A & A Mechanical Contractors and Company Ltd v Petroleum Company of Trinidad and Tobago
| Jurisdiction | UK Non-devolved |
| Judge | Lord Stephens,Lord Lloyd-Jones,Lord Briggs,Lord Leggatt,Lord Burrows |
| Judgment Date | 03 November 2022 |
| Neutral Citation | [2022] UKPC 39 |
| Docket Number | Privy Council Appeal No 0031 of 2020 |
| Court | Privy Council |
[2022] UKPC 39
Lord Lloyd-Jones
Lord Briggs
Lord Leggatt
Lord Burrows
Lord Stephens
Privy Council Appeal No 0031 of 2020
Privy Council
Michaelmas Term
From the Court of Appeal of the Republic of Trinidad and Tobago
Appellant
Daniel Feetham KC
Anand Ramlogan SC
Rowan Pennington-Benton
(Instructed by Jared Jagroo of Freedom Law Chambers (Trinidad))
Respondent
Anneliese Day KC
Prakash Deonarine
Odette Clarke
(Instructed by Signature Litigation LLP)
Heard on 7 April 2022
Lord Stephens ( with whom Lord Lloyd-Jones, Lord Briggs, Lord Leggatt and Lord Burrows agree):
In these proceedings A & A Mechanical Contractors and Company Ltd (“the appellant”) claims the value of variations carried out under a construction contract entered into with the Petroleum Company of Trinidad and Tobago (“the respondent”). At first instance the appellant relied on the respondent's letter dated 23 June 2008 (“the June 2008 letter”) as agreeing the value of certain variations amounting to TT$7,291,961.81. In addition, it claimed the value of certain other alleged variations not addressed in that letter. The June 2008 letter was not marked “without prejudice”. At trial the respondent objected to the June 2008 letter being admitted in evidence on the basis that it was part of without prejudice negotiations between the parties. In his judgment dated 28 April 2014 Boodoosingh J (“the judge”) held that the June 2008 letter was not written on a without prejudice basis and therefore could be admitted as evidence. Based on the June 2008 letter, the judge made an award in favour of the appellant in the sum of TT$7,291,961.81. The judge also awarded a further TT$2,680,300.93 in relation to variations numbered 27A, 27B1, 27B2, 28 and 29 which were not addressed in the June 2008 letter. Accordingly, the total award in favour of the appellant was TT$9,972,262.74.
On 12 December 2019, the Court of Appeal (Mendonça and Smith JJA, with Jones JA dissenting on this issue) held that the June 2008 letter was a “without prejudice” communication and was as a result inadmissible. Consequently, the Court of Appeal set aside the award of TT$7,291,961.81 and remitted the question of the variations addressed in the June 2008 letter for retrial. The Court of Appeal unanimously set aside the further award of TT$2,680,300.93 in respect of variations 27A, 27B1, 27B2, 28 and 29 on the basis that the judge was wrong to conclude that there was no evidence given by the respondent concerning those variations. The appellant's claims in relation to those variations were also remitted for retrial.
The appellant now appeals to the Board. On this appeal the appellant accepts that the total amount of the valuations which were agreed in the June 2008 letter was TT$5,180,175.31 rather than TT$7,291,961.81. Furthermore, the appellant accepts that by its pleadings it had excluded variation numbered 10c so as to further reduce its claim based on the June 2008 letter by TT$290,000.00 to TT$4,890,175.31.
The issues on this appeal are:
(a) Whether the Court of Appeal was correct to find that the June 2008 letter was without prejudice and inadmissible (“the first issue”);
(b) Whether the Court of Appeal was correct to interfere with the judge's approach with respect to variations 27A, 27B1, 27B2, 28 and 29 (“the second issue”); and
(c) Whether the judge erred in failing to make an award with respect to interest (“the third issue”).
The appellant is a limited liability company which performs engineering and construction works primarily in the oil and gas industry. Mr Azard Ali is the managing director of the appellant. Mr Selwyn James was the appellant's project engineer and Mr Leon David and Mr Ali were the appellant's project managers in relation to the works which are the subject matter of these proceedings.
The respondent, otherwise known as Petrotrin, was at all material times a state-owned oil company in Trinidad and Tobago. Its principal activities were the exploration, development and production of hydrocarbons in addition to the manufacturing and marketing of petroleum products. Mr Ainsley Newton was the respondent's project manager and Mr Paul Fortune was the respondent's construction supervisor in relation to the works which are the subject matter of these proceedings.
By its Invitation to Bid (“the ITB”) dated 28 October 2003 the respondent invited various contractors, including the appellant, to bid to perform stipulated steelworks relating to the strengthening of the respondent's platform and block station number 4 in the respondent's main Soldado oilfield.
On 17 December 2003 the appellant submitted its tender to carry out the work as stipulated in the ITB (“the work”) for the price of TT$26,800,000 (exclusive of VAT).
The appellant emerged as the successful bidder and on 23 September 2004, a contract was entered into between the appellant and the respondent. The parties agree that the contract is contained in several documents, namely the ITB dated 28 October 2003, the respondent's General Conditions of Contract, the appellant's tender dated 17 December 2003, the respondent's letter of intent dated 23 July 2004, addenda numbers 1 and 2 dated 20 and 28 November 2003 and the respondent's purchase order dated 23 September 2004.
Under the contract the appellant agreed to carry out the work for the “Contract price” of TT$26,800,000 (exclusive of VAT) or such other sum as should become payable under the contract.
By clause 2 of Part V to section 3 of the ITB, the respondent had the power to instruct the appellant to carry out variations to the work. Clauses 4 and 5 of Part V to section 3 of the ITB provides:
“4. If, in the opinion of the [appellant], such a variation shall impact on the cost of the Contract, the Project Schedule or the parties' obligations under this Contract, then the [appellant] shall notify the [respondent] in writing and submit to the [respondent] for approval the costs, a statement as to the variation/s and the impact of such a variation/s on the Project Schedule and/or obligations. The amount to be added or deducted from the Contract Price shall be determined in accordance with the rates specified in the Schedule of Prices, if applicable. Where rates are not contained in the said schedules or are not applicable, then the amount shall be such sum as is in all the circumstances reasonable. Due account shall be taken of any partial execution of works which is rendered useless by any such variation.
5. In any case where the [appellant] is instructed to proceed with a variation prior to the determination of the value thereof, the [appellant] shall keep contemporary records of the Cost of making the variation and of time expended thereon. Such records shall be open to inspection by the Engineer at all reasonable times” (emphasis added).
In arriving at a valuation in respect of a variation the emphasised part of clause 4 provides for adherence to the quoted rates in the Schedule of Prices unless not contained in the said schedule or unless the rates are “not applicable.”
Clause 7 of section 5.1 of the ITB makes further provision for the adjustment of the contract price, either by way of addition or deduction, to reflect the value of “such extras, alterations, additions or omissions” directed by the respondent during the progress of the work. It is appropriate to set out clause 7 in full. It provides:
‘“ Clause 7 Alterations and Variations (Section Five General Terms and Conditions of Contract)
[The respondent] may at any time during the progress of the Work make alterations in or additions to or omissions from the Work or any alterations in the kind or quality of the materials to be used therein and if [the respondent] shall give notice thereof in writing to the [appellant] and the [appellant] shall alter, add to or omit as the case may require and the value of such extras, alterations, additions or omissions shall in all cases be agreed between [the respondent] and the [appellant] the amount thereof shall be added to or deducted from the Contract price as appropriate. No variation shall be made to the Work stipulated without prior written approval of [the respondent's] authorized representative. Failure to observe this condition may at the sole discretion of [the respondent] result in non-payment for the unauthorized Work.”
It is convenient at this stage to set out several points which can be made about the express wording of clause 7:
(a) In addition to the power contained in clause 2 (see para 11 above) it enables the respondent at any time during the progress of the work to “make alterations in or additions to or omissions from the [w]ork” and to make “alterations in the kind or quality of the materials to be used” in the work.
(b) It envisages the respondent giving notice in writing to the appellant in respect of variations to the work and that if the appellant carries out the variation without the respondent's authorised representative giving prior written approval, then this may result at the respondent's sole discretion in non-payment for the unauthorised work.
(c) It provides that if the appellant shall alter, add to or omit from the work in accordance with the respondent's direction then “the value of such extras, alterations, additions or omissions shall in all cases be agreed between [the respondent] and the [appellant].”
(d) It directs that the agreed amount of the value of such extras, alterations, additions or omissions shall be added to or deducted from the contract price as appropriate.
(e) The obligation to agree arises in respect of each extra, alteration, addition or omission so that, for instance, if agreement is reached in...
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...relied in oral submissions upon the recent case of A&A Mechanical Contractors and Company Ltd v Petroleum Company of Trinidad and Tobago [2022] UKPC 39. This case dealt with, amongst other things, the admissibility of material under the exception relating to the conclusion of an agreement ......