Mitsui Construction Co Ltd v Attorney-Genera

7/23/2019 Mitsui Construction Co Ltd v Attorney-Genera

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Construction Law Reports/Volume 10 /Mitsui Construction Co Ltd v Attorney-eneral o! "ong #ong - 10ConLR 1

10 ConLR 1

Mitsui Construction Co Ltd v Attorney-General of Hong Kong

COURT OF APPAL OF HO!G KO!G

"#R ALA! HUGG#!" $-P% CO!" A!& FUA& ''A

() 'A!UAR* ()+,

'U&#C#AL COMM#TT OF TH PR#$* COU!C#L

LOR& R#&G OF HAR.#CH% LOR& RO"K#LL% LOR& GR#FF#TH"% LOR& ACK!R A!& "#R 'OH!"TPH!"O!

(/% (,% (0 'A!UAR*% (1 FRUAR* ()+2

Tunnelling work - Major discrepancies between estimated quantities of different types of lining and actualquantities - Whether engineer entitled to agree or fix new rates

O It is a mistake in interpreting a construction contract to pay too much attention to decisions on apparentlysimilar wording in different contract forms

O If words are used which are capable both of a businesslike and an impractical construction thebusinesslike should usually be preferred This presumption is stronger when the contract is clearly badlydrafted

$%e appellants &Mitsui' entered into an agreement wit% t%e overnment o! "ong #ong !or civil engineeringwor(s intended to improve t%e water supply o! "ong #ong) $%e present dispute concerned t%e e*cavationand construction o! a tunnel some + 22, m long and +) m in diameter !rom Ma Mei "o to .am C%ung) twas impossile to predict in advance t%e nature o! t%e ground t%roug% w%ic% t%e tunnel was to pass) $%econtract provided !or !ive di!!erent types o! lining and !or t%e engineer to decide w%ic% type was needed !orparticular parts o! t%e tunnel as wor( proceeded) $%e ills o! uantities contained estimates o! t%e lengt%s o!eac%

!" #on$% ! at & type o! lining w%ic% would e reuired) n t%e event t%ese estimates turned out to e uite wrong) o t%eilled lengt% to e le!t unlined was 1 334 m and t%at in !act le!t unlined was 45, m6 t%e illed lengt% !or t%emost e*pensive lining was 2,4 m7 w%ereas t%e actual lengt% o! t%at lining was 2 553 m) As a result o! t%eseune*pected developments wor( on t%e tunnel too( muc% longer t%an e*pected) $%e engineer granted ane*tension o! ,35 days)

$%e contractors %ad een paid at t%e ill rates !or t%e amount o! linings actually carried out) $%ey contendedt%at t%ey were entitled to a !res% determination y t%e engineer o! t%e amount o! t%e rates7 $%e employercontended t%at t%e engineer %ad no power to agree or !i* any ad8usted rates) $%e dispute was re!erred to



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aritration and t%e aritrator stated a special case !or t%e decision o! t%e "ig% Court)

HL& &y t%e "ong #ong Court o! Appeal7 "uggins VP dissenting'9 $%e contractor7 y entering into acontract in t%e !orm w%ic% %e %ad7 %ad agreed to provide so muc% o! eac% o! t%e (inds o! linings as s%ould eactually reuired at t%e uoted rate &see pp) ++-+5')

HL& &y t%e Privy Council'9 :n t%e true construction o! t%e contract and on t%e agreed !acts t%e di!!erencesetween t%e measured uantities and t%e illed uantities were suc% as to entitle t%e engineer7 i! %e t%oug%tt%e amount o! t%e di!!erences was suc% as to ma(e t%e illed rate inapplicale7 to agree a suitale rate wit%t%e contractor or7 in t%e event o! disagreement7 to ! i* a new rate &see p) 54')

"#R ALA! HUGG#!" $-P3

;%atever else t%is case may estalis%7 t%e civil engineers are li(ely to t%in( it estalis%es t%at t%ey %avead8usted to t%e needs o! t%e modern world etter t%an t%e lawyers) $%e ;ater ;or(s :!!ice o! t%e Pulic

;or(s <epartment7 as it t%en was7 decided to ring water in large uantities !rom t%e west o! t%e .ew$erritories to Plover Cove in t%e east) A range o! mountains stood in t%e way and it was decided t%at a tunnels%ould e ored t%roug% t%e mountains !or t%e purpose) $%e contractors were engaged to underta(e t%ewor( and it was eventually completed) "owever7 t%e construction %ad ta(en more t%an !our years instead o!t%e estimated two7 and t%e contractors claimed t%at t%ey s%ould e paid7 pursuant to t%e terms o! t%eircontract7 more t%an t%e overnment &t%e employer' considers it is ound to pay) $%e matter was re!erred toan aritrator7 w%o stated a case !or t%e opinion o! t%e "ig% Court) t is against t%e decision o! t%e "ig% Courtt%at t%e employer now appeals)

As is customary !or civil engineering pro8ects o! t%is magnitude7 t%e contract was contained in severaldocuments7 ut is was e*pressly agreed y clause &1' o! t%e eneral Conditions o! Contract &t%e generalconditions' as !ollows9

!" #on$% ! at '=>*cept i! and to t%e e*tent ot%erwise provided y t%e Contract t%e provisions o! t%ese Conditions s%all prevail overt%ose o! any ot%er document !orming part o! t%e Contract)=

?y clause 1 o! t%e general conditions t%e =Contract= was de!ined as meaning)

=$%e Articles o! Agreement7 $ender &including t%e Appendi* t%ereto' and t%e acceptance t%ereo! y overnment7drawings7 Conditions o! Contract7 peci!ications7 ?ills o! @uantities and c%edules o! Rates &i! any'=)

n t%e event t%e issues we %ave to decide arise not !rom any discrepancies etween t%e di!!erent documentsut !rom an alleged amiguity in t%e terms o! t%e general conditions7 an amiguity w%ic% t%e engineer would

not ac(nowledge7 wit% t%e result t%at %e declined to certi!y t%at t%e contractor %ad een involved in ane*pense w%ic% it %ad no reason to anticipate)

$%e tender documents included drawings7 speci!ications and a ill o! uantities) rom t%ese it appeared t%att%e tunnel wit% w%ic% we are concerned would e appro*imately + 22, m in lengt% =wit% an unlined diameter+)+0 m=) $%e documents provided !or t%e lining o! t%e tunnel w%ere necessary) $%e necessity !or lining andt%e nature o! t%e lining7 i! needed7 depended upon t%e nature o! t%e ground surrounding t%e e*cavation7w%ic% could not e determined wit% any degree o! accuracy e!ore tunnelling commenced) Accordingly si*di!!erent designs %ad een prepared7 one !or unlined sections o! tunnel and !ive7 giving di!!erent degrees o!support7 !or sections o! tunnel w%ic% would reuire permanent lining) $%e decision as to w%ic% permanent



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lining &i! any' was to e inserted was to e decided y t%e engineer w%en t%e eginning o! eac% new sectiono! tunnel was reac%ed7 and %e was given power to c%ange %is mind a!ter eac% section %ad actually eene*cavated) ome geological e*ploration %ad een made7 ut it is common ground t%at suc% in!ormation as%ad een otained le!t muc% uncertainty as to w%at lengt% o! eac% o! t%e permanent linings would ereuired) .evert%eless a ill o! uantities %ad een prepared y t%e employer and it contained estimates o!

t%e lengt%s w%ic% would %ave to e constructed) t is t%e !act t%at t%ose estimates proved to ear little relationto t%e lengt%s actually reuired w%ic% %as led to t%e present dispute) or e*ample7 t%e estimated lengt% o!t%e most e*pensive type o! lining was 2,4 m and t%e actual lengt% constructed was 2 553 m) $%e uantity o!steel estimated as eing reuired !or t%e linings was 50 tonnes and t%e uantity actually used was 2 B5+)31tonnes) $%e contractors tender uoted rates !or all t%e relevant wor( done and materials supplied7 and t%eserates %ave een paid y t%e employer7 ut t%e contractor contends t%at t%e rates were ased on t%eestimated uantities and are unreasonale !or t%e actual uantities e*ecuted7 and it says t%at t%e engineer%as power to vary t%e rates accordingly)

!" #on$% ! at ( As understood %im7 counsel !or t%e employer at t%e very end o! %is reply was in e!!ect contending t%at t%eclaim !or additional payment now made y t%e contractor was e*pressly !oridden y clause 14 o! t%eeneral Conditions7 alt%oug% %e disclaimed any intention to rely on clause 14 !or t%is purpose) Clause 14

reads9=&1' $%e Contractor s%all e deemed to %ave inspected and e*amined t%e ite and its surroundings and to %avesatis!ied %imsel!7 e!ore sumitting %is $ender7 as regards e*isting roads or ot%er means o! communication wit% andaccess to t%e ite7 t%e nature o! t%e ground and su-soil7 t%e !orm and nature o! t%e ite7 t%e ris( o! in8ury or damage toproperty ad8acent to t%e ite or to t%e occupiers o! suc% property7 t%e nature o! t%e materials &w%et%er natural orot%erwise' to e e*cavated7 t%e nature o! t%e wor( and materials necessary !or t%e completion o! t%e ;or(s7 t%eaccommodation %e may reuire and generally to %ave otained %is own in!ormation on all matters a!!ecting %is $enderand t%e e*ecution o! t%e ;or(s)

&2' .o claim y t%e Contractor !or additional payment will e allowed on t%e ground o! any misunderstanding ormisappre%ension in respect o! t%e matters re!erred to in su-clause &1' or ot%erwise or on t%e ground o! any allegationor !act t%at incorrect or insu!!icient in!ormation was given to %im y any person w%et%er in t%e employ o! overnment or not or o! t%e !ailure on %is part to otain correct and su!!icient in!ormation7 nor s%all t%e Contractor e relieved !rom anyris(s or oligations imposed on or underta(en y %im under t%e Contract on any suc% ground or on t%e ground t%at %edid not or could not !oresee any matter w%ic% may in !act a!!ect or %ave a!!ected t%e e*ecution o! t%e ;or(s)=

t was certainly suggested t%at t%e contractor was ma(ing its claim ecause t%e rates uoted were asedupon t%e estimated uantities7 t%at it would %ave uoted %ig%er rates i! it %ad appreciated t%at t%e nature o!t%e ground and susoil was as it was !ound to e7 t%at t%e uotation o! t%e lower rates was due to t%econtractors !ailure to otain correct and su!!icient in!ormation and t%at t%e claim was t%ere!ore made =on t%eground o! DaE misunderstanding or misappre%ension in respect o! t%e matters re!erred to in su-clause &1' )))or on t%e ground o! ))) !ailure on %is part to otain correct and su!!icient in!ormation=) ! t%at was in trut% eingadvanced as an argument !or re8ecting t%e contractors claim in limine7 would re8ect it on two grounds) irst7suc% a contention %ad not een advanced e!ore and it was too late to raise it y way o! reply on an appeal)econdly7 !or reasons w%ic% will %ave to elaorate later7 t%in( t%is contract was concluded on t%e asis t%atit was not reasonaly practicale to otain =correct and su!!icient in!ormation= in t%e sense o! precisein!ormation w%ic% would enale t%e contractor to (now in advance w%at lengt%s o! eac% type o! lining t%eengineer mig%t properly

!" #on$% ! at ) order) do not accept t%at t%e present is t%e sort o! claim w%ic% is !oridden y clause 14&2')

t is unuestionaly part o! t%e employers case t%at t%e claim was arred y clause 4&5' o! t%e generalconditions y reason o! t%e granting o! an e*tension o! time !or completion o! t%e ;or(s) t is common groundt%at t%e engineer did issue an order e*tending t%e time) t was in t%ese terms9



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;ater upplies <epartment7 "ong #ong Additional ;ater upply !rom >ast River - tage $itle Pipelines F $unnels !rom River ndusPumping tation to Plover Cove Contract .o 20 o! 1B,, Variation :rder .o 1$o Mitsui Const Co Ltd Re! ;;:&#' 11/B20/,,Rm 12, :cean Centre

4 Canton Road <ate eptemer 1B32#owloon

Please e*ecute ;or(s as set out elow)

$%is Variation :rder amounts to an estimated increase/decrease in t%e contract sum o! .il

$%e Contract Period is increased y ,35 days) Revised <ate !or completion o! Contract +1 May 1B3+ <escription :!;or(s9

$%e e*tension o! time is granted as special circumstance under clause 4&2' o! t%e eneral Conditions o! Contract tocompensate !or t%e e*tra time reuired to cope wit% ground conditions in e*ecuting t%e tunnel e*cavation and lining

wor(s as !ollows9

$unnel e*cavation +05 days&;< letter re! &11' in ;;:&#' 12/B20/,, dated 13)4)31'$unnel lining 530 days&;< letter re! ;;:&#' 12/B20/,, Part dated 2+)3)32'$otal ,35 daysigned &Lee un-c%eung'C%ie! >ngineer/Construction;ater upplies <epartment

$%e contractors claim7 it is t%en argued7 was !ramed in paragrap% 5 o! t%e contractors rie! to t%e aritratoras one !or compensation !or =reasonale and proper payment !or t%e costs o! t%at e*tra time7 principallyunder clause ,5&5' and &4' o! t%e conditions o! contract=) Clause 4&5' o! t%e general conditions reads9

=Any e*tension o! time granted y t%e >ngineer to t%e Contractor s%all7 e*cept as provided elsew%ere in t%e Contract7e deemed to e in !ull compensation and satis!action !or and in respect o! any actual or proale loss or in8urysustained or sustainale y t%e Contractor in respect o! any matter or t%ing in connection wit% w%ic% suc% e*tensions%all %ave een granted and every e*tension s%all e*onerate t%e

!" #on$% ! at * Contractor !rom any claims or demands on t%e part o! overnment !or or in respect o! any delay during t%e period o!suc% e*tension ut no !urt%er or ot%erwise nor !or any delay continued eyond suc% period)=

$%ere!ore7 counsel argues7 t%e contractor %as e*pressly agreed t%at t%e compensation claimed s%ould not epayale) As understand it7 t%e contractor %as now !ormulated its claim as one !or loss related to7 ut not

necessarily arising directly !rom7 t%e e*tra time reuired) n t%e event not%ing turns upon w%at mig%t edescried as a pleading point7 ecause clause 4&5' is limited y t%e words =e*cept as provided elsew%ere int%e contract=)

$%e issues stated !or t%e determination o! t%e 8udge and !alling !or our decision on t%e appeal and cross-appeal were as !ollows9

& +' ;%et%er on t%e true construction o! t%e contract t%e contractor is entitled to !urt%er compensation !or anylosses sustained y reason o! t%e e*tra time reuired to cope wit% ground conditions)



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&,' ;%et%er on t%e true construction o! t%e contract t%e site instructions re!erred to in paragrap% 4 o! t%estatement o! agreed !acts were variation orders !or t%e purpose o! clause ,+ o! t%e general conditions)

&# ' ;%et%er on t%e true construction o! t%e contract an e*cess o! e*ecuted over illed uantities as set out int%e statement o! agreed !acts7 wit%out %aving een ordered y t%e engineer as a variation7 is wit%in clause,5&5' o! t%e general conditions)

$%e 8udge dealt !irst wit% issue &# ' and we were invited to do t%e same) t must e orne in mind t%at issue&# ' only arises i! a negative answer is given to issue &,'7 !or issue &# ' presupposes t%at

=An e*cess o! e*ecuted over illed uantities as set out in t%e statement o! agreed !acts D%as not eenE ordered y t%eengineer as a variation=)

$%e 8udge7 w%en emar(ing on %is consideration o! issue &# '7 stated it wit%out t%e words w%ic% %aveemp%asised7 i)e) %e assumed t%at t%e particular e*cesses wit% w%ic% we are concerned %ad not een

ordered y t%e engineer7 alt%oug% it is7 o! course7 true t%at %e did eventually give a negative answer to issue&,') t %as een t%e contractors contention7 !irst7 t%at t%e e*cesses were ordered y t%e engineer asvariations and7 secondly7 t%at even i! t%ey were not so ordered t%ey were =wit%in clause ,5&5' o! t%e eneralConditions=)

t is important to ear t%e two contentions in mind t%roug%out)

$%e contractors claim is made under clause ,5&5' o! t%e general conditions7 ut !or a proper understandingo! t%e argument it is necessary to set out t%e fasciculus o! clauses o! w%ic% t%is !orms part9

=,+&1' $%e >ngineer s%all ma(e any variation o! t%e !orm7 uality or uantity o! t%e ;or(s or any part t%ereo! t%at mayin %is opinion e necessary !or t%e completion o! t%e ;or(s and !or t%at purpose or7 i!

!" #on$% ! at !or any ot%er reason it s%all in %is opinion e desirale7 s%all %ave power to order t%e Contractor to do7 and t%eContractor s%all do7 any o! t%e !ollowing9

&a' increase or decrease t%e uantity o! any wor( included in t%e Contract6

&b' omit any suc% wor(6

&c ' c%ange t%e c%aracter or uality or (ind o! any suc% wor(6

&d ' c%ange t%e levels7 lines7 position and dimensions o! any part o! t%e ;or(s6

&e' e*ecute Additional ;or(s and >*tra ;or(s6

and no suc% variation s%all vitiate or invalidate t%e Contract ut t%e value &i! any' o! all suc% variations s%all e ta(eninto account in ascertaining t%e amount o! t%e inal Contract um)

&2' .o suc% variation s%all e made y t%e Contractor wit%out an order in writing !rom t%e >ngineer9

Provided t%at



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&a' no order in writing s%all e reuired !or any increase or decrease in t%e uantity o! any wor( w%ere suc% increase or decrease is not t%e result o! an order given under t%is clause ut is t%e result o! t%e uantities e*ceeding or eing lesst%an t%ose stated in t%e ?ills o! @uantities6

&b' i! !or any reason t%e >ngineer s%all consider it desirale to give any suc% order verally t%e Contractor s%all complywit% suc% order and any con!irmation in writing o! suc% veral order given y t%e >ngineer w%et%er e!ore or a!ter t%e

carrying out o! t%e order s%all e deemed to e an order in writing wit%in t%e meaning o! t%is clause6 and

&c ' i! t%e Contractor s%all con!irm in writing to t%e >ngineer any veral order o! t%e >ngineer and suc% con!irmation s%allnot e contradicted in writing y t%e >ngineer e!ore t%e commencement o! t%e wor( concerned it s%all e deemed toe an order in writing y t%e >ngineer)

,5&1' $%e >ngineer s%all determine t%e amount7 i! any w%ic% in %is opinion s%all e added to or deducted !rom t%eContract um in respect o! any Additional ;or(s or >*tra ;or(s done or wor( omitted y %is order)

&2' All Additional ;or(s or omitted wor( s%all e valued at t%e rates set out in t%e Contract)

&+' All >*tra ;or(s s%all e valued at rates agreed upon etween t%e >ngineer and t%e Contractor)

&5' ! t%e nature or amount o! any omission or addition relative to t%e nature or amount o! t%e ;or(s or to any partt%ereo! s%all e suc% t%at in t%e opinion o! t%e >ngineer t%e rate contained in t%e Contract !or any item o! t%e ;or(s isy reason o! suc% an omission or addition

!" #on$% ! at . rendered unreasonale or inapplicale t%en a suitale rate s%all e agreed upon etween t%e >ngineer and t%eContractor)

&4' n t%e event o! disagreement t%e >ngineer s%all !i* suc% rates as s%all in %is opinion e reasonale and proper)

,4 .o increase o! t%e Contract um or variation o! rate under Clause ,5 s%all e made unless as soon as ispracticale7 a!ter t%e date w%en t%e order was given under clause ,+ and7 in t%e case o! Additional ;or(s or >*tra;or(s e!ore t%e commencement o! t%e wor( or as soon t%erea!ter as is practicale7 notice s%all %ave een given in

writing--

&a' y t%e Contractor to t%e >ngineer o! %is intention to claim e*tra payment or a varied rate6 or

&b' y t%e >ngineer to t%e Contractor o! %is intention to vary a rate as t%e case may e9

Provided t%at no notice s%all e reuired in respect o! Additional ;or(s and omitted wor(s w%ere suc% wor(s are to emeasured as constructed)=

t will e seen at once t%at t%ese clauses deal wit% =variations= and =additions=7 so t%at t%e uestionimmediately arises9 variations and additions to w%atG t is t%is uestion w%ic% is t%e root o! t%e t%ree issues

w%ic% %ave een !ormulated !or our opinion) $%e contractor sumits t%at w%at Mr ;aller %as called =t%enorm=7 ut w%ic% pre!er to re!er to as =t%e ase=7 is t%e uantity o! wor( as estimated in t%e ill o! uantities7w%ereas t%e employer says t%at it is t%e uantity o! wor( necessary to construct t%e tunnel in t%e !orm inw%ic% it was contemplated at t%e time t%e contract was made) :n t%e employers case7 t%ere!ore7 t%econtractors uoted rate !or eac% item in t%e ill o! uantities is applicale and conclusively inding event%oug% t%e estimated uantities were greatly e*ceeded7 w%ereas t%e contractor contends t%at it ceases to econclusively inding i! t%e estimated uantities are so !ar e*ceeded t%at t%e rates ecome unreasonale)"ere7 t%e contractor alleges7 t%e rates %ave ecome unreasonale7 and it is argued t%at it matters not w%yt%ey %ave ecome unreasonale - w%et%er as a result solely o! t%e e*tra time necessary to do t%e wor( or asa result o! a comination o! t%at wit% ot%er reasons7 e)g) t%e e*pense o! %andling t%e e*tra materials reuired)



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ince many o! t%e terms used in t%e general conditions %ave een de!ined in clause 17 must set out t%osew%ic% are important to t%e argument9

=Additional wor(s= means all suc% wor(s w%ic% in t%e opinion o! t%e engineer are o! a c%aracter similar tot%ose contemplated y t%e contract and w%ic% can e measured and paid !or under items in t%e ills o!uantities or sc%edule o! rates)

=Contract sum= means t%e sum named in t%e articles o! agreement !or t%e construction7 completion andmaintenance o! t%e wor(s)

!" #on$% ! at /=>*tra wor(s= means all suc% wor(s as are not7 in t%e opinion o! t%e engineer7 o! a c%aracter similar to t%osecontemplated y t%e contract and w%ic% cannot e measured and paid !or under items in t%e ills o!uantities or sc%edule o! rates)

=inal contract sum= means t%e contract sum su8ect to suc% additions t%ereto or deductions t%ere!rom asmay e made under t%e provisions %erea!ter contained)

=;or(s= means all t%e wor( and t%ings to e e*ecuted or supplied y t%e contractor under t%e contract andincludes temporary wor(s)

=$%e wor(s= are di!!erently de!ined in t%e recitals to t%e articles o! agreement7 w%ic% suggest t%at t%is was toe a lump-sum contract) $%e de!inition !or t%e purpose o! t%ose articles is9

=$%e ;or(s s%own on t%e <rawings and descried in t%e peci!ications and set !ort% in t%e orm o! $ender &includingt%e Appendi*7 t%ereto' and t%e Acceptance t%ereo! y t%e overnment7 ?ills o! @uantities and/or c%edule o! Rates)=

$%e di!!iculty %ere is t%at =t%e ;or(s s%own in t%e <rawings and descried in t%e peci!ications= and =set!ort% in t%e orm o! $ender ))) and t%e Acceptance t%ereo! are not t%e same as t%ose =set !ort% in ?ills o!@uantities=) "owever7 t%e operative words o! t%e articles o! agreement suggest t%at =t%e ;or(s= !or t%epurpose o! t%e articles are all t%e wor(s as de!ined in t%e general conditions ot%er t%an =>*tra ;or(s and

Additional ;or(s as may e ordered or reuired under t%e said Conditions=) $%e operative words areinconsistent wit% a lump-sum contract7 ecause t%e consideration e*pressed ignores t%e recited lump sum7t%e =Contract um= o! t%e general conditions not eing a sum o! w%ic% payment was to e made) ;%en allt%e documents !orming =t%e Contract= are considered7 t%ere is no room to dout t%at t%is was a re-measurement contract7 ut t%at is in no way inconsistent wit% t%e contractors argument as to w%atconstitutes a variation) ndeed7 t%e articles appear to contemplate =Additional ;or(s= w%ic% are only=reuired= and not =ordered= under t%e general conditions)

As is customary in de!inition provisions7 t%e de!initions in t%e general clauses apply =e*cept w%en t%e conte*tot%erwise reuires= and it is ovious t%at t%e conte*t reuires di!!erent meanings to e assigned to t%e word=wor(s= on t%e !irst two occasions on w%ic% it is used in clause ,+&1') $%e meaning assigned y t%e de!initionclause is appropriate on t%e second occasion ut not on t%e !irst9 =t%e ;or(s= !irst re!erred to are t%e ase !or t%e variations &i! any' w%ic% will produce =t%e wor(s= as de!ined) >ually7 t%e word =contract= in paragrap% &a'cannot mean t%e contract as de!ined in clause 1)

?ot% counsel sumit t%at t%eir construction o! clauses ,+-,4 produces a !air result) :n t%e ot%er %and it issaid t%at7 as t%e contractor %ad agreed to insert any o! t%e linings s%own in t%e drawings upon receipt o!



Page B

!" #on$% ! at !" in!ormation !rom t%e engineer as to w%ic% %e %ad c%osen7 t%e contractor %ad assumed t%e ris( t%at t%eengineer would !ind it necessary7 y reason o! t%e ground met during tunnelling7 to direct more o! t%estronger lining t%an %ad een estimated7 so t%at it was !air t%at t%e contractor s%ould e %eld to %is tenderrates7 !or %e s%ould %ave tendered on t%at asis) :n t%e ot%er %and it is said t%at in a civil engineering

contract o! t%is (ind7 w%ere accurate assessment o! t%e conditions underground was recognised to eimpracticale and t%e contract itsel! gave unilateral power to t%e engineer to c%oose w%ic% lining was to eused7 t%e parties cannot %ave intended in e!!ect to emar( upon a gigantic gamle9 t%e greater t%e oviousris( o! gross errors in t%e ill o! uantities7 t%e more li(ely t%e parties would e to ma(e provision !or re-rating)?ot% parties accept t%at t%e aim o! t%e court must e to ascertain t%eir intentions as revealed y t%e contractdocuments7 yet it must e rememered t%at7 i! events %ave operated upon t%e contract to produce a resultw%ic% is disadvantageous &even severely disadvantageous' to one party upon a proper construction o! t%econtract7 t%at does not necessarily mean t%at t%e contract itsel! was un!air) ! we assume !or a moment t%att%e construction contended !or y t%e employer is correct and t%at t%e contractor (new it to e correct w%eninvited to tender7 t%ere were two alternatives open !or t%e avoidance o! t%e ris( to w%ic% Mr ;aller re!ers9eit%er t%e contractor could %ave re!used to tender on t%e asis o! a contract w%ic% may well not e suitale tot%is (ind o! suterranean wor( or it could %ave uoted di!!erent rates !or uantities in e*cess o! t%oseestimated in t%e ill o! uantities) !7 as Mr ;aller suggested7 t%e latter alternative involved suc% massivecalculations as to ma(e it impracticale7 a prudent contractor would %ave adopted t%e !irst alternative) $%ew%ole !oundation o! t%e contractors case was t%e in%erent uncertainty w%ic% e*isted at t%e time t%e contractwas made as to t%e amounts o! laour and materials w%ic% it would e called upon to provide9 so in e!!ect weare as(ed to approac% t%e contract wit% t%e t%oug%t t%at no contractor in %is rig%t mind would %ave agreedand7 in t%e event7 to say t%at t%e parties must %ave intended somet%ing di!!erent) am well aware t%ataut%ority can e !ound !or an approac% w%ic% amounts to t%is7 t%at t%e court s%ould as( itsel! w%at it wouldli(e to decide7 or in ot%er words7 w%at it would itsel! %ave een prepared to agree i! it %ad een in t%e s%oeso! eac% o! t%e parties in turn7 and t%en to construe t%e written terms accordingly7 ut t%at appears to me to ea dangerous and !undamentally wrong approac%) :ne must start wit% t%e written terms and give to t%em t%eir natural and ordinary meaning7 i! t%ey %ave one) $%e assumed intention may e a guide7 ut it must never et%e master) or t%e reasons %ave 8ust given do not t%in( t%at eit%er construction argued e!ore us ma(essuc% commercial nonsense t%at it cannot possily e correct)

do not t%in( t%e argument %as een assisted y re!erences to a

!" #on$% ! at !!=lump-sum contract= and to a =contract !or an unlined tunnel=) As understand it7 a lump-sum contract is onein w%ic% a lump sum is agreed !or t%e completion o! t%e entire pro8ect7 alt%oug% provision may e made !oran increase or decrease i! t%e employer c%anges %is mind during t%e course o! t%e construction as to w%at%e reuires9 see Mr ) .) <uncan ;allace @C on t%e I#0 #onditions of #ontract &4t% edition' at p) +07 w%eret%e aut%or indicates t%at suc% contracts are used w%ere =t%e wor( is capale o! more precise estimation=)$%e contractor %as not suggested t%at t%is was a lump sum contract ut only t%at a lump sum was agreed !or t%e wor( uanti!ied in t%e ill o! uantities7 w%ic% uanti!ication was never intended to e more t%an a asis!or suseuent calculation) Again7 it %as never een suggested y t%e contractor t%at t%is was a contract !oran unlined tunnel9 w%at Mr ;aller sumits is t%at i! t%e engineer %ad !ailed to give in!ormation as to %isreuirement o! permanent lining t%e contractor could %ave gone a%ead on t%e asis t%at no permanent lining

was reuired7 and !rom t%is %e went on to argue t%at any direction to insert a section o! permanent lining wasa =variation order=) &or reasons w%ic% will give later am not persuaded t%at t%e contractor was everentitled to assume t%at no permanent lining was reuired and to proceed accordingly9 it was intended t%at t%eengineer s%ould not only indicate w%ic% lining was to e inserted w%ere a lining was reuired7 ut alsoindicate t%at no lining was to e inserted w%ere %e t%oug%t a lining was not reuired)' Het again7 am unaleto agree t%at t%e contractors argument would even turn t%e contract into a =cost-plus contract=7 !or it is onlyw%en a uoted rate is t%oug%t y t%e engineer to e unreasonale or inapplicale t%at anot%er rate can eapplied under clause ,5&5')

$%e 8udge came to t%e conclusion t%at7 i! clauses ,+-,4 were construed wit%out re!erence to clauses 1+ and



157 t%ey s%owed an intention not to cover t%ose =increases= w%ic% consisted o! t%e di!!erences etween t%eilled uantities and t%e e*ecuted uantities necessarily !lowing !rom t%e giving y t%e engineer o!in!ormation as to w%ic% o! t%e several alternative lining designs s%own in t%e tender documents %e %adselected !or eac% section o! t%e wor(s) $%ere is a danger in t%e present case in re!erring to suc% increasesas =automatic increases=) $%at p%rase was used in 1rinaker #onstruction 2Trans3aal4 25ty4 $td 3 Trans3aal

5ro3incial +dministration &1B32' &1'A&A' ,36 20 ?LR +0 to mean any increase o! t%e uantities s%own in t%eill o! uantities w%ic% was not due to a variation order) n t%at case t%ere was no uestion o! t%e engineersc%oosing etween alternative designs and t%ere!ore no issue w%et%er t%e giving o! in!ormation as to t%ec%oice o! design was a =variation order=) s%all re!er to t%e type o! increases wit% w%ic% we are concerned as=c%oice o! design increases= and t%e wor(s to w%ic% t%ey relate as =c%oice o! design additions=)

Alt%oug% t%e 8udge would %ave construed clauses ,+-,4 in !avour o!

!" #on$% ! at !& t%e employer %ad t%ey stood in isolation7 %e t%oug%t t%at clause 1+ c%anged t%e w%ole tenor o! t%eagreement and s%owed t%at c%oice o! design additions were =additions= in respect o! w%ic% =suitale rates=could e agreed under clause ,5&5') "is initial approac% to clauses ,+-,4 !ollowed t%at adopted y t%eupreme Court o! out% A!rica &Appellate <ivision' in 1rinaker 7 and do not t%in( Mr ;aller was disposed toc%allenge t%e correctness o! t%at decision) $%ere t%e pro8ect was t%e construction o! a road and appurtenantwor(s) Clause 5B o! t%e contract contained t%e sustance o! our clauses ,+-,4 in !ive su-clauses) As in t%epresent case t%ere was a ill o! uantities containing estimates o! eac% item o! wor( t%at would e reuired)

As in t%e present case t%ere were terms in t%e agreement w%ic% le!t no dout t%at t%e uantities stated in t%eill o! uantities were merely estimates and t%at t%e uoted rates were to e applied to t%e measureduantities necessary to complete t%e pro8ect in accordance wit% t%e drawings and speci!ications) $%eestimates turned out to e ad estimates and t%e contractor soug%t payment on t%e asis o! ot%er rates to e!i*ed in accordance wit% a provision comparale to our clause ,5&5') t was %eld t%at7 as t%e increases inrespect o! w%ic% t%e contractor claimed were due not to orders varying t%e uality or uantity o! t%e wor( toe done ut to inaccurate estimation7 no re-rating was possile under t%e terms o! t%e contract) $%e courtsaid t%at t%e asic !law in t%e argument on e%al! o! t%e contractor was t%at it euated a variation o! t%euantity o! t%e wor(s as envisaged in t%e euivalent o! our clause ,+&1' wit% an increase o! t%e uantitiess%own in t%e sc%edule o! uantities) t%in(7 wit% respect7 t%at most o! t%e reasoning o! t%e court was

unassailale7 alt%oug% uestion w%et%er t%e words =!or t%at purpose= in t%at su-clause s%ould &as wassuggested' %ave read =i! !or t%at purpose=9 t%e paragrap% was grammatically and sensily correct as it stood)?eyond pointing out &1' t%at under t%e contract in t%at case t%ere was a limitation w%ic% prevented t%eengineer !rom ordering %ig%er rates !or wor( covered y a variation order unless t%at wor( constituted aspeci!ied proportion o! t%e w%ole wor(s and &2' t%at t%ere could e a re-rating only i! t%e contractor producedevidence o! =loss or damage=7 do not t%in( it is necessary to detail t%e contractual terms7 and merely citet%is passage !rom t%e 8udgement at &1B32' &1'A&A' 34

=$%e sc%eme o! clause 5B demonstrates t%at it deals solely wit% variations emanating !rom orders made y t%eengineer in respect o! t%e matters set out in clause 5B&1'&a' and t%e rig%ts o! t%e contractor emanating t%ere!rom) $%isconcept dominates clause 5B and regulates t%e suseuent unilateral variations y t%e engineer o! t%e contract and isnot concerned wit% a di!!erence on measurement concept) $%e 20 per cent margin in clause 5B&1' was intended togrant a measure o! protection to t%e contractor against suc% unilateral orders o! t%e engineer made a!ter t%e conclusiono! t%e

!" #on$% ! at !'contract and t%e re!erence to suc% 20 per cent and 24 per cent must e read wit%in t%e conte*t o! clause 5B7 i)e) avariation order issued y t%e engineer as a!oresaid) $%at clause 5B deals wit% variation orders issued y t%e engineer&and not an increase or decrease in uantity o! any wor( w%ere suc% increase or decrease is not t%e result o! an ordergiven under t%e a!oresaid clause 5B7 ut is t%e result o! t%e uantities e*ceeding or eing less t%an t%ose stated in t%esc%edule o! uantities' &t%e di!!erence on measurement concept' appears not only !rom t%e e*press wording o! clause5B&1' and &+' ut also !rom t%e !act t%at it is inconceivale t%at notice in terms o! clause 5B&4' would e reuired as aprecondition to a claim y t%e contractor in respect o! suc% increase or decrease in respect o! t%e di!!erence onmeasurement concept) urt%ermore7 t%e provisions o! clause 5B&4' reuire an order and a date6 t%is provision is totallyinapposite to t%e appellants contentions) Moreover7 clause 5B&5' provides t%at7 in t%e case w%ere t%e margin o! 20 percent or 24 per cent is e*ceeded7 t%e engineer s%all !i* ot%er rates or prices su8ect to t%e production o! satis!actoryevidence t%at loss or damage %as een sustained y t%e contractor as a result o! suc% variation or variations) t is



inconceivale t%at t%e contractor can sustain loss or damage in a legal sense simply as a result o! a di!!erence onmeasurement) $%e w%ole asis o! t%e contract is t%at t%e contractor would e*ecute t%e contract wor(s irrespective o!t%e actual uantities involved in carrying t%em out)=

At t%is point must say two t%ings aout t%e argument o! t%e contractor to t%e e!!ect t%at clauses 1+ and 15alter t%e w%ole tenor o! t%e agreement in our case) irst7 t%e argument is ased upon t%e interpretation o!=variation= in clause ,+&1' and7 as we %ave 8ust seen7 does not necessarily con!lict wit% t%e decision in1rinaker 7 ecause o! t%e distinction etween =automatic increases= and =c%ange o! design increases= w%ic% %ave already drawn) An automatic increase is one !or w%ic% no variation order is reuired and Mr ;allerssumission is t%at a giving o! in!ormation as to a lining reuired is a variation order) econdly7 not onlyclauses 1+ and 15 ut also ,+-,4 must e construed in t%e lig%t o! t%e entire contract) ! =variation order= %adeen e*pressly de!ined in clause 2 as including in all conte*ts7 and in particular in clause ,+&1'7 a noticegiving in!ormation as to w%ic% o! t%e speci!ied linings was reuired7 it could %ardly e said t%at t%e resultcontended !or y t%e contractor was impossile) ;e s%all7 t%ere!ore7 %ave to consider w%et%er clauses 1+and 15 were intended to %ave t%e same e!!ect as suc% a de!inition)

now set out t%ose clauses9

=1+) ;%en ?ills o! @uantities are included in t%e $ender documents t%e uality and uantity o! t%e wor( included in t%eContract um s%all e deemed to e t%at w%ic% is set out in t%e ?ills o! @uantities) 15) ;%en ?ills o! @uantities are notincluded in t%e $ender

!" #on$% ! at !(documents t%e Contractor s%all7 prior to signing o! t%e Contract7 provide t%e >ngineer wit% t%ree copies o! a !ully pricedand detailed c%edule o! Rates and t%e appro*imate uantities w%ic% !ormed t%e asis o! t%e Contract um7 and t%euality and uantity o! t%e wor( included in t%e Contract um s%all e deemed to e t%at w%ic% is s%own in t%e<rawings or descried in t%e peci!ication)=

ince a ill o! uantities was included in t%e tender documents in t%e present case7 it is clause 1+ w%ic% isdirectly applicale) $%e e!!ect o! it7 t%e contractor argues7 is t%at t%e uantities estimated in t%e ill o!

uantities ecame t%e ase !or any variations or additions) $%e oscurity o! t%e clause is not reduced y t%eovious con!usion etween t%e wor( and t%e price to e paid !or t%e wor(9 t%e contract sum is a sum o!money and neit%er t%e nature nor t%e uantity o! wor( can e descried in terms o! money) .evert%eless Mr;aller contends t%at w%atever t%e clause was intended to mean7 it must %ave een more t%an a mererepetition o! t%e de!inition o! t%e contract sum in words re!erale to t%e wor(s rat%er t%an to t%e price9 %adt%at een t%e intention t%e dra!tsman need not %ave mentioned =t%e uality and uantity o! t%e wor(=7 norwould it %ave een necessary to =deem= somet%ing w%ic% was a !act9 %e could merely %ave said9 =;%en illso! uantities are included in t%e tender documents7 t%e contract sum s%all e t%e sum otained y addingtoget%er t%e uotations !or all t%e uantities estimated in t%e ills o! uantities)=

Alt%oug% Mr ra%am was unwilling to agree t%at t%e clause could7 i! %is construction were correct7 euallywell %ave een dra!ted in t%at !orm7 %e was unale to suggest w%y t%e dra!tsman s%ould %ave used t%ewords w%ic% cast dout upon t%at construction) do not7 o! course7 overloo( t%e !act t%at a usiness contract

is not to e construed wit% t%e strictness o! a statute7 ut a contract w%ic% re!lects an attempt to attainprecision may !airly e construed more strictly t%an one t%at does not) $%e employers argument7 it seems tome7 does !ail to give any meaning w%atever to sustantial parts o! clause 1+) $%e Contractors argument7 ont%e ot%er %and7 gives some meaning to t%e w%ole su-clause7 even t%oug% t%e suggested intention could%ave een more clearly e*pressed)

$%at suggested intention can e summarised as !ollows) $%e distinction etween clauses 1+ and 15 is t%at7in t%e one7 ills o! uantities are included in t%e tender documents and7 in t%e ot%er7 t%ey are not9 w%ere t%eyare included7 t%ey regulate t%e uality and uantity o! t%e wor( covered y t%e contract sum and7 w%ere t%eyare not included7 t%e uality and uantity o! t%e wor( covered y t%e contract sum are regulated y t%e



drawings and speci!ications) ;%at di!!erence does it ma(e w%ic% document regulates t%e uality and uantityo! t%e wor( covered y t%e contract sumG :r7 to put t%e uestion in anot%er way7 w%at is t%e relevance o! t%euality and uantity o! wor( covered y t%e contract sumG Mr ra%ams argument does not satis!actorilyanswer

!" #on$% ! at !) t%ese uestions) As we %ave seen7 %e suggests t%at clauses 1+ and 15 do no more t%an repeat w%at is sel!evident !rom t%e de!inition o! contract sum and7 to use %is own words7 t%at clause 1+ =means t%at t%econtract sum is t%e grossed-up total o! t%e priced items in t%e ill o! uantities=) "e goes on to e*plain w%yt%e ill o! uantities contains estimated uantities and cites !rom <uncan ;allace on The I#0 #onditions of#ontract 7 4t% edition at p) +0,7 to s%ow w%at are =t%e t%ree uite separate contractual !unctions= o! a ill o!uantities in t%e modern >nglis% contract o! w%ic% uantities !orm part7

=.amely &a' as a asis !or valuing variations7 &b' as a asis !or assessing interim payments and &c ' as aasis !or producing a ! inal re-measurement or re-calculation o! t%e ultimate contract sum7 w%et%er or not t%ewor( %as een varied)=

$%e aut%or continues9=$%is last !unction7 wit% w%ic% t%e present article is primarily concerned7 is !reuently con!used7 even y t%e mostardent and e*perienced protagonists o! ills o! uantities7 wit% t%e variation valuation !unction7 and it is o! cardinalimportance to understand t%e distinction) "ow t%e ultimate uantities can di!!er !rom t%e original contract uantitiesindependently o! any variation o! t%e wor( eing called !or may at !irst sig%t seem puIIling7 ut roadly spea(ing7 t%iscan %appen in two ways) irstly7 w%ile w%erever possile t%e rules !or measuring uantities enale t%em to ecalculated wit% precision !rom t%e drawings and speci!ication wit%out any need !or p%ysical measurement on site7 t%eprecise uantities o! some wor( items cannot e t%e su8ect o! e*act calculation e!ore%and and o!ten will needp%ysical measurement - e)g) t%e removal o! so!t or unsatis!actory material !rom e*cavations and t%e sustitution o!imported !ill7 w%ic% will depend upon t%e ascertainment o! t%e suitaility o! t%e susoil a!ter e*cavation %as ta(en place7and on p%ysical measurement or estimation o! t%e uantities o! unsuitale material ultimately replaced) Again7 separateprices may e included !or e*cavation in roc( w%ere !ound7 w%ic% oviously cannot e determined preciselye!ore%and) $%is type o! di!!erence in uantities is particularly to e e*pected in civil engineering contracts7 or in t%eengineering parts &i)e) e*cavation7 !or e*ample' o! uilding contracts7 and can at times e relatively sustantial)econdly7 t%ere may simply %ave een errors in ta(ing-o!! or estimating t%e uantities !rom t%e contract drawings orot%er documents w%en preparing t%e ills) n a large and complicated pro8ect t%is can easily %appen)=

t is true t%at in t%e present case separate prices were uoted !or eac% o! t%e linings and it oviously couldnot e determined e!ore%and %ow muc% o! eac% would e reuired7 ut t%e case contemplated y Mr<uncan ;allace was not one w%ere a unilateral decision lay wit% t%e

!" #on$% ! at !* engineer9 t%e applicaility o! a particular rate uoted depended on a simple issue o! !act - roc( or no roc(G"ere t%e applicaility o! t%e uoted rates depended upon t%e opinion o! t%e engineer and it was an opinionw%ic% %e was e*pressly allowed to c%ange w%ile t%e e*cavation was in progress) Mr ;aller does not7 t%in(7c%allenge t%e assertion t%at t%ere are t%ree uite separate contractual !unctions o! t%e ill o! uantities9 %econ!ines %imsel! to saying t%at clause 1+ would not e necessary i! it were not in order to estalis% w%at is a

variation !or t%e purpose o! !unction &a') $%e contract sum is de!ined in clause 2 and no !urt%er provision isreuired to s%ow %ow t%at is to e arrived at9 t%e estimated uantities are admittedly necessary !or t%atpurpose and clause 1+ was not necessary to ma(e t%em so) "e sumits t%at t%e only possile intention o!clauses 1+ and 15 is to estalis% t%e ase !or t%e determination o! variations and additions) A comparaleprovision was not reuired in t%e contract in 1rinaker ecause t%ere could e no dout w%at was t%e ase !or t%e determination o! variations and additions or7 t%ere!ore7 w%at constituted a variation or addition) n caseso! t%e (ind we %ave %ere t%e dra!tsman needed to ma(e it clear w%et%er a c%ange o! design addition was orwas not a variation and clauses 1+ and 15 were inserted !or t%at purpose)

t%in( we must assume t%at clauses 1+ and 15 were not inserted merely to e repetitive and to state t%e



Page 1+

ovious7 unless any possile alternative construction raises insolule con!lict wit% ot%er parts o! t%e contract)Mr ra%am contends t%at t%ere is suc% con!lict) irst %e sumits t%at t%e contractors construction con!lictswit% t%e clear intention t%at t%e uantities indicated in t%e ills o! uantities were to e treated as estimatesonly) ndeed7 it is eyond dout t%at t%e contractor must %ave een !ully alive to t%e !act t%at t%ere mig%t edi!!erences etween t%e estimated uantities and t%e uantities measured !or remuneration purposes) $%e

=contract sum= %ere was J32 31 4, and one t%ing is certain9 no one e*pected t%at t%at was t%e precisesum w%ic% would e paid9 it was7 to use R%ind Ks words7 a !igure =w%ic% was arrived at y a totting upe*ercise a!ter multiplying t%e uantities s%own in t%e ills o! uantities y t%e unit rates uoted y t%econtractor=) & s%all re!er to t%ose rates as =uoted rates=') >ually7 no one %as suggested t%at7 i! t%econtractor %ad stopped wor( as soon as it %ad put in all t%e uantities s%own in t%e ills o! uantities7 it would%ave !ul!illed all its oligations) $%at t%e uantities s%own in t%e ills o! uantities were intended to e not%ingmore t%an a roug% estimate was made aundantly clear in several places) ;e can start wit% t%e preamle tot%e ill o! uantities itsel!7 paragrap% + o! w%ic% reads9

=$%e uantities o! wor(s and materials in t%e ?ill o! @uantities are appro*imate only and s%all not e considered aslimiting or e*tending t%e wor( to e done and t%e materials to e supplied y t%e Contractor) All t%e wor( done andmaterials supplied y t%e

!" #on$% ! at ! Contractor will e measured and paid !or at t%e rates uoted in t%e ?ill o! @uantities)=

$%at is ec%oed y clauses B1 and B2&1' o! t%e general conditions9

=B1) $%e uantities set out in t%e ?ills o! @uantities are t%e estimated uantities o! t%e ;or(s ut t%ey are not to eta(en as t%e actual and correct uantities o! t%e ;or(s to e e*ecuted y t%e Contractor in !ul!ilment o! %is oligationunder t%e Contract)

B2) &1' $%e >ngineer s%all7 e*cept as ot%erwise stated7 ascertain and determine y measurement t%e value inaccordance wit% t%e Contract o! wor( done in accordance wit% t%e Contract)=

.e*t Mr ra%am says7 t%e contractors construction con!licts wit% t%e provisions w%ic%

=!i*ed t%e Contractor wit% (nowledge o! t%e nature o! t%e su-soil9 i! t%e $ender was sumitted on t%e asis o! anassumption o! (nowledge o! t%e ground t%roug% w%ic% t%e tunnel would pass it could not %ave een intended to treat ac%oice o! lining as a variation=)

"ere %e points to section 1)1+ o! t%e particular speci!ication7 to clause 14 and to t%e recital in t%e !orm o!tender to t%is e!!ect t%at t%e contractor %as =inspected t%e site=)

$%irdly7 t%e contractors construction is said to con!lict wit% t%e natural construction o! clauses ,+-,4 as acompre%ensive sc%eme !or dealing wit% w%at may e descried as =speci!ication variations=7 all t%e linings%aving een included in t%e speci!ication and drawings)

must deal wit% eac% o! t%ese alleged con!licts in turn) or my part do not see any di!!iculty arising !rom t%e!act t%at t%is was a re-measurement contract) $%e =additions= re!erred to in t%e de!inition o! !inal contract suminclude7 !irst7 increases o! uantities due to underestimation in t%e ills o! uantities) ?y virtue o! clause B2t%e engineer was responsile !or measuring t%e wor( actually done) ! t%at wor( were no more t%an %ad een=contemplated y t%e contract=7 t%e wor( would e paid !or strictly in accordance wit% t%e rates set out in t%eills o! uantities ut ased on t%e actual measurements instead o! on t%e estimates in t%e ills o! uantities)$%us t%e estimated uantities %ave7 prima facie7 no relevance to t%e calculation o! t%e !inal contract sum) $%e=additions= could also include wor(s ordered y t%e >ngineer ut not contemplated y t%e parties at t%e timeo! t%e contract9 =additional wor(s= and =e*tra wor(s=) $%e contractor does not suggest t%at7 i! t%e engineerdoes not consider t%e tender rates =unreasonale or inapplicale=7 t%ey are ot%erwise t%an t%e rates w%ic%



Page 15

oug%t to e paid) All t%at is soug%t is a declaration t%at t%e engineer %as power to apply ot%er rates i! %e is o!opinion t%at t%e tender rates are unreasonale or inapplicale) $%e appropriate rate7 w%atever it may e7 isadmittedly to e applied to t%e uantities as measured and to regard Mr ;allers argument as

!" #on$% ! at !.

implying t%at t%is was a lump-sum contract is to misunderstand it) $%ere is no con!lict %ere) recognise t%atany re-rating would apply to t%e illed uantitites as well as to t%e e*cess over t%e illed uantities7 ut t%at isa matter w%ic% t%e engineer would doutless ear in mind w%en !i*ing a =suitale rate=)

$%e second alleged con!lict7 w%ic% amounts to an argument o! imputed (nowledge7 is allied to t%esumission re!erred to at t%e eginning o! t%is 8udgement to t%e e!!ect t%at a claim !or additional payment wase*pressly !oridden y clauses 14 and 4&5') set out clauses in t%at connection and now need only addsection 1)1+ o! t%e particular speci!ication9

=$%e geological in!ormation given in Appendi* was prepared !rom !ield oservations7 drilled cores and ored samples7t%ese latter are availale !or inspection at t%e ;;: depot at Argyle t7 #ow-loon) overnment does not guarantee t%isin!ormation and t%e Contractor s%all satis!y %imsel! on %is own responsiility as to t%e e*tent w%ic% t%e in!ormationrepresents t%e conditions to e encountered) &<rilling Contractors used !or site investigation9 &1' >npac( Ltd &2'ammons <iv')=

$%e employer cannot %ave it ot% ways9 eit%er t%is is essentially a re-measurement contract or it is not) ! it isand i!7 as is admitted7 ot% sides were well aware o! t%e impossiility o! ascertaining in advance w%atconditions would e met in t%e course o! tunnelling7 it would need very clear language to s%ow an intentionon t%e part o! t%e contractor to contract on t%e asis o! assumed (nowledge) am not persuaded t%at clause14 was intended to relate to t%e ground along t%e site o! t%e tunnel at all9 it concerned an e*amination o! =t%esite and its surroundings= and imputed to t%e contractor only suc% (nowledge as suc% an e*amination y acompetent contractor would reveal) ection 1)1+ merely provided t%at t%e geological in!ormation supplied yt%e employer was not a representation upon w%ic% t%e contractor was entitled to rely9 %e was to satis!y%imsel! as to t%e e*tent to w%ic% t%at in!ormation represented t%e conditions to e encountered) $%at was avery di!!erent t%ing !rom deeming t%e contractor to (now w%at conditions would e encountered - (nowledgew%ic%7 as is to e in!erred !rom t%e terms o! t%e contract itsel!7 no one could ascertain until eac% section was

reac%ed) Moreover7 even precise (nowledge o! =t%e conditions to e encountered= would not enale t%econtractor to say wit% certainty w%ic% particular lining t%e engineer would consider appropriate to t%oseconditions) Mr ra%am t%en relies on section 2))13 o! t%e particular speci!ication7 t%e !irst two paragrap%s o!w%ic% are in t%ese terms9

=n accordance wit% clause 14 o! t%e Conditions o! Contract t%e Contractor s%all e deemed to %ave ascertained t%egeneral nature o! t%e ground t%roug% w%ic% t%e tunnels will e constructed and must

!" #on$% ! at !/ma(e allowance in pricing t%e ?ill o! @uantities !or t%e proaility o! meeting dy(es7 !ault Iones7 water earing groundand !or any contingency w%ic% may e e*pected)

>*cavation !or all tunnelling will e paid !or y t%e linear metre) ;%ere t%e engineer considers t%at t%e ground reuiresminimum temporary support !or ad ground7 %e s%all de!ine t%e tunnel as eing in ad ground) ;%ere tunnelling is not

classi!ied y t%e engineer as eing in ad ground t%e contractor s%all nevert%eless provide suc% support as %econsiders necessary !or t%e sa!ety o! t%e wor(s and t%e rate o! tunnelling s%all allow !or suc% costs) rom t%e portal!aces a minimum o! 10 m will e classi!ied as tunnel in ad ground)=

$%is mig%t at !irst sig%t appear to support t%e employers contention7 ut two t%ings need to e noticed) irst7t%e contractor is not to e deemed to %ave ascertained w%at could oviously not e ascertained ut only =t%egeneral nature o! t%e ground t%roug% w%ic% t%e tunnels will e constructed=) econdly7 w%at %as to eallowed !or is =t%e proaility= o! meeting di!!iculties and !or any contingency =w%ic% may e e*pected=) n myview t%at !alls !ar s%ort o! ma(ing allowance !or any possile di!!iculty w%ic% could e met and !or any



Page 14

contingency w%et%er e*pected or une*pected9 it is common case t%at t%e prolems e*perienced were neit%er proale nor e*pected) $%e rates uoted did ma(e allowance !or t%e proale and e*pected conditions and am not persuaded t%at t%e intention o! t%e parties was =very clear indeed= t%at all ris(s arising !rom adground were to e orne y t%e contractor) $%e second paragrap% o! t%e very section s%ows t%at t%e partieswere contracting on t%e asis t%at t%e e*tent o! t%e ad ground was uncertain and would e de!ined as t%e

e*cavation proceeded)

$wo ot%er provisions must e re!erred to in relation to t%is argument o! imputed (nowledge) irst clause 1reads9

=$%e Contractor s%all e deemed to %ave satis!ied %imsel! e!ore tendering as to t%e correctness and su!!iciency o! %is$ender !or t%e ;or(s and o! t%e rates stated in t%e priced ?ills o! @uantities and t%e c%edule o! Rates7 i! any7 w%ic%rates s%all e*cept in so !ar as it is ot%erwise provided in t%e Contract7 cover all %is oligations under t%e Contract andall matters and t%ings necessary !or t%e proper completion and maintenance o! t%e ;or(s)=

$%is7 again7 is said to s%ow t%at t%e contractor %as assumed all t%e ris(s arising !rom t%e ground conditions) do not t%in( it does so) $%e words =e*cept in so !ar as it is ot%erwise provided in t%e contract= indicate t%att%e uoted rates do not necessarily cover all t%e contractors oligations under t%e contract) Moreover7 t%e

tender was not !or =t%e ;or(s= as de!ined in clause 1 ut !or =t%e ;or(s= as understood in t%e articles o!agreement) t egs t%e uestion we %ave to decide to say t%at t%ose words include t%e wor(s madenecessary y c%oices o! lining) $%e contractor

!" #on$% ! at &" does not deny t%at it must e deemed to %ave satis!ied itsel! as to t%e correctness and su!!iciency o! itstender !or t%e uantities o! wor(s speci!ied in t%e ill o! uantities)

ection 1)14 o! t%e particular speci!ication is also relied upon) t reads9

=$%e Contractor s%all !ul!ill all t%e reuirements and oligations o! all clauses o! t%e Conditions o! Contract andpeci!ications) Rates tendered in t%e ?ill o! @uantities s%all e deemed to include !or everyt%ing necessary to providecomplete and !inis%ed wor( to t%e !ull intent o! t%e <rawings and all wor( s%all e complete and ready !or use to t%e

entire satis!action o! t%e >ngineer wit%out e*tra payment)=

am not clear w%at is t%e signi!icance o! t%e word =!or= a!ter =include=7 ut cannot see t%at t%e paragrap%could possily assist t%e employers argument) $%e drawings do not indicate t%e lengt%s reuired o! eac% o!t%e lining designs) n so !ar as t%e lengt%s do not grossly e*ceed t%e uantity estimated in t%e ill o!uantities it is not disputed t%at t%e uoted rates =include everying necessary to provide complete and!inis%ed wor( to t%e !ull intent o! t%e <rawings=) $%e paragrap% is not inconsistent wit% t%e contention t%at t%eengineer %as power to apply di!!erent rates i! t%e measured lengt%s are suc% t%at t%e uoted rates arerendered unreasonale and inapplicale)

$%e t%ird alleged con!lict reuires us to consider in detail clauses ,+-,4) t is wit% =Variations= t%at clause ,+is concerned) n!ormation as to w%ic% o! t%e speci!ied linings was reuired was wit%out dout necessary !ort%e completion o! t%e wor(s and it would e unreasonale to view t%e contract in t%e lig%t o! a suppositiont%at t%e contractor could complete t%e wor(s in t%e asence o! any suc% in!ormation) t is true t%at section2))+0 o! t%e particular speci!ication does not e*pressly say t%at t%e contractor will e in!ormed i! nopermanent lining is reuired) $%e section is in t%ese terms9

=;%ilst tunnel driving is in progress t%e >ngineer will order t%e type o! permanent lining to e suseuently installedand separate items !or e*cavation are provided according to t%e type o! lining ordered) $%e Contractor will e in!ormedo! t%e type o! permanent l ining reuired !or a lengt% o! tunnel immediately e!ore it is drilled !or lasting and separateitems are provided in t%e ?ill o! @uantities !or additional costs arising !rom t%is decision eing c%anged a!ter t%e lengt%%as een e*cavated)



Page 1

$%ese items s%all include !or all additional overrea( !illing7 relocation o! services7 survey wor( and ot%er necessarywor( and e*cavation necessitated y t%e c%ange o! decision)=

t seems to me t%at t%is s%ows an intention not only t%at t%e contractor would e in!ormed o! t%e type o!

permanent lining reuired w%ere t%e

!" #on$% ! at &!engineer t%oug%t t%at permanent lining was reuired7 ut t%at it would e in!ormed i! t%e engineer t%oug%tpermanent lining was reuired) $%e parties appear to %ave een o! t%at opinion7 since we !ind &!or e*ample insite instructions .os 4 and ,B' directions to e*cavate !or unlined sections) Mr ra%am contends t%at toregard t%e ma(ing o! a c%oice o! speci!ied lining as a =variation= was prima facie to stretc% t%e ordinarymeaning o! t%at word6 %e would %ave us %old t%at suc% a c%oice was not a variation ecause7 w%atever t%ec%oice made7 t%e resulting wor( was no more t%an was contemplated y t%e parties at t%e time o! t%eagreement)

$%e only indication %ave een ale to !ind as to w%at is normally understood y arc%itects and civil

engineers as a =variation= is to e !ound in 6udson7s ,uilding and 0ngineering #ontracts &10t% edition' at p)409

=;or(s w%ic% are not e*pressly or impliedly included in t%e original contract and7 t%ere!ore7 are not included in t%econtract price7 are generally termed variations7 w%et%er t%ey represent a c%ange or alteration o! t%e original wor(7 orsimply an addition to or omission !rom it7 and may occur wit%out aut%orisation y t%e employer or %is arc%itect7 in w%ic%case t%ey will e a reac% o! contract y t%e uilder7 or may e ordered y t%e employer or %is arc%itect)=

Mr ra%am says t%at t%e linings were e*pressly or impliedly included in t%e original contract =and t%ere!ore )))included in t%e contract price=7 ut Mr ;aller says t%at7 alt%oug% it may e t%at t%ey were e*pressly orimpliedly included in t%e original contract7 t%ey were not included in t%e contract sum save to t%e e*tent o! t%euantities stated in t%e ill o! uantities and %e euates =contract sum= to "udsons =contract price=) :nalance incline to t%e view t%at c%oice o! design increases would not normally e regarded as variations

any more t%an would t%e automatic increases in 1rinaker ) t%in( it would e di!!icult to regard t%e giving o!in!ormation as to t%e c%oice o! lining reuired to e a variation order w%ere t%e result was an e*cess over t%euantity speci!ied in t%e ill o! uantities !or a particular lining and not a variation order w%ere it was not) t isalso to e noted t%at c%oices o! lining were in practice noti!ied in t%e !orm o! =ite nstruction= under section2))+0 o! t%e particular speci!ication and not in t%e !orm o! =Variation :rders=7 a !act w%ic%7 alt%oug% notconclusive7 is some indication t%at ot% parties loo(ed upon c%oices o! lining in a di!!erent lig%t !rom t%at inw%ic% t%ey viewed ot%er =variations=) :ne must t%ere!ore rememer t%at7 w%en t%e contractor argues t%at =ast%e tunnel was eing constructed t%e engineer ordered muc% greater lengt%s o! permanent lining t%an %adeen !oreseen=7 t%is egged t%e uestion w%et%er =y reason o! clause 1+7 t%e site instructions were to eregarded as variation orders=)

$o t%is e*tent7 t%ere!ore7 Mr ra%am is rig%t7 t%at %e says t%e contractors construction places a strain on t%eplain language o! clause ,+&1') "owever7 i! t%e c%oice lies etween giving a strained construction

!" #on$% ! at && to clause ,+&1' and giving no e!!ect w%atever to some o! t%e words in clause 1+7 would t%in( t%at t%e !ormeralternative is to e pre!erred) ;%at we %ave to decide is w%et%er t%at strained construction is !orced upon usy clause 1+) :viously t%e answer must e =.o= i! t%e result is to ma(e clause ,+ and its associatedclauses unwor(ale7 and !or t%e moment will assume t%at a c%oice o! design addition is a variation) Clause,+&1' reuires t%e engineer to ma(e necessary variations and con!ers on %im power to give speci!iedconseuential orders to t%e contractor) Paragrap% &a' allows %im to order t%e contractor to =increase ordecrease t%e uantity o! any wor( included in t%e Contract= and para &e' to =e*ecute Additional ;or(s and>*tra ;or(s=) $%e latter paragrap% seems to me to e clear enoug%9 it is paragrap% &a' w%ic% is di!!icult) t



Page 1,

would e impossile to increase t%e wor( included in t%e contract as de!ined in clause 1) ;%at does =wor(included in t%e contract= mean in t%is conte*tG Mr ;aller says in e!!ect t%at it means =wor( uanti!ied in t%eill o! uantities and !orming t%e asis !or t%e calculation o! t%e contract sum=) Mr ra%am says t%atparagrap% &a' was only intended to s%ow t%at an automatic increase &in w%ic% %e would include a c%oice o!design increase' is not a variation at all) ;it% respect7 paragrap% &a' seems to me a strange way o! trying to

ac%ieve suc% an o8ect) Mr ra%am reasonaly says t%at all =t%e wor(s= were contemplated ot%er t%an=additional wor(s and e*tra wor(s=7 ut w%y t%en include paragrap% &a' at all7 since paragrap% &e' coversadditional wor( and e*tra wor(sG

;%atever paragrap% &a' was intended to mean7 t%e clause does seem to contemplate t%at any =variation= tow%ic% it relates s%all e t%e su8ect o! an order) As a general rule t%at order must also e in writing9 clause,+&2') $%at su-clause draws a distinction etween increases w%ic% are =t%e result o! t%e uantitiese*ceeding or eing less t%an t%ose stated in t%e ?ills o! @uantities=) u-clause &2' can only apply w%eret%ere is a variation under su-clause &1' and it !ollows t%at t%e proviso can only apply w%ere su-clause &2'clearly reuires an order in writing !or any variation wit%in su-clause &1' unless suc% variation is anautomatic increase or decrease6 ut suc% an automatic increse or decrease would not7 on Mr ra%amsconstruction7 e a variation wit%in su-clause &1' anyway) $%e di!!iculty is t%at7 i! suc% an automatic increaseor decrease was not a variation in t%e !irst place7 it was unnecessary to insert proviso &a' at all) t is t%us not

t%e contractors construction ut t%e employers construction w%ic% produces di!!iculty %ere) Mr ra%amsee(s to get round t%e di!!iculty y suggesting t%at proviso &a' =is e*planatory and declaratory= and =enalest%e contractor to e paid !or an increase in uantities !or wor( wit%in t%e scope o! t%e contract wit%out it eingdisputed on t%e asis t%at t%ere was no order in writing=) "owever7 t%e contractor could e so paid !or ot%automatic increases and c%oice o! design increases wit%out t%e proviso)

!" #on$% ! at &';e t%en come to clause ,5) u-clause &1' relates to t%e valuation o! additional wor(s and e*tra wor(s doney t%e engineers order) Mr ;aller sumits t%at c%oice o! design additions are additional wor(s and %e see(sto re!ute t%e argument t%at t%ey cannot e additional wor(s ecause t%ey are not =similar to= ut are =t%esame as= =t%ose contemplated y t%e contract= y saying t%at only t%e speci!ied uantities o! linings were=contemplated y t%e contract=) cannot accept t%at) t seems to me clear t%at t%e contract contemplated allt%e linings reuired !or t%e + 22, m o! tunnel) $o t%e e*tent t%at t%e tunnel was e*tended in lengt% y

variation orders t%ere were additional wor(s7 ut to t%e e*tent t%at t%e total lengt% o! all t%e various design!inis%es did not e*ceed + 22, m not%ing was done w%ic% was not =contemplated y t%e contract=) Mr ;allerargued t%at =t%e uestion is not =w%at was contemplated y t%e contract)= ut =was t%is wit%in t%e contractumG= $%e answer to neit%er o! t%ose uestions gives t%e complete answer to our prolem ecause we still%ave to decide w%et%er wor(s can e an =addition= !or t%e purpose o! clause ,5&5' wit%out eing additionalwor(s) :n a strict construction t%ey can7 especially as it would %ave een more logical to place su-clause&5' immediately a!ter su-clause &2' i! =addition= was intended to e synonymous wit% additional wor(s) >venso7 can =additions= include c%oice o! design additionsG $%ere seems to me to e no possile reason !ore*cluding t%em ot%er t%an t%e argument t%at7 despite t%e natural meaning o! clause ,5&5' t%e w%ole o!clauses ,+-,4 appear to provide a compre%ensive sc%eme !or dealing wit% =variations= as t%at word isnormally understood) $%e word =additions= in clause ,5&5' clearly cannot include e*tra wor(s7 t%e rates !orw%ic% are7 y su-clause &+' to e valued at rates agreed upon etween t%e engineer and t%e contractor);%y t%en s%ould t%e dra!tsman not %ave said =additional wor(s= i! t%at is w%at %e meantG "e %ad done so in

su-clauses &1' and &2') t is t%en said t%at clause ,4 operates against suc% a construction7 ecause itappears to contemplate t%at an order under clause ,+ will normally %ave to e made e!ore t%ere can e avariation o! rate under clause ,5&5') Alt%oug% clause ,4 re!ers to =increase o! t%e contract sum= t%at is one o! t%e many e*amples o! ad dra!ting in t%e contract documents and clearly means =amounts added to ))) t%econtract sum= under t%e ot%er terms o! t%e contract9 =t%e contract sum= is as unc%angeale as was t%e law o! t%e Medes and Persians) Clause ,4 cannot %ave een intended to reuire two notices in t%e case o!additional wor(s and e*tra wor(s and it seems to me t%at t%e word =and= at t%e eginning o! t%e t%ird line int%e printed version must o! necessity e read as =or= &wit% all respect di!!er as to t%is !rom t%e 8udges in1rinaker ') Clause ,4 t%ere!ore reuires t%at e!ore t%ere can e a variation o! rate under clause ,5&5' inrespect o! an =addition= w%ic% is not additional wor(s t%ere s%all %ave een notice given =as soon as is



Page 13

practicale a!ter t%e date w%en t%e order was given under clause ,+=)

!" #on$% ! at &(t !ollows t%at an order is necessary e!ore t%ere can e a re-rating under clause ,5&5') :nce again onecomes ac( to t%e uestions w%et%er t%e c%oice o! design additions are suc% t%at a variation order is

reuired and w%et%er site instructions can properly e regarded as variation orders)

$%e 8udge !inds strong support !or t%e contractors contention in 8 #rosby 9 :ons $td v 5ortland ;<# )&1B,' 4 ?LR 121) ;it% respect t%in( %e misunderstood t%at case at least in one respect7 alt%oug% it muste said t%at some o! t%e reasoning in t%e 8udgment is di!!icult to understand) $%ere were two points w%ic%were material to t%e present case) $%e !irst related to t%e materials to e used in per!ormance o! t%e contract)$%e contract gave t%e contractor a c%oice etween using pipes manu!actured y one company and pipesmanu!actured y anot%er) $%e engineer insisted t%at t%e contractor use t%e pipes o! t%e second company)R%ind K !ound it =di!!icult to accept t%at w%ere t%e engineer %as to c%oose etween two items w%ic% are ot%wit%in t%e contemplation to t%e contract %e is some%ow ma(ing a variation=)

$%e answer is t%at7 alt%oug% ot% were wit%in t%e contemplation o! t%e contract7 t%e engineer not only was

not oliged to ma(e a c%oice etween t%em9 %e %ad no rig%t to ma(e it9 it was t%e rig%t o! t%e contractor) ?y!orcing t%e contractor to use t%e pipes o! one particular manu!acturer %e deprived t%e contractor o! %is rig%t o! c%oice and t%erey varied t%e terms o! t%e contract) t was t%ere!ore 8ust t%at t%e contractor s%ould ecompensated) n t%e present case t%e decision as to w%ic% &i! any' lining was to e used in a particularsection o! tunnel was not t%e c%oice o! t%e contractor7 as we %ave seen !rom section 2))+0 o! t%e particularspeci!ication) Accordingly7 y speci!ying t%e type o! lining t%e engineer was e*ercising a rig%t con!erred upon%im and was not depriving t%e contractor o! a rig%t w%ic% elonged to it) $%us t%ere was no variation asnormally understood)

$%e only ot%er point in 8 #rosby 9 :ons $td v 5ortland ;<# is more oscure) $%e aritrator !ound t%at t%ewor( done &including laying7 8ointing and moulding t%e pipes' was =an increase in t%e uantity o! wor( asstated in t%e ?ills o! @uantities=) tem 1 o! t%e ill o! uantities .o 2 allowed !or e*cavation not e*ceeding 4!tdeep and averaging 5!t in deep) $%ere were provisional items to cover =additional e*cavation

supplementary to item 1 to e ta(en out o! trenc% ottoms only over 4!t deep ut not over 10!t deep= and !or=ditto only over 10!t deep ut not over 20!t deep=) $%ere was no provisional item !or laying7 8ointing andmoulding t%e pipes at a dept% elow 4!t) <onaldson K said at p) 1+09

=n my 8udgment t%e e*cavation item was in e*cess o! t%e uantity stated in t%e ills o! uantities and accordingly nowritten variation order was reuired9 &see t%e second sentence in clause 41&2' o! t%e contract)=

$%e second sentence in clause 41&2' was9

!" #on$% ! at &) =Provided t%at no order in writing s%all e reuired !or increase or decrease in t%e uantity o! any wor( w%ere suc%increase or decrease is not t%e result o! an order given under t%is clause ut is t%e result o! t%e uantities e*ceeding oreing less t%an t%ose stated in t%e ?ill o! @uantities)=

$%at t%e e*cavation item was in e*cess o! t%e uantity stated in t%e ills o! uantities would appear to %aveeen a !inding o! t%e aritrator rat%er t%an a decision o! t%e 8udge) $%e 8udge %eld t%at it !ollowed !rom t%at!inding t%at no written variation order was reuired) $%at is understandale) "owever7 t%e 8udge went on9

=! t%e additional e*cavations were suc% t%at in t%e opinion o! t%e engineer &or aritrator' t%e contract rate wasunreasonale or inapplicale7 %e was entitled to vary t%at rate9 see 42&2') $%is is w%at occurred in t%is case)=

;it% respect to %im t%is is not entirely clear) ?y t%e =contract rate= %e appears to mean t%e rate speci!ied in



Page 1B

t%e ills o! uantities !or laying7 8ointing and moulding t%e pipes) Clause 42&2' allowed !or revision o! t%at rate=i! t%e nature or amount o! Dt%eE ))) addition relative to t%e nature or amount o! t%e w%ole o! t%e contract wor(made t%e rate unreasonale=) Presumaly %e regarded t%e laying o! t%e pipes at dept%s o! more t%an 4 !t as%aving produced an addition to t%e uantities stipulated in t%e ills o! uantities in t%e same way as t%ee*cavation to suc% greater dept%s led to one decrease and two additions to t%e various e*cavation items7 ut

was t%at correctG t was7 i! t%e item !or laying7 8ointing and moulding pipes was so e*pressed as to relate onlyto wor( at not more t%an 4!t dept%s7 ut not ot%erwise) ! t%e item %ad een e*pressly !or laying7 8ointing andmoulding pipes t%roug%out =at any dept%s= it could not possily %ave een said t%at t%at item was e*ceeded)$%e report does not indicate t%e terms o! t%is item and can only assume t%at t%e 8udge t%oug%t t%at it7 atleast implicitly7 covered only wor( at not more t%an 4!t dept%s) n t%at event t%ere was7 on t%e one %and7 adecrease o! t%e uantity under t%at item and7 on t%e ot%er7 a uantity w%ic% was not covered y any item andt%ere!ore could not strictly e descried as an =e*cess= or an =addition=) t is t%e words =%e was entitled tovary t%at rate= w%ic% produced t%e di!!iculty) ;%at t%e 8udge appears to %ave done in !act was not to vary acontract rate !or laying7 8ointing and moulding pipes at up to 4!t dept%s ut to supply t%e omitted rates !ordept%s in e*cess o! 4!t) Het %e disclaims %aving done t%at9 %e implicitly re8ected t%e alternative argument !ort%e claimant t%at7 t%ere eing an omission in t%e ills o! uantities7 =t%e >ngineer &and t%us t%e aritrator'DwasE entitled to !i* a price or rate !or laying and 8ointing at dept%s in e*cess o! t%e standard dept%= andaccepted t%e contention =t%at t%e >ngineer was ound or at least entitled to vary t%e ?ill o! @uantity rate int%e e*ercise o! t%e power contained in clause 42&2' o! t%e Contract=) ;%atever t%e real asis o! t%is decision7

!" #on$% ! at &* cannot accept t%e case as good aut%ority !or t%e proposition t%at w%erever a uantity stated in a ill o!uantity is e*ceeded t%e engineer %as power under clause 42&2' o! t%e C> Conditions to increase t%e=contract rate=)

n t%e result !ind not%ing in t%e contract w%ic% ma(es t%e strained interpretations o! =variation= in clause,+&1' completely untenale) :n t%e ot%er %and must decline to give to clause 1+ a meaning w%ic% notmerely deprives it o! all sensile purpose ut introduces concepts o! uantity and uality w%ic% are w%ollyirrelevant to t%e suggested purpose) ;it% t%e 8udge t%in( t%at t%at clause was intended to provide t%atc%oice o! design increases were to e deemed to e variations)

At t%e very least7 it seems to me t%e intention is uncertain) come t%ere!ore7 to t%e contra proferentem rule)Mr ;aller e*pressly said t%at %e did not rely %eavily upon t%is) Alt%oug% suspect %is stance was largelydictated y %is contention t%at t%e intention o! t%e parties was clear7 a contention w%ic% would e inconsistentwit% t%e e*istence o! t%e necessary !oundation !or t%e application o! t%e rule) .evert%eless7 t%e rule wasdescried y Lord elourne in =eill v <uke of <e3onshire &1332' 3 AC 1+47 15B as =well settled=) t will onlye applied in t%e last resort7 w%en all ot%er rules o! construction %ave !ailed to produce a satis!actory answer)Mr ra%am does not suggest eit%er t%at t%e rule is unsound or t%at it does not operate against t%e Crown9%e7 too7 argues t%at t%e intention is clear) n my view i! anyt%ing is clear a!ter nearly a wee( o! argument7 it ist%at t%is contract is an appalling conglomeration o! oscure provisions7 some o! w%ic% %ave een ta(en &notnecessarily in precisely t%e same !orm' !rom sets o! institute clauses %aving a di!!erent conceptual asis andw%ic% cannot conceivaly %ave een intended to mean w%at t%ey plainly purported to say) ;e %ave eenre!erred at lengt% to comparale sets o! institute clauses and to decisions upon t%em) or my part %aveotained no assistance !rom t%is) C%ameleon-li(e7 words can c%ange t%eir colour in a di!!erent conte*t7 andin t%e !inal analysis it is t%e contract signed y t%ese parties t%at we %ave to construe) uc% signposts as t%iscontract contains are contradictory and any one w%o con!idently asserts t%at %e is on t%e rig%t road is asli(ely to !ind %imsel! in ?ag%dad as in Rome) t is in 8ust suc% a case t%at t%e contra proferentem rule can eapplied - and deservedly so) t cannot !airly e said t%at t%e construction contended !or y t%e contractorwould wor( a wrong to t%e employer9 rat%er would it e said t%at t%e construction contended !or y t%eemployer would wor( a wrong to t%e contractor ecause t%e contractor may %ave een misled y t%e !ailureto state clearly w%at t%e employer contends was intended)



n t%e event would up%old t%e decision o! t%e 8udge and o! t%e aritrator on issue &# ')

:n issue &,' t%e employer contends t%at7 even i! =site instructions= could properly e regarded as =variationorders=7 t%e relevant site instructions %ere were ine!!ective as suc%) $%e argument is t%at a

!" #on$% ! at & variation order %as to e signed y t%e engineer and t%at7 alt%oug% clause 2&+' o! t%e general conditionsempowered %im to delegate in writing any o! %is !unctions7 t%e only written delegation did not include are!erence to clause ,+9 t%e site instructions not eing signed y %im7 t%ey could not e variation orders) Mr;aller ac(nowledges t%e !orce o! t%is argument ut see(s to avoid its impact y saying !irst t%at power wasdelegated under =all clauses o! t%e particular speci!ication=7 and t%e letter o! delegation t%ere!ore empoweredt%e senior engineer/construction to give orders under section 2))+07 even i! t%ey were variation orders !ort%e purpose o! clause ,+&1' o! t%e general conditions) econdly7 %e says t%at t%e engineer rati!ied t%e orderso! t%e senior engineer/construction and t%at in any event t%e contractor treated t%e site instructions as validvariation orders and t%at t%e employer paid !or t%e wor( at t%e uoted rates7 so t%at t%e employer cannot nowe %eard to contend t%at t%e orders were invalid) $%e 8udge too( t%e view t%at variation orders under section2))+0 were di!!erent in nature !rom variation orders under clause ,+&1' and t%at a separate delegation undert%e clause was essential e!ore t%e site instructions could e relied upon) Mr ;aller says t%at t%at is to !ail todistinguis% etween t%e power to order and t%e =ministerial act= o! signing t%e order) $%at is7 t%in(7 tooarti!icial a distinction) "owever7 t%e 8udge did not deal wit% t%e argument ased on rati!ication and t%is seemsto me to %ave greater !orce9 i! t%e site instructions are properly to e regarded as variation orders it would lieill in t%e mout% o! t%e employer7 %aving accepted t%eir validity !or t%e purpose o! measurement7 to deny t%eirvalidity !or t%e purpose o! considering increased rates) $%e 8udge7 w%o disagreed wit% t%e aritrator on t%isissue re!erred to =t%e !allacy o! supposing t%at 8ust ecause %ere is an order it is a variation order=) $%atwould7 indeed7 e a !allacy7 ut it is not necessarily a !allacy to suppose t%at a site instruction w%ic% is in trut%a variation order is invalid ecause it is not signed personally y t%e engineer) :n issue &,' would restoret%e decision o! t%e aritrator)

%ave already e*pressed y view at t%e eginning o! t%is 8udgment t%at issue & +' was !ramed upon amisappre%ension o! t%e real asis o! t%e claim) $%e issue does not arise and would say no more aout it)

would dismiss t%e appeal and allow t%e cross-appeal) "owever7 as t%e ot%er two memers o! t%e court %avereac%ed a di!!erent conclusion t%e appeal is allowed7 and issues &,' and &# ' will e answered .o) $%e cross-appeal is dismissed) $%ere will e an order nisi under :rder 527 r) 4A t%at t%e respondent pay t%e costs %ereand elow7 application to vary t%at order to e made wit%in 15 days)

CO!" 'A3

%ave %ad t%e advantage o! reading in dra!t t%e 8udgment w%ic% my lord %as 8ust delivered) $%e ma8oruestion wit% w%ic% we are !aced permits7 as my lord %as amply illustrated7 o! no con!ident

!" #on$% ! at &. answer) :n alance %owever regret t%at %ave come to a di!!erent conclusion)

My main di!!iculty is t%at to t%e e*tent t%at t%ey constitute =variations= or not7 !ind mysel! unale to draw anydistinction etween w%at were termed =automatic increases= in 1rinaker and w%at my lord %as termed=c%oice o! design increases= in t%e present instance) would t%ere!ore e !orced to accept7 as Mr ;allerindeed argued7 t%at any deviation7 %owever small7 !rom t%e !igures contained in t%e ill o! uantities is a=variation= wit%in t%e contract) $%e siIe o! t%e variation would e relevant only i! it were suc% as wouldwarrant an ad8ustment o! t%e rate originally uoted)



t is suggested y Mr ra%am t%at as !ar as automatic increases are concerned 1rinaker %as alreadyprovided t%e answer) Mr ;aller see(s to distinguis% t%at decision on t%e grounds t%at it dealt wit% increasesw%ic% could %ave een discovered !rom t%e actual drawing in t%e very !irst instance and t%at t%e contractt%ere contained no euivalent o! our clause 1+)

$%e !ull provisions o! t%at contract do not appear in t%e report so t%at it is di!!icult to estimate t%e strengt% o!t%ese distinctions) "owever7 uite apart !rom t%at aut%ority7 would not e satis!ied t%at automatic increasesamount to =variations= under t%e present contract) Paragrap% + o! t%e preamle to t%e ill o! uantities states9

=+) $%e uantities o! wor(s and materials in t%e ?ill o! @uantities are appro*imate only and s%all not e considered aslimiting or e*tending t%e wor( to e done and t%e materials to e supplied y t%e Contractor) All t%e wor( done andmaterial supplied y t%e contractor will e measured and paid !or at t%e rates uoted in t%e ?ill o! @uantities)=

$%en again t%ere is clause B1 o! t%e contractual conditions9

=B1) $%e uantities set out in t%e ?ill o! @uantities are t%e estimated uantities o! t%e ;or(s ut t%ey are not to e ta(en

as t%e actual and correct uantities o! t%e ;or(s to e e*ecuted y t%e Contractor in !ul!ilment o! %is oligations undert%e Contract)=

$%ese provisions s%ow t%at t%e contractor was reuired to complete t%e wor( speci!ied in t%e contractdocuments as a w%ole regardless o! t%e actual !igures inserted in t%e ill o! uantities) $%at was %isoligation under t%e contract) t is to my mind inconsistent to suggest t%at y !ait%!ully !ul!illing t%at oligation%e was at t%e same time ma(ing a variation o! it)

;%en it comes to c%oice o! design increases t%e position is strengt%ened y paragrap% 2))+0 o! t%eparticular speci!ication9

=2))+0 ;%ilst tunnel driving is in progress t%e >ngineer will order t%e type o! permanent lining to e suseuently

installed and separate items !or e*cavation are provided according to t%e type o! lining

!" #on$% ! at &/ordered) $%e Contractor will e in!ormed o! t%e type o! permanent lining reuired !or a lengt% o! tunnel immediatelye!ore it is drilled !or lasting and separate items are provided in t%e ?ill o! @uantities !or additional costs arising !romt%is decision eing c%anged a!ter t%e lengt% %as een e*cavated)

$%ese items s%all include !or all additional overrea( !illing7 relocation o! services7 survey wor( and ot%er necessarywor( and e*cavation necessitated y t%e c%ange o! decision)=

$%e details o! t%e various types o! lining are to e !ound in drawings 4B to 2)

Mr ;aller contended t%at t%e contract documents did not reuire t%e contractor =to supply an open endedrate !or any numer o! cominations o! lining w%ic% mig%t %ave ta(en 40 years to complete=)

?ut wit% respect it seems to me t%at7 so !ar as providing t%e actual linings was concerned7 paragrap% 2))+0did 8ust t%at) t may %ave een7 as my lord %as already oserved7 t%at neit%er t%e employer nor t%e contractor e*pected t%at so muc% o! t%e most di!!icult type o! lining would e reuired7 ut t%e oligation to provide it i!necessary was t%ere wit%in t%e contract) All t%at t%e engineer suseuently did was to reuire t%e contractorto ma(e good t%at oligation7 not to vary it in any way)



A consideration o! clauses ,+ to ,4 leads me to no ot%er conclusion) Clause ,+&1' aut%orises t%e engineer toorder w%at would7 upon any view7 e variations Dt%e learned 8udge set out clause ,+&1'9 see pp) -, aoveE)

$%e clause is per%aps not too care!ully worded7 ut in my view we cannot e*pect even !rom standard !ormcontracts t%e meticulous dra!ting appropriate to a statute) Moreover we understand t%at t%e asic !orm o!

contracts suc% as t%ese %as ecome traditional) ta(e t%en %ead &a' to re!er simply to an actual piece or (indo! wor( speci!ically set out in t%e contract7 e)g) a contract to uild a %ouse mig%t include provision !or anoutside patio at t%e ac(7 t%e patio to e o! certain siIe) $%at would seem to me to e aptly descried as a=wor( included in t%e contract=) ! ground conditions suseuently compelled t%e patio to e increased ordecreased in siIe t%e appropriate order could e given under %ead &a') :n t%e ot%er %and7 i! it weresuseuently decided to %ave a patio in t%e !ront as well7 t%at would e an =additional wor(= under %ead &e')t was not included in t%e contract ut is o! a c%aracter similar to wor( t%at was) do not read any signi!icanceinto t%at use o! t%e slig%tly di!!erent wording in t%e de!inition section7 i)e) =contemplated y t%e contract=)$%ere will7 o! course7 e instances w%ere it is not easy to say under w%ic% %ead t%at particular variationwould !all7 e)g) t%e e*tension o! a central %eating system to more rooms in t%e %ouse t%an was originallyplanned7 ut in practice it would not really matter)

$%is view o! clause ,+&1' seems consistent wit% clause ,5) uclauses &2' and &+' o! t%e latter deal wit%additional and e*tra wor(s7 i)e)

!" #on$% ! at '" %ead &e') $%e remaining %eads !all wit%in su-clause &5') $%e purist mig%t argue !or t%e inclusion o! t%e word=c%anges= toget%er wit% =omissions or additions=7 ut ta(en in a road sense t%ose words are su!!icient tocover any (ind o! order t%at t%e engineer is t%ere aut%orised to ma(e)

Clause ,+&2'&a' presents di!!iculties7 !or at !irst glance its presence seems to imply t%at automatic increasesare variations7 ot%erwise it would not e necessary to e*clude t%em !rom t%e need o! a written order) t issuggested y Mr ra%am7 uoting !rom Mr <uncan ;allace @C7 The International #i3il 0ngineering#ontract 7 at p) B39

=$%e present proviso &li(e so many ot%er parts o! t%e contract' spells out w%at t%e position would e in any eventindependently o! t%e proviso7 and it is proaly inserted ex abundante cautela to protect contractors presentingper!ectly proper claims !or measurement o! increased uantities ))) eing met wit% t%e o8ection t%at t%ey lac( an orderin writing)=

%ave eventually come to t%e conclusion t%at t%at must e so) t is per%aps a!ter all not surprising) wouldt%in( t%at t%ose responsile !or standard !orm contracts suc% as t%ese would %ave in mind to reduce t%eneed o! t%ose using t%em to see( particular legal advice and to t%at e*tent t%e standard terms may well ee*planatory as well as contractual)

t is against t%e same ac(ground t%at approac% clause 1+9

=1+) ;%en ?ills o! @uantities are included in t%e $ender documents t%e uality and uantity o! t%e wor( included in t%e

Contract sum s%all e deemed to e t%at w%ic% is set out in t%e ?ills o! @uantities)=

$%e e!!ect o! t%ese7 said t%e 8udge elow7 is t%at =t%e illed uantities ecome t%e measure o! t%e wor(included in t%e contract sum7 so t%at any e*cesses over t%e illed uantities ))) can amount to variation=)

;it% every respect to t%e learned 8udge do not t%in( clause 1+ goes t%at !ar) t is part o! a process w%ic%enales t%e parties to arrive eventually at t%e !inal price to e paid7 and e*plains %ow t%at is to e done w%ena ill o! uantities %as een included in t%e tender documents) Clause 15 e*plains %ow t%at is to e done



Page 2+

w%en t%ere is no ill) t could again per%aps %ave een etter worded - in particular t%ere seems no reason!or t%e use o! t%e words =uality and uantity= - yet am not persuaded t%at t%e actual words c%osen aret%emselves alone su!!icient to c%ange t%e w%ole nature o! t%e contract7 w%ic% to my mind is clearly apparent!rom ot%er parts o! t%e documents)

or t%ese reasons would7 !or my part7 allow t%e appeal wit% respect to uestion &# ') agree wit% my lordt%at uestion & +' does not arise) also agree wit% %is conclusion on w%at appears to e t%e real issue raisedy uestion &,'7 ut i! t%e uestion e ta(en literally an a!!irmative answer would accept t%at t%e c%oice o!design increases were in !act variations) would t%ere!ore dismiss t%e cross-appeal on t%at issue)

10 ConLR 1 at 31

FUA& 'A3

%ave %ad t%e advantage o! reading in dra!t t%e 8udgments 8ust delivered7 and t%e Vice-Presidents review o!t%e !acts7 contractual documents7 issues and sumissions ma(es it possile to ma(e my own oservationsuite rie!)

$%e proper construction o! uilding contracts is a notoriously !ruit!ul source o! litigation and t%e tas( o! a courtw%ere7 as in t%e present case7 t%e competitive arguments are so nicely alanced7 ristles wit% di!!iculties)$%ese di!!iculties are not reduced y t%e !act t%at t%e parties %ave apparently adopted7 as t%ey are !ullyentitled to do7 contractual arrangements drawn !rom di!!erent standard !orms w%ic% do not necessarily %ave acommon conceptual !oundation)

Central to t%e controversy w%ic% still divides t%e parties is t%e uestion w%et%er upon a true interpretation o!t%e contractual documents read as a w%ole7 in t%e lig%t o! t%e agreed !acts7 t%e contractor w%o %as received!ull payment !or all t%e wor( done and materials supplied at t%e rates provided !or in t%e ill o! uantities isentitled to insist upon t%e e*ercise y t%e engineer o! t%e duty imposed upon %im y clause ,5&5' o! t%egeneral conditions to determine w%et%er or not in %is opinion t%e rate !or any particular item %as een

rendered inapplicale so t%at a suitale rate s%ould e agreed or determined) As understood t%e position att%e conclusion o! t%e ale and %elp!ul arguments addressed to us7 it was conceded on e%al! o! t%econtractor t%at no suc% claim could succeed unless %e could ring %imsel! wit%in t%e amit o! clause ,5)

n my view t%e intention o! t%e parties7 e*pressed y t%e words t%ey used7 t%at t%e items in t%e ills o!uantities were to e regarded as mere estimates is made plain y certain e*press provisions in t%eagreement) $%ere is paragrap% + o! t%e preamle to t%e ills o! uantities itsel! w%ic% states t%at t%e=uantities o! wor(s and materials in t%e ?ill o! @uantities are appro*imate only and s%all not e consideredas limiting or e*tending t%e wor( to e done and t%e materials to e supplied )))=) $%en we %ave clause B1 o!t%e general conditions w%ic% provides t%at t%e uantities set out in t%e ill o! uantities gave t%e estimateduantities o! t%e ;or(s ut t%ey are not to e ta(en as t%e actual and correct uantities o! t%e wor(s to ee*ecuted ))) As regards payment7 paragrap% + o! t%e preamle to t%e ills o! uantities stipulates t%at =All t%ewor( done and materials supplied ))) will e measured and paid !or at t%e rates uoted in t%e ills o!uantities= and clause B2&1' o! t%e general conditions reuires t%e engineer to =ascertain and determine ymeasurement t%e value in accordance wit% t%e contract o! wor( done in accordance wit% t%e contract=) would remar( in passing7 t%at i! an oligation to pay !or t%e wor( done and materials supplied eyond t%atstated in t%e ills o! uantities is not to e in!erred !rom clause B1&1'7 t%e matter is put eyond argument yt%e sentence wit% w%ic% paragrap% + o! t%e preamle concludes)

;%at t%en is t%e e!!ect o! clause 1+ o! t%e general conditions in t%e

!" #on$% ! at '&



Page 25

conte*t o! t%e w%ole agreementG $%e learned 8udge t%oug%t t%at t%is was =t%e Ac%illes %eel o! t%eovernments case=7 and Mr ;aller urged upon us t%e construction accepted y t%e 8udge t%at its e!!ect is tode!ine t%e wor(s !or t%e purpose o! clari!ying w%et%er any departure !rom t%e uantities in t%e ills s%all eregarded as a variation)

;it% due respect to t%e arguments advanced e!ore us7 in my opinion7 it is not %elp!ul to attempt tocategorise t%e agreement %ere as a =lump sum contract= or a =measurement and value contract=7 or to see(to attac% to it any o! t%e ot%er laels used y t%e te*t-oo( writers to descrie t%e di!!erent types o! standarduilding contracts encountered) ;e %ave7 o! course7 to e*amine and construe t%e actual words used and allt%at can sa!ely e said as to t%e nature o! t%e contract e!ore us7 is t%at as regards t%e issues t%at !all !ordetermination7 it contains certain !eatures o!7 !or e*ample7 t%e C> Conditions o! Contract and o! t%e R?Aorm)

Clause 1+ o! t%e general conditions states t%at =;%en ?ills o! @uantities are included in t%e $enderdocuments t%e uality and uantity o! t%e wor( included in t%e Contract um s%all e deemed to e t%atw%ic% is set out in t%e ?ills o! @uantities=) Clause 12&1' o! t%e R?A orm contains a parallel provision7 utunli(e our contract7 goes on to provide in su-clause &2' =Any error in description or in uantity or in omissionor items !rom t%e Contract ?ills ))) s%all e corrected and deemed to e a variation reuired y t%e Arc%itect=)

$%e C> Conditions omit any provisions o! t%e (ind 8ust mentioned and contain clauses similar to our clausesB1 &uantities are estimated uantities' and B2&1' &t%e engineer is to measure t%e value o! t%e wor(' - C>clauses7 respectively7 44 and 4)

;%atever mig%t e t%e e!!ect o! provisions drawn on t%e lines o! clauses 44 and 4 o! t%e C> conditions7 oro! clause 12&1' o! t%e R?A orm7 cannot e t%e same as t%e e!!ect o! a contractual arrangement w%ic%includes t%e salient !eatures o! ot% sets o! provisions) Put uite simply7 it seems clear to me t%at t%e duty o!t%e court is to give e!!ect7 i! it is at all possile7 in t%e lig%t o! all t%e ot%er relevant terms7 to clause 1+ and toclauses B1 and B2 o! t%e general conditions) t is7 o! course7 not necessary to resort to clause &t%at t%egeneral conditions prevail over ot%er documents' or to t%e contra proferentem rule unless t%ese provisionscannot e reconciled)

$%e learned 8udge considered t%at =t%e e!!ect o! creating t%e uantity o! wor( included in t%e contract sum aseing t%e same as t%at set out in t%e ills o! uantities in my view is t%at t%e illed uantities ecome t%emeasure o! t%e wor( included in t%e contract sum7 so t%at e*cesses over illed uantities7 provided t%ey aresu!!iciently sustantial to ma(e t%e e*isting rates unreasonale7 can amount to a variation=) And later %e says=clause 1+7 on t%e view ta(e7 ma(es t%e uantities in t%e ills t%e measure o! t%e wor( included in t%econtract sum7 so t%ere is no reason

!" #on$% ! at ''w%y an increase or decrease in t%e uantities o! t%e ills s%ould not amount to a variation o! t%e uantity o!t%e wor(s=)

;it% t%e utmost respect to t%e learned 8udge7 consider t%at t%is was to read into clause 1+ more t%an itsays) ;%ere t%e R?A orm is used7 t%e prolem does not7 o! course7 arise due to t%e e*istence o! clause12&2') ?ut %ere we %ave clause 1+ wit%out t%e euivalent o! R?A clause 12&2'7 and we also %ave paragrap%+ o! t%e preamle to t%e ill o! uantities7 as well as clauses B1 and B2&1') n my 8udgment7 clause 1+ meansno more t%an t%at t%e wor( descried in t%e ills is t%e precise measure o! t%e wor( included in t%e contractsum and in its e!!ect in!ers t%at all ot%er wor( not emraced y t%e contract sum must e paid !or7 anin!erence con!irmed7 in t%is particular contract7 y paragrap% + to t%e preamle to t%e ills and clause B2 o!t%e conditions) $%e clause may indeed add little to t%e ot%er contractual arrangements ut t%is is not to sayt%at it is meaningless) t is not7 a!ter all7 un(nown !or a dra!tsman to include a provision in a contract t%atanot%er reader mig%t regard as otiose)



Page 24

n my view t%e contractor cannot rely on clause 1+ as indicating t%at any e*cess over t%e illed uantitiesamounts to a variation !or t%e purposes o! clauses ,+-,4)

As regards t%e interpretation o! clauses ,+-,4 o! t%e general conditions will add little to w%at %as een saidy my lords) <espite t%e di!!erences in wording etween t%e provisions e!ore us and t%ose considered yt%e Appellate <ivision o! t%e upreme Court o! out% A!rica in 1rinaker #onstruction 2T3l4 25ty4 $td v Trans3aal 5ro3incial +dministration &1B32' &1' A &A' ,37 respect!ully agree wit% and would !ollow t%atdecision7 pre!erring t%e reasoning to t%at adopted y <onaldson K &as %e t%en was' in #rosby v 5ortland;<# &1B,' 4 ?LR 121)

pea(ing in road terms7 w%at mig%t call =variation provisions= commonly !eature in uilding contracts7 !orno rig%t to order variations can e implied) ;%ere t%ere is no e*press power to order t%em a contractor7 o!course7 is not oliged to carry t%em out) And so7 it seems to me t%at7 w%ere a contractor is oliged to docertain wor(7 even t%oug% alternative met%ods o! carrying out t%e wor( are prescried y t%e e*press termso! t%e contract y w%ic% %e %as ound %imsel! &w%et%er upon t%e instruction o! t%e engineer or not'7 t%e wor(actually done cannot y any !air use o! language e said to e a variation7 unless t%e contract ot%erwise

provides) t would e wrong7 t%in(7 to euate oligations w%ic% arise only as t%e result o! an order wit% t%eoligation underta(en y t%e contractor w%en t%e contract was entered into)

$%e matter mig%t per%aps e tested in t%is way) everal provisions o! t%e contractual arrangements arerelevant to t%is point7 ut more speci!ically paragrap% 2))+0 o! t%e particular speci!ication - w%ic% states t%at=w%ilst tunnel driving is in progress t%e engineer will order t%e type o! permanent lining to e suseuentlyinstalled ))) $%e contractor will e

!" #on$% ! at '(in!ormed o! t%e type o! permanent lining reuired !or a lengt% o! tunnel ))) and separate items are provided int%e ills o! uantities !or additional costs !rom t%is decision eing c%anged a!ter t%e lengt% o! tunnel %as eene*cavated )))= n t%e lig%t o! t%is provision7 i! clauses ,+-,4 %ad een omitted7 could it %ave een success!ully

maintained t%at t%e contractors oligations were limited to t%e wor( and t%e supply o! materials contained int%e ills o! uantitiesG t%in( not) or in suc% circumstances7 to read clause 1+ in t%e way urged upon us one%al! o! t%e contractor would7 it seems to me7 to give it t%e e!!ect o! stipulating t%at !or t%e contract sum7 t%econtractor %ad underta(en only to complete certain precisely stated uantities o! wor() $%is is to !ly in t%e!ace o! paragrap% + to t%e preamle to t%e ills o! uantities itsel! and clause B1 o! t%e general conditions) t%in( it would e uite unrealistic to suggest t%at at t%e time agreement was reac%ed eit%er party t%oug%t !orone moment t%at as wor( progressed it mig%t possily turn out t%at t%e uantity o! wor( underta(en %adindeed een precisely estimated) n t%e circumstances7 an increase or decrease in uantities was inevitale)

%ave reac%ed t%e conclusion t%at wit% t%e ac(ground o! t%e agreed !acts and upon a proper construction o! t%e contractual documents7 clauses ,+-,4 o! t%e general conditions %ave no application) $%e contractor %asnot roug%t %imsel! wit%in t%e contemplation o! t%e sc%eme !or ordering and valuing variations envisaged yt%ose clauses and cannot t%ere!ore rely on clause ,5&5') would %ere note t%at in t%e =measurement=

provisions contained in t%e general conditions we are reuired to interpret &clauses B1-B+' t%ere is not%ingeuivalent to clause 4&2' o! t%e C> conditions7 w%ic% e*pressly allows an increase or decrease o! t%e rateto e considered y t%e engineer w%en %e is measuring t%e value o! t%e wor( done)

or t%ese reasons7 in my 8udgement7 eac% o! t%e t%ree uestions raised y t%e preliminary points o! law we%ave to decide s%ould e answered in t%e negative7 and t%e appeal s%ould e allowed on issues & +' and &# 'and t%e cross-appeal dismissed on issue &,')

>+ppeal allowed? cross-appeal dismissed@



Page 2

LOR& R#&G OF HAR.#CH3

$%e appellant company &t%e contractors'7 concluded an agreement wit% t%e "ong #ong overnment &t%e

government'7 represented as a party to t%ese proceedings y t%e Attorney eneral o! "ong #ong7 tounderta(e ma8or civil engineering wor(s reuired to improve "ong #ongs water supply y ringing water!rom t%e River ndus Pumping tation to Plover Cove) $%e only part o! t%e wor(s wit% w%ic% t%is dispute isconcerned is t%e e*cavation and construction o! a tunnel some + 22, m in lengt% and +) m in diameter !romMa Mei "a to .am C%ung) $%e overnment %ad otained certain

!" #on$% ! at ') geological in!ormation w%ic% is descried in t%e contractual documents) ?ut it is common ground t%at7%owever t%oroug% t%e pre-contract site investigations7 t%e nature o! t%e ground t%roug% w%ic% t%e tunnel wasto pass could not e predicted accurately in advance ut would only e discovered as e*cavation proceeded)n t%ese circumstances t%e contract7 not surprisingly7 speci!ied !ive di!!erent types o! lining7 suitale no dout!or di!!erent ground conditions7 ut did not speci!y7 save wit% respect to t%e portals at eit%er end o! t%e tunnel7w%ere lining was to e reuired or o! w%at type) $%e contract provided !or t%is to e decided y t%e engineeras t%e wor( o! e*cavation proceeded) $%e contract7 %owever7 included ills o! uantities priced y t%econtractors wit% re!erence to estimated lengt%s o! tunnel w%ic% were to e le!t unlined and to e lined wit%eac% o! t%e di!!erent types o! lining respectively)

.o one douts t%at t%e estimated lengt%s o! lined and unlined tunnel included in t%e ills were ased on t%eest assessment w%ic% t%e overnments tec%nical advisers were ale to ma(e in t%e lig%t o! t%e geologicalin!ormation availale) n!ortunately t%e estimates turned out to e wildly wrong) $%is can e su!!icientlys%own y re!erence to t%ree items in t%e ills o! uantities and comparing t%e illed uantities wit% t%emeasured uantities o! wor( in t%e event reuired and carried out in eac% case)

$%e illed lengt% o! tunnel to e le!t unlined was 1 334 m6 t%e lengt% le!t unlined in t%e event was 45, m) $%eilled lengt% o! tunnel to e lined wit% t%e %eaviest and most e*pensive type o! lining was 2,4 m6 t%e lengt%

so lined in t%e event was 2 553 m) $%e illed uantity o! steel reuired !or lining support was 50 tonnes6 t%euantity reuired and used in t%e event was 2 B5+ tonnes)

As a result o! t%ese di!!erences wor( on t%e tunnel too( very muc% longer t%an it would %ave done i! t%euality and uantity o! lining reuired %ad corresponded reasonaly closely wit% t%e illed uantities) $%etime allowed y t%e contract !or completion was two years) $%e engineer e*ercised %is power under t%econtract to grant an e*tension o! time o! ,35 days =to compensate !or t%e e*tra time reuired to cope wit%ground conditions in e*ecuting t%e tunnel e*cavation and lining wor(s=) $%e contractors %ave een paid !ort%e wor( as e*ecuted and measured at t%e rates in t%e ills o! uantities) $%ey claim t%at7 in t%e events w%ic%%ave %appened7 t%ey are entitled to an ad8ustment o! rates to e agreed wit% or !i*ed y t%e engineer) $%eposition ta(en y t%e government is t%at7 on t%e true construction o! t%e contract7 t%e engineer %as no powerto agree or !i* any ad8usted rates)

$%e dispute was re!erred to t%e aritration o! "is "onour >dgar ay @C on t%e asis o! a statement o!agreed !acts and t%e contractual documents) $%e issues as !ormulated !or %is decision as preliminary pointso! law were as !ollows9

!" #on$% ! at '* =& +' ;%et%er on t%e true construction o! t%e contract t%e contractor is entitled to !urt%er compensation !or any lossessustained y reason o! t%e e*tra time reuired to cope wit% ground conditions)

&,' ;%et%er on t%e true construction o! t%e contract t%e ite nstructions re!erred to in paragrap% 4 o! t%e tatement o!



Page 2,

Agreed acts were variation orders !or t%e purpose o! clause ,+ o! t%e eneral Conditions)

&# ' ;%et%er on t%e true construction o! t%e contract an e*cess o! e*ecuted over illed uantities as set out in t%etatement o! Agreed acts7 wit%out %aving een ordered y t%e >ngineer as a variation7 is wit%in clause ,5&5' o! t%eeneral Conditions)=

Mr ay made an interim award in t%e !orm o! a special case !or t%e decision o! t%e "ig% Court) "e answeredall t%ree uestions o! law a!!irmatively in !avour o! t%e Contractors) n t%e "ig% Court R%ind K7 in sustance7up%eld t%e aritrator y answering uestions & +' and &# ' a!!irmatively7 t%oug% %e answered uestion &,'negatively) :n appeal y t%e overnment t%e Court o! Appeal reversed t%e 8udge y a ma8ority) All t%oug%tt%at uestion & +' did not arise) Cons and uad KKA answered uestions &,' and &# ' negatively) ir Alan"uggins V-P dissented) "e would %ave answered uestions &,' and &# ' a!!irmatively) $%e contractors nowappeal to "er Ma8esty in Council y leave o! t%e Court o! Appeal)

$%e contract was emodied in a numer o! documents o! w%ic% t%ose presently relevant are t%e articles o!agreement7 t%e general conditions7 t%e particular speci!ication7 and t%e ills o! uantities) t will econvenient7 even i! somew%at cumrous7 to set out en bloc all t%e provisions w%ic%7 in t%eir Lords%ips

8udgment7 are capale o! t%rowing any lig%t on t%e uestion o! construction in dispute)

$%e articles o! agreement contain t%e !ollowing recital9

=;">R>A t%e overnment is desirous o! constructing t%e ;or(s s%own on t%e <rawings and descried in t%epeci!ications and set !ort% in t%e orm o! $ender &including t%e Appendi* t%ereto' and t%e Acceptance t%ereo! y t%eovernment7 ?ills o! @uantities and/or c%edule o! Rates &%ereina!ter re!erred to as t%e ;or(s' in accordance wit%suc% <rawings7 peci!ications7 orm o! $ender &including t%e Appendi* t%ereto' and t%e Acceptance t%ereo! y t%eovernment7 ?ills o! @uantities and/or c%edule o! Rates and in accordance wit% t%e Conditions o! Contract w%ic%<rawings7 peci!ications7 orm o! $ender and Acceptance t%ereo! y t%e overnment7 ?ills o! @uantities and/orc%edule o! Rates are anne*ed %ereto and/or %ave een signed y t%e parties %ereto and ;">R>A t%e Contractor%as agreed to e*ecute t%e said ;or(s !or t%e sum o! <ollars >ig%ty-two Million >ig%t "undred i*teen $%ousand i*"undred i!ty-seven only &3231 4,)00' and to do

!" #on$% ! at ' suc% e*tra wor(s and additional wor(s as may e ordered or reuired upon and su8ect to t%e said Conditions o!Contract &%ereina!ter re!erred to as t%e said Conditions')=

$%e !ollowing are t%e relevant provisions o! t%e general conditions9

=1&1' n t%e Contract t%e !ollowing words and e*pressions s%all %ave t%e meaning %erey assigned to t%em e*ceptw%en t%e conte*t ot%erwise reuires9

Additional ;or(s means all suc% wor(s w%ic% in t%e opinion o! t%e >ngineer are o! a c%aracter similar to t%osecontemplated y t%e Contract and w%ic% can e measured and paid !or under items in t%e ?ills o! @uantities )))

Contract um means t%e sum named in t%e Articles o! Agreement !or t%e construction7 completion and maintenance o!

t%e ;or(s6

>*tra ;or(s means all suc% wor(s as are not7 in t%e opinion o! t%e >ngineer7 o! a c%aracter similar to t%osecontemplated y t%e Contract and w%ic% cannot e measured and paid !or under items in t%e ?ills o! @uantities orc%edule o! Rates6

inal Contract um means t%e Contract um su8ect to suc% additions t%ereto or deductions t%ere!rom as may emade under t%e provisions %ereina!ter contained6

;or(s means all t%e wor( and t%ings to e e*ecuted or supplied y t%e Contractor under t%e Contract and includes



Page 23

$emporary ;or(s)

&1' >*cept i! and to t%e e*tent ot%erwise provided y t%e Contract t%e provisions o! t%ese Conditions s%all prevail overt%ose o! any ot%er document !orming part o! t%e Contract)

&2' u8ect to t%e !oregoing t%e several documents !orming t%e Contract are to e ta(en as mutually e*planatory o! oneanot%er ut in case o! amiguities or discrepancies t%e same s%all e e*plained and ad8usted y t%e >ngineer w%os%all t%ereupon issue to t%e Contractor instructions directing in w%at manner t%e wor( is to e carried out9

1+ ;%en t%e ?ills o! @uantities are included in t%e $ender documents t%e uality and uantity o! t%e wor( included int%e Contract um s%all e deemed to e t%at w%ic% is set out in t%e ?ills o! @uantities)

14&1' $%e Contractor s%all e deemed to %ave inspected and e*amined t%e ite and its surroundings and to %avesatis!ied %imsel!7 e!ore sumitting %is $ender7 as regards e*isting roads or ot%er means o! communication wit% andaccess to t%e ite7 t%e nature o! t%e ground and su-soil7 t%e !orm and nature o! t%e ite7 t%e ris( o! in8ury or damage toproperty ad8acent to t%e ite or to t%e occupiers o! suc% property7 t%e nature o! t%e materials &w%et%er natural orot%erwise' to e e*cavated7 t%e nature o! t%e wor( and materials necessary !or t%e completion o! t%e ;or(s7 t%eaccommodation %e may reuire and

!" #on$% ! at '. generally to %ave otained %is own in!ormation on all matters a!!ecting %is $ender and t%e e*ecution o! t%e ;or(s)

&2' .o claim y t%e Contractor !or additional payment will e allowed on t%e ground o! any misunderstanding ormisappre%ension in respect o! t%e matters re!erred to in su-clause &1' or ot%erwise or on t%e ground o! any allegationor !act t%at incorrect or insu!!icient in!ormation was given to %im y any person w%et%er in t%e employ o! overnment or not or o! t%e !ailure on %is part to otain correct and su!!icient in!ormation7 nor s%all t%e Contractor e relieved !rom anyris(s or oligations imposed on or underta(en y %im under t%e Contract on any suc% ground or on t%e ground t%at %edid not or could not !oresee any matter w%ic% may in !act a!!ect or %ave a!!ected t%e e*ecution o! t%e ;or(s)

,+&1' $%e >ngineer s%all ma(e any variation o! t%e !orm7 uality or uantity o! t%e ;or(s or any part t%ereo! t%at may in%is opinion e necessary !or t%e completion o! t%e ;or(s and !or t%at purpose or7 i! !or any ot%er reason it s%all in %isopinion e desirale7 s%all %ave power to order t%e Contractor to do7 and t%e Contractor s%all do7 any o! t%e !ollowing9

&a' increase or decrease t%e uantity o! any wor( included in t%e Contract6

&b' omit any suc% wor(6

&c ' c%ange t%e c%aracter or uality or (ind o! any suc% wor(6

&d ' c%ange t%e levels7 lines7 position and dimensions o! any part o! t%e ;or(s6

&e' e*ecute Additional ;or(s and >*tra ;or(s6

and no suc% variation s%all vitiate or invalidate t%e Contract ut t%e value &i! any' o! all suc% variations s%all e ta(eninto account in ascertaining t%e amount o! t%e inal Contract um)

&2' .o suc% variation s%all e made y t%e Contractor wit%out an order in writing !rom t%e >ngineer9

Provided t%at--

&a' no order in writing s%all e reuired !or any increase or decrease in t%e uantity o! any wor( w%ere suc% increase or decrease is not t%e result o! an order given under t%is clause ut is t%e result o! t%e uantities e*ceeding or eing lesst%an t%ose stated in t%e ?ills o! @uantities6



Page 2B

&b' i! !or any reason t%e >ngineer s%all consider it desirale to give any suc% order verally t%e Contractor s%all complywit% suc% order and any con!irmation in writing o! suc% veral order given y t%e >ngineer w%et%er e!ore or a!ter t%ecarrying out o! t%e order s%all e deemed to e an order in writing wit%in t%e meaning o! t%is clause6 and

&c ' i! t%e Contractor s%all con!irm in writing to t%e >ngineer any

!" #on$% ! at '/veral order o! t%e >ngineer and suc% con!irmation s%all not e contradicted in writing y t%e >ngineer e!ore t%ecommencement o! t%e wor( concerned it s%all e deemed to e an order in writing y t%e >ngineer)

,5&1' $%e >ngineer s%all determine t%e amount7 i! any7 w%ic% in %is opinion s%all e added to or deducted !rom t%eContract um in respect o! any Additional ;or(s or >*tra ;or(s done or wor( omitted y %is order)

&2' All Additional ;or(s or omitted wor( s%all e valued at t%e rates set out in t%e Contract)

&+' All >*tra ;or(s s%all e valued at rates agreed upon etween t%e >ngineer and t%e Contractor)

&5' ! t%e nature or amount o! any omission or addition relative to t%e nature or amount o! t%e ;or(s or to any part

t%ereo! s%all e suc% t%at in t%e opinion o! t%e >ngineer t%e rate contained in t%e Contract !or any item o! t%e ;or(s isy reason o! suc% omission or addition rendered unreasonale or inapplicale t%en a suitale rate s%all e agreedupon etween t%e >ngineer and t%e Contractor)

&4' n t%e event o! disagreement t%e >ngineer s%all !i* suc% rates as s%all in %is opinion e reasonale and proper)

,4 .o increase o! t%e Contract sum or variation o! rate under clause ,5 s%all e made unless as soon as is practicalea!ter t%e date w%en t%e order was given under clause ,+ and7 in t%e case o! Additional ;or(s or >*tra ;or(s e!ore t%ecommencement o! t%e wor( or as soon t%erea!ter as is practicale7 notice s%all %ave een given in writing--

&a' y t%e Contractor to t%e >ngineer o! %is intention to claim e*tra payment or a varied rate6 or

&b' y t%e >ngineer to t%e Contractor o! %is intention to vary a rate as t%e case may e9

Provided t%at no notice s%all e reuired in respect o! Additional ;or(s and omitted wor(s w%ere suc% wor(s are to emeasured as constructed)

B1 $%e uantities set out in t%e ?ills o! @uantities are t%e estimated uantities o! t%e ;or(s ut t%ey are not to e ta(enas t%e actual and correct uantities o! t%e ;or(s to e e*ecuted y t%e Contractor in !ul!ilment o! %is oligation undert%e Contract)

B2&1' $%e >ngineer s%all7 e*cept as ot%erwise stated7 ascertain and determine y measurement t%e value inaccordance wit% t%e Contract o! wor( done in accordance wit% t%e Contract)=

$%e Particular peci!ication7 y clause 2))+07 provides9=;%ilst tunnel driving is in progress t%e >ngineer will order t%e type o! permanent lining to e suseuently installedand separate items !or e*cavation are provided according to t%e type o! lining ordered)

!" #on$% ! at (" $%e Contractor will e in!ormed o! t%e type o! permanent lining reuired !or a lengt% o! tunnel immediately e!ore it isdrilled !or lasting and separate items are provided in t%e ?ill o! @uantities !or additional costs arising !rom t%is decisioneing c%anged a!ter t%e lengt% %as een e*cavated)=



Page +0

$%e preamle to t%e ills o! uantities7 y clause +7 provides9

=$%e uantities o! wor(s and materials in t%e ?ill o! @uantities are appro*imate only and s%all not e considered aslimiting or e*tending t%e wor( to e done and t%e materials to e supplied y t%e Contractor) All t%e wor( done andmaterials supplied y t%e Contractor will e measured and paid !or at t%e rates uoted in t%e ?ill o! @uantities)=

$%ere is no dispute t%at t%e measured uantities o! relevant wor( e*ecuted in t%e tunnel w%ic% are set outand compared wit% t%e corresponding illed uantities in a document w%ic% !orms part o! t%e statement o!agreed !acts resulted !rom proper compliance y t%e contractors wit% orders given y t%e engineer pursuantto clause 2))+0 o! t%e particular speci!ication) t is eually accepted t%at t%ese instructions were prompted yt%e une*pectedly di!!icult ground conditions encountered in t%e course o! e*cavation)

$%e sumission !or t%e contractors may e rie!ly summarised t%us) n t%e conte*t o! all t%e relevant terms o! t%e contract7 t%e e*pression =any omission or addition=7 w%ose =nature or amount= must e compared wit%=t%e nature or amount o! t%e ;or(s= under clause ,5&5' so as to trigger an ad8ustment o! any rate in t%e illso! uantities7 i! =in t%e opinion o! t%e >ngineer t%e rate contained in t%e Contract !or any item ;or(s is yreason o! suc% omission or addition rendered unreasonale or inapplicale=7 is apt to cover every di!!erence7w%et%er y way o! increase or decrease7 etween t%e uantity o! any item o! wor( priced in t%e ills o!uantities and t%e measured uantity o! wor( e*ecuted w%ic% is covered y t%at item) t is immaterial w%et%er t%e di!!erence results !rom orders given y t%e engineer in e*press e*ercise o! t%e power to =ma(e anyvariation o! t%e !orm7 uality o! uantity o! t%e wor(s or any part t%ereo! under clause ,+&1'7 or7 as in t%iscase7 !rom orders wit% respect to tunnel lining given pursuant to clause 2))+0 o! t%e particular speci!ication7or wit%out any speci!ic order w%en t%e uantity o! measured wor( properly completed in accordance wit% t%econtract turns out !or any reason to di!!er !rom t%e illed uantity)

or t%e overnment it is sumitted7 again in rie! summary7 t%at t%e only =omission or addition= w%ic%uali!ies !or consideration under clause ,5&5' is one w%ic% results !rom an e*press e*ercise y t%e engineero! t%e power to order a variation under clause ,+&1'6 t%at an order under clause 2))+0 o! t%e particularspeci!ication is not suc% an order ecause =t%e ;or(s=7 w%en !irst re!erred to in clause ,+&1' and again inclause

!" #on$% ! at (!,5&5'7 are not to e uanti!ied y re!erence to t%e ills o! uantities ut must e ta(en to emrace w%ateveruality and uantity o! tunnel lining t%e engineer c%ooses in t%e event to order under clause 2))+0 o! t%eparticular speci!ication) Counsel !or t%e overnment relies %eavily on clauses 14 and B1 o! t%e generalconditions and clause + o! t%e preamle to t%e ills o! uantities)

n order to resolve t%e issue arising !rom t%ese rival contentions t%eir Lords%ips do not !ind it necessary togive any answer to uestions & +' or &,') $%e single issue reuiring resolution %as een re!ined as t%e case%as progressed t%roug% t%e courts) @uestion &# ' is not per%aps as precise a !ormulation o! t%at issue as onemig%t %ave wis%ed) ?ut an a!!irmative or negative answer to uestion &# ' will e su!!icient to indicate w%et%er or not t%e engineer %as 8urisdiction7 in t%e events w%ic% %ave %appened7 to consider t%e di!!erences etweent%e relevant measured uantities and illed uantities and7 i! %e is o! opinion t%at t%ose di!!erences are suc%as to render any ill rate =unreasonale or inapplicale=7 to agree a =suitale rate= under clause ,5&5' or !i* anew rate under clause ,5&4')

t is ovious t%at t%is is a adly dra!ted contract) $%is7 o! course7 a!!ords no reason to depart !rom t%e!undamental rule o! construction o! contractual documents t%at t%e intention o! t%e parties must eascertained !rom t%e language t%ey %ave used interpreted in t%e lig%t o! t%e relevant !actual situation in w%ic%t%e contract was made) ?ut t%e poorer t%e uality o! t%e dra!ting7 t%e less willing any court s%ould e to edriven y semantic niceties to attriute to t%e parties an improale and unusinessli(e intention7 i! t%elanguage used7 w%atever it may lac( in precision7 is reasonaly capale o! an interpretation w%ic% attriutes



Page +1

to t%e parties an intention to ma(e provision !or contingencies in%erent in t%e wor( contracted !or on asensile and usinessli(e asis) As already stated7 t%e ground conditions w%ic% would largely dictate t%escope o! t%e tunnel lining wor(s reuired were unpredictale) As t%e overnment t%emselves stated in adocument entitled a =rie! w%ic% was e!ore t%e aritrator in lieu o! a pleading9 =All tunnelling wor( is mainlydetermined y ground c%aracteristics on w%ic% planning and met%ods o! construction are largely dependent=)

Later t%ey added9 =))) time related costs are a signi!icant !actor and are closely determined y groundconditions=)

Against t%is ac(ground o! !acts7 i! t%e contract documents were understood in t%e sense contended !or yt%e overnment7 engineering contractors tendering !or t%e wor( would %ave two options) $%ey could eit%ergamle on encountering more or less !avourale ground conditions or t%ey could anticipate t%e worst caseand price t%eir tenders accordingly) t is clear !rom w%at %appened %ere t%at t%e worst case mig%t doule ormore t%an doule t%e time reuired to do t%e wor( wit% a conseuent increase in time related costs) :n t%isasis7 tenderers gamling on !avourale ground conditions would ris( a large loss7 w%ile

!" #on$% ! at (& conversely7 i! all tenderers anticipated t%e worst case7 ut in t%e event reasonale conditions wereencountered7 t%e overnment would e t%e losers) t !ollows t%at7 i! t%e overnment are rig%t7 t%ere is a largeelement o! wagering in%erent in t%is contract) t seems to t%eir Lords%ips somew%at improale t%at aresponsile pulic aut%ority on t%e one %and and responsile engineering contractors on t%e ot%er7contracting !or t%e e*ecution o! pulic wor(s wort% many millions o! dollars7 s%ould delierately emar( on asustantial gamle)

?y contrast7 i! t%e contractors sumission is correct7 tenderers can and will ase t%eir tenders on t%ee*pectation t%at t%e scope o! t%e tunnelling and lining wor( is reasonaly to e in!erred !rom t%e illeduantities) $%en7 i! une*pectedly ad ground conditions dictate so large a departure !rom t%ose uantities7and conseuent alteration o! t%e scope o! t%e wor(7 t%at7 in t%e opinion o! t%e engineer7 t%e ill rates are=rendered unreasonale or inapplicale=7 t%e rates can e suitaly ad8usted) iven t%e in%erent uncertaintyas to t%e scope o! t%e wor( t%at will e reuired7 a provision to t%is e!!ect would seem an eminently sensilemeans o! ensuring t%at t%e contractors receive no less7 and t%e overnment pay no more7 t%an a reasonale

price !or t%e wor( actually done)

.ot t%e least in!elicity in t%e dra!ting o! t%e contract is t%at it contains two de!initions o! =t%e ;or(s= and usest%e e*pression indi!!erently in ot% senses) ;%ic% meaning is to e attriuted to it can only e ascertained!rom t%e conte*t in eac% case) $%e !irst de!inition is emodied in t%e recital in t%e articles o! agreement setout earlier in t%is 8udgment) $%e parent%esis =&%ereina!ter re!erred to as t%e ;or(s'= !ollows words w%ic%include a re!erence to t%e ills o! uantities) =$%e ;or(s= as so de!ined are uanti!ied y t%e illed uantities)t is y re!erence to t%e wor(s so uanti!ied &re!erred to later in t%e recital as =t%e said ;or(s=' t%at t%econtract sum is calculated) $%is is emp%asised y clause 1+ o! t%e eneral Conditions) t will e convenientto re!er to =t%e ;or(s= in t%is sense as =t%e asic ;or(s=) :n t%e ot%er %and =;or(s=7 as de!ined in clause 1o! t%e eneral Conditions7 is all-emracing and apt to include =Additional ;or(s= and =>*tra ;or(s= ast%erein de!ined) n t%is sense =t%e ;or(s= re!ers to w%at may e conveniently called =t%e e*ecuted ;or(s=)

5rima facie it seems to t%eir Lords%ips clear t%at =t%e ;or(s= w%en !irst re!erred to in clause ,5&5' mustmean =t%e asic ;or(s=) t would !ollow !rom t%is t%at any di!!erence etween illed and e*ecuted uantitiesgives rise to an =omission or addition= t%e nature or amount o! w%ic% is to e considered relative to t%e natureor amount o! t%e asic wor(s as indicated in t%e ills o! uantities) $%eir Lords%ips !ind it di!!icult tounderstand %ow7 on t%e argument advanced !or t%e overnment7 t%e =amount o! t%e ;or(s=7 w%ic% are toprovide t%e standard o! comparison in considering omissions and additions7 can e uanti!ied at all)

"owever7 it is said rig%tly t%at clauses ,+7 ,5 and ,4 o! t%e general



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!" #on$% ! at ('conditions must e read toget%er) $%e argument !or t%e overnment t%en proceeds t%us) $%e words =y %isorder= in clause ,5&1' govern t%e w%ole o! clause ,5) $%ey re!er ac( to variation orders7 strictly so called7under clause ,+) .o suc% order was given %ere) Proviso &a' to clause ,+&2' was inserted ex abundanticautela to protect t%e contractors against a re!usal to pay !or wor( properly carried out wit%out any order

w%ic% results in an increase o! measured uantities over illed uantities7 ut does not dispense wit% t%eneed !or a variation order to activate t%e mac%inery under clause ,5) Li(ewise clause ,4 presupposes t%at avariation order will %ave een given e!ore t%e clause ,5 mac%inery can e set in motion and t%e proviso toclause ,4 does not re!ute t%is presupposition)

Clause ,+&1' raises again t%e uestion o! deciding in w%at sense t%e e*pression =t%e ;or(s= is used) $%eirLords%ips t%in( t%e sense o! t%e opening words must e9 =t%e >ngineer s%all ma(e any variation in t%e !orm7uality or uantity o! t%e asic ;or(s or any part t%ereo! t%at may in %is opinion e necessary !or completiono! t%e e*ecuted ;or(s etc)=) :n t%is reading7 rein!orced y t%e language o! clause ,+&1'&a'7 t%ere is muc% toe said !or t%e view t%at proviso &a' to clause ,+&2' amounts to a deeming provision w%erey any di!!erenceetween measured uantities o! wor( properly carried out pursuant to t%e contract and illed uantities isdeemed to result !rom a variation order) "owever7 it is uite unnecessary to decide w%et%er t%is view is or isnot correct) :n any view it is clear t%at proviso &a' to clause ,+&2' plays an important part in relation to t%e

operation o! t%e mac%inery o! clause ,5)

?y t%e de!inition in clause 1&1' o! t%e eneral Conditions t%e !inal contract sum reuires to e calculated yma(ing additions to or deductions !rom t%e contract sum =under t%e provisions %ereina!ter contained=) $%eonly provision in t%e eneral Conditions to w%ic% t%is de!inition can re!er is clause ,5 and t%ecorrespondence etween t%e language o! clause ,5&1' &=s%all e added to or deducted !rom t%e Contractum=' wit% t%e language o! t%e de!inition is unmista(ale) "ere t%en is t%e only contractual mac%inery yw%ic% t%e di!!erence etween t%e contract sum and t%e !inal contract sum can e determined and t%atdetermination must7 ex concessis7 ta(e account o! di!!erences etween measured uantities o! wor( properlye*ecuted and illed uantities7 w%et%er or not resulting !rom any order given y t%e engineer) Clause ,5&1'and &2' and clause B2&1' toget%er provide t%e necessary mac%inery !or calculating7 y re!erence to t%e ratesin t%e ills o! uantities7 t%e appropriate amount to e added to or sutracted !rom t%e contract sum) $%ere isnot%ing to con!ine t%e operation o! clause ,5&2' to di!!erences etween measured and illed uantities w%ic%

arise !rom variation orders) Contrary to t%e sumission !or t%e overnment7 t%e de!inition o! =Additional;or(s= is not so limited) t !ollows7 alt%oug% t%e dra!ting is inelegant and clumsy7 t%at t%e words =y %is order=in clause ,5&1' must e read su8ect to t%e proviso to

!" #on$% ! at ((clause ,+&2' &a' i! t%e plain purpose o! clause ,5 is not to e !rustrated) $%is enales all di!!erences etweenmeasured and illed uantities to e ta(en duly into account under clause ,5&2') $%eir Lords%ips can see noreason w%y t%ey s%ould not eually e ta(en into account under clause ,5&5')

$%is reading o! clause ,5 is rein!orced y clause ,47 w%ic% applies ali(e to any increase o! t%e contract sumas it does to any variation o! rate) $%is again would lead to asurdity i! it precluded any increase o! t%econtract sum in t%e asence o! an engineers order) ?ut %ere again t%e proviso ma(es clear t%at t%is was not

intended)

Clause ,+ to ,4 emody t%e terms o! t%e contract providing e*pressly !or t%e manner o! calculating t%e !inalcontract sum) t remains to consider w%et%er t%ere is any ot%er provision o! t%e contract capale o! displacingor modi!ying t%e meaning w%ic%7 in accordance wit% t%e views already e*pressed in t%is 8udgment7 t%oseclauses7 and in particular clause ,5&5'7 appear on t%eir !ace to ear) .eit%er clause B1 o! t%e eneralConditions nor clause + o! t%e preamle to t%e ills o! uantities could possily do so) $%e overnment place%eaviest reliance on clause 14 o! t%e eneral Conditions) $%is clause7 so runs t%e argument7 is e!!ective tocast upon t%e contractors all ris(s !rom di!!icult ground conditions7 including t%e ris( t%at t%e uality anduantity o! tunnel lining reuired will di!!er7 no matter to w%at e*tent7 !rom t%e estimates in t%e ills o!



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uantities) $%eir Lords%ips cannot agree) Clause 14 can e given ample content wit%out impinging onclauses ,+ to ,4) nder clause 14 t%e contractors ta(e t%e ris(7 !or e*ample7 t%at in e*cavating particularlengt%s o! tunnel t%ey will encounter un!oreseen di!!iculties !rom roo! and sides repeatedly caving in7 w%ic%can only e met y providing elaorate and e*pensive temporary support) ?ut i! t%e uantities o! tunnel liningwor(s as ordered and e*ecuted under clause 2))+0 o! t%e particular speci!ication are so di!!erent !rom t%e

estimated uantities in t%e ills o! uantities as to attract t%e operation o! clause ,5&5'7 it is uite immaterialt%at t%e engineer may %ave een prompted to order t%ose uantities y t%e nature o! t%e ground conditions)

$%eir Lords%ips cannot %elp t%in(ing t%at muc% o! t%e di!!iculty !elt y ot% courts elow in construing t%econtract e!ore t%em arose !rom t%e attention t%ey devoted to reported decisions on t%e construction o! ot%ercontracts containing supposedly similar provisions) n particular t%e overnment relied on a decision o! t%eout% A!rican Court o! Appeal in t%e case o! 1rinaker #onstruction 2TA$4 25TB4 $td 3 Trans3aal 5ro3incial

+dministration D1B32E 1 ALR ,3) R%ind K and ir Alan "uggins V-P t%oug%t it necessary to distinguis% t%iscase) $%e ma8ority in t%e Court o! Appeal e*pressly purported to !ollow it) ;it% all respect7 t%eir Lords%ipst%in( t%e decision in t%e case o! 1rinaker is simply irrelevant) $%e case was concerned wit% a di!!erentlyworded contract applied to di!!erent !acts)

!" #on$% ! at () Certain p%rases in t%e contract w%ic% %as to e construed in t%e instant case are mirrored y t%e samep%rases in t%e contract w%ic% %ad een construed in t%e case o! 1rinaker ) $o !asten on t%ose p%rases andignore t%e di!!erences in t%e conte*t in w%ic% t%ey were !ound and to treat 1rinaker as a relevant7 even i! onlypersuasive7 aut%ority in t%is case was erroneous) t would e ot% wasted e!!ort and an impertinence !or t%eirLords%ips to consider and e*press a view as to w%et%er 1rinaker was rig%tly or wrongly decided) uc% aview would e o! no assistance in construing t%e contract in t%e instant case)

$%eir Lords%ips must also say respect!ully t%at t%ey t%in( uad KA !ell into error in t%e comparisons %e madeetween some o! t%e terms o! t%e contract presently in issue and analogous ut di!!erently worded terms inot%er !orms o! uilding and engineering contracts commonly in use and in t%e signi!icance %e attac%ed tot%ose comparisons) t is7 o! course7 always legitimate to say t%at parties to a contract mig%t %ave e*pressedt%emselves more clearly t%an t%ey %ave wit% respect to t%e point at issue) ?ut comparison o! one contract

wit% anot%er can seldom e a use!ul aid to construction and may e7 as t%eir Lords%ips t%in( it was in t%iscase7 positively misleading)

$%eir Lords%ips are satis!ied t%at on t%e true construction o! t%e contract and on t%e agreed !acts t%edi!!erences etween t%e measured uantities and t%e illed uantities are suc% as to give 8urisdiction to t%eengineer7 i! %e is o! opinion t%at t%e nature and amount o! t%ose di!!erences relative to t%e nature and amounto! t%e corresponding items in t%e ills o! uantities are suc% as to render t%e illed rate !or any itemunreasonale or inapplicale7 to agree a suitale rate wit% t%e contractors under clause ,5&5' or7 in t%e evento! disagreement7 to !i* a rate under clause ,5&4') $%eir Lords%ips will7 t%ere!ore7 %umly advise "er Ma8estyt%at t%is appeal s%ould e allowed7 t%e order o! t%e Court o! Appeal set aside and t%e order o! R%ind K7 saveas to issues & +' and &,'7 restored) $%e overnment must pay t%e Contractors costs o! t%e proceedings in t%eCourt o! Appeal and e!ore t%e ?oard)

COU!"L

or t%e appellants9 &e!ore "ong #ong Court o! Appeal' Mr Mar( ;aller @C and Roert #otewall6

&e!ore Privy Council' Mr ) #entridge @C and Mr P) .aug%ton &instructed y Lovell ;%ite and #ing')

or t%e respondents9 &e!ore "ong #ong Court o! Appeal' Mr Martin ra%am @C and Mr ra%am ;%eatley&e!ore Privy Council' Mr Martin ra%am @C and Mr P) .unn)

Mitsui Construction Co Ltd v Attorney-Genera

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Transcript of Mitsui Construction Co Ltd v Attorney-Genera