The Centre For Maritime And Industrial Safety Technology Limited V. Ineos Manufacturing Scotland Limited
| Jurisdiction | Scotland |
| Judge | Lord Tyre |
| Neutral Citation | [2014] CSOH 5 |
| Date | 17 January 2014 |
| Docket Number | CA17/12 |
| Court | Court of Session |
| Published date | 17 January 2014 |
| OUTER HOUSE, COURT OF SESSION | |
| [2014] CSOH 5 | |
| CA17/12 | OPINION OF LORD TYRE in the cause THE CENTRE FOR MARITIME AND INDUSTRIAL SAFETY TECHNOLOGY LIMITED Pursuers; against INEOS MANUFACTURING SCOTLAND LIMITED Defenders: ________________ |
Pursuers: Clark QC, Drummond (Solicitor Advocate); Shepherd and Wedderburn LLP
Defender: Sandison QC, Simpson; Anderson Strathern
17 January 2014
Introduction
[1] On 20 July 2006, the parties entered into a contract for the supply by the pursuers of vocational and educational training to apprentices recruited by the defenders or by BP at Grangemouth and Aberdeen. The contract was subsequently terminated by the defenders with effect from 31 July 2007. In this action the pursuers seek (i) declarator that in terms of the contract the defenders were bound to make certain monthly payments to them throughout the duration of the contract; (ii) alternatively, rectification of the contract to make provision for such payments; and (iii) payment of a sum of £693,745.22 said to be due by the defenders to the pursuers in accordance with the contract. The defenders resist the conclusions for declarator and rectification, and for their part have a counterclaim for £368,016.68 said to have been overpaid to the pursuers while the contract subsisted. The present action was raised in 2011 and appointed to the commercial roll on 8 February 2012. It came before the court for a preliminary proof on:
· four issues concerning construction of the contract;
· the pursuers' conclusion for rectification of the contract; and
· pleas by the defenders of personal bar and acquiescence on the part of the pursuers. These pleas were not insisted in at the close of the hearing and I need say no more about them.
The invitation to tender
[2] In early 2005, BP Oil Grangemouth Refinery Limited ("BP Grangemouth") issued an invitation to tender for the provision of a training programme for the site's "Modern Apprenticeship Scheme". At that time BP Grangemouth had a programme in place operated by another provider called TTE Scotland Limited ("TTE"), but wished to seek alternative tenders for the provision of the service for a period of five years commencing on 1 September 2005.
[3] In view of the nature of the dispute that has arisen between the parties, I set out at this stage a number of the provisions of the invitation to tender. Section 3 (Scope of Services) stated inter alia as follows:
"The trainee technicians will be employed and managed by the provider. BP Grangemouth will commit to sponsor a minimum of 20 trainee technician places for the Grangemouth site per year. The number of trainee technicians required on an annual basis will be advised 6 months in advance of programme commencement.
In addition to this BP Grangemouth will commit to sponsor a further 14 trainee technicians on behalf of BP Exploration. The program requirements for BPX Aberdeen trainee technicians will be different in part to that of the Grangemouth based trainee technicians..."
The maximum duration of the training programme was specified as four years for BP Grangemouth trainees and three years for BPX Aberdeen trainees who would spend their fourth year offshore. The required minimum educational and training outcomes included achievement of HNC in a chosen discipline and achievement of NVQ/SVQ Level 3 within three years for BPX Aberdeen trainees and within four years for BP Grangemouth trainees. The tenderer was to undertake responsibility for "managing all aspects of vocational training at BP Grangemouth through job placement, job rotation and classroom specific training". The invitation to tender then stated:
"BP Grangemouth holds an NVQ awarding accreditation and will supply competent and approved personnel to be used for assessment and verification processes associated with NVQ attainment. All aspects of the NVQ processes will be managed by BP. Should the tenderer wish to submit a proposal for management of the NVQ processes this should be detailed in the tender submission and the cost included in the cost appendix.
The tenderer will provide continuous assessment and periodic appraisal of the Trainee Technicians throughout the training programme and provide progress reporting to BP Grangemouth. This process should be detailed in the tender submission."
[4] The tenderer was also required to make provision for accommodation for the BPX Aberdeen trainees. The invitation to tender provided:
"The basis of charging for accommodation and related costs shall be 'cost plus', i.e. reimbursement of actual documented costs plus a management charge as a fixed cost or as a percentage of the actual costs.
Tenderers shall provide detailed estimates of all relevant costs on a yearly basis together with the Tenderers proposed management charge or 'mark-up'."
[5] The description of the Scope of Services concluded as follows:
"It is the responsibility of Tenderers to identify and include costs for all the elements of delivering the training programme that they consider necessary to meet all objectives included above...
Costs should be specified as a variable cost per Trainee Technician on an annual basis.
If appropriate, the most viable economic cost option should be stated which may be dependent upon the minimum/maximum number of trainees per annum. Where costs are not dependent on the numbers of Trainee Technicians, i.e. the price is fixed irrespective of number, this should be clearly identified."
[6] Annexed to the invitation to tender was a draft contract agreement. At this stage it is necessary to note only that Clause 29 (Termination) provided, in sub-clause 29.1 for termination "With Cause", and that sub-clause 29.2, entitled "Without Cause", contained only the words "not used".
The pursuers' tender
[7] The pursuers carry on business under the name C-MIST at Heriot Watt University Research Park, Edinburgh, providing a range of services including training services to the oil, gas and petrochemical industry. They are approved as a training centre by a number of UK certifying authorities including the Scottish Qualifications Authority, City & Guilds and PAA/VQ-SET. Mr Mehdi Laftavi has been managing director of the pursuers since 1988. He is also the controlling shareholder.
[8] The pursuers were known to BP Grangemouth as they had provided training services at another BP refinery, and were invited to tender for the Modern Apprenticeship Scheme. Prior to tendering the pursuers sought clarification of a number of points, including details of BP's salary costs per trainee, to which BP's Mr Frazer Tollan responded by email. Responses by BP to pre-tender inquiries by other potential tenderers were also circulated. On 24 February 2005 the pursuers submitted their tender timeously. The tender was prepared by several members of the pursuers' staff including Mr Laftavi and Mr Nick James who both gave evidence at the proof. The pursuers' pricing strategy was determined by Mr Laftavi.
[9] In their tender, the pursuers offered to "provide, or actively manage, all the education and off-the-job training and manage/monitor all the on-shore on-the-job training, competency assessment and verification processes." In order to achieve this, the pursuers indicated an intention to establish and develop a training centre in Grangemouth to accommodate instructors, workshops and teaching facilities as well as managerial/administrative support required inter alia to manage and/or monitor the practical on-the-job training and competency assessment programme. The tender included, at section 4.8, a proposal for management of "the entire NVQ process" at the proposed new training centre. The tender stated:
"...C-MIST's strategy is to reduce the time consuming effort of candidates developing written portfolios and provide them with greater opportunity for on job training and assessment. This strategy will require the support of the existing Grangemouth accredited Assessors and Verifiers who will have a key role to play in the training, development and competency assessment of the Modern Apprentices. C-MIST's Instructors will also be accredited Assessors and will add additional support to the existing Grangemouth assessment base."
The tender went on to specify that there was no individual cost for management and administration of the vocational qualification scheme; the costs of such activities were absorbed in the total cost of management of the proposed centre and co-ordination fees detailed in the training programme cost breakdown. In Appendix 4C, the pursuers set out the proposed responsibilities of a staff member with the title of "Grangemouth Apprentice Scheme Manager"; these included a duty to "...manage the NVQ Assessment programme, including recruitment, training and monitoring of Assessors, Mentors and Coaches".
[10] In the cost breakdown section of the tender for "Training", Mr Laftavi included a lump sum cost which he entitled "Training allowance for apprentices" and which was carried through to the pursuers' total sum tendered. This cost, which in the breakdown for the first year of the scheme amounted to £1,117,293, was based upon the actual salary cost figures supplied by BP Grangemouth in response to the pursuers' pre-tender inquiry. It proceeded upon an assumption that there would be 34 trainees in each of years 1, 2 and 3 of training and 26 in year 4. In his evidence to the court, Mr Laftavi explained his pricing strategy as follows. If all of these trainees attended throughout the training programme he would make no profit from this part of the tender. In his experience, however, it was almost always the case that not all trainees stayed the course. In that eventuality the salary cost would reduce and the pursuers would make a profit. As regards this explanation, it must be borne in mind that, as I have already noted, the invitation to tender made reference to the sponsoring of a minimum, not a maximum, of 34 trainees...
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