Tube Tech International Ltd v Technip-Coflexip SA & Ors

The claimant, Tube Tech International Limited (“Tube Tech”) is a company that specializes in the cleaning of industrial pipework. This claim arises out of work done by Tube Tech in the cleaning of pipes in condensers and heat exchangers in a plant for the production of liquefied natural gas on Bonny Island in Nigeria. Bonny Island is an island in the Niger delta. The plant is owned by a company known as Nigeria LNG Limited (“NLNG”).

The claim is made under four contracts, which have been called contract 1, contract 2, contract 2A and contract 3. The claim is for the unpaid balance, £643,295.11, of sums invoiced under those contracts, plus interest. The defence is that some of the sums invoiced are not due and some invoices have been overpaid. It is denied that the defendants were party to contract 2A. Damages are counterclaimed for breach of a contractual condition as to the provision of personnel. The total liquidated sum counterclaimed is £176,032.49, or alternatively £831,982.49. There is, however, no criticism of the work done by Tube Tech or of the speed with which they did the work.

One major issue in the case is the identity of the party or parties with which Tube Tech contracted. Tube Tech’s primary contention is that it contracted with a consortium of the first four defendants known as TSKJ. The first four defendants in their defence contend that neither individually nor collectively have they ever contracted as TSKJ with any person, including Tube Tech. They also deny that they were ever collectively called (except possibly in some publicity releases) or traded as TSKJ. The exception was added by way of re-amendment to their defence. The defendants contend that Tube Tech contracted with the fifth defendant. The fifth defendant was joined to the proceedings by way of amendment.

Among the publicity material that has been put before me, the following statements are made. In publicity material of NLNG there is reference to the Base Project and the Expansion Project. The Base Project was for a two-train gas liquefaction plant and much else. The Expansion Project was for a third LNG (sc., liquefied natural gas) train of similar design to the two Base Project trains, and again much else. The publication states that NLNG awarded the Base Project engineering, procurement and construction contract, with construction commencing in November 1996, to (and I quote)

In publicity material dated April 1999 JGC Corporation announced that

In a press release dated 1^st March 2000, Halliburton Company stated:

By another press release of the same date, Halliburton announced that the first phase of the two-train LNG plant had been completed by “a joint venture team of Technip, Snamprogetti, Kellogg, Brown and Root, and JGC (TSKJ)”. It also stated

“This milestone demonstrates TSKJ’s ability to bring world class engineering, construction, and project management skills to complex projects,” said Lou Pucher, TSKJ’s executive director for the project. “We are pleased and proud that the first shipments of LNG are leaving Nigeria on schedule, considering the numerous obstacles and difficulties which TSKJ has overcome during the course of execution”.

By a further press release dated 31^st October 2001, Halliburton announced that NLNG had awarded a preliminary letter of intent for initial works for the realization of the trains 4 and 5 expansion project to “Halliburton KBR, formerly Kellogg Brown and Root, and joint venture partners Technip, Snamprogetti, and JGC Corporation affiliates (TSKJ)”.

By a press release of 22^nd March 2002 Halliburton announced that NLNG had awarded the engineering, procurement and construction (EPC) contract for the realization of the trains 4 and 5 expansion project (and I quote)

I mention the above publicity material by way of background. It is not suggested that the claimants saw any of it before the contracts which are the subject of these proceedings were made. Indeed, most of it came into existence after those contracts were performed.

The EPC dated 15^th December 1995 was made between NLNG and three Madeiran companies collectively called the Contractor. Those three companies (“the Madeira companies”) were:-

There was also an agreement dated 25^th April 1997 between the fifth defendant and its wholly-owned subsidiary Bonny Project Management Company Limited (“BPMCO”). Under that agreement, the fifth defendant appointed BPMCO as its representative for purposes of administration of the engineering design, equipment supply, construction and other services to be provided by the Contractor under the EPC. BPMCO was an English company whose registered office was at Kellogg House, Greenford, Middlesex.

For performance of on-site activities on behalf of the Madeira companies, project management and administrative services were also subcontracted by one of the Madeira companies to TSKJ Nigeria Limited (“TSKJN”), a company substantially wholly owned by TSKJ 2.

There is abundant evidence from the defendants’ witnesses, which I accept, that the term “TSKJ” was used by persons involved in the project as meaning any or all of the Madeira companies, or at the Nigerian site to denote TSKJN or its management. I consider that evidence further below. There is no evidence that the expression was not used to refer to the consortium of the first four defendants, though Mr. Peter Edwards in a witness statement said that to the best of his knowledge defendants 1 to 4 had never traded under the name “TSKJ”. Mr. Edwards was a project manager working for M. W. Kellogg Limited and had worked for BPMCO and for TSKJN.

The company structure is as follows:-

The first communication between the parties (I use the word ‘parties’ without prejudice to the question who were the true contracting parties) was a telephone call from Mr. Cavan MacDonald of M. W. Kellogg Limited to Mr. Watson, managing director of Tube Tech, made in October 1999. Mr. MacDonald said that he thought that Tube Tech might be able to help with the cleaning of some 8,000 fouled condenser tubes. As a result of that call, Mr. Watson entered into discussions with Mr. Dimmock and Mr. Demar, whose offices were in Kellogg House. Those two gentlemen appeared to Mr. Watson to be the men in the United Kingdom who were in charge and who had authority to deal with the matter. On 18^th October 1999, Mr. Watson received from Mr. Dimmock a written instruction to proceed with the supply of the relevant equipment and services. The instruction contained the following words:

I am satisfied on the documentary evidence and the evidence of Mr. Dimmock that BPMCO did not have authority to act for the fifth defendant in relation to the instruction to proceed of 18^th October. Mr. Dimmock initiated the paperwork to obtain such authority, but acted in advance of obtaining it in view of the urgency of the matter. He has not been criticized for that. Mr. Dimmock’s evidence, which I accept, was that it was sufficient to obtain authority from the BPMCO committee since that committee was made up of the four companies of the TSKJ name (sc., the first four defendants). Such authority would have been sufficient via the fifth defendant to make a commitment.

On 18^th October, Mr. Dimmock sent to Mr. Watson for his information a copy of an e-mail sent to Mr. MacDonald by Mr. Amarjeet Sidhu of TSKJN of which the following is an extract:

On 20^th October a meeting was held at Tube Tech’s premises at Rayleigh. Those attending were Mr. Watson, Mr. Byford, general manager of Tube Tech, Mr. Bryan Cooper of NLNG, and Mr. David Andrews of M. W. Kellogg Ltd. Mr. Cooper attended in order that NLNG could satisfy itself as to the technical competence of Tube Tech. Neither Mr. Andrews nor Mr. Cooper was a witness in this case. I am satisfied on the evidence of Mr. Watson and Mr. Byford that Mr. Andrews told them at the meeting that Tube Tech would be working for TSKJ, that TSKJ’s client was NLNG, and that “TSKJ” was an abbreviation for a consortium of companies, namely Technip, Snamprogetti and Kellogg. He said that “J” stood for joint venture.

Mr. Cooper and Mr. Andrews were evidently satisfied that Tube Tech had the competence to carry out the necessary work. They instructed Tube Tech to undertake a site survey in Nigeria as a matter of urgency. The trip to Nigeria had already been booked. It was arranged for the week-end of 22^nd to 24^th October 1999.

On 21^st October, before they flew to Nigeria, Mr. Watson and Mr. Byford attended a technical briefing at Kellogg House, attended also by Mr. Demar, Mr. Andrews, Mr. Dimmock and by two or three others. The meeting was chaired by Mr. Demar. Mr. Byford gave evidence that his understanding was that all those attending the meeting, except himself and Mr. Watson, were employed by TSKJ and based in the United Kingdom.

Mr. Dimmock in his first witness statement, made on 19^th February 2004, described his employment as follows:

Mr. Dimmock did not state in either of his witness statements by whom he was employed in the period from October 1999 to December 1999. However, it emerged in his cross-examination that what he described as his ultimate employer was M. W. Kellogg Limited, but that at the material time he was assigned to BPMCO. I am satisfied that at some time before 25^th October 1999 Mr. Dimmock told Miss Whitford that he worked for M. W. Kellogg Limited. The source of that information is a contemporary note made by Miss Whitford of a telephone conversation between Miss Whitford and Mr. Dimmock. The substance of the note is as follows:

I admitted Mr. Demar’s witness statement, dated 23^rd February 2004, under the Civil Evidence Act. He did not give oral evidence before me. He stated that he was retired. He stated that he had been employed at the material time as the Home Office Construction Manager for NLNG Project. He did not state by whom he had been employed. On the evidence of Mr. Byford as to his understanding, I am satisfied that Mr. Byford had been told at the meeting, probably by Mr. Demar, that Mr. Demar was employed by a member of the consortium or by M. W. Kellogg Limited.

Mr. Byford said in evidence, and I accept, that at the meeting of 21^st October he became aware that the TSKJ consortium included the Japanese company. I revert to this point in paragraph 39 below.

On 27^th October 1999, Mr. Dimmock sent a fax message to Miss Whitford asking for Tube Tech’s formal quotation for the provision of services and equipment.

A document headed Proposal and Questionnaire (“proposal 4070”) was sent to Mr. William Knight, an administrator working for M. W. Kellogg Limited at Kellogg House, under cover of an e-mail dated 29^th October 1999 expressed to be from Mr. Watson but in the form of a letter from Mr. Byford. A copy of the e-mail was sent to Mr. Dimmock. The e-mail stated that an official purchase order accepting Tube Tech’s terms and conditions was required urgently. Proposal 4070 was addressed to TSKJ/MW KELLOGG Ltd. at Kellogg Tower, Greenford. It described the work and stated the total price as £735,000.00. Payment terms in the form of three numbered paragraphs appeared in a box. All that appeared on the front page. The whole document consisted of seven pages. The second page consisted of 24 terms and conditions. The expression TSKJ appeared in several of those conditions, including conditions where certain expenses were stated to be “to TSKJ account”. It is manifest that it was upon TSKJ that the obligations contained in those conditions were intended to be imposed. If that page stood alone, there could be no doubt whatever that TSKJ was intended to be the party contracting with Tube Tech. No other possible candidate appears. The third page included the proposal number, 4070/MW/eh. I can here pass over the fourth to sixth pages. The seventh and last page contained in a box the legends “Signed by Customer” and “Name in block capitals”, with spaces for writing to be inserted beside each legend.

Proposal 4070 was accompanied by a draft confidentiality agreement. That was addressed to TSKJ c/o M. W. Kellogg Ltd., Kellogg Tower. It began:

On 2^nd November, Miss Whitford noticed that there was an error on the front page of proposal 4070 that had been sent to Mr. Knight. The error lay in the payment terms in the box. On the same day, 2^nd November, she sent by fax (in the name of Mr. Byford) to Mr. Dimmock addressed to BPMCO a corrected version of the front page. In the fax message it was explained that the front page of the proposal had been revised by correction of the payment terms.

On 4^th November Miss Whitford received by fax the signed proposal 4070 and signed confidentiality agreement. There was no cover sheet and Miss Whitford was unable to identify the source whence the fax had come. Both proposal 4070 and the confidentiality agreement had been amended without comment. On the front page of proposal 4070, the name of the addressee had been amended to LNG – Serviços e Gestão de Projectos Lda., and a Madeiran address given. The front page was otherwise the original front page with the original payment terms in the box. The last page contained two signatures in the box, those of Mr. J. A. Thomas and Mr. O. Chaumeil. A note was added at the end in manuscript limiting the total value of the order to GBP 1 million in the absence of further agreement. That note was signed by the same two gentlemen. Mr. Thomas dated his signature 4^th November; Mr. Chaumeil dated his, evidently erroneously, as 5^th November.

The confidentiality agreement had also been amended. The name of the addressee had been changed to Tube Tech, with an out of date address at Basildon. The date had been altered to 4^th November. A page number had been added. And the words “Accepted and agreed to: On behalf of TSKJ” had been amended to “Accepted and agreed to: On behalf of LNG”. That part had been signed by Mr. Thomas and Mr. Chaumeil, and their address was given as Funchal, Madeira. No-one had signed on behalf of NLNG. Finally, the name and address and a logo of the fifth defendant appeared clearly in heavy type at the head of the document. The change of the name of the addressee to Tube Tech rendered the word “your” mentioned above inappropriate whoever had signed the agreement.

When Miss Whitford received back the signed copy of proposal 4070 on 4^th November, she noticed that the front page had the original terms and conditions in the box. She thereupon e-mailed to Mr. Dimmock the following message:

No further communication took place in the creation of the first contract.

Miss Whitford gave evidence that when she sent her amended version of page 1 to Madeira she had not noticed that the name of the addressee on the first page of the signed contract that had been returned to her had been changed to that of the fifth defendant. She was questioned about that in cross-examination, and Mr. Leighton Williams invited me to reject her evidence on the point. At first sight the evidence may appear surprising, since the name is at the top and the box containing the terms is towards the bottom of the page. But since the original box had contained the wrong terms, Miss Whitford may have been anxious to check that it was the page with the correct terms that had been returned as part of the signed contract. However that may be, and Miss Whitford did not speak to the point, I accept her evidence that she did not notice the change in the name of the addressee.

Mr. Leighton Williams submitted that the changing back of the name of the addressee to TSKJ/MW Kellogg Ltd. was of no effect since Miss Whitford had not intended to change the name of the addressee when she sent the revised first page to Mr. Thomas and Mr. Chaumeil on 4^th November. I reject that argument. Miss Whitford had not been informed, and was not aware, that the name of the addressee had been changed to that of the fifth defendant.

Mr. Thomas and Mr. Chaumeil were financial controllers of the fifth defendant. They signed proposal 4070 as financial controllers without identifying any company. They signed the confidentiality agreement “on behalf of LNG” as financial controllers. It is clear that Miss Whitford must have known their position. Her fax message of 4^th November to them identified their company as LNG – Madeira. As indicated, she twice mis-spelt Mr. Chaumeil’s name as Chaumlyl. Underneath Mr. Chaumeil’s signature of proposal 4070 as customer his name is given in manuscript block capitals. The writing of the letters EIL is idiosyncratic and looks distinctly like LYL. That resemblance occurs on no other document that is before me. (That the letters really were EIL appears from a similar idiosyncracy in the block capital manuscript writing of the word “value” in the note limiting the value to GBP 1 million without further agreement). Thus, although I accept her evidence that she did not notice the change of address on the front page of proposal 4070, Miss Whitford was aware that the signatories of that proposal could sign on behalf of the fifth defendant (whether or not also on behalf of other companies).

The document that comprised contract number 1 was, as I find, the seven pages of the signed proposal 4070, the last page being the page signed by Mr. Thomas and Mr. Chaumeil and the first page being the amended first page sent to the fifth defendant on 4^th November. That final version was not signed again. But in my judgment it constituted a counter-offer which was accepted when performance of the work for which it provided was accepted. If that document is taken in isolation, it is abundantly clear that the customer is TSKJ, whatever the expression “TSKJ” may mean. Tube Tech promises to carry out the cleaning services in return for performance by TSKJ. However, it is clear from other evidence that the document was in fact signed on behalf of the fifth defendant. The question arises whether the fifth defendant, if not itself TSKJ, (a) itself undertook liability (i.e., as a principal) for performance by TSKJ, or (b) undertook that liability on behalf of TSKJ, or (c) both (a) and (b). Neither counsel suggested that (c) was the case. Since the document purported to be signed by the customer, in my judgment the prima facie interpretation is that the fifth defendant, if not itself TSKJ, was, through its admittedly authorized signatories Mr. Thomas and Mr. Chaumeil, signing the document on behalf of TSKJ. The question remains whether the fifth defendant was, or is to be treated as having been, authorized to bind TSKJ.

Prima facie, the expression TSKJ means the consortium, as explained to Mr. Watson, Mr. Byford and Miss Whitford. Material published by the fourth defendant and material published by the parent company of the third defendant states that the expression TSKJ means the consortium.

Mr. Byford was cross-examined as to when he first appreciated the full meaning of the expression TSKJ. There was no mention of that point in his witness statement. The following is an extract from the relevant part of his cross-examination:

Mr. Byfordwent on to say that his understanding was that all of the people at the meeting at Greenford were employed by TSKJ and based in the UK.

As to Tube Tech’s knowledge or belief as to the identity of the party with whom it was dealing, Mr. Byford said in his witness statement that at the meeting held on 21^st October Tube Tech was advised to address its invoices to LNG Madeira, Portugal but to send the invoices to Mr. Dimmock of TSKJ at Kellogg House, London who would verify them and clear them for payment. Mr. Byford went on to say in his witness statement:

Mr. Byford was cross-examined about that. His cross-examination included the following passages:

That evidence is in contradistinction to the evidence of Mr. Dimmock. In his first witness statement, Mr. Dimmock said:

In that last passage, Mr. Dimmock did not say to whom or on what occasion or occasions he imparted the information in question. He may have been referring to the telephone conversation with Miss Whitford which I mentioned in paragraph 23 above. Mr. Dimmock went on:

In his second witness statement, Mr. Dimmock said:

In cross-examination of Mr. Dimmock the following questions and answers were given:

The only other witness who attended the meeting of 21^st October was Mr. Demar. He chaired the meeting. He did not give oral evidence. Although he gave some evidence about the meeting, none of it related to the subject-matter of the above evidence given by Mr. Byford and Mr. Dimmock.

In so far as the evidence of Mr. Byford and that of Mr. Dimmock on this point conflict, I prefer that of Mr. Byford. My reasons are these. First, Mr. Dimmock gave evidence that Tube Tech were chosen on the basis that their premises were located conveniently near to Greenford. I am satisfied that that statement is quite incorrect, and the making of it adversely affects Mr. Dimmock’s credit as a witness. The second reason is the clandestine way in which the addressee’s name TSKJ/Kellogg on the proposal for the first contract was changed to that of the fifth defendant. Third, Mr. Dimmock gave evidence that it could well have been Miss Whitford, acting on his instructions, who changed the name of the addressee to that of the fifth defendant, and that he seemed to recollect giving such an instruction. I find that evidence implausible, and it seems to have been given on the spur of the moment. Finally, the fact that the proposals were addressed to TSKJ/M.W.Kellogg Ltd. supports Mr. Byford’s evidence. In particular, I accept the evidence of Mr. Byford set out in paragraph 41 above.

Mr. Watson gave evidence about the visit that he and Mr. Byford made to the site at Bonny Island on 22^nd and 23^rd November 1999. He said in his witness statement:

I accept that evidence. Mr. Edwards gave evidence, which I accept, that in Nigeria TSKJ Nigeria Limited was universally referred to as TSKJ. Thus Mr. Edwards and others may have been intending to convey to Mr. Watson that Tube Tech were working for TSKJN, and may have thought that that was what Mr. Watson meant when he used the expression TSKJ. But it is not suggested in these proceedings that the other party contracting with Tube Tech was TSKJN. TSKJN was in fact the site agent of the main contractor under the EPC contract (i.e. of the three Madeiran companies). The confusion extended to the hearing of this claim. TSKJN was occasionally referred to in the documents and orally as the contractor. For example, Mr. Dimmock said (Day 12, p.36) that TSKJ Nigeria was the main contractor.

Mr. Watson also said in his witness statement:

I conclude that at all material times Tube Tech, in the persons of Mr. Watson and Mr. Byford, firmly believed that they were dealing with the consortium TSKJ. Moreover, that conclusion is borne out by the terminology of the terms and conditions of contracts 1 and 2. Mr Leighton Williams argued that the expression TSKJ in the terms and conditions referred to TSKJN. But whilst that is a possible reading in some instances, it must refer to the party contracting for the services in those places where a financial obligation is imposed.

I accept evidence of Miss Whitford that her understanding, derived from Mr. Watson and Mr. Byford, was that TSKJ was the contracting party. She understood the telephone conversation with Mr. Dimmock in which she was told that Tube Tech were working for TSKJ 3 as confirming that understanding. She was business manager of Tube Tech. She had no authority to make or vary contracts on behalf of Tube Tech. The identity of the contracting party was not her responsibility.

In the context of Tube Tech’s state of knowledge as to the identity of the party with which Tube Tech were contracting, Mr. Leighton Williams invited me to consider the confidentiality agreement and a letter of guarantee.

Miss Whitford gave evidence that she did not recall noticing the heading on the confidentiality agreement when she received it back as amended. I consider it unlikely that she did not see the heading. But I find it credible that it did not memorably register with her. She knew that Tube Tech were concerned with the fifth defendant, since Tube Tech’s invoices were addressed to that company.

The letter of guarantee was dated 1^st November 1999. It was addressed to Tube Tech. It began:

Mr. Leighton Williams relied on the confidentiality agreement and the letter of guarantee as clearly identifying the fifth defendant as the contracting party. I reject that submission. First, the confidentiality agreement did not identify any party to the agreement. Second, the changes to the draft letter sent by Tube Tech to TSKJ, namely altering the addressee to Tube Tech and altering the name of the principal of the signatories to that of the fifth defendant, were not drawn to the attention of Tube Tech. Mr. Byford gave evidence that he did not notice the changes. As to the letter of guarantee, the statement that Tube Tech’s proposal was to the fifth defendant was false. And guaranteeing the ability of the fifth defendant, i.e. in Tube Tech’s mind the payment medium, to pay some money would not necessarily imply that the fifth defendant was the contracting party. Mr. Byford did notice the reference to the fifth defendant in the first line, and struck through the letters ‘LNG’ in the name of the fifth defendant. He left unaltered the name of the fifth defendant as the guarantor. He also made some other manuscript amendments. Mr. Byford did not know what became of his amended version. Mr. Leighton Williams pointed out that the document had a fax number at the top and the name M.W.Kellogg at the centre, which meant received at that end. It seems that Mr. Byford’s notes were nevertheless ignored. I accept evidence of Mr. Byford that he did not want a form of guarantee, though he did want assurance of payment.

Mr. Leighton Williams submitted that by checking the financial standing of the fifth defendant, Tube Tech showed that it knew that it was contracting with that company. I reject that submission. Clearly, the consortium TSKJ were a consortium of multinational companies any one of which would have been good for any money due under the contracts. There was at least some point in checking the financial standing of the fifth defendant, given that the moneys due to Tube Tech were to pass through its hands.

These matters are wholly insufficient in my judgment to negative the conclusion I have reached as to the identities of the parties to the contracts for the work or as to the belief of Tube Tech that they were contracting with TSKJ.

Mr. Dimmock gave evidence that authority to contract on behalf of the fifth defendant came from the committee of BPMCO. That committee was made up of representatives of the four companies of the TSKJ name. On 27^th October 1999 Mr. Dimmock sent a fax message to Tube Tech for the attention of Miss Whitford in which he said:

Mr. Dimmock explained in evidence that the reference to “our joint venture” was a reference to the members of the BPMCO committee.

As to the decision that the fifth defendant should be the party contracting with Tube Tech, Mr. Dimmock said that some months before October 1999 he had discussed with Mr. Kuxhausen, the finance director of MWKL, and someone from the fourth defendant whose name he could not remember, the question which Madeiran company should be the contracting party in the case of what he described as servicemen contracts. He said he believed it was Mr. Kuxhausen who made the decision. He, Mr. Dimmock, was instructed to comply with it. The reason for the decision was twofold: to avoid the necessity of registering the vendor or supplier of the services as a limited company in Nigeria, and to avoid a Nigerian withholding tax. Mr. Dimmock said that he applied that general instruction in the case of the contract with Tube Tech.

Mr. Dimmock explained that by a servicemen contract he meant a labour-only contract. If a contract was for the provision of services within Nigeria, as I find the contracts with Tube Tech to have been, Mr. Dimmock accepted that the contract would have to be made with TSKJ 2.

Mr. Lou Pucher was employed at the material time, October 1999, by the third defendant. I accept that from the evidence of Mr. Dimmock. Mr. Pucher did not give oral evidence before me. He gave a witness statement which was in evidence. He stated that at the material time he was employed as the Executive Project Director for NLNG Project; but he did not state by whom he was employed at the material time. He said that not a single contract had been let by the first four defendants collectively or individually nor had any party been so authorized. None of the arrangements between the first four defendants, he said, permit or permitted any of them to enter into contracts for or on behalf of any other of them. He said that he could not make any specific comments as to the contracts that were set up with Tube Tech.

Mr. Ernie Demar was employed at the material time by the third defendant. I accept that from the evidence of Mr. Dimmock. Mr. Demar did not give oral evidence before me. He gave a witness statement which was in evidence. He stated that at the material time he was employed as the Home Office Construction Manager for NLNG Project. As such, he was responsible for the co-ordination of all construction activities and engineering procurement in relation to the project. He did not state by whom he was employed at the material time. He said that Mr. Pucher, in his capacity as Executive Project Director, authorized him to take the steps necessary for the cleaning of the condenser tubes and the cooling water system of train 2. He said that he could not make any specific comments as to the contracts that were set up with Tube Tech as they were dealt with by Mr. Dimmock. He said that not a single contract had been let by the first four defendants collectively or individually, nor had any party been so authorized.

Mr. Thomas stated in his witness statement that neither he, as financial controller of the fifth defendant, nor the financial controllers of the other two Madeiran companies held any authority to act on behalf of the first four defendants. Mr. Khan, who was employed by M.W.Kellogg Ltd. and was at the material time on secondment to TSKJN as project engineer at the site, said that no-one among the Madeira companies would let out any contract for work within the contractor’s scope, except for purchases within Nigeria, which were let by the contractor’s site agent TSKJN.

I accept the statement of Mr. Thomas mentioned in the preceding paragraph (66), if it was intended to be confined to express authority. I cannot accept the evidence of Mr. Khan quoted in the same paragraph. Possibly there is some error in the drafting of his statement. He was called as a witness by the defendants. It is the defendants’ own case that the fifth defendant contracted with Tube Tech. I accept Mr. Pucher’s evidence that none of the arrangements between the first four defendants permitted or permit any of them to enter into contracts for or on behalf of any other of them, if he was intending to refer to arrangements giving express permission. There is no evidence of any express prohibition.

As to Mr. Pucher’s and Mr. Demar’s evidence that not a single contract had been let by the first four defendants collectively or individually nor had any party been so authorized, in the context they must have intended it to be confined to contracts for the works to be performed in pursuance of the project. Even so, I cannot accept that evidence in so far as it extends to contracts entered into with the claimants, for reasons that will appear.

Mr. Dimmock said, and I accept, that in his capacity as principal buyer for and on behalf of BPMCO, he had the authority, powers and duties to ensure the proper execution of the purchase, inspection and shipping of equipment and materials to the job site in Bonny Island. He also said that he neither had nor at any time purported to have authority to act on behalf of the first four defendants. He was the primary person, he said, who was in charge of the matters relating to the contracting and invoicing aspect of the contracts with Tube Tech.

Mr. Dimmock gave evidence, which I accept, that Mr. Thomas, one of the signatories of contract number 1, was employed by MWKL but seconded to Madeira. Mr. Thomas was authorized to sign on behalf of all three Madeira companies.

I infer that the four members of the BPMCO committee, representing the four members of the consortium TSKJ, must have given their authority for the signature of a contract with Tube Tech for the supply of cleaning services for the tubes. But I am not satisfied that they saw the proposal or appreciated that it was addressed to TSKJ. I am not satisfied that they authorized the signature of the contract on behalf of any company other than the fifth defendant. It is true that Mr. Thomas and Mr. Chaumeil signed the agreement as customer, and hence ostensibly on behalf of TSKJ, but I am not satisfied that they had actual authority so to sign the agreement.

There is abundant evidence, given by no fewer than seven of the defendants’ witnesses, that the name TSKJ was used and understood to mean TSKJN and the Madeiran companies or any of those four companies. Mr. Kuxhausen stated in his witness statement that the term TSKJ was used by persons within the project as meaning any one or all of the Madeiran companies, or at the Nigerian site to denote TSKJN management. Mr. Elliott stated that TSKJ Nigeria Limited was informally known in Nigeria as TSKJ. Indeed, Mr. Elliott used the expression in his witness statement, where he referred to TSKJN site management as “TSKJ site management”. Mr. Dimmock stated in his witness statement that TSKJ was “a term used at site to denote TSKJN management or any or all of the Madeira companies. Thus the term TSKJ to denote LNG was not incorrect”. By LNG, Mr. Dimmock meant the fifth defendant. And it was the use of the expression, not on site but in a document, contract 2, emanating from England, to which he was referring as denoting LNG. Mr. Thomas stated in his witness statement that TSKJ was a term commonly used by project personnel to refer to any or all of the Madeira companies that acted as Contractor for the NLNG project. Mr. Pucher stated in his witness statement that the term TSKJ meant the three Contractor Madeira companies and/or its [sic] representative in Nigeria, TSKJ Nigeria Limited. Mr. Edwards said:

It is manifest that the first four defendant companies acquiesced in the use of their consortium name TSKJ by TSKJN and by the Madeiran companies, including the fifth defendant. In my judgment, the conclusion is clear that they allowed their consortium name to be so used.

Mr. Pucher said that the first four defendants have never traded as TSKJ. Mr. Edwards said that to the best of his knowledge defendants 1 to 4 had never traded under the name TSKJ.

For reasons that will appear, I cannot accept the broad proposition that the first four defendants have never traded as TSKJ.

In my judgment, by allowing their consortium name to be used by TSKJN and by each of the Madeiran companies in the course of their businesses, the consortium and its members allowed TSKJN and the Madeiran companies to trade in their name, and held those companies out as authorized to enter into contracts on their behalf. Thus when Mr. Thomas signed the first contract on behalf of the fifth defendant as customer, the fifth defendant was held out as being authorized to contract on behalf of the consortium.

I accept the following propositions, adapted from propositions put forward by Mr. Aylwin, as correct and relevant to the question of ostensible authority:

Mr. Dimmock had actual authority as principal buyer of BPMCO to arrange contracts between Tube Tech and the Madeiran companies. The making of such contracts required the approval of TSKJ in the form of the management committee of BPMCO. Mr. Leighton Williams drew a distinction between the giving of approval and the giving of authority. But in this case no such distinction arises. Given his authority as principal buyer, all Mr. Dimmock needed in order to arrange contracts was the approval of the committee. Such approval completed his authority. Thus Mr. Dimmock had the actual authority of TSKJ to arrange a contract between Tube Tech and the fifth defendant. Given that the fifth defendant was held out by TSKJ as authorized to enter into contracts behalf of TSKJ, Mr. Dimmock was in my judgment held out by TSKJ, and in particular by the four members of the consortium represented in the BPMCO management committee, as being entitled to use the name TSKJ in relation to those contracts. In particular, he was held out as having authority to authorize other authorized signatories to do so. As I have found, Mr. Dimmock did not explain that he had no actual authority to authorize the making of a contract on behalf of the consortium or its members. Indeed, he held himself out as having such authority at the meeting held on 21^st October.

Mr. Thomas and Mr. Chaumeil signed the first contract as the customer, i.e. as TSKJ. They were not actually authorized to do so. They were actually authorized by TSKJ to sign on behalf of the fifth defendant, which was itself ostensibly authorized to enter into the contract on behalf of TSKJ. Although Mr. Watson and Mr. Byford were not led to believe that they were contracting with the fifth defendant, or that Mr. Thomas and Mr. Chaumeil were signing the contract on behalf of the fifth defendant, in my judgment those circumstances are sufficient to establish ostensible authority on the part of Mr. Thomas and Mr. Chaumeil to enter into the contract on behalf of TSKJ. By holding out the fifth defendant as entitled to contract on behalf of TSKJ, TSKJ held out the fifth defendant’s authorized signatories, Mr. Thomas and Mr. Chaumeil, as authorized to sign on behalf of TSKJ. That is what they purported to do by signing as customer.

Contract 1 stated that the objective was to remove as much deposit as possible from internal bore from as many tubes/pipelines as possible within the time allowed on certain units. Those units were identified by alphanumeric references. It said

Payment terms were set out in a box as follows:

24 terms and conditions were set out on the second page. Some of those conditions were as follows:

On the third page it was, among other things, stated that the fly out date was 2^nd November 1999, the fly back date was 17^th November 1999, that the work would be carried out utilising about 30 men and that the working period planned was working 5 X 24 hour shifts within a 7 X 24 hour shutdown window only (6^th Nov. 1999 to 12^th Nov. 1999 inclusive). There followed a list of equipment, materials, documents and facilities to be supplied by Tube Tech and a list of facilities, materials, documents and information to be supplied by customer.

On the fourth page it was stated that there would be a daily rate of £32,000 per day or part thereof in the event of customer delays or performance restrictions or variations to contract. It was stated that consumables, additional equipment hire, delivery and transport charges would be charged at cost + 15% and that delivery and transport would be to TSKJ account cost + 15%. There followed on the fifth, sixth and last pages a questionnaire which I can pass over, followed by the signatures and manuscript writing that I have mentioned (paragraph 30).

Contract 2 was entered into on or about 13^th November 1999. It arose because the deposit in the tubes was found to be substantially worse than expected.

Contract 2 stated the objective to unblock and clean as much deposit from as many tubes as possible from the internal bore of condensers E1431A, E1431B and E1431C in the shortest time period, i.e. production standard defined as a good flow of water through the tube. The three condensers E1431A, E1431B and E1431C were included in the list of units given on page 1 of contract 1.

Contract 2 continued:

On page 2 it was stated that the work would be carried out utilizing ca. 24 personnel, that the working period planned was 24 hour shifts until completion, and that work was based on 24 hour working. There was a list of equipment per man, material, documents and facilities to be supplied by Tube Tech, and a list of facilities and information to be supplied to the customer.

On page 3 there was a box containing a heading in the following terms:

On page 7, there was a list of 25 terms and conditions, including the following:

There is no dispute that the proposal of contract 2 was addressed to TSKJ/M.W.Kellogg Ltd. Mr. Leighton Williams submitted that the parties were the same as the parties to contract 1, i.e. Tube Tech and the fifth defendant. I accept the first part of that submission, but not the second. I find that both contract 1 and contract 2 were made between Tube Tech and the first four defendants.

Mr. Leighton Williams argued that the contracts on their true construction provided that all moneys would be brought into account in due course. And there was an implied term, he submitted, that all invoices submitted by and payments to be made to Tube Tech would be subject to documentary justification, cost accounting and final reconciliation by Tube Tech upon satisfactory conclusion of the work under the contract. He relied upon the facts that the total price was expressed to be estimated and that clauses 7 and 8 in contract 1, and clauses 4 and 5 in contract 2, contained pro rata provisions. He further submitted that any entitlement of Tube Tech to payment of £35,000 a day under clause 5 of contract 1 must be conditional on the supply by Tube Tech of the full complement of approximately 30 men and the specified equipment. Finally, Mr. Leighton Williams submitted that contracts 1 and 2 were contracts for the supply of labour and equipment, not contracts for the supply of services.

I reject Mr. Leighton Williams’s last point. Tube Tech were a specialist supplier of services which involved special skills, not least in the avoidance of the danger inherent in the use of high pressures. The contracts were clearly on their face contracts for the supply of a service as set out in the stated objectives.

In my judgment, the references in both contracts to the price being estimated does not imply that the total price will be revalued on completion of the work on the basis of the man-hours and materials used. It merely foreshadows the fact that the price may be adjusted in accordance with the express terms. Additionally, in relation to contract 2, the inclusion of the word ‘estimated’ in the expression ‘total estimated price £875,000.00’ arises out of the immediately preceding statement that the quotation was subject to an assessment of deposit characteristics.

The statements of approximate numbers of men to be used are in my judgment merely descriptive of the general nature of the work to be performed. They do not constitute contractual obligations, if only because they are uncertain in the sense of being imprecise. Moreover, the basic obligation in the case of each contract is in effect to work as fast as possible. If that is fulfilled, no damage could be suffered by failure to supply the stated approximate number of men. On the other hand, supply of the stated number of men would be no answer to a claim for breach of the basic obligation.

The term sought to be implied by Mr. Leighton Williams is, I think, predicated on the proposition that the sum due to Tube Tech is to be determined by reference to the number of man-days worked and to the number of days’ hire of equipment at a notional rate. Since I have rejected that proposition as a general proposition, I reject his submission that the term is to be implied. The proposition is, however, true to the extent, if at all, that an invoice claims sums due under the pro-rating clauses. But none of the invoices in dispute in this case claim sums under those clauses.

In support of his submissions, Mr. Leighton Williams relied on the background to the contracts. I consider the background further below under the heading Substantiation, but in my judgment there is nothing in the background or in the express terms of contracts 1 and 2 to necessitate implication of the general term for which Mr. Leighton Williams contends.

In my judgment, employment of the approximate numbers of personnel mentioned in contracts 1 and 2 is not a condition of Tube Tech’s entitlement to be paid £35,000 a day under clause 5 of contract 1.

Clause 5 of contract 1 has the effect, in my judgment, that if some equipment and some personnel return to Tube Tech’s premises by 19^th November 1999, the additional charge provided for by that clause will not apply.

Mr. Leighton Williams submitted that the contracts, on their true construction, required a breakdown of the costs and substantiation of the charges. Or such a requirement was to be implied. He submitted that Tube Tech were aware from the outset that the fifth defendant required a breakdown, and that repeated requests were made for a breakdown and for substantiation. He relied on communications made both before and after the making of contract 1.

As to communications made before the making of contract 1, Mr. Leighton Williams relied, in particular, on the following:

As to communications made after the making of contract 1, Mr. Leighton Williams relied on the following:

As to point (1) above, there was a conflict of evidence whether Mr. Byford said that he did not know what full substantiation meant. I do not regard this detail as being of importance, but I return to it shortly below.

There was a dispute whether such breakdown of costs as was given by Tube Tech was for insurance purposes only or was for the purpose of justifying the charges made under the contracts. Mr. Leighton Williams submitted that it was the latter, and that the giving of such breakdown showed that both parties contemplated that all Tube Tech’s charges under the contracts would require justification by reference to costs. It is unnecessary for me to decide that dispute, since it is abundantly clear from the correspondence that such information was supplied with a degree of reluctance on the part of Tube Tech and was given under pressure from BPMCO and TSKJ. The fact that the information was supplied does not in my judgment assist in the construction of the contracts.

I have been invited to consider the above communications as part of the background relevant to the construction of the contracts. But there are other matters of background which are also relevant.

I am satisfied that Tube Tech were in a strong bargaining position vis a vis TSKJ. TSKJ attempted, without success, to find other contractors willing and able to quote for the urgent work of cleaning the tubes. To the knowledge of Tube Tech, the down time was costing NLNG a sum in the region of 1 million United States dollars a day in the value of lost production.

Mr. Byford said in his first witness statement that at the meeting chaired by Mr. Demar on 21^st October 1999 Mr. Demar made it clear that the subject-matter was a category 1 critical path contract and that the site was losing a vast amount of money. He said that the loss would be in the region of $1 million per day during the planned emergency shutdown.

There was a conflict of evidence about that. In his supplemental witness statement, Mr. Demar said

Mr. Demar did not give oral evidence. I find his denial somewhat equivocal. I am satisfied on the documentary evidence from the insurance file that the loss was about $1,250,000 a day and that Tube Tech’s work was undertaken in order to minimize that loss. I accept the evidence of Mr. Byford quoted in paragraph 107 above.

It is clear from some of the contemporary documents that TSKJ were perfectly well aware of their bargaining position. In his email of 2^nd November 1999 to Mr. Thomas, Mr. Dimmock said

I return to the conflict of evidence mentioned in paragraph 103 above. In his first witness statement, Mr. Byford said:

Mr. Edwards, in his second witness statement, said:

I am satisfied that Mr. Byford said some words to the effect “I don’t know what you mean by full substantiation” or “I don’t know what you are talking about”. He was clearly using the language euphemistically in order to avoid providing the information in question, as Mr. Edwards clearly understood. As to the time when Mr. Byford received a copy of the email, Mr. Edwards’s initial statement strongly implied that Mr. Byford was given a copy of the email on the same occasion as that on which it came into existence; he later qualified that evidence. On balance, I prefer Mr. Byford’s evidence on this point, namely that he did not receive a copy of the document until some time later.

Contract 2A is a contract claimed to have been made between Tube Tech and TSKJ on or about 5^th December 1999 whereby Tube Tech would focus all its resources on finishing the cleaning of both exchangers 1431 A and C earlier than the planned finish date of 14^th December 1999 at 6 a.m. and that in return Tube Tech would be paid £35,000 per 12-hour shift saved on both exchangers. It is not disputed that in the event, Tube Tech completed work on the two exchangers by 1800 hours on 13^th December, one shift ahead of program. Accordingly, Tube Tech invoiced the defendants for £35,000 by invoice number 5191. That invoice has not been paid. The defendants contend that they were not party to contract 2A.

There is a conflict of witness evidence about contract 2A. Mr. Byford wrote in his witness statement:

In cross-examination Mr. Byford gave the following evidence:

Mr. Edwards, in a witness statement, said this:

Mr. Edwards was not cross-examined about that passage.

Mr. Pucher stated the following in a witness statement:

The documentary evidence is this. Mr. Kemper, NLNG project manager, sent an e-mail dated 4^th December 1999 to Mr. Pucher and Mr. Norcross of TSKJN. The following is an extract from that e-mail:

The next document is a draft agreement on Tube Tech headed paper dated Wednesday, 15^th December 1999 addressed to TSKJ Ltd, Bonny Island, Nigeria for the attention of John Elliott (TSKJ), c.c. Peter Edwards (TSKJ), David Fletcher (NLNG). The following is an extract from the draft agreement:

The remaining document is a memorandum dated 20^th December 1999 from Mr. Kemper of NLNG to TSKJ: Executive Project Manager (i.e. Mr. Pucher). It is stamped as having been received on 21^st December 1999. The memorandum states:

Mr. Edwards’s evidence that the defendants were not party to the agreement appears to be based on his interpretation of the draft, apparently signed only by Mr. Byford. On the other hand, Mr. Kemper’s statement in his e-mail of 4^th December that “the final arrangement would be subject to our agreement” suggests a tripartite arrangement. It is clear that “TSKJ” was to pay Tube Tech, and would be reimbursed, or put in funds, by NLNG. The question is whether “TSKJ” was merely a conduit-pipe for payment or was liable as a party to the agreement. (It is clear that Mr. Byford continued to draw no distinction between TSKJ and TSKJN). The fact that the arrangement was instigated by NLNG points one way; the fact that Tube Tech was working for TSKJ points the other way.

Some light is thrown on this question by what happened afterwards. Tube Tech presented invoice number 5191 to the fifth defendant in the usual way. It stated:

The invoice was processed by Mr. Dimmock. There was put before me an email dated 7^th January 2000 from Mr. Dimmock to Mr. Bathurst stating that invoice 5191 could be paid when received by Madeira, as he had now received a memo from the client [sc., NLNG] agreeing to fund it. Mr. Dimmock was cross-examined about that. He said that it was envisaged that invoice number 5191 would be processed for payment. The reason why it was not processed at the time was that there were discussions going on with regard to substantiation of costs and pro-rating of men and equipment to site at the time. Once approval from the BPMCO committee had been received, a change order would have been raised and sent to Madeira.

It is difficult to see why approval of the BPMCO committee should be required merely to pass on from NLNG to Tube Tech money in which TSKJ had no interest. Moreover, the reason given by Mr. Dimmock why approval of the payment was not immediately given was clearly that a possible set-off in relation to other invoices presented or to be presented by Tube Tech to the fifth defendant was in consideration. If TSKJ had not regarded themselves as party to the incentive agreement, such considerations would have been, or ought to have been, irrelevant. It may be that TSKJ were reluctant parties to the agreement, but I am satisfied that they believed themselves to be parties. They were in a position to know, and I conclude that they were parties to the agreement.

It is said that there was no consideration for the agreement in favour of TSKJ since Tube Tech were already contracted to work as quickly as possible. That may be so. But there was consideration in favour of NLNG. TSKJ appears to have derived a benefit in that the work was completed one shift earlier than planned. Had it not been, TSKJ might have had a remedy for breach of contract, but there was a clear benefit in not having to enforce it.

I thus find TSKJ liable to pay the sum claimed under contract 2A. Indeed, given that TSKJ had received the money, it is in my judgment irrelevant whether TSKJ were parties to the agreement or not. They would still be liable to pay the money over to Tube Tech. However, that argument has not been raised.

Contract 3 was an oral contract made about mid-November 1999 between Mr. Byford and Mr. Edwards. There is no dispute that an oral agreement was made whereby Tube Tech agreed to retain on site at a daily rate of £10,000 the high pressure equipment that had been used for contract 1. The principal dispute on this point is whether that agreement was reduced to writing, imposing a rate of interest on outstanding payments of 8% a month. For reasons that will appear, I find that it was not.

Mr. Edwards said in his witness statement:

There is before me a 2-page document dated 16^th December 1999 which states at the end of some narrative:

I found Mr. Edwards to be an honest witness, but I do not accept without qualification his opinion that the variation was signed on behalf of the fifth defendant. Mr. Edwards readily stated in cross-examination that he was not a lawyer, that organizing the making of contracts was not the purpose of his being present on site, and that the identity of the other party was not specifically a concern of his job. I deal with the question of parties elsewhere in this judgment.

Mr. Byford said in his witness statement:

Proposal 4070B is in similar format to contracts 1 and 2, though not for a fixed sum. On the first page it states the “Nominal concessional charge” of £10,000.00 per day, from 26^th (sic) Nov.1999 until return of HP pumps and associated equipment to Tube Tech International premises. It states that all overdue accounts will incur interest of 8% per month. It is dated 18^th December 1999 and is unsigned.

Mr. Byford gave evidence that he handed a copy of proposal 4070B over to Mr. Elliott, hand to hand, before he left Nigeria. He said “We never saw a signature back”.

Mr Elliott did not give oral evidence before me. I admitted his witness statement in evidence under the provisions of the Civil Evidence Act. He said in his witness statement that he did not recollect having seen the proposal and that if he had received it, it would have been processed through BPMCO. Mr. Dimmock said that he did not see the proposal until after these proceedings had been started. It was put to Mr. Dimmock that he would not have authorized payment of invoice number 5184, which specifically mentioned proposal 4070B, if he had not seen a copy of that proposal. But he insisted that he had not seen it.

I accept Mr. Byford’s evidence that he handed the proposal to Mr. Elliott. I accept Mr. Dimmock’s evidence that he had not seen it when he authorized payment of invoice number 5184. Whatever happened to the proposal, it was not signed. Mr. Byford said in cross-examination that he had not agreed a figure of 8 per cent. interest with Mr. Edwards when the original oral agreement was made; the rate of 8 per cent., he said, was a decision taken by Mr. Watson when raising proposal 4070B on 18^th December.

On the totality of the evidence, I am satisfied that the rate of 8 per cent. interest contained in proposal 4070B was not agreed. However, it is clear that an oral agreement was reached, evidenced in writing by the document dated 16^th December 1999, for Tube Tech to keep on site the high pressure equipment that had been used on contract 1 (in contradistinction to the ultra high pressure equipment used on contract 2). Mr. Edwards said in a supplemental witness statement that he did not recall any reference to a concessional rate. His understanding was that “we” (by which I take him to have meant TSKJN) would pay the appropriate rate. The rate of £10,000 a day is not in issue, and there is no suggestion that it was not an appropriate rate.

Two invoices, numbers 5184 and 5195, dated respectively 24^th December 1999 and 21^st January 2000, based on the agreement and charged at the rate of £10,000 a day, were paid on 17^th January 2000 and 28^th March 2000 respectively. Invoice number 5184, in the sum of £280,000, covered the period of 28 days from 28^th November 1999 to 24^th December 1999. Invoice number 5195, in the sum of £140,000, covered the period of 14 days from 8^th January 2000 to 21^st January 2000.

Notwithstanding the apparent absence of a dispute about the principal sums due under contract 3, two of the four invoices submitted under contract 3 have not been paid. No justification for that has been put forward in the defences and counterclaims. It is simply that the arithmetic of the counterclaims is based on the tacit premise that that withholding is justified. The amounts of those two invoices, being unpaid, are included in the claim. They are invoice number 5192 dated 7^th January 2000, in the sum of £140,000, and part of invoice number 5199, dated 24^th January 2000, in the sum of £30,000. Those invoices respectively cover the period of 14 days from 25^th December 1999 to 7^th January 2000, and the period of three days from 22^nd to 24^th January 2000. There is no suggestion that those two further invoices are not correct.

All sums invoiced under contract 1 were paid in full. The last such invoice, number 5181, was in the sum of £362,199.38. The defendants do not admit that part of that sum, viz. £33,779.18 claimed in respect of consumables, was due. They put Tube Tech to proof of that sum.

The sums claimed in four of the five invoices issued under contract 2 were paid in full. The defendants now question two of those four invoices. One of them, invoice number 5193, was in the sum of £945,000. The defendants contend that only £651,450 was due under that invoice, and that the balance of £293,550 represents an overpayment. The other invoice of those two, invoice number 5196, was in the sum of £490,000. The defendants claim that only £282,900 was due under that invoice, and that the balance of £207,100 represents an overpayment.

A further invoice, number 5199, part of which, in the sum of £438,295.11, was issued under contract 2, was not paid. Of that sum, the defendants contend that £68,400 is not due; and of a further £181,498.42 in respect of consumables they put Tube Tech to proof. The balance amounts to £188,396.69.

Under contract 2A, one invoice, number 5191, in the sum of £35,000, was issued. It was not paid, and the defendants contend that there was no liability on their part to pay it.

Under contract 3, four invoices were issued. Two of them were not paid: number 5192, in the sum of £140,000, and the remaining part of invoice number 5199 (see paragraph 143 above), in the sum of £30,000. The defendants put forward no reason why those sums should not be paid, save a general argument that they are entitled to an account.

Thus the defendants claim to have overpaid the sum of £500,650 (paragraph 142 above) plus up to £33,779.18 (paragraph 141 above) of which latter sum they put Tube Tech to proof. Those two sums together amount to £534,429.18. In addition, in relation to sums not paid, they defend Tube Tech’s claim to the extent of £103,400 (paragraphs 143 and 144 above) plus up to £181,498.42, of which latter sum they put Tube Tech to proof. Those two sums together amount to £284,898.42. The total of all four sums is £819,327.60.

The total amount invoiced but not paid (which equals the amount of Tube Tech’s claim) is £643,295.11. The defendants counterclaim the difference between £819,327.60 and £643,295.11, viz. £176,032.49. They claim no set-off, nor do they claim recovery of overpayments by way of restitution by reason of mistake or otherwise. They rely on an argument that they are entitled to an account and that they are entitled to damages for breach of an implied term that all invoices submitted by and payments to be made to Tube Tech would be subject to documentary justification, cost accounting and final reconciliation by Tube Tech.

In the alternative, the defendants claim £831,982.49. In that alternative, they contend that the overcharge for labour was £1,225,000.00. The overcharges for labour contended for in paragraph 142 above, £293,550 and £207,100, amount to £500,650. The overcharge for labour contended for in paragraph 143 above is £68,400. Thus the total overcharge for labour alleged in those paragraphs is £569,050. So the alternative claim for £831,982.49 represents an increase over the claim for £176,032.49 by the difference between £1,225,000 and £569,050, viz. £655,950. Damages are claimed in the alternative.

Invoice 5193 is for retention of all pumps and equipment from contract 2 for the period 12^th December 1999 to 7^th January 2000: 27 days at £35,000 per day: £945,000.

Invoice 5196 is for the same matter as invoice 5193, but for the period from 8^th January to 21^st January 2000: 14 days at £35,000 per day: £490,000.

Invoice 5199 (part) extends the period from 22^nd January to 24^th January: 3 days at £35,000 per day: £105,000.

Those sums are claimed under clause 3 of contract 2. The defendants contend that those sums are properly divisible into elements representing man-days and equipment hire. The man-days, they contend, are predicated on the assumption that there were 24 men on site, the number mentioned as an approximate number in contract 2. They contend that fewer men were on site, and that therefore the notional labour element of the charge should be reduced pro rata. The actual figures for which the defendants contend I have mentioned in paragraph 142 above. They are based on figures given by Mr. Bathurst to Mr. Dimmock on 24^th December 1999, viz

The defendants’ deductions from those invoices may be sought to be justified by reference to clause 5 of contract 2. But Mr. Aylwin submitted, and I accept, that that clause is a ‘kidnapping’ clause. Both parties perceived that there was a significant risk in sending men and equipment to Nigeria: the possibility of kidnapping in the case of the men and the possibility of equipment being irrecoverable. Clause 5 applies, in terms, to the case where part of the work force is ‘unable’ to return to the UK. In my judgment, the invoices were properly raised under clause 3.

I reject, for reasons given above, particularly in paragraph 94, the argument that there should be pro-rating in this case.

There is no dispute that all the pumps and equipment from contract 2 were indeed retained from 12^th December 1999 to 22^nd January 2000. I am satisfied that in fact they were not despatched until 24^th January. Mr. Byford had to stay on in Nigeria to supervise their despatch. Accordingly, I reject the defendants’ contentions in relation to these sums.

There was a dispute over the arrangements for Christmas 1999. It was common ground that contract number 2 provided for the men to return to the United Kingdom for Christmas. Mr. Leighton Williams summarized the dispute in approximately the following terms:

The resolution of this dispute does not affect any issue in the case. Mr. Aylwin submitted that it affected the credibility of the witnesses, and he drew my attention to a document showing that Mr. Dimmock was willing for the defendants to pay £500 per man-day for Tube Tech personnel working on the site over Christmas. But there is no claim by Tube Tech or the defendants that depends on the existence of the alleged agreement. Accordingly, I do not consider it necessary to decide this point, and I decline to do so. There is no dispute as to the numbers of persons on site on any given day. If the matter goes further and those numbers become relevant, they will be available.

Mr. Leighton Williams accepted that the rate of interest on all amounts found to be due under any of the contracts was 2½ per cent. a month.

Clause 1 of contract 1 provided that the “above price” (sc., £735,000) excluded “all costs associated with…..minor consumables unspecified”. Clause 1 of contract 2 provided that the “above price” (sc. £875,000) excluded “all costs associated with…..consumables/unspecified”. The stroke is evidently a typographical error.

Invoice 5181, the amount of which included £33,779.18 in respect of consumables, was paid on 17^th January 2000. It is said that the figure of £33,779.18 had not been substantiated by Tube Tech. The defendants pleaded that they were due repayment of that sum on the basis that Tube Tech had failed to comply with the alleged implied term that all invoices submitted by and payments to be made to Tube Tech would be subject to documentary justification, cost accounting and final reconciliation by Tube Tech. Mr. Aylwin accepted that there was such an implied term in relation to the consumables. But he submitted, first, that by letter of 5^th January 2000 Tube Tech had given substantiation in the form of a breakdown of the figures; and second, that the payment had been made in full and final settlement, and so could not be reopened.

On the second of those points, Mr. Aylwin relied on a message from Mr. Dimmock to Mr. Bathurst dated 5^th January 2000. It said “I must press you for a statement that, when settled, the amount shown for contract 1 shall be in full and final settlement of all contract terms and conditions and costs”. But the statement was not made, so I reject Mr. Aylwin’s submission that the payment was made in full and final settlement.

There is no counterclaim for restitution on the ground of mistake or otherwise. There is no defence of set-off. In my judgment, by making the payment the defendants have waived any failure in substantiation. Even if they have not waived it, their entitlement can only be to substantiation and not to a sum of money. As to the claim for damages for breach of the term, there is no allegation (and it is difficult to see how there could have been an allegation) that the breach caused the payment. I reject this part of the counterclaim.

Mr. Leighton Williams submitted that there was no difference between the meaning of “minor consumables” in contract 1 and the meaning of “consumables” in contract 2. He submitted that the difference in wording was purely accidental, and was due to the use of two different templates. He invited me to hold that “consumables” in contract 2 meant “minor consumables”. Tube Tech’s evidence was that the difference in wording was deliberate. In my judgment, it makes no difference to the interpretation of the contracts whether the change was deliberate or not. The private state of mind of Mr. Watson and Mr. Byford cannot affect the interpretation of the contracts. No communication between the parties is relied on in this connection. I have to construe the two different expressions which prima facie have different meanings. That is by no means to say that “consumables” in contract 2 includes major items.

Whilst the interpretation of the contracts is a matter for the court, I have been assisted by some opinion evidence of Mr. Edwards. In his third supplemental witness statement, put before the court after he had finished giving his oral evidence, he referred to an email dated 24^th December 1999 from Mr. Bathurst to Mr. Dimmock where Mr. Bathurst was responding to a request for a breakdown of costs. Mr. Bathurst stated that of the charge of £35,000 a day, £11,000 represented the cost of machinery and equipment hire. Mr. Edwards quoted the following passage from the email:

Mr. Edwards made this statement:

I interpret that last paragraph as indicating that in making his identification of consumables in the Scott Schedule, Mr. Edwards has applied sub-paragraph (2) but not sub-paragraph (3) of the previous paragraph.

In comments on the Scott Schedule the defendants stated the following:

A question arises whether long high-pressure hoses are to be treated as consumables, as being items that are located beyond (i.e. downstream of) the manifold. Mr. Leighton Williams said that his understanding of what Mr. Edwards was saying was that the main hose taking the pressure up to the work face came to the manifold, which was probably the swivel point. Beyond the swivel point were the flexible hoses, by implication short hoses, and it was only those flexible hoses that were consumable hoses. Mr. Watson gave evidence, which I accept, that the hoses led from the pump head to the rotary seals, that is the swivels, on the lances. He went on to say that the hoses did not lead to the manifold: the manifold means the pump head. He did not say that there were any hoses downstream of the swivels.

I have seen pictures which show long hoses which appear to be quite flexible. They are consistent with Mr. Watson’s evidence. But the difference between the two witnesses may arise from differing interpretations of the word ‘manifold’. Apart from a Freelance guide hose, of unstated length, none of the hoses mentioned in the Scott Schedule in relation to contract 2 are less than 17 metres long. Since Mr. Edwards classified the Freelance guide hose as not a consumable, I conclude that that hose was upstream of what Mr. Edwards meant by the manifold. There appear to be no items that answer to the description flexible hoses leading from the swivels to the lances.

Mr. Watson said that all the hoses were consumables, since they were subjected to severe erosion by the water passing through them, which was associated with a damaging gaseous impurity. Mr. Aylwin submitted that all things, including for example pressure gauges, which rapidly wore out owing to the severe conditions were to be classified as consumables. Mr. Edwards’s logic might lead to that conclusion. But in my judgment his pragmatic approach gives a result that is closer to the normal meaning of consumables. Even though he may have been in error over the use of the word manifold, I prefer his view that the hoses (and indeed the pressure gauges) were not consumables.

I find Mr. Edwards’s opinion generally helpful. But in my judgment the high price is little guide to the meaning of consumables, given the exceptional nature of these contracts in respect of perceived risks and the relative bargaining power of the parties. The information provided by Mr. Bathurst after the contracts were made cannot, in my judgment, be prayed in aid in construing those contracts. Not without some surprise on my part as to the contents of sub-paragraph (2) of the passage I have quoted in paragraph 165 above, I accept Mr. Edwards’s opinion set out in that sub-paragraph, subject to my comments in the previous two paragraphs (169 and 170).

Mr. Aylwin submitted that items of tooling needed for Tube Tech’s in-house fabrication of consumable items were themselves consumables. His argument was that the defendants would have had to pay the costs if the consumables had been bought in. I reject that argument. Some articles, such as tape rules, which went missing on a regular basis were claimed as consumables on that account. I reject those claims.

The expression to be construed is consumables unspecified. In relation to contract 2, Mr. Watson supplied two method statements to Mr. Edwards (addressed to TSKJ Ltd.) dated 18^th November 1999. Those method statements mentioned lances, nozzles and jets. Mr. Leighton Williams submitted that those items were thereby specified and excluded from the definition of “consumables unspecified” in contract 2. I reject that argument. They were not specified as consumables in the method statement. There was no list of specified consumables, and in my judgment the expression “consumables unspecified” in the context means the same as “consumables”.

The defendants put Tube Tech to proof that the consumables the subject of invoice 5199 were applied to the contract. Mr. Williams submitted that there was a lack of documentary evidence that the goods had been applied to the contract. It is true that no purchase orders on the part of Tube Tech were produced. There was a full set of invoices from suppliers, however, many of them showing the reference J515. Mr. Leighton Williams accepted that goods ordered by Tube Tech under that reference would have been ordered with the Nigerian work in mind. The pro forma invoices and the packing lists were rarely consistent with one another. Values stated in packing lists hardly ever matched the invoice values. A vast amount of goods was brought back to the United Kingdom. There are no contemporaneous records of what was received back.

It is scarcely an overstatement to describe the inconsistencies between the invoices from suppliers and the packing lists as amounting to a state of chaos. I find that the chaos in the documentation arose as a result of the extreme urgency of the matter. It is said, truly, that there is no documentation showing receipt of the goods in Nigeria. But the defendants should themselves have had some such documents. There were deliveries to Nigeria most days. Much of the carriage, even of quite heavy goods, was undertaken by the defendants’ own personnel, who carried the goods as part of their luggage. I am satisfied on the evidence that all of the goods claimed as consumables were in fact sent out to Nigeria for the purposes of the contract work. Not all of them were used. There was a high rate of attrition of parts, and Tube Tech could not afford to wait until they ran out of stock before ordering replacements. Those that were not used or not worn out were returned to the United Kingdom. Tube Tech still has in its warehouse some unused and some partly-used material for which it has no present use or market. Mr. Leighton Williams pointed out that some of the evidence of Mr. Byford on the stock in Tube Tech’s warehouse was derived from the storekeeper, who, he submitted, should have been called as a witness.

There is no evidence that Tube Tech have been able to use more than a small part of the consumables returned to the United Kingdom. And there is no evidence that they have been able to dispose profitably of any of them. Mr. Byford prepared an inventory of stock held at Tube Tech’s premises as at 22^nd May 2000, indicating specifically the stock that had been sent to Nigeria, and giving in most cases an indication of the extent, if any, that they had been used on site and whether they had been used subsequently. I accept that as the best available evidence of the situation.

I conclude that the items claimed as consumables in Scott Schedule 2 were either applied to the contract or sent out to site for that purpose. In so far as they were not used on site, I find them to have been sent out in reasonable anticipation of a requirement for their use on site. But in so far as they were not used on site but have been or may be used for Tube Tech’s own purposes, in my judgment they cannot be charged for as consumables. Those that have not now, after almost five years, been used for Tube Tech’s purposes are in my judgment unlikely to be so used, and I shall ignore the possibility of their future use. Accepting, as I do, Mr. Byford’s evidence as to the use of the goods, I apply a discount to the sums claimed in Scott Schedule 2 where appropriate.

I must deal here with one particular item in the Scott Schedule (Scott Schedule 2) for invoice 5199 (contract 2), item 62. It relates to a consignment of goods imported from the U.S.A. They comprised 18 HP lances, 36 nozzles and some accessories. The defendants contend that those goods were ordered by NLNG, and that in consequence they, the defendants, are not liable for the charge. My findings on the evidence are these. The goods were ordered by Mr. Visram of NLNG on behalf of Tube Tech because Mr. Watson had identified them as being urgently required on site. They were delivered by aircraft specially chartered for the purpose by TSKJ. It does not appear who paid for the charter. It was not Tube Tech. The nozzles were used on site, but the lances were found to be incorrect. The lances were taken into stock by Tube Tech. It does not appear why they were not sent back to source. Tube Tech used three of those lances subsequently, on work not connected with the Nigerian work. The remaining 15 remain in stock at the premises of Tube Tech. At least 90 per cent. of the price of £5,975.72 was attributable to the lances. My conclusion is this. Given that the lances were not suitable for the work, the defendants are not liable to pay for them as consumables. The total sum claimed in respect of the other items does not appear, and is only a small proportion of the whole. I thus reject Tube Tech’s claim under item 62 of Scott Schedule 2.

I thus find the following items in Scott Schedule 2 to be consumables within the meaning of contract 2:

Thus the total amount I find to be allowable for consumables under contract 2 is £76,994.98. That includes the 15 per cent. uplift, which is not contested.

It follows that there will be judgment for Tube Tech against the first four defendants for the sum of £538,791.67 plus interest. I shall hear counsel on the amount of the interest. The claim against the fifth defendant is dismissed, as are the counterclaims.