Arcadis Consulting (UK) Ltd (formerly called Hyder Consulting (UK) Ltd) v AMEC (BSC) Ltd (formerly called CV Buchan Ltd)

JurisdictionEngland & Wales
JudgeThe Hon. Mr Justice Coulson
Judgment Date25 October 2016
Neutral Citation[2016] EWHC 2509 (TCC)
Docket NumberCase No: HT-2015-000013
CourtQueen's Bench Division (Technology and Construction Court)
Date25 October 2016

[2016] EWHC 2509 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Rolls Building, Fetter Lane, London, EC4A 1NL

Before:

The Hon Mr Justice Coulson

Case No: HT-2015-000013

Between:
Arcadis Consulting (UK) Limited (formerly called Hyder Consulting (UK) Limited)
Claimant
and
AMEC (BSC) Limited (formerly called CV Buchan Limited)
Defendant

Mr Marcus Taverner QC and Mr Gideon Scott Holland (instructed by Herbert Smith Freehills LLP) for the Claimant

Mr Simon Hughes QC and Mr Calum Lamont (instructed by DAC Beachcroft LLP) for the Defendant

Hearing dates: 10, 11, and 12 October 2016

The Hon. Mr Justice Coulson
1

INTRODUCTION

1

This is a relatively straightforward 'contract/no contract' case with something of a sting in its tail. The defendant, whom I shall call "Buchan", acted as the specialist concrete sub-contractor on two large projects, referred to in the documents as the Wellcome Building and Castlepoint Car Park. They engaged the claimant, whom I shall call "Hyder", to carry out certain design works in connection with those projects in anticipation of a wider agreement between the parties that did not materialise. It is now alleged that the Castlepoint Car Park is defective and may need to be demolished and rebuilt. Rebuild costs are said to be many tens of millions but Buchan's claim, linked to a settlement with Kier, together with its own damages claim, is put at £40 million. Hyder deny liability for the defects. However if, contrary to their case, Hyder are liable for all or any of the defects, they argue that there was a simple contract in respect of their design works, pursuant to which their liability was capped in the sum of £610,515.

2

The dispute broadly turns on the court's interpretation and analysis of the contemporaneous documents. There are very few disputes of fact. Thus, although five separate witness statements were prepared, the scope of any relevant and admissible oral evidence was always going to be very limited, particularly in view of the fact that the relevant events occurred 15 years ago. Leading counsel on both sides ensured that the cross-examination was properly focussed.

3

I deal with the issues between the parties in this way. In Section 2, I set out the relevant facts/documents. In Section 3, I set out a brief overview of my conclusions on the critical issue as to the liability cap. In Section 4, I consider whether or not there was a binding contract between the parties. In Section 5, I go on to consider, if there was a contract, which documents comprised or evidenced that contract. In Section 6, I address the issue as to whether section M of Schedule 1, which was the document said to limit Hyder's liability to £610,515, was a term of any contract between the parties. In Section 7, on the assumption that Schedule 1(M) was a term of the contract, I consider shortly what it meant. There is a short summary of my conclusions at Section 8 below.

2

THE RELEVANT FACTS/DOCUMENTS

4

The contemporaneous documents in the court bundle filled six lever arch files. But, as I noted at the outset of the hearing, no more than three dozen documents were of any relevance to the issues before me. I deal solely with those documents in this part of the Judgment.

5

In 2001, Buchan wanted to use Hyder's design services on more than one project involving concrete structures. There were discussions between the parties which ranged over many months and many topics. Mr Shotliff, Buchan's commercial director, met his opposite number, Mr Tyler, on a number of occasions. One of the points which they discussed was a cap on Hyder's liability "where liability is not covered by insurance" (see Mr Shotliff's notes of his meeting with Mr Tyler dated 28 September 2001). This suggested a link between the cap and insurance which was sometimes clear in the exchanges, and sometimes not.

6

On 8 November 2001, Mr Shotliff emailed Mr Tyler to say:

"Please find attached the updated documents we propose to use for design work. The Terms and Conditions document is merely tidied up as I understand. The Protocol document is intended to be the instrument that creates the Agreement. It will be necessary to agree particular schedules for each contract in addition to these and further minor amendments may still be required. We intend to use the documents for the Wellcome Building works subject to your agreement and we will be providing more details shortly. Accordingly I would be grateful if you could make any comments you may have as soon as possible as we are about to start your works on the above basis on this contract."

7

The attached documents included:

(a) The Protocol Agreement, which was in the form of an umbrella agreement, which envisaged separate schedules and work instructions for each specific contract, but which envisaged that each separate contract would be carried out pursuant to the same general terms and conditions. Clause 2.1 of the Protocol Agreement envisaged that all these documents would then form a suite of contract documents, with a stated order of precedence. Clause 5.3 required a £5 million level of PI insurance cover.

(b) The schedules to the Protocol Agreement, which included a template work instruction and a work instruction acceptance.

(c) The detailed terms and conditions, which would themselves form a schedule to the Protocol Agreement. Condition 2A was entitled 'Limit of Liability' and stated:

"The Consultant's liability for defective work under the Agreement shall be limited to whichever is the lesser of the following:

(a) The reasonable direct costs of repair, renewal and/or reinstatement of any part or part of the Sub-Contract Works to the extent that the Client incurs such costs and/or is or becomes liable either directly or by way of financial contribution for such costs; or

(b) The sum stated in Schedule 1."

This was the proposed liability cap in its original form.

(d) Clause 7 of the terms and conditions required insurance in the form and to the level set out in Schedule 6 (which was blank in the version sent out on 8 November).

(e) Schedule 1, at paragraph M, stated that "the limit, if any, on the Consultant's liability for defects in the design (as referred to in Clause 2A) is…" There was a space in which the relevant figure could then be entered. In the version that was sent, that was of course blank.

(f) Schedule 2 was to be a detailed description of the services to be performed by Hyder under the specific work instruction. Schedule 3 dealt with fees.

8

On 9 November 2001, Hyder wrote to Buchan in relation to the Wellcome Centre and said:

"I understand that discussions between David Shotliff and Stewart Tyler on the Design Services Agreement are well advanced. However, it may still take a little time before this Agreement is formally signed. In the meantime I should be grateful if you would confirm that you would underwrite our fees for the design and drawing work and in order that there is a basis for these, propose the following schedule of rates…"

9

On 13 November 2001, Buchan replied acknowledging Hyder's letter of 9 November 2001, anticipating agreement on the Protocol within two weeks. They instructed Hyder to start work on the design for the Wellcome Centre. They went on:

"Your work done under this instruction is to be on the basis of our instructions from Wates and the conditions and terms detailed in the Protocol Agreement, Design Consultancy Terms and Conditions in your possession at present.

It is our intention to enter these Agreements with yourselves in their present form with such minor amendments as maybe mutually agreed and to award you the Design Works on the Wellcome Building Precast Concrete Package in the sum of £55,000 as previously agreed.

Pending formalisation of these Agreements, we will pay you for work done under this instruction up to a maximum £10,000.

Once the Agreements are executed their terms and conditions shall supersede this letter and shall govern any work done retrospectively."

10

On 14 November 2001, Buchan wrote to Hyder referring, for the first time, to the Castlepoint Car Park. The letter said:

"We are currently preparing our tender for a precast concrete frame and associated works at the above contract and would be pleased to receive your keenest fixed price quotation for the supply of design services as detailed herein…"

The letter said that the works were to be priced on the basis that the quotation was compliant with the "Proposed Design Agreement".

11

On 28 November 2001, Hyder replied to Buchan's letter of 14 November 2001, in respect of the Castlepoint Car Park. They offered to provide the required structural design and detailing services for the lump sum of £285,000 plus VAT, although this offer was subject to a number of express conditions including:

"(1) Agreement on the terms and conditions of our appointment for provision of the services

(2) Agreement of commencement date and the design programme

(4) Any variations or additional services required to be charged on a time basis at rates to be agreed…"

12

Mr Tyler was being advised by Mr Brand, another Hyder employee, about the acceptability of the Protocol Agreement, and the terms and conditions, which Buchan had proposed on 8 November 2001. On 19 November 2001, Mr Brand advised Mr Tyler that "you should not be considering entering into a contract with them on the basis of their draft, and Hyder should definitely not be using their draft for a standard for use between the companies". However, it was not until 12 December 2001 that Mr Tyler wrote to Mr Shotliff to express his opposition to the drafts, and he did so in milder terms than those used by Mr Brand 1.

13

In his letter of 12 December 2001, Mr Tyler complained that the documents reflected "some but not all of our comments made on various...

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