Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd (no2)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE JACKSON |
| Judgment Date | 31 January 2007 |
| Neutral Citation | [2007] EWHC 145 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 31 January 2007 |
| Docket Number | No HT-04-314 |
[2007] EWHC 145 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
St Dunstan's House
133-137 Fetter Lane
London EC4A 1HD
Mr Justice Jackson
No HT-04-314
MR ROGER STEWART QC and MR PAUL BUCKINGHAM (instructed by Clifford Chance LLP) appeared on behalf of the Claimant.
MR ADRIAN WILLIAMSON QC and MS LUCY GARRETT (instructed by Reid Minty LLP) appeared on behalf of the Defendants.
(As Approved)
This judgment is in seven parts, namely:
Part 1: introduction.
Part 2: the facts.
Part 3: the proceedings in respect of issue 11.
Part 4: the claimant's evidence.
Part 5: the defendant's evidence.
Part 6: analysis of issue 11.
Part 7: conclusion.
Part 1: Introduction
This is the trial of the eleventh preliminary issue in litigation between Multiplex Constructions (UK) Limited (“Multiplex”) and Cleveland Bridge UK Limited (“ CB”). CB's parent company, Cleveland Bridge Dorman Long Limited, is the second defendant.
I gave judgment on 5th June last year, in relation to the first 10 preliminary issues. I shall take that judgment as read. I adopt but do not repeat the background facts set out in that judgment and also the summary of the present litigation set out in that judgment. I shall use the same abbreviations in this judgment as I did in the first judgment.
The 11th preliminary issue has been listed for trial at the request of both parties, in order to determine which party was responsible under the terms of the Supplemental Agreement for the cost of temporary works for the stadium roof. I have expressed some concerns as to whether it is appropriate for me to determine issue 11 at a time when my judgment on issues 1-10 is under appeal. However, both parties have asked me to give my decision on issue 11 now, without waiting for the Court of Appeal's judgment. Accordingly, I shall do so.
The witnesses who have given oral evidence at this trial are Mr Muldoon, Mr McGregor, Mr Rogan, Mr Underwood and Mr Child. All of those witnesses gave evidence at the trial last year. Their respective roles on the Wembley project have been set out in Part 4 and Part 5 of the first judgment and need not be repeated.
The temporary works for the roof are steel structures which are constructed to facilitate the erection of the roof. One important function of these structures is to provide support for the roof until such time as the various members are in place and the roof is supported by the permanent structure of the stadium. Once the roof is complete, the temporary works are removed. The general design of the roof has been summarised in paragraph 5 of the first judgment.
Now let me turn to the arch. It will be recalled that the arch was constructed at ground level and then had to be raised to an angle of 112 degrees. Five turning struts were used for the operation of raising the arch. The middle sections of these turning struts were triangular trusses. These triangular trusses resembled (at least in their shape) a well known confectionery product. Accordingly they were referred to as “toblerone sections” or “toblerones”. I shall adopt the same terminology.
CB f ormed the very sensible plan of re-using the toblerones after the arch had been raised. Part of the temporary works for the roof would be a number of temporary towers. CB proposed to modify the toblerones so that they could form the central sections of some of those temporary towers.
Now let me turn to the position of CB. It will be recalled that CB fabricated some of the steelwork required for Wembley Stadium at CB's factory in Darlington. CB also arranged for fabrication and design work to be undertaken by CB's sub-contractors. CB used the term “buyouts and sub-contracts” to refer to materials, items or services which CB procured from third parties.
Let me turn next to the documents. The documentation used for the present trial comprises part of last year's trial bundle and an additional bundle assembled for the purpose of issue 11. In addition, Mr Rogan attaches four important documents as exhibits to his witness statement. Mr Rogan's first exhibit is a schedule of buyouts and sub-contracts which are described as category 1. I shall refer to this as “the category 1 schedule”. Mr Rogan's second exhibit is a schedule of buyouts and sub-contracts which are described as category 2. I shall refer to this document as “the category 2 schedule”. Mr Rogan's third exhibit is a spreadsheet which has to be read sideways. In his witness statement, Mr Rogan refers to this document as “the landscape spreadsheet”. I shall use the same terminology.
Mr Rogan's fourth exhibit is a single sheet of paper giving information about steelwork for the bowl. There is a dispute about whether this document was given or shown to Multiplex at the time when the Heads of Agreement and Supplemental Agreement were being negotiated. I shall refer to this document as “sheet 4”.
The category 1 schedule, the category 2 schedule and the landscape schedule all feature in bundle C2 of the present trial bundle and in bundle C10 of last year's trial bundle. There is also a document which comprises the top half only of the landscape spreadsheet. This document is only to be found in bundle C10 of the old trial bundle. It has been referred to during the trial as “the top half schedule”. I shall use the same term.
Mr Rogan's sheet 4 does not feature in any trial bundle because it has not previously been disclosed.
That completes my introductory remarks. I must now turn to the facts.
Part 2: The Facts
As set out in the previous judgment, in early 2004 discussions were taking place between Multiplex and CB which eventuated in the Heads of Agreement signed on 18th February 2004. For present purposes it is necessary to review certain of the meetings during that period and the documents passing between the parties in rather more detail.
On 4th February 2004, Mr Grant of CB wrote as follows to Mr Stagg of Multiplex:
“Towards the end of yesterday's meeting you made a proposal centered on taking a major portion of the fabrication from Cleveland Bridge to subcontractors of your choice. We instinctively suggested that you take the site erection as well, as we could not be exposed to the fabrication deliveries of you and your subcontractor.
“We also identified practical issues related to such a transfer of fabrication and the benefits of maintaining a certain level in our Darlington facility.
“We have been reflecting on the merits and elements of such an approach and will come to Friday's meeting with our ideas on how we might build on this to achieve an optimal solution for all parties. As I have said before, this can best be achieved by us working together.”
On 5th February, Mr Rogan prepared a document entitled “Supplementary Agreement Proposal”. This proposal contained two important elements. First, that part of the fabrication of steel should be taken over by Multiplex. Secondly, that site works and erection should be done by CB on a cost plus basis, until such time as a new fixed price for everything might be agreed. Each of these steps would have the effect of substantially reducing (a) the scope of CB's lump sum contract and (b) the amount of the lump sum price. Mr Rogan's proposal envisaged that CB would still carry out the design of the roof temporary works within the scope of the new reduced lump sum contract.
It is CB's case that late on 5th February or early on 6th February Mr Rogan was instructed that the design of the roof temporary works should not form part of CB's proposal for a new lump sum contract.
On Friday, 6th February there was a meeting between representatives of Multiplex and CB. At that meeting, Mr Grant tabled a document headed “Proposal”. This document asserted that CB's costs to date were £40 million of which £26 million had been paid and £14 million were still outstanding. The document proposed a new lump sum price of £10.8 million in respect of the following items:
“5,000 tonnes fabrication cost only.
“Complete all shop drawings for fabrication.
“Complete subcontractor shop design for defined scope per original contract.
“Bought outs/subcontracts - CB/MPX to agree scope (£1.2m incl'd above).”
It was agreed that there would be a further meeting between Mr Muldoon of Multiplex and Mr Rogan of CB to go into the details of these matters. That meeting took place on the morning of 11th February. It is common ground that during the course of that meeting Mr Rogan gave to Mr Muldoon copies of the category 1 schedule and the category 2 schedule.
The category 1 schedule listed project buyouts and sub-contracts which would fall within CB's new lump sum price. The following items were listed as category 1:
“ Project Buyouts
“Audit of Far East Fab Shops
“Bolts
“Cables (For & Back Stays & Catenary)
“Roof rods and Bars
“Roof Castings
“PPT Truss and Roof Pins
“Bowl Pins
“Arch Bearings
“Bowl Metal Decking
“Grouting
“Ledger Angles
“Temp Works - Arch Temporary Workshops
“Temp Works - Arch Assembly Stillages
“Temp Works - Struts
“Temp Works - Anchors
“Temp Works - Strut Bases
“Temp Works - Pin Assemblies
“Arch Base - Cast-ins
“Temp Works - Cable & strand handling
“Temp Works - Bowl
“Cat 3 Check
“Arch Maintenance System
“ Project Subcontracts
“CHINA Fabrication Sub Contract
“CHINA Materials
“CHINA Shipping
“CHINA Management
“Far East Marshalling yard
“Transport M Yard to site
“Repair and topcoat to Far East steel.”
To the right of that list of items, the category 1 schedule has four numbered columns with the following headings: (1)...
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