PBS Energo A.S. v Bester Generacion UK Ltd
Jurisdiction | England & Wales |
Judge | Mrs Justice Cockerill DBE |
Judgment Date | 07 February 2020 |
Neutral Citation | [2020] EWHC 223 (TCC) |
Date | 07 February 2020 |
Docket Number | Case No: HT-2017-000330 |
Court | Queen's Bench Division (Technology and Construction Court) |
and
[2020] EWHC 223 (TCC)
Mrs Justice Cockerill
Case No: HT-2017-000330
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES (QBD)
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice,
Rolls Building
Fetter Lane, London,
EC4A 1NL
Ms Karen Gough, Ms Sarah Bousfield and Mr Daniel Kozelko (instructed by Keystone Law LLP) for the Claimant
Mr Steven Walker QC and Mr Tom Owen (instructed by Watson, Farley and Williams LLP) for the First and Second Defendants
Mr Luke Wygas instructed by Keystone Law for the Part 20 Defendant
Hearing dates: 9 th, 10 th 11 th 15 th 16 th 17 th, 18 th, 23 rd, 24 th 25 th July 2019, 21 October 2019
Draft Judgment sent to parties: 3 February 2020
Approved Judgment
Introduction
This case concerns a biomass energy plant which was to be located at Kingmoor Park, Bryn Lane, Wrexham Industrial Estate, LL13 9UT, in North Wales (“the Site”). The plant was never built, and the dispute before me concerns the circumstances in which that happened.
In short, the parties to a contract for the construction of the plant — the Claimant (“PBS”) a company incorporated in the Czech Republic, and the First Defendant (“Bester”) a UK of subsidiary of the Second Defendant, a Spanish company — fell out. There were disagreements about ( inter alia) who was responsible for the risk of the asbestos which was found under the surface and which had to be removed to get planning permission finalised and who was responsible for the permits which were necessary for the project to move forward. There were disagreements about whether payment milestones — in particular for the boiler — had been triggered.
Each party claimed to terminate the contract between them. PBS claimed to be entitled to terminate on the basis firstly of a failure to pay the fifth milestone payment instalment by the due date, and secondly on the basis of substantial failures by Bester to fulfil its contractual obligations. A number of such failures were particularised.
Bester in turn claimed to be entitled to terminate the contract firstly by reason of a failure to comply with a Notice to Correct as regards delay to the project, caused by delay in the detailed design and suspensions of works and by reason of failure to provide necessary permits and assistance. Secondly Bester relied on abandonment of the works or an intention not to perform.
The principal task of the Court in this trial has been to decide which (if either) of the parties is correct that they were entitled to, and did, terminate the contract. The subsidiary tasks are to consider (i) what the financial consequence of that termination are, in terms of the successful party's entitlement to damages and (ii) (if Bester is the successful party) whether it has another line of recovery against the Part 20 Defendant.
Those superficially simple issues were broken down by the parties into competing Lists of Issues running to a number of pages, but the core of the factual and expert dispute before me ranged round the validity of PBS's purported termination. The issues were in particular as to the soundness of PBS's claims to terminate the Contract pursuant to Clause 16.2 of the Contract for one or more of the following:
i) Failure by Bester to determine a number of PBS's claims for Extension of Time and additional payment (most centrally those relating to asbestos/ground conditions and permits); and/or;
ii) Failure by Bester to pay Milestone 5 under the Contract which was due when (in very broad terms) the boiler was ready for delivery; and/or;
iii) Prevention by Bester of PBS's fulfilment of its obligations under the Contract.
I will deal with the issues under the following headings (by paragraph number):
Introduction | 1 |
The Trial | 9 |
Essential Background | 28 |
Contractual structure | 28 |
Procedural history | 52 |
The structure of this judgment | 63 |
Contractual construction issues | 66 |
Construction of the Contract: risk as regards ground conditions | 66 |
Factual background | 73 |
Discussion: Construction | 93 |
Discussion: Rectification | 106 |
Implied Terms | 117 |
The Extension of Time claims: July to November 2016 | 120 |
The relevant terms and statutory backdrop | 121 |
Prelude: Extension of Time and termination | 133 |
Extension of Time: the backdrop | 138 |
The asbestos claims — unforeseen circumstances or Clause 17.3 delay | 141 |
“First asbestos” | 157 |
“Second Asbestos” | 165 |
Conclusions on Asbestos Extension of Time | 186 |
Sewerage/Drainage | 202 |
ROC and permits | 205 |
SPEN | 225 |
BT Cable Lines | 231 |
Termination: Milestones | 235 |
Milestone 3: achievement | 240 |
Milestone 4 Site achievement | 276 |
Milestone 5: relevance and sub-issues | 291 |
Milestone 5: Biomass Boiler achievement and requirements for payment | 295 |
Milestone 5 achievement and requirements: discussion | 330 |
Milestone 5 — the Statement Issue | 361 |
Effective termination | 371 |
Bester's termination | 390 |
Abandonment/demonstration of an intention not to perform | 407 |
Substantial Breach, causing delay | 413 |
Prevention principle | 414 |
Common law repudiation | 431 |
Quantum | 432 |
PBS liability for the Equitix termination | 434 |
Liquidated damages and Clause 15.7 | 437 |
The recoverability of third party claims | 450 |
Adjudication fees | 453 |
Declaratory relief | 456 |
Guarantee issues | 457 |
The Quantum of PBS's claim | 468 |
Clause 15.8(i) progress of works | 470 |
Clause 15.8(ii): Other costs | 473 |
Is PBS entitled to legal fees and, if so, in what amount? | 474 |
Prolongation costs | 475 |
Disruption costs | 476 |
Bester credit in respect of plant, equipment or materials for which payment is claimed under Clause 15.8(i) and which has been sold, transferred or monetized by PBS? | 477 |
Conclusion | 480 |
I should add that PBS have at trial and in the closing submissions sought to interest me in Bester's financial situation. It was not suggested that this was relevant to any of the issues which I have to decide and therefore I do not deal with that topic in this judgment.
The Trial
The trial of the action has been conducted over three court weeks with a further half day of oral closings after the service of full written closing submissions. I have been greatly assisted in the preparation of this judgment by the detailed and helpful submissions by counsel on both sides. These ran to hundreds of pages of opening submissions and further hundreds of pages of closing submissions — even leaving aside the lengthy chronologies which were also prepared (the Claimant's closing submissions, for example, were provided with 36 attachments).
Both parties then took issue with the accuracy of the factual summaries which each had advanced — a not inconsiderable part of the oral closings was occupied with such disputes. Given the length of the submissions served, and the range of disagreements between the parties this judgment cannot hope to reflect them in similar detail. It follows that the parties' contentions are summarised in somewhat skeletal form, and that I have not dealt with issues save where they were necessary to one view of the case or the other.
Each party called factual and expert evidence.
The factual evidence was given partly through translators. Although the parties had contracted in the English language, and communicated orally and in writing in English, none of the witnesses had English as their first language and all of them had available to them the services of a translator. Some of the Claimant's witnesses chose to give their evidence entirely through the translator, including asking for documents which they had themselves written in English to be translated to them. Other of the Claimant's witnesses and all of the Defendant's witnesses sought a lesser degree of assistance, or no assistance at all.
I should note however that it was my impression that most of the witnesses, whether giving evidence through a translator or not, listened to the questions given in English. At the same time, while all of the witnesses plainly spoke and understood English to an extent which might be said to be close to fluency, they were none of them truly fluent in English, and were understandably prone to a less than full understanding of complex questions, or communications which were made with an accent or a rhythm which was unfamiliar to them. The result was that witnesses (whether or not apparently relying on the translation) sometimes gave answers to those questions based on an incomplete understanding of that question. The overall result was that the factual evidence was considerably less helpful than would have been ideal and that answers at times had to be read in broader context than would be the case when dealing with a witness giving evidence in his or her first language.
Even with these limitations, I was able to form some impression of the way in which the witnesses gave their evidence. In the usual way, all of the witnesses were described in the opposing side's closings as being thoroughly unsatisfactory and unworthy of belief. Overall my impressions were as follows.
Mr Šipoš. He was the site manager for PBS and the only permanent presence there from PBS. Of the PBS witnesses, he sought the least assistance from the translator. While he was not a hostile or rude witness, he was not impressive. He seemed somewhat inexperienced for the job which he had to do, having no experience with asbestos and very little understanding of the significance of the planning notice. He gave the impression that he was not comfortable...
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