M T Højgaard A/S v E.ON Climate and Renewables UK Robin Rigg East Ltd

M T Højgaard A/S v E.ON Climate and Renewables UK Robin Rigg East Ltd

The correct approach to valuing the omission of the LISA and the addition of the Resolution under the contract is to deduct from the Contract Price the component attributable to the omitted work (the LISA), as reflected in the original pricing, and to add the cost of the additional work required for the Resolution. The Engineer is not entitled to base the deduction on a hypothetical calculation of how long the LISA would have taken or to apply a rate to such time. The valuation must reflect the contribution of the omitted work to the Contract Price, ensuring the contractor is paid for work actually carried out, and not penalised or rewarded based on hypothetical scenarios.

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
Civil Appeal / Appeal From High Court (technology & Construction Court)
Outcome
Appeal dismissed
Legal Topics
Variation Orders, Contract Price Adjustment, Omissions and Additions in Construction Contracts, Valuation of Works, Liquidated Damages
Construction Law Contract Law Variation Orders Contract Price Adjustment Omissions and Additions in Construction Contracts Valuation of Works Liquidated Damages

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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

Civil Appeal / Appeal From High Court (technology & Construction Court)

Legal Issues

  1. 1 How should the financial consequences of the omission of the LISA and the addition of the Resolution be valued under the contract?
  2. 2 Does the valuation of the variation depend on who paid for the Resolution?
  3. 3 Is the Engineer required to ascertain and deduct the component of the original Contract Price relating to the omitted work?

Ratio Decidendi

The correct approach to valuing the omission of the LISA and the addition of the Resolution under the contract is to deduct from the Contract Price the component attributable to the omitted work (the LISA), as reflected in the original pricing, and to add the cost of the additional work required for the Resolution. The Engineer is not entitled to base the deduction on a hypothetical calculation of how long the LISA would have taken or to apply a rate to such time. The valuation must reflect the contribution of the omitted work to the Contract Price, ensuring the contractor is paid for work actually carried out, and not penalised or rewarded based on hypothetical scenarios.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed. The approach of the High Court is affirmed: the deduction from the Contract Price for the omission of the LISA must reflect the original contribution of that work to the Contract Price, not a hypothetical calculation based on time or rates. The Engineer must value the omission and addition...