Carillion JM Ltd v Phi Group Ltd

This case relates to a train servicing depot just to the west (broadly) of the Wembley Football Stadium, which was designed and built between 2004 and 2006 as the new stadium was itself being constructed. The Claimant, Carillion JM Ltd (“Carillion”), was the main contractor engaged by M40 Trains Ltd to carry out these works. The main railway line, built in Edwardian times and linked to Marylebone Station, is located between the depot and the stadium. To create the space for the depot, very substantial excavations had to be made into the clay ground which had the effect of leaving 70° to 80° slopes which both during and in spite of the works have become unstable.

In two related Claims, Carillion have proceeded against Phi Group Ltd (“Phi”), its specialist design and build contractor for what is called the “soil nailing work”, done supposedly to restrain the slopes and render them stable and against Robert West Consulting Ltd (“RWC”), its consulting engineers and lead consultants for the overall works. Carillion have settled with Phi but there remain unresolved Part 20 proceedings between Phi and RWC in relation to contribution. In the second Claim, Carillion pursues RWC for the balance of its claim. Although substantial elements of liability are effectively albeit very belatedly admitted, there remain major issues between the parties as to causation and as to quantum. As the major part of the remedial works has not yet been started, quantum issues include not only programming and planning issues but, importantly, the extent to which Chiltern Railways ("Chiltern") who operates trains on the main line and service its trains in the depot will be disrupted by the remedial works when they are executed.

It is important at the outset that there is an appreciation that in ordinary circumstances clay slopes, at anything approaching 70° to 80°, would not and should not be left unsupported for any significant amount of time. London Clay is and has for many years been known to give rise to different types of instability. Well-known in the Technology and Construction Courts are cases involving subsidence and heave of London Clay, but these have not been the problems in this case. Two types of instability have occurred here: shear face instability in the upper layers of clay and a deep-seated instability in the underlying clay.

What happened here, and there is no dispute about this, is that, in January 2005 and again in October 2005, whilst the construction works were still proceeding, there were slips of the clay in the upper layers which were addressed by remedial works. Following completion of the overall work, the deep-seated instability, which it is accepted is present, was discovered, it never having been actually appreciated beforehand by anyone to have been present or adequately guarded against. The shallower instability led to the slips in 2005 whilst the deep seated instability is the subject matter of the current proceedings. Both types of instability can be influenced by the presence of water and what will and does feature in these proceedings and this judgement is what is known as the “ru” value, which is the water or "pore" pressure factor used in the various calculations and assumptions made by the designers and design reviewers.

Historically the area of the depot building comprised farm land. It is unlikely that the land was wholly flat given the presence of streams and the proximity of Wembley Hill. The ordnance survey map for 1875 showed the site and surrounding area as rural and occupied by fields with isolated trees, orchards, hedges and streams; there were farms to the north and south. By 1896, a small amount of residential buildings had appeared to the south west of the site and Wembley Park with Wembley Tower had been built near to the north and east. By 1914, the site had been partly occupied by the railway lines of the Great Central Railway; the railway lines were in a cutting and the land from the West had been sloped down towards the cutting. By 1935, Wembley Stadium had been built and extensive residential expansion had occurred to the south of the site. By the time that Laing Technology Group produced its Geo-Environmental Desk Study Report in August 2001, further residential housing had been established to the south and west of the site and the site itself comprised rough grass, overgrown areas, scrub and trees; as its title suggests this report was concerned more with the presence of contaminants and the like.

Laing Technology Group produced another document entitled "Preliminary Geo-Environmental Site Assessment Report” dated September 2001 which again was primarily produced to provide data "to allow the environmental liabilities of the proposed redevelopment to be assessed as well as to provide recommendations pertaining to the potential health and safety implications". It is not suggested that this contains information of particular relevance to the issues in this case.

Of most relevance are the ground investigation report dated June 2003 and the Interpretive Report dated September 2003, both provided by URS; these were known collectively known as the "URS Report”. URS reported that London Clay predominated over the site. Seven shallow boreholes (down to 8 m) and eight deeper boreholes (up to 30 m in depth) were carried out. Piezometers, used to measure the head or level of groundwater, were used. Some undisturbed samples were taken for analysis. URS had regard to the earlier Laing Technology Group reports. The URS report did not as such find any failure planes or shear surfaces in the clay; these are discontinuities within the clay where historically one part of the clay has sheared from another part leaving often a recognisable, often almost polished, surface.

Paragraph 7.2 of the September 2003 URS Report addressed groundwater which had been the subject matter of observations between March and August 2003:

“Groundwater indicated from the site investigation activities, and subsequent instrument monitoring is summarised in Table 7.2.

The groundwater observations indicate no consistent trend in water level across the site. However, generalisations may be made for incorporation in the geotechnical design, as follows:

•

Where encountered, groundwater bodies tend to be associated with relatively high permeability claystone bands. These tend to be of local occurrence, and it may be anticipated that the water represents perched bodies of a minor lateral extent.

•

The highest standing water level recorded was at c. 36.0m OD [Ordinance Datum] in RW4. This lies below the maximum extent of anticipated excavation within the works, but may affect pile design.

On the basis of groundwater observations to date, it is concluded that groundwater will not significantly affect near surface excavations or the design of shallow foundations. Local bodies of perched near surface water should be anticipated during construction, although these are likely to be of minor extent and drain rapidly as works progress. Piles should be designed for a water table at 38 m OD (i.e. 2 metres above the highest recorded level). The assessment of the stability of slopes should be undertaken incorporating a suitable ru value to allow for local perched water conditions, and infiltration into the slope…”

RW4 was one of the deeper boreholes, located along the slope which was to be created, and Table 7.2 recorded that water seepage was noted during the boring at 17.8 and 28.10 m below ground level but the piezometer, which extended only to 10 m below ground level noted water at a level of 5.09 m below ground level.

The URS Report in Paragraph 9.32 identified what are called "characteristic peak strength values” for the clay material and produced at Table 9.1 a "Summary of Geotechnical Parameters".

The works to be done comprised creating an access bridge over the railway lines from the Wembley Stadium side and the excavation of very substantial quantities of (mostly) clay from the land which sloped down to the existing railway cutting. Given the proximity of the site boundary on the western side of the site, abutting as it did an open park or space and residential housing, substantial slopes up to about 8 metres high were to be left following the excavation. These slopes could not be expected to stand unsupported. In the middle of the slope there was to be located the substantial depot building, into which the trains would be driven to be serviced, repaired and refuelled. The western wall was to be a substantial concrete retaining wall, a primary function of which was to support the slope along its length.

The remainder of the slope was, ultimately, to be supported by "soil nailing". In simple terms, this comprised the boring of numerous holes down into the clay slopes at an angle lower than horizontal; steel bars would be inserted into the holes which were then to be filled with grout. The outer face of the slope was to have steel reinforcing mesh placed over it with the steel bars protruding through; the heads of the bars would then have steel plates attached. The idea of soil nailing is that it provides resistance through the plates and the mesh against the slope moving outwards; in effect the soil nails hold the slope back. Frictional resistance is created between the grout enmeshed bars and the soil. The bars can be inserted to substantial distances but there was a restraint here which was the boundary, beyond which the bars could not legally be placed.

In front of the soil nail plates and the reinforcement mesh, loose stone was placed in part as a decorative feature and this was itself retained by a further layout of mesh.

In 2003, Carillion, then known as Mowlem plc, was invited by M40 Trains to tender for the design and construction of the depot project. Its tender, dated 7 November 2003, was revised by a letter dated 12 December 2003 down to £11,246,130. It is common ground that this tender was accepted. This main contract incorporated the Design and Construct Conditions of Contract issued by the Institution of Civil Engineers (1992), albeit as amended by the parties, pursuant to which the main contractor was required to design, construct and complete the Works, broadly as defined in the Contract documentation which in this case included "Employer’s Requirements”. Carillion undertook, amongst many other things, by Clause 8(8) of the amended Conditions to

“indemnify and keep indemnified the Employer against all claims, proceedings, damages, costs, losses, charges and expenses of whatever nature arising from the Contractor’s failure to comply with its obligations under this Clause 8…”

Clause 8(9) stated:

“The Contractor shall be deemed to have satisfied himself as to, and to adopt and accept responsibility for, any design contained in and/or reasonably to be inferred from the Employer’s Requirements as though such design had been carried out by or on behalf of the Contractor. In particular, but without prejudice to the generality of the foregoing, the Contractor hereby warrants:-

(i)

that the design contained in and/or reflected by the Employer’s Requirements and/or design prepared by or on behalf of the Contractor does, or as the case may be, will meet in all respects the requirements of the Contract.

(ii)

that he will exercise all reasonable skill care and diligence in the design, construction, testing and commissioning of the Works and all parts thereof.”

It is clear from the main contract documents that Carillion was made fully aware of the need to coordinate operations with Chiltern who were the train operators. The Employer’s Requirements confirmed that the two main railway lines were not electrified; it was understood that no structures had previously existed on the site and it was confirmed that those lines were in a cutting at the north end becoming an embankment towards the south end of the site. It was explained in Paragraph 2.1 that "retaining walls are required towards the North end of the site to create a space at the track level for the depot itself. At the South of the site (London end) earthworks will be required to raise the site level." The following was spelt out in Paragraph 2.2:

“The depot site is adjacent to a residential area and the contractor shall ensure that any disturbance from construction activity be kept to a minimum. Particular attention should be made regarding noise during the construction of the works as well as minimising light pollution to the adjacent properties (e.g. Low level lighting in lieu of tower/mast lighting)."

It went on in relation to "Depot Operation" at Paragraph 2.3:

“The general direction of Depot operation will be from South (London end) to North (Country end). The layout, signalling and design must allow for bidirectional running should the depot be used in the North to South direction. The carriage wash is to be used for cleaning operations in the South to North direction only but must allow unrestricted travel in the reverse direction….”

The Works included the provision of a road bridge from the Wembley Stadium side of the existing rail track over the rail lines and the provision of a two-storey depot facility building through which two rail lines were to run; at track level, this facility was to be used for refuelling and what was called Controlled Emission Toilet operations, and other cleaning together with light maintenance. This depot building was to be constructed hard up against the steep embankment that was to be created immediately to the west of the building. The remainder of the embankment, at the Country end, (that is the end furthest away from the London end), and the London end, would need to be supported in such a way that they did not collapse.

Laing Rail was M40’s consultant and it had commissioned three site investigation reports in 2001 and 2003, referred to above. Laing Rail had been involved for a number of years before Carillion was retained as main contractor. At that time both RWC and Phi had been involved; thus, for instance Phi quoted to RWC a price or costings for various retaining wall systems along the embankments.

On 29 October 2003, RWC quoted to Carillion for the provision of engineering services to enable the latter to quote to M40 for the design and build main contract. This quote was ultimately accepted and I will return to the terms later.

By letter dated 11 November 2003 Mr Bird of RWC wrote to Phi in the following terms:

“We are proposing to use timber permacrib walls for a project at Wembley Depot (LUL). I believe that you may have helped us with this when the project was tendered approximately one year ago. When the project resurfaced the client mentioned a little unease with timber crib walls, although this probably was mainly due to unfamiliarity with the system. I believe that you have helped Andy Kenyon of Mowlem by issuing examples of crib walling in a rail environment.

We need to make sure that the client is completely happy with this proposal in order to progress. We believe that the client may have spotted the 6m height limit in the BBA Certificate. To this end it would be extremely useful to get a preliminary design to back up the proposal, or at least a statement confirming that the proposal is a workable solution. We would be extremely grateful if you could assist us in this, with time as always being critical. I have attached a section through the proposed wall and a copy of the soils data for the site …”

By letter dated 17 December 2003Phi responded to RWC’s query in relation to permacrib retaining walls, providing design proposals and a quotation for the work proposed to be carried out.

On 5 March 2004 RWC first produced on behalf of Mowlem Civil Engineering a document entitled “Wembley Light Maintenance Depot Form A (Approval in Principle) Retaining Walls” (“the AIP”, sometimes also known as “Form A”). The AIP is marked as having been both checked and approved by Mr Bird. This AIP (as eventually amended) spells out a number of things relevant to this case:

By faxed letter dated 25 March 2004Systems Geotechnique, who had been asked to consider the appropriateness of various soil stabilisation schemes, wrote to Messrs. Eyles and Sowden of Carillion inter alia in the following terms:

“Further to our meeting of 11 March, and your subsequent provision of sections and site investigation, we have undertaken a basic design at each section, and consider that a soil nailed solution and geotextile facing, given the site constraints, is historically acceptable for a 120 year design life. We do not consider that a crib wall solution will provide for this life expectancy, since it cannot provide long term resistance to the movement effect of deep-seated slope failure …”

By the end of April 2004, it had as good as been decided by Carillion and RWC that, whilst the wall of the depot would be a retaining wall, the embankments either side would be supported by small lengths of crib walling, either side of the depot retaining wall with, primarily, soil nailing to stabilise the remainder of the slopes both at the London and Country ends, albeit that at the far ends some gabion walling would be provided.

The Design Consultancy Agreement (“DCA”) between Carillion and RWC is a document marked as “Rev 1” and dated 12 May 2004. The Second Schedule to the DCA addressed design and expressly provided, at (A)(1), that, upon award to Carillion of the Main Contract, RWC was to develop the outline proposals into a fully detailed scheme. This fully detailed scheme was expressly to include an obligation upon RWC to “…Advise on further site investigation works to verify the ground…” I will return to this later. On 14 May 2004, Carillion sent to RWC an Order accepting the lump sum quoted by RWC for civil engineering design services.

By letter dated 25 May 2004, Carillion wrote to Phi inviting Phi to provide its tender for what was described by Carillion as “design and construction of soil nailing sub-contract”In relation to the documentation supplied by Carillion to Phi:

On 15 June 2004, Phi sent its costings to Carillion. These were partly based on some calculations done on a Talren 97 computer programme which were based on a ru value of 0.3. The costings were for a soil nailing solution which involved the use of reinforcement mesh. This was followed up by a more formal quotation dated 16 June 2004, which apart from quoting for the soil nailing also quoted for some gabion walling and the permacrib timber walling sections. Material parts of the letter are:

“Further to the recent site meeting…we have carried out a preliminary design appraisal of your retaining wall requirements at the above development based on the following:-…

Wall 2 (Between chainages 8210.0.0-8480.0m)

Based on the use of soil nailing techniques to provide both the short and long-term stability for the strength and embankment. The existing levels are reduced in a series of stages, at each stage, the excavated face is stabilised prior to reducing levels to the next stage.

We note from the Engineers that the excavated face is proposed to be clad in a geotextile facing, however, in order to prevent localised ‘sloughing’ and face instability between the nail plates we would discourage the use of a geotextile alone and for this reason have therefore also included with our quotation for the supply and installation of structural facing mesh…

Wall 4 (Between chainages 8630.0-8700.0m)

As Soil Nailing Wall 2 above…

We have based our preliminary design proposals and Quotations on the information provided. Details of our design proposal are as stated in our Preliminary Technical Appraisal attached hereto.

The Site investigation shows that the in-situ soils consist of stiff LONDON CLAY. These soils have potentially poor effective shear strengths. In order to provide a ‘safe’ temporary earthworks profile during wall construction and to minimise the earth pressures applied to the wall and thereby achieve the most cost-effective solution we have assumed that the in-situ soils will be removed back to a minimum 60° profile. The resulting void, to the rear of the wall, should be filled in accordance with the Permacrib backfill specification.”

The prices were quoted and a programme proposed for the "preparation on design calculations and working drawings", procurement and construction. It was made clear that the quotation walls "based upon our own design for the Soil Nailed…Walls”.

The Technical Appraisal carried out by Phi enclosed with this quotation assumed a Ru value of 0.2. The quotation and appraisal work sent by Mr Kenyon of Carillion to Mr Bird of RWC on 17 June 2004 asking him to review the content and pass on any comments to Mr Sowden. Mr Bird did respond as follows:

“The proposal seems fine. Comments as below:

Soil Nailing-Option B seems sensible given small cost difference…

Programme-allow at least one week for RWC to check Phi design and coordinate interfaces with Phi.”

In July 2004, RWC produced its "Specification for Earthworks" which, although general, did specifically relate to this project. By this time, as all parties were aware, Carillion proposed to employ Phi for the soil nailing and other quoted works. What was envisaged was a 70° slope and batter. RWC was itself to prepare the design for the retaining wall for the depot building. Following an initial meeting between Carillion and Phi on 6 July 2004, Phi quoted again on 13 July 2004 broadly as before but with slightly lower prices. Again the enclosed technical appraisal assumed a ru value of 0.2.

By mid July 2004, Carillion had identified on the site some 24 "Counterfort drains” on the site largely in the areas to be excavated. It is clear that at about this time, RWC was made aware of this as Carillion circulated a schedule of the drains together with their relative locations on the site and by reference to where the soil nailing was to go.

The AIP was reissued by Mr Bird on behalf of RWC to Carillion also in July. This took on board the various changes which had been called for. On 19 July 2004 RWC issued its "Designer’s Risk Assessment" which identified that for deep excavations there was a real risk of "collapsed sides, falls, personal injury".

On 20 July 2004, Carillion sent to Phi a detailed letter which was intended to form the basis of the agreement but required Phi to confirm that the letter did define the agreement between the parties. It gave particulars of the main contract. On 22 July 2004, Carillion sent to Phi a "letter of intent" pending mutual agreement of terms and conditions and final agreement on price. Internally at this time, Carillion had done a cost comparison between the permacrib and soil nailing solutions with soil nailing, costing just over £300,000, about half of the other solution.

It is clear that by this stage Carillion had begun to progress works. Design Progress Meeting minutes for 21 July 2004 indicate that the temporary access bridge across the railway lines form the Wembley Stadium side was in place and bored piling was about to commence on the depot building retaining wall; it must therefore be the case that RWC had done the bulk of the design work on that retaining wall.

On 2 August 2004, RWC produced a document for the Claimant entitled “Wembley Light Maintenance Depot Form B – Certificate of Design and Checking for the Access Bridge North Abutment Sheet Piled Walls”. This did not relate to the slopes which were to be soil nailed.

On 4 August 2004 there was a meeting on site attended by Mr Bird (RWC), Mr Fletcher and Darren Midgley of Phi and Messrs Kenyon and Elson of Carillion. Notes of that meeting recorded amongst other things that Phi and RWC could liaise directly, that RWC would review Phi’s design and that Phi would produce and submit Form B which would be a further check on its design.

On or by 5 August 2004, RWC has produced a computerised contour plot of the existing site which was circulated by Mr Kenyon on that date. On 10 August 2004, Phi produced method statement proposals. Design Team meetings attended by Mr Bird for RWC took place in this period almost every week at which design and programming details were discussed with Carillion representatives, particularly Messr Sowden and Kenyon. At about this time it was resolved that Phi should carry out what was known as a Form B check on its own design whereby another branch of Phi should do a design check on the detailed design produced by Phi for this project. A draftForm B Certificate of Design and Checking was provided by Phi on 20 August 2004.

By letter dated 20 August 2004 Phi provided its initial design proposals in relation to the soil nailed embankment and retaining walls (expressed, at this stage, to be for the purposes of obtaining the necessary approvals), and copied to Mr Bird at RWC. Phi stated:

“… at present we have based our design on the soil parameters specified in the site investigation. Although these seem reasonable it would be prudent to carry out the additional testing in line with the site investigation recommendations to determine the long term design parameters for the in-situ material. We will carry out proof load testing of the soil nails to confirm the nail design assumptions are correct, but we will need confirmation of the soils …”

Phi stated, at Paragraph 5.1:

“…soil parameters differ slightly for our design, see our calculations at section 3.0.

Phi reasonable parameters (φ = 27°,c’ = 4kPa, ru = 0.15)

Phi worst credible parameters (φ = 23°, C = 3kPa, ru = 0.2) …”

Attached to this letter were design calculations which spelt out that Phi had based its design on the soil parameters specified in the site investigation. The calculations were based on the parameters referred to in the letter. On 24 August 2004, Phi had essentially completed its design and its sister office produced the Form B design check on 24 August 2004 which certified that the Phi design satisfied the Form A requirements, requisite design standards and the drawings; this was copied to Mr Bird of RWC on 25 August 2004.

On 27 August 2004, RWC indicated to Carillion by email that, other than an immaterial point, they were “happy with the content of the Phi design”. On 31 August 2004, however, still considering the design calculations, Mr Bird of RWC asked Phi to comment on the difference in values set out in the Phi letter dated 20 August 2004 and the typical values given in the site investigation report. The response from Phi was contained in an email from Julian Fletcher at Phi to Mr Bird dated 1 September 2004which provided as follows:

“…our calculations are based on similar parameters to the SI but not those exact ones. We took a slightly more optimistic approach on stress parameters, but a much more pessimistic approach on the water regime. However, if we rerun the design again with the SI’s worst credible values of Ø = 21 and C =2kN/m2 our design still exceeds an FOS of 1.2. However, with these low parameters, and having re-analysed the SI with respect to water, we have used a ru of 0.05.

Thus we confirm the current design can meet the AIP’s requirements…”

This was acknowledged by Mr Bird in his email dated 2 September 2004without any further comment or query. Mr Fletcher of RWC responded on 3 September 2004 somewhat cryptically with the comment "Good, that’s the design sorted out then!”RWC’s design of the retaining wall to the depot building continued in September 2004 and communications on this continued between Carillion and RWC.

Under cover of a letter dated 8 September 2004, Phi sent to Carillion (copied to RWC) elevations for these soil nailed embankment walls and typical sections, which over the next week RWC reviewed. By a letter dated 13 September 2004 Phi provided the Claimant withbudgetarycostings for the design, supply and construction of Phi’s permacrib retaining wall system. On 24 September 2004, Phi quoted to provide a 120 year design life for the gabion and soil nailing work.

Under cover of a letter dated 14 October 2004, as requested, Phi returned a series of questionnaires to the Claimant (Sub-Contractor Safety and Environmental Questionnaire, the Application for Supply Chain Registration; and Sub-Contractor Insurance Questionnaire). This included a safety plan and this documentation was clearly called for by Carillion as some sort of prerequisite to entering into a contract with Phi.

By letter dated 18 October 2004 to Carillion (copied to RWC), Phi sent calculations, drawings and a completed Form B Certificate. The calculations entitled “Reinforced Slope incorporating the use of soil nails by Phi Group Ltd – Calculations”. This document, which set out the calculations forming the basis for the scheme which was in fact implemented by Phi on Site, stated:

By letter dated 27 October 2004 Laing Rail wrote to Carillion in relation to its review of the Form B document, which document Laing Rail confirmed it wished to reject. The essential reasons given were as follows:

By letter dated 27 October 2004 to Carillion (copied to RWC) Phi responded to the points made by Laing Rail; in summary as follows:

“i)

We have always been under the impression from various site meetings that aesthetics were not the highest priority for the design of the stabilisation works ...”

(ii)

We confirm that the design of the facing is 120 years...

(iii)

We believe the factor of safety of 2.0 in this instance is inappropriate. We assume you are referring to CP2:1951 earth retaining structures, which has been superseded by BS8002:1994. This latest code is a limit state design using partial factors to achieve a factor of safety of greater than 1.1. We are following general working practice, and in accordance with BS6031, achieving a minimum factor of safety of 1.3 ...

(iv)

The three types of construction are as required by yourselves due to site conditions”

On 27 October 2004, Phi quoted again to Carillion for all three elements of the work, soil nail stabilisation walls, permacrib retaining walls and gabions.

By email dated 11 November 2004 Mr Bird of RWC sought clarification from Carillion in relation to queries which had been raised by Laing Rail and Owen Williams on Phi’s design. By a second e-mail on the same day Mr Bird confirmed that he had checked certain of Phi’s drawings as to whether the soil nails crossed the site boundary line. On the same date Phi wrote to Carillion (copied to RWC) addressing the same queries. Correspondence ensued about these queries.

By this stage, Laing Rail was looking for a cosmetic finish to the soil nailed walls and what was under discussion was a loose stone held in place in effect by a mesh. On 15 November 2004, Phi quoted to Carillion for this mesh.By email dated 22 November 2004 Mr Fletcher of Phi indicated to Mr Bird of RWC that it appeared that the Claimant had been given “…the verbal go ahead on the soil nailing scheme at last…”

By letter dated 26 November 2004 Carillion wrote to Phi essentially setting out the proposed basis for the Sub-Contract between the Claimant and Phi and seeking Phi’s confirmation that it would be prepared to proceed on the basis outlined, such offer then becoming capable of acceptance by the placing of an order by the Claimant with Phi. Phi responded to this by its own letter dated 7 December 2004 identifying a series of queries and points of specific disagreement in relation to the proposed terms of Sub-Contract.

On 1 December 2004, Phi sent to Carillion (copied to RWC) revised drawings for approval and comments. It was said that the Form B had been signed by Phi’s designers and sent to its Harrogate office for the “Part II check”. By further letter dated 7 December 2004 Phi provided to the Carillion three copies of Phi’s Form B Certificate (Revision 3); one document was signed on 3 December 2004 in connection with ‘Part 1 : Design’and a further document was signed on 6 December 2004 in connection with ‘Part 2 : Check’. The design had been done by Phi’s Cheltenham Office, and the check was done by the Harrogate Office.

Carillion prepared on 7 December 2004 an internal document entitled “Authorisation for Placing a Subcontract Order” for Phi in respect of the scope of works summarily described as “Soil Nailing & Retaining Walls”.

The installation of the soil nails in the slope began on or about 13 December 2004. This work was necessarily preceded by the excavation of the slopes by Carillion operatives.

By its document entitled “Order to Subcontractor” dated 11 January 2004 (wrongly dated – it should be ‘2005’)Carillion placed an Order with Phi in respect of the “Soil Nailing and Retaining Walls” work. The Order incorporated revised drawings dated 20 August 2004, Phi’s quotations dated 27 October and 15 November 2004 and Carillion’s letter dated 26 November 2004. The agreed price was £510,285 less 2.5% discount.

So far as Phi’s contract with Carillion is concerned, this was contained in or evidenced by Carillion’s Order sent on 11 January 2005 to Phi. It incorporated, amongst other documents, minutes of the meeting held on 6 July 2004, Phi’s document entitled "Reinforced Slope Incorporating the Use of Soil Nails" dated 20 August 2004, Phi’s quotation dated 27 October 2004 and Carillion’s letter dated 26 November 2004 (including all documents referred to in these documents). The fundamental obligation was to design and construct the soil nailing and to do so with reasonable care and skill. Relevant parts of the contract documentation were:

RWC’s contract was contained in the document dated 12 May 2004, entitled "Design Consultancy Agreement" (DCA) which incorporated much of what was that contained in RWC’s letter dated 29 October 2003 to Carillion. Although this "Agreement" was not signed, it is accepted that it reflects the contract between the parties. The preamble stated:

“Whereas:-

(1)

The Contractor has entered into a contract ("the Main Contract)" particulars of which are set out in the First Schedule.

(2)

The Consultant having been afforded the opportunity to read and note the provisions of the Main Contract…has agreed with the Contractor to execute the Design described in the Second Schedule ("the Design") upon the terms hereinafter appearing, and to act as the Designer if so defined under the Main Contract.”

The Second Schedule stated materially:

“A The Design

Civil Engineering Works

(1)

Upon award of the Main Contract, develop the outline proposals to a fully detailed scheme. This will include:

(a)

Advise on further site investigations to verify ground

(b)

Building substructure (including retaining walls)…

(f)

External works including building and track drainage (belowground)

Specific provisions of the DCA included:

“2(1) The Consultant shall execute and complete the Design together with all variations thereof in accordance with this Consultancy Agreement and to the reasonable satisfaction of the Contractor…

2(6) The Consultants shall not assign the whole or any part of the benefit of this Consultancy Agreement nor shall he sub-let the whole or any part of the Design without the previous written consent of the Contractor, which are not to be unreasonably withheld or delayed…

3(1) The Consultant shall be deemed to have full knowledge of the provisions of the Main Contract…

3(2) Save where the provisions of this Consultancy Agreement otherwise require, the Consultant shall so execute and complete the Design that no act or omission of his in relation thereto shall constitute, cause or contribute to any breach by the Contractor of his obligations under the Main Contract. The Consultant shall (as between the Contractor and the Consultant) assume and perform all the responsibilities obligations and liabilities of the Contractor under the Main Contract in relation to the Design.

3(3) Without derogation from his obligations in Sub-Clause 3(2) the Consultant shall carry out the Design with all reasonable skill care and diligence…

3(5) The Consultant shall indemnify the Contractor against every liability which the Contractor may incur to any other person whatsoever and against all claims, losses, demands, proceedings, damages, costs and expenses made against or incurred by the Contractor by reason of any breach by the Consultant of this Consultancy Agreement…

6(1) The Consultant shall make such variations of the Design, whether by way of addition, modification or omission, as may result from:

(c)

any order in writing by the Contractor to the Consultant.

9(1) The Consultant shall (except to the extent due to acts or omissions of the Contractor and his employees or agents) at all times indemnify the Contractor against all liabilities to other persons (including the employees and agents of the Contractor or of the Consultant) for bodily injury, damage to property or other loss consequent upon such injury or damage which may arise out of or in consequence of the execution and completion of the Design…”

It is common ground between the parties that a number of variations were issued to RWC, including one by which RWC was required to take on the role of "Lead Consultant". This necessarily involved taking a lead role in relation to all the design work which was to be done and would include liaison and coordination with any other designers, including Phi. It is clear that the obligation to execute and complete the "Design" related to the design of all the works. There clearly was an understanding between RWC and Carillion that the detailed design of the soil nailing would be done by Phi, albeit that this was not contained in the Agreement between the parties. However, the Agreement left RWC with an overall responsibility for the whole design, albeit in practice and as it turned out RWC did not have to produce the detailed design for the soil nailing.

During the construction, on 20 January 2005, a failure occurred to the soil nailed slope in the area of Ch. 8285m and 8300m; this was at the Country end. This was noted in Phi’s daily return sheet as "bank falling down whilst doing groundwork". This soil movement was identified as a slip and some photographs were taken which identified "shear surfaces” within the fallen clay. These shear surfaces were in effect planes of weakness where historically one part of the clay had moved against another part; they are recognisable from the photographs as smooth and almost polished. Mr Graham of Carillion inspected the slip in the company of representatives of Phi on 21 January 2005 and together they broadly decided on the requisite remedial works. It was noted that material at the base of the slip may have been wet and soft and that this contributed to the slip in some way. Mr Fletcher of Phi reported to Carillion on 27 January 2005 about the slip and suggested that it was Carillion’s “excavation crew” which had initiated the slip; he attached photographs showing the failure planes. It was noted that the slip occurred between two counterfort drains.

There was a design review meeting on 3 February 2005 at site, attended by Mr Bird of RWC. Paragraph 1.7 of the minutes refers to the fact that an additional row of soil nails was required at the top of the wall at the Country end. A second such meeting took place on 16 February 2005, also attended by Mr Bird.

There was a second slip in early February 2005. The view at the timewasthat these were minor slips of the front face and had been caused by over-excavation by Carillion, although at the trial all three geotechnical experts appeared to agree that the impact of over-excavation was likely to be limited. Whilst, with hindsight, these slips were serious, it is common ground, and I find, that these slips were within the top few metres of earth and that they were not deep-seated.

Whilst almost all the correspondence (mostly e-mail traffic) in relation to these slips did not involve (by copying or otherwise) RWC, there was a major issue of fact as to whether RWC and Mr Bird in particular knew about these slips. I am satisfied that they did. Carillion site witnesses say that they must have known. The scope of the remedial works was considerable, and Mr Bird accepted that the scale of these works was such that had he been on site he would have noticed them. He said that he could not remember going to site after either of the site meetings on 3 and 16 February 2005, which he did attend.

There was an express reference by Mr Bird himself in a contemporaneous e- mail of 17 February 2005, the very day after the second site meeting in February, when he expressly asked Phi “for completeness” about areas of site amendment “eg slips”. There could be no good reason for his asking this question, specifically identifying slips, unless he knew about the remedial works going on as a result of the slips. His evidence was that he could not remember but he did accept expressly that there would have been no reason to think about slips unless he had seen this work.

Contemporaneous photographs show how substantial the works were. The slips occurred over a 15 metre length and were initially stabilised by the placement of a large pile of spare soil at the base. The concrete walkway at the top of the slope was largely destroyed. The photographs taken in January and February 2005 were such that the slips and the obvious remedial work going on in the area were easily visible not only from the area where the site meetings were held (on the Wembley Stadium side of the site), but also on the bridge which passed over the rail tracks. There were other works such as trackside drainage and the depot building itself, the detailed design which was done by RWC, which were going on at the same time as the slips were occurring and the remedial work to them being done that it would be inconceivable that RWC, whether it was Mr Bird or someone else, did not see and were not aware of the slips.

The slips were repaired by removing the slipped earth and refilling the gaps left. Phi continued with their work over the next four months. There was in June 2005 a mild contretemps between Phi and RWC as to whether Phi should design a particular gabion wall between Chainages 8600 and 8850; in the result RWC designed it without any apparent difficulty,

Before the overall main works had been completed, a substantial failure of the soil nail retaining wall at the Country end occurred on about 25 October 2005. It initially was seen to relate to a 40 metre length. Mr Coakley of Laing Rail e-mailed Carillion on that day seeking urgent responses as to why the failure occurred and what remedial action was planned as well as calling for an urgent inspection of the remaining areas of soil nail walls on the site. Carillion staff, particularly Mr Graham, inspected on 26 October 2005, as did Mr Wilkinson of Phi. In fact, at least two areas of instability were found, at Chainages 8425 and 8355. Over the next few days Phi began to prepare a report and stone facing was removed to assist in the investigation, the method statement therefor being agreed on 4 November 2005.

On 9 November 2005, Mr Wilkinson of Phi faxed Carillion to the effect that he believed that movement of the embankment was being "created by water softening a layer of clay close to the face and with the increased pressures and reduced support resulting from the over steepening of the face this soil is effectively failing in bearing which allows the flexible face to yield which in turn removes the lateral restraint to this soil allowing further movement."

On 22 November 2005, Mr Sowden of Carillion wrote to RWC:

“We write to inform you that we have experienced a failure in the soil nail wall between the depot building and the Country End of the site. We have attached initial reports undertaken by Phi Group and our internal design manager which provides you with more detailed information.

We believe the failure may be the result of inadequate design. As lead designer for the project we would therefore advise that you notify your insurance company accordingly.

Phi Group are in the process of putting forward remedial work proposals and assessments of the long term stability of the wall. We will keep you advised of all future developments.”

Phi’s November 2005 "Report into Soil Nailed Embankments Failures" was one of the documents attached and was in any event specifically sent to RWC by email on 25 November 2005 for its consideration. This report sets out detailed observations of the two areas of failures, one of which was a very wet area of the face at the base of one of the two areas. The report also expressly referred to the January 2005 failure at the Country End, albeit at a different Chainage; reference was made to the "smooth failure plane” which has been seen. Phi offered four possible reasons for failure but clearly preferred the explanation that there were "pre-existing failure planes in the London Clay mass generating high active forces." Compelling reasons were put forward for this view, in particular the failure surfaces had manifested themselves apparently randomly and not from the toe of the slope. Remedial works were proposed.

At around this time, Carillion contacted CL Associates (“CLA”), which was a company within the then Mowlem group. CLA was a well known geotechnical consulting firm in its own right, with both a national and international reputation. Initially, Mr Harris of CLA, having himself looked at the failed slope, commented on Phi’s report on 29 November 2005 that he concurred with Phi’s analysis; he went on in his e-mail to Mr Sowden:

“Whether this should/could have been predicted at the design stage will be a matter of debate. In any event Phi Group need to demonstrate that the slope has an adequate factor of safety with lower operating parameters. Consideration should be given to both the residual state (c’= 0, phi = 12) and a fully softened state (c’ = 0, phi = 18 to 20).”

Mr Graham emailed Mr Sowden on 1 December 2005:

“I think we know where we are and where we have got to get to.

We know we have a failure(s) of the cut slope and that future failures can not be ruled out by any party.

We need to put in place a design, design check and approval of remedial works and we then need to install them before handing the sidings over to the client for his safe use.

The question is how do we get from where we are to where we want to be. Perhaps Jason [Smith of Carillion] can give us a lead here. Which parties are going to be involved?

I assume the contract as setup should deal with this. Phi I assume will need to be the designers of the remedial works. Will Robert West need to be the checkers? Do Laing Rail sign off any design check certificates? As with all the other main elements of the permanent works designs the principles of the design first need to be agreed (Form A or AIP). The original design assumptions I suggest now need to be revisited and agreed. If additional SI [site investigation] is required to achieve this then that will also need to be designed, agreed and carried out. At this stage I assume we…or CL associates are not required to do any number crunching but only to review that the above procedures are being followed and that the correct design brief, design assumptions and methods are being employed…

The starting point of any design is the design brief. We need to know our position as to whether our original (or any revised) instruction (brief) was correct. Are they prepared to design the remedial works to the same brief or do they now require us to instruct them to work to make changed brief? (80/90° slope angles and are now known fact that pre-existent slips are present).”

Mr Smith, who had been copied in, replied on the same day:

“My personal thoughts are that we need to let Phi take the lead in all these works. Phi must provide their design to accommodate the additional slippages that were not allowed for within the original scheme.

Robert West were required to check the original Phi Design and I believe we should request that this process is maintained. We need to ensure that all the parties involved with the original scheme take collective responsibility for the modifications they are now proposing.

As the works will be a permanent solution Laing Rail will need to approve the method of repair.

If additional SI is required, this should be determined by Phi alone. We need to ensure that they maintain their contractual responsibilities and that we do not by suggesting or commenting influence the decision and take on design responsibilities we never had."

On 5 December 2005, RWC replied to the letter of 22 November 2005 as follows:

“Thank you for your letter of 22 November 2005 relating to a problem you have encountered with some of the soil nailing on site.

We would like to remind you that the soil nailing design and installation was done under a separate design contract between Mowlem and Phi Group. Robert West Consulting were not a party to this contract.

Any discussions on costs arising from this alleged failure should be addressed to the contracting parties (being Mowlem and Phi Group).

Further it is our understanding, from the submitted correspondence, that Phi Group are accepting responsibility of the remedial works to the wall, in which case, we are unclear as to what additional costs you refer to.”

On 5 December 2005 Phi Group submitted their updated "Report into Soil Nailed Cut Slope Failures". It was broadly similar to the earlier version of the report and Phi maintained its view that pre-existing failure surfaces were the primary cause for the later failures. Positive recommendations for remedial works were put forward which involved sealing the failure planes from the future ingress of water, reinstating the upper surface including the footpath and cable troughs, repairing the mesh facing and reinstating the stone filled facing. As for other areas which had not been affected by the slips, Phi suggested that some sampling and monitoring could be done to seek to identify slip plane locations but concluded that it would not be possible to guarantee that all such surfaces would be located within a reasonable timescale. Applying “the soil parameters recommended by the [URS] interpretive soil report and adopted in the AIP (ø´ = 22.5°, c´ = 3 kN/m2) therefore an adequate factor of safety exists against the observed failure mode”. There was no suggestion that the ru value previously used needed to be re-addressed or amended. This report was sent to RWC on 8 December 2005 by Carillion:

“Please find enclosed a report prepared by Phi on the retaining wall failures.

My understanding of the report suggests that works are required to some of the RW designed external works in order to facilitate the repairs to the walls.

I would request that Robert West provide their response to this report and confirm their approval to the remedial measures proposed. Could you please provide this as a matter of urgency.”

On 9 December 2005, RWC responded:

“Comments are as follows:

•

The recommendation to areas 1 & 2 do not seem very robust. There is no statement confirming whether the nails have moved or not (only that theoretically they are O.K.) We would expect a survey of the nails to check if any are out of place, which would signify pullout.

•

There is no mention/justification of the existing steel plate remedial as one of the final recommendations. They look to be very much a temporary work solution. As the mesh has already sheared in this area, we are surprised by the statement on the mesh around plates and would expect some upgrading here.

•

Where a shotcrete solution is specified, some form of filter drain would also be required.

•

Pre-existing slips-Phi should be aware of this possibility and account for it within their design especially after encountering a slip during construction.

•

Crack sealing-This is not really viable as it could occur anywhere. It is implied within the report that hydrostatic pressure from tension cracks had not been taken into account for the design. We would query the validity of ignoring this effect in calculations.

•

There is a durability issue with the size of stone used in the facing. Whilst this does not affect wall stability, it may well come up as an issue with Laing Rail again following the other issues.

•

With regard to changing the design of other elements with in our design remit, the only real suggestion in the report is the LUL cable troughs. It is not possible to effectively seal these, and I do not imagine it would be possible to move the troughs. In addition, the pathway generally slopes down the side, and water would drain down the slope (along the line of the troughs) before permeating into the clay material. Also refer to crack sealing above.

•

No mention is made of lifespan of the structure after the remedial works. This was an important issue at a time of design, and Phi need to be very clear on proposals for this.

Lastly, given the seriousness of the failure and the long-term lifespan required, it may be prudent to consult an independent specialist in the field of soil nailed walls to review the proposals made. This may be the most expedient way of providing Laing Rail with renewed confidence in the soil nailed walls. Oliver [Engleback] has mentioned Jamie Standing of GCG as a recognised expert in the field-0207581 8348”

CLA produced on 12 December 2005 a letter report into the October 2005 failures based on two visits to site, a review of Phi’s reports of October 2004, Phi’s drawings, and Phi’s November and December 2005 reports into the failures. CLA agreed "with the basic conclusion of the report that the excessive deformation in the cut slope has been caused by movements along pre-existing shear surfaces”; CLA went on to say that these "movements have been initiated both by exposure in the base and by rainfall being allowed to enter at the top of the slope locally raising pore pressures along the slip surface.” CLA accepted the adequacy of Phi’s calculations which showed that the soil nails could resist the “additional forces imposed by the slippage of a soil wedge along pre-existing failure planes”. CLA did suggest that the use of "peak parameters" in the original URS site investigation report was unusual for basing the long-term stability of a cutting in London Clay. The suggestion was made that as “a minimum any resistance provided by effective cohesion would be ignored and often a fully softened strength adopted (c´ = 0, ø = 18 to 20°)” and that analysis "should be presented to demonstrate that there is an adequate factor of safety for these reduced parameters." CLA did not query the ru value of 0.05 used by Phi in its calculations and went on to say:

“Excavation of the new cut face will have resulted in unloading of the soil with the resultant drop in pore pressures within the slope. The operating pore pressures will now be negative and will slowly return to equilibrium conditions. Where the soil has access to free water it will "suck" the water into its pores resulting in softening of the soil. This appears to have been observed when the failures were first noticed following a period of heavy rain with possible infiltration of water into pre-existing shear surfaces. The softened areas observed at the base of the cut are most likely a result of this process. With time, the soil forming the cut will weaken as pore pressures equilibriate towards the long-term condition. It is this mechanism that is likely to have led the existing shear surfaces, as negative pore pressures created as a result of the original cut increased towards equilibrium levels effectively weakening the soil is a leading to progressive failure. Hence the inclusion of counterforts to stabilise the old slope. The above discussion emphasises the need to ensure that the safety of the soil nailed slope is satisfactory using softened strength parameters."

This letter report was sent to RWC for comments by e-mail dated 13 December 2005 from Mr Sowden of Carillion and it was also sent to Phi by letter dated 15 December 2005. On the latter date, Carillion also sent on to the Health and Safety Executive the Phi report, CLA’s letter report and Mr Bird’s comments of 9 December 2005

On 21 December 2005, Carillion sent on to RWC for any comments a slightly amended report from Phi as well as Phi’s response to RWC’s email of 9 December 2005 which stated:

“A basic analysis of the old slope at around 22 deg does not show an initial failure outcropping the crest as far back as we are trying to demonstrate that once the first failure has happened then further failures will ‘progress’ back into the slope with time. I have added further comment in the report to explain this. I have also clarified the position with regard to Alan’s query on pore pressure assumptions.

With regard to Robert West comments I have annotated their e-mail in red below...”

The red marked annotations against the bullet points in Mr Bird’s e-mail of 9 December 2005 I have identified using underlining:

“Comments are as follows:

•

The recommendation to areas 1 & 2 do not seem very robust. There is no statement confirming whether the nails have moved or not (only that theoretically they are O.K.) We would expect a survey of the nails to check if any are out of place, which would signify pullout. The fronts of the nails have moved downwards with the face and this is stated. We do not believe that there has been any pull-out and we have added this point to the report. We could monitor the nails for pull-out from here on but we have no reference to make any meaningful measurement of pull-out since construction.

•

There is no mention/justification of the existing steel plate remedial as one of the final recommendations. They looked to be very much a temporary work solution. As the mesh has already sheared in this area, we are surprised by the statement on the mesh around plates would expect some upgrading here. As the mesh has already sheared in this area, we are surprised by the statement on the mesh around plates and would expect some upgrading here. The steel plates may look a little untidy in Area 2 but they are extremely competent structurally, but we could extend the shotcrete across Areas 1 and 2 which would give more continuity of appearance, avoid the need to replace the stone face and enhance further the structural capacity. We have explained why the mesh is adequate in the report. In those areas where the mesh is damaged we could replace it with a higher spec but we obviously do not want to replace all the upper level rear mesh unless it is necessary.

•

Where a shotcrete solution is specified, some form of filter drain would also be required. Agreed.

•

Pre-existing slips-Phi should be aware of this possibility and account for it within their design especially after encountering a slip during construction. We are accounting for them in the remedial work designs.

•

Crack sealing-This is not really viable as it could occur anywhere. It is implied within the report that hydrostatic pressure from tension cracks had not been taken into account for the design. We would query the validity of ignoring this effect in calculations. We don't believe that significant tension cracks exist with the soil being put largely into compression by swelling and the downward movement of the failure wedge reacting against the face and nails. We do have ‘in contact’ failure planes which will weaken if water is able to percolate down them. This is accounted for in the design but any measures that can be taken to reduce this effect would be wise.

•

There is a durability issue with the size of stone used in the facing. Whilst this does not affect wall stability, it may well come up as an issue with Laing Rail again following the other issues. We think that the staggered extra layout of the mesh is the best solution year.

•

With regard to changing the design of other elements with in our design remit, the only real suggestion in the report is the LUL cable troughs. It is not possible to effectively seal these, and I do not imagine it would be possible to move the troughs. In addition, the pathway generally slopes down the side, and water would drain down the slope (along the line of the troughs) before permeating into the clay material. Also refer to crack sealing above. As far as the practicality of sealing them goes we can't comment.

•

No mention is made of lifespan of the structure after the remedial works this was an important issue at the time of design, and Phi need to be very clear on proposals for this. Providing a remedial solution equal in durability to the original scheme is our intention and we have included a comment about this in the revised report.”

On 22 December 2005, CLA commented to Carillion on the latest Phi report:

“I consider Robert West’s query is valid and in many respects they reflect my earlier comments to Alan [Sowden].

Phi have considered most aspects in their report and the proposed solution needs to be adopted consistently along the whole length of the West section of the wall, for both technical and aesthetic reasons.

I am still concerned over the amount of potential movement that may occur in the soil nailed slope between nails leading to a visually if not structurally unsatisfactory situation.

Based on Phi’s analysis I agree that the overall safety of the slope seems assured, however, the report still does not discuss their reasoning behind using ru = 0.05 (which is only a nominal level of pore pressure). There needs to be clear evidence for the long term pore pressure regime assumptions to verify that the slope is expected to remain stable. The control of surface water and potential ingress of water into the slope is vital if long-term problems are to be avoided.”

RWC replied on 3 January 2006:

“The only real comment is with regards to the LUL cable troughs.

The only way of effectively sealing these would be to bury them, or lift them and place a blinding layer below. Neither of these are particularly practical, and we would still debate whether any significant amount of water could connect in this same.

I think that Phi Group need to comment on how critical they perceive this item of the proposed remedial works to be i.e. what is quantified risk of not doing it?"

On 9 January 2006, Mr Sowden e-mailed Mr Wilkinson of Phi suggesting that, in the light of the comments from RWC and CLA, they should sit down to "finalise the details before making the official submission to the client”. This happened on 18 January 2006 and thereafter a meeting was convened at Laing Rail to discuss the problems and proposed remedial solutions.

On 23 January 2006, Phi wrote to Carillion, seeking to clarify the contractual position:

“During our meeting of 18^th January 2006 you claim that, during the Pre-Order Meeting of 6^th July 2004 you asked us to take account of existing failure services. We categorically deny that this was the case. The minutes referred to your requirement for our design to include global stability (slip circle failure) checks of the new cutting which, at that time, not been carried out but would be needed in addition to our structural calculations to provide a complete design. This is an entirely separate issue from existing failure surfaces."

The contractual issue was emerging because it had still not been resolved who was to pay for the remedial work.

Carillion’s response to this was on 31 January 2006:

“We are unable to accept your understanding of the Contractual position with regard to the liability for the failure of the Soil Nailed retaining wall at the Wembley Depot.

We note your comments with regard to the requirements of the Contract. We would wish to reinforce our understanding of the Contract in respect to these works.

•

The Subcontract requires Phi to design and construct a soil nailed wall with a minimum design life.

•

The Pre-tender minutes required Phi to ensure that the design took account of slip circles which were known about at the time of tender. The existence of counterfort drains within the embankment also demonstrated that the slope had been the subject of some instability.

•

Phi Group encountered a slip during the early stages of the construction of the works. Phi Group’s own drawings state that if ground conditions are found to be different to those anticipated by the design then the design would be reviewed. This procedure was not followed and resulted in the whole wall being constructed to the original design.

•

Phi Group are responsible for designing a wall that suits the ground conditions found on the site. It is contended that the design of the wall does not suit the conditions.

We have determined the Mowlem costs associated with the original remedial actions carried out by Phi Group and enclose our calculation sheets…

As stated in our meeting we wish to carry out the remedials for the wall in cooperation with both companies and seek to minimise the cost as far as is practical.”

Phi’s response on 1 February 2006 was that it was "entirely unacceptable" that it should pay for all the costs associated with the remedial works.

On 3 February 2006, Phi produced a further "Report into Soil Nailed Cut Slope Deflections and Proposals to Remedial Works" which was substantially, albeit not entirely, based on the earlier reports. Phi still put forward the pre-existing failure surfaces as being the primary cause for the failures of the slope. The report analysed in some detail the structural integrity of a soil nailed solution but this was in the context of the shallower instability in the upper layers of the soil. Appropriate factors of safety were indicated. Appendices 1 and 2 analysed one of the areas of failure on the basis of adopted and residual soil parameters with a view to confirming in effect that a soil nailed solution would be sufficient to prevent any shallower instability occurring. Appendix 3 analysed one failure area using particular soil parameters and the alternative ru values of 0.05 and 0.10, said to reflect a nominal and conservative water regime respectively. This demonstrated stability.

This report was provided to CLA who wrote to Carillion on 8 February 2006 commenting on it:

“These comments are based on the second visit to site on 17 January 2006, CLA analysis of the current slope design…and an initial assessment of Phi Group’s Proposals for Remedial Works issued on 3 February 2006.

The site visit on 17 January 2006 revealed further evidence of movement in the soil nailed slope both at lower and higher levels in the slope…

At the request of Mowlem, CLA had carried out an analysis of the soil nailed slope using an in-house program, SNAILS. For the purpose of analysis CLA adopted the section at CH 8330 which had a factor of safety of 1.3 as recorded in the Phi Group Report [of] 15 October 2004…The CLA analysis gave a factor of safety of 1.26 which is similar to that indicated by Phi Group and therefore if the design parameters are representative the slope should be stable with the current levels of soil nail reinforcement. However, if lower soil parameters more typical of those used to assess the long-term stability of London Clay slopes and factors of safety approach 1.0 and possibly lower. We calculate factors of safety of 1.0 for c´= 0, phi = 20. Phi Group have re-analysed this section of the as-built conditions and calculate a factor of safety of 1.41 for c´ = 0 kPa, phi = 21. On this basis CL are satisfied that there is an adequate factor of safety for the slope in the long term..

We consider that softening of the near surface clay is inevitable and this would lead to problems with the gravel filled facing and "quilting" of the ground between soil nails…

We consider that the soil nailed slope (both sides of the maintenance shed) should have a stiffer facing capable of resisting bulging between the soil nails and effectively transmitting loads back into the slope…

It is our opinion that Phi Group should not have relied on the reported peak design soil parameters alone for their design but as experienced geotechnical practitioners should at least have considered the possibility of softening of the clay and a reduction in strength. It is common knowledge that London Clay softens with time as it takes up water after excavation with consequent loss of c´ and phi. Such evidence has been described in many papers, eg Skempton’s Rankine Lecture…”

Laing Rail’s consultants, Owen Williams, did a written review dated 20 February 2006 on Phi’s 3 February 2006 report. The review confirmed that a detailed check of design calculations had not been completed albeit that a review of the approach to the design of the remedial works had been completed. The main purpose of the review was "to establish whether good practice is being followed in assessing the cause of the failure and that the proposed remedial works are reasonable measures to take”. Owen Williams had RWC’s comments in the 9 December 2005 e-mail on the earlier Phi report, but did not have the site investigation reports. Their recommendations and conclusions were as follows:

“In our opinion, there are many unresolved issues concerning the methods of assessment of the failure. To enable a firm conclusion to be reached about the proposed remedial works it is recommended that:

•

The slope analysis is reviewed and revised.

•

The design of the facing mesh and Shotcrete be revised.

•

An independent check of the Phi Group analysis and design is undertaken as this would help satisfy Laing Rail of the competency and impartiality of the analysis. If their insurers have already carried this out, then it may be possible for Laing Rail to obtain a copy.

•

The Phi Group be updated in the light of the above, and be submitted for review.

A meeting with the designers to discuss our detailed comments would help clarify and agree a common understanding of the likely failure mechanism and help Phi Group to design satisfactory remedial work proposals.”

There was an attached Appendix A which contained "Detailed Comments on Phi Group Report”. This report was passed to Phi who put in its detailed comments on each of the points raised by Owen Williams.

The Owen Williams Review was sent by Mr Smith of Carillion to RWC by way of e-mail on 23 February 2006 calling for urgent comments. No comments were provided by RWC. CLA did comment on the Owen Williams Review in a memorandum dated the 27 February 2006, saying amongst other things:

“Section 3.4 highlights some of the limitations of the analysis currently presented in the Phi Group report. Most of these issues I have raised with you in meetings but perhaps did not make enough of the issues of analysing the as-constructed wall and its effect on overall stability as well as the design of the facing.

OWR also highlights that consideration must be given to the slope on the east side of the depot. However uncomfortable this is, I did raise the issue and I am not surprised that OWR consider this needs to be considered along with the west side, where the failures have actually appear. With time there is a real risk that unacceptable performance may occur on the east side as well.

Section 3.5. Their comments to the design of the remedial measures is flawed has some justification does not necessarily mean that the proposals will not work effectively. OWR will need some more convincing by analysing a larger range of possible scenarios. OWR are concerned about the long-term effectiveness of the drainage system which is not unreasonable bearing in mind the very low pore pressures assumed in the analysis of the slope to date."

A detailed meeting took place on 28 February 2006 attended by representatives of Laing Rail, Owen Williams, Carillion and Phi. The minutes confirmed that the "design parameters were discussed" and that "agreement is to be reached on their suitability". Laing Rail indicated that it wanted assurance that the wall would stand up on a worst case scenario basis. It was recognised that "water could be developing at the base of the wall and is to be taken in to account in the final solution"; a post-meeting note confirmed that from a visual inspection there was evidence along the wall of water seeping through the face.

Phi produced further calculations in the weeks which followed which indicated an adequate factor of safety. Soil nail pull out tests were done and the results submitted by Phi in early March 2006. A further meeting between Laing Rail, Owen Williams, Carillion and Phi took place on 15 March 2006 at which there were discussions in relation to “the design parameters and some of the methodology being used by Phi in respect of the calculations and sections provided” and worst case scenarios. It is clear that the discussions were proceeding on the basis only that there was or might be further shallow instability in the upper layers of soil. It does not appear to have crossed the mind of anyone that there might be deep seated instability as well. A later meeting between the same parties on 23 March 2006 was called to "pull together all of the information provided by” Phi, Carillion and Owen Williams. Consensus seems to have been reached that the cause of the failures were the pre-existing shear surfaces in the upper layers of clay. There was a detailed discussion about remedial works.

Some correspondence ensued between Laing Rail and Carillion as to responsibility for the failures, with Carillion asserting in a letter dated 10 March 2006 that the failure occurred as a result of incorrect information provided to it at tender stage and Laing Rail asserting in its letter of 21 March 2006 that Carillion had assumed full contractual responsibility and risk.

Phi produced a further updated draft of its report in late March 2006 which retained the same thesis as to the cause of the failures; the remedial works sections were somewhat updated and there were some changes to the calculations. Again the ru values used in the calculations were 0.05 and 0.10 as nominal and conservative water regimes.

By 3 April 2006, Owen Williams had confirmed to Phi that they were satisfied with the remedial works proposal in terms of the long-term suitability of the soil nail design and the suitability of the enhanced rear mesh specification, as confirmed in Phi’s letter of that date to Carillion. The letter went on:

“Concerns were raised however regarding the durability of the existing rear mesh and its ability to support the stone facing over the full term of the design life.

We wish to place on record that we believe this to be an entirely separate matter from dealing with the structural problems that are evident on site. This mesh has always formed a part of the stone facing solution, the design and specification of which was open to question through the whole design process.

We believe that it is inappropriate to raise this issue now and cause further delay to the execution of the remedial works when reports from site are confirming the further deterioration of the cutting…”

There was some discussion internally within Carillion whether these particular comments should be passed on to Laing Rail. This appears to have been unresolved. However, Carillion commissioned experts to examine the possible lifetimes of the galvanised steel mesh and they reported on 13 April 2006.

The proposed remedial works were the subject matter of a Form B check which was submitted on 25 April 2006 by Phi to Carillion who shortly thereafter also prepared their overall detailed method statement for the remedial works, albeit that this went through various iterations. By this stage, the remedial works design had been developed, agreed and worked out.

Meanwhile, a certain amount of other work, not related to the remedial work, was being done. A snagging list running to some three pages was produced on 3 May 2006 and the plan was made for this work to be done or at least commenced in that month.

The remedial work was started in late May 2006 with Mr Sowden in charge. Phi did the new soil nailing work whilst Carillion did virtually everything else. The correspondence suggests that there were further soil slippages during the remedial work. For instance, Mr Wilkinson of Phi wrote to Laing Rail and Carillion on 16 June 2006 referred to an “attempt to deal with the newly failed area between Areas 1 and 2”, Carillion’s letter dated 14 June 2006 to Phi talks of two areas "that have recently slipped" and Mr Sowden talked in his e-mail of 22 June 2006 of there having “been more movement in recent weeks, particularly when work has taken place on sections of the wall that have already shown signs of movement.".

On some five weekends, in late July and August 2009 some works were done overnight. This was recorded in a revised method statement produced by Carillion dated 20 July 2006.

By the end of September 2006, the remedial works had been substantially completed although some work continued into October 2006. There continued to be some involvement by Carillion and Phi to address concerns over possible movement at the London end where some bulging of the stone facing was observed which suggested that there might have been movement; this was investigated by Phi who believed that this was attributable to a failure of some of the mesh clips.

Phi sought to be paid for the remedial works, for instance by its letter dated 22 November 2006 to Carillion whilst Carillion sought to be paid by Phi for its time and effort involved in the remedial works. Phi’s work sheets indicated work being carried out initially in the October to December 2005 period and thereafter in the May to September 2006 period. Carillion’s claim was based primarily on work carried out by Mr Sowden; this related to the period between November 2005 and October 2006. Unsurprisingly perhaps, both Phi and Carillion rejected each other’s claims.

A further slope failure was reported shortly before Christmas 2006 and ground settlement was observed with two 43 metres long attenuator pipes having suffered partial collapse. These were at the London end. These were investigated in January 2007 by Owen Williams on behalf of Laing Rail. Some monitoring had been set up at the Country end. Further bulging in the stone facing was noticed by the end of May 2007 and serious concerns were expressed by Owen Williams as to the stability of the wall. Significant dampness and water seepages were noticed. Mr Wilkinson of Phi e-mailed Mr Sowden on 3 July 2007:

“Please find attached our proposals for dealing with the water seepages observed on the London End wall.

As discussed we believe that the observation of wet patches on the clay face does not indicate the presence of pre-existing failure planes as found at the Country end and that the previous conclusion of all parties in this respect remains valid. However water pressure was not taken into account in the original facing design because neither the AIP nor the soils information provided gave any indication of the need to do so…”

There was continuing monitoring over the months which followed; this indicated some movement. In about August 2007, Carillion engaged an expert, Dr Love, to review the design of the works undertaken by Phi on both the Country and London end walls. He produced his first report dated 27 November 2007 which, amongst other things, reported that there was deep seated instability which in effect had not been adequately accounted for within the design and calculations for the soil nailing works.

On 27 November 2007, Carillion put RWC on notice of a potential claim against it. At around this time also Phi was put on notice of such a claim against it also.

Monitoring continued over 2008 and 2009. Inclinometers and piezometers were also installed; partly as a result of the information from this instrumentation, it was decided that the soil nailed walls were not in immediate danger of collapse, albeit that sooner rather than later substantial remedial works were going to be required.

Initially, Carillion instituted proceedings only against Phi with the Claim being issued on 23 April 2009. The main complaints against Phi were that it had negligently failed at different stages to make the correct design assumptions, in particular in relation to the ru value and to take into account of the likely and actual presence of pre-existing shear surfaces within the clay. Over £600,000 was claimed in respect of historic remedial work costs and a claim was made initially that further remedial works costs were to be incurred in the future.

Initially, Phi defended the proceedings with liability being challenged and points on contributory negligence and quantum being taken. Phi raised a counterclaim in relation to the post October 2005 remedial works done by it on the Country end. In early March 2010, Phi also brought in RWC by way of contribution proceedings on the basis that if it, Phi, was liable for the various losses, then so was RWC. The trial was eventually set for late May 2010.

Carillion and Phi settled the proceedings between themselves and the Consent Order incorporating the settlement terms was made on 18 May 2010. By this stage, it was clear to all parties that Carillion’s total money claim was likely to exceed about £7 million. Essentially the settlement was in these terms:

“[Phi] to pay [Carillion] the sum of £3.8 million…in full and final satisfaction both of the Claimant’s claim and [Phi’s] counterclaim, inclusive of all interest and costs."

Payment was to be and was made within seven days and there was to be no separate order as to costs. There is no suggestion other than, and I find, that this settlement was reasonable. It at least partly in commercial terms reflected the fact that Phi only had insurance cover, as a maximum, of £3 million. The settlement was achieved at a meeting in May between Mr Gale of Carillion and Mr De Waele of Phi’s relatively new holding company. It also reflected, from Phi’s standpoint the fact that its own expert Dr O’ Riordan had formed a clear view that Phi had been causatively negligent. The contribution proceedings between Phi and RWC remained in issue.

Meanwhile, on 30 March 2010 Carillion had issued proceedings direct against RWC for negligence. I deal in the Liability section of this judgement with the 19 complaints of breach of duty pleaded against RWC. Paragraph 23 of the Particulars of Claim identified that it claimed £600,000 plus VAT in relation to remedial works costs to date and that it would claim the cost of future remedial works (set out in Schedule 1) which were still the subject matter of discussion between it and Chiltern Railways.

RWC denied liability on every count in its Defence and later Amended Defence and pleaded extensive grounds of contributory negligence against Carillion, to which I will return later. RWC also unequivocally admitted paragraph 23 save that it asserted that Schedule 1 was not an adequate description of the future remedial works; thus it admitted that the claimant had incurred remedial works costs to date in the sum of £600,000. I gave permission during the trial for it to retract that admission, albeit that the Court can have regard to the fact that it was admitted, as a matter of weight. In effect, RWC also brought contribution proceedings against Phi.

Pursuant to successive orders from the Court, Carillion produced updated Schedules 1 and 2 to its Particulars of Claim which set out its case on quantum, the latest manifestations of which were served on 23 December 2010. In broad terms, the quantum claims is as follows:

Initially, experts were limited to liability (engineering) and quantum disciplines. By November 2010, it was accepted by the Court that the parties should have permission to call programming experts. At the pre-trial review before Mr Justice Edwards-Stuart on 22 November 2010, RWC indicated that it wished to rely also upon a railway logistics expert but the learned judge was at that stage not prepared to make an order entitling RWC call such an expert. However, he effectively permitted RWC to renew its application provided that a report from such an expert that was served by 28 January 2011. When the pre-trial review was reconvened on 18 February 2011, permission was given to the parties to rely upon railway logistics experts.

Since much of what remained in issue in this case is dependent on evidence, it will be helpful if I record my views in general about the witnesses. I am satisfied that all the witnesses were honest as such, in the sense at least that they were not deliberately trying to mislead the Court.

My views on the witnesses called by Carillion are as follows:

Phi’s witnesses were, and my comments upon them are as follows:

RWC called three witnesses:

As for the experts, my views are as follows:

Although Phi admitted liability, RWC in its pleading denied liability until a very late stage in the trial when, finally and properly, it admitted liability in many respects. By a document which became Exhibit 7, RWC submitted a copy of it Defence identifying what allegations or breach of duty were admitted. This series of admissions virtually had to be made in the light of the joint engineering experts’ agreement and indeed of the contents of RWC’s own engineering expert, Mr Jessep’s report.

Before turning to the pleadings against RWC, it is necessary to consider the extent of the contractual obligations and responsibilities of RWC. Mr Bird attempted in evidence to suggest that there was no geotechnical expertise within RWC. This was a difficult proposition to support for a number of reasons, the first being that there was the clearest contemporaneous documentary evidence that RWC held itself out as having in-house geotechnical expertise. Secondly, RWC obviously had sufficient expertise to design without any apparent difficulty the extensive and substantial concrete retaining wall which ran the whole length of the depot building (over 100 meters long); the function of this wall was to support without any material movement the very slope which elsewhere was to be supported by the soil nailed installation. Thirdly, RWC had expressly undertaken to advise upon whether or not further site investigations were required to verify the ground; the service had expressly been offered by RWC and it is a fair inference that RWC believed that it had the expertise to be able to advise whether such investigations were required; that needed some geotechnical expertise. Fourthly, it is clear from a number of e-mails particularly from Mr Bird that he had, or had access within RWC to, some geotechnical expertise because he refers to soil parameters and makes apparently intelligent remarks about matters geotechnical. Mr Bird himself was a chartered structural engineer and it may well be the case that he would not describe himself as having pure geotechnical expertise. RWC can be legitimately criticised for not providing, within its team for this depot project, engineers with sufficient geotechnical expertise.

Carillion’s contract with RWC required RWC to execute and complete the “Design”; that involved developing the outline proposals into a fully detailed scheme. In my judgement, this involved RWC retaining some contractual and professional responsibility even for the design of the soil nailing work. There is nothing in the Design Agreement, unlike in some professional services contracts, which excludes or limits the responsibility of RWC for any design work done by a specialist subcontractor, such as Phi; Clause 2(6) relates to assignment of the benefit of the Consultancy Agreement or in effect the subcontracting by RWC of part of the Design to someone else, neither of which is applicable here. At the very least, the exercise by RWC of reasonable care and skill would involve vetting and checking the design of the soil nailing work design by Phi. Added to this is the fact that, by agreement and by way of variation, RWC was appointed the Lead Consultant which involved necessarily RWC taking a close interest in Phi’s design. It was simply not open to RWC contractually in some way to “wash its hands” of the Phi design.

Turning to the pleaded complaints of breaches of duty against RWC, these were split into three segments which addressed the initial Phi design and the January 2005 and October 2005 slips. In relation to the Phi initial design stage, the first two complaints involved assertions that RWC on an ongoing basis failed to advise Carillion on the need for further site investigation works to verify the ground. These breaches were admitted by RWC in Exhibit 7. The next two complaints, which were not admitted, were that RWC failed to consider whether or not Carillion should be advised on the necessity for a further desk study on the ground conditions, and also failed to advise on the need for such a further desk study. In my judgement, this complaint was made out. It was part of RWC’s obligation to advise on the need for further site investigations. Almost invariably the first step in deciding upon whether and what further site investigation is required is a desk study; that involves looking at what site investigation information is available. The desk study that was available had been performed predominantly for environmental purposes and was plainly inadequate for geotechnical purposes. The fifth complaint was that RWC failed to create a geotechnical 3D model using the site survey date file provided to RWC (also referred to as a “Genio file”) of the slope, or failed to advise the Claimant on the need for such a model. I am not satisfied that this complaint was made out on the expert evidence, albeit that I do find that a further site investigation would have revealed all that was necessary to determine both the shallow and the deeper instability problems which existed at this site.

The sixth and eighth complaints are that RWC failed to recognise evidence of pre-existing slope movements in the topographical survey plans and sections that were available to RWC, this failure being an ongoing failure up to the date of the installation of the Phi Works being commenced and that RWC failed to recognise the significance of counterfort drains present on the site, and/or other physical evidence of previous instability issues with the slope. These breaches of duty are admitted by RWC in Exhibit 7. The evidence of such movements was the surface of the existing slopes down to the existing train track which demonstrated relatively recent surface instability as well as the historic use of counterfort drains, which would have suggested to competent and reasonably careful engineers with the contractual responsibilities of RWC that there was a real risk of instability. Given that this failure to recognise pre-existing movements was admitted, the breaches of duty covered by the third to fifth complaints add little more as they simply go to the fact of putting RWC on notice of pre-existing slope movements. It is agreed by the Engineering Experts that RWC should have been alerted to these anyway, in paragraphs 13 and 14 of the Joint Statement.

The seventh complaint is that RWC submitted the AIP or “Form A”, which should have included a reference to water pressures and/or should have specified what the design assumptions were (or should be) in respect of water pressure. This is in issue but remains more relevant to the contribution proceedings between Phi and RWC. That said, I am satisfied that, if RWC had advised on the need for further site investigations and recognised existing instabilities present at the site, this would have to have been and would in all probability have been passed on to Phi in one way or another.

The ninth complaint is pleaded as follows:

“RWC made the correct design assumptions for height of the water table and water pressure in its own design of the retaining wall for the Depot (and assumed it was about 4m above the toe of the slope). However, RWC failed to notice, or did notice but failed properly to consider the effect of, Phi’s unrealistic and negligent assumption in respect of water pressure and the value of ru in the Phi calculations.”

The second sentence is admitted as a breach of duty. However, it is not accepted, as such, that it was negligent of RWC not to use the same design assumption for water table and water pressure used by it in the design of the depot building retaining wall as was used by Phi for the soil nail work. This is immaterial because, as all engineering experts properly accepted, a ru value of 0.2 or 0.25 or more should have been used by Phi in any event.

The tenth complaint, which is admitted, is that, whilst RWC correctly challenged Phi upon the value of the soil strength parameters, ø and c’, chosen by Phi for use in its calculations for its initial design, it failed to notice, or did notice but failed properly to challenge and/or consider the effect upon Phi’s design of, Phi’s reduction in the value of rufollowing Phi’s reconsideration of the values for the said soil strength parameters. Carillion’s pleaded case was that the reduction by Phi of ru, to a figure of 0.05, was a reduction to an unreasonably low level which could not be justified on any grounds, and was a reduction which no reasonable and competent designer would have made in the circumstances. It was also pleaded that it was a reduction which rendered nugatory the change in soil strength parameters undertaken by Phi as a result of RWC’s challenge.

The eleventh complaint was pleaded as follows:

“RWC correctly considered in its own design for the retaining wall of the Depot that weathered London Clay was likely to be present at the site, and assessed in that design that there was likely to be weathered London Clay down to a depth of 2.5m below the surface. However, RWC failed to notice, or did notice but failed properly to challenge and/or consider the effect upon Phi’s design, that Phi had assumed that the presence of relic shear planes could be ignored. Relic shear planes are only found in weathered London Clay, and a specific difference in characteristics of weathered London Clay, and un-weathered London Clay, is the likely presence of relic shear planes in the former. The presence of relic shear planes would not have been ignored by a competent designer exercising reasonable skill and care.”

The second and third sentences are admitted as breaches of duty but, again, RWC does not accept the first sentence either as correct or as having any material impact. The evidence at the trial did not really focus on the first sentence and I am not satisfied that it is particularly material.

The twelfth complaint was that RWC failed to notice, or did notice but failed properly to challenge and/or consider the effect upon Phi’s design of, the lack of any front face stability calculations by Phi to justify its design assumptions. Although this remained in issue, it hardly stands as a separate complaint because if, as is admitted by RWC, RWC should have picked up that there were shallow and deep seated instabilities which needed to be addressed, it would follow that, if it had done so, it would have noticed that there were no relevant calculations put forward by Phi so far as front face stability was concerned.

The thirteenth complain, which is admitted, is that RWC failed to notice, or did notice but failed properly to consider the effect upon Phi’s design of, any or all of Phi’s errors in its calculations and design assumptions for Phi’s initial design.

The fourteenth pleaded breach of duty is that RWC failed in all the circumstances to carry out a thorough and adequate checking exercise and/or review of Phi’s design such that the design that was produced and implemented was a design produced competently and with reasonable skill and care such that the works would be fit for purpose for the duration of their design life. This was admitted as a breach in Exhibit 7 by RWC insofar as it goes to the complaint about “review” but no breach is admitted in respect of any “checking exercise”. Nothing now turns upon whether or not RWC had a checking as opposed to a review role in relation to Phi’s design because all the engineering experts accept that, even if the obligation was merely that of review, there were substantial and extensive breaches of duty on the part of RWC. There was a reluctance on the part of RWC to accept that there was a checking obligation, I suspect, because in engineering circles “checking” carries an implication of a more detailed analysis of calculations and the like than a mere "review". If it had been necessary to decide the issue, I would have formed the view on the basis of the contractual obligations that RWC’s responsibility in relation to Phi’s design work was to carry out a careful check, as opposed to a simple review, of Phi’s designs and calculations. However, it matters not.

The fifteenth, sixteenth and seventeenth complaints, relating to the period during the course of construction of the initial Phi works, were that RWC failed to take any, or any active or sufficient, interest in the events on site during the performance of the works as they were constructed, in order to check that the design assumptions that had been made were valid (including but not limited to, consideration of the slips that occurred in January 2005), that RWC failed to advise Carillion (and/or failed to direct Phi) that Phi’s design should be reviewed and revised in the light of all the circumstances pertaining to the slope that were known about following the slips in January 2005, including the physical evidence that relic shear planes were present (and which could be seen following those slips) and that RWC failed to challenge Phi concerning the effect upon its design, and/or failed properly to consider the significance, of the slips that occurred in January 2005. These complaints remained in issue. I have found that on the balance of probabilities RWC did know about the slips in January 2005 and it will follow that I am satisfied that as a matter of the exercise of reasonable care and skill by RWC the slips should have alerted RWC to the actual instabilities uncovered by the slips which occurred and to the need for a detailed review of the Phi design and calculations.

RWC was the lead consultant for this project and provided the detailed design for various elements of it, including the depot building, and also the trackside drainage (which was installed quite close to where the January 2005 slips occurred). It plainly had a duty to keep itself informed about what was occurring on site.

The combined views of Dr Love and Dr O’Riordan carry substantial weight. They are both highly respected geotechnical engineers and have between them over 60 years’ experience. By comparison, Mr Jessep is not so experienced and he himself accepted he would have to have “pretty sound” reasons for disagreeing with their collective view where the two other engineering experts agreed on something. Both Dr Love and Dr O’Riordan considered that:

“as part of their ongoing duty as a reviewer of Phi’s design, RWC ought to have taken an interest in what was going on site during their periodic site visits and, had they done so, would probably have discovered the slips for themselves since the retaining wall works at the depot and the soil nailing works were being carried out contemporaneously”.

I have no good reason to disagree with that expert view agreed by two responsible and respected experts. I have found that RWC probably knew about the slips in any event. Even if it did not (which is unlikely), RWC had a duty to have taken an interest in site occurrences and had it done so, it would have found out about the slips for itself.

The final two complaints of breach of duty relate to the period following the October 2005. These breaches are in issue. The allegations are that during this period RWC failed to challenge Phi, and/or failed properly to consider the effect, on the use by Phi of the very low ru value when checking and reviewing Phi’s design of the remedial works following the slips that occurred in October 2005 and that RWC failed to take account of, and/or failed to require Phi to take account of, the physical features and extra information available as a result both of the works during initial construction, and also of the slips that occurred during 2005.

It is clear, and I find, that RWC were made aware of the October 2005 slips and instability and from its own knowledge and again from being informed in late 2005 of the earlier January 2005 slips. It was made aware by the first Phi report that there was at least a strong probability that the cause of the October 2005 slips was “pre-existing planes” in the London Clay. RWC was told in December 2005 and again by reference in February 2006 what the likely remedial works were and how Phi was proceeding in that regard. If RWC had thought about it, and it probably did not, it would and should have been aware that the clay slope, at least at the Country end, was inherently unstable and at the very least it contained pre-existing slip surfaces. The reality is that at best, at least in December 2005, RWC’s approach was reactive; thereafter, apart from the email reply on 3 January 2006, it was not even reactive.

The work and the project were still proceeding when the October 2005 slip happened. RWC had undertaken responsibilities in respect of the whole Design. It was almost as if RWC was disinterested or fearful of becoming involved but it was in any event by agreement the Lead Consultant. It had a duty to become involved. At that stage, RWC should have been considering whether a further site investigation was required; it should have been visiting the site and interesting itself in the detail of what was being done and recommended. There is no plea of estoppel or the like made against Carillion by RWC which would in some way excuse or exculpate RWC from doing little or nothing during this post October 2005 period.

There is no doubt that the October 2005 slips represented a major and serious problem, substantially more so than the January 2005 slips. The ensuing evidence from Dr Love, which is logical and compelling, is that RWC should have reviewed the whole design and that, if it had done so with the care and competence to be expected of an engineer in RWC’s position, it would have uncovered the fact that there was, not only at the Country end but also at the London end, a deep-seated instability problem. In answer to questions from me on Day 7 of the trial, Dr Love made it clear that the deep-seated problem should have been picked up during the design review stage prior to the soil nailing works being commenced:

“Q…assuming...[RWC] had the involvement of the 4 January 2005. But in the light of the January 2005 October 2005 failures, if [RWC] were carefully reviewing the design at that stage, re-reviewing it?

A Yes.

Q. Should a competent careful person in RWC’s position have picked up the potential of the deep-seated problem?

A.

Yes they should have done, but I recognise that the failures that had occurred on site didn't suggest a deep-seated problem. Therefore, I think they would have had to have gone the extra mile to realise, you know, to reassess the deep-seated instability issues, even though they were not apparently causing a problem on site.”

It was the presence of water, more precisely the pore pressure represented by the nominal ru allowance in the calculations being used by Phi, which was one of two principal reasons why there was a deep-seated instability problem. The other reason was the inherent instability in the clay represented by the pre-existing failure planes (where the clay had historically slipped). That was represented in the Phi calculations by the use of what are called “peak soil parameters” as opposed to "critical soil parameters"; the latter would and should be in clay which is known to be unstable.

The fact that others, such as Phi, did not pick up the deep-seated instability which was and was likely to be present during the aftermath of the October 2005 slips is immaterial in considering the liability of RWC. The reality is that, as Dr Love himself accepted, all those involved in the aftermath in fact proceeded on the basis that there was only a problem in the upper and shallower layers of clay, probably because the failures seemed to have occurred in the upper layers.

In my judgement, therefore, RWC was in breach of its contractual duty of care in failing to involve itself more after the October 2005 slips, to review the original and fundamental basis of Phi’s design and to pick up even from the information with which it was provided in the December 2005 to February 2006 period that the same old errors of low ru values and inadequate soil parameters was being repeated.

In relation to Phi’s liability, it was broadly and properly accepted that Phi was liable to Carillion for failing to appreciate and to allow for both the shallow and deep-seated instability during the preconstruction stages as well as following the January and October 2005 slips. Again, the primary complaints which were justified and established as against Phi are that it allowed much too low a ru value and it failed to take into account the established or ascertainable instabilities in terms of shear planes.

My findings on liability are very substantially underpinned by all the engineering experts in their respective reports and as summarised in the various Joint Statements. For instance, in the first, dated 11 April 2010, between Dr Love (Carillion’s expert) and Dr O’Riordan (Phi’s expert), they agreed that there were deficiencies in Phi’s design, for instance that the ru value was too low and that Phi should have amended their original design during the construction, in particular in 2005 and again in 2006. In later joint statements involving Mr Jessep (RWC’s expert), all the experts accepted that RWC should have picked up the inadequate ru value being used by Phi and appreciated the possible presence of pre-existing shear surfaces.

Phi does not strongly or positively put forward any overriding causation defence and indeed through its Counsel expresses some very real scepticism about the causation defences mounted by RWC.

RWC argues that its breaches of duty did not cause the remedial costs incurred in 2006 or the future remedial costs, or, consequently, the Chiltern costs. In broad terms, RWC argues its causation points on a number of bases:

There is broad agreement that, so far as the law is concerned, to establish causation one needs to find what the effective or dominant cause of the loss or damage is and that ultimately the court applies common sense. I agree with the observation made in the Closing Submissions of RWC’s Counsel (Paragraph 66) that the "Courts have traditionally adopted a deliberately pragmatic and common sense approach and have sought to avoid metaphysical or logical niceties to assist a Defendant". They properly referred to cases such as Galoo v Bright Grahame Murray [1994] 1 WLR 1360, 1374-5, Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137 and Yorkshire Dale Steamship Co Ltd v Minister of War Transport [1942] AC 691, 698.

A helpful example in the construction world about breaks in the chain of causation was a fire case considered by the Court of Appeal, Six Continents Retail Ltd v Carford Catering Ltd [2003] EWCA Civ 1790. Six Continents Retail Ltd (“Six”) has employed Carford Catering Equipment Ltd (“Carford”) as project manager for the design and installation of kitchen catering equipment including a rotisserie. The rotisserie was supplied by R Bristoll Designs Ltd (“Bristoll”) and it was hung on wall brackets fixed to a timber stud wall faced with tiled plywood. After completion, Mr Bristoll was asked to return to deal with the rotisserie not generating sufficient distribution of heat; Mr Bristoll and an engineer lifted the rotisserie off the wall, modified the burners and tested the rotisserie. Three tiles on the wall behind the rotisserie had fallen and they were left in the kitchen. The two then lifted the rotisserie and put it back on the wall brackets. Mr Bristoll faxed a message to Carford saying that he had not replaced the tiles, and that he did not know whether the tiles have come away due to wall deflection or a heat effect; if it was heat he recommended a stainless steel sheet at the back of the unit to prevent a fire risk. Carford in turn on 21 January 1997 passed on to Six the fax saying "could you please advise us what action, if any, you wish us/the builders to take." There was no reply. The TCC Judge (HHJ Kirkham) found that heat from the rotisserie caused the fire, and heat had caused the tiles to become detached earlier. However, she held that, although there was a breach of contract on the part of Carford, Six’s failure to take steps following the letter of 21 January 1997 was the effective cause of the fire.

Lord Justice Laws stated:

“18.

A break in the chain of causation for the purpose of claims in contract and tort is commonly said to occur when an unforeseeable extraneous event occurs after the breach of contract or of duty so as to have the effect of preventing any loss from flowing from the breach. But a formulation of that type merely begs the question what will count as stopping loss from flowing. In Galoo v Bright Grahame Murray[1994] 1 WLR 1360, cited in the appellants' counsel's skeleton argument, Lord Justice Glidewell held, after citing learning from Australia, that the question how the court decides whether a proven breach of duty was the cause of the loss claimed or merely the occasion for the loss was to be answered by the application of the court's common sense (page 1375 A). But that would not appear to take us very far and, with respect, an appeal to common sense is sometimes apt to be little more than an alibi for want of principle.

19.

There is an underlying difficulty in the very concept of a break in the chain of causation. Whether there has or has not been such a break looks very much like a question of fact. Indeed in this very case Mr Sampson, for the respondents, has been at pains to submit that the judge's finding on the point, being a finding of fact, ought not to be interfered with by this court. But a finding as to a break in the chain of causation is not, or at least is not purely, a finding of fact because it is by no means value-free. The real question is whether on the proved or admitted facts the respondents should or should not be held responsible for the appellants' loss. If one looks at it that way one sweeps aside the metaphysics of causation.

20.

Such an approach is, it seems to me, commended by material in their Lordships' opinions in Fairchild[2003] 1 AC 32. In that case their Lordships' House was concerned with a personal injury action in which the claimants had suffered asbestos dust disease, and there were multiple defendants. I will cite two paragraphs from the opinion of Lord Bingham and from Lord Hoffmann. Lord Bingham said at paragraph 12:

"My noble and learned friend Lord Hoffmann has, on more than one occasion, discouraged a mechanical approach to the issue of causation. In EnvironmentAgency (formerly National Rivers Authority v Empress Kahn Co Ltd[1999] 2 AC 22 at 29, he said:

'The first point to emphasise is that common sense answers to questions of causation will differ according to the purpose for which the question is asked. Questions of causation often arise for the purpose of attributing responsibility to someone, for example, so as to blame him for something which has happened or to make him guilty of an offence or liable in damages. In such cases, the answer will depend upon the rule by which the responsibility is being attributed.'

More recently, in Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 and 5) [[2002] 2 AC 883, 1106] paragraph 128 he said:

'There is therefore no uniform causal requirement for liability in tort. Instead, there are varying causal requirements, depending upon the basis and purpose of liability. One cannot separate questions of liability from questions of causation. They are inextricably connected. One is never simply liable; one is always liable for something and the rules which determine what one is liable for are as much part of the substantive law as the rules which determine which acts give rise to liability."

Lord Bingham then proceeded to set out a passage from a judgment of mine which I hope I may be forgiven for repeating. His Lordship said:

"Laws LJ was reflecting this approach when he said in Rahman v Arearose Ltd[2001] QB 351 at 367-368 [paragraph 33]:

'So in all these cases the real question is, what is the damage for which the defendant under consideration should be held responsible. The nature of his duty (here, in the common law duty of care) is relevant; causation, certainly, will be relevant - but it will fall to be viewed, and in truth can only be understood, in light of the answer to the question: from what kind of harm was it the defendant's duty to guard the claimant? ..... Novus actus interveniens, the eggshell skull, and (in the case of multiple torts) the concept of concurrent tortfeasors are all no more and no less than tools or mechanisms which the law has developed to articulate in practice the extent of any liable defendant's responsibility for the loss and damage which the claimant has suffered.'

13 I do not therefore consider that the House is acting contrary to principle in reviewing the applicability of the conventional test of causation in cases such as the present. Indeed, it would seem to me contrary to principle to insist on application of a rule which appeared, if it did, to yield unfair results. And I think it salutary to bear in mind Lord Mansfield's aphorism in Blatch v Archer [1774] 1 Cowp 63 at 65, quoted with approval by the Supreme Court of Canada in Snell v Farrell (above) [[1990] 2 Supreme Court Reports 311/328]:

'It is certainly a maxim that all evidence is to be weighed according to proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.'"

Lord Hoffmann said at paragraphs 51 and 52 in the same case:

"51 First, in what sense is causation a question of fact? In order to describe something as a question of fact it is necessary to be able to identify the question. For example, whether someone was negligent or not is a question of fact. What is the question? Is it whether he failed to take reasonable care to avoid such damage as a reasonable man would have foreseen might result from his conduct. That question is formulated by the law. It is the law which says that failure to take reasonable care gives rise to liability. And the question is then answered by applying the standard of conduct prescribed by the law to the facts.

52 The same is true of causation. A question of fact is whether the causal requirements which the law lays down for that particular liability have been satisfied. But those requirements exist by virtue of rules of law. Before one can answer the question of fact, one must first formulate the question. This involves deciding what, in the circumstances of the particular case, the law's requirements are. Unless one pays attention to the need to determine this preliminary question, the proposition that causation is a question of fact may be misleading. It may suggest that one somehow knows instinctively what the question is or that the question is always the same. As we shall see, this is not the case. The causal requirements for liability often vary, sometimes quite subtly, from case to case. And since the causal requirements for liability are always a matter of law, these variations represent legal differences driven by the recognition that the just solution to different kinds of case may require different causal requirement rules."

21.

That a finding of a break in the chain of causation is an evaluative exercise, not merely a finding of fact simpliciter, is I think starkly illustrated in the present case when one calls to mind that the judge's factual finding on causation at paragraph 32, which I have set out, shows that as a matter of fact the respondents' breach of contract, essentially fixing the rotisserie too close to a combustible wall, was certainly instrumental as a cause of the fire.

22.

The true question here is whether the appellants' failure to respond to the letter of 21 January 1997 ought to absolve the respondents of what would plainly otherwise be their responsibility for the fire. For my part, I think it plain that the risk of a fire of this kind was, on the facts, well within the scope of outcomes which the respondents' contractual duties were intended to avoid. So much appears, I think, from the catalogue of obligations cited by the judge at paragraph 38 which I have set out. Accordingly, even if the letter of 31 January 1997 and the enclosed fax did constitute a warning of a risk of fire of the kind which occurred on 9 January 1997, a question to which I will come in a moment, it was a warning of an outcome which the respondents themselves should have prevented from happening. I find it very difficult to see how the giving of such a warning ought to transpose the burden of avoiding that very outcome from the respondents, who owed a duty in effect to prevent it, to the appellants who were the beneficiaries of that duty.

23.

But in any event I do not consider that the letter was a warning - certainly not a sufficient warning - that there was a risk of fire happening as this fire happened. The wording of the letter did not in terms amount to a warning at all. Indeed the expression "please advise us what action, if any, you wish us/the builders to take", suggesting that action was optional rather than necessary, is all but inconsistent with the notion of a warning; and the enclosed fax is, to say the least, indefinite as to fire risk. To constitute a proper warning the respondents must have drawn attention - in terms, or at least very plainly - to the fact that the unit was fixed directly on to a combustible surface; and that, as I have foreshadowed, would have been a warning of the respondents' own breach of contract.

24.

In my judgment for these reasons the judge below was wrong to find that the chain of causation as between the respondents' breach of contract and the fire was broken. Her errors were errors of principle, and so Mr Sampson, despite his energetic efforts this morning, can take no comfort as I see it from any suggestion that the judge was merely expressing a particular view of the facts.

25.

These same considerations really conclude, in the appellants' favour, a further question - whether the judge was right to hold that the respondents' duty in tort was discharged by the letter of 21 January 1997. That duty cannot have been discharged by notifying the appellants that a risk of fire had arisen from the respondents' own want of care.”

Lord Justice Buxton, agreeing with Laws LJ went on to say:

“29.

The judge did not direct herself in such terms with the result that she did not articulate the particular rule or question to which the causal issue was relevant. Had she approached the matter in that way she would have inevitably been referred back to her own reasons for finding breach of contract and breach of duty on the part of Carford, as set out in particular in paragraphs 43 and 47 of her judgment which my Lord has already mentioned. In the light of that conclusion - that Carford were in breach of their contractual obligations by not installing the rotisserie in accordance with the manufacturer's instructions - the issue before her was therefore in what circumstances, if any, would it be possible for a notification or warning by Carford of its own breach discharge its continuing liability for damage caused by that breach.

30.

For that to be achieved, any warning would as a matter of law have to be overwhelming and plainly effective before it could excuse Carford. Carford would in effect have had to make it its own business to ensure that the breach was nullified, and have been frustrated in that attempt by a lack of response by the building owner. The judge did not look at the question in that way. She seems to have assumed that the question was simply one of a breach of chain of causation looked at in general terms and that any warning that could be sufficiently described as such would suffice for that purpose.”

Returning to the facts of this case, RWC’s approach to causation ignores or effectively overlooks some key facts:

I put to Counsel during the trial the following example. A buys a new car from Garage B, with certain warranties as to fitness and merchantability; the car in fact contains two specific defects 1 and 2. The car goes wrong and A takes the car to another Garage C, who only picks up defect 1 which C tries to repair. The car appears to be satisfactory for a few months and it goes wrong again; A takes it to C but tells B about it. C again only addresses defect 1 and B does not challenge C’s approach. C then repairs the car again. Some months later defect 2 is discovered. In my judgement, B is liable to A in respect of defect 2 and can not readily raise a causation argument that the need to repair defect 2 was not caused by its initial breach of contract. There really is not much real difference between this example and what happened here.

Even if one looks simply mechanically at the factual linkage between on the one hand the deep-seated instability and the need to carry out currently extensive remedial works and the various breaches of duty which I have found both at the pre-and post-construction stages, a simple and common sense conclusion is that the breaches of duty caused the deep-seated instability and the need for extensive remedial works. This is because, if RWC had acted with the required care and skill at each of those various stages, the deep-seated instability would have been picked up and positively addressed in the permanent works that would have been provided. One can not readily, at least on the facts of this case, say that there has been any break in the causation chain because others, whether Phi, Carillion, Owen Williams, CLA or someone else might or even should have picked up or realised the existence of the problem of deep-seated instability. This is because as a matter of fact none of these others did actually pick up that problem. If one then moves on to the approach adumbrated by Lord Justice Laws in the Six Continents case, there is no obvious way that it can be said that RWC should not be held responsible. One can ask: why should RWC escape liability for its own breaches of duty simply because others might or even should have picked up on the problem which RWC’s own breaches of duty also failed to pick up? The answer must obviously be that it should not escape liability.

Dealing with the facts, other than those highlighted at Paragraph 142 above:

It follows from the above that I am satisfied and find that the deep-seated instability with which this Claim is concerned and the need for the related remedial works has been caused by the breaches of duty which I have found against RWC.

To some extent this part of the judgement overlaps with the preceding one relating to Causation. Essentially the complaints of contributory negligence have two strands, the first being that Carillion should itself have picked up that there were or might have been errors in Phi’s design and calculations and should have appreciated following the January and October 2005 slips that the deep-seated instability or factors relating to it had hitherto been missed. The second complaint is a miscellaneous category which involves Carillion supposedly failing to follow advice or act on specific information at various stages.

In my judgement, the first strand is simply unsustainable. Whilst it is true that there were a number of chartered civil engineers who worked on this depot project, it is clear that none of them in fact picked up on the deep-seated instability problem or the deficiencies in the calculations or design. There is no and no credible evidence however that anyone within Carillion was charged with checking up on RWC or the substance of Phi’s design or calculations. Dr Love raised the saying which has some if not an absolute resonance: why have a dog and bark yourself? Carillion employed Phi as specialist soil nailing contractors to carry out the detailed design and the installation of the soil nailing work; it employed RWC as its overall consulting engineer designer, its Lead Consultant and as its reviewer or checker of Phi’s designs and calculations. There is no suggestion that RWC and Carillion operated on some convention or understanding that Carillion’s personnel, even if they were chartered civil engineers, would vet the design, calculations or review process carried out by Phi and RWC respectively. The fact that a client of a professional consultant or contractor has some expertise which overlaps with that of its consultant or contractor does not mean, without more, that the client can or will be contributorily negligent if the client fails to notice at the time that its consultant or contractor has been negligent. This applies not only during the preconstruction stages in this case but also in the aftermath of the January and October 2005 slips.

I have addressed those of the complaints within the second strand earlier in this judgement. Obviously, there can be no criticism of Carillion for failing to bring to the attention of RWC the January 2005 slips because it did bring them to the attention of RWC. It is clear that notwithstanding this RWC neither made any contribution at that stage nor would, even if it had thought about it, have given any advice that would have actually uncovered the deep-seated instability problem.

There has been an extensive legal argument as to whether or not RWC is liable to indemnify Carillion against the future costs and losses to be incurred by Carillion arising out of an in connection with the extensive remedial works which will be required to put right the consequences of RWC’s breaches of duty. There is a substantial amount of learning about this topic. The argument in part stems from a pragmatic suggestion which I made, primarily to save time and cost, that, given the uncertainties said by RWC to exist as to whether Carillion would incur all the costs and losses which it says it will, a declaration to the effect that RWC, if found liable, was bound to indemnify Carillion against all costs and losses (not unreasonably incurred) flowing from (or caused by) its breaches of duty, would be sensible. Such an indemnity would avoid the possible injustice of the Court awarding damages for costs or losses which, albeit adjudged on the evidence available as probably to be incurred, turn out not to be incurred. The logic of this position was accepted by Carillion but vehemently opposed by RWC. It may be that the reason for this is that RWC’s team thought that it might be able to exploit the uncertainties as to the future to secure substantial reductions in the recoverable quantum. Be that as it may, it remains to the Court to consider the point.

The first argument put by RWC’s Counsel was that no declaration for indemnity had been pleaded. That is not a good point because the prayer to the Particulars of Claim specifically claims an "indemnity". Although no words of a declaration were spelt out, it was claimed as a remedy separate from the damages and the prayer is sufficient to put RWC on notice that Carillion were seeking to be indemnified against the future costs and losses.

A second argument (that the indemnity provisions do not operate when there is contributory negligence) as it turns out is simply not available in circumstances, as here, where there is no contributory negligence on the facts.

Clause 3(5) of the RWC contract contains the indemnity provision, which I have broken down into numbered segments:

“(1)

The Consultant shall indemnify the Contractor (2) against every liability which the Contractor may incur to any other person whatsoever and (3) against all claims, losses, demands, proceedings, damages, costs and expenses made against or incurred by the Contractor (4) by reason of any breach by the Consultant of this Consultancy Agreement…”

The primary argument advanced by RWC is that its obligation to indemnify has not yet arisen, apart from, arguably, the losses actually incurred to date, to which, pragmatically, there is no need for a separate indemnity because a damages award will allow for such losses in this category as have been proved.

References have been made to the well-known decision of Mr Justice Swanwick in County and District Properties Ltd v C Jenner & Son Ltd [1976] 2 Lloyd’s Rep 728 which addressed, albeit for limitation purposes, when the cause of action under an indemnity provision arose. He said at page 734:

“…that the general rule in cases of indemnity is that while equity will safeguard the position pending the ascertainment of the facts and extent of liability of the person to be indemnified, he has no cause of action until such ascertainment. There is thus a strong body of authority not only in favour of [the] proposition as to when the cause of action for an indemnity arises at common law as modified by equity but also to the effect that these rules…are universal."

However, as Mr Justice Neill, as he then was, said in Telfair Shipping Corp v Inersea Carriers [1985] 1 SLR 553, in relation to express indemnities, “the extent of the indemnity and the time at which the cause of action arises will depend on the construction of the contract.”. He also said that if "the indemnity is an indemnity against liability…the cause of action will come into existence when A incurred as a liability to B”. There has been judicially some debate as to whether an indemnity against liability only arises when that liability has been established or ascertained either in a general sense or a court judgement or possibly arbitration award. Reference was made to Mayor of London v Reeve and Company Ltd and another [2002] BLR 211 in which HHJ Hicks QC, dealing with an indemnity clause which was nowhere near as clear as the current one, formed the view that, although the matter was one of construction, the indemnity against liability ran from the time that there was a “realisation” of the liability. He formed the "impression…from the authorities as a whole [that there was] a general leaning in favour of the date of realisation".

In my view this debate is a somewhat arid one because on any account the cause of action for a contractual indemnity arises in effect and practice when the contract in question, properly construed, says that it does. In this case, the indemnity is “against every liability which the Contractor may incur to any other person whatsoever" (emphasis added). There can be no doubt on the findings of fact which I have made in this case that Carillion is liable to its own employer under the main contract; in the same way that RWC and Phi are liable to Carillion, so is Carillion liable to M40 Trains; for instance, the design and calculations are as careless under all three contracts. The liability of Carillion to M40 Trains is established and ascertained in these proceedings, even though, of legal necessity, this judgement will not amount to a res judicata as between Carillion and M40 Trains as the latter is not a party to these proceedings. That liability was incurred before the completion of the works in 2006 including the remedial works on the Country end and it is clearly established by now. Therefore, the entitlement of Carillion to be indemnified against the liability which it has incurred already to M40 Trains is established, even though it has not been established by proceedings or arbitration as between it and M40 Trains or “realised” in some other way.

The point made by RWC is better in relation to the second part of the indemnity, simply because in relation to the future costs and losses, on the facts, no claim, proceedings or demand as such have as yet been instituted or made by M40 Trains although it would have a right to do so and, in relation to the future costs, losses, damages and expenses, they have not yet been incurred. Therefore, the cause of action based on the second part of the indemnity has not yet arisen.

The real issue on this much debated point comes down to a question of judicial discretion as to whether or not it is appropriate to grant a declaration in effect that Carillion is entitled to be indemnified by RWC against its liability to M40 Trains and in effect to defer to another trial the quantification of damages following the execution of the remedial works, later this year or possibly next year. I have formed the view, with some reluctance but with confidence, that it would be inappropriate, having regard to the overriding objective in the CPR, to defer the ascertainment of future costs and losses when a substantial amount of effort and expenditure has already for this trial gone into the proving or disproving of Carillion’s damages claim. There is more than enough evidence to enable the Court at this stage to determine what the future losses will be on a balance of probability and there is no peculiar difficulty facing the Court which would make this exercise difficult or impossible. To return to the Court, in say 18 months time, would involve a very substantial amount of additional cost and a period of uncertainty for Carillion, who is the innocent party here.

It is an unfortunate and somewhat unusual feature of this TCC case, notwithstanding the deployment of numerous experts and experienced legal teams, that there has been little real agreement on quantum. There remain numerous quantum issues. There are however a number of important and overarching major issues which need to be addressed as a matter of principle and fact.

There is now common acceptance that the basic future remedial scheme proposed by Carillion is a reasonable one. This involves the removal of the existing slope coverings, the installation of a low-level sheet piled wall at the base of the slopes which will arrest and counteract any deep-seated movement, and the further installation of deeper based and more extensive soil nailing works. The engineering experts, and indeed the parties, now accept this. Accordingly, it will and should form the basis of the damages award in relation to remedial works.

However, the cost of those remedial works and the losses or costs to be incurred by Chiltern as a result of the execution of those remedial works is dependent upon a consideration of whether certain constraints imposed by Chiltern are legitimate ones. There are essentially two main constraints which Chiltern has made clear it does and will insist upon. The first is that working hours will be restricted out of concern for the neighbours, whose dwellings are within earshot. The second constraint relates to the need, as Chiltern see it, to limit the remedial works at the Country end to certain limited hours. This latter constraint arises out of the need for Chiltern to keep the depot open at least in part and arises in the following way. There are two railway lines that run through the depot building so that two trains can be serviced at any one time and the two tracks meet at the Country end and are connected by a set of points so that a train from track (“Road”) 3, nearest the slope which will have to be remedied, can transfer to Road 2 which then going north is together a combined line. The problem is that, if and to the extent that Chiltern need to keep the depot open at least for some train servicing work whilst the remedial works are going on, they have to limit working at and around the Roads 3 and 2 points at the Country end because the slope in that area and close to the points also has to be remedied. Whilst, away from the points back towards the depot building, remedial works can go ahead whilst Road 2 is in operation because it is far enough away, they can not go ahead in the area of the points when Road 2 is in operation because the points are too close to the slope and there is not room to do the work without impacting on the use of Road 2. The problem arises that because Chiltern want to use the depot during the days and the nights the only time when it can and is prepared to do without Road 2 is on Sundays. That then makes this area a programming “pinch point” which actually extends the remedial works programme by a substantial number of weeks.

This all gives rise to a number of related issues. First, could Chiltern not bring their trains in from the London end as it tends to do in any event and after servicing go out the way they came in, that is at the London end? A related point is whether the remedial works at the London end could be completed first to release the line adjacent to the slope being repaired. Secondly, if not, could the works at the Country end at and around the area of the Lines 1 and 2 points be expedited so that it is no longer a programming “pinch point”? These are important points because they impact on the length of the remedial works programme and that necessarily impacts on the quantum.

There are a large number of other issues relating to the remedial works which are not simply issues on quantification. They are:

Following on from the major programming related issues, there remains the largest single quantum issue which is the extent to which if at all Chiltern will incur costs of redeploying any trains which can not be serviced as a result of the remedial works (“The Chiltern Costs Issue”). This claim is for well over £3m.

The law on damages so far as is relevant in this case was summarised in AXA Insurance UK PLC v Cunningham Lindsey United Kingdom [2007] EWHC 3023 (TCC)

“256.

The essential object of an award of damages is to put the innocent claimant "in the same position as he would have been in if he had not sustained the wrong for which he is now getting compensation or reparation" (see Livingstone v Rawyards Coal Company (1880 5 App.Cas 25, 39).

257.

Damages for breach of contract "should be such as may fairly and reasonably be considered either (1) arising naturally, i.e. according to the usual course of things from such breach of contract itself, or (2) such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of a breach of it" (Hadley v Baxendale(1854) 9 Ex 341, 354). I am only concerned in this case with first limb of Hadley v Baxendale damages. None of the heads of loss in this case are challenged, properly or at all, on the grounds that they fall outside the first limb of Hadley v Baxendale. Whether the quantum and the requisite causation are proved, however, another matter.

258.

The question of reasonableness of the loss or damage claimed legitimately arises in a number of different ways. As confirmed in Hadley v Baxendale (in the words quoted above) it is necessary that the damages must "fairly and reasonably be considered" as arising from the breach. That reasonableness is itself an essential element in establishing damages was confirmed in the House of Lords case of Ruxley Electronics Ltd v Forsyth [1996] 1 AC 344. The judgments of their Lordships contain many references to the importance of reasonableness in selecting the appropriate measure of damages and determining the extent and measure of damages. For instance Lord Lloyd of Berwick says at page 368A and 370A:

"Once again one finds the court emphasising the central importance of reasonableness in selecting the appropriate measure of damages …

So I cannot accept that reasonableness is confined to the doctrine of mitigation. It has a wider impact …"

Thus, I conclude that it is generally incumbent upon an innocent claimant entitled to damages to demonstrate not only that the loss was within one of the Hadley v Baxendale limbs but also that it is reasonable to recover damages of the type and extent claimed.

259.

Reasonableness as a separate element is to be distinguished from the "duty" to mitigate. That is described in the well-known speech of Viscount Haldane LC inBritish Westinghouse Co v Underground Railway [1912] AC 673, 689:

"The fundamental basis is thus compensation for pecuniary loss naturally claimed from the breach; but this first principle is qualified by a second, which imposes on a claimant the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps."

The onus of establishing a failure to mitigate is upon the defendant. It is clear from numerous authorities that the duty to mitigate does not impose a heavy onus on a claimant. In almost every case, provided that the claimant can be shown not to have acted unreasonably in all the circumstances, to that extent it will not have failed to mitigate its loss.

260.

The duty to mitigate is, generally, not a contractual or statutory duty. For instance Pearson LJ in Darbishire v Warran[1963] 1 WLR 1067 properly said:

"It is important to appreciate the true nature of the so-called 'duty to mitigate the loss' or 'duty to minimise the damage'. The claimant is not under any contractual obligation to adopt the cheaper method: if he wishes to adopt the more expensive method, he is at liberty to do so and by doing so he commits no wrong against the defendant or anyone else. The true meaning is that the claimant is not entitled to charge the defendant by way of damages with any greater sum than that which he reasonably needs to expend for the purpose of making good the loss. In short, he is fully entitled to be as extravagant as he pleases but not at the expense of the defendant."

That dictum has some particular relevance here where, on any count, as it effectively accepts, AXA spent considerably more in resolving the problems at Orchard Farm than was necessary.

261.

The costs of and occasioned by reinstatement in a construction context are often, albeit not invariably, the proper measure of damages where there has been defective or negligence performance, particularly where the defaults have caused defects or deficiencies in building (East Ham Corpn v Bernard Sunley & Sons [1966] AC 406). However "where reinstatement is the appropriate basis for the assessment of damages, it must be both reasonable to reinstate and the amount awarded must be objectively fair as between the claimants and the defendants" (per Clarke LJ in the Maersk Colombo [2001] 2 Lloyd's Rep 275, 281).

262.

In considering reasonableness, both in the context of mitigation and reasonableness as a basis for establishing damages, the court will not be unsympathetic to the predicament in which an innocent claimant is put by the breaches of contract of the defendant. As Lord MacMillan said in Banco De Portugal v Waterlow & Sons Ltd [1932] AC 452 at page 506:

"Where the sufferer from a breach of contact finds himself in consequence of that breach placed in the position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the costs of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken."”

The broad propositions that can be distilled from these cases are:

In reviewing the whole question of quantum, I consider that it is important to take into account the following basic facts:

Before turning to the particular facts relevant to Chiltern and the constraints which it seeks to impose in relation to the remedial work and its programming, it is worth repeating that I was particularly impressed with the three Chiltern witnesses, Mr Harper, Ms Marjoribanks and Mr Coakley and that I was comparably unimpressed with the evidence of Mr Glasscock. This is important because my broad acceptance of what the Chiltern witnesses have said in evidence leads inevitably to the conclusion not only that the constraints which Chiltern seek to impose are logical, reasonable and supportable but also that it consequently cannot be considered to be unreasonable on the part of Carillion to seek to do the remedial works in a way which recognises the need to comply with those constraints. Indeed, it is wholly reasonable for Carillion to do so. Carillion has been put into a very difficult position, both commercially and legally, by the extensive breaches of contract of Phi and RWC because twice in the past Carillion, albeit attributable to the fault of Phi and RWC, has failed to put right underlying defects in the soil nailed walls. It would be commercially unacceptable for and unreasonable to expect Carillion not to wish to put right, finally, the problems with these walls. To do that, Carillion must cooperate with Chiltern, who operate and operate in the depot, and it is, within reason, bound in practice and reality to accept whatever constraints Chiltern wish to impose. Of course, there is a point beyond which it might be said that Chiltern’s constraints or requirements are so ridiculous and so grossly unreasonable that no person in Carillion’s position could properly or reasonably accept them; for instance, if Chiltern insisted on the use of platinum soil nails at the cost of £100m, it would not be reasonable for Carillion, vis-à-vis RWC, to accept that constraint. However, it can not begin to be said that Chiltern’s constraints fall within that type or category.

One must also bear in mind that Chiltern is not a party to these proceedings. Chiltern simply represents an organisation whose constraints effectively have to be complied with by Carillion if it wishes, as it reasonably does, itself to procure the putting right of the defects for which it, Phi and RWC are all responsible. Thus, the reasonableness of Chiltern in imposing programming constraints, save in the case of some ridiculous or grossly excessive requirements on its part, should not fall to be considered in the fixing of Carillion’s damages. Carillion has been put into serious breach of its contract with M40 Trains by reason of the serious breaches of contract on the part of RWC and Phi and its damages should not be reduced because the constraints give rise to a substantial loss over and above the loss which would have been incurred if no such constraints were imposed. In so far as it is at all relevant, it was and must have been reasonably foreseeable and well within the contemplation of the contractual parties in this case that extensive civil engineering remedial works involving the slopes would or could involve serious disruption to the depot operations.

Mr Harper and Ms Marjoribanks in their witness statements (which I accept in broad terms and save as qualified or explained in evidence by them) explained that there are essentially five Roads within the depot. Roads 3 and 2 run through the depot building and enable trains to be serviced, fuelled and repaired as necessary; they are closest to and parallel with the slopes which need to be repaired. Road 1 is parallel to Roads 3 and 2 and bypasses the building and connects to the other two some distance away from the building. It is vital that Road 1 is kept clear, although trains can stop on it for short periods. Roads 4 and 5 are at the London end and are used for stabling trains. There are single lines, known as the reception lines, which branch off and on to the down line (that is, going North and away from London), which then connect via a system of points to Roads 1, 2 and 3. The reception line at the London end goes through a carriage wash facility and most if not all trains are washed as they come in to the depot, albeit that trains can physically go through the carriage wash in the other direction if necessary.

Therefore, the depot is used for a variety of purposes. The trains are washed and then, in the building, attended to. This attendance includes hand-washing, particularly of the front end, internal cleaning, emptying of toilet tanks, safety checks, fuelling (diesel, oil and coolant), interior and under frame checks together with some repairs, major and minor maintenance and safety checks. In addition, there are stabling facilities which involve also shunting and berthing trains together with splitting and joining trains. Major repair and particularly major maintenance work is done at Chiltern’s Aylesbury depot.

Over the years in which the depot has been operated by Chiltern, it has always been operated in a northerly direction, which means that the trains come in from the London end, are washed, and then proceed into the depot building or on occasions along Road 1, the bypass, and then go out and join the main line again at the Country end. A few hundred metres beyond the Country exit, there is a place (the “Headshunt”) where the trains which have exited can cross the up line into a siding and then return to London. Almost all the train vehicles which Chiltern run have engines and driver cabs at either end and therefore the trains do not have to be turned round; the driver simply stops the train, gets out and walks to the other end of the train, gets in the cab at the back and drives off in the other direction. It is rightly accepted that for signalling reasons it is not practicable on any regular or frequent basis to access the depot from the northerly Country end.

Chiltern is unwilling to contemplate the operation of the depot during the remedial works on the basis that trains will come into and out of the depot and depot building at the London end. This is based on very real fears and concerns that, given the number of trains which need servicing, there would be serious disruption within the depot with trains awaiting servicing blocking those trains which, having been serviced, would then need to exit at the London end, together with a very real risk that the services on the main line which are not coming into the depot will also be disrupted as trains come out at the London end which will hold up trains coming out of London on the down line. For instance, in evidence Mr Harper said (Day 7 at page 8) that using only the London end "will result in diminished capacity on the depot, in any event, because trains will not be able to leave the depot via Road 3 in the normal northbound flow and they will require to leave via the South, and that will result in, potentially, conflicting moves, with trains coming on to the depot, potential for additional congestion, and we do not believe there is a significant advantage to this proposal". He went on later to say that using the London end only interfered with flexibility; it would not be practically viable. In my judgement, this is a wholly reasonable concern. There was also raised the possibility of trains coming in from the Country end but it is now, properly, accepted that for signalling (and possibly other) reasons this is not feasible.

The next constraint to consider is the working hours for the remedial works. Chiltern is content to allow working during the day but is not willing to permit the remedial works to go on at night. Their primary reason for this is its concern in relation to adjacent residents and what they perceive as the very real risk of actual complaints. The depot actually operates, as a depot, 24 hours a day throughout the week including at weekends and relations between Chiltern and their (human) neighbours have not been good with neighbours having been vociferous in their complaints, with complaints being addressed to officials of the local authority, Brent Council. Chiltern is not willing to exacerbate the situation by allowing weekend working and extended shift working on the proposed remedial works because the noise of the operations, together with the extra light pollution (caused by construction lights) will be more than insignificant. Chiltern has insisted therefore that Carillion’s remedial works are carried out during the week days during daylight hours and on Sundays restricted to the day time. No work is envisaged for Saturdays. A 10 hour day shift is planned for Monday to Friday as well as for Sunday, with the Sunday working to concentrate mostly on the pinch point area at the Country end.

It is certainly the case that, during the remedial works in 2006, night time and weekend working was carried out over five weekends in July and August 2006; the current proposed remedial works will last over many more weekends. However, the depot was not then fully in operation, although it was being used by Chiltern. The 2006 remedial works did not include sheet piling which is a particularly noisy operation. It must also be remembered that the works at the depot in 2006 were being carried on at the same time as the major construction works at Wembley Stadium, which was just over the rail tracks, and, at least, the perception of local residents would have been that the noise from the remedial works represented the lesser of the noise problems in the area. The Chiltern witnesses, including Mr Coakley and Ms Marjoribanks (who gave their evidence particularly impressively on this topic), made it clear, and I accept, that as an expanding business it wishes to maintain as good as possible relations with their neighbours. Chiltern has recently invested in equipment which reduces the sound from its operations. The domestic properties closest to where remedial work is to be done are no more than about 40 to 50 yards on plan, albeit that quite a few domestic properties are over 100 yards away.

I do not see how it can begin to be said that it is unreasonable for Chiltern to insist upon restricted working hours for the remedial works to limit any noise impact or nuisance on its domestic neighbours on the western side of the depot boundary. The suggestion that a 30 hour series of shifts be worked from early on Saturday morning to early on Monday morning is not tenable in the real world for sites such as in the location of the depot. The operations, not only of sheet piling but also of soil nail hole drilling and substantial shifting of materials and equipment, will be noisy and to suggest that this is acceptable at night and over the whole weekend in a residential area is simply unjustified. Belatedly, it was suggested that the residents should be invited to put up with noise at night in return for being provided with double glazing; however, there is no evidence either that the neighbours would accept this or that, particularly if the work was done other than during cold spells, residents would not want to have their windows open at night. This is a bad point.

There is an issue which is related to these two constraints and it concerns the location of the remedial works crane. Essentially, Carillion have planned the remedial works on the basis that most of the materials are brought to the site from the Wembley Stadium side over the access bridge and down the concrete track that runs from the bridge down towards the London end. The crane will be located about 200 yards away from the bridge and will unload materials down onto the track area from where they will be moved as necessary along the length of both the London and country end slopes to be repaired; some materials will be transferred from that point by open rail carriages. There has been put forward by RWC what has been called the "de-linking proposal"; this was predicated upon the basis that, if the London end was repaired first, the crane could be moved to the Country end which would leave Road 3 at the London end and within the depot available to trains to be serviced. The de-linking proposal however was dependent upon running the service trains southwards instead of the usual northerly direction. On that basis, as discussed above, Chiltern’s reluctance to permit this is a justified one. However, the moving of the crane also gives rise to certain practical difficulties. When materials lorries come over the access bridge, they can not in practice turn to the right, that is towards the Country end in any event because an electrical substation would block that. The suggestion therefore was made that the crane could be taken into the park-like open space, owned by Brent Council to the immediate West side of the depot; this space is mostly grass although there are some trees and bushes. Some sort of track way and materials storage area would be required on this land and the crane would then hoist the materials down to the trackside.

A meeting was held during the trial between representatives of RWC, Phi, Carillion and the Council (on 23 March 2011) in which Council representatives broadly indicated that from a “Parks” standpoint there would be no objection. However, there are justifiable objections to it. Firstly, there is a real risk that local residents might object not only to the intrusion into open space available to the public but also to the creation of noise from the craneage and materials movement operations, particularly given that it will be even closer to their properties than the works at track side. The fact that the "Parks" part of Brent has no objection does not mean that Brent Council will ultimately permit this to happen. Secondly, the slopes, particularly at the Country end, have been demonstrated historically to be unstable, having failed twice in 2005 and with movement continuing even thereafter. The placing of a crane together with quantities of what may be heavy materials on the top of an unstable slope could well be imprudent. If necessary, I would have found that it was positively not unreasonable to programme on the basis that the crane simply remained at the London end.

It is common ground (and in any event I find) that the programme produced by or on behalf of Carillion is a reasonable one, if the Chiltern constraints are valid, reasonable or not unreasonable. It follows that, because I consider and have found that those constraints are legitimate ones for Chiltern to impose, the programme produced is a proper and realistic one, albeit that there is no “float” or spare time within it if things do not go according to plan. Dr Aldridge’s numerous alternative programming options fall by the wayside once it is established that the Chiltern constraints are justifiable; it is unnecessary therefore to review those options any more.

I now turn to the individual costs issues referred to above.

This arises because, it is said, if Phi and RWC had acted with reasonable care during the design stage in 2004, that would have led to advice being given to the effect that deep-seated instability needed to be addressed as well and that would inevitably have cost Carillion significantly more than it actually did in any event. This is, perhaps wrongly, referred to as a betterment issue but in reality it involves working out what, if any, extra cost Carillion would have been put to if there had been no breaches of contract on the part of Phi and RWC. The factual history which I have set out above demonstrates that, although in the autumn of 2004 Phi was working to a letter of intent, there was no more formal contractual arrangement between it and Carillion until after the soil nailing works had been well and truly started. I am satisfied that on a balance of probabilities, and on the assumption that Phi or RWC had given the requisite advice in the late summer and autumn of 2004 that deep-seated instability needed to be addressed, Carillion for all practical purposes would commercially have had to stick with the basic idea of a soil nailed solution, albeit amplified and supported by additional measures to cope with the deep seated instability.

Mr Sowden puts forward two alternative points, the first being that in effect Phi’s sub-contract was such that it was bound contractually to provide sufficient soil nails to a sufficient depth to address the deep-seated instability problem. In my judgement, that is not a realistic point to put forward; if Phi was faced prior to entering into the sub-contract with the prospect of having to carry out about £400,000’s worth of work for which it had not then in fact tendered, it would have pulled out and taken the reasonable costs incurred to date pursuant to its rights under the letter of intent. It is further not a good point because it is clear that the tender was procured on the basis of the site investigation information then available which, at least on its face, did not identify the deep-seated instability and there would have been a good argument that, even under the sub-contract, additional payment was due. The second point made by Mr Sowden is that Carillion "would have seriously reconsidered whether to adopt soil nailing at all". I have no doubts that it would have done but the commercial imperative would have been such that the delay and disruption occasioned by going down a route different to soil nailing, and procuring it, would in all probability have led to adhering to the basic soil nailed solution albeit at an additional cost. There has in any event been no credible evidence that any alternative which complied with the main contract specification requirements would not have cost substantially more than the final sub-contract tender price.

It is therefore necessary to work out the credit which Carillion must give to reflect what it would have cost it in any event if there had been no negligence in the pre-construction phase. The quantum experts have agreed figures as figures. £425,000 is the figure for the basic additional work which would have involved a combination of additional work in relation to the permacrib wall, soil nailing, shotcreting works, reinforcement of labour and materials and soil nailed plates. I found Mr Ayers’ evidence on this item particularly logical and I accept it. He says in effect that, if shotcrete was used, there would have been no need to use a geo-textile facing membrane and so there would be a saving overall in that context of some £17,000. He also says that the otherwise agreed quantum is based on the end plates for these soil nails increasing in surface area as well as thickness; he says that it would not have been necessary to increase the thickness because the shotcrete, which would protect the plates from corrosion, would obviate the need for such additional thickness. Allowing for these two points, the credit which on the figures as figures basis is then agreed as £397,630.

The main parts of the remedial work are to be done by companies in the same group as Carillion; there has been no competitive tendering process and the group companies have simply put in prices for the remedial work. Although it has been put in different ways by the defending parties, it is primarily argued that the tendered costs should be reduced for the purposes of a damages award because they contain in effect a premium of between 10% and 15% which would effectively disappear if there was to be or had been a competitive tender. In logic the point must be put on one of two grounds, either that the true cost will probably turn out to be less than the quoted prices or that Carillion has failed or will fail to mitigate its loss if it does not put the various specialist works out to competitive tender. I can deal with the latter point simply on the facts. I am wholly satisfied that there will be no failure to mitigate for the following reasons:

However, the alternative way of putting the point carries some more weight. There is no and certainly no credible evidence that Carillion has negotiated hard with the group companies and the question therefore arises whether as a matter of probability Carillion will or will be able to secure some reduction from the group companies. I have formed the view that it will be able to do so for the following reasons:

Taking into account additionally the fact that there will be a risk or contingency allowance in the damages which this judgement awards, I am satisfied that there should be a 5% reduction in the ultimately claimed cost for the soil nailing and sheet piling work quoted for by the group companies. I have had regard to all the evidence of the quantum experts and have come to a 5% reduction on a best assessment basis.

My findings on the constraints in relation to the programme determine that the programmed periods for the works set out in the programme relied upon by Carillion in its revised quantum claim and in the pleaded programme are justified and established on the evidence. That programme, SNR2 rev A, shows a total duration of about 32 weeks, albeit that the time on site from establishing a site compound to completion of the site works is some 27 weeks. As indicated above, there is no float or spare time in this programme. The critical path is primarily through the work at the "pinch point” referred to earlier in this judgement which can only be done on Sundays due to the need to keep the depot running, open and operable on every other day of the week. The work at the Country and London ends runs broadly parallel to that work.

It follows from this that preliminary costs to support this programme are justified and allowable as damages.

As a matter of standard and burden of proof, Carillion, which claims over £500,000 as a contingency or risk sum, must prove in effect on the balance of probabilities that it will probably incur some additional costs over and above those which are specifically identified by way of the future costs. I have formed a clear view on the evidence that Carillion will in all probability incur costs in addition to those specifically identified, for the following reasons:

There is nothing wrong in principle for a court to award damages in respect of a contingency or risk provided that the court is satisfied on the balance of probabilities that there is a probability that the factors which are the subject matter of contingency or risk will happen. The problem then becomes one of assessment because, necessarily, the Court can not predict with certainty what the costs will be; all that the Court can do and say, as here, is that it is probable that factors will arise which are not the fault of the claimant (or here Carillion) and they will result in some additional cost. I have formed the view that a fair allowance for contingency risk is £350,000 which is about two thirds of the sum claimed.

Carillion claimed for overheads as a percentage 4.5% of the estimated construction costs but, in their Counsel’s final written submissions, that is reduced to 2.21% to reflect the fact that just over half of the overhead claim relates to the cost of tendering and bidding for future opportunities, which clearly has nothing to do with these remedial works. The real question, in my judgement, is: to what extent do the Head Office Overhead relate to these remedial works? It is likely that various head office facilities, including directors, office support staff, accountancy, safety support and other comparable heads of expenditure, will necessarily be applied to support the remedial works. The defending parties have raised a number of queries on this. Doing the best that I can, I have formed the view that a 2% allowance on construction costs would be a fair and reasonable allowance for the application and use of Head Office Overheads for this particular remedial works project.

This part of the claim relates to what the actual costs of and occasioned by the October 2005 slips and consequential remedial works were. There is about £100,000 difference between the quantum experts, with Mr Ayres supporting a figure of £552,428.35 and Messrs Hackett and Mr Taylor supporting the sum of £452,319.12. The only difference between the parties is in relation to Carillion’s salaries cost (£149,801.33 claimed, as against £49,692.10 accepted). There is no issue and rightly so that in principle that in-house management and similar costs reasonably and properly incurred by a company in connection with remedial works are otherwise recoverable damages; there is authorities for this in Bridge UK Com Ltd v Abbey Pynford Plc [2007] EWHC 728 (TCC) and R & V Versicherung AG v Risk Insurance and Reinsurance Solutions SA [2006] EWHC 42 (Comm).

The issue on the salaries cost is dependent on the view which I take in relation to the evidence upon which this is based. It was Mr Sowden who gave detailed evidence about his assessment on a monthly basis. He was the project manager and was intimately involved in the October 2005 slips, the investigations into it, the development of the remedial works proposals and the execution of the remedial works. He made an assessment of how much time was spent by each Carillion employee involved and has closely reviewed all relevant records which included labour allocation sheets as well as snagging sheets. Necessarily, this involved a consideration of what other work Carillion was doing at the time and made his allocations of time to reflect the extent to which the employees may have been working on other non-contentious work on or in connection with the depot works.

Initially, RWC admitted in its Defence the total quantum of about £600,000 pleaded by Carillion in relation to the historic remedial work costs including the staff salary costs. It was only during the trial that the Defendant applied, as it had to, to withdraw its admission, and, given the expert evidence of the defending parties which obviously sought to challenge the staff salary costs, I permitted RWC to withdraw the admission. However, the fact of the admission having been made and maintained for a very substantial period of time lends some support that the historic remedial works costs as claimed were broadly in the right area.

The percentage of time spent by Carillion’s staff on the Wembley LMD project was contemporaneously recorded in its “Mentor” payroll system, print-outs from which were produced by Mr Sowden. The Carillion evidence (from Mr Johnson) that this information was contemporaneous and accurate was unchallenged. Mr Sowden gave evidence that he made assessments of the percentages of time spent by Carillion employees and necessitated by the historical remedial works. He did this using his knowledge and experience as Project Manager for the depot project from the early days of it and his awareness of the work carried out by the individuals listed in the Mentor printouts. He reviewed Carillion’s contemporaneous records and looked at the amount of time that each individual spent on the Wembley project, and made an assessment of how much of that time, as a percentage, that individual spent each month in dealing with issues arising from the remedial works required. These records included contemporaneous correspondence, emails, labour allocation sheets, labour supply invoices and Carillion’s Snagging Lists, amongst other documents. He mainly concentrated on looking at what other work Carillion was doing at the time other than the tasks relating to the soil nailing remedial works, and he formed a view as to how much time those other tasks would have occupied the relevant individuals. He also considered how much time would have been reasonably involved in dealing with the remedial issues each month. He exercised his judgement in relation to the percentage of that percentage which was necessitated by the remedial works. This was basedon his own recollection of the work being carried out by them at the material time, supplemented by his analysis of the contemporaneous documents, and cross-checked against the other work that Carillion was carrying out at Wembley.

Although it has disclosed all the documentation relied upon by it to support its assessments in this regard, Carillion did not keep timesheets recording the time spent by its disrupted supervisors and support staff on the historic remedial works. This is not unusual or surprising. However, the absence of timesheets introduces an element of uncertainty into the exercise.

The exercise done by Mr Sowden in relation to staff costs spans the period November 2005 to November 2006. This is a legitimate period to consider because by November 2005 the October 2005 slips had become manifest and was being actively investigated and by November 2006 the remedial works had been completed but there remained some further monitoring and checking to be done. However, the fact of the matter is that other work was going on in relation to the depot unrelated to the slip remedial works.

The defending parties make a number of points in relation to Mr Sowden’s allocation exercise. They rely on Mr Taylor’s assessment which allows £1712.45 for November and December 2005, nothing in January to April 2006 inclusive, £43,392.86 from May to September 2006 inclusive and £4586.79 for October and November 2006. It is wholly unrealistic for nothing to be allowed for the first four months of April 2006 for the time spent by Carillion staff in extensive liaison with M40 Trains, Owen Williams, Laing Rail, Phi, its own consultants and others that during that period. However, that said, I am of the view that Mr Sowden’s allocations of staff, although honestly and conscientiously undertaken, do not take adequate account particularly in the November 2005 to April 2006 period of the fact that other works were going on. An example relied upon with some force by RWC and Phi is the allocation of Mr Kearns on a 100% basis to the slip problem and remedial works. He was a site engineer and, doubtless, he was involved in November 2005 when some checking of the walls was required and indeed some temporary remedial measures were taken. There is little or no direct evidence that he was or needed to have been involved on a 100% basis before about April 2006, albeit that I can see and accept that a significant part of his time can properly be allocated because he would have been needed to monitor and check the slopes and assist in discussions and preparation for the remedial works. Similarly I doubt if 100% of Mr Sowden’s time needed to be allocated to the slip problem, albeit that I accept that a high proportion of his time was spent; I do accept that during the actual remedial works period he was needed 100% of the time to assist in securing that the remedial works were properly carried out and administered. A complaint is made that an office manager's time would not be required during the January to April 2006 period; I disagree as I can see that some time was likely to have been spent by the office manager during this period in connection with the extensive discussions in that period relating to the remedial works and the preparation for those works themselves..

A main argument deployed by Mr Taylor is that many of these staff costs would not have been avoided if the remedial works had not been required or, put another way, many of these staff costs would have been incurred in any event given the need to carry out the other remaining work. That, as a general point, is one that is not really related to the facts. The overwhelming evidence is that the large bulk of the works which needed to be done post October 2005 related to the Country end remedial works and, particularly after about March 2006, almost all the other work being of the snagging variety. The more appropriate challenge however to the allocation of these staff costs is as to whether the time allocated, assuming that it was incurred, was reasonable and necessary.

It falls to the Court therefore to make the best assessment that it can. Of the total staff costs in the period November 2005 to April 2006, most recently claimed as £54,351.71, I consider that a reasonable and fair allowance and allocation is £30,000 for this period. For the period May 2006 to October 2006, in which £87,241.31 is claimed, I assess a figure of £70,000. The November 2006 staff cost figure as claimed is £8,206.11, of which I consider that £6,000 is reasonable. Thus, a total of £106,000 will be allowed against staff costs in relation to the October 2005 slip and the subsequent remedial works and design period.

The design costs fall into six categories, of which three, the "Design Target Price", “Category 3 Design Check” and the future monitoring costs for the wall are agreed in the sums of £160,000, £6,800 and £17,500 respectively, as claimed by Carillion. That leaves three relatively minor items. The first and second relate to the cost of initial survey works and existing nail testing, both of which it is clear from the evidence (which I accept) have actually been carried out. The problem however is that virtually none of these costs are recorded in the documentary evidence and there is little explanation, either from factual or expert witnesses, how and by whom, in terms of personnel, consultants or subcontractors these services were provided. Apart from a sum of £4,130 in respect of certain plant provided in relation to the testing of the existing nails, which is supported, there is a very real possibility that some or all of the remainder of the costs are subsumed within other costs claimed elsewhere, such as within the designers’ bills. Therefore, save for the sum of £4,130 which is proved and indeed accepted by RWC and Phi, I am not satisfied that Carillion has proved its case on the balance of probabilities. Therefore only £4,130 will be allowed against these two items.

As for the remaining head of claim which is in issue, "Design Site Meetings and Queries”, this relates to future costs to be incurred by the designers, TPS. Given the nature of the works to be done, although they are substantially designed already (the costs for which are included within the £160,000 admitted in respect of TPS), it is only reasonable, in my judgement, to allow the future costs of the attendance of designers; it is probable that this further attendance will be provided as it is essential that the designers are involved as the work goes along not only to vet that their design assumptions are justified but also to deal with the likely problems which will emerge with these unstable slopes. A sum of £15,000 is claimed and this figure is not challenged on a figures as figures basis. However, the argument primarily seems to be that the cost of this is subsumed within TPS’ £160,000 figure. I am satisfied on the balance of probabilities that this is not the case and TPS’ £160,000 fee covers only their extensive design work to date and not for amendments of that design or reviewing and monitoring the design as it is executed. £ £15,000 seems to be an eminently reasonable allowance for such additional future design work.

There has been a major series of issues between the parties and the quantum experts relating to what are appropriate allowances for the preliminaries costs. On scores of items, there are differences between them which is unfortunate because I would have expected there to have been a much greater level of agreement between the experts.

I consider that it is right and proper in the circumstances of this case to approach the assessment of what the likely preliminary costs will be in relation to the future remedial works in the context of the nature of the work, the history relating to the need for remedial works and the logistical difficulties created by executing work in a depot which must continue to operate. The history I have summarised and set out above highlights a key factor which is that the future remedial works represent the third and what needs to be the final opportunity which Carillion has to take to put right the instabilities in the slopes. Carillion, reasonably, can not afford failure on the third time around, not least because such failure would damage its commercial standing and because it will have no further recourse against Phi and RWC. Clearly, there will have to be very close supervision, monitoring and management of the remedial works to secure success and reasonable expedition. There will have to be a flexibility and ability to deal with the probable albeit unforeseeable problems which will occur, such as further slips during the remedial works. There will have to be continuing and close liaison with Chiltern Rail in connection with the programming of works and there is a very real probability that, given the nature of the railway operation in the depot, there will be un-programmed changes to the daily train routine. Taking into account all these factors, I am satisfied not only that it is probable that a substantially enhanced level of preliminary resources will be utilised but also that it is wholly reasonable for Carillion to deploy them.

There was substantial disagreement as to what, in percentage terms, would be an appropriate level of preliminaries in relation to the basic cost of the work. I did not find this debate helpful because the preliminaries will cost what they will cost and, if that turns out to be a high, middling or low percentage, that is immaterial. In reality, I have formed the view that a relatively high level of preliminary costs are reasonably required to secure the new performance of what will be difficult, confined and restricted works on a problem site, where the ultimate user of the site, Chiltern, needs to use it whilst the works are going on. I accept Mr Ayer’s evidence to the effect that it is wholly reasonable to adopt the level of supervision and management put forward by Carillion. Even Mr Taylor accepted that a "safe level of supervision" was reasonably called for.

So far as supervision and management is concerned, I accept the evidence of the Carillion witnesses that the level of supervision identified in the revised quantum document attached to its Counsels’ written closings is at an appropriate level, save in two minor respects relating to the need for a commercial manager and senior buyer each for one day a week for 35 and 32 weeks respectively. In each case, I am satisfied that on a balance of probabilities all that is needed is one day per week for 20 weeks for each of these two people; this is because the bulk of the work in value terms will be done by Carillion or Carillion group companies and the remainder, comprising materials, plant and other more minor areas of work, can be readily procured and managed over 20 working days, equating to 4 weeks’ worth of time. Thus, the allowance for the commercial manager will be four weeks at a rate of £2,074, £8,296 in total and for the senior buyer the allowance should be for weeks at a rate of £1399, namely £5,596. As for the remainder of the supervision and management personnel, these are reasonable and proper allowances to make.

The largest single items are the Project Manager, Mr Sowden and the Works Manager. Mr Sowden, I am satisfied, with his experience generally and specifically over the past few years in relation to this project, will be required both before the works start, during the work and for a limited period after the work and on a full time basis; it is vital that this job is closely controlled and managed and a full-time project manager is essential, in my judgement. The Works Manager, similarly will be required for the whole period of the project on site from mobilisation to completion. It is not realistic to suggest that this is not necessary. Whilst there will of course be engineers also on the project, the Works Manager, together with the section foreman, will need to be responsible for the day-to-day running of the site and to manage labour and plant. Mr Taylor has wrongly interpreted Mr Sowden’s evidence as meaning that the works manager and section foreman are the same person. A design coordinator is required, in my view, given what has gone wrong in the past with both Phi and RWC and given the need to ensure that there is no room for doubt as to what is required to be provided. An office manager’s time of half a week for 32 weeks is reasonably and properly claimed. There will be numerous activities for an office manager to undertake on a project such as this, which is an inherently difficult one, in circumstances in which a close eye on efficiency will be required not only in the works actually physically undertaken not also in the administration of the project.

It is suggested by the defending parties that a section engineer and an engineer will not both be required for the whole period of the project. I disagree because works will need to be closely supervised from an engineering standpoint. Indeed, RWC accepts the need for both whilst even Phi accepts the need for two such engineers at least part of the time. It is said that two engineers will not be required on the Sunday working in the pinch point area; I disagree also because if two engineers are required during the week they are also required, reasonably, for the Sunday working.

As to the remainder of the preliminaries which comprise, attendant labour, plant and fuel welfare, miscellaneous plant and attendant labour plant and fuel, I accept Carillion’s evidence on this, interestingly, much of which is accepted if not by both then by one of the defending parties. An example is lighting towers, four of which are said to be required to run 112 weeks’ worth at a cost of £219.25 per week, leading to a total of £24,556. RWC accepts this figure whilst Phi argues that this should only be £18,417. The only example of items in this category where both defending parties challenge is the "cleaner/tea lady" for whom the whole 28 weeks is claimed at the rate of £520. I consider that it is wholly reasonable to have a person come to the site every weekday and Sunday to keep the site huttage clean and provide refreshments to the workers and other staff involved; it is very common on construction sites that this facility is provided and provided on site rather than run the risk that personnel will leave site to go and find cafes and the like, with time being lost. Accordingly, in relation to these items I am satisfied that these costs will probably be incurred and that it is reasonable to incur them for the periods given finally by Carillion.

There then follow certain miscellaneous costs. 1.25% on the construction cost was intended to be claimed is claimed for each of the small plant and tools on the one hand and consumables on the other. However in relation to each, although the probable construction costs run to a significant seven figure sum, only £5,250 is claimed which actually equates to something approaching 1/10 of 1.25%. In my judgement, the sums of £5,250 are not only eminently reasonable but also represent items which are required and which will in all probability cost substantially more. Therefore, both sums should be allowed. There are other "General Charges" claimed which in my judgement are wholly reasonable, proved and are likely to be incurred.

Finally, the cost of insurance is claimed in relation to Contractor All Risks insurance at a rate of 1.25% of the construction cost plus an allowance of 0.25% for excesses which as rates are agreed as reasonable. In relation to all other preliminaries, there is agreement between the experts, which I accept.

The Staff Costs Issues

This relates to a claim for £22,728 for staff costs to date in 2010. This is based on an assessment made by Mr Sowden of time spent by him, a Ms Hart (a quantity surveyor) and a Ms Wilsonham (an office manager). In his second witness statement dated 23 December 2010, he sets out in detail between paragraphs 34 and 48 how he has carried out this assessment. Based on that witness statement which I accept, I am wholly satisfied that this allocation exercise is a valid one and realistic in the circumstances prevailing in 2010 when Mr Sowden largely set up the basis upon which the remedial works were to be done and carried out extensive liaison with amongst others Chiltern Rail to facilitate the work. A quantity surveyor's time was required to address the procurement, for instance from the other group companies, as well as reviewing various subcontractor and professional services applications the payment; office managers time was required to collate and record costs being incurred in 2010. I accept the allocations of time and the costings. It is accepted by Phi and RWC that about half of this sum is due but that seems to be simply on the basis of some unjustifiable guesswork. Thus accordingly the full sum claimed, £22,728, is due under this head.

Carillion’s settlement with Phi in May 2010 involved the payment by Phi to Carillion of £3.8m, inclusive of costs and interest. It is rightly accepted that, in its claim against RWC, Carillion must give credit for such part of this as represents recovered damages. RWC and Phi argue that 100% of this sum represents the credit whilst Carillion asserts that the total figure less 100% of its costs fall to be deducted, the sum of £505,379 being the agreed figure on a figures as figures basis. There is an additional argument relating to interest and the benefit which Carillion has had from the use of the settlement money since May 2010.

The settlement agreement, as is often the case, identifies an overall figure which is inclusive of costs and interest; there is, as here, no order as to costs because there is no need for the costs judge to assess costs. In my view, the right test involves asking simply: how much of the settlement figure probably represents damages (as opposed to costs) which are to be awarded in the current case? The costs of pursuing Phi are not damages. The answer to the question is therefore that on a balance of probabilities the settlement included for the costs which Carillion undoubtedly incurred. Logic also suggests that probably all that was being allowed for within the settlement sum was an amount which would have been recovered on a standard assessment. There is no inference that, because at that stage about half of what was being claimed was recovered, the costs included only a proportion of the standard assessable costs; this is because at that stage liability was effectively and unconditionally being accepted by Phi and Phi had disclosed during the negotiation that it only had £3m insurance cover.

I must assess what proportion of Carillion’s costs of £505,379 of pursuing Phi would have been recovered on a standard assessment; the parties have left it to me based on experience to do this. Usually between two-thirds and three-quarters are recovered on a standard assessment although obviously this could be more or less. I doubt, given the overall size of the bill in relation to the stage of proceedings it would be more that than three-quarters. Doing the best that I can, I have formed the view that about 70% would have been recovered on a standard assessment and therefore the settlement sum less 30% rounded down to a net £350,000 is the credit for costs which Carillion must give in relation to the sum recovered from Phi. Therefore, the overall credit taking into account these costs is £3.8m less £350,000, namely £3,450,000, for sums recovered from Phi.

In principle, Carillion should give credit for the use which it has had since the date when it was paid the settlement sum up to the date of this judgement because it has had an advance payment which largely goes to future remedial works. This is because it has had the use of the money for some 13 months, albeit that some of the settlement money must relate to expenditure which has been incurred since 2005 to to the present day. The calculation has to take into account the fact that by the time of the settlement Carillion had already spent over £500,000 on remedial work costs and indeed started to incur some staff costs for the future remedial works and the settlement reflected that. The appropriate debitis agreed at £20,000.

There are two elements to this claim of £62,608, the first being a claim for £33,150 for costs to be incurred by TPS in carrying out an initial and final survey (£15,000) together with monthly monitoring (£13,750). Mr Sowden’s written evidence about this was fairly vestigial in that all he says in Paragraph 49 of his second witness statement is that he helped prepare or has reviewed the quantum pleading and believes that these costs will be incurred. The pleading (Trial Bundle 2 at page 130) simply says "an initial and final survey of the Track (£15,000) + monthly monitoring (£4400 setup + £2750/month X 5 months) has been allowed. Quote from TPS.” There is no written quotation as such. Nothing has been allowed by RWC or Phi. I am wholly satisfied that on the balance of probabilities that this work not only will be done but that it is reasonably necessary. The remedial works will be being done immediately by a rail track and indeed materials and plant will in all probability actually be placed on the rail track, Road 3. It will be necessary to carry out a before and after survey to satisfy Chiltern Rail that no material damage has been done by or during the course of the remedial works. It will also be important to monitor the track, both as to level as well as for any damage. It is difficult however, without a specific quotation or breakdown to have any confidence that the sum of £33,150 is realistic. It is clear however that some significant survey and monitoring work will be required and that it will cost a significant sum. Doing the best that I can, I consider that a reasonable and fair allowance is £15,000.

The second part of the claim (for £29,458.80) relates to the monthly maintenance of the track, involving minor levelling, together with final levelling works being carried out with a tamping machine at the conclusion of the remedial works. Phi’s expert accepted this sum as reasonable whilst Mr Hackett considered that £20,000 was appropriate. Dr O’ Riordan queried the need for tamping on the basis that it was probably not necessary. Obviously, if the remedial works operation was carried out with perfect care, the need for this work would still exist that be more limited. However, I bear in mind that rail wagons will be used to transport materials from the crane position at the London end down to the Country end and that it is inevitable that, given only reasonable care can be anticipated, some damage to the track will occur. I am therefore satisfied with the balance of probabilities this work will be necessary and therefore will be done but, in the absence of detailed costings, I accept Mr Hackett’s figure of £20,000 as a reasonable allowance.

Accordingly against these costs which as claimed total £62,608.80, I allow £35,000.

As set out above, the constraints imposed by Chiltern are reasonable and proper ones to be imposed in relation to the remedial works. It is essentially understood and agreed as between Chiltern or M40 Trains and Carillion that Carillion will pay for all reasonable costs incurred by Chiltern by reason of disruption to the depot operations. There is little or no alternative to Carillion to agree to this in principle because, if it does not, M40 could have the remedial works done by others, probably at greater cost and then in any event charge for the disruption to Chiltern’s rail operation. The findings above confirm that the programme period for the remedial works is a reasonable and realistic one, subject to the findings which I have made in relation to contingency and risk.

The problem facing Chiltern is created in effect by two factors. The first is that the impact of the remedial works, even as programmed, will be that a number of trains which would have been serviced at the Wembley depot will not and can not be serviced there whilst the remedial works are going on in effect because only half the depot's servicing and re-fuelling capacity will be available; therefore those trains will need to be serviced somewhere else. The evidence put forward by Mr Harper and Ms Marjoribanks, which I accept, is that Chiltern itself has absolutely no spare capacity elsewhere to service these trains. The second factor therefore is the need to service these trains elsewhere and the evidence, which I accept, is that there is only one viable and practical place to do so which is at the London Midland depot at Tyseley in the Birmingham area. There was some attempt to suggest that there might be some spare capacity at Chiltern’s Aylesbury depot in Buckinghamshire but I accept Mr Harper’s and Ms Marjoribanks’ clear and unequivocal evidence that that depot is already fully committed and utilised.

There is a particular language which is used in railway logistics, which is not readily known to the normal public. A diesel multiple unit or “DMU” is a multiple unit train consisting of multiple carriages powered by one or more on-board diesel engines. Chiltern operate DMUs which can utilise between two and six actual powered carriages as well as a number of (perhaps) more traditional locomotives hauling coaches behind. "Diagramming” or “re-diagramming” involves planning or programming of a given railway.

The main issues between the parties on the Chiltern costs involve firstly the number of DMUs, trains or carriages which will or need to be sent to Tyseley for servicing and re-fuelling as a result of the remedial works and secondly whether re-diagramming will reduce the numbers of trains likely directly to be affected.

In relation to the first issue, Mr Harper supported by Ms Marjoribanks unequivocally and convincingly stated that, based on current diagramming, 34 train units would be required to be serviced and re-fuelled at Tyseley. The key period to consider on any given day is the "peak period" of use for the depot and this relates broadly to the non-rush-hour period during the day. During the morning and evening rush-hours, Chiltern lays on a large number of additional trains to and from London in particular and to a lesser extent to Birmingham and those are the times when most of the trains are actually needed for passenger use, even though regular but much less numerous trains are run at other times during the day. Thus it makes sense for the servicing and refuelling of trains to take place at Wembley depot during the "peak period" which is approximately between about 8.15 am and 5.00 pm. Mr Harper said, and I accept, that normally there are 16 scheduled DMUs which arrive on weekdays at the Wembley depot and two further units formed of locomotive and coaches, totalling 18 units. Of these units, about 14 require refuelling and other maintenance within the peak period. In the ordinary course of events, assuming no remedial works, these would be dealt with in the depot building on both tracks, Roads 2 and 3. Each unit takes about one hour including shunting in and out. It is unrealistic, allowing for the usual exigencies of dealing with trains, to expect that more than seven trains can be dealt with during the peak period, even though that period is closer to nine hours; I accept the Chiltern witnesses’ evidence on this point.

It follows, he said logically, that if, as will be the case, Road 3 will be unavailable whilst the remedial works are being carried out, therefore half, about seven train units, will need to be fuelled and serviced elsewhere. As each unit comprises on average typically three vehicles, seven trains comprising three vehicles will then need to be relocated to Tyseley; thus 21 vehicles will be involved. In addition to this, he said that there are on average at least three unplanned or unscheduled additional arrivals on the depot each day which comprise units which need maintenance work due to breakdowns or additional fuel due to unplanned moves. Thus, an additional three trains or nine vehicles will also need to be relocated to Tyseley during the remedial works. This figure of three unplanned moves was agreed by Mr Glasscock in the experts’ Joint Statement but I have no hesitation in accepting the Chiltern evidence about three unplanned moves. He went back in evidence on that agreement in a wholly unconvincing way. In addition to this, Chiltern has recently required a new fleet of 8 Class “172” vehicles which will in all probability be in service well before the remedial works are commenced. The ramifications of this are, so Mr Harper said, that a further four vehicles would be displaced from using the Wembley depot for servicing and refuelling. The total of vehicles therefore which will need to be sent to Tyseley for refuelling and servicing will be 34 (21+9+4).

A number of points are made by RWC and Phi. The first is that there simply will not be time during the peak period to get the trains to and from Tyseley because, it is agreed, the average time to transfer the trains to and from Tyseley and get them serviced will on average be about five hours. This, it is suggested, demonstrates that it will simply not be possible to get 7 trains currently arriving between about 9 am and 5 pm at Wembley to and from Tyseley and back to London in time for the London rush hour traffic; this demonstrates, it is asserted, that Chiltern simply will not send the trains to Tyseley at all. The answer given emphatically by Mr Harper on several occasions in evidence was that these trains have to be serviced and fuelled somewhere, they would have been dealt with at Wembley, they can not be dealt with at Wembley due to the remedial works, there is no room elsewhere for them to be serviced other than at Tyseley and by one means or another 34 train vehicles will have to be and will be got to Tyseley and back in time. He suggests that this latter activity will have to be and can be done by way of re-diagramming. I accept his evidence.

Next, RWC and Phi suggest that what is called a “turnover” arrangement could be used at Tyseley. This would involve Chiltern keeping probably two spare 3 vehicle train units at Tyseley. The turnover would operate by re-diagramming operations so that working trains which came into Birmingham on the usual itinerary as part of the regular service would be sent the three or so miles to Tyseley to be serviced and refuelled; one of the spare trains would at the same time be sent back to Birmingham to perform the return journey as most and possibly all trains which go to Birmingham have a 40 minute “turnaround” time. The re-serviced train would then be available to replace the next train to Birmingham and so on. Superficially, this appears a possibly attractive option as it would avoid the extra cost of fuel and some train driver time going to Birmingham because the trains would be going there in any event. This falters however because the Chiltern witnesses said and I accept that they have no spare train capacity to make available two trains or even one spare train to operate this turnover arrangement. Asked whether Chiltern could not hire trains for this purpose, they accepted that this was possible but only at a cost of hundreds of thousands of pounds a month (about £800,000 per month as Mr Harper said in evidence). It is worthy of comment that the turnover idea did not emerge until the trial and found no real expression in Mr Glasscock’s reports.

A variant on this was floated in RWC’s Counsels’ closing which was that trains which are left at Birmingham overnight could be sent to Tyseley overnight to be serviced and, whilst there will be some extra costs associated with this such as overtime for drivers, one or two trains could be dealt with in this way. The problem with this is that it was not really addressed in evidence and there is no direct evidence that this would be practical or that Tyseley would have capacity and sufficient staff overnight to cope. If anything and this was not clearly (if at all) raised before Mr Harper gave evidence, this option could well be difficult because, as he said, London Midland do “a significant amount of work on their own trains overnight”; he also said that Tyseley depot can only accept trains during the off peak period in the daytime. I attach little weight to this option as it was not clearly supported by Mr Glasscock in his reports.

Another option put forward by RWC was the idea of sending trains which need servicing or refuelling to Wembley in the evenings or overnight from the Birmingham area or places such as Banbury. Again, this is superficially attractive because, although late night working might result in overtime payments to maintenance staff, at least Wembley would have the capacity outside its peak period. The Chiltern evidence was that most of its trains are out of London up country for the purpose of being in the right places for the impending rush hour commuter traffic to London from country stations in the early morning. Therefore, as this evidence goes on to indicate, this further option fatally ignores the fact that the trains are then out of place geographically if they come to Wembley in the evening or at night because Network Rail only exceptionally allows ordinary trains to be run on the network between midnight and about 5 a.m.; trains have to be available in, say, Banbury to bring commuters to London and, if they still are at Wembley at 5 a.m., they will not get to Banbury in time to pick up the early morning commuters. There is, I accept, the possibility (but no more) that re-diagramming might enable one or two DMUs to be treated in this way, if rush hour trains arrive at their destinations in sufficient time that (a) they are not needed again that evening, and (b) they can be got back to Wembley before about 8 or possibly 9 p.m. to be serviced and fuelled and returned to the place they need to be in for the following morning; this will attract extra labour cost (overtime for drivers and possibly staff at Wembley) and fuel.

I now come on to re-diagramming. All the evidence is that this will have to be done and that it will be done over a period of about six months before the remedial works are started, albeit as part of one of the bi-annual timetabling exercises undertaken by Chiltern. Unsurprisingly, it has not been done yet. There are however some basic facts which necessarily have to be taken into account such as:

In the light of these facts, I can not see in logic that there is some easy and simple way, by a new timetabling exercise, to reduce the need for the 34 vehicles to be serviced and refuelled at Tyseley. This was effectively echoed by the Chiltern witnesses, albeit none of them were train planners as such. The problem is that Mr Glasscock has not done the re-diagramming exercise either; this is said to have been because Chiltern did not hand over relevant documents but, as no effort was made by RWC to seek to secure by court order such documents from Chiltern as a non-party, that does not take the Court any further. I was particularly unimpressed with him as an expert in any event. The re-diagramming exercise will have a constraint which the current diagram does not have which is the need to get 34 vehicles which are currently dealt with at Wembley to Tyseley after the London morning rush hour and back in time for the evening rush hour; this is not going to help make matters very much easier. What I can see however is the possibility that re-diagramming could seek to secure that some passenger carrying trains or vehicles can be programmed to go to Birmingham at times when they can be sent on the three miles to Tyseley for servicing. A more likely alternative is that the passenger trains will still have to go to Birmingham and return to London as usual but they will have attached at the back the trains which need to be dealt with at Tyseley; these can then be de-coupled at Birmingham and then under their own power go to Tyseley leaving the train which brought them up to Birmingham free to return to London on its regular timetabled journey; of course this alternative does not go to reduce the quantum finally accepted as claimable by Carillion in relation to Chiltern’s costs.

The pleaded case is based on 32 vehicles being required to be taken to Tyseley. There has been no application as such on the part of Carillion to amend its case, although its final closing submissions base this part of its quantum claim on 34 vehicles. I am in any event not satisfied that on a balance of probabilities Chiltern will not by dint of effective re-diagramming be able to reduce the number of vehicles which will otherwise be required to be taken empty to Tyseley below 34. I am so satisfied however that there will in all probability be limited room for manoeuvre by Chiltern on this figure but, doing the best that I can, I have formed the view that at least 30 empty vehicles per weekday will have to be taken to Tyseley for servicing and refuelling. Therefore, the Chiltern Rail costs will need to be calculated on the basis of 30 vehicles as opposed to 32 or 34.

Much is made by RWC about Saturday displacements caused by the remedial works. However, no cost is specifically claimed as such directly for Saturdays as far as I can ascertain; this may be superficially because there are no remedial works currently programmed actually to be carried out on a Saturday and it might be argued that the depot could cope with its current train servicing and fuelling requirements simply by using Road 2 which is unaffected by the remedial works. However, Carillion’s quantum in relation to Chiltern costs is based on there being a weekly multiplier of six days as opposed to five weekdays. This is because there will in fact be disruption to the depot’s operations even on Saturdays and also on Sundays when there are sports or non-sports related events at Wembley Stadium . Of course, there will be remedial works being executed on Sundays at the pinch point at the Country end. In the case of Wembley Stadium, there is a new Wembley station no more than about a quarter of a mile from the depot and numerous trains are laid on for the thousands of fans and other visitors who will use trains to get to and from Wembley. Mr Harper said (and I accept) that there will be disruption at the depot on Saturdays whilst the remedial works are going on; although no remedial work are programmed to occur on Saturdays, only Road 2 is available throughout the remedial works on site; the peak hours are shorter on Saturdays and trains will need to be sent to Tyseley to be serviced and re-fuelled, which would not have otherwise have been necessary. Even Mr Glasscock accepted that there would be some disruption on Saturdays; in their Joint Statement he and Mr Mackintosh agreed that 15 vehicles would need such alternative arrangements. Although, unconvincingly, Mr Glasscock reduced this later to 9 vehicles needing alternative arrangements, he did accept that there would or could be such disruption. Mr Harper’s figure was half of the weekday moves; as I have found that 30 vehicles are proved for weekdays as requiring to be taken to and from Tyseley, it follows that I am satisfied that 15 vehicles will need such arrangements on each of the Saturdays during the remedial works programme on site. I also accept that there will be numerous additional occasions over weekends relating to the use of trains for Wembley events which will give rise to the need for trains to be taken to Tyseley. All in all, I am satisfied that a multiplier of six days’ worth of train vehicles being required to be dealt with at Tyseley is a reasonable and realistic estimate of the number of vehicles which need to be so dealt with on a weekly basis.

I should conclude this part of the judgement by reference to a number of other points which have been made at length by RWC in its lengthy closing submissions, which ran to 83 written pages, supplemented by oral representations. There was a wholesale attack on the credibility of Messrs Harper and Coakley and Ms Marjoribanks and a spirited promotion of Mr Glasscock. These positions are, unfortunately for RWC, largely undermined by the extremely favourable view I formed about the honesty, integrity and competence of the Chiltern witnesses and the unfavourable view which I formed of Mr Glasscock. The suggestion was made that Chiltern and its witnesses had prepared only rudimentary plans and that Carillion blandly and almost blindly accepted them. This is, simply, not made out on the evidence. It is clear that intelligent and honest consideration was given by Chiltern to the ramifications and consequences of the remedial works on its train operations. Wholly honestly, Chiltern witnesses made appropriate concessions on the Chiltern costs claim but, ultimately and with justification, they maintained that the likely costs would be at the levels and rates and for the items identified in Carillion’s Counsels’ closing submissions.

Much was made by RWC’s Counsel of the fact that Carillion did not call its railway expert, Mr Mackintosh and that the Court should draw some negative inference that everything that Mr Glasscock said was right. Initially, Carillion clearly did not want to call a railway expert at all; that was a justified position for it to take because it could rely upon the Chiltern evidence, because what Chiltern was calling for in terms of programming at the depot was not unreasonable and because it was obvious that substantial disruption was going to be caused in any event to its railway operations. By the time that it came to the stage in the case when the railway experts were to be called, the evidence of fact was completed and I have formed the view that it was a reasonable decision on the part of Carillion not to call its railway expert as his further evidence would have added little to what was in evidence already. Given that he and Mr Glasscock had produced joint experts’ statements and reports, that no suggestion has been made that Mr Mackintosh was dishonestly or unprofessionally advancing untenable views and that there was no great benefit in calling Mr Mackintosh, it would be wholly wrong to draw any negative inference, as suggested.

It has also been argued that, because no settlement or agreement has yet been made as between Chiltern and Carillion as to the amount of the costs to be paid to Chiltern and because there is no rush to do the remedial work, the Court can somehow award a relatively small sum to Carillion for Chiltern’s costs and that Chiltern will or may well accept whatever the Court allows. It is not for the Court to descend into the negotiating arena (assuming one existed as between Chiltern and Carillion) and to toss into that arena a figure which Chiltern might accept. In any event, Chiltern has given no indication that it will negotiate; it does not have to negotiate on a figure as such because the remedial works will only be done on the basis that Carillion agree to pay all costs reasonably incurred by Chiltern and the total can and will in all probability only be capable of finalisation at the conclusion of the remedial works.

There was then a suggestion that Carillion and Chiltern had held back relevant documentation which would or might have revealed matters which would or could undermine their respective positions. However, Carillion did produce documentation in its possession relating to its discussions and negotiations with Chiltern in connection with the remedial works and, apart from several orders made by the court in relation to disclosure, ultimately no further orders were sought by RWC or Phi. As for Chiltern, the Court is simply not in a position to draw any inference in relation to Chiltern’s documents; a number were in any event disclosed by Chiltern but no effort was made by RWC or Phi to seek by court order any third party disclosure from Chiltern; given the circumstances, it is not at all unlikely that the Court would have granted such an order. It is therefore wrong to suggest that Chiltern was in some nefarious way holding back documentation which might have undermined the evidence which its witnesses were giving.

Next, it was suggested that some of the evidence given by the Chiltern witnesses was opinion evidence which is said to be inadmissible. I do not see how the very large bulk of that evidence can even begin to be described as opinion evidence. It dealt with what actually happened at this depot and how in practice, given the constraints which Chiltern wished to impose, its operations would be disrupted. It is not opinion evidence for such witnesses to say that re-diagramming will not overcome the inescapable facts that a certain number of trains which can not be serviced and fuelled at Wembley will have to be dealt with elsewhere and that the only available place is Tyseley at a certain likely cost based on costs historically charged to them. It is somewhat “cheeky” of RWC to argue that answers elicited from Chiltern witnesses as a result of questions posed to them by its Counsel in cross-examination by which they were asked their opinions should be disregarded if the answers do not support RWC’s defence.

Be that as it may, in dealing with the particular points raised on this topic, the Chiltern evidence as to how many vehicles will require alternative arrangements each day if Road 3 is fully closed is not opinion evidence; the evidence was based on what happened in the past on weekdays at the depot. That evidence is the reasonable and realistic basis upon which, unsurprisingly, the Chiltern witnesses identified how many trains would in future be affected by the remedial works which will close Road 3. The Chiltern witnesses’ evidence that the trains will have to go back and forth to Tyseley is factual because their evidence that Chiltern has no capacity elsewhere leads inexorably to that conclusion. It was open and admissible for evidence to be given by Chiltern witnesses relating to other suggestions put to them in cross-examination relating to other supposedly feasible means of dealing with the closure of Road 3; for instance, asked why the extremely late suggestion that turnover arrangements could be adopted at Tyseley were not feasible, the Chiltern evidence was simply that Chiltern did not have the train capacity to accommodate turnover trains. Therefore, trains would have to be hired at very substantial cost. That is fact, not opinion, albeit relating to what might happen in the future. The Chiltern evidence about operating the depot by only using the London end was to the effect that Chiltern had always operated the depot in a northerly way and that it was unwilling to operate it as suggested is simply evidence of past conduct and the reasons for the current unwillingness are what they are.

The related argument was that it was not fair or possible for the Court to prefer the evidence of factual witnesses over the only expert evidence (on a given topic). All cases must depend on their own particular circumstances and a particular circumstance here is that Mr Glasscock was an unimpressive expert witness. As the onus of demonstrating a failure to mitigate was on RWC, most of the points relied upon by RWC in this context fall to the ground because most of them related to mitigation points which RWC has simply failed to establish.

A great deal of time and effort was applied by RWC’s Counsel to what Mr Harper said in a witness statement in response to Mr Glasscock’s report that Chiltern "is not going to take empty trains to Tyseley for servicing”. Ms Marjoribanks said that in effect either empty trains on their own or empty vehicles attached to passenger trains would go to Tyseley. She accepted that there might be vehicles attached to passenger trains which passengers may use but they would effectively be superfluous; this state of affairs would arise from the need to get such vehicles to Tyseley for servicing and re-fuelling. There are 156 DMU vehicles in the Chiltern fleet; if each unit on average comprises 3 vehicles, there are 32 trains and each train usually needs re-fuelling every second day. If almost all vehicles are needed at rush hour, it is at the peak times (for the Wembley depot operations) that the vehicles will need to be got to Tyseley and it is of course at that time that there are spare vehicles which are not needed. Mr Harper explained his witness statement about empty trains by supporting what Ms Marjoribanks said which was that vehicles will need to be taken to Tyseley which would not otherwise have gone to Tyseley and they will either be on their own or attached to other trains.

I am satisfied that Chiltern will incur the future costs which are set out in the finally amended schedule of Chiltern costs as attached to Carillion’s Counsels’ written closings, save that the costings should be assessed on the basis of 30 vehicles which will need to be taken to refuelled and serviced to Tyseley. For the avoidance of doubt, this is based on the agreed period of works on site and a weekly multiplier which allows for six days’ worth of disruption. Ms Marjoribanks was largely responsible for collating these costings and I am satisfied that these are realistic. Indeed, there was little and little effective challenge to the rates and prices on a figures as figures basis.

It will be helpful if I set out below a schedule of the sums due by way of damages to Carillion, it having been agreed that the parties will consider the quantum ramifications from the draft judgement findings, preferably agree them and fill in any initially blank figures:

I finally turn to what level of contribution there should be as between RWC and Phi. Both were and are liable to Carillion for 100% of Carillion’s loss and damage. The Civil Liability (Contribution) Act 1978 materially provides:

“1.

(1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).

(2)

A person shall be entitled to recover contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, provided that he was so liable immediately before he made or was ordered or agreed to make the payment in respect of which the contribution is sought…

(4)

A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established…E+W+N.I.

2 (1) Subject to subsection (3) below, in any proceedings for contribution under section 1 above the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage in question.

(2)

Subject to subsection (3) below, the court shall have power in any such proceedings to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity…”

The level of contribution must therefore be just and equitable having regard to the extent of that person’s responsibility for the damage in question.

There is a wealth of learning and authority on the issue of apportionment. The text books provide assistance. McGregor on Damages (18th Edition) at Paragraph 5-007 discusses apportionment between claimant and defendant under section 1(1) of the Law Reform (Contributory Negligence) Act 1945 and refers to the judgment of Denning LJ in Davies v Swan Motor Co [1949] 2 KB 291 which sets out that the exercise of the court’s discretion so as to be “just and equitable” “involves a consideration, not only of the causative potency of a particular factor, but also of its blameworthiness.”

Clerk & Lindsell on Torts (20th Edition) at Paragraph 4-28 provides that:

“Section 2(1) of the Civil Liability (Contribution) Act 1978 provides that the amount of the contribution recoverable from any person“shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage inquestion…There was some initial controversy as to the proper basis of apportionment but in Downs v Chappell Hobhouse LJ made clear that:

“…it is just and equitable to take into account both the seriousness of the respective parties’ faults and their causative relevance. A more serious fault having less causative impact on the plaintiff’s damage may represent an equivalent responsibility to a less serious fault which had a greater causative impact.”

The apportionment of damages is substantially a matter for the discretion of the trial judge and an appellate court will revise his award only in very exceptional circumstances.”

Keating on Construction Contracts (8th Edition) [8-013] discusses the Civil Liability (Contribution) Act 1978 and the issues in respect of “same damage”. The Editors then note:

“This Act…enables a just and equitable apportionment, including a complete indemnity, to be made. The tribunal is therefore required to take into account not only the respective “causative potency” of the parties’ acts and omissions towards causing the damage in question but also their relative “blameworthiness”, although the first factor will be the most important. Where the party claiming contribution has settled its liability it is still open to the party from whom contribution is sought to challenge the amount of such settlement as unreasonable and therefore not the basis on which the apportionment should be based [J Sainsbury v Broadway].”

Mitchell on The Law of Contribution and Reimbursement (2003) [10.22] states that:

“The courts have adopted a rule of thumb in construction cases that an architect or engineer charged with supervising a contractor should be responsible for the contractor’s poor workmanship to an extent which ranges from 20 per cent to 33 per cent, except where the supervisor had been exceptionally slapdash in the discharge of his duties, or where the contractor has a duty to warn of unsafe works.”

In a footnote to the text quoted above, the author notes that:

“As between negligent construction professionals, e g architects and

engineers, the apportionment of liability will obviously turn on therelative extent of their involvement and roles in the project.”

It is unnecessary to review all the authorities on which these books base their views but it is clear that the Court should take into account relative blameworthiness of the contributing parties and the “causative potency” of their respective acts and omissions. There is a slight danger in attaching too much weight to some Court of Appeal decisions because that Court reviews the apportionments made by the lower court and will not readily interfere with what the lower court has done; put another way, the appellate court in dismissing the appeal is accepting that the apportionment is within a range which is not obviously wrong.

In construction cases, the conventional approach in construction defects cases has been that one can fix the culpable builder with about 80% to two thirds and the culpable supervisor who has failed to pick up the defects between 20% and one third. The high point was McKenzie v Potts (1995) 50 Con. L.R. 40 in which two defendants were found in breach of statutory duty, the first being the builder who used inappropriate material and the second being the architect who failed to properly supervise the work. The architect argued that at the point at which he became involved in the project he was assured by the builder that the appropriate materials had been used and the architect relied upon that assurance, therefore his blameworthiness was less. HHJ Roberts (unreported) at first instance held that the apportionment should be 60/40 as between the builder and architect:

“I now have to consider, given that I have found each defendant to be in breach of statutory duty, the question of apportionment between them. The plaintiffs are entitled to Judgement in full against both defendants but as between each other, the question of responsibility has to be apportioned by this court. I bear in mind the test of culpability and causative potency that are relevant to this issue. As to the latter, it seems to me that there is nothing between the two defendants; each of their breaches was as causative of the problem as the other. However, when one looks at the question of culpability, it does seem to me that greater culpability is shown by the breach of duty of the builder. His breach, it seems to me, was one of commission rather than one of omission, which was the nature of the breach of duty, as I found it to be, by the architects. In those circumstances, having the opportunity directly when the work was proceeding to know what was going on, the first defendant should be held the more to blame. The proper apportionment seems to me, as between the two, is sixty per cent against the builder and forty per cent against the architects.”

In the Court of Appeal Russell LJ upheld the findings of the trial judge:

“I am satisfied that the learned judge applied the right tests. He considered

questions of causation and culpability. I have to say that in my view other judges may have taken a more sympathetic view of the degree of culpability on the part of the architects, but…I cannot interfere with the apportionment as made by the judge.”

The case of J Sainsbury v Broadway Malyan [1999] PNLR 286 concerned the negligent design of a supermarket fire compartment wall by the architect and the consulting engineers. The architect settled the initial claim with the supermarket, and claimed a contribution from the consulting engineer on the basis they failed to observe or draw attention to the unprotected steelwork. HHJ Humphrey Lloyd QC found that the consulting engineer was not under a duty to comment on fire protection. However, he went on to examine what, had he held that the consulting engineer was under such a duty the correct apportionment would be between it and the architect. Despite finding that, had the architect been alerted, it would have redesigned the compartment wall to correct the defects, the judge held that the architect’s responsibility would have been substantially greater than that of the consulting engineer, since the architect had overall responsibility for designing fire protection; their errors were elementary and fundamental; and responsibility for the consulting engineer’s failure to comment lay at least in part on the architect.

The judge held that the correct apportionment would have been 12.5% to the engineer (EGP) and 87.5% to the architect (BM):

“If EGP were liable its share of responsibility could not be regarded as minimal. Previous decisions on contribution have to be treated with caution as each case depends on its own facts. However it is not irrelevant that in Worlock v. Saws (1982) 22 B.L.R. 66 Robert Goff L.J. said that in cases where a building inspector had been negligent the “conventional approach” was then to attribute 75 per cent responsibility to the builder and 25 per cent to the local authority…In my judgment the role of EGP in relation to the design of the fire protection of the compartment wall ought not to be regarded as higher than that of a building inspector or clerk of works. EGP's negligence was essentially a failure to warn; it was required by BM to comment, not to redesign. However BM's failure to be specific, and its subsequent failures to pursue EGP for a reply, and above all, in 1991 to pick up the deficiency in the design in my view contributed as much as the original error.”

Therefore, the “poacher/gamekeeper” or the perpetrator/supervisor apportionment will often be in the 80-66.6% and 20-33% ranges respectively but where both contributors each have a responsibility towards their mutual client to have regard to the same dangers and difficulties that does not seem to suggest that there is a poacher/gamekeeper scenario.

The reality here is that each of RWC and Phi at all stages in the pre-construction stage and after the January 2005 and October 2005 slip periods totally failed to spot and pick up initially both the potential for shallow instability and at all material times deep-seated instability. In one sense these were “big picture” points to pick up and the liability findings reflect this. Although one could argue that the negligence was in the detail of the design produced by Phi, the deficiencies in the design were in essence fundamental misconceptions in the design approach. Each of Phi and RWC had a responsibility towards its client, Carillion, in effect to pick up the two types of instability and secure that they were guarded against in the design and installation. This case does not involve complaints about bad workmanship by Phi; Phi merely implemented a negligently drawn design at various stages.

It is necessary to review the facts in relation to the two parties and the contractual responsibilities of RWC and Phi. It would be wrong to describe RWC as simply having a checking or reviewing function. RWC was contractually appointed to design the whole of the works but was, by variation, also the Lead Consultant. RWC had a specific responsibility toadvise on the need for further site investigation, which Phi did not. This responsibility must in logic have entailed considering in detail the available site investigation reports as well as considering the information available at the site, including the known presence of counterfort drains and the visible signs of surface movement. In this context, RWC’s obligation was intended to precede design work by Phi and in effect to assist Phi to perform its obligations, which would otherwise have involved Phi in producing detailed designs which took into account the existing site investigation data.

Furthermore in its own design for the depot reinforced concrete retaining wall, RWC assumed a ground water level 5 metres higher than that shown in the URS Report. Thus it was that the detailed designs for the two elements of work (retaining wall and soil nailed walls) proceeded on materially different assumptions as to ground water levels and as Lead Consultant RWC, as opposed to Phi, should have been able to pick up the discrepancy. In fact the assumption made for the retaining wall was much closer to being right than the ru value used in the design of the soil nailed walls. RWC and Phi ought to have questioned the underlying basis of the design. RWC ought to have raised the more general point about the level of theground water assumed within the design, and the basis for that assumption in the site investigation data. Whilst Phi was responsible for initially selecting the ru value of 0.05, which was hopelessly low, RWC should have been able to review that selection against the site investigation data in the context of the likely instability indicated by the presence of counterfort drains in the area of the slope and the signs of surface movement.

RWC’s own expert accepted that if RWC “had adequately queried Phi’s design for the soil nailed slopes and as a result the design had been reviewed generally to adopt critical state soil parameters, an appropriate ru value and allow for pre-existing shear surfaces, then the failures of the soil nailed slopes from October 2005 would have been prevented. Had this been the case then the need for remedial works, including the works associated with Laing Rail relating to track possessions and the like, would not have arisen.” The same applies to Phi.

RWC cannot properly be regarded only either as a “design checker” or “design reviewer” only or as having the role of a gamekeeper. There are a number of reasons for this:

There can be no doubt however that Phi was equally responsible at the design stage as RWC. It for no prudent or good reason used a hopelessly low ru value and adopted soil parameters which were also low when coupled with the selected ru value.

The position is somewhat different in relation to the January and October 2005 slips. Whilst Phi was involved fully in addressing the problems and addressing them both in design and work terms, RWC’s role was subsidiary to that of Phi. For the January 2005 slip, RWC was aware but did nothing; however, RWC was not asked or apparently consciously expected to do anything about it, albeit that it should have reviewed the design assumptions. From October 2005 onwards, whilst again it should have been alerted to the underlying deficiencies in the design, RWC’s role was and was accepted by all concerned as being subsidiary to that of Phi; that role was reactive to what Phi produced and involved RWC being asked for comments.

Whilst I can see and accept that both Phi and RWC are equally responsible at the pre-construction stage, there is less “causative potency” and less “blameworthiness” at the later stages in relation to RWC when Phi, by its greater involvement, was more to blame than RWC.

It then falls to determine what apportionment should be made as between the two of them. The large part of the damages arises in relation to the deep seated instability which neither RWC nor Phi picked up at any stage. However, the losses associated with the post October 2005 slip work account for less than 10% of the damages awarded and those could have been avoided if Phi with its greater involvement at that stage had picked up the deep-seated problem. Against that the deep-seated instability should have been picked up by RWC at the pre- and post-construction stages also.

There are two specific matters which Phi apparently argue should materially influence the apportionment, its Counterclaim (against Carillion) for remedial work following the October 2005 slips and the treatment of interest on the sum (net of costs) of £3.45m paid by them pursuant to its settlement with Carillion. I do not consider however that these are sufficiently material matters to weigh significantly in the balance on the apportionment to be carried out. The Counterclaim, agreed on a figures as figures basis at £378,221.16, did not succeed and indeed was not and could not be pressed as against Carillion, because Phi was simply putting right something for which it was liable to Carillion. It is true that Phi took the financial burden for putting right the shallow-seated instabilities revealed by the October slips and RWC did not. However, it did so because it had a contractual responsibility to put right, and a liability for, notified defects. Its expenditure was in fact abortive in the sense that the remedial work did not put right the deep-seated instability and in effect the future remedial work will substantially remove and replace what Phi did in 2006. So far as the interest on the £3.45m paid out by Phi in 2010 is concerned, the amount, said to be £23,280.28 up to 15 April 2011, is in the context of an apportionment relating to over £6.7m is about one third of one percent, which is insignificant.

Phi argues alternatively in summary that Carillion declined to pay costs incurred by Phi carrying out of remedial work essentially relying on the failures as having been caused by Phi and that, as part of the Phi settlement in May 2010, Phi gave up the whole of its counterclaim, RWC not challenging the settlement as unreasonable in this (or in any other) respect. It goes on that the agreed quantum for the Counterclaim being £378,221.16, as things stand, the works by Phi, which were the subject of the Counterclaim have been wholly funded by Phi, and that the Court, having determined that there be apportionment of liability between RWC and Phi on the basis of 40% and 60% contributions, respectively (see below), it is inconsistent with the 40/60% conclusion of the Court on apportionment for Phi to fund (or forgo) 100% of its Counterclaim for work done and/or services rendered. It is said that the work done and/or services rendered by Phi in respect of the remedial works are plainly part of the overall ‘cost’ of the remedial works and that this ‘cost’ should be apportioned 40/60 in exactly the same way that damages are to be apportioned. In my view this argument is misplaced. I have taken into account in the apportionment the facts that Phi was mostly to blame in the post construction stage after the October 2005 slips and that it assumed, as it was bound to contractually, the responsibility for putting right the slip problem. The Counterclaim was worthless as a counterclaim because the work was simply and purportedly putting right defects for which Phi was contractually responsible and for which it took the contractual risk; there was therefore no entitlement to the sums counterclaimed. The argument falters at this point because it is only if Phi’s Counterclaim was a valid one that it can be taken forward. In the words of Section 1(1) of the 1978 Act, “any person liable [here RWC] in respect of any damage suffered by another person [here Carillion] may recover contribution from any other person liable in respect of the same damage [here Phi]”. Carillion has not suffered damage in respect of the cost to Phi of the 2006 works, the subject matter of its Counterclaim; it has not paid out and was not liable to do so.

Phi’s argument is illogical as well because it amounts to saying artificially that the gross damages awarded against RWC should in some way be deemed to include the unsupportable Counterclaim and, because Phi has paid it out itself, it should get credit (or some credit) for what it cost Phi to do the 2006 remedial works. The apportionment below takes into account the fact that Phi took the burden of the 2006 remedial works. I should add that, if the only default by Phi and RWC had been their negligence following the October 2005 slips, the apportionment would not have been 60:40; it would have been closer to 75-80%: 25-20%.

So far as interest is concerned, Mr Hughes QC argues that Phi do not wish to disturb the apportionment as such but his point, he argues, is concerned with the question of whether it is fair and reasonable for RWC to claim some of the benefit (ie, 40%) of the interest on a settlement sum paid wholly by Phi. It simply cannot be right, in Phi’s submission, that RWC should derive a benefit from the good sense and prudence of a fellow contract-breaker/tortfeasor in this way. He argues that the interest which has been achieved on the Phi settlement sum will be calculated by reference to the sums paid by Phi. Such sum will be deducted from the overall damages sum to be paid to Carillion, Carillion already having had the benefit of it. This is a relatively simple calculation, and is one which Phi should (alone) benefit from. It does not relate in any way to the apportionment between the parties, he continues, but rather it is a discrete point which relates only to Phi’s approach to the litigation, specifically its settlement with Carillion. I remain of the view that the interest on this is so small compared to the damages awarded that a micro-calculation of the sort contended for by Phi in this regard is not merited and that the apportionment which is supposed to be of a broad brush type takes these minimal adjustments into account. The interest argument is even more infinitesimal because the damages awarded have already deducted the agreed figure of £20,000 for this interest.

I have formed the view that the just and equitable apportionment is 60% to Phi and 40% to RWC to allow for their equal responsibility in the pre-construction stage, the relatively greater responsibility of Phi in the post-construction stages and all other matters advanced. This apportionment applies to the gross amount of damages which have been found, namely £6,700,863.93. Against that, Phi has effectively already paid to Carillion the sum of £3,450,000 as damages. Therefore, Phi’s 60% of the gross damages awarded is in the sum of £4,020,518.35; allowing the sum of £3,450,000 against this sum, Phi remains liable to pay the balance as between it and RWC, namely £570,518.36. It is of course open to Carillion to enforce this judgement in full against RWC and then the most that RWC can recover is that net balance, plus any proportionate allowance for interest.

Phi pressed in argument the proposition that it should have to pay by way of contribution only the sum which it had already paid by way of settlement as damages. Whilst the settlement was commercially sensible, it left the way open for RWC to seek a contribution as it has done. Phi took a gamble in one sense that its settlement figure would represent what its contribution would be. There is no authority which would suggest that as such a prior settlement by one party even if reasonable should determine what the ultimate apportionment based on the eventual award of damages should be.

There will be judgement for Carillion against RWC. Whilst RWC is wholly responsible to Carillion for the damages found in this judgement, as between it and Phi, RWC is 40% and Phi 60% responsible respectively.

I will hear the parties on questions of costs and interest. This judgement is necessarily a lengthy one and reflects the numerous issues of fact, liability and quantum raised by the parties. If any party considers that any material matter has not been addressed or if additional reasoning is required, it should identify those matters to the Court before the judgement is formally handed down. Following the submission to the parties of the draft judgement, quantum was largely agreed but the parties raised quantum matters also which the draft either had not dealt with or which I had misunderstood. I have now dealt with those latter matters particularly at Paragraphs 236, 245, 267, 268 and 269 above.