ERDC Group Ltd. v Brunel University

In this action ERDC claims payment for the construction of new sports facilities for Brunel University (Brunel) at a location known as Site 3, which forms part of Brunel’s Uxbridge campus. The works, known as “Phase 1”, comprised a new outdoor athletics track with associated field events, an equipment storage building, and associated floodlighting and landscaping (“the works”). Later phases were to comprise pitches for football, rugby and hockey, and the upgrading of existing netball and tennis courts.

In December 2001 ERDC submitted a tender for the works which were to be carried out on the basis of the JCT Standard Form of Contract With Contractor’s Design, 1998 Edition. Under the proposed terms Carless and Adams Partnership (CAP) were to be Brunel’s Employer’s Agent and Quantity Surveyor. (Brunel’s other consultants included Building Design Partnership (BDP) for landscaping and “GVA Grimley” (Grimley) for planning.) On 5 February 2002 Brunel decided, having considered competing tenders, to appoint ERDC to undertake the works. However, it was also decided that the formal execution of contract documents ought to be deferred until after the grant of full planning permission (which was expected in a relatively short space of time). Pending full planning permission, it was agreed that ERDC would progress with the design of the works under the terms of a letter of appointment. The first letter of appointment was issued on 6 February 2002^. A further letter of appointment was issued on 30 April 2002, followed by a third on 15 May 2002. All three letters were returned countersigned by ERDC as provided by their terms. ERDC commenced construction of the works on 27 May 2002. Clear planning permission had still not been obtained when ERDC started work, and two further letters of appointment were issued on 1 July 2002 and 2 August 2002. (ERDC did not countersign and return these letters.) The authority under the final of these letters expired on 1 September 2002. Contract documents were never executed. Following this date ERDC continued with the works even though no further letters of appointment were forthcoming. The athletics track was completed on 22 October 2002, some 3½ weeks after the date that ERDC had planned to meet. The majority of the remaining works were finished by the end of November 2002.

On being sent contract documents for signature ERDC, in a letter to CAP of 3 December 2002, declined to do so and claimed (for the first time) that it would only continue work on the basis that all work carried out by it would be valued on a quantum meruit basis rather than in accordance with the valuation principles applicable under the JCT Standard Form of Building Contract with Contractor’s Design (“the JCT Valuation Rules”). Its letter read:

“Dear Sirs

Brunel University – Running Track

We refer to our meeting at the University on 20 November 2002 and confirm having received from you various packages referred to as “Contract Documents”.

As you are aware the letter of intent expired during early September and the work content of the project has changed significantly disrupting and changing the original planned intent. It is therefore not possible for us to sign these Contract Documents and we write to confirm formally that the terms thereof are unacceptable to ERDC.

Notwithstanding the foregoing, we are prepared to continue work on the project in accordance with the agreed scope of works and any changes instructed thereto but strictly on the basis that all work carried out by us is valued on a Quantum Merit basis.

Unless we hear from you to the contrary, then we will assume that you are agreeable to the foregoing and we will continue to construct the works on the foregoing basis and will discuss with you our weekly and monthly programming including all costing information available.”

Prior to December 2002 ERDC had submitted eight Applications for Payment based on the Contract Sum Analysis referred to in the Second Recital of the proposed conditions of contract and following the JCT Valuation Rules. The Contract Sum Analysis had evidently been prepared by CAP from the Contract Sum Analysis which had been appended by ERDC to its tender dated 3 December 2001 with amendments and which was then endorsed and adopted by ERDC as the basis for its applications for payment submitted between 10 June (Application for Payment No 2) and 29 November 2002 (Application for Payment No 8).

Brunel did not accept ERDC’s contention that all the work should be valued on a quantum meruit basis. At a Site Meeting No. 9 on the date after ERDC letter, 4 December 2002, CAP said that ERDC had to provide reasons why they were not willing to sign the documents that it had and without them work would not be valued “on a quantum meruit basis”. Despite a further request from CAP on 16 December 2002, ERDC did not do so until it sent a letter of claim in July 2003, although in the meantime it continued to maintain its basic position (see its letter of 23 December 2002). In this action ERDC’s main claim is that all the works should be valued on a costs plus basis. Brunel says that the works should be valued in accordance with the arrangements proposed and, until late 2002, followed by both parties.

ERDC left site, by agreement, at the end of March 2003. The works were then not entirely complete. After December 2002 ERDC had completed the mains electrical connection, lighting installation, planting and top soiling, construction of a pedestrian crossing to Kingston Lane, the placing of turf strips/fencing as a temporary measure to either side of the track, fencing to the tennis courts and other minor fencing works, and screeding and drainage works to the steeple jump.

ERDC called, as witnesses of fact, Mr Colin Blank, Contracts Manager of J B Corrie & Co Ltd, ERDC’s fencing sub-contractor; Mr David Comminskey, a General Foreman employed by ERDC; Mr Donald Cunningham who was employed as a quantity surveyor by ERDC until July 2003 based in ERDC’s Head Office in Edinburgh and who gave evidence by videolink from Malaysia); Mr Gordon Thompson, Contracts Manager of the Sports Surfacing Division of ERDC; Mr Paul Merriman, a Foreman employed by ERDC; Mr Dan Shotton, a Partner in DW Shotton Landscapes, ERDC’s Landscaping sub-contractor; Mr Brian Blunden, Floodlighting Division Manager for Lorne Stewart Plc, ERDC’s Lighting sub-contractor; Mr Joseph Lenzie, a Site Agent employed by ERDC; Mr David Reynolds, Sports Surfacing Director of ERDC Group Limited; Mr Ronald G Mitchell, Managing Director of ERDC Group Limited. The evidence of Mr Niall Barry was admitted under the Civil Evidence Act. There were witness statements from others (Mr Denis Betts, Mr William Kinross and Mr Jon Mawson) who were not called but whose evidence was treated as agreed. In the event little reference was made to witnesses that were not called.

Brunel called Mr Stuart Binnie, a Partner in the firm of Carless and Adams Partnership (CAP) and a Chartered Quantity Surveyor; Mr John Martin Jones, a landscape architect working for Building Design Partnership (BDP, retained by Brunel); Mr Phillip Christopher Keeley, a Senior Consultant at Materials Science Consultants Limited; and Mr Tom Enright, Clerk of Works, of Hickton Consultants. The evidence (that I admitted) of Mr David Rumsey, Commercial Manager of Mace Limited (trading as C2C Management Limited) was agreed. The evidence of Mr Paul Farley, Brunel’s Deputy Director of Estates until mid 2004, was received under the Civil Evidence Act.

ERDC did not call any expert opinion evidence on delay. It called as its expert on quantum Mr Robert Burt, an Associate Director of Trett Consulting. Brunel called Mr Ian Robinson, a Partner in Davis Langdon LLP, Chartered Quantity Surveyors, to express opinions on matters of delay and to give evidence in relation to quantum. Mr Burt was somewhat constrained on quantum by his instructions, e.g.

“My instructions in respect of ERDC’s Primary Case and hence this present exercise, are that the original tendered prices are not binding, relevant to or determinative of the measure of reasonable cost”.

Mr Burt expressed no opinions about delay and disruption. Mr Ian Robinson had carried out a detailed analysis that was contained and discussed in his Report on Delay. Both experts had put in an immense amount of work in preparing their reports, in answering questions and in four joint and other helpful statements.

There was the usual volume of documents. An indication of the complexity of the ramifications of the case may be seen from the length of the written closing submissions,

As a general preliminary observation I have to say that I found that the conduct of each party during the work was not appealing. ERDC, although evidently a leader in the design and execution of sports grounds, displayed a marked lack of consistent and effective management. It was needed on a design and build project which was being carried out way from its base in Scotland and, inevitably, with numerous sub-contractors and suppliers. A high degree of skilful co-ordination and supervision was plainly required but was not apparently provided. On the other hand in 2002 Brunel’s approach (with which I include, collectively, its advisers) seemed not to take account of the short working period actually available for outdoor work. In addition, whilst it was understandable that Brunel wanted the track ready for the start of the academic year it did not appear to have made up its mind as to what it wanted. Either by changes of mind or indecision it managed to make things difficult for ERDC. However I consider that ERDC was treated fairly by CAP in valuing the work and in determining what extensions of time might be granted, especially bearing in mind the lack of information provided by ERDC. Paradoxically, perhaps, I mention these views at this stage solely to get them out of the way. Attitudes in 2002 and in 2003 are now water under the bridge. With a very few exceptions I have decided the issues in this case without regard to them as the issues in the main require a completely objective approach, although not too clinical an approach. Put another way, this is not a case in which the merits are all on one side and not the other. Similarly, these are only general impressions of each party, corporately, as it were. I have not formed any views about the competence or otherwise of any individual, particularly those whom I saw and heard, other than to recognise that a number of them (on both sides) were doing their work well and professionally in trying circumstances.

The first primary issue between the parties is whether the work done prior to 1 September was done prior to any contract or contracts and, if so, what contract(s). The second main issue concerns the valuation of the work done. Although the parties disagree about the basis on which the works should be valued, it does not translate into a large amount on a basic valuation. The greater difference between the parties depends not on valuation but on the position in relation to delay and disruption and items excluded by Brunel, e.g. those termed Potential Further Entitlements (PFEs) by ERDC. In summary, the respective positions of the experts on valuation at the outset of the trial were given as follows:

Brunel paid ERDC £1,266,366.30. That amount will be deducted from the appropriate gross valuation. Brunel had formally maintained in its Counterclaim that ERDC had been overpaid by about £50,000 (but that has been overtaken). However Brunel maintains a Counterclaim for unfinished and defective work and design which comes to about £145,000, excluding about £43,000 for professional fees.

Essentially the issues between the parties may be grouped as follows:

Valuation of Work done prior to 1 September 2002

Letters of intent come in all sorts of forms. Some are merely expressions of hope; others are firmer but make it clear that no legal consequences ensue; others presage a contract and may be tantamount to an agreement “subject to contract”; others are contracts falling short of the full-blown contract that is contemplated; others are in reality that contract in all but name. There can therefore be no prior assumptions, such as looking to see if words such as “letter of intent” have or have not been used. The phrase “letter of intent” is not a term of art. Its meaning and effect depend on the circumstances of each case.

In this instance there can be no doubt, in my judgment, that there was a clear intention to create legal relations. That is plain from the text of the letters itself (exemplified by the extracts quoted above) and, in the case of the first three letters, by the formal countersignature by ERDC. However Mr Hargreaves is correct to draw attention to the need for certainty. It is essential for the determination of the rights and obligations that the parties intend them to be legally binding. It may be trite to say that contracts for construction work generally require agreement on the scope of the work or services to be undertaken (although framework or term contracts with only indicia as to the work to be done are valid), on the price or rates or other mechanism for determining what it is to be paid (although in the absence of such agreement some term will usually be implied), on the method by and time within which payment is to be made (although here again, quite apart from statute, such as the Housing Grants etc Act 1996, the common law may imply terms), on the time within which the work or services are to be performed (although a reasonable time will be implied if there is no agreement). The parties may of course also designate other matters as so essential to a concluded contract that without agreement on them there will be no legally enforceable agreement. Even without such selection, it may be clear that there has to be agreement on something without which there could be no contract.

Equally I have no doubt that the letters and their acceptance by ERDC were contracts, perhaps of the classic “if” or “conditional” variety. Both their background and their terms demonstrate that Brunel was not going to contract unconditionally for the whole of the Works. Instead it decided to offer ERDC a familiar limited contract which would readily ensure that, when it was able to conclude the full contract that was contemplated, that contract would take effect retroactively with the minimum of difficulties. In this instance Brunel decided that the limit should primarily be by reference to value, with limits on scope of work or services, being secondary, presumably since ERDC was responsible for design.

I do not consider that there was any uncertainty or other factor that prevents each letter and its acceptance being a contract, the second and subsequent contracts effectively superseding the previous one. The fourth and fifth letters were accepted by ERDC’s conduct in continuing to execute the works without demur to the terms upon which they were carried out. The work is clearly set out in each letter. The amount payable is that to be determined by the application of the JCT conditions on the assumption that the work formed part of a contract for the whole works, e.g. by the use of clauses 12, 13, 26 and 30 of the JCT Design and Build Form which I regard as aptly and adequately described by the term “normal valuation and certification rules” and the use of a Contract Sum Analysis to which I have referred and which ERDC itself treated as agreed in its applications. In so far as the terminology used might be regarded as a matter upon which expert evidence might be required (which in the TCC it is plainly not) then Mr Robinson’s views are right and to be accepted. In so far as it was necessary for a duration or programme to be established (e.g. for the purposes of the application of clause 26) then the letters did so in the references to the overall periods for mobilisation and execution which was not only more than sufficient but was regarded as such as that form of words was agreed. There was no official start date: ERDC was only authorised to make a start. It did so on 23 May 2002. There was no postponement. There was therefore no pre-start delay in the sense employed by ERDC. I do not regard the absence of formal agreement as to liquidated damages as essential, nor was it so treated by ERDC. It had priced its tender on Brunel’s intentions and I have little doubt that the formal contract would have been executed on that basis. I cannot see that there would have been any difficulty on either side in filling in the blanks and executing the documents (unless of course either party were to resile from a position previously agreed or established). Obviously the letters, although remarkably thorough, do not comprehensively deal with certain eventualities but there is nothing in them or missing from them that prevents an effective contract and which cannot be supplied by interpretation or implication.

Mr Hargreaves however argued that if, contrary to ERDC’s primary case, there was a contract nevertheless it did not make provision for the extension of the completion date (if agreed), or for the valuation of variations.

In my judgment for the reasons already given I do not accept that there was no mechanism for an extension of time: there was an agreed date for completion; the JCT conditions contained a provision for extending time. The point is however academic. A provision for an extension of time exists to protect an employer’s right to liquidated damages should there be an “act of prevention” which would otherwise disentitle the employer to damages for the contractor’s failure to complete by the agreed completion date and also to protect a contractor from liability for damages where the completion date cannot be met by the occurrence of an event that would otherwise have fallen within the contractor’s sphere of risk or responsibility. The absence of any mechanism might have been material had ERDC failed to complete the Works on time and been in breach of a contract. That never arose.

A point arose over the timing of the letters. It was said that there were periods when no letters were effective i.e. between 1-30 April 2002 and 2-27 August 2002. The point can disposed of shortly. Each letter took effect from the date of the first letter: “Your appointment shall be deemed to have commenced as at the date of the initial letter of intent issued on 6 February 2002”. The value in each letter obviously covered work done in the periods in question. The last letter was also backdated to 2 August 2002.

It was however suggested that there could be no proper valuation. Mr Hargreaves drew attention to clause 12.5.6:

“Provided that no allowance shall be made under clause 12.5 for any effect upon the regular progress of the Works or for any other direct loss and/or expense for which the Contractor would be reimbursed by payment under any other provisions in the Conditions.”

He contended that unless there was some other provision ERDC had no contractual means whereby the “effect upon the regular progress of the Works or any other direct loss and/or expense” arising out of the variations might be valued. ERDC’s case was that there were considerable variations prior to 1 September and by that date some had delayed the works or disrupted other operations and, as a result, the works carried out before 1 September 2002 were almost unrecognisable from the original Works. Thus a valuation should not be carried out by reference to the Contract Sum Analysis, but rather on a basis which used cost as a starting-point.

I do not accept this part of ERDC’s case. Clause 26 was available. Its operation does not depend on the existence of a completion date. Delay can be assessed by reference to the progress that a contractor could reasonably have been expected to make, assessed by reference to the contractor’s forecasts such as its programmes. Disruption is always based on the contractor’s own programmes and estimates. ERDC’s case that even if there were a contract the valuation would have to be upon a quantum meruit is therefore incorrect. I see no reason why clause 26 or any other comparable provision of the JCT conditions could not be available and operated (subject to compliance with any pre-conditions). Thus the restriction on valuations in clause 12.5.6 need not prejudice ERDC and has not done so.

Accordingly the work done pursuant to the letter contracts prior to the expiry of the last contract on 1 September 2002 is to be treated and valued as if it had been carried out under the contract contemplated by the last letter. It is not to be valued on a quantum meruit basis. The valuation should be made applying the relevant rates and prices. Where the “contract” rates or prices would not be applicable, either party is free to contend for a different and more appropriate rate or price or valuation by reference to cost, if reasonable. Thus Brunel, like any employer, is not bound by the opinion formed by CAP unless, of course, there was an agreement binding on it (e.g. by the use and application of a contractual procedure) or if it would not be fair or equitable to ERDC to use another rate or price or basis of valuation.

Valuation of Work after 1 September 2002

It has rightly been said that there are no hard and fast rules for the assessment of a quantum meruit. All the factors have to be considered. This is not a case in which there was no contract. In such circumstances the assessment of a quantum meruit is usually based on actual cost (which will include on and off site overheads, with in the latter case some estimates or extrapolations being required), provided that it was reasonable (which can frequently be checked by the use of standard rates and prices such as Spon) and was reasonably and not unnecessarily incurred, plus an appropriate addition for profit. Nor is it a case where the contractor’s tender and its rates or prices do not make allowance for the risks and responsibilities to be borne by a contractor undertaking this type of work. In addition ERDC continued to work for a considerable time after 1 September 2002 as if the previous arrangements were still in existence. On the other hand, the circumstances in which ERDC worked were no longer those contemplated by the contract and there is considerable force in ERDC’s contention that it should not lose and that it should not be worse off because Brunel was still not in a position to contract (on any basis).

However I have come to the firm conclusion that, on the facts of this case, which are unusual in that there was a move from contractual to a non-contractual basis, it would be not right to switch from an assessment based on ERDC’s rates to one based entirely on ERDC’s costs. The move was not marked at the time and ERDC only made its position clear at a much later stage by which time all the main elements of work were either substantially complete or, seemingly, heading for completion. ERDC applied for payment and was paid (until December 2002) on the basis of the principles set out in the first letter of intent, i.e. in accordance with the JCT Valuation Rules, as Mr Cunningham said. After 1 September some 40% (by value) of the work remained to be done. Mr Robinson sensibly and pertinently said, as quantity surveyor: “a price or rate that was reasonable before 1 September, in my opinion, does not become unreasonable after 1 September simply because the authority in the letter of appointment expires”. I agree. The conditions in which the remaining work was carried out did not differ materially from those which (it must be assumed) were originally contemplated. In addition ERDC applied for a proportion of the value of work in accordance with the Contract Sum Analysis. For variations, however, ERDC used the rates in its March Tender Estimate or breakdown, rather than the Contract Sum Analysis. Although CAP did not have that breakdown the use of such rates was sensible as the former provided a much better basis. It would not now be right to depart from it as ERDC used it. Such a contractual basis must be regarded as in principle fair for the purposes of a quantum meruit, especially here, where, for example, it is clear that ERDC’s tender was not abnormally low but was close to others. Mr Robinson’s analysis convincingly demonstrated that ERDC’s tender was commercial. He also checked the rates and prices shown in the March Tender Breakdown with the 2002 Spons Price Books. His conclusion (which I accept) was that ERDC’s rates and prices were also objectively reasonable.

Its use would avoid the problem identified in Sanjay with which I entirely agree:

“A building contractor should not be better off as a result of the failure to conclude a contract than he would have been if his offer had been accepted, i.e., in practical terms, in a case such as this, the price which the building contractor thought he was to get for the works (because he thought his offer had been accepted) must be the upper limit of the remuneration to which he could reasonably claim to be entitled, even if at that level of pricing the building contractor would inevitably have ended up showing an overall loss.”

It would thus not be unfair to Brunel, if that is relevant, which I consider that it is, if an objective view is required. In addition, I am satisfied from an examination of Mr Robinson’s work that, if properly approached and applied, ERDC should be fairly and properly remunerated for doing the work in the circumstances in which it found itself after 1 September 2002. Where appropriate Mr Robinson valued ERDC’s work on a cost basis as he considered that “the JCT Rules” required such a valuation to be fair. He did this even where CAP had decided to apply the rates.

In my judgment a quantum meruit for the work done after 1 September should be assessed on the same basis as that done before that date. In making that assessment it is necessary also to consider the value of the benefit received or conferred, although, as Goff & Jones on Restitution points out, the benefit need not be realised; it need only be “realisable”. Construction work is the product of labour, plant and materials, managed over a period of time. The costs of management (commonly termed overheads, whether “site” or “head office”) are generally included in the rates and prices, and will be recovered by payment at such rates and prices. If a project takes longer than allowed for in the rates and prices the contractor may incur management costs which will not be so recovered. In assessing a quantum meruit by reference to rates and prices (whether contractual or conventional, such as those in Spon) it would ordinarily be right to see that something is included for the costs incurred should the execution of the works be prolonged beyond the period contemplated by the rates (taking into account the risks for which the rates must be taken to have covered for otherwise there may be duplication) and a fair allowance for time-related costs will not otherwise be achieved. Assessment by reference to actual cost will not require such an exercise. On the other hand, whether the assessment is made by reference to cost or to rates and prices, it is in my view clear from the authorities that the party paying for the benefit is not to be required to pay for delay or inefficiency. Accordingly in arriving at the total payable by reference to rates and prices it will be necessary to look at what the contractor should have recovered by the use of those rates and prices.

Finally, I should deal with ERDC’s case as to December 2002 and the following months. Mr Hargreaves argued that Brunel kept ERDC on site for its benefit and should therefore pay for its presence. He referred to CAP’s email of 24 December 2002 which was an acknowledgement that ERDC was incurring costs and at Brunel’s request and for Brunel’s benefit.

“Further to the message I left on your mobile can we arrange a meeting for early in the new year. In order to reduce your mounting costs might I suggest the possibility of omitting the infield works, store building, extension of paving etc from your Works this would then enable you to concentrate on the extensive snagging list remedial works with a view to handing over the track by the 13^th January 2003 and in turn enable us to release further monies. Obviously this approach would then enable you to cease incurring further site set up costs, particularly when we do not know yet when the weather will allow the infield works to commence.”

ERDC replied on 22 January 2003:

“…We advised you in our letter of 3^rd December 2002 Ref. RGM/RK that we are only continuing on the basis that we will be paid on a Quantum Meruit basis.

…If we can agree a further certification and payment to account, we would return to site to complete all remedial works at no cost to the University, and any outstanding works unaffected by weather conditions. We would leave site eliminating any further wastage of expenditure and return in the Spring to complete all outstanding works”.

Mr Hargreaves also relied on communications with Chris Steffen such as one of 6 February 2003:

“As you are aware the strategy at present is to remove ERDC from the site at the most convenient opportunity. We need to agree by what process and procedure this takes place…”

I have to say that I do not read this correspondence (or any other evidence) as an acceptance or acknowledgement by Brunel that if ERDC was entitled to be paid a quantum meruit then it would be paid its recurring site or other costs such that it could not now argue not to pay them.

The upshot therefore is that the work done prior to 1 September 2002 is to be valued under the JCT Valuation Rules and that the amount due in respect of the work done thereafter although recoverable upon a quantum meruit is also to be assessed primarily by reference to the rates and prices pertaining to the work done before that date. That means, that subject to such differences there may be as to Mr Robinson’s valuations, they represent the valuation and assessments to be applied, as Mr Robinson’s assessment was therefore made on the right lines, balancing both the application of ERDC’s rates and prices against the evidence of cost and valuing on the latter basis where appropriate. I shall therefore use it as the basis for determining what is due to ERDC by way of a quantum meruit. It was however prepared using Mr Robinson’s opinions on delay. I shall therefore now consider ERDC’s case on delay, generally following the order of its presentation. On specific items, I shall look first at the Electrical Connection, then Lighting, and then other matters relied on by ERDC and Brunel, to see if Mr Robinson’s opinions (e.g. that an proper assessment ought not to allow time-related costs after 1 November 2002) require alteration. I shall then turn to other aspects where Mr Robinson’s valuation may require alteration, although many of the differences and points at issue stemmed from divergences between the experts on the assessment on a cost plus basis.

Allowances for any delay or disruption experienced by ERDC.

I. will first deal with some general points on the parties’ cases on delay and disruption. First, ERDC presented a case which constructed a critical path until ERDC left site on 31 March 2003. Its salient points were:

The purpose of this was to counter the views expressed by Mr Robinson, viz. that ERDC was “justified” (i.e. not culpable) in taking until 22 October 2002 or 1 November 2002 to complete the Works. He said in his conclusions in Section 4 of his Delay Report and summarised in paragraph 4.3:

“In overall summary, it is my opinion that ERDC ought reasonably to have completed the majority of those works which it did eventually complete by 22 October 2002. The lighting installations ought reasonably to have been completed and commissioned by 1 November 2002. Beyond that date only a small number of further items of work (mainly to the fencing and the pedestrian crossing) ought to have remained and almost all of those works were located off the main site. The planting works would always have been required to be carried out after the end of October 2002 but, in themselves, ought not to have involved ERDC in any time-related site establishment and management costs of any significance.”

Mr Robinson modified these views to the extent that he agreed works would have gone into November. Brunel had also thought that ERDC might have had an “extension” until the end of November 2002. For example, Mr Reynolds sent an email to CAP dated 23 December 2002:

“I think we are all aware of the main reasons for the delays:

(a)

delayed start on site; (b) reduced contract period; (c) increased topsoil depth; (d) importation of suitable fill; (e) attenuation tank; (g) no planning consent.”

Brunel relied on it since, in cross-examination, Mr Reynolds confirmed that the views were what he understood to be ERDC’s position, rather than merely his own. ERDC therefore wished to concentrate on the period from October 2002 to March 2003.

I do not accept ERDC’s case on its “critical path”. First, it is not supported by any evidence either factual or opinion. The fact that ERDC did not call an expert on delay would not itself be material if a critical path was otherwise supported. Secondly, it is therefore, as Mr McCall rightly said, presented as a matter of submission or conclusion. Thirdly, I do not consider that such a critical path is of any real value to this case where the issues are one of quantification of time-related and other costs of the effect of certain events. Fourthly, Mr Robinson did make a very careful and cogent analysis with that objective.

Mr Robinson wished to establish why ERDC remained on site after the time originally contemplated for completion i.e. around the end of September 2002 (the difference between 28 September or 4 October 2002 is, as I have said, immaterial as neither was ever a contractual date in the ordinary sense) and whether it was a result of factors for which ERDC was responsible. His primary purpose was of course to see if quantum should be adjusted accordingly. He therefore looked at the athletics track, the infield, the outfield (including outfield events), landscaping and fencing, drainage, the mains electrical supply and the electrical installations (including the site lighting), and the equipment storage building. As his Delay Report recounts he then prepared a fragnet of the relevant activities from ERDC’s Original Programme CP/2186/00. Each fragnet showed ERDC’s original planned programme intent for that element of the work. He also prepared a similar fragnet setting out ERDC’s actual as-built progress in respect of the same element of the work. In that way, as he said, he produced an ‘as-planned versus as-built’ programme for each element of the work. In so far as the as-built dates on these programmes were later than the as-planned dates this evidenced the extent of programme slippage to each activity and, overall, to each element of the work. On the basis of the facts set out in that Report, Mr Robinson ascertained what he believed to be the reasons for the programme slippage apparent from the ‘as-planned versus as-built’ programmes. He then offered an opinion as to the responsibility. He concentrated especially on investigating the 28 separate Delay Events which ERDC had pleaded in paragraphs 2.2.4 and 3.1.1 of Annexure A to the Particulars of Claim as the cause of delays to its progress of up to 26 weeks and 2 days. His conclusions in relation to the elements of work set out above and the 28 Delay Events identified by ERDC are set out in Section 4 of his Quantum Report.

Mr Robinson was however cross-examined as to why he had not produced by way of a programme, the as built critical path of all the works. He explained that he frowned on as-built critical paths since an as-built programme was essentially a record of when things happened and, as such, it did not contain a logic network. In order to create an as-built critical path a logic network would have to be imposed on it but such a programme was not intended to have a logic network imposed upon it. That as-built critical path does not recognise the fact that during the course of a project the critical path will move from time to time. In my view that is a perfectly satisfactory explanation, and certainly for this case. Mr Robinson was not however cross-examined on what such a critical path would have showed. It was said that these were questions of fact and taken up with witnesses of fact and that there was no point in putting the case again to Mr Robinson. I do not criticise counsel for not having done so but without Mr Robinson’s views I cannot accept the submissions made that since Brunel had not grappled with ERDC’s case with the result that its case was not tested by Brunel with ERDC’s witnesses and that the works relied on were also not tested with ERDC’s witnesses and therefore ERDC’s case was not made out. In my judgment the reverse is not only just as valid but correct. I have no grounds for not accepting Mr Robinson’s approach and his conclusions (other than in a few areas to which I shall refer).

It was part of ERDC’s case that there were delays prior to the start of work which had the effect of moving its original planning back by a month, so that the track works were postponed from June, July and August into July, August, September and one week into October. There is no doubt that works of this nature are sensitive to weather. However ERDC in my view accepted the fact that, through the evolution of the first three letters of intent, the period of execution which was based on 8 weeks’ mobilisation and 18 weeks on site (“26 weeks overall from award of contract”) was put back ultimately to 27 May 2002, with works commencing on 5 June 2002. It was equally clear that, whatever might have been the position earlier, from early April 2002, there was no float in ERDC’s programme to allow for overrun and still maintain progress on track work etc. On 11 April 2002 Grimley recorded that in order “to meet this timetable it is essential that development works commence on site on 29 April 2002”. Mr Binnie agreed that that was so. Equally, as already set out, although ERDC had worries about weather and voiced them there was no agreement that ERDC were not to shoulder the risk of bad weather and so the rates and prices are to be viewed on that basis.

So too with site conditions. Any difficulties in gaining access to the whole or any part of the site must be treated as having been allowed for by ERDC in its rates. Such evidence as there was showed that the difficulties were not unusual. There were of course other problems. Thus Mr Blank said that the difficulties to which he referred in his evidence related to deliveries of materials which were affected by other activities of ERDC and wet ground conditions both of which would normally be within ERDC’s risk to assume and to manage.

ERDC, in relation both to time and to cost, maintained that where there was a letter of intent it was less easy to control sub-contractors. Brunel challenged this proposition. As a general statement it has some plausibility, largely because a contractor is not likely to commit itself to a subcontractor unless it has secured a contract. However in certain sectors of the industry much business is done perfectly well without formality. The evidence that I received did not really support ERDC’s case. For example, although Mr Cunningham said that the line marking contractor and the steelwork sub-contractor for the storage building had been difficult to appoint because there was no contract, only a letter of intent, neither sub-contractor was called. Similarly Mr Cunningham suggested that PG Bevan stated they were not interested in pricing for the storage building because of the existence of a letter of intent. However a letter from PG Bevan dated 2 October 2002 makes it clear that there were other reasons. On the other hand, Mr Blank of JB Corrie said that they were keen to do the work because of their relationship with ERDC whether or not under a letter of intent. (See also the minutes of the pre-start meeting with JB Corrie on 11 July 2002.)

Progress was certainly affected by the need to comply with the conditions attaching to planning permission before work (the otherwise permitted development) could lawfully start. Yet in my judgment ERDC was right to say that there was no blanket restriction. It is clear from the evidence of Mr Binnie that the local planning authority relaxed its attitude so as to permit some development to start but the conditions had to be met in relation to certain parts. I now move to specific topics.

Considerable time was spent on the history of the electrical connection. The supply of electricity to the site was not energised until 17 January 2003 for which ERDC claims it is not responsible. Brunel’s case is that ERDC was responsible but in any event that other works were delayed by ERDC which meant that any delay to the electrical connection was immaterial. The other works included the storage building (suspended unfinished on 18 November 2002), footpath lighting, paths & paving, fencing, landscaping and planting, top soiling, the mains water connection, turf strips and temporary fencing to the track perimeter, and remedial works. The late energisation of the supply did not hold up any other activities other than commissioning by ERDC’s electrical sub-contractors and therefore did not lead to time-related costs being incurred at anything other than a relatively insignificant level.

Paragraph 1.1 of the Performance Specification in the Employer’s Requirements:

“The Contractor will be responsible for providing power and water supplies to the scheme and liaising with the Statutory Authorities…” .

Other provisions dealt with the supply on the site so it was clear that a low voltage (i.e transformed high voltage) supply had to be provided – see paragraph 3.1.6 (Equipment Store):

“The cost shall include for provision of internal lighting, security lighting and providing an electricity supply to the store”.

Contract Addendum no. 1 (16 November 2001) said:

“In addition to the Electrical requirements contained in the tender documents the following is to be allowed for:

Make provision in the design and construction of the electrical works for sufficient mains electrical supply and site distribution to suitable locations, for the requirements of all the sports facilities planned to be built in this and subsequent phases in order to avoid any disturbance to the completed Phase 1 works when subsequent phases are built. The intention is not to provide electrical distribution on the site/s of subsequent facilities within this phase.”

Contract Addendum no. 2 (by way of a letter of 23 November 2001) said:

“Make allowance for the following additional Provisional Sum

Include the Provisional Sum of £100,000

The work is defined as follows

Mains electrical connection (including builders work in connection with the mains connection) for entire Site 3 and site distribution to areas of subsequent phases of work as defined in Item 5 of Amendments to Tender Information 1.

It is NOT intended that this provisional sum covers for electrical works and site distribution to the Phase 1 works.”

Clause 12.3 of the JCT Conditions (With Contractor’s Design 98) say:

“The Employer shall issue instructions to the Contractor in regard to the expenditure of provisional sums (if any) included in the Employer’s Requirements.”

ERDC included the Provisional Sum in their Contract Sum Analysis as follows:

These provisions were carried forward in that they were not altered by CAP for issue on 21 May 2002. However they were clearly erroneous as the Provisional Sum of £100,000 was not for site distribution. Indeed on 26 March 2002 ERDC had written to O’Brien Price Cheltenham:

“We also require to bring power, water and telephone services to the site and will require mechanical and electrical design services to liaise with the local utilities with regards the loading requirements etc from the details supplied by our Sub-Contractors for the mechanical and electrical installations”

In addition on 9 April 2002 ERDC was sent a copy of a letter from BDP to CAP attaching the revised electrical strategy and referring to drawing (9-) LP016 rev A which had recently been issued. BDP’s revised electrical installation strategy included:

“A new 450kVA HV three phase incomer shall be supplied to the site by the Regional Electricity Company Scottish & Southern … The Contractor shall contact the Utility and make all arrangements for this connection to be made to a new substation to be built to the REC requirements to allow for both their equipment and new LV distribution switchgear to be accommodated”.

Drawing (9-) LP016 Rev A showed the requirement for substation as part of the scheme, and Note 5 on the drawing stated:

“The contractor shall arrange for the connection of an HV supply from the utility”.

At the briefing meeting on 18 April 2002, arrangements were made for ERDC to liaise about utilities.

However the inclusion of the provisional sum made it necessary for an instruction to be issued. That came effectively by Contract Instruction 1 (CI) on 23 May 2002 and CI 2 on 27 May 2002. CI 1 said:

“1.03: Follow up and liaise with Electrical Engineer and Southern Electric to progress design, cost finalisation and construction of mains electrical supply as referred to in attached letter from BDP dated 22 April 2002 and as shown on the following drawing:

Site 3 Sports Facilities

Electrical and Ancillary Services Indicative Containment

Drawing (9-) LP016 Rev AA”.

Drawing (9-) LP016 Rev AA was “Issued For Construction”. Note 5 said: “The contractor shall arrange for the connection of an HV supply from the utility”. The letter of 22 April 2002 from BDP to S&S requested a high voltage supply. It read:

“Mr Don McConnel

Connections Designer

Scottish and Southern

…

Dear Sir

BRUNEL UNIVERSITY, UXBRIDGE SITE 3 SPORTS DEVELOPMENT

Further to our previous telephone conversations regarding the above site for which you provided a budget cost to one of the tendering parties for an LV supply we are writing to formally request a quotation for the supply and installation of a 5004 VA supply to the site. However we require an HV supply complete with meeting circuit breaker. The associated transformer shall be supplied, and installed by our clients’ contractor and owned by the client. An increase in capacity has been allowed to account for all existing LV supplies to the site which shall be re-supplied from the new substation.

Please therefore forward a quotation including a timescale of how soon the supply could be available on site. Your specific requirements for civil works including substation construction etc will also be helpful at this stage.

We understand you will be extremely busy, however, if you could treat this as a matter of urgency it will be most appreciated by all parties involved. The client, Brunel University are keen to make their new facilities available to their students and local community as soon as possible

We have included a copy of a drawing showing the extent of the site which is alongside Kingston Lane. If you require further information, payment or signatures etc please do not hesitate to contact us and we shall endeavour to reply quickly.

Yours sincerely

Stuart Carrick

For Building Design Partnership Ltd”

CI 2 said:

“With reference to Contract Instruction 1.03, attached is a quotation and further information dated 21 May 2002 received from S+S for obtaining the electrical connection and supply onto the above site.”

It attached a long and clear quotation from Scottish & Southern for new electricity connections. (Brunel’s supplier was NPower.) It was subject to there being other agreements such as the Supply Agreement, the Meter Operator Services Agreement and the Connection Agreement before the supply would be energised. A substation had also to be provided.

ERDC placed much reliance on the fact that BDP also had an obligation to “arrange for new supply.” However the two are not mutually exclusive. On a design and build project it is not at all unusual for parties’ contractual obligations to overlap. The client’s interests may be better served in that way. On 18 February 2002 CAP had sent an email to Dave Reynolds to confirm that ERDC had commenced discussions with the services supply bodies, adding that ERDC should liaise with Martin Jones of BDP with regard to site wide electrical distribution.

In my judgment ERDC was now bound to get on with whatever was needed to provide electricity. If any approvals or permissions were required it had either to obtain them or to advise Brunel or its advisers as to what was needed. I accept that ERDC would not have been obliged to get all that was necessary such as a planning permission for the substation or to obtain Brunel’s wayleave in respect of the mains supply or substation or to get the agreements listed by Scottish & Southern (S&S) signed, or to get a lease for the substation but it was bound to advise Brunel on what it needed in respect of these matters. Mr Binnie said ERDC was obliged to obtain a Supply Agreement between NPower and Brunel, a Meter Operator Services Agreement and a wayleave. It is at such points that BDP might also be obliged to act.

Thus on 31 May 2002, ERDC wrote to CAP asking for clarifications:

“We refer to your Contract Instruction No. 02 regarding the quotation for the new electricity connection from S&S.

For the avoidance of doubt can you please confirm that this is an instruction to:

Accept their quotation on behalf of the Client.

Complete the quotation acceptance on behalf of the Client.

Pay the connection charge of £69,074.00 in advance.

If so can you provide the name of the Client’s proposed electricity supplier and their meter operator.

Can you also issue an additional instruction to undertake the civil works that S&S have excluded.

As this is quite a large sum we would be grateful if an Interim Payment could be made to cover this amount plus initial design costs and site establishment. We will phone you on your return from holiday to discuss the above”.

CAP replied on 5 June 2002:

“In reply to your letter dated 31 May 2002 we confirm that the 3 points you raise in relation to the Contract Instruction are correct. Please liaise directly with Bob Stiff, the University’s Energy Manager, (01895 274 000), Brunel University Estates Department, Cleveland Road, UXBRIDGE, UB8 3PH, bob.stiff@brunel.ac.uk) for details of the electricity supplier & mater operator. He does have a copy of the quote given by S+S.

Can you please provide your cost for the building and civil works in connection with the mains supply cable and substation. Please liaise with Martin Jones of BDP regarding any specific requirements he may have for the substation enclosure. We will issue an instruction for this work in due course.

As requested, you may submit an interim payment claim for the works completed thus far. The University will pay the cost of the connection charge in this claim provided that evidence is given that S+S have been paid.

We trust the above answers your queries.”

Footpaths were also late. They were to have been constructed between 8 July and 30 August. They were put back three weeks, to the end of July. They were recorded as being 40% complete by 9 August 2002. Although at a meeting on 5 August 2002 ERDC was instructed to follow BDP drawing (9-) LP016, it was then instructed on 8 August 2002 to install a further ducting system as shown on drawing (-9) LP016AA. As the ducting system was close to the previously excavated and stoned footpaths, and at a lower level, the footpath works had to be suspended until the ducting had been installed. Duct chambers had to be ordered and it took a week for them to be delivered. Installation of the ducting was carried out between 19 August and 4 September 2002. The footpaths were recommenced. Laying of block paving then started although the laying of sub-bases and kerbs continued until at least the end of October 2002. Block paving continued until at least early January 2003.

Similarly variations to infield drainage did not affect the overall position. ERDC started the infield drainage around 24 July 2002 and initially completed it around the middle or late August 2002. Thereafter screening and placing of the topsoil started in the infield, but with variations. The infield drainage had been varied around 15 July 2002 as a result of which a second upper layer of topsoil was introduced which was to be screened to 10mm (20mm was originally envisaged). BDP changed the detail on ERDC’s proposal on 31 July 2002, the effect of which to move the sand/gravel layer up into the upper layer of topsoil. Accordingly, ERDC had to place the second layer of topsoil (screened) and then excavate through it to elevate the layer of gravel and sand into the top layer of topsoil. The works of screening, laying topsoil, back excavating and bringing up the sand and gravel layer began in mid August 2002 and continued to the end of September 2002. The infield drains were re-excavated during week commencing 16 September 2002 and screening and placing of topsoil continued until the end of September 2002 and were therefore complete before 22 October.

Meanwhile, on 10 September 2002, Mr. Binnie sent Mr. Thompson an email saying that the latest programme showing track completion by 25 October 2002 was not acceptable to Brunel and that it had to be ready by 7 October 2002. “I can’t emphasise strongly enough the University’s requirement”. Mr. Binnie accepted that the dates in the letter were very tight and that there could be no guarantee that they would be achieved. ERDC had difficulties in meeting this request. It could not get its subcontractors to accelerate although I do not accept Mr Thompson’s evidence that ERDC had no means of compelling its subcontractors to begin work at all. In the email Mr Binnie suggested four operations that might be speeded up. The first was to adopt the quickest artificial oxidisation process possible (viz. spraying the surface of the track). This was a labour-intensive task involving the scrubbing of 4000m² of track and required some diversion of resources from other works. The same applied to the second suggested item in the email (synthetic surface). Although the third item (line marking) was the responsibility of ERDC’s subcontractor, Trackmasters, ERDC helped it by supplying labour – so there was spare labour. Although work on the track was accelerated by a week on the early September 2002 programme, it was not completed by 7 October 2002 but some 10 days later.

Mr Hargreaves submitted that, given these demands, in effect ERDC did the best that it could on fencing and pathways. He said that it was for ERDC (in consultation with CAP and BDP) to set out the line of the fencing for its subcontractor and to clear roots and ERDC had not had time to get around to this since it had been carrying out varied and accelerated work since the very start of the project. He relied on an account from ERDC’s sub-contractor (JB Corrie) as set out in its letter of 21 October 2002:

“We have considered deploying extra labour on-site but at the time of writing we have only two or three days' work in hand. My information from site tells me that the line of fencing at the rear of the houses still has to be defined and then tree roots have to be cleared from this line. We appreciate your efforts that went into having us appointed as fencing contractors.”

Mr Blank could not really recall the circumstances which Corrie answered ERDC’s criticism of lack of labour. At Site Meeting 7, on 23 October 2002, a few days later it was recorded:

“4.08

– “The progress of the fencing and the footpaths have been particularly slow. ERDC say they are experiencing difficulty obtaining labour to complete these and other works.”

I find it difficult to see how ERDC could be allowed anything in respect of the fencing work. It had originally planned to start fencing on 1 July 2002 to complete the first stage 2 August 2002 and then to do a second stage between 16 September and 27 September 2002 (two weeks), i.e. a planned duration of seven weeks. Fencing could plainly be carried out at the same time as the main elements of the works, such as the infield, track, the outfield and the storage building. It was quite separate and on the periphery of the site, as Mr Binnie said. ERDC issued a letter of intent to JB Corrie on 8 July 2002. It said that fencing was programmed for completion on or before 20 September. Corrie was not troubled by ERDC’s lack of a contract. In cross-examination Mr Blank agreed JB Corrie was keen to do the work, whether or not under a letter of intent because of its relationship with ERDC. (This was true of other sub-contractors.) The pre-start meeting with JB Corrie on 11 July 2002 shows its flexibility and willingness to co-operate:

“4.0

Programme was discussed and agreed as follows:

Start on Site ASAP

Completion date 28 September 2002

7.1

The Sub-Contractor indicated that the anticipated labour force would be 2-4 men

7.2

The Sub-Contractor confirmed that the required labour resources could be increased or decreased to suit the site requirements.

16.1

Normal site working hours ….

16.2

Overtime may be worked by the Sub-Contractor by prior arrangement with ERDC provided there are no additional costs to ERDC”

Items 7.2 and 16.2 are important. Fencing did not in fact start until around 19 August 2002. It continued in various forms and areas until the end of February 2003 , with the realignment of the north boundary fence being carried out in March 2003. The fencing work was affected by weather in that it became difficult to traverse the site and to work in muddy conditions but the work itself, being unaffected by wet weather, could still continue. Labour shortages were matters for Corrie and ERDC.

ERDC issued a programme on 9 September 2002 (some three weeks after the start of fencing) which allowed a further six weeks for completion of the fencing, against the seven weeks that had been envisaged by the pre-start programmes. Thus Corrie had more time to deal with any wet weather conditions. There were some additional fencing works required by CVIs 12, 13 and 14 issued on 26 September and confirmed on 10 October 2002. ERDC programmed these works to be carried out along with the rest of the fencing in its November 2002 programmes, i.e. so ERDC did not envisage completing fencing before the end of November 2002. This additional work (Delay Event 20) did not affect ERDC’s progress.

I have to conclude that there were no events that would justify any further allowance to ERDC. The problems with the fencing work appear to be simply slow progress by Corrie. Mr McCall referred to ERDC’s fax of 17 October 2002 to JB Corrie which showed that there were no fencers on the site and only 20 metres of fence had been erected that week and to another fax from ERDC to JB Corrie dated 18 October 2002 in which ERDC said:

“We are disappointed to record that your fencers failed to show up again today. From commencement on site, your rate of production has been insufficient to finish your works within the programme period and your numerous recorded absences from site have only exacerbated the situation. We seek your assurance by return that additional resources will be brought to site to make up for the time you have lost on this and other occasions.”

The Employer’s Requirements called for:

“3.1.6

Equipment Store

The Contractor shall design and construct an equipment store of approximately 100m² in accordance with Drawing No. SKS3A001 Rev A.

The cost shall include for provision of internal lighting, security lighting and providing an electricity supply to the store.”

The fencing panels along the eastern boundary were installed the wrong way round. Remedial works were not commenced until December 2002. JB Corrie finished the work round by 8 January 2003.. However, still further remedial works to the fencing were found.. It is obvious that no allowance can be made for these events.

I consider that BDP’s request of 29 August 2002 justifies an allowance for time related costs beyond 1 November until 1 December 2002.

What is due to ERDC in respect of the work done?

I deal first with certain general points at issue that affect the assessment of a quantum meruit in this case.

For completeness I deal both with the amount for overheads applicable to a costs plus valuation and to a valuation on a rates basis. As regards the costs plus valuation ERDC’s accounting year ran from 1 November to 31 October. It was agreed between Mr Burt and Mr Robinson that from its audited accounts ERDC’s head office and regional office overheads for 2002-2003 were 12.66% and from 2001 to 2002 were 12.92%. Which figure should apply? In my view the figure should be 12.66% which was generally adopted by Mr Burt and accepted by Mr Robinson as work was being carried out into 2003.

For the valuation of variations or provisional sum items, Mr Robinson applied 12.66% whereas during the works, a mark-up for overheads and profit of 25% had been used. Mr Robinson accepted that that had occurred as a rule. That percentage comprised 10% for overheads, 5% for profit, 5% for site preliminaries and 5% for site design. Brunel contended that since the actual figure was now available the assumptions made by the parties should be disregarded.

In my judgment the figure of 25% should be used. It was adopted as a matter of convention between the parties and I have no doubt that had a contract for the whole work been agreed and signed it would have been used. If the JCT valuation rules are to be used, as I think they should be, then they should be applied as the parties did or would have done. Accordingly, where there is a difference or PFE in issue that relates to the value of variations or provisional sums the figure of 20% or, including profit, 25%, should be used instead of Mr Robinson’s figures.

The appropriate addition for profit has to be decided for ERDC’s claim. ERDC had claimed 10%. This was difficult to justify. Mr Burt thought that 10% was “at the high end of the range which I would expect. In general terms, for work of this size and nature, in my experience I would expect a sports surfacing contractor of ERDC’s size to aim to achieve a profit percentage in a band ranging from 5% to 10%.” Mr Burt found that ERDC had achieved a profit of 1.09% of cost of sales (see its Summary Profit & Loss Accounts for the financial year ended 31 October 2003); that in tendering it had assumed 2.55% profit of cost of sales (see the tender analysis of 26 March 2002 – but an earlier one had indicated 1.12%); and that, as set out above, 5% for profit had been agreed by CAP.

Mr Robinson referred to guidance from the RICS, set out in The Surveyors’ Construction Handbook published by the Royal Institution of Chartered Surveyors, paragraph 4.2.5.13:

“The level [of profit] should be that prevailing in the market during the period immediately following the original date for completion … it might, therefore, be higher or lower than that contemplated in the contract sum.”

He thought that, as a general principle, a contractor ought not to recover a level of profit from the use of his resources on a particular contract which he would have been unable to earn elsewhere in the market. On that basis Mr Robinson thought that 0.7% was the right figure (itself derived from ERDC’s first March tender estimate) as it was close to the average of 0.77% operating profit achieved in the two years ending 31 October 2002 and 2003 (0.45% in the year ending 31 October 2002 and 1.09% in 2003). In addition it was consistent with the figure of £8,301.23 (or 0.67%) which ERDC had given as its “tender margin” in its Monthly Contract Reports, up to 29 November 2002. Since the majority of ERDC’s work had been completed by 31 October 2002 Mr Robinson would have preferred the first percentage. Mr Robinson also pointed out although ERDC had lost money on the Brunel project little of that loss had in fact been incurred prior to the end of October 2002.

On 29 April 2005 ERDC disclosed some management accounts from which it appeared that the profits for the Sports Surfacing Division of ERDC for the year ending 31 October 2002 were 4.85% and for year ending 31 October 2003 were 10.14%. Mr McCall did not object to them being read but maintained that their probative value was low since management accounts were not audited and were prepared for internal purposes and the person responsible for the preparation had not been called. In addition these accounts had just been prepared. The covering letter said: “Our accounts department has updated the management accounts”. (That was reference to some earlier “management accounts” which were not put in evidence.)

The assessment required has to include an element for profit. It should not however be arrived at by reference to the profits of others. Mr Burt may well be right in saying that others make net profits of between 5 and 10% (although that would be higher than the annual average in many, if not most, sectors of the domestic construction industry). A reasonable addition for profit must be related to the contractor in question: what is the return that this contractor would have made? In my judgment, both for the purposes both of assessing an appropriate profit percentage for valuing work on a costs plus basis under the JCT Valuation Rules and for assessing a quantum meruit, the percentage addition in this case should be 0.7%. This was virtually the figure contemplated by ERDC for this project and near enough that used by it during the work. ERDC competed for the work and I do not see that Brunel should pay more than the amount which ERDC contemplated that it would receive. The figure appears low but it was originally the margin for risk and profit. On a costs plus basis there is no risk; the amount is now only profit so it is higher than ERDC might have received had there been a contract for the whole work. Nor do I consider that any adjustments should be made because ERDC had also assumed nil profit on the expenditure on provisional sums and Brunel’s contingency item (even assuming that they were used). On the face of it ERDC appears to have been unrealistic but that is what ERDC did. Perhaps ERDC was expecting to make profits elsewhere, e.g. in sub-contracting for less than the amount estimated, but I have no evidence to justify a higher figure for that reason. Mr Robinson said that where he had valued on the basis of subcontractor accounts, he had used the margin for overheads and profit that ERDC anticipated making on that sub-contract, which was generally more than 0.7%. That percentage was only used by Mr Robinson where he had “fallen back on basic costs plus”. (The figure used for variations will also not be affected.)

Finally, the management accounts establish nothing. They were not the contemporary accounts (which were never disclosed, if they existed), which occasionally have value, provided that they are endorsed by auditors or otherwise shown by other evidence to be reliable for the purposes for which they are tendered (e.g. on applications for security for costs). They have to be treated as an exercise of self-interested creativity.

Thus the starting point is now the assessment made by Mr Robinson as presented as part of Brunel’s final submissions. That reached a total of £1,508,377.15. The parties agreed that the material in their spreadsheets etc provided a sufficient agenda for a discussion of any adjustments to be made, depending on which basis for assessment was used. For convenience and completeness I shall use the four Schedules submitted by Mr Hargreaves as part of ERDC’s final submissions to set out my decisions on various differences and the PFEs even though some are irrelevant, given my starting point for an assessment. The Schedules are appended. As they reproduce Brunel’s case reasonably fairly it will not normally be necessary to supplement them for that purpose. It will also avoid criticisms of the kind made by Mr Hargreaves of Brunel’s description of ERDC’s case. I have not therefore restated Brunel’s submissions but I have provided cross-references to the Appendices to Brunel’s final submissions which I have read and considered (as well as the material that was helpfully referred to in each set of submissions). I have therefore reached my decisions on the basis of that information and other relevant evidence that I received. In order to deal with the case in a reasonably cost-effective matter many of the items in dispute (especially where the value was low, relatively or absolutely) were not explored at the trial as fully as they might have been (or at all) and the parties were content for me to decide the issues on that basis, almost as if I had been an arbitrator or expert.

In summary the alterations or adjustments required to Mr Robinson’s assessment are:

Adjustment on account of Brunel’s “Counterclaim”.

Long jump/triple jump: with the exception of the southern landing area, the kerbing was not laid to the correct level

Brunel’s case was that ERDC’s drawing C3677/8 Rev C dated 1 July 2002 set out its design for “typical field track sections” in accordance with the Performance Specification and showed that the long/triple jump runway was to be constructed with a crossfall of 0.5%. To achieve this crossfall the kerb at one side of the runway should have been set at 46.650m and the kerb at the other side set to 46.632m. The levels survey of the runway carried out by Blakedown and attached to C2C’s fax to MSC dated 2 June 2003, showed that not only did the level of the kerbs along the length of the runway vary, but also that the crossfall fell to different sides along the length of the runway. This survey established that the levels of the kerbs deviated by significantly more than the 3mm allowed in paragraph 3.9.2 of the Performance Specification. ERDC also failed to comply with the British Standard for laying concrete pavers. Mr Thompson agreed that the levels survey showed deviations outside the tolerances specified. He also specifically stated that ERDC did not have a positive case to rebut the levels set out in that survey. Brunel used Blakedown to remove the kerbs and to relay them to the correct level in accordance with the Employer’s Requirements at a cost of £1,350.00. The work was done pursuant to a Contract Instruction dated 12 June 2003:

“Break out kerbs to existing Long Jump run-up and 1 No. sandpit and relay in accordance with MSC drawing to be issued 16 June 2003.”

The figure was agreed by CAP, certified and supported by Mr Robinson.

ERDC’s case was that it had had no opportunity to do the work. It was also ordered as a variation so the costs claimed (£1,350) were higher than necessary.

In my judgment there is no doubt that the kerbs had not been laid properly and had to be put right. However in the absence of an explanation as to why the work was done as a variation the measure of the adjustments could not be assessed at the figure claimed. In my view it would not be fair to ERDC to assess the figure as greater than £1,000.

Long jump/triple jump: The take off boards could no longer be used as a consequence of the remedial work required as a result of defects 1.1 and 1.2.

Brunel’s case was that ERDC installed take off boards in the middle lane of the long/triple jump runway, contrary to the Employer’s Requirements. Mr Jones said that ERDC were required to remove them. Brunel relied on an admission in an ERDC document entitled “Abortive Works” that the drawing was incorrect and did not conform to the Employer’s Requirements. The boards had to be removed again by Blakedown when it was discovered that the runway was outside tolerance. As the boards were set in steel troughs, removal affected them adversely. Mr Keeley gave an explanation of the defect. The cost for replacement boards was £2,580.

ERDC relied on the fact that this defect was amongst those not put to any ERDC witness. Mr Hargreaves therefore decided only to cross-examine Brunel’s witnesses on the defects put to ERDC witnesses. Hence there was no real case from ERDC.

I do not think that in this instance I can ignore the clear and perfectly acceptable evidence of Mr Keeley and Mr Jones and make no finding. I have to decide on what I have seen and heard. A party cannot avoid a decision by electing not to adduce evidence. Mr McCall took a perfectly sensible approach in deciding to confine cross-examination to what Brunel considered to be the more important items and to rely on the evidence that it presented or that was elicited which might or might be sufficient. In the main questions were not asked about items of low financial value. This is consistent with cost-effective practice in this court where once the scene has been set and the ground generally prepared the judge is usually well able to reach conclusions even though some matters have not been explored fully or at all in cross-examination or been the subject of oral or extensive submissions. These conclusions and observations apply to other items, such as those which were not taken up by Mr Hargreaves with Brunel’s witnesses.

In my view Brunel has proved that the work was not up to standard. There should be an adjustment. In the absence of any reason why it should not be of the order of £2,580, I assess it at that figure.

The gradient of the embankments to the north of track (lower third), the entire southern embankment and mounding west of long triple jump were incorrect.

Brunel’s case was that the gradient of the lower third portion of the embankment to the north of the track, the entire southern embankment and the mounding west of the long/triple jump were not in accordance with the performance specification, paragraph 3.16.1 which specified that the gradients were not to exceed 1 in 4. This was shown on ERDC’s drawing C3677/2 Rev D dated 28 May 2002.. The defect was supported by Mr Jones’s evidence, and shown on drawing (9)LP053 dated 12 May 2003. In its Response set out in the Scott Schedule ERDC accepted that the contours in a number of areas to the North and East of the track exceeded the specified gradient of 1 in 4. It was no answer that there had been a change in level, as Mr Jones in his evidence said, that ERDC had required the level of the track and infield to be reduced from 47m to 46.650m, as allowed by para 3.16.1 of the Specification, ERDC had not adjusted the surrounding contours and gradients to take account of the reduced level of the track.

In answer to ERDC’s case that the final grading of the embankments would have been carried out later (during cultivation and seeding/turfing process it was submitted that on the evidence of Mr Martin Jones that was not the intention as recorded in December 2002 (see item 1.1 on the December defects list) when re-grading was to be carried out before landscaping operation began). In the event Blakedown re-built the embankments to the correct gradient by stripping the topsoil, re-excavating the bank, re-grading and replacing the topsoil. The cost was £15,593.50 made up as follows:

The first two items were said to be part of landscaping and earth works required to achieve the required standard. Brunel’s case was that on the evidence of Mr Jones the removal of rubbish and of the fence post arisings had to be done in order to do the re-grading work.

ERDC’s case was that Brunel had not established the deviation alleged; that the work had not been completed and that any corrections would have been done before seeding or turfing (see the December list and what Mr Jones agreed); that the claim was never broken down and included work that had nothing to do with re-grading embankments. (The removal of fence post hole arisings was claimed under item 10.1.)

This item has difficulties. First, in my judgment, it is clear from the evidence, especially that relied on by Brunel, that the work was not up to standard and that, contrary to ERDC’s position, the re-grading required had to take place as a separate operation, although it might have taken place in the Spring of 2003 (see the December list). On the other hand the work actually undertaken and claimed under this head in my view goes beyond that required to bring the work up to standard. It ought also to be excluded in considering what adjustment is to be made to reflect the “benefit” of the work in the condition left by ERDC. The fact the cost was a lump sum and not broken down does not help Brunel. Nevertheless some adjustment is required and, doing the best I can, I assess to about 50% of £11,253 i.e. £5,600.

The topsoiling works were very uneven, the soil was contaminated with subsoil and contained excessive stone.

Brunel’s case was that the topsoil on the outfield was left “in a terrible state” as it was put by Mr McCall, being uneven, contaminated with large lumps of subsoil and with stones in excess of the minimum size specified. The Performance Specification, paragraphs 5.14 and 5.15 provided that:

“Soil levels will be adjusted to produce a smooth surface with regular gradients to levels suitable for the appropriate finished level as indicated on the drawing, filling to be consolidated in consecutive layers not exceeding 225mm deep by heavy roller. Trim to uniform true surface leaving free of noticeable ruts and depressions”

“Prepare all areas to be seeded by cultivating the area to a minimum of depth of 300 mm and levelling the area to specified levels. Bring the areas to a fine tilth by raking or harrowing and light rolling to achieve soil particles not in excess of 6mm. All stones above 10mm in any dimension should be removed from the surface to the approved contract’s tip”.

Brunel relied on Mr Martin Jones’ evidence. In summary he said that ERDC was “fully aware” of the condition of the soil. The March defects list recorded the agreed position: see items 1.3, 1.4 and 1.5.

Mr Jones referred to photographs in his witness statement. Mr Thompson accepted in oral evidence that the soil was left in an irregular and lumpy state and that topsoil contaminated heavily with subsoil would have to be replaced before it could be raked to a fine tilth and smoothed for grass seed. The contaminated soil was removed (see drawing (9-)LP053) and was replaced with soil from the stockpile at a cost of £23,010, viz:

Mr Robinson thought the rate of £5.45 per m² to be high for placing 150 mm of top soil on prepared ground.

ERDC’s case was that Brunel had not established how much work needed to be done in terms of quantities, nor was there detail of the degree of contamination nor what was meant by “excessive” stone. The photographs did not support the claim. As regards contamination by stone, Mr. Jones accepted that there was no obligation in the Earthworks section of the Employer’s Requirements to screen topsoil in areas outside the infield and, as regards stone picking, Mr Jones also agreed that it was “up to ERDC” when they did this. Mr Jones also agreed that ERDC had not claimed for or been paid for turfing and seeding in the outfield as it remained to be done. Mr Hargreaves submitted that Brunel’s claim for stone contamination therefore failed. On quantum ERDC also relied on Mr Jones’ evidence, e.g. the rate of £5.45/m² was extortionate (as it was equal to £36.33/m³).

In my judgment it is disingenuous of ERDC to suggest that the outfield was not in the state claimed by Brunel. That is apparent from the evidence of Mr Martin Jones, the photographs (even though they do not take one far) and, particularly, the defects lists. The issue is not whether the work was up to standard but whether it was complete. In my judgment it was not only plainly not complete but had not yet been completed. Brunel took over work which had to be completed. Judging from Mr Thompson’s evidence in cross-examination, one might doubt if ERDC would ever have completed it properly. However that is not the point. ERDC had no obligation to complete as a result of the absence of any contract. Some one would have had to complete the work. To the extent that Brunel had not paid for work which was never proffered as complete it has received no benefit in respect of which an adjustment could be made. No adjustment could in any event be made in the circumstances. Furthermore the amounts put forward by Brunel are patently unsupportable as a basis for making any calculation. Brunel appear to have paid far too much. Its claim fails.

Manhole covers had not been set to suit finished levels or in accordance with contractor’s details.

Brunel’s case was that this item was listed on the December defects list (see items 2.07, 2.10-2.14) and was not then disputed. In the event 15 manhole covers had to be removed and the brickwork put right for £1,425. Mr McCall submitted that as the manholes had been built, it would not have been normal practice to have completed the work immediately prior to landscaping operations, as suggested by the comments on the December list.

ERDC disputed the item. It was not the subject of cross-examination (see above).

It is clear from the documents that manholes were recorded as not being up to standard and ERDC evidently accepted that further work was required. I also accept Brunel’s case that adjusting manhole covers is not an integral part of the landscaping works. Their levels are fixed. There should therefore be an adjustment. In the absence of any reason why it should not be of the order of £1,425.00, I assess it at that figure.

Waterlogging and surface water run off onto track from the north eastern embankment.

Brunel’s case was the ERDC had not made sufficient provision to drain water from this embankment. The water came from up the embankment as appeared from a photograph. The Performance Specification required a system of below ground drains and perforated land drains and to undertake all necessary drainage works within the site appropriate to the conditions. Mr Thompson has admitted in cross examination that it should not have happened and that it was ERDC’s duty “to undertake whatever drainage was necessary to prevent water spilling on to the track”. ERDC had been reminded that the Employer’s Requirements required a land drain and a collector drain in the northwest segment of the outside track and that ERDC’s design did not do that (see also Mr Martin Jones’ email to John Murphy dated 14 August 2002). A land drain had to be installed to relieve the problem at a cost of £3,201.00, viz.:

ERDC’s case was that if additional drains were needed these were required as a direct result of the track levels being lowered pursuant to CAP’s instruction, compliance with which would have been additional work. Since that work was not done by ERDC or paid for by Brunel, the latter had no claim. Mr Hargreaves also elicited from Mr Jones the admission that the last item did not relate to the claim.

This item also is not straightforward. First, I reject ERDC's case that the waterlogging was created by any change in level. The water did not come from the ground but from up the side of the embankment – see Mr Martin Jones’ very clear evidence, both written and in cross-examination. ERDC’s design did not fulfil the requirements of the Specification and was thus not up to standard. However since ERDC did not provide the additional drain to overcome the design flaw, can a defect in design be said to be affect the value of the benefit? In my judgment, it does since this is one of the reasons for emphasising that the benefit should be realisable and does not have to be realised. Put another way, the benefit may comprise a design and is not limited to the work as it was built. By the time that ERDC left the site the additional drainage should have been designed and installed. The area of the embankment was therefore not what it should have been. It was waterlogged and not drained. There must be an adjustment. There is no good reason to question the first two items (the third is to be disregarded) so an adjustment should be of the order of £2,000.

Failure to screen infield topsoil down to 10mm and spread a consistent layer of soil in accordance with the Employer’s Requirements

This item is a complaint about quality. Originally ERDC were only to screen out stones greater than 20mm (see paragraph 3.16.3 of the Performance Specification) but in the summer of 2002, following a report from the National Playing Fields Association, ERDC had to remove stones greater than 10mm. Brunel’s case was that the infield contained numerous stones greater than 10mm; that there were substantial areas where there was no topsoil at all; and that there were areas where topsoil was contaminated with subsoil. Mr Martin Jones produced photographs. BDP’s site survey carried out after ERDC had left site recorded in relation to the infield:

“There were still a number of low areas, an excessive amount of stones on what was supposedly a screened topsoil. The infield required laser grading, stone picking, further adjustments to drains to suit finished levels, burying of manhole covers and spreading and levelling of sand prior to turfing.”

ERDC’s case was that it had carried out screening both before and after September 2002; that there was no complaint at the time either from Mr. Binnie or from Mr. Martin Jones that the topsoil was not being screened down to 10mm. The latter said that he thought that the screening was going ahead properly. It was suggested that the results were consistent with the need to re-excavate the trenches to “bring up” the sand and gravel layer which was a variation. In any event Mr. Martin Jones accepted that some fetching up of gravel was inevitable. Screening and spreading topsoil in the infield had finished by November when the infield was then left until March 2003. Mr Thompson explained that in such a period the soil would have compacted by the action of rain and cold and stones would have surfaced. In addition Mr Thompson said left that there were certain areas of the infield, approx 2 m close to the track, where topsoil had not been screened and laid at all, because this work had not been completed by the time the track surfacing works had begun (and accelerated). Finally, any remaining stone picking was something which ERDC would have done prior to turfing. Mr Thompson said in cross-examination, that in March 2003, there was no consistency to the infield soil, that it varied from patch to patch and that ERDC had never said that it was complete. In addition ERDC questioned the work done.

I am unable to accept Brunel’s case. First, in my view, if ERDC had not screened the soil properly in the autumn of 2002 so that there were significant quantities of stone greater than 10mm they would surely have been visible and seen by Brunel’s representatives. Secondly, the winter conditions were bound to affect the ground so that it would not be possible to conclude from any inspection or survey made after March 2003 that the stone then visible resulted from ERDC’s supposed failure to screen properly. In addition, even if I had not reached that conclusion, the amount claimed by Brunel appears to include matters not referable to its complaint but to the ordinary completion of the work and other requirements of Brunel. There will be no adjustment in relation to this item.

Lateral drains not in accordance with Employer’s Requirements. Installed at a level to render them ineffective. ERDC’s remedial works made no attempt to bring drains to surface.

Brunel’s case was that ERDC completed the drainage system before completing topsoiling and backfilled the drainage trenches with topsoil, rather than the required levels of stone and sand, according to Mr Martin Jones’ account. As a result the drains were installed too low and needed to be “brought to the surface”, as Mr Jones said in an email to ERDC of 9 October 2002:

“the drains will need to be lifted in stone aggregate to within 150mm of pitch level and blinded with 150 sand..”

BDP’s site survey of July 2003 recorded the position

“The field drainage system had been installed prematurely before final levels had been established. The contractor assured us that the drains had been brought up to the surface when the final grading took place…”

…

Subsequent inspection of the field drainage system by specialist contractor and BDP revealed that the system had indeed been installed by ERDC at a level well below the finished level of the pitch. The drain runs visible on the surface were just gravel filled trenches say 500mm deep with no pipes… There was standing water in one of the trial excavations. Deeper excavation revealed that the drainage system was some 300mm below the base of these gravel filled trenches and not even on the same line.”

Mr Binnie said:

“…it was ascertained that ..the stone in the top layer of topsoil was out of sync with the stone in the bottom layer and where in fact the actual drainpipe was.”

ERDC’s case was that its work was not useless such that a new system was needed. It had installed the pipes and it had backfilled as required (including by way of variation whereby there might be too many layers). Brunel had not surveyed the site; it had accepted Inturf’s recommendation to have new system, without any investigation, albeit that there was concern at the time. Mr Carl Baldwin sent an email to Mr Martin Jones on 14 April 2003:

Mr Jones replied:

“I have spoken with Inturf and told them that the only drainage that we require is reinstatement work after the final grading. This assumes that the infield drainage is compliant. We will request some exploratory pits whilst they are on site to assess in what condition ERDC have left the infield drains…. What we need is for Inturf to be appointed as soon as possible…”

Mr Hargreaves was not overstating the position when he submitted that “matters did not improve with this item”. I am not able to conclude on the basis of the evidence provided by Brunel that the drainage system effectively did not function and was useless so as to justify a new system. There were a few trial pits and a recommendation from a person with an interest. In financial terms Inturf may have been right to say that it would cost Brunel more to try to find where the system was defective or the drainpipes were missing. However I cannot conclude that ERDC conferred no benefit on Brunel or that there should be an adjustment without more evidence to justify the steps taken. Accordingly there will be no adjustment.

The blind surface catch pits were incorrectly constructed and not in accordance with ERDC drawing C3677/3 Rev D.

Brunel’s case for this small item was that contrary to ERDC’s drawing C3677/3 Rev D dated 1 July 2002 the cover level was at the level of the pitch, rather than being buried. The defect was listed at item 2.12 on the December defects list. The remedial work cost £264.00.

ERDC did not advance a positive case.

There appears to be no answer to this complaint. In my view Brunel has proved that the work that was not up to standard. There should be an adjustment. In the absence of any reason why it should not be of the order of £250 I assess it at that figure.

No connection between CP6 and steeple chase water jump drain down.

Brunel’s case was that an access draining point at the bottom of the pit had not been connected to the drainage system itself, as Mr Martin Jones recounted. Then in the course of excavating by hand to find the drain cover it was discovered that there was a leak in the water pit which also had to be put right, but according to Mr Keeley’s statement, there is still a leak. The costs come to £2,425 and are:

ERDC did not advance a positive case (see above) other than that the cost should be that for item 4.03.11 of Appendix A4 to the Particulars of Claim: £100.48

There appears to be no answer on liability. In my view Brunel has proved that the original fault disclosed work that was not up to standard. There should be an adjustment but I do not consider that it could possibly be measured in terms of the costs claimed. Equally ERDC’s figure appears far too modest. In my view a figure of £500 would be appropriate to measure the apparent effect on benefit.

The damp proof course had been constructed at the incorrect level. The brick and block walls were also structurally unsound as large cracks were found in them near the jamb of the smaller door.

Mr Thompson agreed that the store building was left in the state complained of and that the work was defective. The DPC had been set 450mm too low and the finished floor level was not achievable using the slab construction proposed in ERDC’s drawings, due to the incorrect location of the store building. In addition to the cost of demolition works, store doors, and construction (£1,032) Brunel’s case relied on an assessment by CAP since the works paid for went beyond the immediate remedy. CAP’s assessment was £4,996.19, making £6,028.19 claimed by Brunel.

ERDC did not contest the state of the building. It merely said that it would have put it right.

I trust that ERDC would have put right these defects since they ought never to have been present. In terms of adjustment, Brunel’s case is still contractual, so in fairness to ERDC an assessment should be of the order of £5,000.

Drainage system not tested and certified

Brunel’s case was that ERDC accepted that it had yet to provide the certification (see its reply to the March defects list: “to be arranged”). The cost was estimated by CAP to be £250. Brunel had not obtained the certificate and did not intend to do so until it had recovered the cost from ERDC.

ERDC did not advance a positive case (see above). However Mr Hargeaves made a general (and telling) submission in relation to items which had not been put right. Over two years had elapsed since ERDC and Brunel had every opportunity to carry out remedial works. It had contractors on site for the phase 2 works. Other work had been put right. Either Brunel had no intention of carrying out the work or, more likely, the supposed defect was either non-existent or exaggerated and Brunel would do little or nothing to correct it. Mr Hargreaves reminded me that on Day 1 I had raised questions about Brunel’s position but it took 10 days for Brunel to apply to adduce evidence from Mr Rumsey, for which limited permission only was eventually given. It was not as if Brunel could not afford the money. The works formed part of a £13 million development.

Although it is not necessary to establish loss or damage in financial terms in order to determine the value of a benefit, in this instance the fact that the certificate has still not been obtained, the lack of any evidence of material disadvantage to Brunel, and the low estimate relied on by Brunel lead me to conclude there has been no real effect and that there should be no adjustment. The criticisms made by Mr Hargreaves are in my judgment valid and militate against any effect on benefit. These conclusions apply elsewhere (see later).

CCTV survey of drainage not provided

Brunel’s case was similar to the previous item. In its reply to the March list ERDC had agreed that the CCTV survey had not been provided. The cost was estimated by CAP to be £500, but Brunel was not going to do the work until paid by ERDC.

ERDC did not advance a positive case (see above).

I repeat what I have said in relation to the previous item. There has been no real effect and that there should be no adjustment.

Reinstatement of Kingston Lane verges and hedge disturbed by services crossing works.

This item was not pursued.

No drainage provision to cable draw pits.

Paragraph 3.20.5 of the Performance Specification in the Employer’s Requirements states:

“The Contractor shall provide cable ducts beneath the athletics track at 4 No. positions near the tangent points, to permit the passage of power and control cables, photofinish cables, public address cables, etc., terminating in chambers with covers at ground level. The chambers are to be adequately drained. At each position there shall be 2 No. ducts, of minimum 150mm diameter, each fitted with 2 No. draw cords. With his tender, the Contractor shall provide a drawing showing the proposed construction and exact locations of these ducts.”.

Mr Martin Jones explained that draw pits had to be constructed to enable the contractor to pull (or draw) cables through the ducting on site. The requirements of paragraph 3.20.5 are not limited to the catch pits required beneath the athletics track as all such chambers have to be adequately drained. ERDC did not provide drainage in about one-third of the 40 draw pits on site. It professed an intention to rectify the situation. In the March defects list it was noted that drainage “was being made to all boxes”. Mr McCall for Brunel was sceptical about ERDC’s intentions since the drainage ought to have been provided: first, the item had been in the December defects list and ERDC had never submitted its proposals to BDP.

However Brunel has not done the work (estimated cost £8,309.92) and will not do so until it has recovered the cost from ERDC.

ERDC did not advance a positive case (see above).

I repeat what I have said in relation to the two previous items. If the problem was really as material as Brunel’s case suggested the work would have been done. I cannot therefore conclude that there has been a real effect on the benefit and that there should be any adjustment.

Duct entry detail on all ducts not in accordance with manufacturer recommendations.

Brunel’s case was the ducts protruded too far into the draw pits and needed to be cut back so as not to impinge on the working area in the draw pits. ERDC accepted that work needed to be done. As before Brunel has not done the work (estimated to be only £274.43) as it would only do so once it has recovered the money from ERDC.

ERDC did not advance a positive case (see above).

I repeat what I have said in relation to earlier similar items. There has been no real effect and that there should be no adjustment.

2 no. draw pit chambers in the south west corner of site were not of sufficient size for the number of cables required.

ERDC accepted that this work had to put right. Brunel did so at a cost of £656. However ERDC said that one of the draw pits was bigger but Mr Jones said that this was so that some one could work at that depth.

Mr Jones’ explanation is reasonable. I do not consider that there is any “betterment” or break in the chain of causation so that it could be said that Brunel’s costs were avoidable or not attributable to ERDC’s error. Brunel is entitled to an adjustment of £656.

Cables lack identification tags in every draw pit.

Brunel’s case was that ERDC failed to label each cable on site. The defect was listed in March 2003. The estimated cost of providing labelling was £528.59. Brunel only going to do the work if paid by ERDC.

ERDC did not advance a positive case (see above).

I repeat what I have said in relation to similar previous items. There has been no real effect and that there should be no adjustment.

Kingston Lane draw pits not built in accordance with agreed details. Brickwork leaning, no lintel over duct work.

There is no dispute about the fact that the draw pit was not up to standard, and, it seems, that it had to be demolished and rebuilt. The cost was £1,975.00.

ERDC’s case is that the cost should be that for item 4.01.1 of Appendix A4 to the Particulars of Claim in the sum of £172.40. Brunel claim the actual cost.

There should be an adjustment but I do not consider that it could possibly be measured in terms of ERDC’s figure which appears to be far too modest and is apparently for completing the work that had already been done. In my view since this work was worthless the cost claimed would confer the benefit: £1,975.

Location of local electric heater required to be moved as prone to damage in position.

Brunel claim £48.52 to move an electrical heater. That is the estimated cost. Despite the fact Brunel’s case was that there was a safety risk Brunel was not going to move it until paid by ERDC.

ERDC did not advance a positive case (see above).

I repeat what I have said in relation to the previous item. There has been no real effect and that there should be no adjustment. If the complaint were correct then Brunel would be acting irresponsibly, at the least, in not doing the work.

Failure to provide a wiring diagram and permanent labelling in this area.

This another small value item: £62.67. Nonetheless Brunel did not intend to put it right until paid by ERDC which had failed to label the irrigation system or to provide a wiring diagram.

ERDC did not advance a positive case (see above

I repeat what I have said in relation to similar items. There has been no real effect and that there should be no adjustment.

Brunel’s case was that there ought to have been a back flow valve. The item was included in the December defects list and the March defects list and was evidently accepted by ERDC. The cost for the remedial works was £675.00.

ERDC did not advance a positive case (see above), other than that the cost should be that for item 4.06.1 of Appendix A4 to the Particulars of Claim in the sum of £270.56.

There appears to be no answer on liability. A valve was required to meet the requirements of the Water Authority. There should be an adjustment but ERDC’s figure appears to be on the low side. In my view a figure of £500 would be appropriate to measure the apparent effect on benefit.

Failure to have identification trace/tape visible on water supply

Brunel’s case was that ERDC had failed to identify the pipework running beneath the central area with blue warning tape marked ‘water’, as is standard practice. The defect was apparently accepted by ERDC – see the December and March defects lists. However Brunel was not going to do the work (estimated cost £1,608.78) until it has recovered the costs from ERDC.

ERDC did not advance a positive case (see above).

There appears to be no answer on liability. However I repeat what I have said in relation to similar items. There has been no real effect and there should be no adjustment.

Water supply trench to irrigation plant not reinstated.

This item was not pursued by Brunel.

Labelling of LV panel is outstanding.

A cover plate has been fitted over the LV room trenches however a rebate has not been cut into the tope of the trenches.

ERDC agreed a figure included in a sum of £399.53 covering these items (8.1, 8.2) and items 8.4-8.6.

Track power supply manholes defectively constructed.

Brunel’s case was that the pits contained an electrical socket attached to ‘a rough sawn piece of timber’ fixed into the manhole ‘with relatively poor levels of workmanship’. The pits also flooded with water and unsafe to use. Thus Brunel had two unusable power points. ERDC had agreed that work was required to rectify the position – see the March defects list. The cost was estimated by CAP as £1,239.23. However Brunel was only going to carry out the work once it had been paid by ERDC.

ERDC did not advance a positive case (see above).

There is no answer on liability. However I repeat what I have said in relation to similar items. I cannot see that there has been any real effect. There should be no adjustment.

Failure to seal gap between the substations and floor slabs.

Failure to make good damage to floor slabs.

Failure to make good cracks, scratches, dents and holes in GRP substation enclosures.

See items 8.1 and 8.2 above: £399.53.

Failure to make good trip hazards around chamber covers of 2 no. chambers located in paved footpath between northern fence line and pedestrian crossing.

Brunel’s case was that the two chambers covers were not flush and were a hazard. They were on the December and March defects lists. ERDC undertook some work to rectify the problem after the December defects list but the risk of tripping on the covers remained. The cost of rectification was estimated at £100, but despite the fact that the situation was hazardous (on Brunel’s case) Brunel was only going to do the work once ERDC had paid.

ERDC did not advance a positive case (see above).

There is no apparent answer on liability. However I repeat what I have said in relation to similar items. I cannot see that there has been any real effect and in my view there should be no adjustment.

Failure to make good damage/settlement caused by site traffic.

Brunel here claim that ERDC used the path running along the track beside Kingston Lane as an access route for its vehicles and thus damaged the path. The results were listed in the March defects list. Brunel did not make good such damage as was (estimated to cost no more than £750) and was not going to do so until paid by ERDC.

ERDC did not advance a positive case (see above).

As there was no contract, this seems to be a claim in tort rather an answer to a claim for a quantum meruit. Even though there is no apparent answer on liability in tort I shall not allow anything against ERDC’s claim since in view of the time that had passed there can now only be nominal damage. Alternatively, and more relevantly, I repeat what I have said in relation to similar items. I cannot see that there has been any real effect and in my view there should be no adjustment.

Fence posts leaning/unstable due to inadequate concrete footings.

Brunel’s case was that on ERDC’s departure many fence post were left leaning as footings or posts had not been set in concrete to ground level. Some posts were loose and unstable. ERDC had been carrying out remedial work to the posts by topping up the concrete when they left site (the work was described as “ongoing” in the March defects list) but had done about 30%. The BDP Report of July 2003 stated:

“ERDC had been topping up the concrete to the fence posts. This has not been successful and the concrete had not keyed to the original concrete. A number of posts are unstable, particularly along the southern boundary”

Further work was required to bring the concrete footings to ground level and to correct fence posts that were unstable. The estimated cost of rectification was £12,612.90, but Brunel was not going to do the work until paid by ERDC.

ERDC’s case was to deny that anything was left unfinished. Fencing did not start towards the end of August 2002 and thus was in the main done after 1 September 2002. When cross-examined Mr Jones said that he was “not aware of the fence posts leaning at this stage” although he had found some that had rocked. He also agreed that the work could easily have been done by Brunel. Brunel’s case was therefore to be dismissed.

I agree with ERDC. On the evidence presented by Brunel I am unable to conclude what posts were not up to standard when ERDC left the site (although it is clear that the original work was not satisfactory). Nor can I conclude that there is a material effect on benefit. If any part of the fence was not performing its function then Brunel would surely have put it right. There will be no adjustment. I also repeat what I have said in relation to comparable items.

Corners are unstable and detail not in accordance with manufacturer’s instructions.

Brunel’s case was that there were no fence corners. They were called for by the Expamet fencing guidelines. ERDC used another supplier which did not require installation details or guidelines. The defect was included in the December and the March defects lists. The estimated cost for eight corner posts was £343.13, but Brunel was not going to do the work until paid by ERDC.

ERDC did not advance a positive case (see above).

The position on liability in a contractual sense is not at all clear. As ERDC was not contractually bound to use Expamet it would be necessary to establish that corners were required using the Ash and Lacy system adopted by ERDC. On the material before me I am unable to conclude, despite inclusion in the defects lists, that ERDC ought to have provided corners as part of the benefit for which it seeks restitution. In any event, if I am wrong on this, I repeat what I have said in relation to the previous item and other items where Brunel did not rectify the supposed defect. I cannot see that there has been any real effect and in my view there should be no adjustment.

White lining not on synthetic surface on last 40m before finish line.

Brunel’s case was that ERDC ought to have provided this white lining since it was required under the IAAF Rules – see Paragraph 3.9.2 of the Employer’s Requirements:

“Circuit width:- sufficient to ensure that the outer white line is marked entirely on the synthetic surfaces, as required by the IAAF and UKA Rules”.

Mr Keeley when explained in his witness statement that in order for the facilities to be used for competition use, certification by UK Athletics is required but that it might issue conditional certification and when cross-examined said that the IAAF Rules & Regulations stipulate that the whole of the white line on a running track has to be laid on the requisite synthetic surfaces. Some one (Mr Miller) from the South East Athletics Association carried out an inspection on 24 April 2004 and was not willing to certify the track without the white lining but no report to that effect was forthcoming. Brunel had to engage Blakedown for the lining at a cost of £4,476.05.

ERDC’s case was that Brunel had failed to establish why the need for the lining was not known earlier. There was no evidence about the rectification cost as I had refused permission to Brunel to adduce evidence from Mr Rumsey about it.

This item might be explicable in terms of a contractual claim. ERDC submitted its design of the track for approval. It was not until a year after it had left that this question arose. Brunel failed to give proper disclosure (admitted to have been selective). On the face of it however ERDC should have provided such lining but without evidence of cost or loss I cannot assesses what adjustment, if any, might be made. There will therefore be none.

Pole vault base plates in Synthetic D fixed incorrectly into track.

Brunel’s case was that ERDC installed the base plates too far into the ground and accordingly not in accordance with the manufacturer’s specified method of installation. The cost of these remedial works was £460.00. However another pole vault was provided and then Brunel decided that it did not need that installed by ERDC and so it was removed and filled in.

ERDC did not advance a positive case (see above).

Since Brunel removed the pole vault I do not consider that its complaint (which I have no reason not to uphold) now ranks for consideration as there can be no reduction in a benefit which was realised but about which I have no evidence that it proved not to be useable. I cannot see that there has been any real effect. In my judgment there should be no adjustment.

Accordingly I conclude that the balance payable to ERDC for its work is £360,110.09, plus VAT.

I am aware that in arriving at this conclusion there may still be some elements of double-counting. However I do not believe that they are very significant or that I should have gone further and removed them. The manner in which I have had to consider many of the points at issue has required me to be rigorous in examining and deciding each as if it were a contractual claim on its merits. What is ultimately required is an overall assessment of the value of ERDC’s work, e.g. in terms of a restitutionary benefit and taking account of the circumstances in which it came to be carried out. I consider that the total represents just that.

ERDC’s case included a claim for interest in relation to sums that it said were due to it each month that it had been kept out of its money. Such a claim cannot form part of the assessment of a quantum meruit. Interest may be awarded in the usual way to compensate a party from being kept out of its money.