England and Wales High Court (Technology and Construction Court) Decisions

Between

Plaintiff

- and -

(a company registered in The Netherlands)

Defendant

Case number: 1997 ORB 659

2. Date of Judgment: 6 May 1999

3. Contract - Sub-contract for topsides of floating oil production unit - Preliminary issues as to programme, implied exclusion of right to damages by variations clause, voluntary acceleration and effect of bonus agreement for early completion.

5. The text of the judgment approved by His Honour Judge John Hicks QC is as follows:

Introduction

1. In or before 1995 Shell UK Ltd ("Shell") engaged a Swiss company called Single Buoy Moorings Inc ("SBM") to provide a floating production unit for the extraction and processing of crude oil from the North Sea. Although it was to work at a fixed location it was based on a ship's hull, had a ship's name ("The Anasuria"), is commonly referred to in the documents as a vessel or barge and was treated as having fore and aft ends and port and starboard sides. SBM procured the hull from a Japanese shipyard (Mitsubishi) and engaged the Defendant's predecessor, Stork Protech BV, to design, fabricate, construct, install and precommission the topside facilities. Nothing turns on the means by which the Defendant has succeeded to Stork Protech's rights and liabilities, and I shall refer to each simply as "Stork". Stork carried out the design itself and supplied certain materials but sub-contracted the remainder of its contract works to the Plaintiff, which I shall call "Amec".

2. The written sub-contract was not executed and dated until 17 August 1995 but it is common ground that it related back to and governed the parties' rights and duties as from a letter of intent dated 15 February 1995. The vessel arrived at the installation yard on 29 March 1996, mechanical completion was achieved on 12 July 1996 and the "sail away" date was 24 August 1996.

3. In these proceedings Amec claims adjustments of price or damages to a total of some £13.75M and Stork counterclaims liquidated damages, price reductions and repayment of overpayments to a total of some £2.85M. I need give no further details, since I am concerned only with the resolution of certain preliminary issues, as explained below.

4. By his Order for Directions dated 16 October 1998 Judge Humphrey Lloyd QC directed the trial of certain issues, expressed in general terms which I need not recite, since they were to be, and were, more precisely defined by agreement between counsel and since then have, again by agreement, been revised. Finally, the parties have come to agreed terms which dispose of some of those revised issues, leaving only those numbered 1, 3, 6 and 8 to be tried. There is also an agreed "position paper" which helpfully explains the background to those remaining issues. Since each largely turns on a discrete set of contractual provisions and is expressed in terms which presuppose some acquaintance with its contractual and factual setting it is best to set each out separately, after describing that setting and immediately before dealing with any disputed evidence and the submissions on that issue.

5. Since Stork was the designer, and the supplier of some of the materials and equipment, the progress of the work, and Amec's ability to meet the stringent time requirements of what Stork's Mr Hamelijnk described as a "very short" job - "I think a record in that time", depended on (among other things) Amec's receiving in due time from Stork the drawings and other information, materials and equipment which Stork was to supply. Many of Amec's claims are based on allegations that that did not happen. I am not concerned with the many factual disputes which no doubt arise in relation to those claims, but there is an issue before me as to how the "due time" referred to in the last sentence is to be ascertained.

6. The basic scheme of the contract in that regard is quite simple and not in dispute. There was in existence, and set out in a contract schedule, a "Protech Plan". This was a Stork document containing essentially four dates, together with some notes (in particular about the consequences of early or late arrival of the vessel) and a bar chart. The dates were:

6. Contract Award 15 February 1995

7. Vessel Arrival Installation Yard 15 March 1996

8. Mechanical Completion / Ready for

9. Pre Commissioning 31 May 1996

Sail away 31 July 1996.

7. In Section II of the contract Article 15.1, (a) to (c), then provided as follows:

15.1 Programme

(a) [Amec] shall be responsible at all times for scheduling, progress reporting, forecasting and independently controlling progress to achieve performance of the WORK in accordance with the PROTECH PLAN. [Amec] shall produce a detailed work plan providing for the performance and completion of the WORK in accordance with the PROTECH PLAN.

(b) [Amec] shall submit its detailed work plan and all the reports and forecasts, calculations and documents supporting the said plan to [Stork] for review. The detailed work plan shall become the PROGRAMME when it complies with the requirements of the CONTRACT and when acknowledged as such by [Stork].

(c) [Amec] shall use the PROGRAMME as the basis for progress reporting, scheduling, forecasting and controlling the performance of the WORK.

8. There is in Article 1.20 a definition of "PROGRAMME" as meaning the detailed work plan prepared by Amec "which [Stork] acknowledges as being the current detailed work plan that [Amec] shall utilise in the performance of the WORK". Stork is by Article 5.9 to supply to Amec the documents and information relating to design and construction specified in Section IV (scope of work) and by Article 6.1 to provide at its own cost to the site the items specified in Section VIII (materials, equipment, services and facilities). Article 1.1 of Section VII essentially duplicates Article 6.1 of Section II, but with the additional words: "in accordance with the PROGRAMME".

9. Although there is not, for documents and information relating to design and construction under Section IV, the same explicit obligation on Stork's part to comply with the Programme as for materials, equipment, services and facilities under Section VIII I have no doubt that on these contractual terms such an obligation existed, subject to Stork's submissions as to the effect of the questions and answers recorded at a "tender clarification meeting" on 7 February 1995. Nor did I understand Mr Gray to contend otherwise; his argument rested wholly on that meeting and on the incorporation of its minutes into the contract documents.

10. I take it that the general factual setting of this meeting (I do not recall its being explored to any significant extent in evidence) was the usual one that Amec, presumably among others, had tendered for this contract and was the favoured candidate for acceptance, subject to "clarification" (as the title of the meeting indicates) of outstanding queries. There was, however, a more specific background to the aspect of the meeting with which I am concerned. It was that Stork had expected to be able to issue all the design information on a single date, and that date had been specified in the tender documents and relied upon by Amec as the basis for its tender programme, whereas Shell had by the date of the meeting imposed changes which made it difficult or impossible as a practical matter for Stork to keep to that one date and had forced it to spread the dates out, some being later than the original. Stork was therefore in the position of wanting Amec to stand by its tender price while asking it to accept what were potentially more onerous programming conditions.

11. The relevant questions and answers were as follows:

54.2 Steel AFC packages ["approved for construction" drawings] .... are likely going to be issued on a module basis. Can Amec comply with this? Answer: AMEC confirm compliance to above providing continuity is achieved.

54.3 And how many weeks then in advance before the start of fabricating this steel for a module, should an AFC package for a module be made available? Answer: AMEC have cut steel within 10 days before start of fabrication, however, this greatly depends upon client approval of shopdrawings (if required). AMEC suggest a 3 week minimum cycle should be assumed.

54.4 .... Also the issue of AFC packages for piping are likely going to be issued on a phased basis. Can Amec comply with this? Answer: AMEC confirm compliance with the above.

54.5 And how many weeks then before starting the prefabrication of pipe-spools for a module or module inter-connecting pipe-spools, should individual piping packages be available? Answer: AMEC envisage a cycle of 3 weeks before starting prefabrication.

54.6 .... Can Amec also comply here ["for E & I"(electrical and instrumentation)] with a flexibility of having AFC packages in the yard on different dates? Answer: AMEC confirm compliance with the above.

54.7 How many weeks in advance for what typical activities in the proposal barchart should individual E & I AFC packages be available? Answer: AMEC request a 4 week lead in time prior to commencement of E & I packages.

12. Although the formal contract documents were not assembled and executed until much later it is, as I have said, common ground that they relate back to 15 February 1995. The minutes of the meeting of 7 February became Appendix II-4 to Section II (the Articles of Agreement) of the contract.

13. Following the issue of the letter of intent of 15 February 1995 Amec submitted for approval as the contract programme a revised work plan "P1" on 29 March 1995. It was admittedly defective, in that it still assumed the same single date as in the tender documents for the issue of design information, and was rejected by Stork on that and other grounds. On 4 May 1995 Amec submitted a further revision of the work plan, "P2". It did accommodate the abandonment of a single fixed date for the supply of design information, in that it specified phased dates for steelwork and E & I and an extended (albeit undifferentiated) period during which the pipework packages were to be issued.

14. On 16 May 1995 Stork wrote to Amec, in relation to P2, as follows:

subject: Shell PFU Project: Review planning Level 1, 2 & 3, issue rev. P2

Dear Mr O'Neill,

10. Following our review on the contents and presentation of the above referred plannings, we herewith agree with these plannings as a baseline for further execution of the project activities and accept the presentations for reporting.

11. In the future possibly one or more replanning exersizes [sic] might be required, resulting in a new baseline. However, this will be at a stage when the baseline appears to be no longer suitable for comparison with the actual situation, e.g. in case of majore [sic] changes or implementation of the requirements for the Precommissioning Programme.

15. On 23 May 1995 Amec issued a revision of P2, "Rev A", incorporating some information and modified release dates sent by Stork to Amec on 16 May and known as the "Shell Aberdeen Changes". It is common ground that the differences between P2 and Rev A are irrelevant to the issues before me and that Stork's letter of 16 May 1995, set out above, is to be understood as applying to Rev A.

16. That is the background to issue 1, which is expressed as follows:

(1) On a true construction of the sub-contract was [Stork] obliged to supply drawings, other design information, FIM ["free issue materials"] and FIE ["free issue equipment"], so as to enable [Amec] to proceed with the work in accordance with the Rev A programme?

(2) If the answer to (1) is Yes, in relation to the provision of design information for pipework was [Stork] obliged to provide that information:

(a) progressively for the modules between the two dates shown on Rev A;

(b) sequentially on a module by module basis in the sequence in which [Amec] proposed, according to Rev A, to carry out the erection of pipework for each module;

(c) in any event all drawings for each module would be supplied not later than three weeks prior to the date by which the Plaintiff proposed according to the programme, to commence pipework fabrication for that module?

(3) If the answer to (1) is No, whether [Stork] was obliged to provide the information in accordance with the terms of the tender clarification meeting, namely:

(a) in the case of drawings and design information for secondary and tertiary steel, on a modular basis three weeks prior to the start of fabrication;

(b) in the case of pipework, on a modular basis three weeks prior to the commencement of pre-fabrication of pipe stools;

(c) in the case of drawings and design information for E & I, four weeks prior to fabrication of the E & I packages.

(4) If the answer to (1) is No, whether [Stork] was obliged to provide the FIM:

(a) in accordance with Section VIII of the sub-contract; or

(b) by a date which would not unreasonably hinder or prevent [Amec's] progress.

17. Although Mr Gray on occasion referred to Amec's answers at the clarification meeting as "representations", as no doubt they were, nothing turns on their status as such; they were plainly incorporated into the contract and I am asked to construe the contract, not to award relief for misrepresentation by way of rescission or damages. It is answers 54.3, 54.5 and 54.7 which are crucial to issue 1(1) and I shall call them for brevity the "lead-time answers".

18. In my view to answer question 1(1) entails, first, construing the second sentence of Article 15.1(b) of Section II of the contract: "The detailed work plan shall become the PROGRAMME when it complies with the requirements of the CONTRACT and when acknowledged as such by [Stork]". Leaving aside for the moment the factual issues whether Rev A did comply with the requirements of the contract, incorporating as they did the lead-time answers, and whether it was "acknowledged as such" by Stork, the question of construction is whether the two conditions introduced by the words "when it complies ... " and "when acknowledged ... " operate in the same way and cumulatively, as Mr Gray contends, so that a work plan, even if approved and accepted as the programme by Stork and acted upon, has never become "the PROGRAMME" for contractual purposes if, ex post facto, it is held not to have "[complied] with the requirements of the contract".

19. I reject that construction, both (negatively) because it leads to unacceptable and unworkable consequences, which cannot have been intended by the parties, and (positively) because there is an alternative interpretation of the sentence which does no violence to the words, gives full contractual effect to both conditions and accords with the commercial realities of the context.

20. The first choice confronting anyone who advances Stork's construction is whether to conclude that the result of a non-compliant but approved work plan is that there is no contract programme at all or that there is one, differing from the approved plan. As I understand it Stork does not support the former conclusion and I agree that it is so unattractive that the Stork construction, if saddled with that consequence, is untenable. In such a complex, highly organised and tightly scheduled engineering project, to the successful undertaking of which an agreed and binding programme was essential, it can never have been contemplated by either party, nor can it be the case, that the outcome of the situation postulated is that work must proceed, but without any deadlines or critical path requirements for any specific step or process - only the overall dates in the Protech Plan for arrival of the hull and two stages of completion.

21. Stork therefore contends for the second conclusion, that there is a contract programme, but not the one approved. It is to be created, as I understand Mr Gray's exposition, by taking the dates for activities to be implemented by Amec (including the commencement of fabrication) from its approved work plan and replacing the dates there for the supply of drawings and information by Stork by ones exactly three (for steel and pipework) or four (for E & I) weeks before fabrication of the relevant package is due to begin. That understanding is confirmed by the terms of issue 1(3), which effectively embodies Stork's case in this regard.

22. The first difficulty with that formulation is that it falls foul of the very canon of construction by which Stork reaches this stage of its argument, namely that both conditions of Article 15.1(b) must concurrently be fulfilled. If, as it contends, a work plan becomes the contract programme only when it both "complies with the requirements ... " and has been "acknowledged as such ... " how can a work plan qualify which, ex hypothesi, is not the one so acknowledged but a departure from it, and which does not even have any documentary or other detectable existence? Sauce for the goose is sauce for the gander.

23. That is in truth a fatal flaw, but there are equally powerful objections of a more obviously practical nature. A programme of this kind is a formidable document. Rev A occupies some 223 closely packed and (to all appearances) photo-reduced pages in the trial bundles. It has to be available to, relied upon and operated by a substantial number of persons at varying levels of skill and responsibility in both organisations and with varying degrees of knowledge of how what they are doing fits into a wider picture. Stork's contention entails that every such person must be assumed to know (how?) of the existence, terms and effect of the lead-time answers, to be aware of the need to disregard the dates in the programme where inconsistent with those answers, despite its having been approved, and to be capable of adjusting such dates accordingly and acting on the adjusted timetable. That is not at all persuasive.

24. The second practical objection is that this contention disregards the realities of the process of negotiation by which the contractor's work plan is likely to be, as in this case it was, analysed by the employer, criticised and amended before it is finally accepted. The "contract requirements" to which Article 15.1(b) refers, whether or not they include such additional material as the lead-time answers, will in a contract of this size and complexity inevitably leave room for debate as to whether particular features of a work plan comply. Why are such debates not to be taken to be settled by the agreement of the programme? Even if a departure is not just debatable but clear, why should the parties not be free to vary the contract terms in that regard by incorporating that departure in the agreed programme? It is simply not commercially realistic to construe Article 15.1(b) in such a way that disputes of those kinds can be reopened after the programme has been settled. Moreover (combining this point with that in the previous paragraph) Stork's argument, if valid, goes not just to what should be the result of this or any litigation but to how the persons actually doing the work should have acted, and entails that they should have disregarded the programme actually agreed and operated the one which Stork now says should have been agreed. The implausibility of any such suggestion is self-evident.

25. Those are my "negative" reasons for rejecting Stork's construction. I turn to the task of explaining and justifying my "positive" assertion that there is a satisfactory alternative. I start from the agreed position, already stated in paragraphs 2 and 12 above, that the contract dated 17 August 1995 must by relation back be treated for all purposes as having been in existence and in force from 15 February 1995. It must therefore, in my view, wherever possible be construed on that basis. In relation to the present issue that could hardly be, and is not, contested by Stork, which relies on the relation back for the incorporation of the minutes of 7 February 1995. Nor is it, in truth, at all artificial in that regard, since the contractual effect of answers 54.2 to 54.7 was clearly very much in the parties' minds in the process of negotiating the programme.

26. In the factual and documentary context which I have described the two conditions in the second sentence of Article 15.1(b) of Section II perform different functions and at different stages. The words "when [the work plan] complies with the requirements of the CONTRACT" govern the situation pending acceptance of the work plan by Stork. They are indeed contractual and as such conferred and imposed on each party here rights and duties. As to enforcement, they certainly entitled Stork to reject a non-compliant work plan, as it did P1. Had there been an impasse through failure to agree one party or the other would have been in repudiatory breach of this condition - Amec by submitting a non-compliant work plan or Stork by refusing to accept a compliant one - and that breach would have sounded in damages. How far injunctive or declaratory relief would have been available to forestall such an event I need not decide; I see no objection in principle, but the very stringent timetable and the practicalities of resolving possibly intricate technical points of dispute would no doubt have affected the court's ability and willingness to grant such discretionary remedies in time to be of use.

27. Nor need I decide whether either party could have accepted the other's position "under protest", without prejudice to its right to claim damages for breach, since in the present case there was no such reservation. There are substantial arguments both ways. On the one hand repudiatory breaches ordinarily give the other party the election of accepting the repudiation or affirming the contract and many contracts proceed to completion with claims for damages for non-repudiatory breach outstanding. On the other hand it is arguable that the sentence as a whole, and the second condition in particular, are intended to produce finality in every case, Amec being bound by the work plan it has produced and Stork by an acknowledgment of it "as such" (that is as complying with the requirements of the contract).

28. In my view that gives full and realistic effect to the words "when [the work plan] complies with the contract", without running into the insuperable difficulties which, for the reasons given in paragraphs 22 to 24 above, face a construction which extends the temporal and operational scope of those words so as to nullify an unqualified acceptance by Stork of Amec's proposals. In my judgment the acceptance by the letter of 16 May 1995 was, indeed, for this purpose, unqualified. Although there was some faint attempt to suggest that the use of the word "baseline" in the first paragraph of that letter somehow made it only a provisional acceptance that is plainly not so. The ordinary and natural meaning to be derived from the word's sporting origin is that of a fixed criterion by reference to which a step can unequivocally be judged good or bad. It recurs twice in the second paragraph of the letter in a context which makes it clear that the "baseline" (that is the programme) can be changed only in specified and, in practice, quite limited circumstances. It is clear that unless and until so changed it is intended to be final and binding on both parties. There are no words in the letter to suggest that the work plan does not comply with the contractual requirements, whatever the effect of such words might have been.

29. The second condition in Article 15.1(b), "when acknowledged as such by Stork", takes over from the first at the moment of acknowledgment. That is in my view the clear implication of the words "as such", confirming and reinforcing as they do the reasons already rehearsed why the first condition should cease to be operative at that point except, possibly, to the extent that there is the right to reserve a claim to damages by an agreement "under protest", as discussed in paragraph 27 above. A work plan so acknowledged without any relevant qualification, as here, becomes the contractual programme, with the effects summarised in paragraphs 8 and 9 above.

30. Before drawing the discussion of this primary issue of construction to a conclusion I should interpose that what I have said about the temporal and operative relationships between the first and second conditions is directed to Stork's argument that the former operated to invalidate and override an inconsistent agreed programme. It is therefore applicable only to the extent that the programme is indeed complete and inconsistent with the prior contractual requirements relied upon. I do not intend to exclude the possibility of the continuing effect of such requirements where they supplement an incomplete programme with which they are compatible. That possibility remains to be considered if the question arises. Nor am I deciding, because it was not before me and it is not necessary to do so, that Rev A was in fact inconsistent with any specific contract requirements.

31. It follows from paragraphs 18 to 29 above in general and the last sentence of paragraph 29 in particular that I must, in principle, answer issue 1(1) in the affirmative. I say "in principle" because, for reasons which I shall explain, I believe that the words "so as to enable [Amec] to proceed with the work" should be omitted from the question, so that it reads:

(1) On a true construction of the sub-contract was [Stork] obliged to supply drawings, other design information, FIM ["free issue materials"] and FIE ["free issue equipment"] in accordance with the Rev A programme?

12. To the question as so framed I answer "Yes".

32. My reasons for the change of wording are twofold. In the first place the revised version follows more closely the provision which is explicit in Article 1.1 of Section VII and which I have found to be implicit in Article 5.9 of Section II (see paragraphs 8 and 9 above). Secondly, although it is common ground that there is no ambiguity as to the effect of an affirmative answer to the question in the case of all the other categories, there is a dispute (reflected in issue 1(2)) as to the consequences in the case of design information for pipework, and in my view issue 1(1), in its original form, ran the risk of begging some of the questions which have to be addressed at that stage.

33. I therefore turn to issue 1(2), the only remaining part of issue 1, since 1(3) and 1(4) arise only if 1(1) is answered in the negative. Issue 1(2) arises because Rev A gives no separate dates for the provision of design information for specific elements of pipework but simply, in the words of Mr White's opening statement, shows it as "a single general activity beginning on 1 May [1995] and ending in mid-September [1995]".

34. I have been somewhat puzzled by the terms of issue 1(2), which I have set out in paragraph 16 above, and the approach of the parties to it. In the context in which it arises, as described above, it might have been expected to set out their rival contentions, possibly with alternatives. In fact, as I understand it, the issue as framed reflects only Amec's case as pleaded, and in that pleading the word "and" appears before (c), so that (a), (b) and (c) are to be understood as all cumulative, without any alternatives, and unless the issue is simply answered "Yes" (which, for reasons to which I shall come, it manifestly cannot be) the question what other form the relevant obligation took is left completely open. Nor did I find that in this respect matters developed far in argument. Mr Gray did not, so far as I understood him, advance any positive case as to how Stork's obligations for the supply of pipework information were to be performed if he lost on issue 1(1). Mr White, although part of his oral opening and some of his questions in cross-examination flirted with alternative formulations, closed his case by standing pat on the ipsissima verba of his pleading and written opening.

35. I cannot suppose, however, that I shall do justice to this issue, or assist the parties or the trial judge, if I simply answer "No". I shall therefore do my best to arrive at a more constructive reply by examining the relevant documents against the factual background appearing from the evidence, in particular that explaining the nature of the working processes involved.

36. In view of my answer to issue 1(1) the starting point must be Rev A. The parts relevant to pipework are summarised in a diagram appended as "Attachment 2" to the second supplemental witness statement of Mr Bell, Amec's lead planning engineer. It shows six activities, each of the first five being represented by a single undifferentiated bar. The first, "Receive Piping Info", starts at the beginning of May 1995 and lasts for some 20 weeks. The second is "Prepare Shop Drawings", of the same length and starting about three weeks later. The third is "Approve Shop Drawings", also of the same length and starting some six weeks after the first. The fourth and fifth bars are apparently longer, lasting some 24 weeks each, but that may be simply because they span a Christmas/New Year break. The former, "Pipework Fabrication", begins about 14 weeks after the first bar and therefore ends about 18 weeks after it. The corresponding intervals for the latter, "Blast & Paint Pipework", are 16 and 20 weeks respectively.

37. The sixth activity, "Pipework Erection", is dealt with differently. Attachment 2 shows four short bars of about four working weeks each, identified by module numbers. The evidence was that these four modules were merely illustrative; the full programme gave such a bar for each of the 25 modules into which the topsides were divided. The four did, however, include the first and last in time, modules 4 and 19 respectively, the former beginning some 22 weeks after the start of the first activity and the latter finishing a similar period after its end. The modules were not in the same order for erection of pipework as for steelwork.

38. Of these activities the first and third, "Receive Pipe Info" and "Approve Shop Drawings" respectively, involved action by Stork and the remainder were Amec's responsibility.

39. I return to the question left open in paragraph 30 above as to the availability of the relevant "contract requirements", in the form of answers 54.4 and 54.5 in paragraph 11 above, to supplement (but not contradict) a programme which was incomplete in the sense, at least, of not giving specific dates for the supply of particular "packages" of pipework design information. I conclude that in principle they are available for that purpose. Nor did I understand either party to contend to the contrary. Stork was of course contending for an even stronger role for them and Amec's head (c) of issue 1(2) is plainly based on answer 54.5. Whether, in the event, those answers are of any assistance of course raises separate questions which must be addressed as they arise.

40. In order to attempt a positive formulation of Stork's obligations I must go into a little more factual detail, but I can at this stage clear the ground by giving my reasons for rejecting a straight "Yes" to issue 1(2) as framed. They are, quite simply, that head (c) of that issue requires, in respect of each module, knowledge of "the date by which [Amec] proposed according to the programme, to commence pipework fabrication for that module" (my emphasis). As is apparent from the description in paragraph 36 above the programme did not specify any dates by which Amec proposed to commence pipework fabrication for any particular module. Since issue 1(2) expressly requires that (c) be complied with "in any event" that is conclusive.

41. I return to the factual background. Each of the 25 "modules" referred to was a spatial division or compartment of the deck, not as I understand it surrounded by any physical barriers but demarcated in the drawings and housing some particular item or items of plant or equipment. It is common ground that the programme for steelwork was framed by reference to a sequence of modules. There is a question how far that was true of pipework, but much of the factual setting relevant to that question is either not in dispute or in my view clearly established.

42. One relevant fact is that by its nature pipework crosses module boundaries, and it may be convenient to design and fabricate it in "spools" which begin or end otherwise than at such boundaries. Another is that the modular approach, even if modified to take account of the last point, was not the only mode of classification of pipework for planning purposes. Mr Hammelijnck of Stork said that release of piping information was normally by what he called "systems", in this case the process system, the utility system and the safety (fire-fighting) system. Leaving aside for the moment the word "normally" and whether, as Mr Hammelijnck said, "phased" in question 54.4 meant "by systems", I accept that that was a known method of proceeding in this field. At a later stage Amec itself tried to change to a "materials" basis, according to the type of steel or other material employed. How that related to the "systems" approach was not clear to me and does not matter; the point is simply that proceeding by module was not to persons experienced in this field self-evidently the only appropriate way. A further relevant fact is that after fabrication in the workshop and painting in the paint shop the pipework, including spools spanning more than one module, was erected on the quayside. Then, "much later down the programme" in Mr Bell's words, it might have to be cut between modules and later rejoined as modules were installed on deck.

43. Against that background issue 1(2), as widened in accordance with paragraph 35 above, should in my view be approached by asking, first, whether some identifiable timetable for the supply of pipework design information can be derived from the relevant documents in their factual context. If so that resolves the issue. If not a second question arises: since both of the two critical activities (the supply of design information by Stork and the commencement of fabrication by Amec) are scheduled by lengthy, undifferentiated bars, which party is entitled to set the sequence and which must conform? I assume for that purpose, as is in my view plainly correct and not I think in dispute, that the "lead" party must in any event proceed in an orderly and continuous fashion.

44. If the second of those questions arises a final element in the factual setting will need to be examined. It concerns how far ahead either party would in practice need prior notice of the other's actions or requirements, or conversely how far the contract was workable if one party or the other was free to set its own sequence. If, as in matters other than pipework design (and even in that if the first question can be answered in the affirmative), the programme fixes the date for each step by each party no such enquiry is necessary or relevant, so I shall not embark upon it at this point but shall return to it if required.

45. The prime candidate for a positive answer to the first question is that for which I take it that Amec impliedly contends, failing the simple "Yes" to issue 1(2) as framed which I have rejected. It is that there is a timetable, to be derived from the dates prescribed for the erection of pipework by modules in Rev A. It is expressed in terms of sequence in head (b) of the issue. That does not lead directly to specific dates, but head (a) places the sequence within the relevant bar in Rev A and the word "progressively" is presumably intended to import a criterion of continuity and regular pace. More specifically it was, perhaps rather tentatively, suggested by Mr White that exact dates could be derived by working backwards from the module bars for erection, since their span exactly matches that for design information at a measurable interval (see paragraph 37 above).

46. Mr Gray, as I have said, did not propound a rival positive answer but a passage in Mr Hammelijnck's cross-examination, to which I have already briefly referred, might on one view provide one if accepted:

13. Q. At 54.4 you pose a question in relation to piping, and you say also, "The issue of AFC packages for piping are likely going to be issued on a phased basis. Can AMEC comply with this?" And again by that I take it you meant, "We intend to issue piping on a module by module basis?" A. No, sir, on a phased basis.

14. Q. On a phased basis? A. It has nothing to do with the module by module basis.

.....

15. Q. What phases, if any, had you got in your mind at that time? A. Phases in piping - releasing piping in the normal industry is by systems, big systems, the process systems, utility systems, fire-fighting systems.

16. JUDGE HICKS: Are those the three main systems, or are there more? A. My Lord, I have process, utility and safety, yes.

.....

17. MR. WHITE: You knew from tender programme 2 that the contractor intended to erect pipework on a module by module basis because there was a date for erection in tender programme 2? A. Yes, but that cannot be on a module by module basis.

18. Q. I just pose the first question: tender programme 2 showed an erection sequence for pipework. What I want to know, please, is what did you understand then by the answer that was given by AMEC, namely, "AMEC confirm compliance with the above"? What did you understand that to mean? A. For the release of the piping on a phased basis. I understood from it that they completely knew what we were talking about, and that we would release it on a system by system basis.

19. Q. Does that really make sense to you given the question and answer that was given to the question at 54.2? It does not make sense, does it? A. For me it makes sense, yes.

47. I do not consider that that provides the basis for a timetable of the kind required. In the first place Stork has not satisfied me on the balance of probabilities that there was any common understanding that "on a phased basis" meant "system by system" in the sense explained by Mr Hammelijnck. No such proposition had been put to Amec's witnesses. Secondly, question 54.4 must be read in conjunction with 54.5, which refers not to phases but to "pipe-spools for a module or module interconnecting pipe-spools". Thirdly, no sequence of systems was put or accepted, let alone specific dates; question and answer 54.4 were directed simply to establishing that Stork had freedom to act in the way proposed. Amec "confirmed compliance", but for the reasons given in paragraphs 18 to 29 above that did not itself specify a programme; its primary effect was to entitle Stork to require that Amec's work plan conformed before being obliged to accept it as the programme.

48. Although I therefore reject that evidence as the basis of a positive answer to the first question posed in paragraph 43 above it is of relevance to Amec's proposed answer. There is a significant change of vocabulary, I am sure not lost on Amec, between questions 54.2 and 54.3 about steel, which are framed exclusively by reference to modules, and 54.4 and 54.5 about pipework, with their references quoted above to "a phased basis" and "module interconnecting pipe-spools". For the reasons given in paragraphs 18 to 29 above that would not have overridden an unequivocal programme, accepted by Stork, for the supply of pipework design information by modules, but it is something properly to be taken into account if there is any lack of clarity in the programme in that respect.

49. I therefore turn to the question whether Amec's proposed answer, as described in paragraph 45 above, can be adopted. I accept that there being a general correspondence, at progressive intervals, between the periods allocated in the programme to the six activities described in paragraphs 36 and 37 above, and there being also a timed sequence of modules for erection, the last of the six, it is possible to construct a corresponding sequence for each of the other five. I accept also that for all I know that may have been a feasible and even sensible way of proceeding. The question, however, is not whether it was feasible or sensible but whether it was binding on the parties. I say "the parties" rather than "Stork" because if there was such a timetable it bound both Stork and Amec and it would have been just as much a breach for the latter to depart from it in performing one of its three activities as for the former to do so in relation to either of its two.

50. In my judgment there was no such binding sequence, timed or not. My primary reason is that this was Amec's work plan in which, having provided specified dates both for design information in other trades such as steelwork and for one other activity (erection) in this trade, it deliberately chose not to provide such dates for design information or other pre-erection activities concerned with pipework. That would be my conclusion on the documents alone, but it is reinforced when they are construed against the factual background which I have summarised, in which there is nothing to invalidate that conclusion and much to support it. There is certainly nothing in the work plan sufficiently clear or certain to contradict or override the answer to question 54.4.

51. I do not overlook the fact that in his witness statement Mr Bell gives the following evidence:

.... the blasting and painting of the paintwork had to be carried out in the same sequence in which the pipework was to be erected which in turn meant that the fabrication of pipework and the preceding general activities of approval, preparation of shop drawings and receiving AFC ["approved for construction"] isometrics also had to be carried our in the same sequence.

20. In the light of the factual background which I have described, of the almost immediately following passage set out in paragraph 54 below and of the consideration that if what Mr Bell says were correct the obvious course would have been to incorporate those sequences, with dates, in the work plan, I do not accept that evidence. Moreover, even if I were wrong in rejecting it, there would be no contractual consequence unless what Mr Bell says was not only the case but also the common understanding of both parties at the time the work plan was accepted. There was simply no evidence that it was.

52. It is therefore necessary to proceed to the second question posed in paragraph 43 above: which party was entitled to set the sequence? That being so the factual element of practicability identified in paragraph 44 becomes relevant. It has to be examined on the two alternative hypotheses that the "lead" is given either by Stork's delivery of design information or by Amec's commencement of fabrication; other lead activities are theoretically possible but it is clear to me that those were the only two which either party ever contemplated.

53. It is first necessary to be clear about the nature of the enquiry. It presupposes that there is no fixed timetable but that one party, A, will proceed in some orderly and continuous (but not preordained) manner to execute the lead activity between fixed start and finish dates. The question then is whether it is practicable for B to conform, and if so what notice does B need of what work packages it must carry out and when, if it is to be able to comply with its start and finish dates. So understood, it is clear that it is not illuminated by the apparently attractive analogy of answers 54.3, 54.5 and 54.7 at the tender clarification meeting. They presuppose fixed dates for the start of fabrication and state at what minimum period in advance (for example three weeks) Amec requires the design information. It does not at all follow that Amec could start fabrication three weeks after receiving the information if it came out of the blue, with no previous knowledge which package would arrive when. Still less can one infer that Stork could produce the design forthwith if told that in three weeks fabrication of a particular package would commence.

54. There was some evidence from Mr Bell relevant to this enquiry, if one is approaching it first on the basis that the supply of design information was the lead activity. In his written statement he says:

21. By the end of May 1995 Stork had told us in what sequence we were now to receive AFC information. The sequence itself was not the key issue for the purposes of the programme, it is continuity and the dates that information is received that are the key. If we received all the information within the bar for receiving information on a continuous basis, then that could be accommodated.

55. That was never qualified, withdrawn or challenged, and I accept it. I therefore find that it was practicable for Amec to conform to a sequence set by Stork's orderly and continuous issue of design information within the period allowed for that purpose by the relevant bar in Rev A.

56. Approaching the enquiry on the other basis, that the lead activity was Amec's commencement of fabrication, the question is whether it was practicable for Stork to conform, and since the issue of design information came first that resolves itself into the question how far in advance of fabrication Stork would have needed to know the sequence and dates of the fabrication packages in order to be able to produce the corresponding design packages within the allotted period.

57. On that question I am not aware of any relevant evidence of any significance. I am therefore unable to make any finding as to whether or on what conditions it would have been practicable for Stork to conform.

58. Taking into account that further aspect of the factual background as well as those earlier recorded I address the question which party was entitled to set the sequence. In my judgment Stork was. That, again, is a conclusion which I would reach on the documents alone; the work plan was Amec's, the provision of design information was the activity which came first in time, and there was no provision for the prior notice which Stork would have needed of Amec's fabrication sequence if that were the lead activity. (That some such notice would have been needed is obvious, and that it would have required contractual regulation is a separate point from the factual enquiry considered in paragraphs 56 and 57 above.)

59. That conclusion is reinforced when the documents are construed in their factual setting, and in particular that explored in paragraphs 53 to 57 above.

60. That completes my consideration of issue 1(2). The parties should in advance of the appointment for the handing down of this judgment lodge agreed or separate submissions as to the terms of the formal answer to the issue which should be entered in order to give effect to my conclusions.

61. As I understand it I am required by the formulation of the revised issues and by the parties' agreed approach to the hearing before me not to take into account any variations or further agreements which may have come into effect after the acceptance of Rev A, in particular the matters alleged in paragraph 56 of the Defence, which remain to be dealt with at some other hearing if still pursued. That stipulation does not cause me any difficulty.

62. I am also told in Mr White's written opening that paragraphs 22 to 26 of the Defence are not for determination at this hearing. I find that more problematic. The second sentence of paragraph 22 reads: "[Rev A] was approved by Stork only insofar as it demonstrated the sequence of working." I do not see how I could have answered issue 1(1) without addressing that allegation, and I have done so in paragraph 28 above. I agree that the contents of paragraphs 23 and 24 seem to be innocuous or to relate to events later than the acceptance of Rev A. Paragraphs 25 and 26, however, seem (paradoxically) to put a construction on the pipework programme very similar to that advanced by Amec under issue 1(2). I have inevitably dealt with the latter. Whether, in the circumstances, any life remains in paragraphs 25 and 26 is not for me to say.

63. Article 13 of Section II of the contract contains an elaborate code of provisions for variations and related matters. It is important to note that for this purpose "VARIATION" is defined by Article 1.33 of that Section as meaning both an instruction under Article 13 and any adjustment to the Protech Plan or the price to which Amec is entitled under the provisions for authorised variations. Which sense is conveyed by the context may be obvious or may need consideration. Outside direct quotations, in which I shall capitalise the word as in the original document, I shall confine my use of "variation" to the second sense unless otherwise stated.

64. Clause 13.1(a) entitles Stork at any time to issue instructions for the revision of work to be done or already done, deletion of work, acceleration, reprogramming or rescheduling of resources. Clause 13.1(b) provides for the form of such instructions and for what is to happen if no adjustment of price has been agreed or if Amec considers compliance with the instruction impracticable.

65. Clause 13.2 provides in (a) that Stork may require estimates before instructing a variation, and (c) is a saving clause for contractual rights and obligations not expressly varied. Sub-clause (b) reads as follows:

13.2(b) The CONTRACT PRICE and/or PROTECH PLAN shall be subject to adjustment only as a result of a VARIATION. [Amec] shall not be entitled to receive a VARIATION to cover any instruction, decision or act of [Stork] which may be made or given in order to ensure that [Amec] complies with any of its obligations under the CONTRACT. If [Stork] issue an instruction in order to ensure that [Amec] complies with any of its obligations under the CONTRACT then [Stork] shall clearly identify that part of the CONTRACT with which such compliance is required and the associated default of [Amec].

66. Clause 13.3 deals with Amec's right to request variations. By sub-clause (a) it may do so if it considers that any instruction from Stork constitutes a revision to the contract work or if matters arise in respect of which it is specifically provided that a variation will be instructed. By sub-clause (b) failure to submit such a request or the supporting estimates provided for results in forfeiture of the right to a variation. Sub-clause (c) requires Stork to accept or reject such a request within a limited period.

67. By clause 13.4 Amec is to provide estimates for variations instructed under clause 13.2(a) or requested under clause 13.3. They are to deal with the effect on both the price and the programme, and Stork may require them to be prepared on one or both of the bases that the Protech Plan is changed or remains unaltered.

68. Clause 13.5 specifies the bases on which adjustments "relating to any VARIATION" are to be made to the contract price or to the Protech Plan. In particular, by sub-clause (a), adjustments to the contract price are to be evaluated in accordance with one of the methods detailed in Section III (the schedule of prices) or in the absence of any appropriate provision by a fair and reasonable evaluation.

69. Clauses 13.6 and 13.7 lie at the heart of issue 3, and I shall set 13.6 out substantially in full. It is entitled "VARIATIONS in respect of delay and/or additional cost" and reads as follows:

22. In the absence of any specific provisions in Section II .... [Stork] will authorise a VARIATION if [Amec] can show that it has suffered delay and/or incurred loss as a direct result of any of the following:

(a) failure of [Stork] to comply with relevant contract provisions in respect of drawings and/or specifications and/or other information and/or the giving of instructions;

23. (b) failure of [Stork] to comply with the relevant contract provisions in respect of Section VIII: "MATERIALS, EQUIPMENT AND SERVICES

PROVIDED BY [Stork];

(c) information supplied by [Stork] for which [Stork] is liable under the terms of the CONTRACT and which is incorrect, other than information included in the CONTRACT.

24. Under any such VARIATION and notwithstanding the provisions of sub-clause 5(a) above [Amec] shall be entitled to such adjustments to the CONTRACT PRICE and PROTECH PLAN as are fair and reasonable taking into account all relevant factors including the following:

(i) any acceleration ordered by [Stork] to overcome all or of any part of any delay in accordance with sub-clause 1(a)(iv) above;

(ii) that [Amec] has an obligation to mitigate the effects of any such failure;

(iii) that [Amec] is entitled to recover necessary direct additional cost which includes any necessary additional overheads but not profit.

25. In the event that specific rates and prices for delay and/or extension to the Contract Period are included in Section III SCHEDULE OF PRICES, then such rates and prices shall be used where appropriate to evaluate any adjustment to the CONTRACT PRICE under the provisions of this clause and shall be deemed to represent direct additional cost to [Amec] as defined herein.

70. Clause 13.7, entitled "disputed VARIATIONS", reads as follows, omitting sub-clause (e), an obscure provision on which neither party relied and from which I have not been able to derive any assistance:

(a) If at any time [Amec] intends to claim any adjustment to the CONTRACT PRICE and/or PROTECH PLAN additional to that previously determined by [Stork] for a VARIATION issued by [Stork] or requested by [Amec], [Amec] shall give notice in writing of such intention immediately after the happening of the events giving rise to such claim.

26. Such events shall include but not be limited to the following:

(i) rejection by [Stork] of a request for a VARIATION made by [Amec];

(ii) rejection by [Amec] of any decision of [Stork] in respect of any VARIATION instructed by [Stork];

(iii) any VARIATION where effect on CONTRACT PRICE and/or PROTECH PLAN cannot be determined at the time.

27. Upon the happening of such events [Amec] shall keep such contemporary records as may reasonably be necessary to support any claim [it] may subsequently wish to make.

(b) Upon receipt by [Stork] of any such notice of claim, and without necessarily admitting any liability, [Stork] may instruct [Amec] to keep such contemporary records or further contemporary records as the case may be as are reasonable and may be material to the claim of which notice has been received and [Amec] shall keep such records, copies of which shall be supplied to [Stork] as and when [Stork] may direct.

(c) [Amec] shall send to [Stork] at the end of every month an account giving particulars, as full and detailed as possible, of all such claims.

(d) If [Amec] does not give notices and/or does not submit records and accounts in accordance with the provisions of sub-clauses 7(a) 7(b) and 7(c) above [Amec] shall forfeit any right to receive any adjustment to the CONTRACT PRICE and/or PROTECH PLAN in respect of any such claims.

71. Clause 13.8 is an overriding warranty by Amec that it has "allowed for VARIATIONS up to an aggregate of 15% .... of the CONTRACT PRICE not to affect the execution of the WORK in accordance with the PROTECH PLAN". The rates and prices in Schedule III are to apply to variations up to an "aggregate minimum" of 15% of the contract price and in the case of variations exceeding this 15% they are to be adjusted by mutual agreement.

72. Against that background issue 3 asks:

28. Does Article 13 exclude any claim for damages arising out of the following:

(i) Additional/Varied Work

(ii) Late provision of information

(iii) Late provision of materials and equipment

in the event that [Amec] has failed to comply with the requirements of Article 13.7?

73. Some comments are first required on the wording of the issue. As framed at the outset of the trial it referred at the end to Article 13 generally, and Mr White's written opening dealt with the procedural requirements of clause 13.3(b) as well as those of 13.7. It was agreed in the course of argument, however, that only the latter were relevant and the wording of the issue was amended accordingly.

74. The second comment on wording arises out of the fact that although (ii) and (iii) of the issue seem to mirror (a) and (b) respectively of clause 13.6, and to relate to breaches by Stork, head (i) of the issue has no such obvious reference and could refer to legitimate variations and additions outside the scope of 13.6 altogether. Mr Gray, for that reason, submitted that there could not on any view be an alternative claim for damages for "additional/varied work". In my view that is clearly right in the case of variations properly instructed under 13.1 or 13.3. In truth the whole of the substantive argument, on both sides, was conducted by reference not to heads (i) to (iii) of this issue, as framed, but to breaches by Stork within (a) to (c) of clause 13.6, and I shall address it on that basis.

75. My third and last comment on wording is that although the issue refers only to compliance by Amec with the (procedural) "requirements" of Article 13.7 the argument on both sides was at least as much about the substantive question whether Amec's rights to variations under 13.6 (that is to adjustments to the price and programme) have replaced any claims to damages which it would otherwise have had. The two questions are separate but related, since if the procedural requirements of 13.7, including the forfeiture provisions of 13.7(d), apply to variations under 13.6 that is a factor to be taken into account in considering whether claims to damages are inferentially excluded where clause 13.6 applies. I must therefore deal with both, beginning with the ambit of clause 13.7.

76. The argument on both sides assumed, and I did not at the time question, that clause 13.7 applies to variations to which Amec is entitled under clause 13.6 as well as to those instructed by Stork under 13.1 or requested by Amec under 13.3. On considering the matter further, however, that did not seem to me by any means as clear as had been supposed, and although I have in the end come back to that view I should briefly explain the difficulties.

77. They arise from the first sentence of 13.7(a), which is ambiguous. Does the comma mark the end of a parenthesis beginning at "additional", so that "any adjustment .... PROTECH PLAN" is qualified only by that parenthesis, or should "additional to that previously determined by [Stork]" be read as if in brackets, so that the only "adjustment .... " affected is one "for a VARIATION issued by [Stork] or requested by [Amec]" (that is one under clause 13.1 or clause 13.3) not previously determined?

78. Neither alternative is wholly felicitous. A strict construction suggests the latter, since on the former there is no apparent reason for excluding earlier determinations of clause 13.6 claims from the "additional to .... " list. Also pointing in that direction is the absence of any reference to clause 13.6 claims in examples (i) to (iii) in 13.7(a). It is true that those examples are introduced by the words "not limited to the following", but clause 13.6 claims would be such a different and potentially significant category that one would expect to find them mentioned if it had been intended to include them. Moreover (and this is both a consideration in its own right and one adding force to the last) it is not at all clear what is "the event giving rise" to a clause 13.6 claim for the purposes of clause 13.7. Is it, on the one hand, the "failure to comply" in 13.6(a) or (b), or the incorrectness of the information in (c) (the last of which, at least, probably not being known at the time) or, on the other hand, the ability to show the suffering of consequent delay or loss without which a clause 13.6 claim apparently does not arise?

79. The most obvious argument the other way is the position of clause 13.7, after 13.1, 13.3 and 13.6 and therefore apparently relating to all of them. That, however, is weakened by the existence of 13.8, of which the same is true in terms of position but which would seem more naturally and fairly to apply to variations under clauses 13.1 and 13.3 only; why should Amec's warranty cover variations caused by Stork's breaches, and what sense can be made of the pricing provision summarised in the second sentence of paragraph 71 above in a situation in which the the Schedule III rates have already been excluded? Some force, nevertheless, remains in the "position" argument and there are others. Unless clause 13.7 applies to claims under 13.6 there is no prescribed procedure for dealing with them. No doubt none is, strictly, essential; both the right to the variation and the criteria for evaluation are in clause 13.6 itself and 13.7, if it applies, merely adds restrictions on Amec's exercise of that right. Nevertheless it would be rather odd if there were a detailed procedure for dealing with variations under 13.1 and 13.3 and none for those under 13.6. The most compelling point to my mind, however, is that if clause 13.6 is not subject to 13.7 then it functions essentially as a "measure of damages" clause. If that were all that the parties intended then the natural course would simply have been to say so, or at least to have placed the clause elsewhere, and certainly not to have included it in an Article about variations generally, as part of the group of provisions leading to clause 13.7, and treated its subject-matter ostensibly on a par (albeit with different valuation provisions) with "ordinary" variations.

80. On balance, and despite inclining the other way when the point first came to my attention, I have come to the firm conclusion that the considerations in paragraph 79 above outweigh those in paragraph 78. The latter can, I think, be discounted or explained as arising from the same lack of exact draftsmanship which produced the ambiguity which gives rise to the whole problem. Thus "requested" may have been used loosely as if applicable to clause 13.6 claims (where it is strictly inapt) as well as to those under clause 13.3, and the absence of clause 13.6 claims from examples (i) to (iii) in clause 13.7(a), as well as the apparent misplacement of clause 13.8, may reflect the historical development of the document if clause 13.6 is a later addition to an already established form.

81. It is therefore necessary to turn to the substantive effect of clause 13.6 against the background that the benefit of clause 13.6 variations can be obtained only by compliance with clause 13.7 procedures and may be forfeit under clause 13.7(d). Mr White's submission is that in those circumstances Amec's right to claim damages for breaches by Stork can be excluded only by clear terms and that clause 13.6 contains no such clear exclusion.

82. Mr Gray's principal argument in reply can be summarised as follows:

(i) The contract documents are expressed to constitute the entire agreement between the parties.

(ii) There are provisions defining the "Contract Price" and providing that it is deemed to constitute full and complete compensation to Amec for performance of the contract works.

(iii) The contract price and programme are by clause 13.2(b) to be subject to adjustment only as a result of a variation.

(iv) Clause 13.6 enables Amec to obtain a variation entitling it to compensation or an extension of time for the breaches by Stork (or, perhaps the argument goes, what would otherwise have been the breaches but now are not) dealt with by that clause.

(v) Any claim for damages as an alternative to a clause 13.6 variation would be an adjustment to the contract price, and/or compensation for the contract work additional to the contract price.

(vi) Any such claim is therefore barred by (ii) and (iii) above.

83. I reject that argument. Proposition (v) is simply and plainly wrong. A claim for damages is not an adjustment to the contract price. It is indeed for "compensation" in one sense of that word, namely compensatory damages for the other party's breach, but not in the sense required by the proposition, namely remuneration under the contract for contract work done.

84. If, as I just have held, the issue cannot be disposed of in that sweeping way, the parties are not for the rest as far apart as might be supposed. It is common ground that clause 13.6 is not exhaustive of all potential breaches by Stork and that claims for breaches not within its scope can be freely pursued, although Mr Gray says (and it may not be in dispute - I do not for present purposes have to decide the point) that in fact all Amec's claims for damages in the present action are also raised as clause 13.6 claims to variations. Mr Gray concedes that if Amec made a clause 13.6 claim and were not satisfied with the result it could still sue in damages, although as I understand it he says that that would not be a revived claim for the original breach but a new one for breach of clause 13.6 itself. Mr White, for his part, accepts that clause 13.6 deals comprehensively with the ground which would be covered by a claim for damages arising out of the same facts and that there cannot be double recovery, so that at least in that sense the remedies are alternative. It seems to me that even if Amec succeeds on the construction issue that inevitably raises the question whether, and if so at what stage, if Amec initiates and pursues a clause 13.6 claim, it has elected against or waived its claim for damages for the same breach.

85. There is no doubt that neither clause 13.6 nor clause 13.7 expressly deprives Amec of any right to sue for damages for breach of contract. What is forfeit by clause 13.7(d) for non-compliance with sub-clauses (a) to (c) is not that right but "any right to receive any adjustment to the CONTRACT PRICE and/or PROTECH PLAN". Any such deprivation can therefore arise only by inference from the fact that clause 13.6 provides an alternative and, as Mr White concedes, in terms of quantification at least equally valuable alternative remedy.

86. Had clause 13.6 not been subject to clause 13.7 that would, I think, have been a natural and proper inference. Clause 13.6 would then, as I have already suggested, have functioned essentially to specify with some precision a perfectly reasonable (if anything perhaps rather generous) measure of damages for the relevant breaches and make them recoverable by the contractual machinery instead of by the threat or actuality of an action. The obligation would have been entirely on Stork ("will authorise a variation") and there would have been no question of subjecting the aggrieved party (Amec) to onerous conditions or depriving it of its rights.

87. As it is, however, Mr White submits that the situation falls within the principle enunciated by Lord Diplock in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689:

29. It is, of course, open to parties to a contract for the sale of goods or for work and labour or for both to exclude by express agreement a remedy for its breach which would otherwise arise by operation of law .... . But in construing such a contract one starts with the presumption that neither party intends to abandon any remedies for its breach arising by operation of law, and clear express words must be used in order to rebut this presumption. (page 717G)

88. I accept that principle, but on its own terms it is concerned with construction, not with substantive law, and states an initial presumption, not a conclusion. Every document falls to be construed on its own terms and in its own factual setting. It is not therefore, as Mr White accepted, much to the point to examine the actual decisions reached in Gilbert-Ash itself or in the other cases which he cited on their very different facts. Of the other examples canvassed in argument perhaps the closest analogy (but still only analogous and illustrative, not determinative) is defects liability clauses, which do not in general exclude claims for damages for breach, although failure to operate them may affect the measure of damages.

89. Bearing in mind the principle appearing from the words of Lord Diplock quoted above, and construing clause 13.6 in its documentary context (in particular the impact of clause 13.7) and in its factual setting, I reach the conclusion that it does not operate to exclude claims for damages for breaches within its scope.

90. That is a conclusion going to the issue whether such claims are excluded in limine by the very existence of clause 13.6. Mr Gray, with some encouragement from me, advanced a more modest alternative contention that once Amec had embarked upon the process of invoking clause 13.6 it had exercised an election against pursuing the corresponding claim for damages, or had waived the right to do so. I do not exclude the possibility of a defence based on election or waiver, for the reasons given at the end of paragraph 84 above, and my answer to issue 3 must be framed in such a way as not to preclude one, but on reflection I am clear that I am not in a position to rule on any such defence at this stage. Whether it can and will succeed, and to what extent, must depend not only on the law on the subject but also on facts which have not yet been investigated. I do not know whether, and if so how far, Amec has operated the contractual machinery for advancing any clause 13.6 claims, or how far it has complied with clause 13.7 in pursuing them. Indeed, as I understood them, neither Mr White nor Mr Gray himself knew the answer to the last of those questions at the time of the hearing before me.

91. I therefore answer "No" to issue 3, as posed in the following reformulation:

30. Does the existence of clauses 13.6 and 13.7, in itself, exclude any claim for damages by Amec based on any of the matters specified in heads (a), (b) and (c) of clause 13.6 if Amec has failed to comply with the requirements of clause 13.7?

92. In paragraph 5.3 of his written opening Mr White referred to a "new issue" as to the meaning of a "determination", as defined by clause 13.7, but I do not recall that that was pursued in oral argument or in closing submissions, nor is it within the terms of issue 3 in any of its formulations, and I have assumed that I am not required to deal with it.

93. Article 13 is the background to this issue as well as to issue 3, and I shall not repeat the extracts copied in paragraphs 65, 69 and 70, but some of the provisions merely summarised in dealing with issue 3 need to be set out more fully.

94. In clause 13.1 the following passages are particularly material:

(a) [Stork] shall have the right at any time to issue instructions to [Amec] to do and [Amec] shall do any of the following:

(i) ....

(iv) Accelerate the WORK within limits of practicality in order to recover all or any part of the delay in respect of which [Amec] would otherwise have been entitled to a revision to the PROTECH PLAN in accordance with clause 5 below.

(v) Reprogramme the WORK and reschedule its resources within the limits of practicality in order to complete the WORK or any part thereof in accordance with any amendment to the PROTECH PLAN which [Stork] may require.

(b) [Instructions under (a) to be given on variation forms and then to constitute variations.] On receipt of any such VARIATION [Amec] shall proceed immediately as instructed even though the amount of any adjustment to the CONTRACT PRICE and/or PROTECH PLAN may not have been determined. [Substantial variations to proceed on reimbursable cost basis until some other agreed. Amec to inform Stork immediately if compliance not practicable.]

95. The whole of clause 13.3 is very material to this issue. It reads as follows:

(a) If [Amec] considers or should reasonably have considered that an occurrence has taken place for which it is entitled to receive a VARIATION [Amec], before proceeding with any work affected by such occurrence, shall request immediately in writing that [Stork] issue a VARIATION. Any such request shall include details of the occurrence including any dates and the Article or Articles of the CONTRACT under which [Amec] considers itself to be entitled to a VARIATION. Such occurrences shall include but not be limited to the following:

(i) An instruction from [Stork], whether contained in drawings or specifications issued by [Stork] or not, which in the opinion of [Amec] constitutes a revision to the WORK.

(ii) Matters arising under any Article of the CONTRACT including clause 6 below in respect of which it is specifically stated in Section II .... that a VARIATION will be authorised by [Stork].

(b) If [Amec] fails to submit requests for VARIATIONS and to provide supporting estimates in accordance with sub-clause 3(a) above and clause 4 below respectively [Amec] shall forfeit any right to receive such VARIATIONS and any right concerning any adjustment to the CONTRACT PRICE and/or PROTECH PLAN.

(c) [Stork] will within 14 days of having received a request for a VARIATION and the supporting estimates advise [Amec] of the period within which [Stork] shall give notice to [Amec] stating either:

(i) that the proposed VARIATION or part thereof is accepted in principle in which case [Stork] will issue such VARIATION; and/or

(ii) that what is requested or part thereof is included in the obligations undertaken by [Amec] under the terms of the CONTRACT and that the request is accordingly rejected; and/or

(iii) that the request or part thereof is rejected for other stated reasons.

31. Should [Amec] wish to pursue any request for a VARIATION or part thereof which has been rejected by [Stork] it shall proceed in accordance with the provisions of clause 7 below.

96. In clause 13.4 there are relevant provisions in sub-clauses (a) and (b):

(a) Within 5 days of having been requested by [Stork] in accordance with sub-clause 2(a) above or [Amec] having requested a VARIATION in accordance with sub-clause 3(a) above or such longer time as [Stork] may agree for any specific VARIATION [Amec] shall submit to [Stork] fully detailed estimates prepared on one or both of the following bases as directed by [Stork];

(i) on the basis that the PROTECH PLAN remains unaltered

(ii) on the basis that the PROTECH PLAN may be changed.

(b) Such estimates shall include, in respect of both the WORK and any associated options that may be exercised by [Stork] under the CONTRACT:

(i) a description of the work to be performed under the VARIATION

(ii) a detailed schedule for the execution of the VARIATION showing the resources to be employed; the effect on the CONTRACT PRICE (if any);

(iii) the effect on the PROGRAMME and the PROTECH PLAN (if any).

97. I have summarised sub-clause (a) of clause 13.5, specifying the basis for adjustments to the contract price by reason of variations, in paragraph 68 above. Sub-clause (b) deals with adjustments to the Protech Plan as follows:

(b) .... A fair and reasonable adjustment to the PROTECH PLAN shall be made taking into account all relevant factors including any acceleration instructed under sub-clause 1(a)(iv) above.

98. Against that background issue 6 asks:

32. Is Amec entitled to sums claimed to have been incurred by it in respect of accelerative measures:

(a) Pursuant to Article 13; and/or

(b) Otherwise than pursuant to Article 13;

(c) In either case was an express instruction (whether oral or in writing) a pre-requisite to recovery of such sums?

99. It is immediately apparent as a matter of both grammar and logic that the first sentence should end with (b) and that what is now (c) should be a fresh, unlettered, paragraph, so that it is not a third, free-standing, question but a rider to each of the first two.

100. It is clear that even with that correction I cannot answer the questions as framed. Whether Amec is entitled to sums "claimed to have been incurred" raises issues of fact as to each such claim which were not canvassed before me. Moreover, apart from the factual merits, there may be issues as to the continued applicability of the original contract terms in the light of subsequent events relied upon by way of variation, waiver or estoppel. I am concerned only with the true construction of the contract documents before me.

101. There is a final difficulty, which concerns the meaning of the words "accelerative measures". "Acceleration", as an ordinary English word, means simply "increase in speed". In the context of this contract that would entail finishing, or possibly reaching some intermediate stage, before the contract date. I did not gain the impression that that was the basis of many of Amec's claims, or perhaps of any. There is, however, a clear exposition in clause 13.1(a)(iv) itself of what "accelerate", as used in that sub-clause, means. It involves taking steps "in order to recover .... delay in respect of which [Amec] would otherwise have been entitled to a revision to the PROTECH PLAN". It does not, by inference, include such reprogramming of work and rescheduling of resources as is dealt with separately in the immediately following category (v).

102. Judging by the examples canvassed in argument, however, the sums which Amec seeks to claim "in respect of accelerative measures" may cover a much wider field. They seem to include measures within category (v) as well as category (iv) of sub-clause (a), the increase of resources generally in order to cope with increases in the quantity of work, measures taken in consequence of breaches of contract by Stork, or in order to mitigate those consequences and, most generally, any use of "additional resources" in consequence of Stork's instructions, acts or omissions. "Additional" implies some basis of comparison - additional to what? - and it was not clear to me whether claims of that kind were advanced on the basis of there being some contractually specified level of resources or whether the comparison was simply with Amec's internal pre-planning.

103. In the circumstances described in paragraphs 99 to 102 above I do not think it possible to answer this issue in the terms in which it is posed, nor do I find it helpful to try to re-word it. In particular I believe it best to avoid the use of "acceleration" and its derivatives in any undefined sense. I do not for myself, however, find the principles which should be applied to the issues canvassed and examples advanced under this head particularly obscure or much open to debate, and I shall endeavour to state them in the following paragraphs.

104. Amec is entitled to be paid for variations instructed by Stork under clause 13.1(a), including those of the kind specified in categories (iv) and (v).

105. Amec is entitled to be paid for variations, including variations of the kind specified in clause 13.1(a)(iv) and (v), requested by Amec under clause 13.3(a) and accepted by Stork under clause 13.3(c)(i) or, if initially rejected, successfully pursued under clause 13.7.

106. The amount of any entitlement under paragraph 104 or 105 above will be that provided for by clause 13.5(a). Unless the variation in question is expressly an "acceleration" within the meaning of clause 13.1(a)(iv) the question whether that entitlement includes the cost of what Amec may classify as "accelerative measures" cannot be answered in any general way; it is one to be decided by the application of the pricing provisions of clause 13.5(a) to the facts of the case.

107. Where Amec is entitled either to an extension of time or alternatively, in lieu of such an extension, to an instruction to accelerate in accordance with clause 13.1(a)(iv), Stork has the option which to award, without prejudice to any claim for damages which Amec may have if Stork fails to comply with its duties in dealing with the matter, for example under any express or implied time limits within which it must reach or communicate decisions. This is the first of the two instances in which the propositions which I am setting out may not be essentially common ground, but in my view the existence of such an option is properly to be deduced from Article 13 as a whole, and specifically from clauses 13.1(a)(iv), 13.4(a), 13.5(b) and 13.6(i).

108. Amec is entitled to the benefit of clause 13.6, subject to compliance with the procedural requirements of clause 13.7, and the question whether the cost of what Amec may classify as "accelerative measures" shall be included in any consequential price adjustment is one to be decided by the application of the pricing provisions of clause 13.6 to the facts of the case.

109. Amec is not entitled to a price adjustment under the variation provisions of the contract except by one of the above routes, in which for this purpose I include the operation of any contractual machinery there may be for re-opening or reviewing Stork's decisions in those cases. (I do not know whether there is any such machinery, nor if so what form it takes, since it was not necessary for me to be referred to the point at the hearing of the issues before me.) It may be (I am not entirely clear on the point) that this proposition, like the one in paragraph 107 above, was challenged by Mr White, but in my view what is said in the first sentence of this paragraph is plainly the meaning and effect of Article 13 in general and clauses 13.3(b) and 13.7(d) in particular, and no argument was advanced for setting the latter provisions aside.

110. Amec is entitled, subject to such questions as that raised in connection with issue 3 at the end of paragraph 84 and in paragraph 90 above, to damages for any breach of contract by Stork. Such breaches may arise out of failure by Stork to carry out its obligations in dealing with Amec's rights to or requests for variations, and the damages recoverable may include the cost of what Amec may classify as "accelerative measures", but whether any such breach is established and whether the damages recoverable include any such element are questions to be decided in each instance by applying the relevant contractual terms and the law, in particular the law of damages, to the facts as found.

111. I envisage that the "answer" to issue 6 will simply incorporate the propositions comprising paragraphs 104 to 110 above, omitting the commentaries or explanations added in paragraphs 107 and 109, but the parties should in advance of the appointment for the handing down of this judgment lodge agreed or separate submissions as to the wording.

112. By March 1996 the project was behind programme and there were fears that the key dates for mechanical completion and sail away (see paragraph 6 above) would not be achieved. In those circumstances an "incentive agreement" was entered into between Shell, SBM, Stork and Amec. It is undated, but as I understand it is taken to have been entered into on 28 March 1996. It recites the contractual relationships between the parties, defines the terms "BARGE ARRIVAL", "MECHANICAL COMPLETION" and "SAILAWAY" and continues:

[Shell] wishes to maintain or improve on MECHANICAL COMPLETION and SAILAWAY date in order to achieve Handover and First Oil at the earliest possible opportunity. This requires the achievement of the planned MECHANICAL COMPLETION date and an earlier SAILAWAY date than are presently contemplated in the SBM-AMEC Contract and the [Stork/Amec] Contract.

113. Of the operative clauses 1.1 provides for Amec to receive £250,000 from Shell and £250,000 from SBM/Stork if Mechanical Completion is realised within 11 weeks after Barge Arrival, and clause 1.2.1 for Amec to receive £1,000,000 from Shell and £250,000 from SBM if Sailaway is realised within 17 weeks after Barge Arrival. Clauses 1.2.2 to 1.6 supplement those two main provisions. Clause 1.7 reads:

1.7 All Parties recognise that variations may arise during the remaining period. No such variations will have any form of effect on the Incentive Scheme specified above except for variations originated by [Shell] which directly affect the critical path activities and thereby the date for achieving MECHANICAL COMPLETION and/or SAILAWAY.

114. The other provisions of the incentive agreement relevant to issue 8 are clauses 2 and 4.1:

2. Liability

33. The Parties shall use their best efforts to achieve MECHANICAL COMPLETION and SAILAWAY as soon as possible but in the event that such events are not achieved for whatever reason (including Termination of the SHELL Main Contract, Force Majeure, default or negligence of any Party), in time for [Amec] to receive any or all of the additional payments as per clause 1, no Party shall be liable to [Amec] or to each other for any of such amounts or any other costs or damages.

....

4. No Effect on the Contracts

4.1 The existence and operation of this AGREEMENT shall, except as given in this AGREEMENT, in no way affect the rights and obligations of the Parties hereto under the Contracts to which they are a Party.

115. Against that background issue 8 raises the following question:

34. Is the effect of the [incentive] agreement Clauses 2 and 4.1 to exclude [Stork], for whatever reason (including default or negligence), from liability for the cost of accelerative measures taken by [Amec] between 28 March 1996 and the Sailaway Date.

116. It is common ground that the dates to be met if incentive payments were to be earned were not achieved, that that conclusion is not affected by any "variations originated by [Shell] which directly [affected] the critical path activities and thereby the [relevant dates]" for the purposes of clause 1.7, and that Amec is accordingly not entitled to any such incentive payments.

117. The argument on this issue, reflecting the terms in which the issue itself is expressed, centred on the relationship between clauses 2 and 4.1 and between "accelerative measures" which would have been taken in any event and those taken additionally for the purpose of qualifying for the incentive bonuses, alternatively between those already in place on 28 March 1996 and those instituted later. I have come to the clear conclusion, however, first that those are unhelpful and unnecessary distinctions and secondly that clause 1.7 plays a key role, in conjunction with clause 4.1, in assessing the ambit of the word "costs" in clause 2, on which the substance of the dispute between the parties centres.

118. The distinctions identified in the last paragraph are unhelpful on two main grounds. The first is that for the reasons developed in paragraphs 101 and 102 above "accelerative measures" has no clear meaning and its use, in the guise of a term of art, in any answer to issue 8 would be as inappropriate as in the case of issue 6. The second ground is that even if "accelerative measures" were a well-defined concept the distinctions postulated would on the first formulation involve speculative investigations into what would have happened in hypothetical circumstances and on the second formulation entail a risk of Amec's being deprived of full payment for at least one category of work which should on any fair view be remunerated, namely work under variations instructed after 28 March 1996.

119. In addition to being unhelpful those distinctions are also unnecessary, because a perfectly clear and satisfactory alternative is not only available but in my view required by the plain terms of the incentive agreement. Clause 1.7 begins by recognising that "variations may arise during the remaining period". Variations may, of course, affect both price and programme. The force of the provision in the next sentence that such variations shall not "have any form of effect on the Incentive Scheme .... except ...." is clearly directed to a particular feature of the second aspect, namely the qualifying dates for the incentive bonuses, and debars any reliance upon variations as extending those qualifying dates, subject only to the exception expressly provided for. It is only in relation to that "effect on the Incentive Scheme" that variations "during the remaining period" are singled out for special treatment, and it is arguable that even that provision is an example of over-abundant caution. The clear implication, in my judgment, is that in all other respects variations continue to have their ordinary contractual requirements and effect. That conclusion is reinforced by the title of clause 4 and the terms of clause 4.1.

120. The presence of the word "costs" in the exclusion from liability at the end of clause 2 does not in my view cast any doubt on that construction of the agreement. The object and effect of clause 2 is clearly to prevent Amec, having failed to earn an incentive bonus by the front door of achieving the relevant target date, from getting in through the back door by blaming something or someone else and on that basis claiming either "any or all of the additional payments" or, if another party is allegedly to blame by "default or negligence", an equivalent amount as "other costs or damages". It cannot conceivably have the object or effect of depriving Amec of part of the contract price. Even to express the possibility immediately invites the unanswerable question: which part, and why?

121. I conclude that the necessary and sufficient criteria for additional payment for allegedly "accelerative measures" were the same after 28 March 1996 as before, namely those explained above in dealing with issue 6. That conclusion entails rejecting Stork's case, if it was still maintained in its full rigour, that clause 2 excludes all liability on its part for the costs of accelerative measures taken after 28 March 1996. So far as such costs are recoverable by those criteria they remain so, whether incurred before or after that date and whether arising from variations authorised before or after that date. It may well be that in practice the criteria produce results somewhat similar to those intended to flow from Amec's contentions, based on distinctions of the kind described in paragraph 117 above, because after 28 March 1996 Stork would clearly not be prepared to grant, and Amec could hardly request, variations to cover additional costs which Amec was incurring by its own choice with a view to qualifying for the incentive payments. For the reasons which I have given, however, they have two advantages over those distinctions. The first is that they provide straightforward tests instead of difficult, contentious or impossible ones. The second and decisive advantage is that they are what the contract and the incentive agreement, taken together, require instead of being devised and imposed out of thin air.

122. On a strict construction issue 8 could in the light of my conclusion simply be answered "No", but that would not be very informative. As in the case of issues 1(2) and 6 I shall need agreed or separate submissions on the form of the answer to be entered.