mr Holloway, the parties' respective quantum experts' prior to September 2002 agreed that the volume of the overburden was 27,641 cubic metres and that the proper rate for its removal was £2.57 per cubic metre. It went over the road with minimum haulage and time expense and attracted no landfill tax.

  8. All of the spoil from the site, howsoever generated, went onto the South site. Thus in terms of convenience as well as expense, SCL reaped considerable benefit for both the `contract spoil' deposition, and that not within the contract. This claim is valued at £71,039. I accept the evidence of the experts and my value is £71,039.

    CLAIM H (1) 1.2 FILLING TO LOG PARK

  9. The high point of the evidence in relation to SCL's claim was that of Mr Howlett who said that there had been a corrective to the levels left by the earthworks Contractor which had left them `a little bit high and a little bit low'. He enlarged on this difference as being a cut of 828mm and fill of 1069mm. This implies a need for fill of 250 cubic metres which hardly connotes the generation of spoil to be removed. The experts in their joint report value this part of the claim at nil. On the evidence before me, there is no merit in this part of the claim. I reject it.

    CLAIM H(1) 1.3 COST OF SURVEY

  10. Mr Holloway and Mr Simper agreed a nil valuation for this claim. Egger contends that a figure of £5,000 was allowed for site survey costs in the build-up to the GMP and that this figure, therefore, falls within that provision. Since this survey does not arise out of SCL's performance of its contractual obligations but from the failure of APC, the earthworks contractor to form its pre-contract obligations, this expense cannot form part of the GMP figure agreed. I hold that it is recoverable in the sum of £1,750.00.

    DOUBLE HANDLING OF EXCAVATED MATERIAL

  11. I accept the evidence of Mr Howlett that the volume double-handled was 2,000 cubic metres. The rate to be paid for the removal of this spoil off site is the subject of heated dispute. The contract makes no material distinction for the purposes of payment between depositing spoil at an agreed onsite location or some other place off site.

  12. The starting point is the contract itself. The relevant parts of Clause 12 provide:-

    ``(4)

    Subject to the procedures required to be followed by the Contractor in the event of a change as set out in the Employer's Requirements, the valuation of Changes and of the work executed by the Contractor for which a provisional sum is included in the Employer's Requirements shall, unless otherwise agreed be made in accordance with the provisions of clause 12(5). Such valuation shall include allowance for the addition or omission of the relevant design work.

    (5) (a)

    The valuation of additional or substituted work shall be consistent with the values of work of a similar character set out in the Sub-Contracts making due allowance for any change in the conditions under which the work is carried out and/or any significant change in the quantity of the work set out. Where there is no work of a similar character set out in the Sub-Contracts a fair valuation shall be made.''

  13. The contract contemplated that all work would be sub-contracted. In fact SCL were committed to undertake a number of direct packages which include work rates B2 and B4 which contain Bills of Quantities rates relied upon by Egger. Whilst there were no relevant sub-contracts, in interpreting the contract the Bills of Quantity rates in the Direct Packages may properly be used as a guide to the valuation of these variations by analogy. These rates provide a mechanism for the valuation of work which was of a similar character.

  14. In my judgment there is no work of a similar character. I reject the evidence of Mr Simper that there was. The valuation calls for an approach based on a fair valuation. Mr Simper and Mr Holloway have already considered a similar operation and arrived at a figure of £2.57 per m3.

  15. Mr Wishart proffers a figure of £4.68 per m3.

  16. SCL paid its sub-contractor Barr £2.45 per m3 for the removal of surplus spoil from the spoil heaps which was then deposited on the South side. SCL's own formulated claim contains £4.68 per cubic metre for excavation, £1.69 for disposal to the tip with a further allowance of £2.67 for levelling and compaction with a final 0.15p for `additional distance travel'. This totals £9.1 per m3 - almost as profitable as gold mining.

  17. Mr Wishart's `fair valuation' is £4.68 per cubic metre. Coincidentally, this corresponds with the excavation rate in the Bills of Quantities. He is influenced in his view by the evidence of Mr Bradley the onsite quantity surveyor employed by SCL that a back-actor was used in this operation and concluded that the type of operation undertaken could therefore be categorised `loosely...as excavation' as opposed to `loosely as ... earthmoving'.

  18. The wisdom of using back-ackters on top of a recently formed potentially unstable spoil heaps is questionable as opposed to the use of a front loader from a stable surface. But this work was clearly earth moving over a short distance. A fair valuation of this operation is that sensibly agreed between Mr Holloway and Mr Simper. It affords a helpful guide to this court. On the evidence before me I conclude the proper and fair valuation rate is £2.57 per cubic metre. The Claimants are entitled to £5,140.00. SCL has no entitlement in respect of APC overburden double handling.

    H(1)3 SURPLUS SOIL ARISING FROM CHANGES IN DESIGN.

  19. The assessment of these quantities will depend upon the resolution of other issues in this case. The rate due for its removal, since it all went to the South side, in my judgment, properly should be £2.57 per cubic metre. If temporary stockpiles were created on site for the convenience of SCL, no double recovery claim can arise. But if quantities of spoil arose by reason of additional excavation because of changes during the period when the Southside was not available and spoil had to be stockpiled on the North side, that would give rise for double recovery. A fair and reasonable valuation of the cost of this excavation, cartage and placement, followed by a second removal would be £5.14 per m3. The use of a front loader would clearly suffice in these earthmoving operations.

    The sum of £28,722.32 is due to the Claimants having regard to the arithmetical consequences of the findings below agreed by the parties.

    H(1)4

  20. This part of the claim relates to the removal of spoil heaps left by APC. The volume is agreed at 7,443 cubic metres. The proper valuation of this claim is £19,128 representing a fair rate in my judgment of £2.57 per cubic metre.

    The total therefore under claim H 1 is £125,779.83.

    H.3...

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