M T Højgaard A/S v E.On Climate And Renewables UK Robin Rigg East Ltd & Anor [2014] EWCA Civ 710 (22 May 2014)

M T Højgaard A/S v E.On Climate And Renewables UK Robin Rigg East Ltd & Anor [2014] EWCA Civ 710 (22 May 2014)

The adjustment to the contract price following the omission of the LISA vessel must be based on the original contribution of the omitted work to the contract price, as reflected in the contract's price segregation, not on a hypothetical calculation of the time the LISA would have taken. The contract price is a fixed lump sum, and the pricing risk remains with the contractor. The Engineer must approximate the value of omitted works using the contract as a whole, including relevant schedules, under Clause 31.3.

Citation
[2014] EWCA Civ 710
Parties
Claimant/respondent: M T Højgaard A/S; Defendant/appellant: E. ON Climate and Renewables UK Robin Rigg East Ltd; Defendant/appellant: E. ON Climate and Renewables UK Robin Rigg West Ltd
Jurisdiction
England and Wales
Judgment Date
22 May 2014
Procedural Posture
Appeal / Court of Appeal Judgment on Appeal From High Court (tcc)
Outcome
Appeal dismissed
Legal Topics
Variation Orders, Contract Price Adjustment, Omissions and Additions, Valuation of Works, Interpretation of Contractual Clauses
Construction Law Contract Law Variation Orders Contract Price Adjustment Omissions and Additions Valuation of Works Interpretation of Contractual Clauses

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Parties

M T Højgaard A/S

Claimant/respondent

E. ON Climate and Renewables UK Robin Rigg East Ltd

Defendant/appellant

E. ON Climate and Renewables UK Robin Rigg West Ltd

Defendant/appellant

Procedural Posture

Appeal / Court of Appeal Judgment on Appeal From High Court (tcc)

Legal Issues

  1. 1 How should the contract price be adjusted following the omission of the LISA vessel and addition of the Resolution vessel under Variation Orders?
  2. 2 Does the valuation of the omission depend on the time the LISA would have taken or on the original contract price allocation?
  3. 3 Is the approach to valuation affected by who paid for the Resolution?

Ratio Decidendi

The adjustment to the contract price following the omission of the LISA vessel must be based on the original contribution of the omitted work to the contract price, as reflected in the contract's price segregation, not on a hypothetical calculation of the time the LISA would have taken. The contract price is a fixed lump sum, and the pricing risk remains with the contractor. The Engineer must approximate the value of omitted works using the contract as a whole, including relevant schedules, under Clause 31.3.

Court Disposition

Appeal dismissed

Orders

  • The appeal by E. ON is dismissed.
  • The judgment of the High Court (Stuart-Smith J) is affirmed.