HSM Offshore BV v Aker Offshore Partner Ltd

Neutral Citation Number: [2017] EWHC 2979 (TCC) Case No: HT-2016-000156 IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES QUEEN'S BENCH DIVISION TECHNOLOGY AND CONSTRUCTION COURT Royal Courts of Justice Rolls Building, Fetter Lane, London, EC4A 1NL Date: 28 November 2017 Before : THE HON MR JUSTICE COULSON - - - - - - - - - - - - - - - - - - - - - Between : HSM OFFSHORE BV - and - AKER OFFSHORE PARTNER LIMITED Claimant Defendant - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Mr Simon Hughes QC (instructed by Muckle LLP) for the Claimant Mr Adrian Williamson QC and Mr Calum Lamont (instructed by Pinsent Masons LLP) for the Defendant Hearing dates: 4, 5, 9, 10, 11 and 12 October 2017. - - - - - - - - - - - - - - - - - - - - - Judgment Approved The Hon. Mr Justice Coulson : 1. INTRODUCTION 1. 2. 3. 4. The claimant (“HSM”) is a specialist fabricator of offshore process modules, with a fabrication yard (“the yard”) just outside Rotterdam. The defendant (“Aker”) is a global provider of products and services to the oil and gas industry. By a contract dated 11 April 2014, and incorporating the LOGIC Sub-Contract conditions, Aker engaged HSM to carry out the fabrication, load-out and sea fastening of two process modules, M12 and M14 for use on the Clyde Platform for the Flyndre- Cawdor oilfield in the North Sea. The modules were designed by a company affiliated to Aker. The customer was Talisman, who would operate the modules once they were commissioned. In late 2014/early 2015, it became apparent that there were problems at the yard, and the Ready for Sail Away (“RfSA”) date of 10 May 2015 would not be met. HSM and Aker entered into negotiations to try to resolve the difficulties. Those negotiations resulted in a Memorandum of Understanding (“MOU”) dated 18 March 2015. Thereafter, the modules were completed and Sail Away occurred on 10 August 2015. It is common ground that the MOU made a number of changes to the way in which HSM were remunerated for the sub-contract work. Between the period of June and 5. 6. 7. August 2015, there was a good deal of co-operation between the Quantity Surveyors based at the yard and large monthly sums were approved and paid by Aker to HSM. However, following Sail Away and the provision of HSM’s final account, the broad measure of agreement between the parties fell away and a series of specific disputes became apparent. In these proceedings, commenced on 20 June 2016, HSM seek to recover the sums which they say remain outstanding pursuant to the LOGIC Sub-Contract and/or the MOU. Aker dispute those claims, and they also maintain a counterclaim in respect of both liquidated damages and alleged defects. The disputes between the parties might therefore be said to cover every aspect of a fabrication contract: there are disputes as to the construction of the MOU and how it should be read with the original LOGIC Sub-Contract; there are an extensive range of estoppel arguments, designed by HSM to prevent Aker from, as they see it, going back on the approval process adopted between June and August 2015; there are factual disputes; there are disputes of principle as to what items are recoverable; and there are any number of disputes about the quantum of particular items of claim. This case was originally set down for an eight day trial (one reading day and seven further days). It was immediately apparent to me that it was quite impossible to deal with all of the disputes between the parties in that timescale and, for a variety of reasons, the parties were unable to extend the eight day period (although the court could have done). In addition, there were real uncertainties as to the nature, scope and extent of the disputes between the parties because there was no List of Issues and the written openings did not obviously correlate one with the other. Following the reading day, on the first day of the trial proper (4 October 2017), I identified 12 difficulties with the shape and nature of the case as it then stood and the impossibility of it all being shoehorned into what was by then a seven day hearing. However, instead of adjourning the trial, I made it plain that I was happy to resolve as many issues as possible in the time slot that had been allocated. The parties accepted this suggestion. Thereafter, rather confirming the views that I had expressed at the outset, there was a lively debate between them as to what was and what was not in issue between them. This required repeated scrutiny of the pleadings, evidence and other material. I was obliged to give rulings on the second and third days of the trial, in advance of the oral evidence, as to what was and was not in issue. True to form, the parties remained in dispute about the issues between them even during their closing submissions on the last day of the trial, and in the written documents they provided thereafter. 8. In simple terms, the disputes between the parties which were addressed at the trial, were: (a) Whether or not Aker were entitled to bring a counterclaim for liquidated damages; (b) Whether or not Aker were estopped from going behind the figures which had been agreed between June and August 2015; (c) The nature, scope and extent of HSM’s entitlement in principle to recover certain of its pleaded claims for (i) Materials; (ii) Labour Positions; (iii) Management Positions; and (iv) Third Party Costs. 9. I propose to deal with those matters in this way. In Section 2, I set out the relevant terms of the LOGIC Sub-Contract. In Section 3, I set out the MOU. In Section 4, I deal with Aker’s counterclaim for liquidated damages. In Section 5, I address the estoppel argument in respect of the approval of invoices between June and August 2015. In Section 6, I make some general points about the detailed claims, and then at Sections 7, 8, 9 and 10 I deal respectively with the claims for Materials, Labour Positions, Management Positions and Third Party Costs. There is a short summary of my conclusions at Section 11. 2. THE LOGIC SUB-CONTRACT 2.1 10. 11. Time Throughout the LOGIC Sub-Contract, HSM are referred to as “CONTRACTOR” and Aker are referred to as “COMPANY”. The Sub-Contract contained at Section XI a list of Company Key Dates. Milestones 02-05 were the start and finish dates of Mechanical Completion on M12 and M14. Milestone 07 was described as “module ready for Sail Away”. The date for that was stated to be 10 May 2015. In the adjoining “comments” column were the words: “Clause 35.1 Liquidated Damages date”. 12. Clause 35 of the sub-contract provided as follows: “35. LIQUIDATED DAMAGES 35.1 If the CONTRACTOR fails to complete any of the items listed in Appendix 1 to Section I - Form of Agreement in accordance with the relevant date included in the SCHEDULE OF KEY DATES and/or fails to achieve the requirements of the CONTRACT in respect of any other items listed under the heading Clause 35.1 Liquidated Damages in the said Appendix 1, the CONTRACTOR shall be liable to the COMPANY for Liquidated Damages. The amounts of such Liquidated Damages shall be as specified in the said Appendix 1. 35.2 All amounts of such Liquidated Damages for which the CONTRACTOR may become liable are agreed as a genuine pre-estimate of the losses which may be sustained by the COMPANY in the event that the CONTRACTOR fails in its respective obligations under the CONTRACT and not a penalty. Such Liquidated Damages shall be the sole and exclusive financial remedy of the COMPANY in respect of such failure.” 13. Appendix 1 provided: “Liquidated Damages for delay to the Module completion and ready for Sailaway date one hundred an fifty thousand Euros (€150,000) per day to maximum liquidated damages liability of one million five hundred thousand Euros (€1,500,000).” 14. There was no section of the sub-contract dealing with extensions of time. However, Clause 14.7(a) provided as follows: “14.7 Disputed VARIATIONS (a) If at any time the CONTRACTOR intends to claim any adjustment to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES additional to that previously determined by the COMPANY for a VARIATION issued by the COMPANY or requested by the CONTRACTOR shall give notice in writing of such intention without delay after the happening of the events giving rise to such claim. the CONTRACTOR, Such events shall include but not be limited to the following: (i) (ii) rejection by the COMPANY of a request for the a VARIATION made by CONTRACTOR; any VARIATION where effect on CONTRACT PRICE and/or SCHEDULE OF KEY DATES cannot be determined at the time. Upon the happening of such events the CONTRACTOR shall keep such contemporary records as may reasonably be necessary to support any claim it may subsequently wish to make. (b) Upon receipt by the COMPANY of any such notice of claim, and without necessarily admitting any liability, the COMPANY may instruct the CONTRACTOR to keep such contemporary records or further contemporary records as the case may be as are reasonable and may be material to the claim of which notice has been received and the CONTRACTOR shall keep such records, copies of which shall be supplied to the COMPANY as and when the COMPANY may direct. (c) The CONTRACTOR shall send to the COMPANY at the end of every month an account giving particulars, as full and detailed as possible, of all such claims. (d) If the CONTRACTOR does not give notices and/or does not submit records and accounts in accordance with the provisions of Clauses 14.7(a), 14.7(b) and 14.7(c) the CONTRACTOR shall, at the sole discretion of the COMPANY, forfeit any right to receive any adjustment to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES in respect of any such claims. (e) Where any matter in respect to adjustments to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES has not been finalised and without prejudice to the rights of either the COMPANY or the CONTRACTOR, the COMPANY having taken into account the relevant provisions of the CONTRACT and all other relevant factors, will make such adjustments as it considers to be fair and reasonable. The COMPANY will inform the CONTRACTOR of decisions reached in this respect and will make appropriate payments in accordance with such decisions.” This was the term which allowed HSM to seek adjustment to the date for RfSA. It related only to variations, so was of limited effect. Any act of prevention by Aker outside Clause 14 would, on the face of it, render the liquidated damages mechanism inoperable. 2.2 15. Remuneration and Payment Section III of the sub-contract was headed ‘REMUNERATION’. The section entitled ‘Principles of Contract Pricing’ included the following: “Preliminaries shall compensate CONTRACTOR for compliance wit the obligations of the CONTRACT and provision of project management and fabrication facilities and construction facilities for the complete service provision and facilities that may be required and associated with the construction and mechanical completion. CONTRACTOR shall present a payment profile for preliminary lump sums. Compensation to CONTRACTOR for WORK installed and certified mechanically complete shall be in accordance with the rates and prices contained within the Bills of Quantities – quantities of WORK shall be measured by CONTRACTOR and presented to COMPANY for review, check and approval and compilation of the final CONTRACT price.” 16. There was a General Preambles section. Section D of that was entitled ‘Measurement of Work’. Particular parts of that provision to which reference was made during the trial were: “D2. All items of Work are measured net as fixed/completed in final position as shown on the design documentation or Approved For Construction (AFC) drawings and no allowance is made in the quantities for waste. … D5. Quantities contained in the BOQ are not to be taken as the final quantities. The final quantities. The items and quantities of Work to be executed may vary considerably. Any variation, omission or addition should be dealt with in accordance with the CONTRACT and the rates shall apply irrespective of the finally agreed quantities. The CONTRACTOR has, therefore, included in its preliminary costs, against the respective items in Discipline 1 – Preliminaries, all costs and has not included such costs in the measured rates or as an overall percentage in general summary… D8. Where any measurement of quantities on site (i.e. in the field) is required, all methodology used shall be Approved by COMPANY in advance of any measurements taking place. CONTRACTOR shall give COMPANY adequate prior notice of any measurements taking place in order to allow COMPANY the opportunity to attend same. Any failure on part of COMPANY to attend same shall not relieve COMPANY’s right to question CONTRACTOR’s measure.” 17. Section E of the General Preambles was concerned with Rates and Prices. Section E1 began: “The lump sums, rates and prices are deemed to be fully inclusive of all items necessary to complete the WORK and include, but not be limited to… There is then a lengthy list of what was deemed to be included in the lump sums, including “all supervision, consumables, temporary block-works and facilities, transport, haulage, maintenance and running costs of plant”. 18. 19. Section 1.2 of the ‘Preambles to Bills of Quantities’ was entitled ‘Contractor’s Facilities and Equipment’. The lump sum for that work was deemed to include “… item of fixed permanent Plant and operating labour for permanent Plant…” (1.2.2). Section 1.3, which dealt with ‘CONTRACTOR’S MANAGEMENT, SUPERVISION AND STAFF’, identified all the things deemed to be included in the lump sum for that item, including all project management, cost and planning, programming and the like. There was Remuneration Summary which showed that the lump sum elements totalled €14,386 million. The lump sum for Contractors Facilities, Scaffolding and equipment was €1.1 million. For management supervision and staff, the lump sum was €1.75 million. There was also a Schedule of Daywork Rates, divided into Table 1 - Labour1, Table 2 - Plant and Equipment, and Table 3 - Mark-Ups for supply of Materials, Services, Plant and Equipment. 20. The provisions of Clause 17 were concerned with the terms of payment. Clauses 17.1-17.9 provided as follows: “17. TERMS OF PAYMENT 17.1 For the performance and completion of the WORK, the COMPANY shall pay or cause to be paid to the CONTRACTOR the amounts provided in Section III- Remuneration at the times and in the manner specified in Section III and in this Clause. 17.2 Except where it is expressly provided that the COMPANY shall carry out an obligation under the 1 Although the heading of Table 1 is ‘Labour’ it is a table that sets out both labour and management roles (or ‘positions’ as they were called by the parties throughout). The management/supervision roles include ‘Project Manager’, ‘Project Engineer’, ‘Procurement Advisor’ and the like. 17.3 17.4 CONTRACT at its own cost, all things to be supplied or performed by the CONTRACTOR under the CONTRACT shall be deemed to be included in the rates and prices included in Section III - Remuneration. The CONTRACTOR shall submit to the COMPANY an invoice within thirty (30) days after the end of such stages as are specified in and showing the amount calculated in accordance with Section III - Remuneration. To the extent that payments to be made under the CONTRACT attract Value Added Tax, the CONTRACTOR shall issue to the COMPANY a proper Value Added Tax invoice, which shall detail separately the proper amount of such Value Added Tax payable. Value Added Tax shall be added to the CONTRACT PRICE as appropriate. 17.5 Accompanying any invoice submitted by the CONTRACTOR alter the COMPLETION DATE in respect of the whole of the WORK shall be a schedule of all items for which, in the opinion of the CONTRACTOR, payment is due under the CONTRACT but for which, at the date of issue of the said invoice, payment in part or in full has not been received. Such items shall be limited to those for which previous notification has been given by the CONTRACTOR to the COMPANY pursuant to Clauses 14.3 and 14.7. The schedule shall include estimates of cost against each item fully supported by necessary documentation as described in Clauses 14.4 and 14.7. Following completion of the whole of the WORK, the CONTRACTOR shall not be entitled to receive any payment on any invoice received by the COMPANY alter the time specified in Appendix 1 to Section I - Form of Agreement as the latest time for receipt of invoices. Nevertheless the COMPANY may, at its sole discretion, make payment against any such invoice. 17.6 Each invoice shall show separately the individual amounts under each of the headings in Section III - Remuneration, and shall quote the COMPANY Contract Reference Number, Title and such other details as may be specified in the CONTRACT. Each invoice shall be forwarded to the address specified in the CONTRACT. 17.7 Within thirty (30) days from receipt of a correctly prepared and adequately supported invoice by the COMPANY at the address specified in Clause 17.6, the COMPANY shall make payment in respect of such invoices as follows: 17.8 (a) (b) for payments in Sterling the COMPANY shall make payment of the due amount into the bank account of the CONTRACTOR specified in the CONTRACT or otherwise notified by the CONTRACTOR, using the Banker’s Automated Clearing System; and for payments in foreign currencies the COMPANY shall make payment of the due amount in the appropriate currency into the bank account of the CONTRACTOR specified in the CONTRACT or otherwise notified by the CONTRACTOR. If the COMPANY disputes any items on any invoice in whole or in part or if the invoice is prepared or submitted incorrectly in any respect, the COMPANY shall notify the CONTRACTOR of the reasons and request the CONTRACTOR to issue a credit note for the unaccepted part or whole of the invoice as applicable. Upon receipt of such credit note the COMPANY shall be obliged to pay the undisputed part of a disputed invoice. If any other dispute connected with the CONTRACT exists between the parties the COMPANY may withhold from any money which becomes payable under the CONTRACT the amount which is the subject of the dispute. The COMPANY shall not be entitled to withhold monies due to the CONTRACTOR under any other contracts with the COMPANY as set off against disputes under the CONTRACT, nor shall it be entitled to withhold monies due under the CONTRACT as set off against disputes under any other contract. On settlement of any dispute the CONTRACTOR shall submit an invoice for sums due and the COMPANY shall make the appropriate payment in accordance with the provisions of Clause 17.7 and Clause 17.10 where applicable. 17.9 Neither the presentation nor payment or non-payment of an individual invoice shall constitute a settlement of a dispute, an accord and satisfaction, a remedy of account stated, or otherwise waive or affect the rights of the parties hereunder. In particular the COMPANY may correct or modify any sum previously paid in any or all of the following circumstances: (a) any such sum was incorrect; (b) any such sum was not properly payable to the CONTRACTOR; (c) any work in respect of which payment has been made and which does not comply with the terms of the CONTRACT.” 21. 2.3 22. Section V was concerned with Administration. Part 8 of that Section dealt with invoicing, and set out a regime for interim payments and monthly invoicing. Other Relevant Provisions Although my attention was drawn to a number of other provisions of the sub-contract, it is necessary for me to set out only a few. These include: “34.1 Waiver None of the terms and conditions of the CONTRACT shall be considered to be waived by either the COMPANY or the CONTRACTOR unless a waiver is given in writing by one party to the other. No failure on the part of either party to enforce any of the terms and conditions of the CONTRACT shall constitute a waiver of such terms. … 34.2 Retention of Rights Subject to the provisions of Clauses 22 and 36, unless otherwise specifically stated in the CONTRACT, both the COMPANY and the CONTRACTOR shall retain all rights and remedies, both under the CONTRACT and at law, which either may have against the other. The CONTRACTOR shall not be relieved from any liability or obligation under the CONTRACT by any review, approval, authorisation, acknowledgement or the like by the COMPANY. … 34.8 Entire Agreement The CONTRACT constitutes the entire agreement between the parties hereto with respect to the WORK and supersedes all prior negotiations, representations or agreements related to the CONTRACT, either written or oral. No amendments to the CONTRACT shall be effective unless evidenced in writing and signed by the parties to the CONTRACT.” 3. THE MOU 3.1 23. The Factual Matrix I am aware that, in oil and gas contracts, it is not unusual for the parties to seek to address problems arising under the original contract with a subsequent, modifying agreement. I am also aware that, depending on the circumstances, these subsequent agreements can themselves give rise to major disputes: see, by way of example, DSND Subsea Ltd v Petroleum Geo Services ASA and another [2000] EWHC 185 (TCC). Of course, in order for the court to construe any contract, it is necessary to have regard to the factual matrix, that is to say the context in which that contract came into effect. That can be particularly important in a case of this kind, where the agreement in question, namely the MOU, came into existence part way through the performance of the underlying sub-contract, and as a result of ongoing disputes about that performance. On the other hand, the court has to be very careful not to let the parties cherry-pick particular parts of the background favourable to the case they now seek to run, particularly in circumstances where, as here, each side was blaming the other for the slower-than-expected progress on the modules. There was originally a major dispute between the parties, apparent from their written openings, as to what was or could be part of the factual matrix to the MOU. Thereafter, on behalf of HSM, Mr Hughes scaled down his case, moving away from the pages and pages of emails set out in his opening. Still a few disputes remained, and I gave a ruling on those on Day 3. Consequently, the factual matrix for the MOU was agreed by the parties in the following terms: “By no later than March 2015, the parties recognised that the progress of the modules was facing difficulties which needed to be addressed. They therefore agreed to vary their contractual arrangements by entering into the MOU. The Parties agree that a substantial purpose of the MOU was that HSM were to use their fullest endeavours to achieve Mechanical Completion for Process Modules M12 and M14 on or before July 1st 2015 and that this substantial purpose forms part of the admissible matrix for the purposes of interpreting the MOU.” The Express Terms The MOU was dated and intended to have effect from 18 March 2015. It is necessary to set out its terms in full: 24. 25. 3.2 26. “In return for HSM utilizing their fullest endeavours to complete Mechanical Completion for Process Modules M12 and M14 on or before July 1st 2015 HSM will receive the following concessions against the CONTRACT. i. ii. All Piping WORK (including Piping & Valves) shall be compensated by means of directly reimbursable man-hours at SUB-CONTRACT Rates as per SUB CONTRACT No.359-330511/Est-003 plus applicable Mark-Up. (Subcontract still to be submitted and accepted by AOPL and TSEUK). All Electrical and Instrumentation WORK shall be compensated by means of directly reimbursable man- hours at SUB-CONTRACT Rates as per SUB CONTRACT No 359-331010/008, plus applicable Mark-Up. (sub contract still to be submitted and accepted by AOPL and TSEUK) iii. Scaffolding WORK shall be excluded from the existing CONTRACT PRELIMINARIES (with effect from Week 05/2015) and all remaining Scaffolding WORK shall become directly reimbursable at SUB- CONTRACT Rates as per SUB CONTRACT No. 13AFR/003, plus applicable Mark-Up thereafter. iv. All remaining Structural and Mechanical labour WORK shall become directly reimbursable (with effect from Week 05/2015) at the applicable Rates from CONTRACT Section III Remuneration - SCHEDULE OF DAYWORK RATES Table 1 - Labour, General Section. No mark-up shall be applicable to these rates. v. For E&I Materials where no STAR Rate is present, or it is not possible to extrapolate existing rates, then E&I Materials will be reimbursed at Cost plus 15% Mark-Up. vi. All Insulation labour WORK shall be compensated by means of directly reimbursable man-hours at SUB- CONTRACT Rates as per SUB CONTRACT No Subcontract 359-3375l0/kds-001, plus applicable Mark-Up. Materials are as BoQ. vii. All Safety labour WORK shall be compensated by means of directly reimbursable man-hours at SUB- CONTRACT Rates as per SUB CONTRACT which is yet to be issued. Plus applicable Mark-Up. Materials are as BoQ. SUBCONTRACT shall be issued to AOPL and TSEUK for Approval viii. All remaining Corrosion Protection labour Work shall become directly reimbursable (with effect from week 05/2015) at the applicable Rate from CONTRACT Section III Remuneration - SCHEDULE OF DAYWORK RATES Table 1 - Labour, General Section. No Mark-up shall be applicable to these rates. Piping corrosion protection shall be compensated in accordance with the piping agreement item (i) above. Quality issues shall be addressed by the CONTRACTOR at their account. Construction damage Touch-Up will be reimbursable. Piping corrosion protection shall be compensated in accordance with piping agreement item (i) above. ix. Weighing of the Modules shall be in accordance with the CONTRACT LUMP SUMS and CONTRACTOR shall refund COMPANY 50% of the relevant LUMP SUM should only one (1) Weighing operation be carried out. x. Nitrogen arid Helium Testing shall be compensated by means of directly reimbursable man hours at SUB- CONTRACT Rates plus applicable Mark-Up. CONTRACTOR shall provide COMPANY with the opportunity to review and approve the chosen tenderer prior to execution of any SUB-CONTRACT. xi. M12 and M14 Module Movement will be reimbursed in accordance with the CONTRACT plus the payment of 50% by AOPL to HSM towards the additional costs of the extra move from the fabrication hall to an outside location. However no additional payments shall be made for any additional trailer costs. xii. Passive Fire Protection (PFP) labour shall become compensated by means of directly reimbursable man- hours at SUB-CONTRACT Rates as per SUB CONTRACT No. 359-344500/Est-005 Rev 2, plus applicable Mark-Up with effect from a mutually agreed date to coincide with the completion of the repairs of all sub-standard work on decks and columns. be removed from xiii. The costs of CONTRACTOR’S Project Management organisation shall the PRELIMINARIES Section 1.3 with effect from end of Week 04/2015 and will become directly reimbursable from the commencement of week 05/2015 at the applicable Rates from Section III Remuneration - SCHEDULE OP DAYWORK. RATES Table 1 - Labour, Project Management Section. a. (Parties are to agree a detailed method of calculation for PRELIMINARIES expended to endWk4) xiv. The applicable mark-up for all directly reimbursable SUB-CONTRACT Trades (excluding those HSM Trades accountable under Section III Remuneration - SCHEDULE OF DAYWORK RATES Table 1) shall he payable by 7.5% (seven and one half percent) upon Invoice with an additional 5% (five percent) incentive for achieving successful Mechanical Completion on or before July 1st 2015. Minor remaining WORK shall not unreasonably be considered as default. xv. HSM agree to void all known, previously submitted but not yet approved VOR’s and those VOR’S wider preparation in return for a single payment of Euro 500,000 (five hundred thousand Euros). HSM will Void said VOR’s and raise one VOR to account for the single payment referencing the listing of Void VOR’s. In addition to the concessions noted above HSM will continue to fulfill their CONTRACT Obligations with respect to: a) HSM shall submit full priced copies of all subcontracts and supporting documentation. b) HSM shall provide a Schedule for COMPANY Review and Approval no later than Monday, March 23rd 2015 showing Mechanical Completion (MC) no later July 1st 2015. COMPANY shall not unreasonably withhold approval of MC due to agreed carry-over work c) All Materials cost(s) for all Trades shall be at the applicable trade re-measure in accordance with Section III Remuneration Bills of Approximate Quantities, except as noted otherwise below. 1. Piping, where not covered by BOQ, either as agreed Star Rates or Cost plus mark-up. 2. Electrical, where not covered by BOQ, either as agreed Star Rates or Cost plus mark up d) All Mechanical WORK on COMPANY Provided Packages shall be directly reimbursable at the applicable Rates from Section III Remuneration priced against a Scope of Work provided by AOPL - SCHEDULE OF DAYWORK RATES Table 1 Labour, General Section where HSM’s own resources are used or at the applicable SUB CONTRACT rates as per the attachments with applicable mark-up. e) All quality issues shall remain the responsibility of the SUB CONTRACTORS and are to be rectified at SUB-CONTRACTOR’S cast including all associated services necessary to undertake the reworks. HSM to ensure all rework costs are not invoiced to COMPANY The above concessions will form the basis for a CONTRACT AMENDMENT to be issued.” 27. It will be seen that a critical element of the MOU was the lengthy list of sub-contracts into which HSM had entered, or proposed to enter, to facilitate the completion of the sub-contract works. Inexplicably, HSM have not disclosed, either to Aker or to the court, these underlying contracts. Despite my express request, it was not until 14 November 2017 (over a month after the end of the trial, when the draft judgment was almost complete) that I was provided with a list which married up the name of a sub- contractor to a sub-contract referred to in the MOU. As explained below, this curious reticence has had an adverse effect on HSM’s claims in these proceedings. 4. LIQUIDATED DAMAGES 4.1 28. 29. 30. 4.2 31. 32. 33. Issue 1 and Summary The parties have defined Issue 1 in the following terms: “1. In relation to Item 21 in the table from Aker’s Opening Submissions called ‘Section 14: Conclusion: The Rival Final Account’: (i) On a true construction of the MOU/LOGIC Sub- Contract, the Parties agreed, by operation of the MOU, that liquidated damages will no longer apply where the claimant fails to achieve the date for RfSA? (ii) By instruction or agreement, was the date for RfSA altered from 19 July to 10 August 2015 (with the consequence that, as the Claimant contends, the date for RfSA within Section XI of the LOGIC Sub-Contract became 10 August 2015?” I am not entirely confident that Issue 1(i) properly encapsulated the point of construction between the parties. The real issue, as dealt with by both leading counsel in their closing notes, is whether, following the MOU, there was ever a binding date for RfSA, HSM’s failure to comply with which triggered an entitlement on the part of Aker to liquidated damages. In addition, Issue 1(ii) only becomes relevant if I decide Issue 1(i) in favour of Aker. Obviously, if there was no contractual trigger for liquidated damages as a result of the MOU, then Issue 1(ii) does not arise. For the reasons set out below, I have concluded that, on the true construction of the MOU, Aker can have no valid claim for liquidated damages against HSM. If I am wrong about that, and such a claim was valid in principle, I find that there was an agreement between the parties, alternatively an instruction from Aker, to extend the RfSA to 10 August 2015 which bars any right on Aker’s part to recover liquidated damages for delay. Issue 1(i): The True Construction of the MOU Under the original LOGIC Sub-Contract (paragraphs 10-14 above) HSM were obliged to achieve the RfSA on 10 May 2015. If they failed to achieve that date then, unless they were entitled to an extension of time, or unless Aker were responsible for a breach of contract which prevented completion by that date, HSM would be in breach of contract and would be liable to pay liquidated damages. The RfSA date of 10 May 2015 was no longer operative by the time of the MOU. Both parties knew that the 10 May 2015 date would not be achieved. Indeed, that was why the MOU had come into being in the first place: it was required to effect ‘acceleration and catch-up’ (the phrase used by both leading counsel during the trial) because the original completion date was not going to be met. Whilst the reasons why that situation came about are irrelevant to the issues that I have to decide, the starting point is that the original completion date was no longer operative. Further confirmation of this can be found in Clause (b) of the MOU (paragraph 26 above), which required HSM to produce a programme showing Mechanical Completion (presumably for both M12 and M14) on a date no later than 1 July 2015. If Mechanical Completion was not going to be achieved until 1 July 2015, then plainly and obviously the RfSA, which could only occur after Mechanical Completion, could not have been 10 May 2015. 34. Was a new RfSA date set out in the MOU? In my view, it was not. No RfSA date can be found anywhere in the MOU. The date now contended for by Aker, namely 19 July 2015 is not identified, either expressly or by implication, in the MOU. At paragraph 28.1 of his closing note, Mr Williamson said that the MOU “does not even refer to RfSA or liquidated damages”. In circumstances where the contractual RfSA date was no longer applicable, that is a point against Aker, not in their favour. 35. 36. 37. 38. 39. The 19 July 2015 date derives from a version of the Rev 5 programme provided by HSM to Aker on 27 March 2015. That programme was provided to meet HSM’s obligation to produce a programme showing Mechanical Completion on 1 July 2015 (Clause (b) of the MOU). It was not provided for any other purpose, and the MOU does not suggest otherwise. I note that, on 23 March 2015, just 4 days before, HSM had produced another version of Rev 5 which showed the date of 10 August 2015 for the RfSA. In my judgment, the 19 July 2015 date had no contractual status. It was at most a date shown on a programme produced after the date of the MOU. The fact that it was the date on which, as at 27 March 2015, HSM aspired to achieve RfSA, does not give it any contractual status or effect. Neither does the evidence that, for some weeks thereafter, this remained the hoped-for date to which everyone was working. But there is a second, and perhaps more important reason, for my conclusion that, on the true construction of the MOU, there was no obligation to achieve RfSA by 19 July 2015. In my view, the MOU was a very different sort of agreement to the LOGIC Sub-Contract. Instead of an absolute obligation on the part of HSM to complete by a specified date, the MOU replaced that with an obligation on HSM to utilise “their fullest endeavours” to achieve Mechanical Completion on or before 1 July 2015. That was not an absolute obligation: it was simply a promise by HSM to use “their fullest endeavours” to achieve a particular stage (Mechanical Completion) by a specified date. Thus, it was perfectly possible for HSM to comply fully with that general obligation, and still not achieve Mechanical Completion by 1 July 2015. So, leaving aside for this purpose the difficulty that liquidated damages were not contractually triggered by Mechanical Completion in any event, an absolute obligation (which carried with it a potential liability to pay liquidated damages) was replaced with a general obligation that HSM would utilise “their fullest endeavours,” and which made no mention of any sanction at all. So, provided HSM utilised “their fullest endeavours”, they would not even be in breach of contract, let alone liable for liquidated damages, whatever the actual date for Mechanical Completion or RfSA. I was only referred to one case on this unusual obligation: the decision of HHJ Bowsher QC in Midland Land Reclamation Limited and Another v Warren Energy Limited [1997] Technology EWHC 375. That was not a case about completion obligations, but was instead concerned with the defendant’s obligation to “use its best endeavours…to maximise the use of the gas available from the quarry.” At paragraph 92 onwards of his judgment, HHJ Bowsher noted that such a ‘best endeavours’ provision was sufficiently certain to be enforceable. But he expressly rejected the submission that such an obligation was the next best thing to an absolute obligation or guarantee. I respectfully agree with his reasoning. In the same way, I have concluded that the obligation to use “their fullest endeavours” to obtain Mechanical Completion by 1 July 2015 was not an absolute obligation on the part of HSM. Since the absolute obligation to meet a particular date had been replaced by something very different in the MOU, the claim for liquidated damages – which depended on the breach of the absolute obligation – must fail. 40. Mr Williamson argued that, in some way, the obligation on HSM to utilise “their fullest endeavours” to achieve Mechanical Completion by 1 July 2015 was additional to the obligations in the LOGIC Sub-Contract. I disagree: it was not and could not be additional to the absolute obligation to achieve RfSA by 10 May 2015 because that was a different (and contradictory) obligation, which had so obviously been superseded by the MOU. 41. Mr Williamson also argued that the effect of HSM’s case was that Aker could never recover liquidated damages, no matter how late the RfSA date might be. But that over-states the position. As a result of the MOU, Aker could still have made a claim against HSM for damages for delay, but such a claim could only have been based on an alleged failure by HSM to utilise “their fullest endeavours” because that had become the relevant obligation as to time. 42. 43. 4.3 44. 45. Finally on the issue of construction, I consider that the fact that HSM were entitled to a bonus if Mechanical Completion was achieved on 1 July 2015 is consistent with my interpretation of the MOU. It indicated that a different regime as to time was now in operation as a result of the MOU. For those reasons, therefore, I consider that, as a matter of construction of the LOGIC Sub-Contract and the MOU, HSM cannot be liable to Aker for liquidated damages calculated by reference to a date that was not part of the MOU, and which claim ignores the fundamental change to HSM’s obligation as to time brought about by the MOU. That, then, is the answer to Issue 1(i) and disposes of this stand-alone item of Aker’s counterclaim. It is only necessary to consider Issue 1(ii) at all if that conclusion is wrong. Issue 1(ii): Instruction/Agreement If my answer to Issue 1(i) is wrong, and there was a RfSA date of 19 July 2015 which was contractually binding and which prima facie triggered an entitlement on the part of Aker to liquidated damages, then I consider that, by agreement or by instruction, the RfSA date was extended to 10 August 2015, such as to provide a complete answer to any claim for liquidated damages on the facts. Although that depends on various detailed findings, which I set out below, it is important first to consider the matter in the round. It is plain that, throughout the first eight months of 2015, the priority of both the parties to this litigation (and of Talisman, the ultimate customer) was on the completion of the modules as soon as possible. It was for that reason that, pursuant to the MOU, HSM were entitled to recover sums by reference to Clauses (i) – (xv) of the MOU which, but for those clauses, would or may not have been recoverable (or at least not in that way and/or in those amounts). What mattered to everyone, as is so often the way in the oil and gas industry, was speed; debates about who may have been responsible for the delays had been abandoned in favour of getting the work completed as quickly as possible. In addition, everyone wanted to avoid the risk of significant ‘carry-over’ (i.e. works that could not be completed in the yard before RfSA, which would then have to be ‘carried over’ and completed at sea, at considerable additional cost). It certain circumstances, therefore, it was better to delay RfSA so as to reduce carry-over, a point made expressly in the minutes of the May meeting of the relevant Steering Group. The argument about the extension to the RfSA date has to be seen against that background. 46. 47. 48. 49. 50. 51. 52. Consistent with this background, I note that, at no time after the date of the MOU of 18 March 2015 and before RfSA on 10 August 2015, was there any suggestion by Aker that HSM were in breach of contract or liable for any delay beyond 19 July 2015. Not only was there no asserted claim for liquidated damages before the modules were towed out to sea, but there was not even a hint of it. In a case where there are hundreds of emails over that short period, many of them very argumentative, this omission is telling. I find as a fact that such a claim was not asserted during this period because Aker did not consider that any such claim was open to them2. This can be seen most clearly in Aker’s letter to HSM of 22 June 2015 (set out in paragraphs 57-58 below). Leaving aside for the moment whether or not this was an instruction or a confirmation of an agreement (or even a bit of both), the document plainly acknowledged that the RfSA date would be 10 August 2015. It was concerned with various practicalities arising out of that. Accordingly, of all places, this was the moment for Aker to say that, because RfSA was now going to be 10 August 2015, and not 19 July 2015, there was a delay which they attributed to HSM. They said no such thing. Finally as a general observation, Mr Williamson’s closing note sought to draw a distinction between the date for RfSA, on the one hand, and the date of actual physical Sail Away, on the other. I considered that this over-complicated the argument and ultimately went nowhere. Sail Away could not occur physically until the modules were ready for Sail Away. After the MOU, the parties were focussed on Sail Away as a reality, not a contractual concept. That may help to explain why a new RfSA date did not appear in the MOU. I now turn to the detailed facts which lead me to conclude that the change to the RfSA date in the Rev 5 programme, from 19 July 2015 to 10 August 2015, was a change arrived at by agreement and/or on Aker’s instruction. At a meeting on 9 June 2015 between Talisman and HSM, HSM were asked to supply certain information as to progress and carry over. On 11 June 2015, HSM replied that, looking ahead, their preference for a load-out date was the end of week 32 (the week that started 2 August 2015). That would mean that Sail Away would occur about ten days later (10/11 August 2015). Thus, I accept Mr Hughes’ submission that the initial contact, to begin the process of altering the RfSA date, was made in a request by Talisman to HSM. Aker now complain that this was short-circuiting the contractual arrangements, but that was a matter for them to sort out, given that it was they who were in contract with Talisman, not HSM. The fact that it was Talisman who contacted HSM, and that the changed arrangements subsequently agreed were in accordance with Talisman’s wishes, was confirmed by the witness statement of Mr Dunbar-Smith of Talisman. In addition, in the email of 11 June 2015, Mr Kaashoek of HSM dealt in detail with the consequences for any necessary carry-over works, and reiterated that the earlier the RfSA date, the more carry over work would have to be carried out off-shore. There was much a much greater percentage risk of significant amounts of carry over work if RfSA was in July 2015; a much lesser risk if it was in August 2015. On 16 June 2015, Mr Dunbar-Smith confirmed that Talisman “are looking at earlier Sail date of 11th August 2015”. He confirmed that load-out in week 32 (week of 1-2 August 2015) “would work for this date” (i.e. 11 August 2015 RfSA). On the same 2 Mr Williamson noted that the draft amended LOGIC Sub-Contract sent on 18 June 2015 still referred to the 19 July 2015 date. But that was unsurprising because, as noted below, it was the day before Talisman informed Aker of the changed RfSA. day Mr Kaashoek replied saying that he had spoken to Mammoet, the company transporting the modules from the yard. They had indicated that a load-out for week 33 or 34 would not be a problem, but that if it was around 3-4 August 2015 they might have to hire out trailers. His reply went on to talk about the advantages and disadvantages of a Sail Away date of 11 August 2015 or an earlier date. 53. 54. On 18 June 2015, Mr Bringes of Talisman confirmed that 1-2 August 2015 for the load-out was suitable. Talisman asked HSM to instruct Mammoet to have all the equipment in place for that date. HSM confirmed that Mammoet would be instructed accordingly. On 19 June 2015, Talisman wrote formally to Aker to confirm that the module installation window offshore was 15-29 August 2015. The letter confirmed that HSM would provide notification of the seven day window on 1 August 2015. It also said: “The barge departure will be dependant on the installation date…currently 10th August 2015.” Talisman repeated that the load-out date was 1/2 August 2015. 55. Importantly, Talisman’s letter to Aker of 19 June went on: “The decision to change the installation dates is as a result of the predicted level of the mechanical completion at the RfSA date of 21st July 2015 and the potential to take unacceptable levels of hours off-shore. It is imperative that Contractor continues to expedite delivery to ensure that the module is mechanically complete, pre-commissioned in line with agreements, and punch lists cleared prior to load-out.” There was no suggestion in this formal contractual letter that Talisman were blaming Aker (and/or their sub-contractor, HSM) for this change, or that the delay somehow made Aker culpable under their main contract with Talisman. It was instead represented to be a change which, as the ultimate customer, Talisman was entitled to seek and wanted to bring about. 56. 57. On the same day, there was an exchange of emails between HSM and Talisman (which was then passed on to Aker) which confirmed the new load-out dates on 1/2 August 2015, and thus the delayed RfSA. The next relevant document is Aker’s formal letter to HSM of 22 June 2015. The letter was in precisely the same terms as the letter from Talisman to Aker of 19 June 2015 (paragraph 54 and 55 above). The letter confirmed “changes to the installation vessel and timing” including the change to the module installation window off-shore being 15 August 2015 to 29 August 2015. It expressly said that one of the changes was: “The barge departure will be dependant on the installation date (5 days before lift-HLV2) currently 10th August 2015. Company notes that the barge could be at HSM until 24th August 2015.” 58. The letter went on to say that HSM were instructed “to make the necessary arrangements to accommodate this change including:  Confirm load-out date. This currently anticipated as being 1st/2nd August 2015 by 24th June 2015.  Update the plans to reflect the new proposed load-out date by 24th June 2015.  Provide a cost estimate for any impact on the new proposed dates by 24 th June 2015.” The letter concluded within the same paragraph set out in paragraph 55 above. I have already made the point that, despite being the perfect opportunity to do so, Aker’s letter gave no indication that this delay was somehow the responsibility of HSM. On 25 June 2015, in accordance with the letter of 22 June 2015, HSM notified Aker of the load-out dates of 1 and 2 August 2015 which they had incorporated into a revised programme. Thereafter, the load-out went ahead in accordance with these dates and the RfSA date of 10 August 2015 was achieved. On the basis of those exchanges, I find that HSM, Aker and Talisman were involved in a three-way discussion – begun by Talisman – which concluded in an agreement as to precisely when the modules would be loaded-out and towed to the North Sea. I consider that this agreement is evidenced by the documents which I have set out above. Furthermore, I find that on the basis of those documents, the agreement had been instigated by Talisman because it was in their interest (and arguably only their interest) to reduce the amount of expensive off-shore work and to increase the amount of work done on-shore. In the alternative, I find that the letter of 22 June 2015 (paragraphs 57 and 58 above) was an instruction from Aker to HSM to alter the dates, just as the similar letter from Talisman to Aker was an instruction under the main contract. Although at paragraph 35.1 of his closing note, Mr Williamson points out that the letter of 22 June 2015 does not refer to the contractual RfSA date, that is hardly surprising given that the date had been superseded by the MOU. And although he is right to say that the letter emphasised that the decision had been taken to avoid taking “unacceptable hours off- shore”, that only confirms my view that the change emanated from Talisman for good commercial reasons and that, if Aker had thought that gave rise to a claim against HSM, they would or should have said so here. In addition, I find that my conclusion that the changed dates arose due to an agreement or an instruction was confirmed by Aker themselves after Sail Away. On 11 September 2015, Aker wrote to HSM to say (amongst other things) that the RfSA date had been extended because “the CLIENT [Talisman] exercised its discretion to postpone Ready for Sail Away until 11 August.” I agree with that statement: it is in accordance with the facts as I have found them to be. 59. 60. 61. 62. 63. Mr Williamson’s final point on this topic was to say that the fact of an agreement or an instruction did not affect the working of the extension of time mechanism in Clause 14.7 and that, because HSM had made no extension of time claim in consequence, they were still liable to pay liquidated damages. I reject that submission. The agreement or instruction was either relevant under Clause 14.7 as a variation which affected the RfSA of 19 July 2015; alternatively, if Clause 14.7 did not apply, then the agreement or instruction were acts of prevention which now prohibit Aker from making any claim for liquidated damages based on a date which HSM agreed or had been instructed to alter. 64. In all those circumstances, if (which I do not accept) the MOU maintained a contractually-binding RfSA date and a contractually-binding obligation that HSM would pay liquidated damages if that date was not met, I have no hesitation in concluding that the date was extended by agreement or by instruction. There was therefore no entitlement on the part of Aker to liquidated damages. 5. APPROVAL OF INVOICES 5.1 65. The Issues and Summary The parties have agreed the issues on this topic in the following terms: “Issue 2: The Approval of Invoices by Aker 2. There were a number of invoices which were approved by Aker, with those amounts then invoiced by HSM, certified by Aker and paid by Aker. These sums are: February March April May June July € 2,684.209,17 € 2,757.076,42 € 3,882.783,65 € 4,014.174,60 € 2,936.977,56 € 4,449.322,00 (i) (ii) As a result of the process whereby representatives of the Claimant and the Defendant reviewed HSM’s draft invoices and ‘approval’ was given by Aker, is Aker estopped by convention from contending that the sums subject to approval are not fully due and payable under the terms of the MOU read together with the LOGIC Sub-Contract (save in relation to arithmetical errors or errors of calculation)? If HSM does not succeed on its estoppel case in relation to the invoiced amounts which have been paid by Aker (see Issue above), then what, on a true construction of the LOGIC Sub-Contract, are the correct parameters (if any) for the determination of HSM’s entitlement.?, it being noted that Aker contend that: (a) (b) HSM have not pleaded any case as to any such parameters; It is in any event not possible for the court to provide a meaningful answer as to such parameters in the absence of any factual or evidential issue to which such answer might apply.” 66. HSM rely on certain invoices which concerned work done between February and July 2015. These were approved and paid by Aker in a short period between June and August 2015. It is HSM’s case that Aker are now estopped from contending that any 67. 68. 69. 70. 71. 5.2 72. parts of the sums approved and paid during that period are not due and/or can be clawed back as part of the final account process. It is as well to examine at the outset how and why this unusual issue arises at all. Why are HSM so keen to rely on what happened during the frantic weeks when the modules were being completed at their yard, so as to prevent Aker from reviewing the figures that had been approved during that time? It is inherent in HSM’s case that at least some, perhaps all, of the disputed claims cannot be recovered under the express terms of the MOU, leaving this estoppel argument as the only way in which HSM can continue to justify them. If all HSM’s claims could be recovered under the MOU in any event, their estoppel argument would be redundant; instead, it is the critical issue arising from their claim. In my view, the answer to this question can be found in remarks made by two of their witnesses, Mr Dekker and Mr Kaashoek, during cross-examination. At one point, Mr Dekker said that the MOU had made this a “dayworks reimbursable” contract. Later that same day, Mr Kaashoek said that “we were on a reimbursable contract”. Both men were wrong; the MOU was emphatically not a reimbursable contract, much less one which gave rise to a simple entitlement to be paid on dayworks. The MOU made some changes to HSM’s remuneration, and may have made ‘cost plus’ the basis of their recovery for some elements of the work (although even that depended on standard QS considerations, such as whether there were applicable BoQ rates, or whether a star rate could be agreed etc); but those changes were specifically identified in the MOU. Beyond those particular alterations, the sub-contract remained as it had been, a largely lump sum contract. The MOU did not change the underlying sub- contract into a reimbursable contract. In my view, the estoppel argument only arose at all because HSM belatedly realised that the MOU did not say what Mr Kaashoek and Mr Dekker wanted it to say; that it was not a simple reimbursable contract. To that extent, I agree with paragraphs 6 and 12-13 of Mr Williamson’s closing note: that HSM’s stance has always been that they were entitled to be paid on a reimbursable basis, and that this “fundamental misunderstanding” of the MOU explains why HSM are now having to run the estoppel argument, in an attempt (as he put it) to get what they cannot get under the terms of the MOU. I agree with him that that would be an extraordinary result. For the detailed reasons set out below, I have concluded that no estoppel case arose (or could arise) out of Aker’s approval of the monthly invoices between June and August 2015. Aker are not therefore estopped from now disputing the validity of the claims made in those invoices. Aker’s approval of the monthly invoices did not bind them for all time, and did not mean that they could not seek to recover sums which were not, in fact, properly payable. I address the law on estoppel in Section 5.2 below. I then set out five separate and shorter reasons that explain how and why I consider the estoppel case must fail (Sections 5.3-5.7 below). Thereafter, at Section 5.8, I set out a more comprehensive review of the conduct relied on by HSM and, in Section 5.9, I explain how and why that conduct cannot give rise to the alleged estoppel. The Law Chitty on Contracts 32nd Edition, Volume 1, at paragraph 4-108, defines estoppel by convention as follows: “Estoppel by convention may arise where both parties to a transaction ‘act on assumed state of facts or law, the assumption being either shared by both or made by one and acquiesced in by the other.’ The parties are then precluded from denying the truth of that assumption, if it would be unjust or unconscionable (typically because the party claiming the benefit has been ‘materially influenced’ by the common assumption) to allow them (or one of them) to go back on it.” 73. The assumption must be unambiguous and unequivocal: see for example Smithkline Beecham PLC v Apotex Europe Ltd [2006] EWCA Civ. 658. It must be an assumption which plainly passes ‘across the line’ from one party to the other: see for example The Vistafjord [1988] 2 Lloyds Rep 343. The communication of the assumption may be effected by the conduct of one party if it is known to the other, but the communication must be express: see for example Bank Leumi (UK) PLC v Phillip Robert Akrill [2014] EWCA Civ. 909. For unconscionability and the concept of ‘material influence’, see Robert Goff J in Amalgamated Investment and Property Co Ltd v Texas Commerce Bank International Ltd [1982] QB 84 at 104. 74. It is important to note that this is not alleged by HSM to be a case of promissory estoppel. That is defined by Chitty at paragraph 4-87 in this way: “For the equitable doctrine to operate there must be a legal relationship giving rise to rights and duties between the parties; a promise or a representation by one party that he will not enforce against the other his strict legal rights arising out of that relationship; an intention on the part of the former party that the latter will rely on the representation; and such reliance by the latter party. Even if these requirements are satisfied, the operation of the doctrine may be excluded if it is, nevertheless, not ‘inequitable’ for the first party to go back on his promise.” 5.3 75. 76. 77. This is important because, as set out in Section 5.3, I have concluded that the express terms of the LOGIC Sub-Contract mean that the absence of any case on promissory estoppel, to avoid or render nugatory those contractual terms, is fatal to HSM’s estoppel argument. Short Reason 1/The Terms of the LOGIC Sub-Contract Each of the sums paid and referred to in the table set out at paragraph 65 above were interim payments made between June and August of 2015. They were the sort of stage payments, reflecting the work carried out in the month in question, which are common to almost all building and manufacturing contracts. What does the LOGIC Sub-Contract say about the status and effect of such monthly or interim payments? In my view, Clause 17.9 of the LOGIC Sub-Contract (paragraph 20 above) could not be clearer. It says in terms that the payment of an individual invoice, such as those that Aker approved and paid between June and August 2015, did not constitute the settlement of a dispute or otherwise waive or effect Aker’s right to say that such a sum was incorrect or not properly payable. On its face, therefore, Clause 17.9 is a complete answer to HSM’s estoppel argument. The only remaining hope for HSM is to argue that Clause 17.9 was expressly or impliedly modified by the MOU. But in my view, it was not. There can be no doubt that it was not modified expressly: there is no reference to Clause 17.9 or its content anywhere in the MOU. Neither is it arguable that the provisions of Clause 17.9 were impliedly deleted or altered by any of the terms of the MOU. The MOU is careful to explain what the concessions were in terms of payment. Those were the provisions at 78. 79. 80. 81. 82. Clauses (i) – (xv). There is nothing there to indicate that the agreement in the original LOGIC Sub-Contract (that payment of individual invoices would not be binding for all time, with a right to further review), had been modified in any way. The MOU set out the changes to the heads of claim which were recoverable, but it said nothing whatsoever about the mechanics of payment, which therefore remained governed by Clause 17.9. In addition, HSM’s estoppel case wholly fails to address, let alone attempts to avoid, the other provisions at Clause 34 of the LOGIC Sub-Contract (paragraph 22 above) dealing with waiver, retention of rights and the like. In my view, those provisions also comprise a complete answer to the alleged estoppel by convention. For example, HSM are seeking to say that Aker waived their rights under Clause 17.9, but they cannot point to the required written waiver (Clause 34.1); similarly, HSM have to say that their liability under Clause 17.9 was relieved by the alleged approval of their invoices, but that proposition is contrary to Clause 34.2. Furthermore, I consider that my conclusion that an estoppel did not arise from the agreement to make monthly payments is entirely in accordance with common sense and ordinary business practice. Even if Clause 17.9 had not been an express part of the LOGIC Sub-Contract, then in my view, something like it would inevitably be implied into any contract or sub-contract of this sort. It is contrary to industry norms for a contractor to be paid on an interim or monthly basis, with the employer or main contractor thereafter having no ability to revisit any sums that might previously have been agreed. Such an arrangement would be highly unusual, because it would place such an enormous burden on those dealing with the monthly valuations, and invest them with an authority to bind their employers for all time which they would not ordinarily have. At the very least, in order to have such an effect, such an arrangement would have to be expressly recorded in clear terms. There is of course no such express (or even implied) arrangement here. In those circumstances, I conclude that the MOU did not change the terms of the underlying LOGIC Sub-Contract relating to the status and effect of payment on individual invoices. Stage/interim payments on individual invoices remained just that: payments that were made to ensure that HSM recovered a proper cash flow as the work progressed, but which were capable of being revisited – if warranted – by Aker at a later date. In my judgment, therefore, the LOGIC Sub-Contract terms expressly bar the estoppel argument. It is convenient to deal here with the highpoint of Mr Hughes’ estoppel argument as set out in his closing note. He relied on the well-known case of ING Bank NV v Ros Roca SA [2011] EWCA Civ. 353 (CA), a classic estoppel by convention case, where the issue was whether the use by the parties of a formula for the calculation of a fee due to the bank, which gave rise to a much lower fee than the complex formula set out in the contract, meant that it was the version of the formula that the parties had used that should take precedence over the version in the contract. The court concluded that the bank was bound by the version that was actually used. There was no question in that case of there being any other contractual provisions which cut across the alleged convention. Thus, in my view, Mr Williamson was right to point out that ING (and cases like it) were of no assistance to HSM. What HSM had to do was to get around the clear provisions of the LOGIC Sub-Contract, which remained in place after the MOU, and which made clear that payments on individual invoices were not binding forever after. They could only have done that by arguing that, in some way, Aker had indicated to HSM that they would no longer rely on Clause 17.9 and the other relevant provisions; in other words, a case of promissory 83. 5.4 84. 85. estoppel such as The Stolt Loyalty [1993] 2 Lloyds Rep 281 or Seechurn v Ace Insurance SA [2001] EWCA Civ 67. But as I have observed, that was not HSM’s case, and in his closing submissions, Mr Hughes expressly disavowed any argument based on promissory estoppel. In all those circumstances, it seems to me that the terms of the LOGIC Sub-Contract not only subsist, but they mean that the estoppel by convention argument must fail. There cannot be a convention in circumstances where the terms of the contract say that there is no such convention, and those terms remain in full force and effect throughout. If I am right about that, then the estoppel case on the approval of invoices fails and the remainder of Section 5 of this Judgment is redundant. Short Reason 2/The Evidence of Mr van der Waerden It has been HSM’s case throughout that, because of the way in which the sums were approved and paid by Aker following the agreement of the MOU, Aker were not able to go back on those sums. HSM’s pleaded case puts the MOU, and the changes which it allegedly made, at the heart of this estoppel case. That case was not supported by the evidence of one of HSM’s principal witnesses, Mr van der Waerden. He was HSM’s project manager. It was put to him that HSM could not possibly have believed that Mr Vidovic – the relevant Aker QS based at HSM’s yard – or Aker themselves, were agreeing that the monthly amounts were due and payable for all time, without any redress thereafter if in fact they were not due. Mr van der Waerden said in answer that this was his belief for “the entire time” that he was the project manager, which long pre-dated the MOU. 86. It struck me that this answer was contrary to HSM’s entire case on the MOU because, on that basis, there was an alleged estoppel arising out of all the interim payments, including those which pre-dated the MOU. There was then this exchange: “Judge: You tell Mr Williamson that it was your belief that [Mr Vidovic’s] agreement set this in stone for all time. You said that was your belief the entire time. You then clarified that and said that meant after the MOU. A: Yeah, well – Judge: So I am asking you about the payments made before the MOU, so let’s say a payment for October 2014; was it your belief that the payment that was made in October 2014 was also set in stone, paid for all time? A: Yes. Judge: Because that’s what Mr Vidovic did; that was his job? A: Yes. As soon as I got the payment certificate, that was for me a closed deal, invoice being issued and we get what we asked for and what we agreed upon.” 87. In my view, this evidence only arose at all because, in his cross-examination, Mr van der Waerden had been unable to point to any particular circumstances after the MOU which comprised the alleged common assumption. Thus he felt obliged to say that the estoppel covered the entire period of both the original LOGIC Sub-Contract and the MOU. I consider that this stance is hopeless. Not only is it contrary to HSM’s pleaded case, but it was not supported by any contemporaneous material. It arose because of HSM’s difficulties in establishing the case that it was trying to run about the changes allegedly brought about after the MOU. For reasons noted below, HSM have not made out an estoppel case arising out of the alleged changed circumstances following the MOU, and I reject as fanciful this fall-back position, that the convention was in place even before the MOU. That is therefore a second reason why the estoppel point must fail. Short Reason 3/The Payments Made “Without Prejudice” In my view, if a payment is said expressly to be made “without prejudice”, then it means that the payment is made without the loss of any rights; that the existing rights of the payer (and for that matter, the payee) are preserved. Contrary to Mr Hughes’ submission at paragraph 21(vi) of his closing note, there is no mystery about the use of those words. I consider that Mr Vidovic’s oral evidence was to the same effect. Thus the position here was that any payment by Aker which was ‘without prejudice’ would be a payment which would not deprive them of the protection of (for example) Clauses 17.9 and 34. Here there can be no doubt that the post-MOU payments were made without prejudice. I reach that conclusion for two separate reasons. First, that was the general thrust of Mr Vidovic’s evidence: that everyone knew that the payments were made on the basis they could be reviewed later. I consider that Mr Vidovic was a truthful witness and I therefore accept what he said on that topic. Conversely, I considered that the evidence of Mr van der Waerden and Mr Kaashoek, understandably driven by commercial considerations, was not always so reliable. Secondly, the documents make plain that, not only was Mr Vidovic treating the payments as being “without prejudice”, but he made that point expressly to HSM at the time. There are three relevant documents. 88. 5.5 89. 90. 91. 92. 93. His internal email of 5 June 2015 said: “Here is my analysis of received invoice regarding approval/dispute value. When I discussed with Finn, he agreed that value of the errors in E&I materialist will be disputed… Small invoices without sufficient project reference also disputed. I have not Hours without timesheet backup disputed. challenged any rates not in contract, not either volume of expended hours. Uncertain what is covered by VO015 which is pay (€749k) or any other already paid VO. This approval will be without prejudice an amount will be reconciliated afterwards… PS I have not received yet backup for invoices February and March.” This email was not sent to HSM, and Mr Vidovic said that he forgot to include the phrase when he emailed Aker later that day, a point which HSM’s witnesses were all too quick to point out. But the email demonstrates that this was at least what Mr Vidovic thought he was doing. I agree with Mr Williamson that, even if HSM approached the process on a different basis, the fact of the difference alone demonstrates that there was no clear and unequivocal assumption, shared by both sides, as to the basis and status of the interim payments. 94. Secondly, there was the email from Mr Vidovic dated 8 July 2015 and sent to Mr Kaashoek and Mr van der Waerden. It said: “Reviewing of the same takes some time but my plan is that at Monday noon we agree clarification meeting (you arrange) and hopefully at Tuesday 14th July will payment certificate for approved (without prejudice) value be issued.” This was an unequivocal statement to HSM of Aker’s position. Having pointed out that the email of 5 June had not been sent to him, Mr van der Waerden had no answer as to how and why he had not commented on the fact that, in accordance with this email, he knew that the interim payments were being made by Aker to HSM ‘without prejudice’. The best that he could do, having agreed that he saw those words at the time, was to suggest that their significance had only become clear to him in “the last couple of weeks”. I reject that. So the fact that Mr Vidovic had made Aker’s position clear to HSM, that the payments were made ‘without prejudice’ and therefore not binding for all time, destroys any case that there was a common assumption to the contrary. The same point can be made about Mr Vidovic’s email of 6 August 2015, again sent to Mr van de Waerden and Mr Dekker at HSM. That too made it plain to HSM precisely what Aker were doing; that the payments for the July invoice was being approved “without prejudice”. Again, neither Mr van der Waerden nor Mr Dekker had an answer as to why they did not complain about that if, as they now say, they did not agree to such an arrangement. Mr Dekker seemed to suggest that he had too much else to do to spend time thinking about the longer term. That may well have been true but only supports my conclusion that, because of the pressure on everyone at the yard in those weeks, it would be wrong to attach permanent legal consequences to the monthly valuation process. Again, however, the email’s use of the expression ‘without prejudice’ is fatal to the common assumption HSM require in order to establish an estoppel. Accordingly I find as a fact that, in accordance with Mr Vidovic’s evidence and the emails sent to HSM, the interim payments were made on a ‘without prejudice’ basis. As Mr Vidovic said in his evidence, which I also accept, he told Mr van der Waerden that Aker “would come back at the end on all items”. I find that this was the clear meaning of the words ‘without prejudice’ and it had broadly the same effect as that for which the LOGIC Sub-Contract provided at Clause 17.9. That is therefore a third reason why the estoppel claim must fail. Short Reason 4/The One-Way Street Not content with alleging that Aker were bound by any payments that they had made, it was also inherent in HSM’s case that they themselves were not so bound, and could add further claims to their monthly invoices as and when it suited them. 95. 96. 5.6 97. 98. Take, for example, the claims in respect of the work done in February and March 2015. It was originally agreed that, following HSM’s claims, there would be a 75% on-account payment (which could not possibly have attracted any sort of estoppel case). Subsequently, HSM made further claims in respect of the February and March work. That was not just a claim for some part of the 25% that had not been paid, but were claims for sums in addition to those which had been originally claimed for February and March 2015. 99. Mr Kaashoek accepted this contradiction in his cross-examination. In addition, he agreed that the August 2015 invoice did not include just for August 2015 work but also included additional claims for work carried out earlier. Whilst it is true that, for that work, some of the items were added in because, so it was said, further sums had been agreed by Aker, the principle remained the same: on HSM’s case, this was a one-way street, by which Aker were bound for all time when they approved any part of any invoice, whilst HSM could continue to go back and claim further sums for that same month in later invoices. In my view such an estoppel is so inherently unlikely as to be unarguable. It was not established in any of the evidence. It is another reason why the estoppel argument must fail. 5.7 Short Reason 5/The General Circumstances of the Approvals 100. 101. 102. The final short reason why I consider that the estoppel case should fail, before embarking on the more detailed analysis of the parties’ conduct, concerns the circumstances in which the relevant invoices were approved. Although the invoices themselves relate to work done between February and July 2015, the approvals relied on took place in a few weeks between June and August 2015. I agree with paragraph 56.2 of Mr Williamson’s closing note that the temporal scope for the operation of any ‘convention’ is therefore very narrow. How realistic is it to say that, in that relatively short time span, these binding agreements were reached at HSM’s yard? The man-hours being expended by HSM and their sub-contractors were logged and, to the extent that it was possible, checked off on a weekly basis. That of itself was a huge amount of work for Mr Vidovic. It is not suggested by Aker that anyone should now go behind those records. They have been and remain an agreed record of the man-hours expended; what remains in issue is the extent to which HSM are entitled to recover the costs of those hours. To that extent, therefore, the work done by the quantity surveyors on site in this busy period was neither futile nor wasted. In addition, Mr Vidovic was faced with huge numbers of claims based on invoices. These were mainly invoices from HSM’s sub-contractors, sub-sub-contractors, and suppliers. Many were in Dutch. The basis of the sums being claimed was not always clear. The supporting documentation was variable in quality and often did not support the claims for which it was produced. I agree with paragraph 56.5 of Mr Williamson’s closing note that the evidence of Mr Dekker made plain that at least some of that back up information was incoherent because it did not allow the checker to see what hours had been spent on re-work and other tasks. Mr Kaashoek also accepted that the information did not allow Aker to work out how much re-work was contained in the labour hours. 103. In addition, the time pressures manifested themselves in two particular ways. First, the evidence made plain that Mr Vidovic was being asked to approve invoices within days of their presentation. The workload was enormous, and not helped by the fact that HSM were not doing a similar checking exercise before presenting claims to Aker (see, for example, paragraphs 124-125 below). Accordingly, Mr Vidovic did his best, identifying where some claims were unsupported by the evidence or where there were miscalculations. But beyond that, I find that time did not permit a wider review. 104. 105. Secondly, the pressure to agree interim payments has to be seen against the threats regularly made by HSM, and recorded in the documents, such as Mr Jacobs’ email of 4 June 2015, in which he records HSM’s attitude as being “if you don’t pay us we won’t do the work”. It is necessary to have regard to this type of threat when considering whether there was any sort of common assumption. It also bears upon what is equitable in all the circumstances. There are other personal factors relating to Mr Vidovic which support the conclusion that he was not binding Aker for all time by his approval of certain invoices. He was a relatively low-level Quantity Surveyor for whom English – the language of his discussions with Mr van de Waerden and Mr Dekker and his emails to them – was his third language. He had to agree monthly sums due to HSM, but it is impossible to see how he ever had the required authority (or could have been regarded as having the authority) to amend the contract, scrap Clauses 17.9 and 34 and, by agreeing to pay an individual invoice, bind Aker for all time. 106. The evidence in respect of the limited nature of Mr Vidovic’s role came together in the cross examination of Mr Dekker, who seemed surprised that this was HSM’s case: “Q: A: Q: A: And what I would suggest that Mr Vidovic was doing, and doing with you, was essentially checking that the hours that you had claimed for had some back-up information, and that the invoices you had claimed for had some back-up information? Yeah … So that was really all Mr Vidovic was doing, wasn’t it, was just checking documents? He wasn’t saying on behalf of Aker that €3.9 million was due now and forever? Never talked about paying invoices and the value of approved invoices and it’s only for now. I was not involved in the approval process in that respect and I … no, I don’t know. I have never heard saying it, no.” 107. Similarly, in the cross examination of Mr van der Waerden, the witness accepted Mr Williamson’s proposition that “you cannot have understood, can you, that within a week, Mr Vidovic on behalf of Aker was agreeing for all time that €4.5 million were due?” It is correct that he went on to qualify that in relation to the fact that much of the €4.5 million related to hours, the records of which had been produced, but that is an entirely different point. 108. Accordingly, I do not consider that anyone at HSM ever said – or intended to say – in clear or unequivocal terms to Mr Vidovic, or anyone else at Aker, that they assumed or believed that the payments made between June and August 2015 were somehow inviolable or incapable of review. There was no evidence to that effect. So not only was there plainly nothing crossing the line from Aker to HSM to that effect, but there was also nothing crossing the line the other way either. 109. 110. Finally, there is a more general point to be made about the allegedly binding nature of the interim payment regime, which I put to Mr Hughes during his closing submissions. The process in respect of monthly payments that was adopted here was only a more high-pressured version of the process for interim payments adopted on construction and engineering contracts all over the world. The quantity surveyors agree what they can on a monthly basis, knowing that, at the end of the project, the claims can be reviewed as part of the final account process. In my judgment, the circumstances here were no different. There is nothing here that takes this case out of the ordinary. It would be an astonishing development for the construction engineering industry worldwide if it were thought that an agreement to pay an individual invoice by the on-site QS was somehow an agreement to be bound to accept the validity for all time of the claims that it contained merely because, on HSM’s case, the opposite was somehow not made plain. 111. In those circumstances, I consider that the circumstances in which these approvals took place mean that it would be wrong and artificial to conclude that, by approving payment of certain invoices, Aker was bound by such payments for all time. 112. Only if each of those five short reasons for rejecting the estoppel case is wrong, is it necessary to consider the conduct of the parties in greater detail. 5.8 The Conduct of the Parties/The Facts 113. There was a large amount of evidence in respect of the dealings between the parties in relation to the invoices after the MOU. It would be unnecessarily wearisome to set out all those exchanges in full. I have had regard to them all. I identify in paragraphs 114-147 those exchanges which I consider to be of particular relevance to the alleged common assumption. 114. On 3 April 2015, Mr Dekker of HSM sent Aker the “Weekly Report expended Man hours”. This was the start of a process by which large swathes of man hours were agreed on a weekly basis, principally by Mr Dekker and Mr Vidovic of Aker. As I have said, Aker do not go behind the man hours which they agreed. They made it plain in their response, however, that it was critical that they had sufficient control on the specific tasks and that the claim items were “clearly segregated” and “the alignment of HSM reporting [is] in line with the MOU” (see Mr McGee of Aker’s email of 7 April 2015). 115. It is clear that, for those dealing with the day-to-day detail, the MOU did not provide all the answers. Thus Mr Vidovic emailed Mr Jacobs at Aker, also on 7 April 2015, to say: “We need to clarify with HSM regarding reimbursement of hours. Who and what category of labour/management is entitled to reimbursement. We need also to agree their organisation charts… We have to challenge them in their manning level, demobilisation plan both for labour and management etc. Even after signing of MOU is lot of stuff to clarify with HSM. What is your idea regarding these items.” It is no coincidence that the items identified by Mr Vidovic in his email are those which remain in issue in these proceedings. 116. 117. In a similar way, on 14 April 2015, Mr McGee emailed others at Aker, including Mr Vidovic, to say that there were three major differences between the parties: “(i) quality (reworks also impacting MC); (ii) productivity factor versus out of sequence; (iii) paying for the same thing twice.” He also went on to note that the HSM estimates to complete “include the same person in multiple cost basis”. It was clear from the evidence of Mr Jacobs (the Project Services Manager at Aker) and Mr Vidovic that, throughout this period, Aker were alive to the fact that there was a significant risk, because of the way in which HSM were setting out their claims, that Aker were being asked to pay for the same item or the same resource twice over. In addition, the email went on to say that Aker needed to ensure that “those hours that are considered reimbursable are constricted to an agreed set of trades while those covered by the preamble stay there”. As we shall see below, that remained an issue between the parties, as did the topic in the next paragraph of Mr McGee’s email, which referred to the problem of dealing with claims by/for HSM’s sub-contractors. He gave an example about the claims for the Cofely scaffolding in circumstances where “not all scaffolding is with HSM, this can again be challenged as paying twice”. 118. Aker did not keep those concerns to themselves. In his email of 17 April 2015, Mr Jacobs informed Mr Kaashoek of HSM that Aker were “keen that the reimbursable nature of the remainder of the project does not become a ‘blank cheque’”. A variety of matters were identified to try and ensure this including the need to “clearly identify the roles and responsibilities of personnel deployed on project, both part-time and full-time”. Mr Jacobs also said that there was a need to agree “the rate build ups identifying accruals for indirect personnel – currently we seem to be charged for everyone even though indirect and management and administration are included in the Schedule of Rates.” He also made the point that material cost recovery was still at the BoQ rates “except where not available”. This email was also subsequently sent to Mr van de Waerden. Accordingly, HSM can have had no doubt that the claims being made were contentious. There was no common assumption. 119. Towards the end of April 2015, it was acknowledged that HSM had a problem, because they had been incurring costs since week 5 (i.e. the beginning of February 2015) without being paid. On 21 April 2015 they sought an ‘on account’ payment of 75% of the current draft invoice value. That was agreed by Mr Jacobs on 29 April 2015. 120. On 12 May 2015, Mr Vidovic sent Mr van de Waerden a draft template for the invoices going forward. It appears that HSM adopted that template. On the same day, Aker provided a summary in respect of electrical and instrumentation material costs. Mr McAndrew, Aker’s lead quantity surveyor, replied on 18 May 2015, to say that the costs “appear to be extremely high. Could you confirm that the costs of these materials have been screened by HSM and that they are directly purchased by HSM, by way of the purchasing and procurement principles as set out in the contract?” This remained an issue between the parties, as did the high costs claimed for expended hours (see Mr Vidovic’s email of 19 May 2015). Mr Vidovic noted that “there appears to be no control on which hours are presented for reimbursement.” 121. On 20 May 2015, Mr van der Waerden sent a lengthy email to Aker dealing with piping, hours and the like. It was principally concerned with the expansion of manpower. The email concludes: “We will continue to discuss and agree manning levels on a daily basis in order to reach maximum progress.” This is broadly what happened. 122. In mid-May 2015 there was a meeting of the Flyndre Steering Group. This was attended by Aker representatives. The minutes said: “HSM now reimbursable, lots of hours being invoiced, need checking…check on man hour bookings required in detail. Re measure per end week 4 to be agreed.” This same meeting identified the “risk of significant carry-over works” (see paragraph 45 above). 123. Disputes about the claims for materials continued to arise. On 27 May 2015, Mr McAndrew of Aker reminded Mr Dekker that “all materials are still recovered by the principles laid out in the contract.” In other words, the MOU did not change the principles by which HSM recovered for materials. Difficulties with the claims for materials are also apparent from Mr Vidovic’s email to Mr Jacobs of 28 May 2015. 124. However, that email is also important for a number of other reasons. It set out the huge difficulties under which Mr Vidovic was operating in trying to agree the large number of hours that were being claimed. Mr Vidovic said: “It must be decided and agreed which trades are not to be reimbursed by hours.” He complained that, when he pointed out errors in the claims being made, these were immediately admitted as mistakes, making Mr Vidovic worry that there were other claims which had also not been properly checked by HSM. Mr Vidovic noted that “their contention is that everything is 100% correct” (unless Mr Vidovic found a mistake). Mr Vidovic also made the point in this email that HSM should not be paid for rework due to bad workmanship or bad planning/supervision. He said that this was not easy to capture and impossible to control. He said expressly: “I do not want to approve/sign any expenditure before items here are sorted out (if I do, it will make precedence for rest of the project).” 125. Mr Vidovic’s difficulties were summarised in the next paragraph of the email, when he said: “In general, HSM is arrogant and do not admit any incorrect delivery of data. Everything they deliver to us is 100% correct but when we discover something wrong and ask them to check, they admit error only on that item, rest of delivery is 100% correct.” From the documents I have read and from the evidence that I heard, I agree with and accept Mr Vidovic’s comment. It encapsulates the way in which HSM were making their claims to Aker. They were putting the onus on Aker to point out mistakes. That conduct, and the attitude behind it, also militates against any finding of a shared common assumption, which is necessary for HSM’s estoppel case. 126. At the same time, by the end of May 2015, it was plain that HSM were in a worsening financial situation. Mr Kaashoek’s email of 28 May 2015 said that the financial status had become “unacceptable and we need a swift solution”. Mr van de Waerden said on 29 May 2015, that “cash-flow is far from being neutral at the moment.” 127. On Monday 1 June 2015, Mr van der Waerden sent Mr Vidovic the draft invoice for April 2015. Attached were invoices “included as back-up for material and third party costs.” The draft invoice was in accordance with the template, and the supporting documentation was voluminous. Later that day, Mr Vidovic replied to say that to go through all that material, he would need to sit down with the relevant cost controller and “clarify eventually questions.” He also sought various elements of back-up documentation. 128. On 2 June 2015, there was a meeting between HSM and Aker. Item 3.7 of the minutes stated as follows: “Manpower levels are discussed (efficiency, diminishing return, and late Sail Away). Aker requests HSM to maintain current manpower levels.” 129. Also on 2 June 2015, Mr van der Waerden replied to Mr Vidovic identifying who was going to deal with any outstanding queries to man hours and the like. He said that he would deal with directly with materials and third party costs. On the same day Mr Jacobs, the business manager for Aker on the project, emailed Mr Vidovic to say: “If HSM have not followed the contract with regard to procurement then Aker can hardly be seen to be liable for their errors, as my first line of argument. HSM are supposed to issue for our approval all purchase orders and had we had that opportunity then we would have corrected the error at that point. My view is therefore that it is entirely HSM problem not ours. Accordingly we will request a credit for the disputed amount IMO. Do we have the full back-up for February and March as well as that for this April invoice? If so, is it acceptable in its current form of do we need to demand further details? It is crazy to my mind that we are at the beginning of June and have not yet approved their January invoice…” 130. Mr Vidovic replied to this by explaining that the January invoice had been approved and paid. He said that the April invoice was the first invoice “as drafted invoice with back up documentation.” He said his intention was to reject items “which will mean a dispute and ask HSM to issue credit for that amount. Percentage payment is not recommended.” He also referred to a number of other outstanding issues. 131. On 3 June 2015, Mr Steinar Haugen of Aker emailed Talisman to say that Aker and HSM were “still far apart in interpretation of the MOU and discussion leading up to it.” He went on to say that they had agreed that the invoices of February/March and April would be reviewed in detail and that the parties would “all work a dispute-credit re-invoice process so at least we can process payments not contested/disputed. I hope this will be completed with HSM over the next few days.” 132. On 4 June 2015, Mr Jacobs emailed a variety of people at both Aker and Talisman to identify certain outstanding items in HSM’s claim which were disputed. He summarised the problem as follows: “HSM are steadfastly sticking to their guns that they consider everything to be fully reimbursable. Aker consider that given the DAYWORKS RATES including for a portion of Management, Administration and Supervision then either some of those individuals on the ORG Chart should not be reimbursable or HSM should provide a lower rate across the board. Currently it is apparent that HSM are being reimbursed more than once for these people. This remains unsolved and the HSM project manager is of the opinion of “if you don’t pay us we won’t do the work” as he has stated often to our senior QS on site. We are now taking the approach that we will simply ‘dispute’ items going forward that cannot be agreed and request credit invoice(s) where appropriate, and then pay the undisputed portions of the invoice.” Again I find that this was an accurate summary of HSM’s position, and that they sought to gain a commercial advantage by regularly threatening not to do the work. Again, such circumstances militate against a finding that there was a common understanding by both parties that any payments made in these circumstances would be final and binding. 133. On 5 June 2015, Mr Vidovic emailed Mr Jacobs to say he was aware of the costs and HSM’s excessive mark up on those costs. Mr Jacobs replied to say that he was not at all surprised to see such a huge mark up from HSM. He then said that “confidentially however, we intend to do a full commercial audit on HSM after Sail Away.” Although Mr Hughes was entitled to complain that the prospect of an audit was not shared openly with HSM, it might be said that it was consistent with Clause 17.9 and the ‘without prejudice’ payment regime. 134. As part of the ongoing discussions in respect of the April invoice, on 5 June 2015, Mr Dekker of HSM sent certain spreadsheets to Aker including potentially disputed items marked in yellow. Later that day, Mr Vidovic emailed others at Aker in relation to the draft invoice, at the same time identifying items which were disputed and items where there were insufficient timesheet back ups. It was then that he said that “this approval will be without prejudice an amount will be re-conciliated afterwards” (paragraph 93 above). Mr Williamson asked me to note that this was just four days after the invoice and the voluminous back-up material had been provided. 135. There was a further meeting on 8 June 2015, at which much of the draft invoice was approved, whilst other items remained disputed. On 9 June 2015, Mr Vidovic emailed Mr van der Waerden requesting him to reissue the April 2015 invoice in the approved amount of €3,882,783.65 for further processing. That is the sum that is set out in the table at paragraph 39 above. Mr Vidovic went on to say that Aker were not in a position to approve the outstanding values for February and March 2015 because they did not have all the back up documentation and requested those invoices to be put in the same format and structure as the April 2015 invoice. On 11 June 2015, in response to the request, HSM issued the invoice for April 2015 in the approved sum of €3,882,783.65. The covering email expressly said that it was for the “undisputed part” of the original invoice. On 16 June 2015, Aker issued a payment certificate in that amount. 136. This then was the way in which the claims for interim payments were dealt with in June-August 2015, on which the entirety of HSM’s estoppel claim hangs. I make the following four points about the process: (a) (b) (c) (d) Although Mr Hughes at paragraph 21(i) of his closing note said that this procedure was “startlingly different from what had come before”, that submission was not made out on the evidence. There was no real evidence as to what had happened before. Mr van der Waerden suggested that the MOU changed nothing (see paragraphs 84-88 above). In truth, as I have said elsewhere, this was just a high-pressure version of the typical discussions and negotiations that take place on engineering and construction sites all over the world. The important part of the process for the purposes of the subsequent estoppel argument was the fact that the undisputed amount of the monthly invoice was separated out by agreement, and the subject of an approved invoice which could then be paid in full. In my view that was a matter of form rather than substance; there was no significance in the fact that the interim approvals were recorded that way. That conclusion is borne out by the fact that this process was never the subject of an agreement in advance by those with the necessary authority in Aker and HSM; it was instead an ad hoc process that was agreed by Mr Vidovic of Aker and Mr van der Waerden and Mr Dekker for HSM as the days went by, and the need to restore HSM’s cash flow became more important. In my view, there was a tendency on HSM’s part to imbue this evolving commercial process with a significance and effect which it simply does not deserve. To suggest that it was “far more detailed and involved than anything which is contemplated by clause 17 of the LOGIC’S Sub-Contract” (as Mr Hughes does at paragraph 21 (iv) of his closing note) is unrealistic and wrong. 137. The process noted above was followed in respect of invoices for the work done in May, June and July 2015. Each time the back-up material was extensive: each time Mr Vidovic had just a matter of days to agree an amount for payment. Thus, for example, Mr van der Waerden sent Mr Vidovic the draft invoice for the work done in June 2015 on 8 July 2015. Mr Vidovic replied immediately, confirming receipt of that draft invoice. He said that the reviewing of it would take some time and that a clarification meeting would be required. He said that “hopefully at Tuesday 14 th of July will payment certificate for approved (without prejudice) value be issued.” The relevant meeting happened on 15 July 2015 and that same day Mr Vidovic sent Mr van der Waerden the invoice for June 2015 “with overview of disputed items”. He said that if Mr van der Waerden agreed, then he could request the issue of a payment certificate. The attachments indicated the disputed items. Mr Vidovic had done all of that in a week. 138. Not only did Mr Vidovic have to deal with the claims for the work done following the MOU, but it was also agreed that the invoices for February and March 2015 would be dealt with in the same way. These two were considered and certain sums approved, in the same way as noted above, in June 2015. Indeed, as his email of 23 June 2015 makes clear, within the space of little over a week, Mr Vidovic dealt with the invoices for February, March and May 2015. Again, most of the claims were approved for payment, whilst some were not. 139. One of the consequences of the approval regime adopted by Mr Vidovic on site was that the costs that were being paid, and which were forecast until the end of the project, were in larger amounts than Aker wanted or expected. Accordingly, on 21 July 2015, Mr Vidovic pointed out to Mr Jacobs that, whilst he (Mr Jacobs) had not wanted to see an overall figure of €40 million, the position at that time “is much worse than that”. Mr Vidovic explained how, in respect of man hours and the like, the likely over-run was almost €3 million. Mr Jacobs was concerned, and wondered whether there could be a reduction in numbers. He also said that Aker “should put our foot down once and for all on Management. We need to pick a good number of management people and tell HSM that we will not reimburse them after this week. End of.” 140. In his reply, Mr Vidovic said that HSM claimed that they were instructed by Aker to maintain these manning levels and that “their attitude is that Aker is taking over- manning responsibility and HSM only provide resources on Aker’s request and prioritise work as Aker instructed.” Mr Vidovic also pointed out that Graham [Emmerson, of Aker] “also says that first priority is to complete most of scope and cost can be what it will be.” He said therefore that the forecast cost of €42 million “is very likely to be realistic”. 141. Mr Jacobs replied to say that “given these huge increases and I my opinion in very poor responses from HSM, I think you should not be in too much of a hurry to agree these ‘disputed’ items with them.” He said that “confidentially I want to be in the position where after Sail Away we have considerable sums of their money in our accounts.” 142. I accept that, although not uncommon in these high-pressure commercial situations, Mr Jacobs’ stance might fairly be said to be underhand. But even if Mr Hughes’ implicit criticisms of him are correct, that does not help HSM over the difficulty of establishing the required common assumption. The emails show that each side had a completely different idea of what HSM’s entitlement might be, and each side was protecting its own commercial position as best it could. For a common assumption to arise, to the effect that everything that was being approved and paid was being approved for all time, in circumstances where there was such a disjunct between the parties, is particularly difficult. As an absolute minimum, something crossing the line between the parties to that effect would be required. There was no such communication. 143. On 23 July 2015, Mr Kaashoek emailed Talisman and Mr Haugen of Aker complaining that Mr Jacobs wanted a reduction on the Cofely man hour rates. Mr Kaashoek was uncompromising: “There is to be no reduction and there is no reason for reduction.” He went on to say that he had been trying to get a clear statement that the matter is closed or open and he had not succeeded. Again, I note the absence of any sort of common assumption. Indeed, the Cofely rates remain in issue in these proceedings. 144. On 5 August 2015, Mr van der Waerden sent Mr Vidovic the draft invoice for July 2015 again including “the native file and third party invoices”. Mr Vidovic replied on 6 August 2015, saying that he attached the “reviewed invoices for July 2015 with approved – without prejudice amount of €4,449,322.75”, as noted in paragraph 95 above. 145. On 11 August 2015, following an exchange with Mr Jacobs, Mr Vidovic emailed Mr van de Waerden, amongst others, to say: “After transferring of the contract pricing format from re- measured to reimbursable after week 04, the last issued Fabrication Progress Tracker is to be treated as officially agreed status on measured quantities – see attachment. Progress payment for January was based on installed quantities from this document. Status of installed 10 off equipment (attached) is also agreed and paid as installed under the re- measured period of the contract.” The attached showed that the re-measurements by reference to the Progress Tracker stopped after the end of week 4 (the end of January 2015). Mr van de Waerden was invited to agree but did not do so. 146. Once the modules had been sailed away, the differences between the parties became apparent. There was a major dispute on who was responsible for the surplus materials at HSM’s yard. Each side produced a schedule for materials: Mr McGee of Aker commented that the HSM schedule “is just as aggressive as our own.” 147. On 20 August 2015, Talisman instructed Aker not pay any further HSM invoices. The Aker claim for liquidated damages was first notified on 26 August 2015. On 7 September 2015, Aker wrote to HSM to say that, because the contract required a re- measure for materials, HSM were liable for all surplus materials. HSM replied to both, on 8 and 14 September 2015 respectively, setting out their position. Thereafter, the battle lines were drawn. 5.9 The Conduct of the Parties/Analysis 148. I find that what happened at the yard was that, in order to progress matters and to ensure that there was a proper cash-flow to HSM, Aker divided the monthly claims into those heads of claim which they were prepared to pay, and those heads which they disputed. Those that they accepted were then included in the approved invoice. I consider that to be entirely normal. The issue is whether, by making those agreed payments, Aker are now estopped from subsequently disputing or seek to claw back any part of the sums paid as part of the final account process. 149. In my view, there is nothing in the exchanges which I have set out in Section 5.8 which could lead anyone to conclude that Aker were agreeing to be bound for all time by the sums that they were paying. There is no suggestion of that in any of the exchanges to which I have referred. 150. For completeness, and by reference to the principles of law noted in Section 5.3 above, I find that: (a) (b) There was no unambiguous and unequivocal assumption or representation that the monthly payments approved between June and August 2015 were final and binding and could never be reopened by Aker. The evidence was that Aker were certainly never working on any such assumption. Even the HSM evidence on the point was equivocal, since they did not clearly suggest that that was their position at the time and their evidence thereafter suggested that the MOU made no difference. The oral evidence, particularly from Mr van De Waerden, Mr Dekker and Mr Kaashoek, confirmed the impression created by the documents, that there were numerous differences of opinion between the parties as to what should be provided in support of the claims; what was being offered, and how that arguably fell short of what HSM required; what might be paid and what would not be paid. In the end, what mattered – to both sides – was getting some agreement so that some money could be paid. The position in the future was never at the forefront of anyone’s mind: there was just too much else to do. (c) (d) There was no communication of the alleged common assumption that passed across the line from HSM to Aker, and certainly nothing the other way. On the contrary, the only thing that passed across the line of any relevance was the clear representation by Mr Vidovic, made on 8 July 2015 (paragraph 94 above) and repeated on 6 August 2015 (paragraph 95 above), that the payment was being made ‘without prejudice’. That was, of course, completely contrary to the alleged assumption. There was no intention on the part of Aker that HSM would rely on any convention, neither has any reliance been made out in the evidence. Neither was there any intention by Aker that they would waive or forego any of their contractual rights. 151. It is also necessary to say something about unconscionability. Mr Williamson was careful to cross-examine a number of the HSM witnesses as to whether or not they would have been able to produce a final account in the form which Aker said, after the Sail Away date, needed to be produced. Mr van der Waerden and Mr Kaashoek both agreed that it would have been possible to provide that information: they did not do so because they did not feel they were obliged to do so. 152. Accordingly, on that basis, even if there had been any such assumption/representation, and even if it had been acted upon by HSM, there can be no damage or detriment because HSM could – if they had chosen to – have put in a final account in accordance with what Aker said was the correct reading of the contract. 153. 154. The questions as to what HSM could do as part of a comprehensive final account process focused on the re-measure of the materials. In relation to that, a number of HSM witnesses confirmed expressly that this was something which they could have done, and when it was suggested to Mr Jacobs of Aker in cross-examination that it would be a ‘logistical nightmare’, he explained how and why it would be a straightforward exercise. In his final submissions, Mr Hughes complained that the remeasure of materials was only a part of the final account exercise. But for present purposes it was and is the most important, because Aker do not dispute the quantities of man-hours as such, those having been recorded on a weekly basis. It might have been said that, whilst HSM could have done the necessary remeasure in the autumn of 2015, they were in greater difficulties in putting forward a different sort of claim by the time of these proceedings in the middle of 2016. But that was not the evidence, and neither is that the test. HSM have known since August 2015 at the latest what Aker said about the final account and what information they said was required. HSM chose not to provide any further information, although they said they could have provided it if they had wanted to. If (which was not their evidence) they are now in difficulties, then that is the result of their own choice, not because of anything said or done by Aker. 155. Mr van der Waerden was asked questions, not only about the possibility of re- measuring materials, but also about the piping work and the hours spent on that work. He agreed that HSM knew in 2015 how many hours had been spent on piping work and that HSM “know that now”. He agreed that they knew in 2015 what rates were in the relevant sub-contract, and that again they also knew that now. He expressly agreed that the same would be true in relation to each of the activities which were referred to in the MOU. On the basis of his evidence, therefore, there appeared to be nothing which had prevented HSM from presenting a final account claim entirely in accordance with the MOU. 156. 157. Taking the point to its logical extent, therefore, I consider that Mr Williamson was right to point out, at paragraph 57.4 of his closing note, that Aker do not understand how their insistence that HSM present its claims in accordance with the sub-contract, so as to demonstrate a proper entitlement to payment, could lead to unconscionability. In my view, it cannot do so. The final point to make on the question of unconscionability is to note the gap between HSM’s pleadings and their evidence. HSM plead in their Particulars of Claim that it would be unfair to allow Aker to resile from the alleged assumption. They even suggest that they would not have proceeded with the work if that had been made plain to them (a difficult submission as a matter of law in any event). However, by the time of HSM’s written opening, no unconscionability was identified. 158. During the trial, at no time did HSM adduce any evidence as to any detriment or material effect on them caused by the alleged common assumption, and at no stage did they point to some aspect of their final account claim now in play which they said could not be advanced under the terms of the LOGIC Sub-Contract or the MOU. It was as if HSM had forgotten that it was a necessary part of their estoppel claim in law to show that they had relied on the common assumption in circumstances which meant that (for example, because of the destruction of records or the failure to keep records in a particular way) they were now irredeemably prejudiced in presenting some or all of their final account claims in the way envisaged by the LOGIC Sub- Contract or the MOU. Instead there were times when HSM’s witnesses gave the general impression that they maintained the estoppel argument, not because they had real difficulties in presenting their claims in another way, but because the alternative involved some sort of loss of face on their part. 5.10 Conclusion on Issue 2(i) 159. For the reasons that I have given, I decide Issue 2(i) against HSM. The agreement of the invoices, pursuant to the process that I have noted, did not irrevocably bind Aker to the sums approved and paid between June and August 2015, and did not prevent them from seeking to argue that, on analysis, some of those sums were not in fact due. 5.11 The Parameters (Issue 2(ii)) 160. 161. I can deal with this issue much more shortly. I acknowledge that the issue only arose as a direct consequence of one of my rulings about the real disputes between the parties. At the time, I thought that it might be of help to the parties if I indicated what the parameters were (if any) relating to Aker’s ability to revisit the sums which had been paid on the monthly basis. Mr Williamson was wary of that, saying that HSM had not pleaded any case to that effect, and that in the absence of any evidence the point could not be said clearly to arise. In my view the answer to this issue is simple. Aker can revisit any sums which they have paid, but which they now say are not in fact due. That reflects the wide terms of Clause 17.9. Putting the point another way, it seems to me that each of the points which Aker now raise on the HSM Final Account are just iterations of the basic complaint that the sums previously paid “were not properly payable” to HSM. That is caught fair and square by Clause 17.9(b). So if a payment had been made for a forklift operator, but it turned out that, on a proper consideration of the LOGIC Sub- Contract and the MOU, the forklift operator was caught by an item in the preliminaries and therefore already in the sub-contract lump sum, then any sums previously paid for that forklift operator were not properly payable and were recoverable in these proceedings by Aker. 162. Rather to my surprise, Mr Williamson’s closing note seemed to want to rely on rather more than Clause 17.9. The highwater mark of that argument was to the effect that “the existence of an additional entitlement to challenge and claw back under the contract under clause 17.9 does not fetter the underlying entitlement to challenge. Clear words would be needed for that effect and they are simply not present.” 163. I confess that I do not fully follow that. Of course, Aker are entitled to rely on any part of the sub-contract in order to defend themselves against any suggestion that HSM are entitled to retain sums that are not properly due. There is also the possibility of a claim in restitution. But in reality, and for all practical purposes, I consider that Clause 17.9 gives Aker an unlimited right to reopen any interim payment (as Mr Williamson himself describes it at paragraph 67.3 of his closing note). 6. INTRODUCTION TO INDIVIDUAL ITEMS 164. 165. 166. 167. In relation to certain major items of HSM’s claim, namely Materials, Labour Positions, Management Positions and Third Party Costs, HSM have a stand-alone case, either that they are entitled to these items on the proper construction of the express terms of the MOU, or that, because of the way in which the claims for these items were dealt with by the parties between June and August 2015, Aker are estopped from denying HSM’s entitlement to that item as set out in the HSM Final Account. The individual arguments of construction are dealt with, item by item, in Sections 7- 10 below. The rules of construction are now well-known: there have been a plethora of cases in the House of Lords and the Supreme Court in recent years in which the relevant rules have been set out, including Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; Rainy Sky SA v Kookmin Bank [2011] UKSC 50; Arnold v Britton [2015] UKSC 36; and Woods v Capita Insurance Services Ltd [2017] UKSC 24. Although some practitioners and legal commentators with nothing better to do have sought to exploit certain fine linguistic differences between the various judgments, in my view they all point in the same general direction. What matters is the objective meaning of the language, to be derived from the natural or usual meaning of the words used, when seen against the background/context of the contract; where there are rival interpretations, one test is to consider which interpretation is more consistent with business common sense. But, although those are the principles that I apply to the issues of construction in Sections 7-10 below, it will be seen that in this case, on analysis, the construction issues are very straightforward and do not require extensive analysis. I also deal briefly in Sections 7-10 with HSM’s individual estoppel arguments. But I have to say at the outset that I can see no possible way in which, given my conclusions on the overarching estoppel point set out in Section 5 above, the estoppel arguments in relation to the individual items can even get off the ground. The reasons for the failure of the estoppel point in relation to the general approval of invoices apply all over again to the approval of these individual heads of claim within those invoices. There is a third and final point to be made by way of introduction to my consideration of the individual items of claim. With the part-exception of the claim for Materials, the other three heads of claim with which I am asked to deal – namely Labour Positions, Management Positions and Third Party Costs – find no expression whatever in the MOU. In other words, HSM’s Final Account in these proceedings is structured in such a way that it is, certainly on occasions, impossible to correlate it with either the MOU or the underlying LOGIC Sub-Contract. Thus, in order to identify how or 168. 169. 170. 171. 172. why HSM might be entitled to recover under these various heads, a contractual analysis is required which HSM have not undertaken in their pleadings or their witness statements. Sometimes during the course of the oral evidence, a particular Labour or Management Position was identified and then an investigation attempted with a witness to see under what possible terms of the LOGIC Sub-Contract or the MOU the particular claim might arise. That was an unheralded (and therefore unfair) attempt to do in an ad hoc fashion what HSM should and could have done, and in a comprehensive way, months if not years ago. It was also not a proper use of the limited time available for the hearing. I am bound to conclude that the presentation and pursuit of HSM’s final account in this way has been deliberate: it suited them to make their claims as they have always done, presumably because that was the easiest way of passing on the claims that were being made to them by their sub-contractors and indeed, in the case of ENREM and others, their sub-sub-contractors. Mr Dekker and Mr Kaashoek agreed that they could have presented their claims in a way that was, to put it neutrally, more comprehensible in the light of the terms of the MOU and the LOGIC Sub-Contract, but they chose not to. This is not merely a matter of correct form (although I acknowledge that it made for a certain amount of judicial exasperation, and only confirmed yet again that the absence of independent quantity surveyors on either side was a grievous loss to comprehension and clarity). In a case where HSM were saying that the proper construction of the MOU entitled them to make a claim for a particular type of claim (such as Third Party Costs), but where Third Party Costs were not identified in the LOGIC Sub-Contract or the MOU, the difficulties were obvious. Furthermore, such a presentation also made it very difficult to pinpoint precisely how or why it could be said that, in relation to the individual items of claim, if the MOU did not achieve the result for which HSM contended, in some way Aker’s conduct after the MOU gave rise to that result. Perhaps as a result of these difficulties, Mr Hughes endeavoured to argue that, pursuant to the LOGIC Sub-Contract, HSM were not obliged to put in an all-singing, all-dancing final account and could instead choose to put in a final invoice which just dealt with the sums which had not been paid along the way. He said that, on this basis, the burden would then be on Aker, under Clause 17.5, to demonstrate why particular sums were not payable. The suggestion was that, in those circumstances, HSM’s form of presentation may not be very helpful, but it was in accordance with the sub-contract and that any problems of presentation were therefore the responsibility of Aker. In my view, Mr Williamson was right in his complete refutation of that submission (which itself only arose on the last afternoon of the trial). It is clear from looking at the contemporaneous documents and the subsequent pleadings that, between September 2015 and January 2016, HSM provided three versions of their final account which had one thing in common: they were all comprehensive claims for a gross sum of around €42 million. Those claims were not limited in the way they might have been under Clause 17.5. They were full final account claims. Furthermore, the claim in these proceedings has been pleaded as a claim for the gross amount due under the final account, less what had been paid to date, and that is also how HSM’s claim was opened. In those circumstances, I take the view that Aker’s fundamental criticisms of HSM’s presentation, set out in the previous paragraphs, are valid and relevant. 173. With those points in mind, I now turn to the individual items of claim. 7. MATERIALS 7.1 The Issues 174. The parties have agreed the following issues in respect of materials: “Issue 3: Materials: In relation to Items 10 and 11 in the table from Aker’s Opening Submissions called ‘Section 14: Conclusion: The Rival Final Accounts’: (i) (ii) (iii) Is the Claimant entitled to be remunerated for actual quantities of materials supplied without re-measure in accordance with the re-measurement rules set out in the LOGIC Sub-Contract at the rates set out in clause c) of the MOU? (HSM’s case) OR are quantities of materials re-measurable in accordance with the re- measurement rules set out in the LOGIC Sub- Contract, to be valued at the rates set out in clause c) of the MOU? (Aker’s case) If the Defendant succeeds on the question of construction identified above, is the Defendant estopped by a convention of the parties, alleged by the Claimant, whereby the Claimant was to be remunerated for actual quantities of materials supplied without remeasure, at the rates set out in clause c) of the MOU? If the Claimant succeeds on either (a) or (b) above, what sum is HSM entitled to recover? (€2,759,397.76 on the Claimant’s case; zero on the Defendant’s case).” 7.2 The Contractual Position: Issue 3(i) 175. 176. 177. It is common ground that, pursuant to the LOGIC Sub-Contract, the materials were to be valued on a re-measurement basis: in other words, the quantities would be re- measured from the final As-Built Drawings. The applicable rates were those set out in the Bills of Quantities at Section D.5. The MOU made two modifications to this. The first was in respect of E&I materials which, at Clause (iv) of the MOU, were to be reimbursed at cost, plus 15% mark up, in circumstances where there was no star rate and it was not possible to extrapolate from existing rates. Clause (iv) said nothing about altering the basis of ascertaining the quantities of these materials. The second was Clause (c) of the MOU, which stated that “all materials costs for all Trades shall be applicable trade re-measure in accordance with Section III…except as noted otherwise below.” Clause (c) then went on to set out the exceptions (piping and electrical) where the rates were star rates (if there was no rate in the BoQ), with cost- plus being appropriate only if no star rate was agreed. It is Aker’s case that these words mean what they say, and that HSM’s entitlement in respect of materials for piping and electrical was at one of these three alternative rates, with the quantities being ascertained on a re-measurement. 178. On the face of it, Aker’s contention would appear to be unassailable. Nothing in the MOU appeared to modify or change in any way the method by which the quantities of materials were to be ascertained (i.e. the re-measurement basis). However, that conclusion would mean that HSM would be significantly out of pocket, because at the end of the project, they were left with a considerable amount of surplus materials. Accordingly, they have put forward a number of alternative arguments as to how and why, following the MOU, a re-measure was not applicable or appropriate. 7.3 The Various Iterations of HSM’s Case on Issue 3(i) 179. The first thing to note is the case which HSM does not pursue. Originally, they had pleaded an alternative case that, if materials were-measurable, they should be measured against the Material Take-Offs (“MTOs”). There were procedural disputes about the particularisation of this claim. At the CMC, HSM were ordered to confirm whether or not they were proceeding with this alternative case and, if so, to provide particulars. Following the CMC, HSM confirmed that it was not proceeding with its MTO case. 180. Nor does the matter end there. Aker have done a re-measurement of the actual materials used in M12 and M14. Their response to this item of claim is based on that re-measurement. That has not been challenged in any detailed respect. Accordingly, unless HSM can show that they were entitled to be paid on a different basis, they will be unable to recover any further sums in respect of materials. 181. There were hints throughout HSM’s case that, in some way or another, the MOU turned the materials element of the work into a reimbursable contract. I have already dealt with and rejected that general submission (see paragraphs 68-69 above). Dealing specifically with materials, the question is whether there is anything in the two provisions of the MOU, referred to at paragraph 176-177 above, which makes the basis of payment for the materials reimbursable, without any re-measurement. 182. Neither of the clauses of the MOU dealing with materials gives any suggestion that they are to be paid for on a reimbursable basis. It might be thought that, at the very least, that word (or some form of equivalent) would have had to have been used somewhere in the MOU if that was to be the result. It was not. This is not just a rote point: everyone in the construction and engineering world knows the critical difference between re-measurement on the one hand (when the risk of ordering too much rests with the contractor) and reimbursable on the other (when there is no risk to the contractor). 183. Not only does the MOU not say that it is changing the basis by which materials are paid for, but it also reiterates the existing terms of the LOGIC Sub-Contract. The MOU states that, apart from the ‘concessions’, which are silent on the point, “HSM will continue to fulfil their CONTRACT obligations …”. Accordingly, clause (c) of the MOU has to be read as part of a reiteration of the terms of the LOGIC Sub- Contract conditions, not a departure from them. That confirms my view that the LOGIC Sub-Contract agreement to re-measure materials remained unchanged by the MOU. 184. HSM next suggested that Clause (c) of the MOU should be read as if it contained the word “rates”, which they said should be added after the words “applicable trade re- measure”. It was said that this reading “makes complete sense” and demonstrates that the material quantities would not be re-measured. I reject that submission for three separate reasons. 185. 186. 187. First, it is never a promising start to construe a contract by adding words which are not there. Although in HSM’s opening there was a suggestion that this could be done because of the factual matrix (itself a difficult concept), that submission falls away as a result of the agreement of an appropriately concise factual matrix, recorded at paragraph 25 above. There is nothing in that brief description which could possibly justify the introduction of the word “rates” into clause (c) of the MOU. Secondly, it is not necessary to add the word “rates” after “re-measure”. Clause (c) of the MOU already refers to “cost(s)”. Thus the clause already deals with the basis of remuneration. I accept Mr Williamson’s submission at paragraph 82.2 of his closing note that if (which he does not accept) a further word has to be added to the clause; it makes much more sense to add the word “quantities” rather than “rates”. That would then, of course, achieve precisely the opposite of what HSM want. Thirdly, it does not seem to me that, even if HSM’s construction was the correct one, it would support a claim that the materials were reimbursable. The dispute between the parties concerns how the quantities of materials are to be ascertained. Adding the word “rates” into Clause (c) of the MOU would make no difference to that issue. HSM would still be left with the difficulty that under the LOGIC Sub-Contract it was a re-measurement contract, and under Clause (c) of the MOU there would be what is referred to as a “re-measure”. 188. HSM’s next contention, expressed in a number of different ways in their opening and closing submissions, is that “it would be commercially difficult, if not impossible, to re-measure materials whilst having significant [labour] resources reimbursable.” But that suggestion was defeated by HSM’s own evidence. Both Mr van der Waerden and Mr Dekker confirmed in cross-examination that it would have been perfectly possible for HSM to carry out a re-measure of the relevant materials. This evidence was given freely and without qualification. Accordingly, there is nothing in the suggestion that the obvious construction of the MOU was somehow commercially unworkable. 189. The final contractual argument put forward by HSM was to the effect that a re- measurement of the materials was somehow at odds with the “fullest endeavours” obligation. I confess that I did not really follow that submission. I understand that the “fullest endeavours” obligation was an important qualification as to the time for completion, and indeed it is one of the reasons why, in Section 4 above, I have concluded that Aker are not entitled to levy liquidated damages. But it is irrelevant to the method of valuation. That is because HSM expressly agreed that, in exchange for utilising their ‘fullest endeavours’, they would be remunerated in accordance with the various modifications (or “concessions” as they are described) set out in the MOU. Those provisions do not make materials reimbursable on a full cost basis. HSM cannot rewrite the remuneration part of the MOU simply because they promised to utilise their “fullest endeavours” to achieve Mechanical Completion by 1 July 2015. One does not follow from the other. 190. Accordingly, as a matter of construction, HSM’s case on materials must fail. The MOU reiterated what the LOGIC Sub-Contract said: that the quantities of materials would be ascertained on a re-measure. It contained no departure from that basic principle. 7.4 The Estoppel Case (Issue 3(ii)) 191. HSM argue that the parties’ conduct in relation to the invoicing process meant that Aker accepted that materials were to be paid for on a reimbursable basis and that they are now estopped from saying that the quantities should be re-measured. As I have already observed in paragraph 166 above, it seems to me that this argument fails for all the reasons set out in Section 5. The payments authorised by Aker in respect of the invoices (including claims for materials) were being made on a without prejudice/on account basis in accordance with Clause 17.9, and nothing happened which bound Aker either to accept liability for all time on the basis of the invoices or to indicate to HSM that Aker were not going to rely on their contractual entitlement to a re-measure. 192. As to the parties’ particular conduct in respect of materials, it is plain that, from June to August 2015, HSM’s interim claims were dealt with on the basis of the invoices which they had received from their sub-contractors and suppliers. It is also clear that, at that time, the quantities of materials to which those invoices related were not being re-measured. Very often, the quantities and even type of material were not apparent from the invoices supplied by the sub-contractors and suppliers, with the result that Mr van der Waerden had to do a rough-and-ready apportionment exercise (80% labour, 20% materials) in respect of the labour and material elements respectively. 193. 194. 195. 196. The alleged estoppel in respect of materials is set out in paragraph 42(i) of the Particulars of Claim. This alleges that what Mr Vidovic and those at the yard did when looking at the invoices was to look at the “actual quantities of materials supplied” and agree them, and it is alleged that Aker cannot now resile from that. But that is wrong on the facts: there was no evidence that, at the yard, the Quantity Surveyors did or could look at actual quantities; all they could do was to look at invoices from suppliers and sub-contractors, which did not generally indicate any quantities for materials at all (hence the allocation). Thus, the pleaded factual basis of HSM’s estoppel case on materials was contradicted by the evidence. In argument, the high watermark of HSM’s estoppel case in respect of materials related to the Progress Tracker. This was a rolling computer programme that tracked progress on the Modules by reference to the re-measured quantities from the as-built drawings. That programme was no longer updated after week 4 (end January 2015). HSM said that this demonstrated the switch away from the re-measurement of materials. I have considered that submission carefully, but I cannot accept it. As the name implies, the Progress Tracker was concerned with progress. Prior to the MOU, it was one of the tools in which the parties worked out the projected date for completion. After the MOU, and the abandonment of a binding contractual completion date, there was no need to use the Progress Tracker. The fact that it was not used after January 2015 might therefore be said to be further support for HSM’s case that liquidated damages were no longer operable (see Section 4 above), but it cannot be said that it is of any relevance to the estoppel case in respect of materials. The abandonment of the Progress Tracker cannot be read as an agreement that the materials would no longer be re-measured. They were two entirely different things. I had wondered at the outset if the case about the Progress Tracker was going to be linked to a submission that, once it was no longer used, and the different method was adopted for the interim payments, HSM were unable to carry out a re-measurement exercise. Such an argument would certainly have demonstrated detriment. But, as I have already noted at paragraphs 151-154 above, that was not the evidence. On the contrary, HSM said that it was open would have been quite open to then at any time after Sail Away to claim for materials on a re-measurement basis. In those circumstances, the fact that the Progress Tracker fell into abeyance after the end of January 2015 is nothing to the point. 197. Essentially, the estoppel case is based not on the facts or on principle, but on necessity. HSM treated the MOU as if it was reimbursable, even though it was not. They maintained the case that materials were reimbursable despite the fact that the LOGIC Sub-Contract and the MOU said to the contrary, and so they needed an estoppel case in order to succeed. But that simply does not work, either as a matter of fact or as a matter of principle. For all these reasons, the estoppel based on the alleged treatment of materials must fail. 7.5 Quantum (Issue 3(iii)) 198. 199. This Issue only arises if (contrary to my conclusions) HSM had won on either construction or estoppel. Aker say that, even if HSM had been right on either point, HSM had not presented its claim in accordance with the re-measurement rules set out in the LOGIC Sub-Contract, and/or by reference to Clause (c) of the MOU. For example, Aker note that HSM have nowhere identified the materials being claimed at BoQ rates; or explained why the BoQ rates were inapplicable such that the materials could be claimed at star rates and what those star rates were; or explained why there were no appropriate star rates either and why the materials could be claimed at cost; or provided an explanation for what the materials were for and how they arose under the various clauses of the sub-contract or the MOU which entitled HSM to recover for them in the first place. Instead, say Aker, all that HSM have done is to supply a series of invoices which dealt with materials in an extremely cursory way, often requiring a broad-brush percentage split between labour and materials, and a similarly general allocation as between M12 and M14. For these reasons, Aker submit that the valuation for this item should be nil in any event. 200. One of the difficulties for me is that HSM did not separately address Issue 3(iii). They would therefore appear to have no answer to Aker’s submissions on quantum. In my view, there was no answer: Aker’s submissions on this Issue are well-founded. Accordingly, I find as a fact that, despite their pleaded assertion to the contrary, HSM have not made a claim for materials in accordance with the LOGIC Sub-Contract, as amended by the MOU. The best evidence of the true value of this claim is Aker’s assessment. On that basis, I conclude that Mr Williamson is right and that, even if HSM had succeeded on either the construction or the estoppel argument, the court could not have awarded any further sum in respect of materials. 8. LABOUR POSITIONS 8.1 The Issues 201. The parties have agreed the following issues in respect of Labour Positions: “Issue 4: Labour Positions: In relation to the Labour Positions (totalling €463,825.14) a) fork lift operator b) PFP foreman c) PFP QC inspector and d) ENREM all as identified in HSM’s Annex F to its Opening Note and Item 12 in the table from Aker’s Opening Submissions called ‘Section 14: Conclusion: The Rival Final Accounts’: (i) Are these positions recoverable under the terms of the MOU read with the LOGIC Sub-Contract? (ii) If the Defendant succeeds on the question of construction identified above, is the Defendant estopped by a convention of the parties, alleged by the Claimant, whereby the parties treated these Labour Positions as recoverable, with the result that HSM is entitled to be paid for them.” 202. These disputes are of a slightly different kind to those dealt with in Section 7 above. Although the estoppel point essentially remains the same, the construction points are specific, and require a consideration of particular parts of the LOGIC Sub-Contract and/or the MOU. Accordingly, I deal with those issues in Section 8.2 below. I deal with the estoppel argument in Section 8.3 below. For the reasons set out in those Sections, I reject both arguments. 8.2 Issue 4(i): Construction 8.2.1 The Forklift Operator 203. The disputes between the parties as to what was truly in issue between them even extended down to this level of detail. HSM’s pleaded claim said that this item was recoverable pursuant to Clause (iv) of the MOU. However, HSM’s written opening seemed to abandon that, and instead put this claim by reference to Clause (i) of the MOU. HSM’s closing note reverted to Clause (iv). Whilst this constant chopping and changing is a sure sign of a claim in disarray, it may not make a difference to the outcome. 204. Whether the claim is under Clause (i) or Clause (iv), HSM’s case is generally the same: namely that the word “all”, which introduces these respective items (whether for piping work in Clause (i) or for structural and mechanical labour work in Clause (iv)) allows them to recover every last element of cost incurred in respect of these works, regardless of the other provisions of the sub-contract. It is said, therefore, that one or other of these Clauses must cover the forklift operator. 205. 206. In my view, there are two reasons why that general submission should be rejected. First, at the most basic level, there would need to be an explanation of what the forklift operator was doing before there could be recovery under any Clause of the MOU. Thus, to the extent that the claim is maintained under Clause (i), HSM would need to explain why the cost of the forklift operator was a part of the piping work. To the extent that the claim is made under Clause (iv), HSM would need to explain why the cost of the forklift operator was part of the structural and mechanical labour. The absence of any such evidence goes back to the wider criticisms of the presentation of HSM’s claim, noted above. In short, there is no evidence to explain why the cost of the forklift operator is claimed under either of these Clauses. That uncertainty has, of course, been compounded by the fact that the relevant sub-contracts, which are expressly referred to in Clauses (i) and (iv) of the MOU, have not been provided to Aker or the court. Secondly, I do not consider that the use of the word “all” could allow HSM to recover all its costs, regardless of the provisions of the LOGIC Sub-Contract and the other parts of the MOU. That would mean that the MOU had turned this into a fully reimbursable arrangement, and that is emphatically not what it did (see paragraphs 68-69 and 181-182 above). Clauses (i) and (iv) of the MOU would not, for example, cover resources for which recovery was already being made under the LOGIC Sub- Contract in another way (i.e. by way of the agreed lump sums). The MOU did not allow HSM to recover twice for the same item of resource, a point which Aker made to HSM repeatedly between April and August 2015. 207. In addition, on the material before me, I conclude that the cost of the forklift operator was not separately recoverable under the MOU in any event, but was covered by the LOGIC Sub-Contract. I have referred at paragraph 18 above to paragraph 1.2.2 of Section E of Section III. That set out what was included in the lump sum for the Contractor’s Facilities and Equipment. It expressly included the “operating labour for permanent plant”. On any interpretation of those words, a forklift operator would be caught by that description: he was the labour operating an item of permanent plant (ie the forklift). If it was said that an additional forklift operator had to be engaged solely to deal with additional obligations created by the MOU, then this item claim might at least have been arguable, but there was no evidence of that, and that was not how this item of claim was put. 208. For these reasons, I reject the claim for the forklift operator. 8.2.2 The PFP Foreman and QC Inspectors 209. The Passive Fire Protection (“PFP”) contractor was apparently Bilfinger. I consider that their foreman, and the QC Inspectors, were a supervision cost. They were therefore covered by the lump sums, rates and prices already recoverable under the Sub-Contract. Specifically, Paragraph E.1 of Section A of Schedule III said that all lump sums rates and prices were deemed to be fully inclusive and expressly included supervision (paragraph 17 above). Clause 1.2.2 of Section B of Schedule III (paragraph 18 above) stated that daywork labour rates also included ‘all management, supervision…’. 210. Accordingly, I accept Aker’s submission that both the PFP Foreman and the QC inspectors were already covered by the lump sum and a separate claim for them would amount to double recovery. 211. 212. In respect of the PFP foreman, HSM sought to rely on Clause (xii) of the MOU, which is the relevant part of the MOU dealing with PFP. However, that does not provide an answer to Aker’s argument that this is already included, because that was a provision which allowed PFP labour to be compensated by means of man-hours; it did not deal with supervision at all. Mr Hughes accepted at paragraph 49 of his note that “there is no rate for the foreman in the Bilfinger sub-contract”, an admission which, in my view, also meant that Clause (xii) could not be invoked. The admission could not be checked, of course, because the sub-contract has not been provided. The refence to the dayworks schedule in the LOGIC Sub-Contract was misconceived; that regulates what is recoverable under some Clauses of the MOU (like Clause (xiii)) but is not referred to in Clause (xii). Furthermore, I consider that, even if the QC inspectors were not properly categorised as supervision, they would still not be recoverable as an extra cost. First, there was no evidence from HSM as to what these inspectors were doing, or how and why their cost was recoverable as an additional sum under either the MOU or the LOGIC Sub- Contract. Secondly, the item is claimed as a third party cost (i.e. a cost that was not initially incurred by either HSM or HSM’s sub-contractors – in this case Bilfinger - but by others further down the contractual chain). To the extent that this is an appropriate description of this item of claim, it seems to me to be untenable, because the recoverability of such costs was not expressly identified in the MOU at all (a point to which I return in Section 10 below). 213. Thirdly, although there was reliance on Clause (xiii) of the MOU at paragraph 52 of HSM’s closing note, I do not consider that that is of any assistance. Clause (xiii) related to the “CONTRACTOR’S” project management organisation (ie HSM’s organisation). It does not on the face of it permit recovery of the project management costs of other parties; there is certainly no reference there to the organisation costs of sub-contractors or third parties. And yet, when it wanted to, the MOU did refer to sub-contractors: Clause (e) referred expressly to “SUBCONTRACTORS”, so they were a recognised entity under the MOU. The absence of such a reference in Clause (xiii) means that the costs of the QC inspectors were not recoverable under Clause (xiii). Similarly, table 1 of Section III (paragraph 19 above) contained no daywork rate for a third party QC inspector. 8.2.3 ENREM 214. 215. 216. 217. 218. ENREM were not one of HSM’s sub-contractors, so they were not a party to any of the sub-contracts referred to in the MOU. I was told that they were a sub-contractor to Cofley, who were the piping sub-contractor under the sub-contract referred to at Clause (i) of the MOU, and also the E&I sub-contractor under the sub-contract referred to at Clause (ii) of the MOU. I reiterate that neither Aker nor I have seen those sub-contracts, let alone any contract(s) down the line between Cofley and ENREM. Mr Hughes submitted that it would be artificial to disallow this item of claim because, if the work had been done by Cofely, it would have been recoverable under Clause (i) of the MOU. Why, therefore, he asked, should it be disallowable merely because Cofely sub-contracted this work – whatever it was – to ENREM? There are therefore a number of answers to that. First, it seems clear that there was no entitlement to recover these sums under the LOGIC Sub-Contract. Paragraph 37(6) of the Particulars of Claim expressly confirms that ENREM “did not supply resource contained within the claimant’s pricing or allowances under the LOGIC Sub-Contract and the resource supplied was not intended to be covered or deemed to be so covered”. On one view, that could be said to be the end of this item of claim: if they were not providing something covered by the sub-contract, they must have been doing something extra. But what? What were they doing and how can the cost of that extra work be recovered? In the absence of answers to those questions, the claim cannot succeed. Secondly, and leading on from that point, in order for this claim to come within the MOU, HSM would have to show under which clause of the MOU it arose. That could only have been done if they had been able to demonstrate what the ENREM employees were actually doing. But there was no written or oral evidence about that. Because the claim has always been put forward on the basis of the ‘approved’ invoices only, the claim has never been properly presented. So the position in respect of ENREM (and it is not limited to them) is very unsatisfactory. It may be that the cost of at least some of the work that ENREM carried out was recoverable under Clause (i) of the MOU. But no sustainable claim for such work has been presented or evidenced, and in consequence, Aker invited me on the pleadings and on the evidence to reject the claim that has been made. In the circumstances, it seems to me that that is the only permissible result. 8.3 Estoppel 219. I have already observed (paragraph 166 above) that my answer to the overall estoppel case, advanced by reference to the approval of invoices, is determinative of this specific issue as well. The treatment of Labour Positions was no different to the treatment of any of the other interim claims in the discussions between Mr Vidovic and Mr van de Waerden, so no different result can eventuate. 220. 221. I should say that the factual evidence in respect of the ENREM invoices highlights the absurdity of HSM’s estoppel case on this item of claim. Mr Vidovic was asked about ENREM and he smiled and said (in his self-deprecating way) that he only heard of them for the first time in June 2015. He said that he did not see any back-up in relation to ENREM at all until late July 2015. To then suggest that in some way, as a result of Mr Vidovic’s approval of interim payments (which included amounts for ENREM), Aker are bound to accept all of ENREM’s claims, whether they are valid or not, is a commercial nonsense. Perhaps because he was aware of this difficulty, in his closing note, Mr Hughes set out (at paragraphs 46, 50, 53 and 57), various detailed elements of the review/approval process, in order to submit that, because certain items within the Labour Positions claims were “not questioned” in June-August, Aker were now estopped from disputing the claims. Although these specific arguments do not alter my conclusions as to estoppel, I am bound to note that none of this was developed in opening and none of these instances were put to Mr Vidovic, or any of the other Aker witnesses. It would be wholly unfair if the so-called “common assumption” was allowed to become such a moveable feast. 222. Although I must therefore formally disregard those paragraphs of HSM’s closing note, I reiterate my view that, even if those points had been fairly made, they would not have altered my rejection of HSM’s estoppel case in respect of Labour Positions. 9. MANAGEMENT POSITIONS 9.1 The Issues 223. The parties have agreed the Issues in respect of Management Positions as follows: “Issue 5: Management Positions: In relation to the Management Positions (totalling €668,258.64) all as identified in HSM’s Annex F to its Opening Note and Item 3 in the table from Aker’s Opening Submissions called ‘Section 14: Conclusion: The Rival Final Accounts’: (i) Are these positions recoverable under the terms of the MOU read with the LOGIC Sub-Contract? (ii) If the Defendant succeeds on the question of construction identified above, is the Defendant estopped by a convention of the parties, alleged by the Claimant, whereby the parties treated these Management Positions as recoverable, with the result that HSM is entitled to be paid for them.” 224. For similar reasons to those set out in Section 8 above, I have concluded that, as a matter of construction, the particular construction issues should be decided in favour of Aker. I reject the estoppel argument for the same reasons as before. 9.2 Issue 5(i): Construction 9.2.1 Heat Tracing Technician and Project Manager 225. I can take these two HSM Management Positions together. Aker have accepted liability to pay for all the Management Positions set out at paragraph 32 of the Particulars of Claim, with the exception of these two Positions. HSM say that, on a true construction of Clause (xiii) of the MOU, it is entitled to be remunerated for all management/preliminaries costs incurred after the date of the MOU, including these. 226. The starting point is the Remuneration Summary of the LOGIC Sub-Contract, noted at paragraph 19 above, which entitled HSM to €1,757 million, under the heading ‘Prelims’, for “Management, Supervision and Staff”. They always remained liable to provide those services, an obligation which was reiterated by the terms of the MOU. 227. Clause (xiii) of the MOU envisaged that there would be some changes to the basis of remuneration for preliminaries. Instead of the lump sum, after week 4 in 2015 (effectively the end of January), HSM would be paid at the rates set out in the schedule of daywork rates at table 1 of the LOGIC Sub-Contract (paragraph 19 above). Accordingly, for there to be a claim for a particular Management Position once the MOU took effect, Clause (xiii) required HSM to establish an entitlement to that Management Position pursuant to that schedule. 228. Neither the ‘HT Technician’ nor ‘Open Project Manager IV’ appeared in or were referred to in that schedule. Accordingly, on a proper construction of Clause (xiii) of the MOU, these two Management Positions are not recoverable. Mr Hughes endeavoured to answer that by suggesting that it was irrelevant that these Positions were not within the schedule because it was not exhaustive of the Management Positions for which HSM could be reimbursed under the MOU. He further argued that this interpretation would ignore the circumstances into which the MOU came into being. 229. I reject those submissions. The wording of Clause (xiii) is clear. There was no basis under that Clause for HSM to be paid for Management Positions that were not in the schedule. Any difference between the resources HSM used to carry out the works after the MOU, and the agreed basis of remuneration in the MOU, meant there was a risk of a shortfall to HSM, but that was because the MOU was not fully reimbursable throughout. For this item of claim, if the MOU had been fully reimbursable, the qualification in Clause (xiii) by reference to the schedule in the LOGIC Sub-Contract would have been wholly redundant. 230. As to the reference to the circumstances in which the MOU came into being, this seemed to be a reiteration of the general argument that the need for speed that gave rise to the MOU allowed HSM to recover all its costs (in this case for additional preliminaries) regardless of what the MOU actually said about remuneration. I have already rejected that argument. 231. I note that, in HSM’s closing note, a new case was advanced in relation to the heat tracing technician pursuant to Clause (iv) of the MOU. Leaving aside Mr Williamson’s justified complaint that this claim was not opened and emerged, at the last possible moment, in HSM’s closing note, I consider that the new argument fails in any event. Clause (iv) was concerned only with labour, not management or supervision. This claim was advanced as a Management Position because that is what it was, and that is how it has always been treated by the parties. It is wholly disingenuous for HSM now to say that in some way this was a labour role which was treated as a Management Position for administration purposes only. Moreover, that is an argument that is impossible to sustain in the absence of any evidence to that effect. 232. That leads on to the final reason why this head of claim must fail: there was no evidence provided as to what these individuals were doing (i.e. no evidence that the HT Technician was carrying out structural or mechanical work or what the Project Manager was doing at all); the relevant Sub-Contract(s) has not been provided; and no explanation has been given as to how the claimed costs relate either to Clause (xiii) or Clause (iv) of the MOU. 233. For all those reasons, therefore, the claims for additional monies for an HT technician and project manager fail as a matter of construction. 9.2.2 Cofely 234. 235. I was told that Cofely were the relevant sub-contractor referred to in Clause (i) of the MOU. That would seem to make Clause (i) the only possible candidate under which this claim could be recovered. That was certainly the way in which this item of claim was pleaded. In accordance with Clause (i), recovery was only possible if the relevant Management Positions were within the sub-contract rates under the HSM/Cofely sub-contract expressly referred to in Clause (i). That sub-contract has not been produced, and it has never been suggested by HSM that these Positions do fall within that sub-contract in any event. Such a claim is not pleaded and could not now be advanced. Further and in any event, Clause (i) was concerned with work and labour: it does not appear to cover management/supervision, which the LOGIC Sub-Contract and MOU treat in an entirely different way. 236. Accordingly, this became another item for which HSM changed the basis of claim at the last moment. In closing they relied on Clause (xiii) of the MOU. That claim fails for reasons already given, namely: (a) (b) Clause (xiii) related to the ‘CONTRACTOR’s project management organisation, not that of a ‘SUBCONTRACTOR’ (see paragraph 213 above); the Cofely Management Positions with which I am concerned – ‘store manager’; ‘calculator’; and ‘controller’ – were not mentioned in the LOGIC Sub-Contract daywork schedule (table 1) at all, so there could be no claim under Clause (xiii) in any event (see paragraphs 227-228 above). 237. In opening, HSM also sought to justify this claim on the grounds that, as a result of the MOU, “it was plainly envisaged that substantial resources be committed by the claimant beyond those positions mentioned in table 1.” I have already made the point that HSM were entitled to be paid for additional resources, but only if that is what the MOU permitted. If HSM were right, and Management Positions beyond table 1 were envisaged, then numerous unanswerable questions would arise: Why link remuneration to table 1 at all? How would such Positions be paid for under clause (xiii)? What would be the applicable rates? 238. Finally, as with all these items, there was no evidence from HSM as to what these personnel were doing and/or why their costs were now recoverable under the MOU. As previously noted, the relevant sub-contract has not been supplied and there is no explanations as to how the costs claimed could be said to correlate to the applicable rates in Clauses (i) or (xiii) of the MOU. 9.2.3 Bilfinger 239. The parties’ continuing debate as to what was actually in issue between them was best illustrated by this individual item of claim. Although it was part of the openings and an agreed issue, in his closing note, Mr Hughes said that this item was not, in fact, within HSM’s claim. He then went on to say that “it would have been recoverable under Clause (xiii) of the MOU”. That was not the Clause relied on by HSM in their Reply, which, at paragraph 44 (ii), expressly relied on Clause (xii) of the MOU. I have concluded that the only safe course in this case is for me to deal with everything that might conceivably be an issue (including this issue), because it is never entirely clear when one or other of the parties will change their minds about what is actually in dispute. 240. As noted above, Bilfinger were the PFP sub-contractors. Insofar as this claim for their Management Positions is advanced pursuant to Clause (xii) of the MOU it must fail. Clause (xii) deals with labour only, so could not include Bilfinger’s Management Positions. And, insofar as this claim for Bilfinger’s management position is advanced pursuant to clause (xiii), the claim fails for the same reasons as the Cofely claim, noted in paragraph 236 above. 241. In addition, this item of claim must fail because there is no evidence as to what the relevant Bilfinger personnel were doing, what the relevant sub-contract said, or how the costs claimed correlated to the applicable rates in Clauses (xii) or (xiii) of the MOU. 9.2.4 Wiko 242. As I understand it, Wiko were undertaking insulation work. The claim for this Position was therefore made under Clause (vi) of the MOU. However, Clause (vi) covered labour only; it does not give rise to any entitlement to a claim for a Wiko Management Position. 243. Again, because there was a ready answer to their claim as originally formulated, HSM endeavoured in their concluding submissions to rely on Clause (xiii) at the MOU. That claim fails for the same reasons as set out in paragraph 236 above. Again, there was no evidence that would permit this claim to be advanced in any event. 9.2.5 Conclusion 244. As a matter of construction of the MOU, it seems to me therefore that none of these items are recoverable, however the claim is put by HSM. 9.3 Estoppel 245. 246. I have already made the point that this estoppel argument must fail because of the failure of the overarching argument as to the approval of invoices. No specific issues in respect of Management Positions arise that could lead the court to reach a different view in respect of the parties’ conduct in June-August 2015, and how they dealt with those Management Positions in relation to the monthly invoices. The point previously made at paragraphs 221-222 above applies again in relation to the HT Technician, the Project Manager, Cofely and Wiko. Paragraphs 64, 68, 74 and 80 of Mr Hughes’ closing note refers in turn to these claims and purports to identify specific events which are said to give rise to the alleged estoppel. These were not pleaded and (with one possible exception)3 were not put to the relevant witnesses. It would therefore be wrong and unfair for these arguments to be taken into account. However, for completeness, I consider that, if I am wrong about that, none of those matters affect my general conclusions on the estoppel point set out in Section 5 above. 10. THIRD PARTY COSTS 3 Paragraph 75 of HSM’s closing note referred to Mr Haugen’s cross-examination, but the transcript made clear that he had not advised Talisman to be bound by any agreement to pay for all time, without any future review. 10.1 The Issues 247. The parties agreed the following issues in respect of this head of claim: “Issue 6: Third Party Costs: 6. In relation to the sums claimed (€3,527,222.62) in item 13 in the table from Aker’s Opening Submissions called ‘Section 14: Conclusion: The Rival Final Accounts’, are such “third party” costs reimbursable in principle on a true construction of the MOU read together with the LOGIC Sub-Contract? 7. If “third party” costs are recoverable in principle, then: 8. 9. Are each of the Third Party Costs claimed recoverable under specific clauses of the MOU and, if so, which? If the answer to Issue 6 is yes, what sums is HSM entitled to recover (€3,527,222.62 on the Claimant’s case; zero on the Defendant’s case)? If the Defendant succeeds on the questions of construction identified above, is the Defendant estopped by a convention of the parties, alleged by the Claimant, whereby the parties treated Third Party Costs as recoverable in principle, with the result that HSM is entitled to be paid for them, and if so, in what sum? (€3,527,222.62 on the Claimant’s case; zero on the Defendant’s case)?” 248. 249. There was a certain amount of muddle in the sequence in which these issues were set out (which differs from the format adopted elsewhere). There are two clear areas of debate which might be conveniently labelled as ‘construction’ (Issues 6-7) and ‘estoppel’ (Issue 9). It remains difficult to see precisely what Issue 8 adds. It is important to note at the outset that the expression “Third Party Costs” is not a reference to those sub-contractors who were carrying out work for HSM pursuant to the sub-contracts referred to in the MOU. Instead it is a reference to what were strictly sub-sub-contractors further down the contractual chain (i.e. Cofeley and other contractors over whom HSM, and certainly Aker, had no contractual rights or liabilities whatsoever). 10.2 Issues 6-7: Construction 250. 251. There is no provision in the MOU that allowed HSM to recover the costs of sub-sub- contractors and suppliers. ‘Third Party Cost(s)’ is not a creature known to the MOU. So the underlying construction issue is straightforward: HSM had no express entitlement to Third Party Costs under the MOU. Accordingly, HSM were obliged to argue that, in some way, the obligation to provide their “fullest endeavours” meant that they were entitled to be reimbursed all Third Party Costs. In my view, for the reasons already set out at paragraph 189 above, that argument is fallacious. In exchange for providing their “fullest endeavours”, HSM were entitled to specific additional amounts, referred to in the MOU as ‘concessions’. Those were carefully delineated. They do not expressly include Third Party Costs. I 252. 253. 254. have already made the point elsewhere that HSM are not entitled now to rewrite the careful remuneration provisions merely because of the reference to “fullest endeavours”. The existence of the MOU did not mean that, overnight, all of HSM’s costs had become reimbursable. The “fullest endeavours” obligation did not turn the MOU into a fully reimbursable arrangement. That said, the MOU did make some changes to the basis of HSM’s remuneration. All that was required was for HSM to establish that they were entitled to the disputed items under the MOU. Similar reasoning leads to the rejection of HSM’s other argument in principle, namely that “all means all”. Clause (i) may cover “all” piping costs, but that does not relieve HSM from the burden of demonstrating why a particular cost relates to the piping work and falls to be claimed under Clause (i). So it might have been possible for HSM to point to a particular Third Party Cost and claim it as, say, an item of piping work under clause (i) of the MOU. If they had chosen to do that, then they would have had to explain how and why a particular third party cost arose under that clause of the MOU. Or take ENREM’s costs as another example: why do they fall under a particular Clause of the MOU? What did ENREM actually do? How do the individual costs claimed for them arise under that Clause? I agree with Mr Williamson that HSM’s belated attempts to address these fundamental difficulties (by embarking in the oral evidence on an unheralded analysis of the content of certain - random - third party invoices), was wholly unprofitable. The court was faced with the same difficulties as Mr Vidovic in 2015, but without the benefit of his quantity surveying expertise. There was no evidence as to what activities these invoices related. Many of them were for unbroken-down lump sums. Many of them were in Dutch. Many of them covered both labour and materials which was the subject of a very rough and ready allocation. Not one of them was pleaded or presented under particular Clauses of the MOU. 255. Mr Kaashoek attempted to undertake this exercise when giving oral evidence, but in the absence of any pleaded case, and in the absence of any evidence in his witness statement as to what these Third Parties were doing, I considered it to be illegitimate. Similarly, in Mr Hughes’ closing note, he endeavoured to place the Third Party Costs claims under particular Clauses of the MOU. But he properly accepted that this exercise was also entirely new and had never been done before. Even more worryingly, that exercise identified a whole raft of new Third Parties to which no reference had ever been made in the evidence or at the trial. 256. Furthermore, even if there had been evidence as to what the Third Parties were doing, and even if there had been a properly presented claim which indicated how particular costs were claimed under particular clauses of the MOU, there would still have needed to be a proper presentation of the quantum of any such claim. Clauses (i), (ii), (iii), (iv), (vi) and (viii) of the MOU each stated that the rate payable for the work in question would be by reference to the particular sub-contract referred to in the MOU. It is impossible for Aker or the court to assess the quantum of the claim in accordance with those contractual provisions, because those sub-contracts had not been provided. For claims under Clauses (v) and (c) of the MOU, it would have been necessary for HSM to demonstrate the appropriate BOQ rates, or star rates, or costs plus, and say how such claims were justified. They have not done that either. 257. Accordingly, it is difficult not to agree with Mr Williamson’s conclusion at paragraph 117 of his closing note that “buried within the mountain of invoices and Excel spreadsheets there may be available claim or claims. But the inadequacy of HSM’s presentation has been pointed out on numerous occasions both prior to and post the issue of proceedings and HSM has had multiple opportunities to resolve the position.” In my view, that gets to the real nub of the issue. Mr Williamson said bluntly that it is not the role of the court to rescue HSM’s claim and that it would be manifestly unjust for it to do so now, or to give HSM another opportunity to reformulate and represent its case. 258. For all the reasons that I have given in this Judgment, I am bound to agree with that submission. Thus, the answers to Issues 6 and 7 are both No. 10.3 Issue 8: Quantum 259. The answers to Issues 6 and 7 being No, Issue 8 does not arise. In many ways, this is similar to the position under Issue 3 (iii), dealt with at paragraph 198 – 200 above. For the reasons previously noted, even if HSM had succeeded on either the construction or the estoppel argument, the claims were not presented in a way which would have allowed the court to award any further sum in respect of Third Party Costs. 10.4 Issue 9: Estoppel 260. I have addressed the general estoppel point in Section 5 above and, for the reasons already given, it does not seem to me that HSM can get round those insurmountable difficulties. 261. More importantly perhaps, the evidence in relation to the discussions about Third Party Costs make only too plain that there was no convention. The evidence from Mr Jacobs was that Third Party Costs was always a live issue. That is reflected in the correspondence to which I have referred in Section 5 above. It is fanciful to suggest that there was a convention that such Third Party Costs were accepted and approved for all time, when Mr Jacobs had expressly stated his concerns to HSM that, if the Third Party Costs were paid in full, there would be a real risk of HSM making a double recovery. Although HSM did not agree with him, the fact of the disagreement is again the opposite of any necessary agreed convention. 262. 263. In addition, it is highly material to the estoppel argument that HSM sought unsuccessfully to add in a reference to Third Party Costs into the draft MOU. As the contemporaneous documents show, after the MOU was agreed and the parties were giving consideration to the consequential amendments to the LOGIC Sub-Contract, Mr Kaashoek endeavoured to add an amendment to make express reference to HSM’s ability to recover Third Party Costs. His attempt to refer to Third Party Costs in the amendments was expressly rejected by Aker. That exchange is, of course, irrelevant to the construction of the MOU. But it is highly relevant to any consideration of the estoppel argument. There could have been no convention here because that which HSM now seeks to rely on by way of estoppel was put to Aker as a term to be agreed under the MOU, and was expressly rejected by them. 11. CONCLUSIONS 264. 265. For the reasons set out in Section 4 above, I reject Aker’s counterclaim for liquidated damages. For the reasons set out in Section 5 above, I reject HSM’s case that the approval of invoices by Aker between June and August 2015 amounted to an estoppel. 266. For the reasons set out in Sections 6-10 above, I conclude that as a matter of construction and/or as a matter of estoppel, HSM are not entitled to make the particular claims for materials, Labour Positions, Management Positions and Third Party Costs considered there. 267. The answers to the individual Issues are set out above. The consequences of those answers will have to be addressed following the handing down of this Judgment.