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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> JDM Accord Ltd. v Secretary of State for the Environment, Food and Rural Affairs [2004] EWHC 2 (TCC) (16 January 2004)
URL: http://www.bailii.org/ew/cases/EWHC/TCC/2004/2.html
Cite as: [2004] EWHC 2 (TCC)
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Queen's Bench Division
Technology and Construction Court
1 Fetter Lane London |
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B e f o r e :
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| JDM Accord Limited |
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| and |
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| The Secretary of State for the Environment, Food and Rural Affairs |
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Mr Philip Naughton QC and Mr Graham Read QC (instructed by McLoughlin & Company, 1 Claremont Bank, Shrewsbury, Shropshire, SY1 1RWP, DX 19749 Shrewsbury (Ref: Pmc.000175.0001.544)) Appeared for the claimant
Mr Jeffrey Gruder QC and Mr Paul Stanley (instructed by Pinsents, 3 Colmore Circus, Birmingham, B4 6BH, DX 703167 Birmingham 12 (Ref: JML/623679.07002/JHR)) Appeared for the defendant
Dates of Hearing: 29 & 30 April, 1, 6, 7, 8, 12 & 13 May 2003, 16 January 2004
Date of Handing Down of Judgment: 16 December 2003
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Crown Copyright ©
- This judgment is concerned with claims for engineering services provided for cleaning up and disease suppression purposes on a large number of sites and farms during the Foot and Mouth epidemic in 2001. The claimant, JDM Accord Ltd ("JDM"), provides construction and civil engineering services to public authorities and public bodies. Its principal offices are located in Shrewsbury. The defendant is the Secretary of State for the Department of the Environment, Food and Rural Affairs ("DEFRA"), the successor of the Ministry of Agriculture, Fisheries and Food ("MAFF") who has been responsible since 8 June 2001 for the responsibilities and liabilities that had been undertaken by MAFF prior to that date. For convenience, I will refer to the defendant and the Department throughout this judgment as DEFRA.
- JDM's claims, totalling in excess of £5m, arise out of extensive work carried out in 2001 on many different sites in the South West of England and in Wales. Much of that work was carried out by subcontractors engaged by JDM or by labour which it engaged on a temporary basis during the foot and mouth outbreak. The size of the operations can be gauged from the fact that JDM has already been paid in excess of £32m and the timescale over which all its work was carried out was between March and December 2001. This work was necessitated by the Foot and Mouth epidemic. The first outbreak of this disease was confirmed on 20 February 2001 at an abattoir in Essex, the outbreak lasted for 32 weeks and by the time that it had finally been eradicated in September 2001, six million animals had been slaughtered and 2,000 premises spread through 44 counties had been infected. The direct cost of the consequent clean up and disposal operations, compensation payments and other direct costs and losses is estimated at over £3 billion to the public sector and over £5 billion to the private sector.
- At the height of the crisis, more than 10,000 vets, soldiers, field and support staff and many thousands of those working for contractors were engaged in fighting, eradicating and preventing further outbreaks of the disease. The work involved the slaughter of animals, the disposal of animal carcases, the preparation of burial sites for the disposal of carcases and the construction of the necessary infrastructure to support those sites and extensive clean up and disease eradication measures taken at each infected site. JDM's present claims form the disputed parts of its overall claim for reimbursement for the part it played in the construction of burial sites and infrastructure works on three different sites and in the clean up works on nearly 160 different farms, largely based at locations in the Worcester, Gloucester and Exeter areas.
- The claims are largely made up of three broad categories of claim being:
- A fourth group of claims are raised by DEFRA which are to largely dependent on JDM being unsuccessful in its claims. In these claims, DEFRA is seeking to reclaim parts of previous payments made against specific invoices which it now contends were overpaid. Much of these alleged overpayments relate to matters covered by the three broad categories of JDM's claims that I have already summarised. These DEFRA claims will require a resolution of the disputes as to JDM's disputed underlying entitlement to payment; of whether the relevant payments were final or merely on account payments; and of whether, if the payments were final, DEFRA may now successfully obtain restitutionary recovery of the overpaid sums on the grounds that these payments were allegedly made by mistake.
- In order to resolve these claims, I will need to consider in detail and make findings about the procedures adopted by JDM in preparing, checking and submitting time sheets and invoices and by DEFRA in both verifying and authorising these documents and in making payments for the work in question. This consideration is necessary in order to determine what evidential weight may be placed on individual time sheets and invoices and what if any conclusive effect arises from any particular submission, authorisation or payment.
- The overall dispute arises from initial delays by DEFRA in processing and paying JDM's invoices as work proceeded. The consequent shortfall in payments perceived by JDM was then compounded in JDM's eyes by DEFRA's decision, taken in about June 2001 whilst the foot and mouth outbreak was still being dealt with, to put in place more rigorous auditing procedures of the invoices being submitted by the many contractors that had been engaged to undertake carcass disposal, burial pit construction and farm clean up work. DEFRA took this decision because it had became aware that its cost control procedures needed strengthening since the existing procedures had been developed in crisis conditions with the relevant officials working under extreme pressure.
- The delays in the payment of invoices were initially ameliorated by DEFRA switching from paying individual invoices as they were submitted to making on account payments. This changed procedure was followed by a complaint by JDM in July 2001 about the extent of outstanding payments which led to extensive accountancy queries being raised by DEFRA in early August 2001. Following JDM's reply to these queries, DEFRA informed JDM on 28 August 2001 that serious concerns had been raised by its experts which would prevent any further payment on account until these concerns had been resolved. This led to correspondence, a discussion between the parties as to whether they should resort to mediation which came to nothing and a letter before action sent by JDM's solicitors to DEFRA and dated 5 December 2001. The claim, when the claim form was issued on 21 December 2001, claimed £5,733,705.
- For convenience, the dispute has been split into three component parts. This judgment is concerned with the second and largest of these components which was, in part and for further convenience, dealt with at the trial by selecting sample sites in the hope that the relevant decisions concerning those sites will enable all similar disputes on other sites to be resolved in the light of this judgment. In the end, 12 sample sites were chosen known during the trial as Throckmorton, Ashmoor, Nibley Mill Farm, Love's Farm, Longswood Farm, Hill Farm, Calcot Farm, Upper Cwm Farm, Walford Small Holdings, Green Band Farm, Stove Farm and Vivod Farm.
- The order that defined the issues for trial was dated 28 January 2003. The terms of the order were agreed by the parties. The wording is tied to the pleadings and, to enable a ready understanding of the scope of these issues, I will define them in my own words as follows:
- As an essential background to the determination of these issues, I will need to make findings as to the manner in which invoices were prepared and dealt with and as to the meaning of the clauses of the contract concerned with JDM's remuneration for the workmen's travelling time, subsistence and lunch breaks, for plant hire and for the provision of aggregate.
- Foot and mouth disease is a highly infectious viral disease that affects cattle, sheep, pigs, goats and other ruminants. Fever is followed by the development of blisters, mainly in the mouth or on the feet. Affected animals lose condition and often develop secondary bacterial infections. Although there is a low mortality rate amongst affected animals, if they are allowed to survive, they would usually be left with chronic infections, lameness, reproductive disorders, loss of milk yield and with the capability of being a continuing source of infection. The virus can survive for a long time so that a very small quantity can infect an animal. Thus, the disease can spread with great rapidity throughout a country and between groups of animals in direct or indirect contact with the infected animal.
- The virus may be present in blister fluid, saliva, exhaled air, milk, urine or dung. In favourable conditions, it can survive for long periods. The strain of virus responsible for the 2001 outbreak was the pan-Asian O type which is highly virulent with a short incubation period. A further problem of such an outbreak was that its clinical signs in sheep were highly variable and often transient, making detection difficult unless a detailed and proper examination of a sufficient number of animals was carried out.
- The infection is picked up from direct or indirect contact with other animals, items or people contaminated with the virus. In consequence, vehicles, equipment, fodder and anyone involved with livestock that have come into contact with the virus may be a source of its transmission. Once an animal has been infected from such contact, it can excrete the virus for some days before clinical signs of the disease become evident and the animal can then remain infectious for a further week.
- It follows that any farm on which even one infected animal has been identified will require a massive clean up operation once contaminated and suspected carcases have been destroyed and then burnt or removed for burial if it is to be ensured that the location has become virus-free.
- Two reports and the 1967-68 outbreak of foot and mouth disease and the 2000 classic swine fever outbreak in East Anglia form an essential background to the 2001 outbreak and this subsequent dispute. In 1967, there was a serious albeit localised outbreak of foot and mouth disease and a committee of inquiry, the Northumberland committee, was set up to investigate and report on this outbreak and on the Department of Agriculture's handling of the epidemic. The Northumberland committee's report made a large number of recommendations as to how the Department should prepare detailed out-break plans for the mobilisation of manpower and equipment to deal with an outbreak wherever it may occur. These were to provide for swift and effective mobilisation of manpower and resources. The departmental planning for foot and mouth outbreaks involved veterinary staff in managing both veterinary and non-veterinary work. Provision was made for seeking the assistance of the armed forces. Such assistance was to be sought, following modified arrangements put in place subsequent to the implementation of the Northumberland recommendations, on a national level and only after all other avenues had bene explored and exhausted.
- The modified plans prepared following the 1967 outbreak were still those in place when the Drummond report was produced in 1999. This was the report of a working group which had been set up in 1998 to examine the preparedness of the State Vetinerary Service to deal with animal disease outbreaks. The report made several recommendations. These included recommendations that regional and divisional training plans should be formulated and national guidance prepared on overcoming the problems associated with the supply of services and materials in dealing with outbreaks. The Drummond recommendations were still being implemented when, in 2000, an outbreak of classic swine fever occurred in East Anglia. This is a disease which spreads like foot and mouth disease and this was contained and eradicated over a three month period involving the slaughter of 74,000 pigs and the involvement of 500 personnel. This led to a further report from a project team comprising state vets to be set up in October 2000 to consider and report on the response to this outbreak of classical swine fever.
- The result of these three reports was that DEFRA had a national contingency plan in place to deal with an outbreak of foot and mouth disease when the epidemic was first notified but although this had been published, its details were not well known. Moreover, many of the relevant detailed Drummond and project team recommendations were still in the course of being implemented.
- This incomplete follow up implementation work included the work involved in the formulation and finalisation of guidance for and the implementation of regional and divisional training plans. Furthermore, plans dealing with the shifting of management responsibility for non-veterinary tasks to non-vetinerary staff had not been finalised or implemented. As a result, the vetinerary staff were soon overwhelmed, in part because of a serious shortage of trained and available vets. In order to cope, later in the outbreak, Regional Operations Directors were appointed to undertake non-veterinary work.
- A further serious problem was that the detailed procedures that were to be adopted to co-ordinate the work of armed services civilian personnel, particularly in administrative matters, once the armed services became involved were not available. In this outbreak, because its huge scale was such that civilian contractors could not provide all the help that was needed, the armed services became involved at local level some three weeks after the outbreak.
- A yet further problem was that an intended national emergency response plan had not been finalised which would have incorporated lessons learnt from the classical fever outbreak. This plan would review such matters as communications, information technology and the roles and responsibilities of staff.
- JDM mounted some criticism of DEFRA's contingency planning for dealing with an outbreak of foot and mouth disease and a significantly greater criticism of DEFRA's financial accounting system and the auditing and checking systems introduced in a somewhat piecemeal fashion during the outbreak. I am not concerned to make findings as to whether or not DEFRA's contingency planning was at fault. Moreover, I am only concerned with DEFRA's accounting system to the extent necessary to see whether JDM complied with it and whether the recording and invoicing system it operated was reasonable in the light of DEFRA practice. As to the gradual introduction of an auditing and checking system and the increasing rigour with which DEFRA checked and sought verification of JDM's claims, I do not have to make findings as to whether or not DEFRA could or should have introduced such procedures earlier or in a different manner or timescale. My only concern is as to whether the procedures have revealed in material ways discrepancies or inaccuracies in JDM's claims and whether DEFRA is estopped from relying on any material or conclusions the procedures have revealed which, if relied on, would be detrimental to JDM's case.
- It is, notwithstanding my need to avoid conducting an exercise in miniature that resembles the NAO or Select Committee investigations, necessary to summarise certain essential background conclusions that these reports arrived at. It is clear that the 2001 outbreak of foot and mouth disease was of unprecedented severity and that its extent and seriousness was not reasonably foreseeable. It was not confined to particular areas, largely because of the developments in the transport network concerned with the food chain which transported around the country in an almost random manner infected sheep. Moreover, the epidemic had obtained a virulent hold before it was first detected in that 57 farms were already infected by the time of the first confirmed notification of the disease on 20 February 2001.
- The NAO report confirms that DEFRA's contingency planning was at an advanced stage at the time of the outbreak and that, in any case, the unprecedented nature of the outbreak was such that even the most advanced and complete contingency plans would have been unable to cope with the outbreak without similar difficulties to those actually experienced. Neither DEFRA nor JDM could have reasonably have predicted the extent of the work that would be required of JDM at the time JDM entered into its contract with DEFRA nor the pressure of work or of the events that unfolded that confronted all of those involved in the clean up operations, whether within DEFRA or JDM or in any other organisation that became involved in the clean up at the time of their first involvement in it. If the system of recording, approving, invoicing, verifying and approving was, at any stage deficient, those deficiencies could only have been appreciated with the benefit of hindsight and were largely the result of the unprecedented and unforeseeable nature and extent of the outbreak.
- Thus, my task is to decide, in the light of this background, what weight should reasonably be placed on the available documentary evidence and on the inevitably generalised oral evidence in so far as it is relied on in support of or to attack JDM's claims and, having done so, decide whether JDM has proved its case. Overall, JDM is entitled to contractual remuneration, or reasonable remuneration in default of any applicable contractual rate, for such labour, plant hire and materials as it proves it provided. If either JDM or DEFRA failed to maintain helpful or even reasonably needed records or diaries, it is not for me to find fault. My task is merely to apply the civil burden of proof to such evidence as was gathered and then adduced at the trial.
- It is, of course, necessary, to keep in mind the modern evidential rules applicable to documentary evidence in civil trials. These are found in the relevant sections of the Civil Evidence Acts 1967 and 1996 and in the relevant provisions of the CPR concerned with the admission of documentary evidence and with the procedures that must be complied with when the statutory provisions relating to the reliance on the contents of documentary evidence are themselves being relied on. These rules are, in summary, as follows:
- In this case, by an order I made during the trial, all the time sheets still available relating to the 12 sites I was concerned with were adduced in evidence. Moreover, the contents of those time sheets, namely the chargeable hours they recorded, were made the subject of schedules summarising the claims being made for unpaid sums due on invoices submitted by JDM. Finally, both JDM and DEFRA served multiple witness statements which addressed the question of the accuracy and reliability of the recorded chargeable hours, the circumstances in which the time sheets and the subsequent documentation reproducing their contents came to be made and as to whether or not these recorded hours should be regarded as being credible, reliable and accurate.
- Thus, the timesheets, spreadsheets and summary sheets supporting claims for operatives' chargeable time at the sites in question in this action were hearsay statements which were adduced in evidence in conformity with the procedural requirements for notice and the attacks on the credibility of the makers or the statements, namely on the credibility of the operatives who made up and signed the timesheets and the clerical staff who compiled the spreadsheets and summaries derived from the timesheets that was mounted by DEFRA was also made subject to the procedural requirements as to notification.
- These difficulties compounded the problems that would have been encountered even if revised and smoothly operating contingency plans had been in place for coping with a foot and mouth epidemic, given the unprecedented speed and size of the outbreak. When the outbreak started, the local Disease Control Centres, used as the focal point for the local management of the control of the disease and for the cleaning up and carcass disposal operations, had rapidly to arrange contractors and contracting arrangements sufficient to cope with both the large burial sites excavation work and with the many farms requiring decontamination. The large sites were effectively, in the early stages, under the control of the armed services and the smaller sites and farms under the control of vets. The relevant Disease Control Centres were insufficiently staffed for the huge amount of work involved, particularly for the routine work involved in checking, verifying and approving for payment the huge volume of paperwork that the cleaning up operations inevitably generated.
- JDM had, in order to provide sufficient personnel for the work involved, to subcontract most of the work to labour only and engineering contracting contractors and also had to bring in labour from a very wide area or from far flung outposts as well as hiring much casual labour on a weekly basis.
- It can be seen with hindsight that there was a need for the large number of different organisations working on the clean up operations under different and uncoordinated systems of control and administration to operate a reliable and co-ordinated system of recording each hour of labour and plant usage using the individual labour returns or records if the necessary valuation, auditing, checking and payment procedures were to run smoothly.
- In general terms, such a system would have required the individuals working on site to record the hours that they and the plant they operated actually worked. These contemporary records would have needed to have been verified by site staff representing each subcontractor, JDM and DEFRA. These records would then have been used as the basis of claiming and receiving payment from JDM for the labour, plant and materials used on site. To these claims, there would have to be added similar records prepared by JDM's own labour where this was used, verified by representatives of JDM and DEFRA. Such a system was never put into place and time and the march of events precluded it from being devised once clean up operations had started.
- How the claiming system actually operated depended on all the contemporary records being authenticated or approved on site by individual foremen or site based supervisors and also by the vets or other representatives of DEFRA on site. However, the armed forces representatives and, where available, DEFRA's site management or the vets on site, were rarely prepared to check or sign the contractors' contemporary records and JDM's management were unable to do more than make occasional short visits to individual sites and had, in consequence, to rely on the individual site records prepared by the operatives, on the authentication of such records by site-based foremen employed by individual subcontractors or by JDM on those sites, namely the larger sites and farms, where were such individuals were employed.
- The records that were prepared had to be transposed by each subcontractor into claims documentation that had to be submitted to JDM who, in turn, had to amalgamate each subcontractor's claim for payment with its own payment claims into a consolidated invoice to enable regular transmission of claims to be made to DEFRA. JDM had neither the time nor resources to institute any form of comprehensive verification by its own staff of the returns of the various subcontractors. Finally, DEFRA staff had to check the invoices, audit them and, if necessary submit them for scrutiny by independent quantity surveyors or accountants. Only then could DEFRA authorise for and institute payment procedures. DEFRA were able check the documents for internal arithmetical accuracy and for overall general reasonableness but had no means of making any more detailed verification of the accuracy or correctness of the contents of the documentation supplied by JDM in support of its various payment claims. Not surprisingly, on account interim global payment procedures were implemented.
- The present dispute arises because DEFRA can no longer fully and independently verify claim documents relating to work that has long since been completed and which are based on supporting contemporary documents whose complete accuracy DEFRA is not prepared to rely upon. This is because the documentation was originally verified by subcontracting or JDM staff usually but not invariably verified by site foreman or similar supervisory staff who are no longer available to support their verification exercise. This documentation was not, save in a few cases, further verified by JDM management. In turn, the documentation was not verified on site at the time of its production by DEFRA representatives, armed services personnel or vets, save in a few instances and then not comprehensively. The subcontractors' claims and site records used by JDM to compile interim applications for payment are not now complete. Finally, the auditing and verification exercises by DEFRA representatives were not able, for obvious reasons, to do more than correct arithmetical errors in, and make generic and largely unsubstantiated reductions or deletions from, the sums being claimed.
- Valuable insight into the background to the dispute between JDM and DEFRA is obtained from two reports prepared about DEFRA's handling of the foot and mouth crisis, the National Audit Office's report prepared by the Comptroller and Auditor General: The 2001 Outbreak of Foot and Mouth Disease (HC 939 Session 2001 - 2002) and the report of the House of Commons Committee of Public Accounts: The 2001 Outbreak of Foot and Mouth Disease (HC 487, Fifth Report of Session 2002 - 2003). The Comptroller examined, amongst other matters, the cost-effectiveness of the clean up operations. The Select Committee, in adopting and repeating his conclusions on these matters, took evidence from DEFRA on, amongst other issues, the controlling of the costs of the outbreak.
- The following significant conclusions emerge from these reports. DEFRA had, by 24 May 2002 spent over £1,100 million on goods and services to eradicate the disease. These payments were spread over 1,200 separate contractors. JDM, having received £27.5m by that date, was the contractor who had received the second highest payments of these contractors, all receipts being in relation to its work of cleansing and disinfecting in Worcester, Gloucester and Devon. This work was instructed to implement ministerial instructions that best value for money would be obtained by eradicating the disease as quickly as possible. In consequence, the construction of burial pits was commissioned at great speed and the work was undertaken with some urgency pursuant to a 24/7 pattern of working. The Comptroller noted that this working pattern substantially increased expenditure on overtime, night-time and weekend working in achieving completion within weeks of construction activities which would normally take two years to complete.
- The work was dirty, hazardous and few companies were willing and able to take it on. In consequence, higher prices than normal were demanded and accepted, contracts were awarded without competition and many contracts, some worth millions of pounds, were agreed in a few hours, were often agreed orally at local Disease Control Centre level and which were never properly documented either at the outset or subsequently. The contract documents were often inadequately drafted for the work to be undertaken. There was a serious shortage of vets, indeed the Chief Veterinary Officer informed the Select Committee on Environment, Food and Rural Affairs in October 2001 that:
- As early as 20 February 2001, with the first notification of infection, DEFRA notified the Armed Forces' Minister that there might be a future request for military assistance. Military assistance was deployed in Devon, Worcester, three other major locations and other locations on and from 19 March 2001. By 31 March 2001, 1,000 troops were deployed and numbers built up so that, by mid-April 2001 at the height of armed services' assistance, 2,100 troops were deployed. Troops were deployed in a key supportive role, assisting in the organisational and logistic arrangements, particularly for slaughter, transport and disposal. It was for these reasons that troops were deployed at the burial sites but, at those sites, they did not get involved in any checking, verification or approval of records. By analogy with traffic functions, the armed services acted as traffic policemen, traffic wardens or parking attendants.
- From 19 March 2001 onwards, some four weeks into the campaign, senior administrators, mostly of Grades 3 and 5 level, were sent to the main Disease Control Centres as Regional Operations Directors and from the end of February 2001, local staff began to receive support and guidance from DEFRA's central procurement branches. This greatly improved local organisation.
- From March 2001, quantity surveyors were employed by DEFRA to give independent assurance that it was being charged reasonably for the work being undertaken. They were also tasked with agreeing schedules of rates for plant, materials and labour, with validating and approving contractors' invoices and checking that paperwork was correct. 80 quantity surveyors were employed at Disease Control Centres. In April 2001, a financial review was undertaken of the emergency purchasing procedures in Disease Control Centres. The review team found that there were no specific contracts for disposal and that, instead, contracts with general terms and conditions had had to be used. The contract with JDM was, I find, one such contract. At the same time, DEFRA began to employ specialist contract administrators at each Disease Control Centre. These officials were tasked with seeking to obtain accurate records of men, materials and plant being used, in negotiating better terms for DEFRA where they could, in monitoring performance and in seeking to ensure that appropriate written contracts were in place.
- From April 2001 forensic accountants were engaged, and these focused on those contractors, such as JDM, who had claimed to have carried out more than £1m worth of work. These accountants found that there were formidable difficulties in checking or auditing claims and payments. The computerised payments systems already in place worked well. The problems arose from the lack of any adequate verification and substantiation procedures within the Disease Control Centres. The claims for payment were often inadequately evidenced and could not properly be verified or substantiated. Monitoring procedures were virtually non-existent. Overall, the forensic accountants that were called in estimated that 40% of contractors' invoices represented claims for payment for work which DEFRA or its agents could not confirm had actually been carried out. Particular emphasis was placed on the inability of DEFRA to be able to rely on timesheets and plant hire sheets provided by contractors. This particular problem arose because of a lack of supporting documentation, inadequately signed or authorised timesheets, an inability to ascertain from the records which plant was being used and which on standby and generic errors such as arithmetical mistakes, discrepancies between time worked and the availability of labour, incorrectly charged overheads and double charging. By May 2002, 13 months later, the invoices of 45 of the largest contractors, including JDM, had been examined totalling £330 million. The Comptroller estimated that, within that 13 month time scale, over £16.8 million had been saved by these exercises in financial control.
- A further initiative was taken on 23 April 2001 when a specialist Finance Unit was set up for the foot and mouth disease at DEFRA's headquarters. A member of the Unit was assigned to improve financial accounting the financial and accounting controls at the Disease Control Centres. He visited the Centres, assessed the level of compliance with procedures and controls and his findings and recommendations were acted upon. The Unit also recruited experienced finance staff and these were placed in key posts in both headquarters and the Disease Control Centres. At the height of the crisis, DEFRA was using 220 financial staff on the outbreak. A further initiative was the setting up of a Financial Control Team to ensure that financial controls at Disease Control Centres were consistent with each other. The Team visited Centres and provided assistance on financial procedures and reported back on compliance procedures at the Centres. Good practice was promoted at each Centre by the Unit.
- In June 2001, DEFRA issued guidance to staff at Disease Control Centres on how they should deal with allegations of fraud. In July 2001, the Prime Minister called for an immediate review of the escalating costs of cleansing and disinfecting work. The review, and subsequent investigations carried out by DEFRA, identified several cases where costs appeared excessive. The review identified a number of problems, the pertinent ones to this dispute being too few departmental staff to assess the required work at any particular location, too generous labour and plant hire rates being used with a concomitant inflation of the reported amount of work actually undertaken, work starting without a budget being prepared, lack of effective financial controls by DEFRA and poor invoicing leading to an inability to check the work being carried out and charged for.
- JDM's complaints about slow, delayed and short payment can be linked to the timetable identifying DEFRA'S growing awareness as to the inadequacies in its procurement practices and financial controls. As has been seen, that timetable involved the employment of quantity surveyors from March 2001, the financial review, the employment of forensic accountants and the establishment of the Finance Unit in April 2001, DEFRA's guidance issued in June 2001 as to how to deal with fraudulent claims and DEFRA's review following the Prime Minister's intervention in July 2001.
- These steps explain what JDM perceived to be a timetable of late, low and non-existent payment by DEFRA. These delays were initially caused by DEFRA's staffing problems and were compounded, in April 2001, by the start up of DEFRA's more rigorous auditing procedures. Soon afterwards, DEFRA switched from paying individual invoices to making on account payments whilst these procedures, involving quantity surveyors and more rigorous checking of invoices, were being implemented. JDM's complaint about the extent of outstanding payments then followed. As it happened, this was made at about the same time as the Prime Minister's July 2001 cost control initiatives were being implemented and the forensic accountants appointed by DEFRA were starting their investigations. These steps led, in August 2001, to DEFRA's investigations of JDM's invoices being intensified and to its raising with JDM extensive accountancy queries. Soon afterwards, DEFRA voicing serious concerns about JDM's invoices and stopped making further payments whilst these were being investigated.
- The immediate background to JDM's contract with DEFRA was the Classic swine fever outbreak followed by the Drummond report and a follow up paper recommending particular procurement procedures in the event of similar future outbreaks. This was a paper prepared by Mr Paul Brisbourne in May 1999. JDM were provided with, and became aware of, the contents of this paper during the discussions it had with DEFRA prior to the contract being entered into. The paper was intended to identify the State Veterinary Services' requirements for goods, services and equipment in the event of an outbreak of serious notifiable disease, particularly foot and mouth disease. Mr Brisbourne was the Animal Health Officer for Shrewsbury and he was assisted by the Senior Health Officer for Preston and the administrative assistant for Shrewsbury. One of the functions of the paper was to address the Drummond recommendation that call-off contracts could be developed to satisfy the needs generated in the event of a disease outbreak. The paper recognised that it was important for this purpose to identify all the services, equipment labour and goods required on an infected premises throughout its confinement.
- The paper recognised that infected premises to be treated might include a farm or an increasing number of farms, a livestock market, an abattoir or even a lairage at a port. It then concluded that it was not possible until disease is suspected and investigated to predict the requirements dictated by any given scenario. However, the paper identified a list of tasks and activities which was intended to cover the total range of predicted matters that any response might have to cope with without it being necessarily intended that each would be needed in any given scenario. The matters identified as being those for which a contractor rapidly responding to a call-off to one or more identifiable premises included transporting carcases, building lagoons, on site burial, incineration and disposal, cleansing and disinfecting. A draft of a contract concerned with service provision which dated back to the 1967 outbreak from the Preston area was annexed to the paper.
- The paper was presented to the Emergency Contingency Planning for Notifiable Diseases within DEFRA and, because Mr Brisbourne was based in Shrewsbury, a trial exercise was begun in late 1999 to see whether its recommendations could be put into effect in a practical way. The Shrewsbury area prepared a schedule of equipment and services based on the Brisbourne paper's recommendations which might be required as part of an emergency response. It was intended that this list would be sent to potential suppliers to provide rates for these services and to indicate the rapid response time from first call-out to supply of those services. These details would govern any call-off pursuant to a long term supply contract if such was subsequently entered into.
- This list was sent to JDM on 27 October 1999 by Citex, a firm of consultants working for DEFRA's Shrewsbury office and this communication amounted to a request to provide an indication of possible prices that might be tendered and JDM's response times for each activity following a call if a tender for a call-off contract was subsequently sought. No potential conditions of contract were indicated or provided with the request. It is noteworthy that what was envisaged was a team that would be dispatched immediately to contain the disease from spreading which would be supplemented by support services provided by the call-off contractor following rapid response to a call-off at rates similar to those notified.
- This request was not answered immediately by JDM but, in January 2000, JDM was invited to attend a meeting with DEFRA personnel. Mr Robert Ratcliffe, JDM's operations manger attended and the DEFRA personnel were led by Mr Paul Brisbourne who introduced a discussion about his paper and as to his proposal that a call-off contract should be entered into with a company such as JDM which would be used as the vehicle for calling off emergency clean up services at short notice and with a rapid response time. The discussion included considering which items of possible equipment supply and services delivery the paper indicated might be required if a notifiable disease call-off should be undertaken by such a contractor. JDM made a short presentation about itself to the assembled DEFRA personnel.
- JDM followed this meeting up with two letters. The first, dated 26 January 2000, expressed JDM's willingness and ability to provide the type of service outlined in the Brisbourne paper. Mr Ratcliffe proposed, in the letter, that he should be the point of contact with DEFRA, that JDM was willing and able to provide the type of service required and that he would be responsible for ensuring that the service required for any disease notification would be delivered within the requisite timescale. Mr Brisbourne then invited JDM to return a priced schedule with confirmed response times and this was provided by Mr Ratcliffe in a letter dated 24 February 2000 which priced, amongst other items, the hourly rates for electrical checks, labourers and plumbers and stated that the plant hire rates did not include for drivers. The plant in question did not include any engineering or construction plant but related to such items as towing vehicles and water bowsers.
- Nothing further was heard from DEFRA until Mr Ratcliffe was invited to visit in East Anglia some of those involved in the classic swine fever clean up operations in 2000. These included a Senior Animal Health Officer and one of the contractor's representatives. They explained the nature of the operations, the plant involved and that the up to 18 hours a day, 7 days a week nature of the operation at particular sites involved considerable difficulties in arranging for sufficient plant and labour.
- The next contact from DEFRA occurred on 26 February 2001, 7 days after the first notified outbreak of foot and mouth disease. This was by way of a fax to Mr Ratcliffe from Citex on behalf of the Worcester area of DEFRA asking for the immediate delivery of 6 portakabins to DEFRA's Worcester premises. This was followed the following day with a request for 12 men to go to a farm, Hill Farm, one of those that the trial was concerned with. The men were to be sent by lunchtime that day.
- Mr Ratcliffe met Ms Anita Williams in Worcester. Ms Williams was the Divisional Veterinary Manager in charge of the Animal Health Divisional Office. At the meeting, it was agreed that signed timesheets would be kept at each farm to be worked on. A DEFRA official, who DEFRA had explained at the meeting in February 2000 would ordinarily be at AHO administrative level and who would be permanently on site, in charge and supervising the operation, would contemporaneously record, or arrange to be contemporaneously recorded by another DEFRA official, the times and numbers of those working and the times and items of plant working each day and who would also authenticate the contents of each timesheet prepared separately by JDM's site representative with similar information on it. These dually signed timesheets would be submitted with an invoice on a weekly basis and the checking, authorising for payment and payment would be made within 7 days of DEFRA's receipt of an invoice.
- This was clearly envisaged as an interim arrangement. Mr Ratcliffe's notes made before and at the meeting contain this entry: "Invoicing of payments (cashflow) ... Invoice weekly - 90% of actual sort out monthly". Furthermore, Ms Williams in evidence stated that Mr Ratcliffe's concern, in seeking regular weekly payments, was with cash flow. She checked with Ms Gillmore in DEFRA's Worcester office finance department during the meeting and Ms Gillmore confirmed that the time sheets submitted by JDM on a weekly basis would be checked against DEFRA's timesheets within seven days of receiving them and would be paid within that timescale. However, minor discrepancies would be sorted out later and major discrepancies would lead to the payment being delayed.
- DEFRA also gave some indication of the nature of the clean up operations to be undertaken. The services required involved a clean up operation on the farms that DEFRA instructed should be cleaned along the lines envisaged in DEFRA's earlier meeting with JDM and in the Brisbourne paper and as subsequently generally described in annex A to the contract. At this stage, no-one had any idea of the size and range of the FMD outbreak but instead envisaged that a relatively small number of farms in a concentrated area over a relatively short period of time would need to be cleaned up.
- Mr Ratcliffe submitted to Mr Maxwell, DEFRA's Senior Aninal Health Offcier], on 5 March 2001 a copy of the previously submitted schedule with a copy of new rates inserted onto it. The letter continued that items of plant or equipment not included in the original schedule that were required would be charged at the Civil Engineering Contractors' Association schedule of rates, the relevant pages of which he attached to the letter. These rates were again stated not to include for drivers or delivery but were inclusive of fuel. A draft of a written document outlining procedures for personnel assisting with the foot and mouth clean up operation was also forwarded.
- Soon afterwards, Ms Williams received instructions from DEFRA's head office that it was important to have a written contract in place with FMD contractors. This was a standard contract for the supply of services provided to Ms Williams by DEFRA head office but was clearly one intended to be used for such services as would be required of rapid response contractors following a call-off or call-offs to assist in cleaning up the effects of a notifiable disease. Ms Williams faxed the draft to Mr Ratcliffe on 7 March 2001 with this somewhat inelastic statement of her instructions:
- The call-off contract envisaged that JDM would have inspected each separate premises and then have provided a tender for the services to be performed (clause 3.1). The Minister was given the power to modify the services and any alteration to the contract price or the completion date arising from such modification would be agreed between the parties (clause 2). Services would be carried out in accordance with best industry practice (clause 6.1). JDM was to comply with all health and safety at work provisions (clause 8).
- Payment was to be made using the pricing schedules set out at annex B and the Minister was to pay JDM in accordance with the procedures set out in Condition 10 of the General Terms. This provided that:
- Annex B is entitled Pricing Schedules. It consists of three parts: (1) a general introduction; (2) a sheet entitled MAFF Labour Schedule and MAFF Plant Schedule; and (3) pages 5 - 28 of the then current CECA Schedules of Dayworks Carried Out Incidental to Contract Works. These pages were the pages concerned with plant hire rates, without a driver. The pages concerned with labour, materials and supplementary charges had been omitted and were not part of Annex B.
- The relevant parts of Annex B for the purposes of the issues that I must decide are as follows:
- Finally, a meeting was held between Mr Ratcliffe and Mr Carty, DEFRA's representative from the National Procurement Section and Ms Williams in Exeter on 11 April 2001 to discuss the problem that had arisen due to the absence on most sites of a DEFRA representative or, at the least, a representative who was both present throughout the day and prepared to sign daywork sheets. This meeting followed an earlier meeting at the Hilton Hotel in Manchester on 28 March 2001 when Mr Carty informed Mr Ratcliffe that DEFRA would attempt to pay JDM's invoices within 14 days of their being received by DEFRA. However, many farms either had no DEFRA representative present or veterinary officer who was both instructed to and able to become involved in contractual administration and recording functions so, in most farms, no-one was signing any daywork sheets. DEFRA had begun to query invoices which were not supported by signed daywork sheets and JDM had become concerned at this situation which had occurred because DEFRA had no representative on many sites or one present on a full time basis.
- This problem had occurred because of the severity and rapidity of the FMD outbreak and of the extreme measures taken to deal with it which understandably overwhelmed DEFRA's available resources. Ms Williams explained the problem in her area, the Worcester area, with clarity in evidence. Initially, she described the enormity of the task confronting DEFRA as follows:
- The upshot of this meeting was an understanding as recorded in Mr Ratcliffe's letter to Mr Carty on 12 April 2001. The suggested procedure involved a DEFRA nominated representative to be based permanently on each site who would record the times and activities carried out by each individual and item of plant and that sheet would be signed each day by that representative and a nominated JDM employee. These jointly signed records would be used to produce weekly invoices which would be sent with copies of the jointly signed daywork sheets. These would be checked by a quantity surveyor within or employed by DEFRA who would clear the invoice for payment if everything was in order.
- However, following this agreement as to the method of recording times at each site, the huge number of different farms being cleaned up still precluded DEFRA from providing a site based representative or one willing and able to sign daywork sheets, notwithstanding this agreed method of proceedings.
- A major development occurred towards the end of March 2001. This was DEFRA's instructions to JDM to become involved in the massive exercise of constructing burial pits for mass burial and collecting points for disposal. Three sites were dealt with in evidence, the Throckmorton site near Pershore, the Ashmoor site in Devon and the collecting points for carcases for disposal at the Arscott site. These operations were remarkable in the huge size of the earth moving and civil engineering work involved, the complete absence of any contract documents, specifications or drawings defining the work and the speed with which they were constructed involving huge numbers of men working around the clock under, from mid-March 2001 until the completion of the work a few weeks later, armed services direction. JDM was heavily involved in work on these three sites and the only governing contractual conditions or written directions for this work was the contract signed on 19 March 2001. JDM suggested in evidence that work at Ashmoor would ordinarily have taken about two years to complete but in fact was undertaken in four weeks including access roads and infrastructure.
- Associated with this work, which was an intrinsic part of the contiguous cull policy adopted once the scale of the FMD outbreak became clear, was the deployment of rapid response units. These units, were manned by JDM under the control of the army and they remained on standby on a 24/7 basis to attend premises or locations where FMD had been detected to initiate immediate culling, carcase removal, burial, disinfectant and initial clean up operations so as to seek to prevent further spreading of the disease from that point.
- Orders to start work at any farm and the details of the work required at any farm were not made the subject of any instruction in writing, no budgets were ever prepared by JDM and no purchase orders were ever issued. JDM had formidable difficulties in manning the many different farms, the burial sites and the rapid response units required of them. The personnel required were obtained in four different ways. Their own personnel based in and around Shrewsbury were used. These were supplemented by personnel brought in from other bases, many from north of Birmingham. Many were hired casually from job centres and in pubs and other public locations. Finally, many were provided by subcontractors supplying labour and services to JDM. The result of this call on so many labourers and other staff from points many miles from Shrewsbury or the sites being worked at was that many labourers were accommodated in bed and breakfast accommodation for days on end. This accommodation was largely arranged and paid for by DEFRA.
- This background gives rise to five questions of construction of the contract:
- Clearly, the factual background to the contract that I have already summarised is both material and admissible as an aid to the construction of ambiguous or uncertain terms. That background and the words of the contract show that the contract was operated in a very different way to that intended by the words of the conditions themselves. The contract was a call-off contract in which JDM agreed for one year to maintain sufficient resources to enable it to respond at very short notice to emergency calls to clean up farms and similar locations following notification of a notifiable disease such as FMD. Each farm would be made the subject of a purchase order which would define the work to be carried out and JDM would prepare a tender for that work which would obviously provide a benchmark for any valuation of JDM's services. Each purchase order would constitute a separate contract to be complete within an agreed programme and the work would be invoiced in one invoice at the completion of the contract work. The services would be of the type described in Annex A, the specification which were services which could be carried out using labourers and, where necessary, an electrician to carry out electrical tests and a plumber. These services were of the kind described in the Brisbourne paper and discussed and rated by JDM prior to the contract. It was envisaged that if JDM was called out for such clean up services, that the number of separate locations to be worked on at any one time would be limited in number and closely confined in area. These locations would be close to Worcester and within the Worcester DEFRA area.
- The actual standard form contract drafted by DEFRA and proffered for use by DEFRA's Worcester area offices was worded so as to make it capable of use as a general service provision contract. It was adopted by the Worcester area on DEFRA's instructions. JDM had no say in, nor ability to change, the wording of the contract. This standard form call-off contract would have been readily capable of use for the type of call-off services anticipated by the Brisbourne paper. The scope of work required of JDM were defined in the annexes to the contract. This scope of work covered call-off clean up services on farms and similar establishments following a localised outbreak of a notifiable disease.
- In fact, the services performed by JDM under this contract on DEFRA's instructions were very different in their content and scope and amounted to significant variations to that contract. The following significant differences between the services required and those for which the contract was prepared occurred:
- The question affects those who travelled directly from their Bed & Breakfast accommodation to site, particularly those who were involved in working at the large burial sites. Many of these operatives were accommodated for long periods in Bed & Breakfast accommodation in the Shrewsbury area and, instead of first travelling to JDM's depot in Shrewsbury and then being bussed from there to site travelled directly to site from their accommodation. This was because the demand for operatives was so great that it could only be fulfilled by both JDM and its subcontractors bringing in their own operatives from other depots located in areas away from the Shrewsbury area or by temporarily hiring operatives who were located in other areas. Given the large number of men having to be accommodated in overnight accommodation and the relative unavailability of accommodation adjacent to the sites in question, the accommodation that was used was scattered over a wide area in the South West and was often located up to 30 minutes or more travelling time away from the site that that individual was working at.
- In most cases, the accommodation was paid for, and also arranged, by DEFRA pursuant to the contractual provision for payment for accommodation where an operative was working away from base. The journey to and from the site was made in a variety of ways. Sometimes the operatives used their own transport to and from site. Others obtained lifts or hired taxis. Yet others arranged to be picked up along their route from the relevant depot to the site by JDM or subcontractors' buses, vans or people carriers which were transporting other operatives to site from the relevant depot.
- The relevant contract provisions are set out in Annex B to the contract and read as follows:
- In construing these provisions, it is noticeable that they fall into three parts. Firstly, travelling time back and forth from base to site is to be included in the period of working time which DEFRA has to pay for. What is referred to as "base" is not defined. Secondly, when working away from base, a trade off between travelling time and the cost of accommodation is provided for. The wording used does not make it clear whether the trade off relates to saved travelling time or the entirety of what would otherwise be paid for travelling time. Thirdly, travel is paid for separately by way of a reduced hourly rate and a mileage allowance. When "travel" time is payable and what constitutes "travel" is not defined.
- What this three-fold division into travelling time, saved travelling time and travel suggests is that, ordinarily, travel from home to base and time spent at base is not remunerated, travel from home or from base not connected with travel to site is remunerated as travel and travel from base to site is remunerated as working time. This three-fold division further suggests that accommodation is to be payable instead of travelling time when an operative is working away from base, that travel to and forth between home and that accommodation or between base and that accommodation is to be remunerated as travel since such travel is travel away from base on JDM's behalf but is not travel directly to or from site and that any necessary travel to and forth from accommodation to site is to be remunerated as travelling time since it is a substitute for travelling long distances to and forth from base to site. However, given the unclear or ambiguous wording of the provisions, this inferred intention is only provided for if "base" in the first of the three provisions means the operative's base at the time of the journeys to and forth from site; "base" in the second of the three provisions means the operative's permanent usual base; the "trade off" provision is read as providing for a trade off only for the saved travelling time and not as excluding all travelling time payments; and "travel" is taken to mean travel on JDM's business but not involving journeys directly between base and site.
- DEFRA contended that no travelling time was payable for the journey time to and from an operative's accommodation where that operative travelled directly between his accommodation and the site. This was because travelling time was only payable where the operative was travelling "to and from base", being the base or depot from which he usually worked. Operatives being put up in accommodation at DEFRA's expense were working "away from base", or their home depot, since accommodation could only be charged to and paid for by DEFRA when they were away from that depot. Thus, since the contractual travelling time payment provision only applied to those travelling to and from their home depot, the contractual travelling time provision did not apply to accommodated operatives.
- In support of its argument, DEFRA also relied on the wording of the contractual provisions concerned with payment for accommodation. This wording allowed JDM to recover or have paid by DEFRA the costs of accommodating an operative who was working away from his home base if these costs were comparable to or less than the cost of travelling time. DEFRA contended that that wording was intended to, and did, exclude any additional claim for travelling time, even if such arose, where an overnight stay occurred and the cost of that accommodation was claimed from or paid for by DEFRA. Thus, DEFRA's argument was that the words "accommodation rates can be claimed if they are comparable to or less than the cost of travelling time" meant "accommodation rates can be claimed to the exclusion of any travelling time if they are comparable to or less than the cost of travelling time".
- It follows that DEFRA's contention was that the contract provided for two clear alternative situations which were mutually exclusive of each other. The first situation was where an operative travelled to JDM's Shrewsbury depot or from the depot of his subcontractor employer and was then transported from there to site in the morning and back again to the depot in the evening. DEFRA accepted that JDM was entitled to be paid for this travelling time. The second situation was where an operative was accommodated in a Bed and Breakfast and then travelled directly between that accommodation and site. DEFRA contended that JDM was not entitled to be paid for the travelling time for that individual. Thus, if an operative was staying in paid for accommodation, no travelling time was payable however long the period of travel each day between that accommodation and site.
- DEFRA did not explain how the contractual provisions operated for those individuals who travelled from Bed & Breakfast accommodation to their employer's local depot and who were then transported by their employer from that depot to site or those who were picked up en route from their accommodation to site by transport arranged by their employer so as to be transported part of their journey by their employer's transport which had started from its depot. If DEFRA's contention is correct, these journeys also would not constitute travelling time since they would not be, for the operatives in question, journeys to and from their home base.
- JDM's argument was that all travelling time from an operative's accommodation to site, whether directly or via a depot of his employer or via a pick up point en route to site, was payable as travelling time "to and from base" since, for these purposes, the local accommodation was that operative's base. In other words, "to and from base" meant to and from that operative's base on the day in question. This meaning was different from the meaning of "base" in the phrase occurring soon after it: "for working away from base overnight accommodation rates can be paid". In that second phrase, "base" was a reference to the operative's home base.
- JDM also contended that the trade off that is provided for by the contract between travelling time and accommodation rates, in which accommodation rates were payable in lieu of travelling time, related only to the notional sum that would have been paid for the travelling time between an operative's home depot and site which had been avoided by that operative staying in local accommodation. In other words, the words "accommodation rates can be claimed if they are comparable to or less than the cost of travelling time" meant "accommodation rates can be claimed instead of travelling time if they are comparable to or less than the saved cost of travelling time".
- In construing the two phrases, account must be taken of the fact that the agreement was entered into on the basis that the work to be performed would be performed within the Worcester area by operatives employed by JDM or by its subcontractors whose base might or might not be JDM's Shrewsbury depot. The operatives would travel as a gang or group together to an infected foot and mouth site in order to carry out a team cleansing activity on that site. Usually, but not necessarily, the base from which the gang had come would be located in or near Shrewsbury. The rapid response required of JDM and the need to maintain resources to allow for a rapid response would mean that, on occasions, the men would be travelling from a base a long way away from the site in question. In other words, operatives would, on occasion be working away from their base in the sense of working a long way from it.
- On such occasions, the clear intention of the contract was to allow JDM a choice of bussing in their operatives on a daily basis from afar or accommodating them en route overnight thereby saving a long daily journey at the expense of that accommodation. The choice was, however, JDM's alone since the contract merely stated that "accommodation rates can be claimed" without requiring that alternative if savings could be made. However, the choice was only open to JDM where the journey time from a depot where the operatives were based to a particular farm was so great that it would involve travelling time in excess of £51 per day, which at contract rates would be one well in excess of one and a half hours in each direction.
- It can thus readily be seen that the contractual intention was that JDM could only exercise its option of claiming for accommodation if a saving would result to DEFRA. Thus, a notional comparison had to be made between the cost of the travelling time involved in travelling from an operative's home depot or base to the site and back and the cost of travelling a much shorter distance combined with the cost of bed and breakfast accommodation at a rate of about £51 per night. No other meaning of the relevant provision would make commercial sense.
- It is also helpful to identify the meaning of the word "Travel" since such travel is to be remunerated at a percentage of hourly rates and with a mileage allowance. The only sensible meaning in context to be given to such travel is that it relates to any travel on JDM's business in performing contract services for DEFRA which is not travel directly between base and site. Clearly, travel between home and base is not covered. Equally plainly, travel between two sites or between a site and DEFRA's offices for a meeting during the day are covered. It would fit in with this structure if travel between home and overnight accommodation many miles away which is being paid for by DEFRA as part of an operative's working arrangements away from base under the contract was also paid for as travel. That part of an operative's travelling time is, I find, to be paid for at the lesser travel and mileage allowance rates contained in the contract.
- What is meant by "base" in the expression "to and from base"? Ordinarily, the same word used in a similar context in two places in the same set of contractual provisions is being used in the same sense on both occasions. On that basis, "base" would mean "home or permanent base" so that travelling time would not be recoverable by JDM when the operatives travelled from their accommodation to site since "base" in the second of its uses in the phrase "working away from base" clearly means "home base". However, that meaning defies commercial commonsense, the obvious meaning intended by the parties and the context in which the word "base" is first used. The obvious meaning of "base" in that first phrase is "base from which the operative is working on the day in question". That might be his home base or it might be a temporary base if he is working away from his home base.
- This conclusion arises for these reasons:
- If, contrary to my findings as to the meaning and intent of the contract provisions concerned with travelling time, JDM is not entitled to recover travelling time between operatives' overnight accommodation and site, an entitlement to the same recovery arises pursuant to JDM's entitlement to reasonable additional remuneration for services that had to be performed pursuant to the variations to, and the enlargement of the scope of, the contract which DEFRA instructed. These additional services were only provided as a direct consequence of those variations and for which JDM would not otherwise be remunerated.
- This is an alternative basis for JDM to recover payment for travelling time between operatives' overnight accommodation and site. JDM may claim that time as a direct consequence of the variations to the contract that they agreed to perform. In essence, the variations consisted of the provision of a greatly increased number of operatives to enable the hugely increased scope of work to be undertaken by JDM under the contract. This unexpected additional labour requirement arose from the unexpected size and scope of the foot and mouth outbreak which had led to the need to call in large numbers of operatives from far afield to match DEFRA's demands for labour. This labour was needed both to clean up over a short space of time the greatly increased number of farms scattered over a much wider area than was envisaged by the scope of the call-off contract and to construct burial sites which was work which was not covered at all by the scope of that contact. This demand in turn required the use of much accommodation located far from the sites that were being worked on and a consequent unexpectedly lengthy daily journey between their overnight accommodation and site for many operatives. In agreeing to instructing JDM to vary the contract to deal with these varied working conditions, DEFRA impliedly agreed to pay JDM additional reasonable remuneration for any services performed to fulfil those variations which were not covered by the existing contract remuneration. Such additional services included operatives' travelling time between their overnight accommodation and site and such travelling time is therefore reasonably to be paid for by DEFRA at the same rate as comparable travelling time between base and site already being paid under the contract.
- For these reasons, the contract has the meaning contended for by JDM. In consequence:
- A further question that arose concerned the time spent by JDM's operatives at their base at JDM's Shrewsbury depot between their arrival and the moment when their transport left the depot. A similar question arose for subcontractors' operatives but the time in question would not have been appreciable since both the depots and the numbers of operatives were small in comparison to JDM's operation. Because of the large number of men working for JDM, including many temporary employees and the large number of sites being worked on, the men had to spend varying times of up to about one hour on arrival at the depot. This time was spent drawing stores, plant and tools and clothing, changing, receiving instructions and awaiting transport and queuing. The numbers of men were unprecedented and the management, equipping and movement of the overall numbers created considerable difficulties. There was no evidence from or suggestion by DEFRA that this waiting time was unreasonable or that JDM unduly prolonged the stay at the depot of operatives pending the start of their journey.
- The operatives were entitled to be paid as soon as they clocked in on arrival at the depot and any time spent thereafter was spent towards and in preparation for their journey to and work at site. Such time is undoubtedly embraced by the phrase: "travelling time back and forth to base". The activities in question were preparatory to and both related and incidental to the actual travel to and work at the site. They therefore are embraced by the concept of "travelling time". Moreover, The Working Rule Agreement for the Construction Industry (June 2000 edition) produced by The Construction Industry Joint Council, which governed the terms and conditions of employment of JDM's operatives, provided that normal working hours for which an operative was entitled to be paid were the number of hours prescribed by the WRA, being four 8 hour and one 7 hour days per week reckoned from the "starting time fixed by the employer". JDM fixed the operatives' starting time as the time they had to arrive at and clock in at the depot and counted all subsequent time spent at the depot as counting towards their working day. A further, albeit limited, period of time occurred when the operatives arrived back at the depot at the end of the day whilst they booked back any equipment, clothing and plant and engaged in rudimentary cleaning operations before clocking out and going home. This period also was appropriately counted towards travelling time for the same reasons as the time spent at the depot at the beginning of the day.
- A further period of waiting occurred from time to time for those operatives at the burial site who formed part of the rapid response teams that were sent out at a moment's notice by the Army to cope with the immediate reports of a new outbreak or discovery of infection. There were occasions, albeit few in number and limited in duration, when these operatives were awaiting instructions and not actually working. This waiting time is undoubtedly part of the working time for which JDM was entitled to charge as chargeable hours.
- It follows that both periods of waiting time, namely the period between arrival at and departure from the depot in the morning and evening and any waiting period incurred by members of rapid response teams counts towards chargeable hours.
- The contract makes no specific provision for meal breaks. The relevant provision reads:
- It is to be noted that there are 9 hours between 8 am and 5 pm so that JDM would be remunerated under the contract for an operative working between those hours for 8 single rate hours. Thus, JDM would not be remunerated at all for the ninth hour or, if it was worked, would be remunerated at time and a half rates. This contractual arrangement suggests that the contract had been drafted to give effect to what the parties agreed was standard industry practice for the provision of civil engineering services, namely that the time taken on the main break during the working day was time for which a contractor was not entitled to charge the employer. Such a practice, given effect to as an implied term of the contract, could of course be overridden by the express agreement of the parties.
- The contract also provided that JDM would comply with all statutory provisions relating to health and safety at work. The Working Time Regulations (1998) (SI 1998 No. 1833), enacted so as to enable the United Kingdom to fulfil its obligation to implement the Working Time Directive 1993 and so as to promote health and safety at work, provide that an adult worker is entitled to an uninterrupted period of not less than 20 minutes to be spent away from his workstation if he has one where his daily working time is more than six hours (regulations 12(1) and 12(3)). However, this regulation is not applicable where a worker's activities involve the need for continuity of service or production in relation to agriculture (regulation 21(c)(vii))or where his activities are affected by an occurrence due to unusual and unforceable circumstances beyond the control of the worker's employer or to exceptional events, the consequences of which could not have been avoided despite the exercise of all due care by the employer (regulations 21(e)(i) and 21(e)(ii)).
- The onset of foot and mouth disease with the severity that occurred in 2001 and the clean up and associated work in which JDM was involved necessitated unprecedented work loads that had to be carried out with great rapidity. The resources available to DEFRA were limited and this led to the need to employ clean-up contractors for excessive working hours and to forgo meal and other breaks. It is clear that, during the clean-up period, all three exceptions to the applicability of regulation 12 were in force. The clean-up work required continuity of work in connection with agriculture, it was affected by the foot and mouth outbreak which was an occurrence that was due to unusual an unforeseeable circumstances beyond both JDM and DEFRA's control and both the outbreak and the resulting severity of the clean-up work it necessitated were exceptional events which could not have reasonably have been avoided.
- There was evidence as to the customary length of the mid working day break. The expert quantity surveyors giving evidence for the parties, Mr Ribbands for JDM and Mr Lumley for DEFRA, agreed on the accepted custom and practice of civil engineering contracting in relation to meal breaks. In summary, they agreed that neither the contractor nor the operatives were entitled to payment for the time taken for the main meal break during the working day. Other breaks taken for refreshment are not subject to such a deduction. Where no agreement is reached between the parties to the contract as to the length of the meal break, it would ordinarily be of 30 minutes duration. However, if a break was not taken, no period of non-payment would arise. Equally, if the break was for either a longer or shorter duration than 30 minutes, the period of non-payment would be of the same length as the actual period of the break.
- There was no consensus as to what constituted a break for the purposes of non-payment. Mr Ribbands believed that a break involve a number of factors. Essentially, it was a period of respite where the operative was able to get away from his immediate working environment and relax. The provision and the taking of food or a meal, whether provided by the employer or by an independent canteen or by the operative himself was an indication of a break being taken but not determinative of that question since food can, on occasion, be taken whilst an operative is still working. The Working Time Regulations refer to time spent away from a worker's workstation. Mr Ribbands stated that it was hard to define a workstation on a civil engineering site but considered that it represented the work face where work was being carried out. He also stated that a meal break, in industry practice, comprised a recognised break which could be a rest period with or without a meal being taken. The break had to be officially recognised as a break and have some formal structure to it. Moreover, it would normally by taken at the approximate mid point of the working day. I accept that opinion. Indeed, a workstation, or a place where a break of the quality and kind envisaged by both the Working Time Regulations and industry custom and practice, would have to be one where the health and safety regulations governing working practices, such as the wearing of a hard hat and the operation of safe working practices, are not applicable since rest cannot be taken if an operative is having to observe such regulation. Thus, the area where a break is occurring must be away from, and protected from, the working environment.
- It is clear that a break does not start until the operative has reached that environment so that walking or travelling time to and from the location of the break does not form part of the period of the break for which no payment is made or received. This is because he is still subject to the working environment and is still subject to health and safety regulations. Only on arrival at a place set aside from the working environment would it be possible for a break to be taken.
- A summary of the position is, therefore, as follows:
- It was accepted by JDM that any item of plant, such as a digger or excavator, which was hired with an operator, would be subject to a meal break deduction. Thus, a plant operator would be subject to the same meal break deduction regime as any other operative.
- No evidence was adduced to deal with the position of plant which came with an operator and which was left not being operated during the period of a meal break. Four possibilities exist: the plant would not be charged for during the whole period from the start of the walking time to a meal break site until the operator's return from his break and the start up of that item of plant; the plant would not be charged out during an equivalent period as the period for which no charge would be made for the operator; the plant would be charged for at standing time rates; or the plant would be charged for in full.
- JDM accepted DEFRA's pleaded contention that JDM was not entitled to charge DEFRA for the hire of plant which was hired at an hourly rate for the period during which the associated plant operators were taking deductible meal breaks. In other words, the same deductible period, if any, for meal breaks that was made for plant operators would by made for the plant those operators were operating.
- I conclude, therefore, that:
- The issues I have had to determine have involved a detailed consideration of the following question for each operative for which a claim for payment was made by JDM:
- The number of chargeable time claimed for each operative on each day worked was recorded on time sheets. These time sheets were prepared in a way that did not provide a direct answer to any of the three questions with which I am concerned. The method of recording working time was for the overall daily chargeable time to be recorded for each operative on a time sheet. Thus travelling time and site working time were recorded in one global figure which was a net figure after any deductible meal break time had been deducted from that overall number of hours. Thus, anyone examining a time sheet after the fact would not be able to tell whether travelling time and deductible meal break time had been included or excluded and, if included, what the relevant period of time was that had been included. All that could be ascertained was, for a particular operative, what were the precise number of hours of chargeable time that had occurred on a particular day on a particular site. Had DEFRA required it, each time sheet could have been prepared so as also to record for each operative: travelling time, the starting point for the journey to work for which travelling time was being charged and the starting and finishing time of both work on site and the main meal break. These additional facts were not asked for and the manner in which the time sheets were prepared was in conformity with accepted civil engineering practices.
- It follows that unless DEFRA is able to point to a generic error in the manner in which the time sheets were recorded, there is no way in which the timesheets can be checked for accuracy in relation to the three categories of primary fact that I have had to investigate. This was because there was no other contemporary comprehensive record available of what individuals were doing at any particular time on any particular day.
- The type of error that could be checked and corrected, if it occurred would be either arithmetical or generic. Firstly, time sheets could be checked and adjustments made to them by DEFRA if they contained arithmetical errors or other patent inconsistencies. Secondly, overall adjustments could be made to the time sheets at a particular location if these had been the subject of generic errors which were able to be detected after the time sheets had been filled in and submitted to DEFRA. Such errors could include the following: no time for meal breaks had been deducted at a site where meal breaks were regularly taken by the operatives; time sheets at a particular site had been retrospectively made up in the depot by their compiler making an estimate of the hours that had been worked; operatives always left site at 6.00 pm at a particular site yet the overall number of claimed chargeable hours were only consistent with the operatives having left site much later than that. Furthermore, a so-called sense check could be carried out on particular batches of time sheets to see whether the daily number of claimed chargeable hours appeared to be reasonable and in line with other comparable sites or with what might be expected given the working conditions and labour involved. What could not be independently checked or verified by DEFRA after the fact was the individual accuracy of any particular timesheet so far as it concerned travelling time and meal breaks in the absence any contemporary site-based authentication, checking and verification of individual time sheets by DEFRA staff.
- The recording of time on time sheets went through a number of stages, not all of which occurred at each site. The longest chain was as follows:
- DEFRA's suggested verification procedure, which JDM had agreed to, involved a DEFRA nominated representative being based permanently on each site who would record the times and activities carried out by each individual and items of plant and that sheet would be signed each day by that representative and a nominated JDM employee. These jointly signed records would be used to produce weekly invoices which would be sent with copies of the jointly signed daywork sheets. These would be checked by a quantity surveyor, whether a private quantity surveyor engaged by DEFRA or one directly employed by DEFRA, who would clear the invoice for payment if everything was in order. That procedure would have involved the DEFRA site based representative signing either or both of the individual members of the sets of time sheets identified in stages 1 and 2 of the procedure set out in paragraph 110. However, in practice, many sites had no DEFRA representative, whether DEFRA employee, vetinerary officer, vetinerary officer's representative, farm owner or manager, quantity surveyor, engineer or armed forces personnel, present sufficiently continuously to enable that person to verify the daily time sheets. Moreover, whether or not there was such a representative on site able to verify the time sheets, on most sites no time sheets were verified or authenticated by a DEFRA representative although the time sheets were available for that purpose had they been required since no such representative was instructed to verify time sheets or regarded it as part of his or her function to undertake this exercise.
- Detailed evidence was given about the procedures that were adopted within DEFRA on receipt of invoices and time sheets. The conclusion to be drawn was that the invoices and supporting materials were subjected to a series of checks. Initially, a clerk would check the paperwork for arithmetical or other errors revealed by a desk check of the paperwork. This check would identify such cases as where the multiplication exercise of hours and rates had been in error or where a particular entry was claimed twice or not claimed for. The resulting checked paperwork would be examined by another more senior official prior to the invoice being recommended for approval for payment. As work proceeded, this check was usually delegated to a quantity surveyor employed or engaged by DEFRA. That check would consider such matters as whether the correct rate was claimed and whether DEFRA had authorised JDM to work on the site in question on the day in question and whether the nature, size and make up of the overall sum and the individual sums claimed appeared reasonable and accurate. The claim for payment then had to be authorised by a senior DEFRA representative in the Worcester area office and, prior to authorisation, that officer would carry out a sample check on individual parts of the claim and an overall sense check of the kind already carried out. Following that exercise, the claim would be authorised.
- As has already been summarised, DEFRA changed the authorisation procedures in the period from March 2001 onwards by introducing external officers and then quantity surveyors into the checking procedures. These additional checks did not alter the nature of the three-stage procedure I have outlined but did introduce into the system, by degrees, those with greater experienced training in civil engineering work and its claims procedures. Inevitably, however, no detailed or individual verification of time sheets in relation to travelling time, meal breaks or plant usage was possible whoever was checking the paperwork since the time sheets had not been checked or authenticated at site.
- What DEFRA did, initially, was to pay invoices as these were submitted. However, the huge number of individual contractors and the size and volume of weekly claims being made led to long delays in payment. DEFRA soon started to make payments which were stated to be on account payments. Soon afterwards the size and frequency of these on account payment, so far as JDM was concerned, were reduced and then, in August 2001, stopped altogether on the advice of those involved in the auditing process, particularly the private quantity surveyors who had been retained.
- For the purposes of the individual issues at the various sites with which I am concerned, this summary of the invoicing procedure is sufficient. The issues are:
- These issues can only be considered on a site by site basis. However, four general issues of principle arose because it became clear that JDM contended that DEFRA was precluded from challenging the contents of time sheets in the three ways that were developed at the trial on four different but successive grounds.
- The first question that arose was as to the effect of payments made by JDM. Once a payment had been made to discharge a particular JDM invoice, it was contended by JDM that that payment finally concluded any question of JDM's entitlement for payment for the work in question. If not, JDM contended as a fall back position that the payment finally concluded DEFRA's ability to challenge JDM's entitlement to reclaim any part of a payment that could subsequently be shown not to have been due to JDM.
- The next question that arose was related to the absence of any site-based authentication or verification of time sheets by DEFRA despite the procedures agreed between DEFRA and JDM at the outset and as modified at an early stage after JDM had started foot and mouth clean up work. JDM contended that that failure to follow an essential step in the checking and claiming procedure by DEFRA precluded it from subsequently challenging any part of a claim for payment that was reliant on the contents of a time sheet.
- JDM next contended that if time sheets and prior payments could be challenged in principle, DEFRA was estopped from challenging the contents of these time sheets at specific sites.
- Finally, there was a dispute about what the evidential effect of the contents of any particular time sheet is. In particular, JDM contended that the evidential burden of proof lay with DEFRA to show that the contents were incorrect and that JDM did not have to establish anything more than the existence of any particular time sheet unless grounds were made out that it was inaccurate at which point JDM could displace that evidential burden.
- The evidence that was adduced was of two general types. It consisted firstly of the personal recollection of those who had some personal knowledge or experience of working at one of the particular sites in question. These witnesses gave general written evidence, in many cases supplemented by oral evidence, about travelling to and from the site, the nature and length of meal breaks, or where appropriate as to the absence of meal breaks being taken and as to site working conditions more generally. Secondly, the evidence consisted of explanations of the procedures adopted at any site to record time sheets, to claim for payment or to check the paperwork submitted in relation for claims for payment at that site.
- In overall terms, therefore, I must decide how to balance the evidence adduced from these witnesses against the contents of any particular time sheet prepared without verification by DEFRA following DEFRA being unable to provide people or procedures that enabled it to contemporaneously verify them on site.
- The first matter to consider is whether any payment against an invoice under the contract prior to the final payment was open to review, that is: "was any payment in the nature of a provisional payment which was subject to final adjustment, in favour of JDM or DEFRA, once the final account was prepared and finalised at the end of the contract?"
- The contract, as has already been seen, was devised for use for an individual site and that each site worked would be subject to a different contract. In summary, the contract provided that:
- It follows from this summary that payment, both of an interim and final nature, would ordinarily be made after completion of work on any one site and in one payment following invoicing by JDM and agreement by DEFRA's representative. Clearly, the scope of the contract as performed was radically different from this scheme since all work at all sites was performed under one contract governed by the same payment provisions. The scope of work was neither defined nor agreed, no tenders were ever submitted, no purchase orders were ever issued and the open-ended contract in fact ran for at least 9 months.
- Of course, the contract provided for alternative invoicing arrangements if "otherwise agreed by the Minister". However, the only alternative arrangements that were agreed between JDM and the Minister's authorised representatives were those agreed between Mr Ratcliffe and Ms Williams in February 2001 prior to the contract being entered into and in April between Mr Ratcliffe an Mr Carty. These arrangements were intended to provide the means for site-based time sheets to be authorised and verified on site by DEFRA representatives which would be used by JDM to submit weekly invoices for the work on all sites which would be checked and an authorisation for payment would be made, if possible on a weekly basis. However, this arrangement was never envisaged as other than an interim or provisional arrangement, in the nature of an interim payment procedure usually operated on a construction contract and which is mandatory for work undertaken pursuant to a construction contract as a result of section 109 of the Housing Grants Construction and Regeneration Act 1996.
- A considerable part of the work performed under this contract, if not all of it, was subject to the HGCRA since a Construction Contract comprises Construction Operations which are defined to include:
- For all work undertaken by JDM which comprised Construction Operations, section 109 of the HGCRA provided that JDM was entitled to payment "by instalments, stage payments or other periodic payments" at intervals and in amounts agreed by the parties to the contract. In the absence of such agreement, the relevant provisions of the Scheme for Construction Contracts (SI 1998 No 649) which defines how and in what manner stage payments are to be made where there is no contractual provision or agreement by the parties as to such payment. The Scheme provisions have effect as implied terms of the contract (section 114(5)). Stage payments which are provided for by the HGCRA, whether by agreement between the parties or by virtue of the Scheme therefore, clearly take effect as express or implied terms of the contract and they are by nature interim or provisional payments, subject to final review at the conclusion of work.
- Furthermore, both JDM and DEFRA representatives envisaged when making the agreements or arrangements in question, that the resulting payments would be provisional. This can be seen from Mr Ratcliffe's note of the meeting he had with Ms Williams in February 2001 (see paragraph 55 above). The obvious sense of the agreed basis of interim payments agreed by Mr Ratcliffe and Mr Carty in April 2001 was that these payments were to assist cash flow and would not constitute final payments for the work carried out in the week or month in question. All the witnesses who gave evidence about the parties' payment arrangement understood that a payment could be subject to further adjustment later.
- Thus, Mr Ratcliffe accepted that invoices would be subject to adjustment or correction if mistakes were found subsequent to payment<2>. Admittedly, he did not envisage any significant adjustment occurring but the fact that he contemplated the possibility of even small adjustments either up in favour of JDM or down in favour of DEFRA shows that the interim payments made against invoices under the contract were not final in nature but were subject to further review and, where necessary, adjustment of and repayment or crediting of any excess in favour of DEFRA. Equally, Mr Pritchard, a supervisor for JDM at various sites, stated that on a number of occasions, JDM credited DEFRA for sums paid in error. On DEFRA's part, both Ms Williams and Ms Gillmore, an Executive Officer who authorised some of the payments, stated that they understood that any payments based on discrepancies or mistakes would be corrected later. Again, although these witnesses assumed that any correction would be minor in nature, and that was a reasonable assumption since the process of checking invoices would be expected to prevent significant over-payments, their understanding was to the effect that the payments were interim and on account payments which would be subject to review at a later stage when JDM's accounts were finalised.
- It follows that the invoicing and payment arrangements agreed in a somewhat informal and ad hoc way by the parties and operated with some difficulty whilst work proceeded were interim and provisional in nature. This is because the contract did not provide expressly for stage payments so that the HGCRA provisions, which created contractual stage or interim payment arrangements, were applicable. The provisional nature of the arrangements made for interim payment by Mr Ratcliffe were also of this kind. Finally, the contract clearly envisaged one final and conclusive payment after the conclusion of all work and this provision survived intact, thereby indicating that the weekly invoicing and payment arrangements applied whilst work proceeded were not final in nature. If the weekly payments were interim and provisional, by necessary implication each was subject to review and finalisation when the final invoice and account was prepared and if, during that process, JDM was shown to have been overpaid, it would be under an implied obligation to repay the excess since such a repayment is inherent in any interim, stage payment and provisional invoicing contractual arrangement.
- Thus, no payment that was made was final in nature and any overpayment which can now be shown to have been made in error may be claimed by DEFRA as part of the overall accounting exercise being carried out now work has been completed.
- The next question that arose was related to the absence of any site-based authentication or verification of time sheets by DEFRA despite the procedures agreed between DEFRA and JDM at the outset and as modified at an early stage after JDM had started foot and mouth clean up work. JDM contended that that failure to follow an essential step in the checking and claiming procedure by DEFRA precluded it from subsequently challenging any part of a claim for payment that was reliant on the contents of a time sheet.
- The parties agreed, as I have already found, that all labour and plant used on site would be recorded on a daily basis and verified and authenticated by both JDM and DEFRA's site based agents. These records would be used as the foundation of sums claimed on invoice by JDM. This arrangement amounted to the type of arrangement envisaged by clause 10.1 that could modify the contractual provisions for payment and it was clearly intended by the parties to form part of the procedure for the submission, receipt and agreement of invoices.
- The need for an accurate contemporary record of the chargeable hours of the labour being used on site was two-fold. Firstly, the parties needed an accurate method of recording so as to enable both parties to be satisfied that payments being sought and made were correct and based on an accurate calculation of chargeable hours in circumstances in which, unless the record was verified on the day on which the chargeable hours were worked, there was no accurate means available to either party of ascertaining or checking the precise number of hours spent working, travelling or on deductible meal breaks. Secondly, JDM and each subcontractor was subject to the Working Time Regulations which limited weekly working hours including overtime to 48 hours for each 7-day period. However, this restriction is not applicable in relation to a worker who has agreed with his employer in writing that it should not apply provided that his employer maintains up-to-date records which specifies the number of hours worked by him for the employer during since the agreement came into effect (regulations 4(1), 5((1) and 5(4)).
- The parties' agreement as to the keeping and verification of time sheets was, therefore one which had contractual effect and which gave effect to both of these purposes. DEFRA's inability to fulfil its contractual obligation was entirely due to circumstances beyond its control. It was, however, a breach of contract. JDM was ready, willing and able to fulfil its part of the agreement and time sheets were available on each site for verification and signature by a DEFRA representative had such been available. The question that I must decide is what the effect is now given that JDM submitted time sheets recording the chargeable number of hours on each site which had not, in breach of DEFRA's contractual obligations, been verified by a DEFRA's site representative.
- JDM was clearly entitled to interim payment on the presentation by it of time sheets that its site based agents had both verified and signed and verified but which were unsigned by a site based DEFRA representative. Since these interim payments were open to subsequent review, a jointly signed supporting time sheet was obviously not something which provided conclusive evidence of the number of chargeable hours and it was not necessary to imply a term to that effect. However, the authenticating signature of a DEFRA representative would have amounted to a declaration against DEFRA's interest that a particular number of chargeable hours had been incurred. Such a declaration can, of course, be proved subsequently to have been based on inaccurate or false information but only if the party whose interest was affected by the declaration can establish that such an error occurred. In other words, in the absence of contrary evidence adduced by DEFRA, any court or tribunal faced with a declaration against interest may proceed on the basis of the correctness of the contents of that declaration without further evidence being adduced.
- The verification procedure was clearly intended to preclude disputes as to the number of chargeable hours actually performed. Thus, although jointly signed time sheets would not amount to conclusive evidence of JDM's entitlement to payment for the particular number of chargeable hours recorded on any time sheet, DEFRA would only be able to challenge the content of the time sheets, for payment purposes, to the extent that it could adduce evidence to show that an inaccuracy or error had occurred. This would place an evidential burden on DEFRA to prove an inaccuracy and, in the absence of such evidence, the parties and any tribunal would have to proceed, and the parties would have a contractual obligation to proceed, on the basis that the recorded chargeable hours correctly represented the number of chargeable hours for which DEFRA was liable to remunerate JDM for.
- It would be to allow DEFRA to take advantage of its breach of contract if DEFRA was to be allowed to make any more extensive challenge to the time sheets than it could have done following their verification by one of its site based representatives. Thus, for any time sheets now in issue which had not been verified by DEFRA on site, DEFRA now has the evidential burden of showing that the contents of the time sheet were inaccurate. In practical terms, therefore, DEFRA is restricted in its attack on the time sheets to showing that they contain arithmetical or other patent errors, that they are subject to some general error such as not allowing for deductible meal breaks, were fraudulently produced or were produced by a process which was inherently unreliable such that no weight may be placed upon them.
- JDM next contended that if time sheets and prior payments could be challenged in principle, DEFRA was estopped from challenging the contents of these time sheets at specific sites. This allegations took two forms. On one site, Throckmorton, the parties allegedly agreed to set off travelling time of the operatives against the time spent on the main meal break so that JDM could charge as chargeable time the whole time spent on site but would not charge for travelling time. This agreement was contended to be an agreed contractual variation. If there was no agreed contractual variation of this kind, JDM contended in the alternative that DEFRA was now estopped from now contending that JDM had to deduct meal time stoppages which were otherwise deductible. The second form of estoppel arose in relation to those sites where DEFRA representatives had signed time sheets on site or had prepared their own contemporaneous records of labour whilst on site and where these records were not taken into account when DEFRA subsequently challenged the accuracy of JDM's own time sheets on those sites.
- I was referred to a number of authorities for the purpose of identifying the modern law of estoppel, an area of law which is rapidly developing and merging with the law of change of position. The relevant principles applicable to this contract may be summarised as follows:
- These principles must be applied on a case by case basis. Thus, it is not possible to apply them generally to this case but the particular facts relating to each site must be considered separately. Suppose it had been agreed by appropriate representatives of DEFRA and JDM that travelling times should be traded off against meal times so as to enable both parties to save themselves much paperwork and administrative time. Alternatively, suppose DEFRA first challenged the accuracy of particular time sheets so long after their submission by JDM that JDM was no longer able to substantiate them because it had reasonably disposed of relevant documents or had lost track of particular witnesses. In such circumstances, for the site in question, JDM could in principle estop DEFRA from relying on its contractual entitlement to deduct meal times or its evidence that undermined the presumed accuracy of JDM's time sheets. However, such an estoppel could only arise if JDM could show that otherwise it would unreasonably suffer detriment.
- I will consider the potential application of the estoppels contended for by JDM when I considered the particular sites at which JDM contends that they arise.
- The parties were not agreed as to what the evidential effect of the contents of any particular time sheet should be. Each time sheet evidenced the chargeable hours each day which each operative had clocked up which formed the basis of the labour element of JDM's claim. Essentially, DEFRA's attack on the recorded chargeable hours was three-pronged: the global figure (eg 14 hours) included or potentially included three elements which were not chargeable being travelling time from overnight accommodation or whilst waiting transport at the employer's depot; meal breaks and time at site before actual arrival or after actual departure. The suspicion that significant amounts of time, represented by these three categories of potential overcharge, largely arose because of the very long hours being claimed for even though, by common consent, the operatives were working phenomenal numbers of hours on a daily 7-day each week basis.
- The principal answer given by JDM's witnesses to the general evidence adduced by DEFRA which sought to show one or more of three things: (1) that travelling time had not been incurred despite it being contended that such time had been incurred or had lasted for a much shorter period than was commensurate with the overall claimed chargeable hours; (2) that meal breaks were regularly taken of about one hour in length at sites where JDM now claimed that no break or only a short break had been taken so that insufficient meal break time must have been deducted from the overall period of time on site; and (3) the number of chargeable hours now being claimed for suggested that the operatives had been arriving on site much earlier or had been leaving site much later than could have been possible had the claimed chargeable hours been accurately recorded. JDM's riposte was, in general, that the operatives and site management staff knew when and in what circumstances travelling and meal break times could or could not be counted as chargeable hours; that the net chargeable hours recorded had included, or were net after deduction of, the correct amount of travelling and meal break time; and (3) that chargeable time had accurately taken account of site arrival and leaving times. Moreover, the operatives and the system were reliable and trustworthy and no contemporaneous complaints had been made, received or recorded as to overcharging. However, JDM no longer had the means or the evidence to substantiate or flesh out the details of the breakdown of any particular daily claim for chargeable time so as to show what account had been taken of meal break and travelling time or to substantiate site arrival and leaving times.
- In deciding what weight and reliance could be placed on a particular statement on a time sheet that the number of chargeable hours for any particular operative x on any particular site on any particular day, I must apply the guidelines set out in section 4 of the Civil Evidence Act 1995 (paragraph x above) and must place particular weight on the circumstances in which and the purposes for which the time sheets were originally recorded. The relevant considerations may be summarised as follows:
- In conclusion, the time sheets could be adduced without further proof of their provenance and authenticity, would stand without further proof as accurate and reliable evidence of the number of chargeable hours worked and their contents on this matter would only be capable of being discounted or not accepted if DEFRA produced significant credible evidence both that the statement was inaccurate and as to how or why a particular group of time sheets were inaccurate notwithstanding the fact that considerable weight should be placed on their reliability and accuracy. In other words, in relation to the number of chargeable hours being claimed by JDM, DEFRA had a heavy burden to displace the evidential burden that JDM had satisfied by adducing the time sheets in the first place. This burden was the more heavy since DEFRA was in practice restricted to seeking to make generic attacks on groups of time sheets without any detailed evidence available to show what should be regarded as the correct make up of any particular time sheet or the precise numerical extent of any overcharging.
- The labour rates provided for in the contract do not include a rate for plant operators. Instead, the only rate of any relevance to plant operations is that for labourers. The other two potentially relevant rates were those for an electrician and a plumber. The Brisbourne paper and the scope of work envisaged by that paper as being required at individual farms subject to foot and mouth and other notifiable disease clean up operations, that was the background to and basis of the content of this labour schedule envisaged a limited role on any farm clean up operation for an electrician and a plumber.
- The contract, as executed, was intended to provide the framework for individual contracts at each farm. These would be entered into on the same terms as the framework contract. The work at each farm would be clearly defined and made the subject of a tender which would be priced using the labour and plant schedules. The workforce would comprise a small gang of operatives working as a team who would undertake all the necessary tasks. These were ones a labourer could perform save for two which would require the short visit of a plumber and an electrician who would otherwise not attend site and would, presumably, only visit site for the specific specialist tasks required of them. Thus, the plumber was envisaged for such limited activities as installing pipework in connection with a portakabin and the electrician for such limited activities as conducting electrical checks on site. That was why the description of each of these two categories of labour in the contract labour schedule uses the singular "plumber" and "electrician" whereas the description of the only significant grade, "labourers" uses the plural.
- It would appear, therefore, that plant operators were not envisaged as being needed for farm and similar clean up work. The plant that would be needed would be plant ordinarily owned by JDM and which would only be needed for limited purposes and for a limited period of time and this plant would be capable of being operated by a labourer. Such operatives are paid at a significantly lower hourly rate than a full-time specialist plant operator.
- Heavy plant is ordinarily hired in and is operated by a plant operator, usually but not invariably one who is hired and comes with the hired plant. His skill grade is ordinarily significantly higher than that of a labourer since the grade is based on a grading of experience, skill, work content and working conditions. Thus, since the gang of operatives envisaged solely comprised a group of labourers with differing pay grades, the labourers' hourly rate in the contract, which was based upon a percentage uplift of an appropriate composite hourly pay rate of various skill pay rates for labourers, would be inadequate, by a significant amount, for a plant operator since the composite pay rate and possibly the percentage uplift as well would be both different and higher.
- The rate for labourers in the contract had originally been made up by JDM by first taking an appropriate hourly rate, which would have been one intended to provide an average of the appropriate hourly rates for the numbers and mix of skills of labourers in a typical gang that it was envisaged would be used in farm clean up work, and then marking this up by what appeared from the expert quantity surveyors' analysis of the rate to be about 117%. JDM was no longer able to identify the precise make up of the labourer's rate which had been tendered or the size or basis of the particular mark up used, as has been seen, some time prior to the contract. The appropriate wage rate would ordinarily be derived for civil engineering work from the CEFC's Working Rule Agreement which defined skill grades and also defined how any particular operative is to be graded, an exercise which depends on a combination of age, experience, skill, work involved and working conditions. A plant operator's hourly rate will ordinarily, using this grading scheme, be significantly more than that for a labourer. There was no reason to suppose that JDM had not used those rates in preparing the tendered rate that had been submitted on 24 February 2000. The rate itself had probably been put together on a rough sheet of paper in a few moments prior to the tender being submitted and would have been based on the schedule of activities annexed to the Brisbourne paper.
- The need for JDM to hire in or use plant operators was largely dictated by the civil engineering work required at the burial sites where huge volumes of material had to be excavated, moved, graded and relaid. Some of the plant required was so large that it did not even feature on the FCEC schedule incorporated into the contract. The only way that the huge plant requirements could be met in the limited timescales in question was to hire in much of the plant from specialist subcontractors and plant hire companies. Usually, such hiring arrangements necessitate hiring both the plant and associated operators together from the hiring company. Furthermore, the size of the plant, the working conditions, the great length of the working day and the volume of work required of the plant all required JDM to rely on and use skilled plant operators to work the plant rather than using individual members of the unskilled gang of labourers put together for clean up work on a single farm as envisaged when the tender rate and the contract scope of work were devised. This tendered and contract use of labourers for plant operations would have involved short relatively easy plant operating tasks with plant which, in the main, was much lighter than the heavy duty plant employed on the burial sites.
- The plant that was hired in and the associated use of plant operators also came to be used on occasion at the larger farms because the scope and nature of the clean-up operations was much greater than was envisaged by annex A of the contract. This was for two reasons. Firstly, it was because the contract was run as a whole with all farms being worked together under the one umbrella contract as opposed to each farm being run under a separate contract. Secondly, it was because of the huge volume of work and the lengthy period of time over which that work was undertaken. It proved impossible to run the farm clean-up operations with only labourers and, moreover, the intensity of plant use was such that the plant required skilled plant operators rather than labourers to use it.
- JDM often had to pay the companies from whom plant and operators were hired a composite hourly hire charge which included as a component a rate for labour based upon rates appropriate for skilled plant operators rather than for labourers. If JDM could only charge DEFRA for plant operators at the contractual rate for labourers', it would receive significantly less than JDM could reasonably have expected, or would reasonably have charged, had a separate rate for plant operators been provided for in the MAFF labour schedule. Another way of looking at the question is to consider what composite rate JDM would have charged had it been pricing civil engineering activities at burial sites and the labour to be used over a 9 month period on one job requiring work at over 200 farms where the demand for labour would vary but which could not be planned for at any one time. Such a rate, if it was a composite rate, would have been significantly higher than £18.70 per hour. Alternatively, a new rate for plant operators would have been provided in addition to a composite labourers rate. On this basis, the labourers' rate would still, probably, have been higher although JDM make no claim for any uplift of the labourers' rate to account for the variations to the contract that occurred.
- The following questions therefore arise:
- The contract required JDM to provide equipment and labour as necessary to deal with operations in relation to foot and mouth disease including an infected premises. The labour and plant to be supplied and the rates at which these were to be supplied were set out in the attached labour and plant schedules. Any other plant or equipment was to be charged at 72% of the rates in the attached schedule. This schedule was the CECA schedule of dayworks carried out incidental to contract work and included all plant that might be used for this purpose. No attempt had been made to identify the potentially relevant plant so that one item it contained was a tower crane. The schedule had been inserted as the convenient means of providing a rate for such additional plant as might be needed on occasion in foot and mouth farm cleansing operations but it was clearly not intended that all items in the list would be used on occasion.
- The plant and the rates that were provided for were to be used for individual farm cleaning work where relatively few farms would be called off, a compact labour force would undertake the work and there would be a relatively small usage of heavy plant such as excavators and dump trucks. For such usage, JDM intended to use its own operatives who would operate the plant for relatively short periods as one of the many tasks they performed on site. These men would be graded and paid for as labourers. However, the scope of work changed with these results:
- In those circumstances, the contract was varied both by the addition of civil engineering work and by the addition of a requirement to hire in plant and plant operators. Some of this plant was not referred to in either of the contract schedules. The contract did not contain a lacuna so far as plant operators was concerned. Instead, the contract in its unvaried state had no provision for plant operators since none were required to undertake the contract scope of work so that none were provided for. Once the scope of the contract was varied, the varied contract generated a significant need for the use of plant operators. This need was part of, and an essential response to, the variations to both the contract and its scope of work that had been instructed by DEFRA.
- The contract made express provision for such variations. Clause 2 provided that the Minister reserved the right to modify the contract services required of JDM. It also provided that any modification to the contract price arising by reason of such modifications would be agreed between the parties. This clause obviated the need for an implied term that would otherwise have arisen to the effect that JDM would be additionally and reasonably remunerated for any variation to the contract or its work scope instructed by DEFRA. Clearly, any modification to the contract price provided for by clause 2 had to be reasonable and, in default of agreement between DEFRA and JDM as to what reasonable adjustment to the contract rates or remuneration would be required, it would be left to a court or adjudicator to ascertain and fix reasonable remuneration.
- DEFRA contended that the contract and the parties intended that all heavy plant hired in would be operated by labourers, or at the very least, would only be remunerated by DEFRA by reference to labourers' rates. Thus, it was contended that JDM accepted the risk of having to perform the contract, even if varied, at the same rate of remuneration even if the cost of performing the varied work was significantly greater than the cost on which the contract rate of remuneration had been based. Undoubtedly, JDM accepted the risk of performing the unvaried scope of work at the remuneration levels provided for in the contract but, once that scope of work was modified by the addition of the Throckmorton and Ashmoor sites and by the requirement to work on so many large farms simultaneously, JDM could no longer be held to that contract risk and was entitled to a modification of the contract remuneration.
- Thus, JDM is entitled to a new rate for plant operators. In principle, it could be contended that that new rate should only apply to plant operator usage that was additional to the more limited plant usage that labourers would have been involved in had the contract not been varied. However, neither party contended for this half way house and it would have been unrealistic. Once the need arose to hire in plant operators, it would have been unreasonable for JDM to have used labourers for plant operations at all and, in those circumstances, all plant operator usage should be remunerated at the new plant operator rate.
- The question arises as to how, in principle, the new rate should be fixed. The new rate could be based on the actual cost to JDM of the plant operators subject to a mark up derived from its then current operating and overhead rates and profit levels. It could, on the other hand, be based on the appropriate working rule agreement labour rates following a complex process of compiling a composite rate to account for the various skill grades and numbers of plant operators to be provided for and then subject to an uplift comparable to that used for labourers in the contract rate. Finally, it could be based on an exercise which seeks to relate the rate to, or to pro rata it with, the contract rates for an electrician, a plumber and labourers. The problem of deciding what method of rating to use arises because of the rudimentary nature of the pricing provisions in the contract. There is no clause identifying how variations are to be priced, no bill of quantities or specification, no method of measurement, no rate breakdowns and no reference to external pricing documents of the kind that are provided in industry-based working rule agreements or a pricing book such as Spon or Laxton. A further difficulty is that the basis of the three labour rates in the contract was no longer available and was not provided in the contract documents.
- Since the contract, in a very rudimentary form, is a rates contract, it is both reasonable and in accordance with the agreed contractual principle that the work to be performed under the contract should be performed using rates, that a new rate be compiled for plant operatives. In civil engineering work, a rate is not based on the actual cost of the work ascertained once work has been carried out but instead is arrived at by using an assessed value that is assigned before work starts. This value, expressed at a rate per hour or a rate per unit of measurement, is grounded on the predicted cost of producing that unit outcome and is arrived at by compiling a composite labour rate from an appropriate mix of prevailing labour rates. This mix is arrived at by making a shrewd and informed anticipation of what mix of labour will be needed for the activity in question. The estimator has to estimate the labour grades in question and the number of operatives in each grade that will be used in producing the average hourly cost of all plant operatives, being the unit of labour in question. The outcome is an average labour plant operator rate which will cater in one rate for the various different rates and numbers of operatives in each rate that are being priced for. The base labour rates will usually be taken from the relevant working rule agreement since a large contractor will usually be paying its own labour at those rates or will be engaging subcontractors whose prices will be related to those labour rates. Moreover, since the use of plant operators is not obviously related to the price provided for an electrician or a plumber being used on an occasional basis or on a small gang of labourers undertaking a discrete and well defined small clean up operation, these contract rates can provide no more than a guide as to the make up of the new plant operators' rate.
- What is required is a new rate derived in a conventional manner which is not itself related to the contract labour rates. The mark up could, however, be related to the contract mark up, at least or labourers, since that provides a guide to what would be a reasonable mark up. The only reasonable use of existing contract labour rates would be as a guide to the content of the new rate and as a control or overall comparison with the new rate to check that this derived plant operators' rate is neither too great nor too small.
- Both expert quantity surveyors agreed in evidence that what was required was the fixing of what is known in the language, or mystique, of quantity surveyors as a "star rate", that is a rate for additional work which is not fixed in the contract and which cannot reasonably be derived from or directly related to existing contract rates. A star rate is, in other words, derived from sources outside the terms of the contract but it must be a rate which sits reasonably along side existing contract rates and is one which, when applied to the varied work, will not throw the whole pricing structure of, or the financial return from, the contract out of balance.
- JDM contended that the parties had reached an agreement in April 2001 that the contract needed to be varied or corrected by the insertion of a new rate to cover plant operators whose extensive use was recognised by DEFRA as being necessary at the Throckmorton and Ashmoor sites. The meeting at which this agreement is said to have occurred was held on 26 April 2001 at Clyst House in Exeter. Mr Ratcliffe as JDM's commercial director and Mr Hartland as JDM's Business Support Manager were present representing JDM and four DEFRA representatives were there: Mr Main, Mr Houlousi, Mr Norrish and Mr Hewett, although Mr Norrish and Mr Hewett had left before the rate to be paid for plant operators was raised. The JDM evidence from both representatives was to the effect that Mr Ratcliffe pointed out that there was no contractual rate for plant operators and that this had become a problem since work had started at the burial sites. Mr Hartland had particular cause to remember this matter because, he explained, he had held up submitting invoices until a rate for plant operators had been agreed. He explained that he had asked Mr Ratcliffe to raise the matter at the next meeting with DEFRA . Both men suggested that Mr Ratcliffe had suggested that the problem could best be solved, given the need for a quick solution which avoided additional administrative work, by using the contract rate for an electrician and that this was agreed to by Mr Main. Neither Mr Main nor Mr Houlousi had any recollection of this discussion and the contemporary notes taken of the meeting by Mr Ratcliffe and Mr Hewett (who may not have been present when this matter was discussed) make no mention of this agreement.
- However, some support for JDM's evidence is obtained by the fact that JDM submitted a whole tranche of invoices to DEFRA two days after the meeting with a total value of £1.7m having submitted no invoices for the Ashmoor site since work had started on 8 April. These invoices included claims for plant operators at the contract electrician's rate of £18.70 which were paid by DEFRA.
- I conclude that there was some mention during a busy meeting of the appropriate rate to be paid for plant operators. This was obviously of some concern to JDM. The absence of any reference to the discussion in contemporary documents is not surprising given the pressure all were working under which meant that no meeting was properly documented or followed up in writing and, in any case, this subject had been raised at the last minute by JDM without prior warning.
- However, I am not satisfied that the meeting went so far as to reach a concluded agreement about a rate for plant operators. What I conclude occurred was that the subject was raised and the four men quickly reached a consensus that as an interim measure, pending a more formal rating exercise, JDM could invoice and DEFRA could pay at the electrician's rate in the contract. In any case, pending some more formal agreement, evidenced in writing and made following the issue of an instruction by DEFRA, any agreement as to the new rate required for plant operators would be provisional and subject to review since it would have been paid in interim payments which were themselves subject to review. Thus, the "agreement" referred to by JDM was one which occurred but had the limited final effect that it would prevail unless and until reviewed and formalised later in the contract or when the final account was being settled. That is why there was so little discussion of the matter and why payments were made against a claim for payment of this rate yet the DEFRA representatives had no subsequent recollection of the discussion.
- The question of whether the two expert quantity surveyors reached an agreement as to what the fair rate should be and the question of what that rate should be are similar since any agreement reached by the experts, pursuant to CPR 35.12, would not strictly speaking, bind the parties albeit that it would provide very good evidence of what a fair rate should be.
- The two expert quantity surveyors reached a lengthy agreement which may be summarised as follows:
- On that basis, the two experts stated:
- This agreement is dependent on my finding that what it refers to as option one is the correct methodology to use. This was the option of taking an arithmetical average of the 5 appropriate plant operator rates. The only other options would have been to establish the actual item of plant being operated and apply the appropriate rate for the grade of operator for that plant or to arrive at a composite rate by means of an assessed weighting of the five appropriate rates. However, both these methods were unavailable to the experts or the court since the necessary facts as to plant usage are not available and, in any case, would not have been available when the rating exercise would have been carried out had the original contract provided for the scope of work that necessitated the use of plant operators. Thus, neither of these other two options was appropriate.
- This method of assessing a new analogous rate, by means of a star rating method, was both appropriate, in accordance with industry practice and obviously reasonable. This was accepted by DEFRA's expert when asked his current opinion of the method and its result that he had previously agreed with JDM's expert quantity surveyor. He stated this:
- I accept and find that the fair rate arrived at by the experts, which was the same as that contended for by JDM albeit that JDM's rate was arrived at by a different method or by an interim agreement reached with DEFRA at an early stage of the work, was a reasonable rate and is the rate that should be adopted for plant operators. This rate, suitably uplifted by 3% and again by 3% and subject to the appropriate factors for 1.5x and 2.0x working rates where appropriate, should be used as the basis for JDM's remuneration for plant operators.
- It is the case that DEFRA's expert sought to contend in oral evidence that a lower rate should be fixed. This was on the basis that although he had agreed the method of fixing a fair rate with JDM's expert, he did not accept the resulting rate as being fair in the context of this contract since it produced a rate that was higher than that for an electrician. However, that was not, I find, a reasonable basis for rejecting the reasonably arrived at rate of £18.70. Firstly, the rate for an electrician was not analogous since it was only applicable to isolated tasks carried out by an electrician visiting site for a short period. The only rate that can reasonably be used as an analogy is that for labourers. Secondly, and probably for this reason, JDM's mark up for an electrician was very much smaller than for labourers. Thirdly, there is no reasonable basis for reducing JDM's recoverable rate, which is otherwise a reasonable rate, for plant operators' time where the plant operations formed a significant proportion of a huge civil engineering contract by reference to a single rate for an electrician in circumstances where the use of an electrician on the contract was negligible at best and non-existent at worst.
- Thus, I adopt and award the plant operators' rate agreed as being the reasonable rate by the expert quantity surveyors.
- DEFRA has made a deduction of one hour from each daily chargeable hour claim on the basis that it contends that that is the usual lunch break deductible period and that it infers, and it invited me to infer, that that period had been taken on every site and had not been deducted from any timesheet and that no trade off arrangement prevailed on any site.
- Several witnesses gave evidence about an arrangement that had been agreed to by JDM and DEFRA representatives at the Throckmorton site to the effect that JDM would not claim travelling time and DEFRA would not seek to deduct meal break time from the operatives' claimable time. The details of any discussion or agreement to that effect were not provided but several witnesses stated that such a trade off was operated. Thus, Mr Walker, was called as a witness by JDM. He had joined JDM in March 2001 as a building department manager and he set up and ran the Throckmorton site. In the early period that he had personal knowledge of, there were no meal breaks taken. However, he understood that the parties had agreed the reporting format of timesheets which included an arrangement that travelling time would be cancelled out by meal breaks. He discussed this arrangement with, amongst others, Mr Hanmer who was a senior DEFRA representative on site. He stated in evidence:
- Mr Hanmer stated in his evidence:
- Mr Moore, an engineer employed by Halcrow who was the Resident Engineer on site gave evidence that he was aware of this arrangement. He stated that he had a discussion with Mr Gould, another JDM representative on site, who told him about the arrangement. He was happy to accept it and made no further comment about timesheets being prepared in this way because he understood, and accepted, from JDM that it was in DEFRA's interest that JDM traded off travelling time against meal break deductions.
- I find that there was an agreed course of conduct in which no travelling time would be claimed for operatives working at the Throckmorton site and, in return, no meal break deductions would be made. DEFRA argued that there was no such arrangement and, in any case, there was no quo in the form of travelling time for JDM to set off against the quid pro which DEFRA forwent in the form of meal break deductions. However, the evidence clearly shows a mutually acceptable arrangement which appears to have been applied by those submitting timesheets which was known to, and accepted by, DEFRA. Moreover, there was an appreciable travelling time recovery entitlement that JDM appear to have foregone so each side benefited and was burdened by the arrangement. It would now be inequitable to allow DEFRA to resile from this arrangement since there is no means of knowing what meal breaks were taken and how much should be both deducted for these or added for travelling time.
- In any event, the number of deductible meal breaks taken by operatives at Throckmorton was very limited or non-existent. The overwhelming evidence from many witnesses was to the effect that the site working conditions were unprecedented in that uninterrupted working days well in excess of 12 hours were worked from the outset with no real pause for meals or breaks. It is the case that a mobile canteen was introduced at Ashmoor at the end of April with very limited seating available in its vicinity and that the intense pressure of work eased somewhat after the middle of May. However, at no time did JDM's operatives take a rest of the kind or quality required for a break, they were never away from site discipline or regulations and did not stop to consume any meal or refreshment taken from the mobile canteen even when this arrived. The limited space near the canteen with the limited number of chairs available for those buying food and the large number of men using the canteen precluded this and the operatives, who would all have been aware of their entitlement to a meal break which would have been taken at their expense, chose to forego a break. The stoppage that was taken was not of the kind that qualified as a meal break in that it was not taken away from the working area in conditions where the men's working environment was suspended. Moreover, the pressure on the workforce to keep working, even after mid-May, was such that they were never, in reality, given the option of electing to take a break.
- Thus, if anything, DEFRA is the beneficiary of the arrangement since there would have been little if anything to deduct from the hours for which the operatives were actually on site.
- In addition to the operatives undertaking civil engineering work at Throckmorton, there were rapid response teams based there and when stationed at Throckmorton were in principle susceptible to a meal break deduction. However, these operatives had to be constantly ready for instant action at a moment's notice. The men would be assigned a number on arrival at site which represented the team they would be working in that day. Each number had a lorry and a tail ended vehicle assigned to it and they had to wait in line in their assigned vehicles and would be directed by the army personnel to go to a farm to clean up. As soon as they returned to Throckmorton, they had to rejoin the queue of vehicles to await to be allotted another task. Mr Gould, JDM's Throckmorton site representative, gave evidence about these teams which I accept. He stated that the men waiting in line:
- It follows that the rapid response teams never took meal breaks for which a deduction would be appropriate or required. They never had any period of recreation or away from the working environment and would have had to have had any refreshment sitting in their vehicles awaiting a call.
- JDM is entitled to the entirety of the sums claimed on timesheets at Throckmorton.
- The picture at Ashmoor was very similar to that already dealt with at Throckmorton. As with its performance at Throckmorton, all independent witnesses spoke with feeling about JDM's remarkable dedication and willingness to work phenomenal hours on a regular seven day a week basis. As the Resident Engineer, Mr Richardson of Halcrow put it:
- It was clear that from 8 April 2001 until about 7 May 2001, no proper meal breaks were taken at all. All the operatives did was to take short breaks or breathers at the place they were working at. Meals were, as it was put in evidence by Mr Skerrit, a consultant working for JDM at Ashmoor, "taken on the hoof". The operatives were "grabbing what you could where you could". The canteen, once it arrived on site, was used to obtain food which was brought straight back to where work was being undertaken. Anyone who had five minutes to spare would fly down to the canteen and obtain food for himself and anyone working nearby from whom he had taken an order and bring the food straight back for eating.
- By mid-May, it was accepted that the pressure eased off a little, indeed Ashmoor was never in fact used for burial purposes and no carcasses were deposited there. However, the engineering work at site was completed. However, many of the operatives still did not take a break. The walking time to the only place where a break could be taken was considerable, the rest place was a small canteen which was usually crowded and the men usually undertook other tasks like washing down vehicles or sitting in their cabs eating and smoking. If a break was taken, the evidence adduced by JDM was that, in general terms, the time taken, never more than 30 minutes and sometimes less than that, was deducted on the timesheets. Thus, Mr Butler, who was a quantity surveyor engaged by one of JDM's subcontractors on site, BT Jenkins who had responsibility for filling in timesheets from the timesheets prepared by BT Jenkins' foremen, stated that he checked the timesheets with the foremen and meal break times were not included on the timesheets. However, this type of omission was rare since the whole job was, throughout, what he described as "hit-the-floor running, keep running" without any formal break but merely a "grab a bite when they can" regime.
- The evidence also was that travelling time was not claimed at this site and although no formal agreement or discussion was evidenced as to a set off arrangement at Ashmoor, it is clear that such a regime was operated by JDM. This would be expected since conditions on site, the nature of the work and the accommodation arrangements for the operatives were similar to Throckmorton. DEFRA appears to have accepted such a trade off arrangement at this site too. It was reasonable for there to be such an arrangement and it would be inequitable for DEFRA to seek to resile from it now.
- Ashmoor is similar to Throckmorton in that: (1) the occasions when deductible meal breaks were taken were few in number and only, if at all, towards the end of the working period on site; and (2) no deductions should in any case be made since the site was subject to a trade off arrangement acquiesced in by DEFRA which DEFRA is now bound to give effect to.
- DEFRA had deducted £37,000 from invoices relating to this farm, the largest deduction of the ten farm deductions that this trial was concerned with. DEFRA contended that the invoiced chargeable hours were excessive for three reasons. These were that the invoiced hours had not been subject to any deduction for meal breaks although these had been taken, they included a period of about 30 minutes travelling time per operative per day even though the operatives had been accommodated only a short walking distance from site and they were based on the operatives being on site for longer periods than had been the case.
- These allegations were supported by the evidence of Mr Gee, DEFRA's representative on site. He accepted that between 21 and 29 March 2001, with pyre burning activities continuing, no meal breaks had been taken but contended that thereafter 30 minutes per man were taken as a break in a portakabin where toilets, washing facilities and cups of tea, made by a local old man, were available. He produced his own diary in which he had recorded his own diary in which he had recorded his own chargeable hours and many months after work ceased at this farm he undertook an exercise in which he compared his chargeable hours on the days he was on this site with those being claimed by JDM's operatives on the same day at this site. For most of the days, the period he accepts as being chargeable was no more than one hour less than the chargeable hours claimed.
- This evidence was roundly disputed by Mr Williams, JDM's site supervisor at Nibley Mill. He stated that the operatives had packed lunches sent in from a local public house, The Belfry, which were not eaten in the portakabin, that several of the operatives travelled long distances to site from their overnight accommodation and that this regime continued throughout JDM's time on site. Tellingly, Mr Gee accepted that he never deducted any time for a meal break, "I wasn't normally taking lunch breaks" he stated. Instead, he had a drink with him. Mr Gee was unable to explain why, although he never took a lunch break, JDM's operatives invariably did. Moreover, Mr Gee accepted that he had little knowledge of where the operatives were accommodated and did not verify timesheets because life was too hectic and no-one from DEFRA gave him instructions to verify them. He also accepted that he did not have any detailed information to challenge the chargeable hours claimed.
- I conclude that DEFRA has failed to adduce evidence which succeeds in showing that JDM is making a claim which includes hours which are not chargeable or which requires to be reduced. No significant meal break was taken by the operatives, at least some daily travelling time was incurred by most of the operatives and there was no evidence to show that some of the claimed chargeable hours represented time when the operatives were neither on site nor travelling.
- The apparent discrepancies between Mr Gee's diary entries and the chargeable hours shown on JDM's timesheets, a period of about one hour per day per operative, is readily explained by a combination of no meal breaks being taken by JDM's operatives, operatives' travelling time, inaccuracies in Mr Gee's diary and Mr Gee's time on site not always coinciding with that spent by JDM's operatives. This is because 30 minutes a day of the suggested period being overcharged represented an alleged meal break which did not usually take place, 30 minutes represented travelling time which allegedly did not occur and additional periods represented time when the operatives were on site when Mr Gee had not recorded that he was on site.
- Mr Smith, JDM's supervisor at Love's Farm, stated in unchallenged written evidence that no routine or hour long meal breaks were taken at this farm. DEFRA's supervisor at this farm was an Animal Health Officer, Ms Louisa Mead. She gave general evidence to the effect that the operatives were on site for no longer than about 7 hours and that they took meal breaks. This farm was exceptional in that the journey time from JDM's Shrewsbury base to site in each direction was at least three hours in length. Thus, Ms Mead, who had no direct knowledge of how long was taken in travelling time, challenged the claimed chargeable periods of up to 15 hours on the basis that the actual chargeable daily period was significantly shorter than that.
- Although Ms Mead attempted to give accurate and reliable evidence, I cannot accept that it must lead to deductions having to be made to JDM's claims relating to this site. No precise details of working time or meal break times were recorded by Ms Mead, nor did she record the precise arrival and departure times of the operatives' transport. Finally, no attempt was made by her to check with the operatives how long they had been travelling for and how long they had spent at JDM's depot once they had clocked in or had arrived back in the evening.
- Ms Mead accepted that she did not get on well with the operatives, largely because she was irritated by what she saw as their thoughtless behaviour in keeping her waiting after her arrival on site and by their leaving early. In truth, the operatives' arrival and departure times were solely dictated by the huge travelling distances that they were having to undertake. Moreover, it was clear from the evidence of Mr Smith that the smells and site working conditions were so unpleasant that it was not reasonably possible for the operatives to take a rest period since no-one had the stomach to rest up in the unpleasant environment that those on the farm were subjected to.
- I conclude that in the main, no rest periods were taken and that such rest periods as were taken were of very short duration, that there is no reason not to doubt the accuracy of the recorded chargeable hours on JDM's timesheets and that any perceived shortcomings in JDM's claim arose solely because of the absence of meal breaks and the huge distances being travelled in each direction by the operatives on a daily basis. No deductions fall to be made at this farm. In particular, no deduction for one hour per operative per day for meal breaks should be made, this being the deduction that has been made by DEFRA.
- DEFRA contended that between 13/4 hours and 3 hours per day have been invoiced in excess of the actual chargeable hours although only 1 hour per day has been deducted from JDM's invoices. DEFRA's evidence of this alleged overcharging was given by Mr Anthony Lathwood and Ms Elizabeth Salmon who were successively DEFRA's site representatives whilst cleansing and disinfectant work was being carried out. The principal evidence was given by Ms Salmon. She prepared a labour time sheet, which was not signed by nor shown to JDM's men, for a two-week period at the end of JDM's working period on site. This recorded that JDM's men were on site for between 8 and 9 hours, including any meal break, although the start and finish times are not given. The claimed chargeable hours was a period of about 12, so there was an apparent discrepancy of 3 hours per day plus any deductible meal break period. Ms Salmon stated that the operatives always spent at least an hour in the portakabin off site for a lunch break. She had no knowledge of how much time was spent travelling or, since the operatives all started from JDM's Shrewsbury depot, how much time was spent kitting up and waiting for transport after they had clocked in.
- JDM's principal evidence was given by Mr Paul Millington who supplied JDM with the operatives on site. He was running an animal feed business as well and did not visit site regularly. He candidly accepted that the operatives, who had been recruited from the job centre for this work, could have inflated their timesheets. However, he received regular reports from his operatives at the time and, based on these, was able to state that the operatives spent a long time each morning and evening at JDM's depot and, further spent one and a half hours in travelling. Ms Salmon only allowed for one hour in total for waiting and travelling time. It is clear that a more realistic period for both would be about three hours. There was, as I have already accepted, considerable delays for the operatives at the depot in the morning and evening and it is likely that the job centre casuals would have been most prone to these delays each day. The journey time for a minibus or van would have been appreciably longer than the 30 minutes in each direction allowed for by Ms Salmon.
- The next difference between Ms Salmon and the JDM witnesses was in relation to the length of the meal break. Ms Salmon estimated that at up to one hour in length. However, she did not make any allowance for walking time to and fro from the workstation to the portakabin or for the time spent in cleaning or disinfecting. Furthermore, Ms Salmon spent her lunch break working on paperwork in her car whilst eating sandwiches so that she neither took a lunch break nor carefully monitored the operatives' start and finish times for the period of actual meal break counting as deductible time. Her records contained patent inconsistencies and were not, for all these reasons, demonstrably reliable. She should have, but did not, produce a jointly signed record of times on site and meal break times.
- A further point of difference was as to the working conditions. Mr Mark Smith, from JDM, visited site on three occasions and stated that the smell was diabolical. It was not possible to sit around for the periods of time suggested by Ms Salmon who roundly disagreed. However, she sat in her car, some distance away from the smell for her working lunch break of at least an hour per day and her evidence was not convincing on this point. Mr Lathwood's records were obviously inaccurate and incomplete and his evidence did not add anything to Ms Salmon's evidence.
- It follows that, of the suggested overcharging by up to 3 hours per day: at least 30 minutes represented travelling time, (11/2 hours per day compared to Ms Salmon's 1 hour per day), 11/2 hours waiting time at the depot morning and evening and 30 minutes instead of 1 hour for a deductible meal break. The possible shortfall between these two periods of 30 minutes is readily accounted for by inaccuracies in Ms Salmon's records.
- It follows that DEFRA's evidence did not displace the evidential burden they had to surmount in order to mount a successful challenge to JDM's unverified timesheets.
- This farm was located about 1 1/2 hours journey time from JDM's Shrewsbury depot. One hour's deduction per operative per day has been made by DEFRA, based on the evidence of the farmer Mr Beckett whose evidence was stated to have been derived from a combination of the daily records maintained by DEFRA's site representative Mr Scott Jones, who was unavailable to give additional written or oral evidence, and his own recollection which was based on his daily observation of, and keen interest in, the clean up work being undertaken.
- Mr Beckett's evidence was to the effect that about 14 hours per day were being charged for when about 13 chargeable hours per day were properly to be charged. The shortfall of one hour was explained as representing meal break time which should have been, but was not allegedly, deducted. Mr Beckett assumed that travelling time was 3 hours per day, he had no knowledge of what if any depot waiting time was incurred, did not know which operatives were accommodated and which travelled from JDM's Shrewsbury depot and based on his own estimate of his time on site. Mr Beckett was shown Mr Scott Jones' records and JDM's timesheets when preparing his witness statement and felt able to state authoritatively that Mr Scott Jones' records were accurate and JDM's were not although he kept no record himself and had to work entirely from memory.
- JDM's evidence, from Mr Millington, the operatives' employer, was of the same general kind as he had given about the Longswood Farm site already referred to. It is clear, from all the evidence, that meal breaks were taken but that the deductible length was appreciably less than one hour. There is no evidence that this time was not deducted, merely DEFRA's assumption based on Mr Beckett's assumption. The hours claimed are, in fact, more consistent with a period of about half an hour having been deducted than with no time having been deducted. This is because no account has been taken by Mr Beckett of any waiting time spent at the Shrewsbury depot in the morning and evening. Once waiting time and a shorter break than the one hour break contended for by Mr Beckett and the imprecise nature of Mr Beckett's recollection are all taken account of, there is no discrepancy at all between claimed chargeable hours and Mr Beckett's asserted chargeable hours. A final, telling matter is that Mr Scott Jones, whose role was DEFRA's site representative, actually acknowledged some of JDM's timesheets by initialling them, thereby apparently accepting the claimed chargeable hours recorded on those sheets as being accurate.
- Thus, DEFRA's evidence did not displace the evidential burden that they had to surmount in order to displace JDM's verified and unverified timesheets.
- This was a small farm where a team of three men worked for about 11 1/2 hours for each of three successive days. Mr Evans of JDM attended on one or two occasions for a short time and found the workforce to be working normally. The timesheets were prepared by JDM's workforce and were used to prepare and send an appropriate invoice. No DEFRA representative verified the timesheets on site. No evidence was adduced by DEFRA to seek to refute these timesheets and no closing submissions were addressed to this farm.
- Thus, DEFRA's evidence did not displace the evidential burden that they had to surmount in order to displace JDM's unverified time sheets.
- Mr Evans of JDM was able to give general evidence about this farm since it was one of those that he visited from time to time during the clean up operations. He stated that the pattern of work was that a gang of about eight to twelve men would arrive at a farm which could be on its own or one of several being worked together. The farmyard and its surrounding farm was usually a very large place. The men would separate so that two men might wash out, two muck out, one would work a JCB, two would clean the rooves, two the buildings and the rest work the surrounding areas. The washing was done with pressure hoses and usually the water supply was poor, being fed from a borehole or a spring. Thus, the water had to be allowed to build up frequently and it was during the periods of enforced water absence that the operatives would usually grab a cup of tea or a sandwich. Portakabins were provided but often several days after work had started. The men would use the portakabin in pairs for short periods when they came off a roof, or in from a field or out from a building or away from a pressure hose without any pattern or structure and for only short periods of time. Those working away from the farmyard would have to walk long distances to the portakabin and often didn't bother but took a short break where they were working. Mr Evans' conclusion about the timesheets was that they had been filled in net of any deductible time for a meal but that the time deducted would have only been for a short period since,if a break was taken at all, it was never a long break, being at most about 30 minutes in all. The summary sheet of the timesheets shows that JDM deducted 30 minutes for a deductible lunch break each day and that the operatives were starting at about 6.45 am and finishing about 7.30 pm, thus providing about 12 chargeable hours per operative per day for the three working days in question.
- DEFRA submitted a witness statement from Ms Delia Florence who had been its representative on this farm but was not available for cross-examination because of her medical condition. Thus, her statement, although admissible, must be given such weight as is appropriate in the circumstances. Ms Florence stated that she supervised JDM's work between 18 and 21 July 2001 and that only 30 minutes were deducted for a lunch break but, in fact, 60 minutes were taken. She arrived at the farm at 9.30 am by which time the operatives had arrived. On the first day, the operatives arrived at about 8.30 am and thus had spent nearly 2 hours in waiting and travelling time. Ms Florence did not record when the operatives left site but it must have been at about 5.00 - 5.30 pm with a further up to 2 hours travelling and waiting time. Thus, the only question is whether, given that the operatives deducted for a 30 minute deductible meal break, whether or not that deductible time was in fact 60 minutes as alleged by Ms Florence.
- Ms Florence's statement, which makes the bald assertion that the men definitely took a 1 hour lunch break, must be subject to considerable reserve since it was not tested in cross examination. This is for two reasons. Firstly, she wrongly asserts that the timesheet she put her name on, without intending to verify the times but merely to prevent further men's names being added to it, did not have Mr Williams' name on it when she signed it, thereby suggesting that Mr Williams' name had been added after the fact when he was not actually working at this farm. However, it was clear from the documents adduced in evidence by JDM that Ms Florence had signed the timesheet after Mr Williams' name had been inserted onto it and that Mr Williams was in fact present and working on this farm. Secondly, Ms Florence appears not to have appreciated that walking time from the place of work to the portakabin should not be deducted. Moreover, she has not referred to the irregular pattern of work adopted on this and similar farms whereby the operatives snatched food in ones and twos as and when convenient and for short periods often not away from their working environment. She does record that she took meals with the men in the portakabin but not the starting time and finishing time of such a meal for each man on site.
- In those circumstances, the evidence presented by the timesheets as elaborated by Mr Evans is not supplanted by, and the evidential force of that evidence is not displaced by, the untested evidence contained in the written statement of Ms Florence.
- Four further small farms formed part of the sample of twelve sites, being Walford Small Holdings, Green Band Farm, Stove Farm and Vivod Farm. JDM adduced timesheets and invoices relating to these farms but neither party submitted any further evidence nor made any submissions about these farms and, in those circumstances, JDM is entitled to be paid the labour element of the timesheets at these farms in full.
- The invoices and timesheets adduced in support of JDM's claims at each of the twelve sites currently in issue were all adduced in evidence and have been carefully inspected by me whilst reviewing the evidence when working on this judgment and they are all both authentic and to be taken to record accurately the chargeable hours for labourers and plant hire operators at each of the twelve sites with which I have been concerned.
- The result of the extensive enquiries and investigations has been that JDM has satisfied the court that the method of recording its chargeable hours for labour was correct, accurate and reliable at each of the twelve sites in question. The possibility of the timesheets prepared on site by the operatives being inaccurate arose for two reasons, firstly because DEFRA did not have sufficient resources to ensure that a DEFRA representative recorded each relevant element giving rise to chargeable hours on a daily basis. This would have involved recording the time when and the place from where each operative started his daily journey; his time of arrival at his depot where he was travelling to site from his employer's depot; his time of arrival at site, whether a daily meal break was taken and the precise time when the actual stoppage for the meal break started and stopped, having carefully observed whether any walking time or non-break stoppages had occurred; and the time of leaving the site, returning to base and, where the base was the employer's depot, the time of leaving the depot. All this data would then have had to have been translated into a number of chargeable hours.
- It might be thought that the principal DEFRA witness at the five sites where such a witness gave evidence about meal times, travelling times and site start and stop times, namely Mr Gee, Ms Mead, Ms Salmon and Mr Beckett in both their written and oral evidence and Ms Florence in her written evidence untested in cross-examination, lacked both care and accuracy whilst recording the activities of JDM's operatives on site since I have not given effect to their evidence. However, that conclusion would not be fair to any of these DEFRA witnesses. They were only able to give first hand evidence about meal breaks and it was not possible to ascertain whether the chargeable hours claimed for were accurately prepared merely by considering whether and for how long a meal break was taken. Moreover, they were not instructed to keep records of site timings or to verify JDM's operatives' timesheets. Finally, they were not instructed on what constituted a deductible meal break or chargeable travelling and walking time. Thus, although their evidence did not lead to any further deductions being made from JDM's timesheets at the sites in question, this did not indicate any shortcomings in the performance of their site duties. I am satisfied that each DEFRA witness attempted to assist the court with as accurate evidence as their memories and the passage of time allowed.
- JDM is entitled to charge as chargeable time the entirety of the labour and plant operatives chargeable time recorded on the timesheets at the twelve sites in question and to recover any deductions from these timesheets imposed by DEFRA following their submission to DEFRA during the clean up operations.
- Unless DEFRA can discharge the evidential burden imposed on them by the submission of signed timesheets by JDM and in the absence of any countersignature by a DEFRA representative on a site by site basis, JDM is entitled to be paid on the basis of the operatives' and plant operators recorded chargeable hours on each site worked on by JDM under the contract. DEFRA will have to show that the entirety of the chargeable hours recorded by any operative on any day at any site, taking into account waiting, travelling and walking time and also taking into account the precise length of any deductible meal break whilst ignoring any rest or meal time falling short of a deductible meal break, are inaccurate and overcharged. Unless this can be shown, JDM may rely on and be remunerated in accordance with, the timesheets maintained on site whilst work proceeded.
- A substantial access road had to be constructed from the highway onto the burial ground sites. This was a substantial civil engineering operation since the road travelled over poor terrain which was very wet. A road over which substantial numbers of agricultural and commercial traffic is to travel has to be constructed to a high standard and, usually, a detailed road specification allied to a complex civil engineering contract would be used. The specification would define in some detail the parameters for the various levels or layers making up the road including the type of material, its depth and the method of treatment of the material including the particle size distribution within the material and the method of treatment to be used.
- The road itself would comprise a number of layers including graded material on top of which would be placed a mat or other drainage material to facilitate water dispersal. On top of this layer would be placed a sub-base of aggregate under a base course over which might be placed a tarmac or wearing course. The sub-base course would ordinarily be placed in layers with the bottom layer comprising the larger stones, a middle layer of middling-sized stones and a top blinding layer of dust an small stones. This blinding layer is intended to travel between the larger stones and fill voids in the middle layer to prevent consolidation and consequent potholes in the road. The maximum size of stones in the sub-base must not exceed a size of about 450mm in diameter since, otherwise, the stones can sink into wet underlying base course and protrude into the base and wearing courses.
- Because of the speed with which the road was constructed, the usual ordering procedures could not be followed. There was no defined stone or aggregate or aggregate grading, no quantities and testing or quality control procedures specified. Indeed, JDM was left with the requirement to construct an access road that was fit for its purpose and itself had to design, detail, specify and order the road and its constituent materials.
- At the Ashmoor site, JDM identified a suitable quarry to supply a considerable part of its requirement as being Meldon quarry owned and operated by Aggregate Industries Ltd. This quarry ordinarily produced about 10,000 - 15,000 tonnes per month. In March 2001, required output had dropped and some of the workforce were about to be laid off. Suddenly, with the onset of foot and mouth clean up, demand escalated so that between 10 and 30 April 2001, JDM alone required at least 44,000 tonnes of all material. Of this, about 21,000 tonnes was supplied as sub-base material for the access road at the Ashmoor site. A further about 1,600 tonnes of sub-base material was supplied from this Quarry to Arscott Farm. These figures still require to be agreed or proved since JDM stated in evidence that Meldon Quarry produced about 30,600 tonnes of sub-base material for JDM.
- Initially, there were two elements to the dispute as to JDM's entitlement to payment for this sub-base material. DEFRA contended that significantly fewer tonnes of aggregate had been delivered to Ashmoor than had been invoiced and also contended that although JDM had invoiced DEFRA for a processed material, in fact a significantly cheaper unprocessed material had been delivered. Following the conclusion of the detailed factual material, involving no fewer than five Aggregate Industries Ltd's employees from Meldon Quarry giving oral evidence, DEFRA accepted that the invoiced quantities of aggregate had been delivered. The dispute as to the type of material actually delivered however remained.
- JDM invoiced DEFRA for "225 - 75mm Crushed Rock". This would be aggregate blasted from the rock face and then treated by being crushed in the Quarry's giant crushing plant and graded so that the finished aggregate was consistent and of various sizes in the size range between 75mm and 225mm in diameter. JDM accepts that this material was not delivered. It contends that what was delivered was a combination of rip-rap, which is treated aggregate in the size range 200 - 450mm which is not available in untreated form, and a capping layer of 225 - 75mm with some 75mm - dust aggregate blinding. All three size ranges had been treated and all aggregate in these treated types would reasonably carry the same price as 225 - 75mm Crushed Rock.
- DEFRA contended that untreated aggregate taken straight from the rock face with the largest boulders having been removed was delivered from Meldon Quarry unprocessed to Ashmoor and Arscott Farm. This was untreated aggregate which is significantly cheaper. Mr Full, the General Manage of Aggregate Industries stated that the Quarry was not supplying any customer unprocessed aggregate at the time that JDM was being supplied and that he could not remember any such supply in the 22 years he had worked for the company. Thus, any supply of unprocessed aggregate would have been either the first for many years or even the first ever.
- The description "225 - 75mm Crushed Rock" was stated by two Aggregate Industries Ltd's employees, Mr Full and Mr Tucker, to be a generic description used by the quarry industry and certainly used by their company to refer to crushed or treated aggregate of the kind used in road building. It was for this reason that the invoiced description used this terminology, what was ordered was rip-rap and capping material. Mr Full gave this explanation in evidence, which was credible and, as I find, correct:
- The way in which the aggregate was ordered was very informal. JDM's site representatives, usually Mr Wilson or Mr Lowton, would telephone through each day the number of wagon loads of material that would be required, each wagon having a known cubic capacity which would keep the loaded wagon within the legal weight limit. Originally, the requirement was indeed for 225 - 75mm but this requirement changed, probably more than once. The change was not specifically recorded but it was early on and following these early changes, dictated by JDM's decisions that were being taken as work proceeded as to the most suitable material need for sub-base to suit the conditions and loads to be carried. The decision to mix dust with the 225 - 75mm, although instructed by JDM, may have originated in a suggestion from Mr Evans so as to increase the quantities of aggregate that the Quarry could produce. The end result was, as already stated, a sub-base/capping material laid in layers with three identifiable types all of which fell within the generic description being invoiced but which comprised three species within this genus, being rip-rap, 225 - 75mm and dust. The change that occurred in the specification of material being ordered was also attested to by Mr Evans, the Quarry manager, Ms Caroline Hulland, one of the Quarry weighbridge supervisors, Mr Russell Lowton, the contracts director of BT Jenkins who was one of JDM's subcontractors and Mr Dennis Wilson, JDM's site agent.
- DEFRA did not accept the explanation as to the use of the generic description given by Aggregate Industries Ltd and regarded the explanation of the changes in specification with considerable suspicion. DEFRA's case was much influenced by what it saw as the late and inconsistent explanations that had been given. It is true that the witnesses could not identify with any precision when and to whom JDM's site representatives had instructed the particular call offs leading to the delivery of the particular three-part sub-base material that was delivered. It was understandable, given the time pressures involved and the absence of any specification to govern the work that the ordering was done informally and that the specification of the material being ordered changed. It was clear that the underlying ground was very wet thereby necessitating a more layered approach to the sub-base with larger material adjacent to the very soft graded layers. Equally, it is clear that the change was largely initiated by JDM although some impetus to make the decision to change may have been provided by the Quarry to suit its operational convenience given the considerable strain being placed at such short notice on its resources. However, the explanations that were given were both credible and consistent, albeit that they had not been provided in any clearcut way until the witness statements were served and were not fully developed until the witnesses gave oral evidence at the trial. I reject DEFRA's closing submission that:
- The material was transported by independent transport contractors. The smaller sized aggregate from 250mm down was transported in aluminium-sided wagons, a material used so as to keep the weight of the unloaded wagons down as much as possible. Rip-rap, with its larger pieces, would have ripped these lightweight sides and so these relatively larger pieces were transported in steel-bodied wagons. Each wagon was loaded at the Quarry and weighed at the Quarry's weighbridge and its weight recorded automatically by the weighing equipment located in the weigh station through which the wagons passed. The wagons then went straight to site and lined up until it was possible to tip the material into the precise location where it was to be spread, rammed and rolled into position in the sub-base.
- DEFRA did not dispute significantly the size range within which the delivered aggregate lay. It contended, however, that the material was untreated so that, apart from removal of the largest pieces by hand at the rock face, the material was loaded straight into wagons having been ripped. Thus, the material was not laid in layers but as a relatively uniform homogeneous layer. The significance of this allegation is, therefore, that the much cheaper untreated aggregate was delivered. JDM's response, overall, to this allegation was that untreated aggregate would inevitably contain significant numbers of much larger pieces, larger than 400 - 450mm, that it would not have the uniformity of treated material and that it would have been unsuitable for use in road sub-base laying, partly because the large pieces would sink into the graded underlying material and push up into the base and wearing courses and partly because it could not be blinded sufficiently since there would be no discernible capping layer which could bind the lower layers of the sub-base.
- There were four strands to the evidence that was adduced by the parties. Firstly, JDM adduced evidence from the Quarry manager and other Quarry employees to give first hand accounts of what material was quarried, treated and then loaded into wagons and sent to Ashmoor. Secondly, JDM adduced evidence from those involved in the receipt of materials on site and then laying those materials into the sub-base. Thirdly, JDM adduced evidence from third parties who had observed the work as it proceeded. This evidence came from Army personnel and Mr Richardson and Mr Luck, personnel from the site engineer, Halcrow. Fourthly, each party adduced expert evidence. JDM adduced evidence from a world authority on road laying, Professor Knapton who is a civil engineer and also adduced, as it was entitled to do, passages from an expert's report originally instructed on this and the other aggregate issues by DEFRA, Mr Price who was superseded and not called by DEFRA but whose report had been served on JDM. DEFRA adduced evidence from a civil engineer, Dr Lynch. The experts, in their expert evidence, relied on visual examination of layers of the sub-base from trial pits and holes dug into the sub-base and of the rock and the methods of working in the Quarry, on Sand and Water Displacement Bulk Density, California Bearing Ratio ("CBR") and Particle Size Distribution ("PSD") tests and on their respective opinions.
- Mr Evans described the layout and method of working of the Quarry. The materials are blasted with explosives and then dug out with a swing shovel. The large boulders are removed from the as dug material and put on one side at the quarry face. The remaining pieces, being everything other than the large boulders, is then processed. The processing line consists of a hopper which is fed with the materials and which passes them over a grizzy which vibrates out pieces less than 225mm. The large pieces pass on to a jaw crusher save for the largest pieces which are fed into a hyraulic breaker. These pieces are crushed down to 225mm and both streams of material are fed onto a double deck Finlay screen which is set to produce the size range and mix of materials required. Rip-rap, being pieces over about 200mm is obtained by a separate breaking operation conducted using a 360 degree machine with a hydraulic breaker arm operated at the time by a father and son subcontracting team named Taylor. This operation was undertaken in a demarcated area in the quarry for safety reasons.
- Mr Evans was asked whether the material that was supplied was unprocessed material. He replied that the material definitely was processed material. He saw much of the material being processed and being despatched onto the wagons since he was at the Quarry throughout the period the material was being sent to Ashmoor, save for a short time when he was on holiday and at weekends, and he both knew and could recognise the visual difference between treated and untreated material and he was clear that the relevant material was treated. Moreover, the layout of the Quarry was such that there would have been insufficient room for the wagons to collect the unprocessed material from the rock face and still allow the Quarry to produce the volume of material as was blasted in that period to feed the surge in volume that was supplied in April and May 2001 and there was nowhere else in the Quarry that such a large volume of untreated aggregate could have been moved to for loading without going through the treatment area. Mr Evans, a patently honest and reliable witness, was adamant that Ashmoor and Arscott Farm were only supplied with processed materials.
- Finally, if the material was untreated and loaded straight from a stockpile onto the wagons, the Quarry would not have needed the extra labour that was temporarily taken on and would not have been subject to the surge in demand for electricity that occurred to keep the treatment process running. Because, but only because, of the need to treat all the material the Quarry was producing in that period, the company had to struggle to fulfil JDM's Ashmoor order because it was an all-processed product and the entirety had to be passed through the processing plant. Had the Ashmoor sub-base material been unprocessed, there would have been no difficulty in the Quarry production process in that period.
- Mr Full only visited the Quarry occasionally in the relevant period. However, he was able to testify to the fact that all material leaving the Quarry at the relevant period had been processed. He was clear that there was no way of mistaking the as dug or unprocessed material from processed material and what he saw being dispatched was obviously processed. Indeed, he was able to identify processed material in the witness box by looking of photographs of such material appended to Dr Lynch's report. The Ashmoor material was a significant proportion of the material being sent out of the Quarry in that period and there had been a significant surge in production costs represented by the additional electricity and labour required to fulfil demand at that time. This surge in resource demand could be seen from an examination of the costs revealed in his management accounts for the periods immediately before, during and immediately after the Ashmoor orders were processed.
- Mr Full was also able to confirm that light aluminium-bodied wagons had been used whereas steel-bodied wagons would have been used for the entirety of the Ashmoor orders had they been supplied with unprocessed material. Rip-rap would have ruined the lighter wagons given the size of the pieces and their drivers would have refused to accept rip-rap. Mr Evans and Ms Hulland, from their perspectives of manager and weighbridge operator confirmed both the use of aluminium sided wagons to deliver to Ashmoor and the fact that the drivers of the lighter bodied wagons would have refused to accept rip-rap being loaded into their wagons.
- Mr Full also stated that he could discern a pattern of wagon weights from the records he had examined which showed that both steel-sided and aluminium-sided wagons had been used since the loaded steel-sided wagons were heavier and would have carried less by weight of aggregate than the aluminium-sided wagons would have done. Although this view was not capable of ready demonstration from the records summarised on spread sheets that were available in court, Mr Full believed that this pattern had been noticeable in the original records and his view was confirmed by other Quarry witnesses. This evidence again supported JDM's case that rip-rap and smaller aggregate had both been supplied.
- Two of the weighbridge operators gave evidence, Ms Hulland and Mr Lionel Smith. Both confirmed that the material loaded onto the Ashmoor-bound wagons was processed material and, in confirmation of this, that rip-rap was delivered in steel-sided wagons. Had unprocessed material been delivered, thousands of loads would have been wrongly recorded on their records as being processed, something which could not have happened accidentally or by mistake. Both witnesses were careful and evidently honest witnesses and weighbridge operators and Ms Hulland, in a convincing almost proprietorial way, stated categorically that:
- JDM's site agent was Mr Wilson. He had built thousands of miles of roads in his career and he stated that he certainly knew the difference between unprocessed and processed material. He would have been able to spot the difference if he saw unprocessed material and, in his view, all delivered material was processed.
- Two representatives of the subcontractors laying the sub-base gave evidence. The first was Mr Russell Lowton, the BT Jenkins' contracts director. He specifically stated that the material had been laid in two layers, initially the larger rip-rap and then the 225 blind, being the layer on top. He categorically denied that one unprocessed layer had been used. This evidence was confirmed by contemporaneous notes, albeit rough ones, which he had retained and which were produced and verified by him in court. These showed that he recorded at the time that a layer of 225 to dust and also showed that a different material, which he recalled was rip-rap, had also been laid. It follows that these notes plainly showed that rip-rap and 225 - dust had been separately ordered and used.
- Moreover, since conditions were so bad, each wagon would have been checked on being tipped to ascertain whether the material was suitable for laying. Unprocessed material, with its variable size, would have caused soft spots and would have pumped up the wet ground so that it would have had to have been dug up and removed. The three men checking the wagons were all highly experienced foremen mid- to late- 50s who had been in road construction all their lives. They would all have known what unprocessed material looked like, would have been on the look out for, and would have immediately spotted, unprocessed material and, had it been delivered, would have rejected the load and immediately contacted Mr Lowton on the two-way radio they all carried. No such material was delivered and no such rejection or contact occurred.
- Finally, Mr Paul Butler, who was a quantity surveyor working for another subcontractor, BT Jenkins, on site, stated that in the early stages he checked the stone that was arriving on site. This activity could not be maintained because of the huge volume of material being delivered on a daily basis. He never spotted or recorded unprocessed stone being delivered.
- Two separate sources of evidence were adduced. Firstly, there was evidence from Army personnel. This was of two kinds, written and inferential. The Army personnel were experienced Royal Engineers who would have had considerable experience of road construction in all manner of conditions. Two visited during the early stages of construction for the express purpose of ensuring that the specification of materials, manner of laying and quality of workmanship were all appropriate. These men approved what was being done and were highly complementary of JDM. Moreover, as is reasonable, the JDM witnesses inferred that had the material that they observed being laid been unprocessed material or had it been laid in one homogeneous layer instead of in layers with larger stones in the lower layers, these Royal Engineers would have noticed and criticised this practice instead of giving JDM such glowing testimonials.
- The second source of third party evidence came from two engineers who were site representatives of the supervising engineers, Halcrow. The first was Mr Richardson, a civil engineer employed by Halcrow. As Resident Engineer, one of his tasks was to ensure that JDM's design and execution of the road materials were fit for their purpose as an access road in difficult terrain and conditions. Had the quality been unsatisfactory, as by inference it would have been had unprocessed materials been used in the sub-base, his job would have been to raise that with JDM and ensure that it was rectified. Moreover, he personally, and many others such as the Army and the police that he knew about, were all extremely pleased with and complementary about, JDM's performance as the design and build road contractor.
- The second Halcrow witness was Mr Richard Luck, Halcrow's Associate Director and an Engineering Geologist. He stated that the ground conditions were both wet and soft. He stated that he was not an expert on road construction but was able to confirm from his own observations that the sub-base was being laid in layers with the large stones going in first and the granular material going in after it. Moreover, geotex layer was also used.
- The first element of the expert evidence was direct visual evidence obtained from inspecting samples of the material in situ from trial holes and samples and from testing its bulk density, particle size distribution and visual appearance at the sides and bottom of the trial holes. Visual evidence was also obtained from inspecting operations in the Quarry and observing rock faces and piles of treated and untreated materials.
- Professor Knapton's evidence may be summarised in this way. His conclusion was summarised in the second experts' agreement concluded under CPR 35.12. He stated:
- In his written and oral evidence he expanded on how he reached this conclusion. He stated that unprocessed material could not have installed, it would indeed have been impossible to instal it at the Ashmoor access road locations using Meldon Quarry materials. This was because Meldon Quarry rip-rap was made by breaking larger materials down to the size range 400mm down. Had an attempt been made to install material of such a size, the wagons travelling over it would have punctured their tyres and become stuck. Furthermore, it could not have been compacted because the larger pieces would have protruded through the surface and because the aggregate interlock that such large pieces would have caused would have resisted compaction. Some of the pieces in unprocessed material would have been up to half a metre in length and would have been trapped by neighbouring pieces thereby precluding compaction to about 95% of the original solid mass, the required compaction since only up to 5% of air voids are permitted in compacted sub-base. In other words, the sub-base as laid would not have been, and would not have appeared to have been, properly compacted sub-base.
- Professor Knapton conducted particle size distribution tests which showed, as he saw it, that the sub-base had been laid in layers. The bulk density tests, although revealing a surprisingly high density material in the capping layer, did not rule that material out as being predominantly a layer of 250mm - dust laid over rip-rap.
- Professor Knapton accepted that only if the material contained very large pieces on delivery would it be easy to tell visually that it was unprocessed and that there were obviously larger pieces near the surface of the capping layer of the material, if there was such a capping layer, which ought ordinarily not have been in a capping layer at that level. This was shown by the relatively high bulk density of the material compared with the norm for a capping layer and the discovery of at least one boulder up to 500mm across just 250mm from the surface. He also accepted that materials can vary significantly in their appearance from quarry to quarry and within a quarry and that, at Meldon Quarry, the largest boulders were hand picked out of the as-dug material before it was processed or, by inference, before it was delivered as unprocessed material.
- Professor Knapton answered these points by confirming that he saw stratification in the sides of trial holes that he inspected with larger material at the bottom and smaller material at the top of the capping layer. Moreover, the two types of material, rip-rap and 250mm down, are not very different materials but adjacent shades on a continuum with the larger pieces in the 250mm down range being the same size or larger than the smaller rip-rap pieces so that the differences in adjacent layers would not be prominent. Equally, the relatively high bulk density towards the surface of the sub-base layer with large pieces being found in it is only indicative of homogenous laying. It is also indicative of laying in difficult conditions where fines towards the surface have been washed through by inclement weather conditions prior to surface laying or, where there was no tarmac, continuously since the sub-base had been being laid.
- A further suggested inconsistency in Professor Knapton's evidence was in his agreed statement with Dr Lynch which recorded their joint view as being that an as dug well graded sand and gravel would provide a suitable capping material with a high CBR value and that the capping materials on site and Meldon as dug materials which were subjected to particle size distribution tests yielded similar results which, in turn, were similar to the particle size distributions of 6F2 material, which is a standard DoT capping material, with some exceptions. However, Professor Knapton responded by stressing that unprocessed material would only be suitable as sub-base if it was well graded sand and gravel. The unprocessed material, if it was such, had come from a quarry which did not produce unprocessed material of this kind. Particle size distributions are indicative of, but not conclusive of, the existence of unprocessed material and high bulk densities towards the surface of a homogeneous rather than layered material. However, when all the evidence, including his own experienced visually gathered evidence, was considered, he was clear that what had been used was rip-rap/250mm down layered processed aggregate.
- The second expert only gave evidence in written form. This expert, Mr Price, had originally been instructed by DEFRA to act as its expert in both the quantity and the quality issues. However, when DEFRA learnt of the apparent misdescription of the supplied material, it instructed Dr Lynch to investigate and report on the material that had been supplied and used as the sub-base. Mr Price's report on both issues had been served on JDM but he was only to be relied on by DEFRA on the quantity issue. On withdrawing its defence on quantity issue, DEFRA stood Mr Price down from attending to give oral evidence but JDM, as it was entitled to pursuant to CPR 35.11, put in and relied on passages of his report concerned with the quality issue. Mr Price had carried out extensive testing of the sub-base materials taken from Ashmoor and his report refers in several places to crushed rock having been used and to the use of material in layers involving different rock types. Both these strands of his opinion evidence support Professor Knapton's opinion evidence.
- Dr Lynch's evidence was that the material he observed and tested was unprocessed unlayered rock from about 500mm down which was consistent with material blasted from Meldon Quarry with the largest pieces having been picked out prior to it being loaded and delivered. He had not, of course, participated in the bulk density tests which had been carried out by Professor Knapton and Mr Price before he was instructed although he had been offered the opportunity subsequently to attend and inspect the relevant trial holes but had declined the invitation. Dr Lynch had undertaken his own testing by taking samples. This testing was not notified to Professor Knapton and JDM had not had any opportunity to witness, observe or investigate the suitability of the test sites or methods. He had also taken photographs and undertaken calculations neither of which had been disclosed or adduced in evidence.
- Dr Lynch concluded from his observations and tests that the material was untreated aggregate laid in one homogeneous layer. This opinion was based on his observation and testing of material in the trial pits he arranged to be dug whose precise locations and observed date were neither logged and recorded. His evidence related to samples and locations taken from the upper part of the sub-base layer. To Dr Lynch, these presented as a high density material inconsistent with a 250mm - dust layer. He observed the relatively large sizes of the pieces at this location in the sub-base layer and he found no evidence of stratification. Furthermore, his particle size distribution tests of the samples taken from the bottom of the sub-base layer suggested that there were not as many pieces as would be expected of rip-rap in the size range 225 - 400mm.
- Finally, Dr Lynch undertook calculations. These, he suggested, showed that an insufficient proportion of larger particles were found in the capping layer to show that rip-rap had been used. These calculations were based on his test results taken from test holes whose location had not been dictated by any statistically verifiable means. I did not find that these calculations, which were not set out in detail, were ones that gave any reliable guide to the composition of the capping layer or that enabled me to conclude, in the face of all the other evidence, that rip-rap had not been used.
- Dr Lynch suggested as a final piece of evidence, that as a geotex material had been used as a drainage matting, rip-rap could not have been placed immediately above it as suggested since such material cannot be used with geotex because it would damage and tear it irretrievably. It was usual to place 6F1 or 6F2 material over geotex materials and the material which was placed over it as sub-base, when tested, was consistent in size to such a material. However, the Lotrac 1800 material that was used was stated to be a suitable geotex material for use with rip-rap. Thus, Mr Wilson stated that the geotex material that was used was a very heavy reinforced netting, Mr Lowton confirmed that a geotex material was used with rip-rap on top of it and Professor Knapton confirmed that the two materials were often used in conjunction with each other where the ground is very wet. I accept the overwhelming weight of this evidence in contrast to Dr Lynch's opinion on this subject.
- Overall, DEFRA summarised its case, despite this evidence, as pointing to the use of unprocessed material by JDM. It suggested that Aggregate Industries Ltd had a clear motive to supply unprocessed material since it would otherwise have been overwhelmed by the sudden need to provide material at the rate of about 60,000 tonnes per month having previously been supplying no more than 10,000 tonnes per month.
- Since unprocessed material is neither significantly different in size or quality and since it can, if properly graded, provide a suitable sub-base material, there was no commercial reason to ensure that the material was unprocessed, particularly if the large unprocessed pieces were first picked out prior to delivery.
- The JDM quarry and site witnesses and their recollection were unreliable in that the explanations as to the reason for the description of the material, the changes in specification of the supplied material, the suggested impossibility of delivering unprocessed material in aluminium sided wagons and the relative weight difference between loaded aluminium- and steel-bodied wagons were not given or given in detail in written evidence but only emerged during cross examination.
- Finally, DEFRA pointed to the difficulty if not impossibility of ascertaining whether sub-base material was treated or untreated by visual examination. Finally, the high bulk density of, and the presence of large pieces in, the so-called capping layer all pointed to the material being untreated homogenously laid aggregate taken direct from the blasted quarry rock surface.
- JDM pointed to the unchallenged weight of the visual evidence from quarry operators, checkers, site operatives, subcontractors, supervisory personnel from the Army and the Resident Engineer's staff and from a world authority on road building, Professor Knapton. Moreover, not one of the many wagon drivers who had delivered sub-base material from the quarry to Ashmoor gave evidence in written or oral form to suggest that only one kind of wagon was used, that rip-rap or unprocessed material could be delivered in aluminium-sided wagons or that unprocessed material was delivered although every delivery ticket described the material as processed. Finally, Mr Price clearly thought that the sub-base was processed layered material and no explanation had been given by DEFRA for not relying on his evidence. The only evidence put forward in support of the unprocessed material contention was that of Dr Lynch which was, in reality, based entirely on flawed tests, observations of material during those flawed tests and on flawed calculations and photographs based on or taken during those tests which were never adduced in evidence.
- It is first to be observed that if DEFRA's case is accepted, the consequence would be that Aggregate Industries Ltd, JDM and its subcontractors had all engaged in a conspiracy to defraud DEFRA and that at least eight witnesses had perjured themselves. This is because it would have been inconceivable for these witnesses all to have been honestly mistaken in stating that processed material had been supplied to Ashmoor and to have so consistently described the unprocessed material as processed in the thousands of delivery tickets produced as the work proceeded. It would also have needed a concerted and well planned and managed system of producing unprocessed material from the outset in order for over 20,000 tonnes of such material to be delivered over a 21-day period in April 2001 following a first order on the day or, or no more than a day or two before, the first order. The evidence of such dishonesty would need to be strong to enable findings to be made that it had occurred. In truth, the evidence all pointed to the honest, reliable and remarkably professional quarrying, processing, delivering, laying and invoicing of, and the giving evidence about, over 20,000 tonnes of processed layers of rip-rap and 250mm - dust materials.
- A second observation relates to the relative experience and standing of the two principal experts, Professor Knapton and Dr Lynch. Professor Knapton was, until 2002 when he retired, Professor of Structural Engineering at Newcastle University. His area of expertise is in road construction and he has published widely and provided consultancy advice in that field in many parts of the world in a career spanning over 30 years. Dr Lynch is employed by Unipure Europe, consultants, as a Principal Engineer with 15 years' experience in ground engineering and site investigations. Apart from one year early in his career working on road building projects for various contractors, he had had very limited experience in road design, forensic investigations of road construction and materials used in construction or road building work. I conclude, and I find that this conclusion was amply supported by the demeanour, quality and measured tone of the evidence of Professor Knapton's evidence compared with the much less impressive evidence of Dr Lynch, that Professor Knapton's opinion evidence, visual identifications and conclusions deduced from test results was to be preferred to Dr Lynch's evidence.
- Dr Lynch's opinion and forensic evidence about the material, derived as it was from his private testing, photographs and calculations, does not raise any significant support for DEFRA's case nor does it shake the overwhelming direct evidence from all other witnesses. His conclusions overlook the weight of factual evidence which shows conclusively that only processed layered materials were delivered to JDM from Meldon Quarry and were laid by JDM and its subcontractors, they are supported by unsustainable opinions, such as that rip-rap material cannot be laid over geotex materials, and they rely on test results, calculations and photographs which were not adduced in evidence and which could not, in consequence, be examined and tested by Professor Knapton or the other JDM witnesses. His conclusions also clearly differed from DEFRA's first expert, Mr Price, in material respects.
- Overall, I am satisfied on all counts that processed, layered material was delivered and laid. Unprocessed material would have been observed and rejected, would have been unsuitable and could not have been delivered in such quantities in such a small timescale from Meldon Quarry. In consequence, JDM is entitled to charge for, and be paid for the invoiced quantity of materials from Meldon Quarry at the agreed price per tonne for processed rip-rap and 250mm - dust aggregate. It is agreed that the amount withheld by DEFRA on the grounds that although processed material was claimed for, the price recoverable should be based on unprocessed material, was £268,626.00. Thus, JDM's resulting entitlement is that sum.
- I can now answer the issues set out at the beginning of this judgment as follows:
- Pending JDM's submission of claim and payment schedules that give effect to the findings in this judgment and identify what sums are now due in the light of those findings, no monetary award is made. The findings will remain as declarations unless and until such further identification of sums due is made by JDM.
- I should record, in conclusion, that the parties undertook an extremely detailed investigation into the timesheets and invoicing procedures and practices submitted by JDM, who had one of the largest accounts with DEFRA for foot and mouth cleaning and dissinfecting work. As a result of this investigation, it is clear to me that JDM and its subcontractors and all the DEFRA employees and representatives engaged on the clean up operations at the twelve sites that I was concerned with and on the management and invoicing work involved is entitled to the highest praise for the dedication, professionalism and service shown throughout. The pressure under which all worked, the achievements obtained in the short time and with the unprecedented working hours provided were remarkable and should not go unnoticed.
- I should also like to place on record the professionalism shown by both parties' legal and expert witness teams. The scope of the investigations undertaken and the paperwork and witnesses that were deployed presented all with formidible difficulties of case and trial management and presentation and the result was, I am satisfied, a credit to both clients and to the public interest since it has enabled a vital investigation into charging for foot and mouth services to be undertaken with both speed and economy. I am particularly grateful to both teams for the assistance with which I was provided.
Index
| Summary of Findings in Judgment | Summary |
| 1. Introduction | 1 - 6 |
| 2. Procedural Background | 7 - 11 |
| 3. Factual Background to Dispute | 12 - 46 |
| 4. JDM's Contract | 47 - 71 |
| 5. Questions of Contract | 72 - 183 |
| Interpretation Answered | |
| 5.1. Introduction | 72 - 74 |
| 5.2. Travelling Time | 75 - 98 |
| 5.3. Meal Breaks | 99 - 106 |
| 5.4. Meal Breaks - Plant Operatives | 107 - 110 |
| 5.5. Invoicing and Payment | 111 - 152 |
| 5.6. Plant Operators' Rate | 153 - 183 |
| 6. The Specific Sites | 184 - 228 |
| 7. Approach to Claims for Labour Including Plant Operators at Other Sites and Farms | 229 |
| 8. Aggregate | 230 - 277 |
| 9 Overall Conclusion | 278 - 280 |
Summary of Findings in Judgment
1. Contract Issues
1.1. Travelling Time
1.1.1. Meaning of "Base" in Annex B of the Contract
The meaning of "base" in the phrase "to and forth from base" where the word is used for the first time in annex B to the contract means "the base from which the operative is working on the day in question". That might be his home base or it might be a temporary base if he is working away from his home base.
"Base" means "home or permanent base" where the word is used for the second time in annex B to the contract.
1.1.2. Travelling Time - Meaning
1. Where an operative was accommodated away from home in Bed & Breakfast accommodation, JDM can claim the cost of accommodation up to a maximum sum of £51 per night and, in addition, the travelling time involved in travelling back and forth from that accommodation to site.
2. Travelling time from accommodation to site includes any time travelling to a depot or to a pick up point and the additional travelling time back and forth from that depot or pick up point.
1.1.3. Alternative Basis for Recovering Travelling Time - Variation to Contract
1. If, contrary to the findings as to the meaning and intent of the contract provisions concerned with travelling time, JDM is not entitled to recover travelling time between operatives' overnight accommodation and site, an entitlement to the same recovery arises pursuant to JDM's entitlement to reasonable additional remuneration for services that had to be performed pursuant to the variations to, and the enlargement of the scope of, the contract which DEFRA instructed. These additional services were only provided as a direct consequence of those variations and for which JDM would not otherwise be remunerated.
2. The variations consisted of the provision of a greatly increased number of operatives to enable the hugely increased scope of work to be undertaken by JDM under the contract. This unexpected additional labour requirement arose from the unexpected size and scope of the foot and mouth outbreak which had led to the need to call in large numbers of operatives from far afield to match DEFRA's demands for labour. This labour was need both to clean up over a short space of time the greatly increased number of farms scattered over a much wider area than was envisaged by the scope of the call-off contract and to construct burial sites which was work which was not covered at all by the scope of that contact. This demand in turn required the use of much accommodation located far from the sites that were being worked on and a consequent unexpectedly lengthy daily journeys between their overnight accommodation and site for many operatives. In agreeing to instructing JDM to vary the contract to deal with these varied working conditions, DEFRA impliedly agreed to pay JDM additional reasonable remuneration for any services performed to fulfil those variations which were not covered by the existing contract remuneration. Such additional services included operatives' travelling time between their overnight accommodation and site and such travelling time is therefore reasonably to be paid for by DEFRA at the same rate as comparable travelling time between base and site already being paid under the contract.
3. This is an alternative basis for JDM to recover payment for travelling time between operatives' overnight accommodation and site. JDM may claim that time as a direct consequence of the variations to the contract that they agreed to perform.
1.2. Waiting Time
Both periods of waiting time, namely the period between arrival at and departure from the depot in the morning and evening and any waiting period incurred by members of rapid response teams counts towards chargeable hours.
1.3. Meal Breaks
1.3.1 Summary of Contract Provisions for Meal Breaks
A summary of the contract provisions for operatives' meal breaks is as follows:
1. JDM would provide its operatives with a break during the working day of a kind which would enable it to comply with Regulation 12 of the Working Time Regulations. That break would be for a minimum period of 20 minutes and for a maximum period of 60 minutes. However, the customary period in the civil engineering industry is 30 minutes.
2. The precise length of the break would be decided on site. In the absence of a formal decision or direction from DEFRA site based staff, the industry custom of taking a 30 minute break would prevail.
3. The Working Time Regulations were not applicable to JDM's work. However, a break would only occur if it was taken in a way and in a location which allowed an operative to rest and to be isolated from his working environment. Walking time to and from that location did not count towards the timed length of this break.
4. For the timed period whilst on a break, JDM would not charge DEFRA for that operative's time. If no break was in fact taken, or one of less than 30 minutes was taken, no deduction would be made or the actual period of the break would be deducted.
5. If a break was taken and the precise length of the break was not ascertained, it would be assumed that the deductible period was 30 minutes unless evidence to the contrary was available.
1.3.2. Plant Operators' Meal Breaks
1. Plant operators' time was deductible whilst they were engaged in their main meal break in the same way as other operatives.
2. Plant which came with an operator was not chargeable to DEFRA during its associated operator's deductible meal break for the identical period that was deducted for the operator but was chargeable during any associated operator walking time. However, if no deductible operator time occurred, no deduction would be made for associated plant hire.
3. If the parties had agreed in advance to a plant standing time or plant hire charge regime during operators' meal or walking times, that agreement would prevail over the contractual provisions summarised in subparagraphs 1 - 2 above.
1.4. Nature of Payments Made to JDM by DEFRA
No payment that was made was final in nature and any overpayment which can now be shown to have been made in error may be claimed by DEFRA as part of the overall accounting exercise being carried out now work has been completed.
1.5. May DEFRA Challenge the Record of Chargeable Hours Recorded on Time Sheets?
It would be to allow DEFRA to take advantage of its breach of contract if DEFRA was to be allowed to make any more extensive challenge to the time sheets than it could have done following their verification by one of its site based representatives. Thus, for any time sheets now in issue which had not been verified by DEFRA on site, DEFRA now has the evidential burden of showing that the contents of the time sheet were inaccurate. In practical terms, therefore, DEFRA is restricted in its attack on the time sheets to showing that they contain arithmetical or other patent errors, that they are subject to some general error such as not allowing for deductible meal breaks, were fraudulently produced or were produced by a process which was inherently unreliable such that no weight may be placed upon them.
1.6. Estoppel
1. I will consider the potential application of the estoppels contended for by JDM when I consider the particular sites at which JDM contends that they arise.
2. These principles must be applied on a case by case basis. Thus, it is not possible to apply them generally to this case but the particular facts relating to each site must be considered separately. Suppose it had been agreed by appropriate representatives of DEFRA and JDM that travelling times should be traded off against meal times so as to enable both parties to save themselves much paperwork and administrative time. Alternatively, suppose DEFRA first challenged the accuracy of particular time sheets so long after their submission by JDM that JDM was no longer able to substantiate them because it had reasonably disposed of relevant documents or had lost track of particular witnesses. In such circumstances, for the site in question, JDM could in principle estop DEFRA from relying on its contractual entitlement to deduct meal times or its evidence that undermined the presumed accuracy of JDM's time sheets. However, such an estoppel could only arise if JDM could show that otherwise it would unreasonably suffer detriment.
1.7. Evidential Approach to Timesheets
The time sheets could be adduced without further proof of their provenance and authenticity and would stand without further proof as accurate and reliable evidence of the number of chargeable hours worked and their contents on this matter would only be capable of being discounted or not accepted if DEFRA produced significant credible evidence both that the statement was inaccurate and as to how or why a particular group of time sheets were inaccurate notwithstanding the fact that considerable weight should be placed on their reliability and accuracy. In other words, in relation to the number of chargeable hours being claimed by JDM, DEFRA had a heavy burden to displace the evidential burden that JDM had satisfied by adducing the time sheets in the first place. This burden was the more heavy since DEFRA was in practice restricted to seeking to make generic attacks on groups of time sheets without any detailed evidence available to show what should be regarded as the correct make up of any particular time sheet or the precise numerical extent of any overcharging.
2. Plant Operators' Rate
2.1. What Rate is Applicable for Plant Operators?
1. The contract was varied both by the addition of civil engineering work and by the addition of a requirement to hire in plant and plant operators. Some of this plant was not referred to in either of the contract schedules. The contract did not contain a lacuna so far as plant operators was concerned. Instead, the contract in its unvaried state had no provision for plant operators since none were required to undertake the contract scope of work so that none were provided for. Once the scope of the contract was varied, the varied contract generated a significant need for the use of plant operators. This need was part of, and an essential response to, the variations to both the contract and its scope of work that had been instructed by DEFRA.
2. The contract made express provision for such variations. Clause 2 provided that the Minister reserved the right to modify the contract services required of JDM. It also provided that any modification to the contract price arising by reason of such modifications would be agreed between the parties. This clause obviated the need for an implied term that would otherwise have arisen to the effect that JDM would be additionally and reasonably remunerated for any variation to the contract or its work scope instructed by DEFRA. Clearly, any modification to the contract price provided for by clause 2 had to be reasonable and, in default of agreement between DEFRA and JDM as to what reasonable adjustment to the contract rates or remuneration would be required, it would be left to a court or adjudicator to ascertain and fix reasonable remuneration.
3. Thus, JDM is entitled to a new rate for plant operators. In principle, it could be contended that that new rate should only apply to plant operator usage that was additional to the more limited plant usage that labourers would have been involved in had the contract not been varied. However, neither party contended for this half way house and it would have been unrealistic. Once the need arose to hire in plant operators, it would have been unreasonable for JDM to have used labourers for plant operations at all and, in those circumstances, all plant operator usage should be remunerated at the new plant operator rate.
2.2. Was There an Ad Hoc Enforceable Agreement as to a New
Rate?
I am not satisfied that the meeting went so far as to reach a concluded agreement about a rate for plant operators. What I conclude occurred was that the subject was raised and the four men quickly reached a consensus that as an interim measure, pending a more formal rating exercise, JDM could invoice and DEFRA could pay at the electrician's rate in the contract. In any case, pending some more formal agreement, evidenced in writing and made following the issue of an instruction by DEFRA, any agreement as to the new rate required for plant operators would be provisional and subject to review since it would have been paid in interim payments which were themselves subject to review. Thus, the "agreement" referred to by JDM was one which occurred but had the limited final effect that it would prevail unless and until reviewed and formalised later in the contract or when the final account was being settled. That is why there was so little discussion of the matter and why payments were made against a claim for payment of this rate yet the DEFRA representatives had no subsequent recollection of the discussion.
2.3. What is the Fair Rate?
I accept and find that the fair rate arrived at by the experts, which was the same as that contended for by JDM albeit that JDM's rate was arrived at by a different method or by an interim agreement reached with DEFRA at an early stage of the work, was a reasonable rate and is the rate that should be adopted for plant operators. This rate, suitably uplifted by 3% and again by 3% and subject to the appropriate factors for x 1.5 and x 2.0 working rates where appropriate, should be used as the basis for JDM's remuneration for plant operators.
3. Set off: Travelling Time against Meal Breaks
I find that there was an agreed course of conduct in which no travelling time would be claimed for operatives working at the Throckmorton site and, in return, no meal break deductions would be made. DEFRA argued that there was no such arrangement and, in any case, there was no quo in the form of travelling time for JDM to set off against the quid pro which DEFRA forwent in the form of meal break deductions. However, the evidence clearly shows a mutually acceptable arrangement which appears to have been applied by those submitting timesheets which was known to, and accepted by, DEFRA. Moreover, there was an appreciable travelling time recovery entitlement that JDM appear to have foregone so each side benefited and was burdened by the arrangement. It would now be inequitable to allow DEFRA to resile from this arrangement since there is no means of knowing what meal breaks were taken and how much should be both deducted for these or added for travelling time.
4. Throckmorton
1. The number of deductible meal breaks taken by operatives at Throckmorton was very limited or non-existent.
2. The rapid response teams never took meal breaks for which a deduction would be appropriate or required. They never had any period of recreation or away from the working environment and would have had to have had any refreshment sitting in their vehicles awaiting a call.
5. Ashmoor
Ashmoor is similar to Throckmorton in that:
(1) the occasions when deductible meal breaks were taken were few in number and only, if at all, towards the end of the working period on site; and
(2) no deductions should in any case be made since the site was subject to a trade off arrangement acquiesced in by DEFRA which DEFRA is now bound to give effect to.
6. The Ten Farms
1. DEFRA has produced insufficient evidence to allow for any deduction from the invoiced chargeable hours and no further correction from invoiced chargeable hours arises for insufficiently deducted meal break times, excessively claimed travelling time or excessively claimed time on site.
2. These conclusions arise both from a consideration of the evidence and from the application of the principles summarised in sections 1.5. - 1.7. above.
7. Aggregate
1. The correct description of the aggregate delivered to Ashmoor from Aggregate Industries' Meldon Quarry was: "Crushed rock appropriate for capping being in part a lower layer of rip-rap 200 - 400mm and in part an upper layer of crushed rock being a blend of 225 - 75mm and 75mm - dust".
2. JDM is entitled to recover in full the sums deducted by DEFRA since,contrary to DEFRA's contention, the material delivered to Ashmoor from Meldon Quarry was processed and not "as dug" material.
8. Invoices
The invoices and timesheets adduced in support of JDM's claims at each of the twelve sites currently in issue have all been inspected and are both authentic and to be taken to record accurately the chargeable hours for labourers and plant hire operators at each of those sites.
9. Use of Judgment at Other Sites
Unless DEFRA can discharge the evidential burden imposed on them by the submission of signed timesheets by JDM and in the absence of any countersignature by a DEFRA representative on a site by site basis, JDM is entitled to be paid on the basis of the operatives' and plant operators recorded chargeable hours on each site worked on by JDM under the contract.
10. Monetary Recovery
Pending JDM's submission of claim and payment schedules that give effect to the findings in this judgment and identify what sums are now due in the light of those findings, no monetary award is made. The findings will remain as declarations unless and until such further identification of sums due is made by JDM.
1. Introduction
(1) The disputed element of JDM's claimed labour costs which DEFRA alleges represents the time spent by JDM's labour force on their lunch breaks for which break time it may not be charged;
(2) The disputed element of plant hire rates used by JDM in its claims for plant usage; and
(3) Claims for payment of some of the quantities of aggregate that JDM claims it supplied and which DEFRA disputes were supplied and that for part of the price of the aggregate that was supplied which DEFRA disputes on the ground that JDM's claims are based on the supply of a better quality, and hence more expensive, aggregate than was actually supplied.
2. Procedural Background
1. What part of JDM's claim is irrecoverable as representing payment for non-chargeable time spent by JDM's direct and subcontract labour on meal breaks?2. What part of JDM's claim is irrecoverable as representing payment for time spent by JDM's direct and subcontract labour travelling to and from site or whilst waiting at JDM's base prior to being transported to site?
3. What part of JDM's claim for supplying aggregate is irrecoverable as representing:
(a) quantities of aggregate that were not supplied at all; and(b) the difference in price between the reasonable price claimed by JDM, being the reasonable price payable for the quality of aggregate JDM claimed it had supplied from Meldon Quarry, and the reasonable price contended for by DEFRA, being the reasonable price of inferior quality aggregate that DEFRA allege was actually supplied from that Quarry?
4. Can DEFRA recover or claim credit for sums paid against specific invoices where such sums were not due, particularly where these sums can be shown to have had been paid for:
(a) time spent on meal breaks or in travelling to orfrom, or whilst awaiting transport to, site; or
(b) aggregate that was never supplied or which represented the difference between the price of the aggregate that was charged for and the reasonable lower price for the inferior quality supplied?
5.1 Can JDM charge its claimed rate for plant operators because:
(a) this was the subject of an oral agreement; or(b) DEFRA is estopped from denying JDM's entitlement to that rate; or
(c) JDM is entitled to be paid at a reasonable rate?
5.2 If the basis of JDM's entitlement to payment is a reasonable rate, what is that rate?
3. Factual Background to the Dispute
3.1. Foot and Mouth Disease
3.2. NAO, HC Select Committee and DEFRA Project Team Reports
3.3. DEFRA's Inadequate Contingency Plans
3.4. DEFRA's Recording, Checking and Auditing Procedures and the Court's General Approach to Documentary Evidence
1. Hearsay evidence is generally admissible in civil proceedings. Such evidence is any statement made otherwise than orally in the proceedings. The statement may be proved by the production of the document. In addition, a document forming part of the records of a business or public authority are admissible without further proof (sections 1(1), 1(2), 8 and 9(1) of the Civil Evidence Act 1995 ("CEA")).2. The relevant hearsay evidence in this case consisted of time sheets, spread sheets which tabulated the contents of these time sheets and invoices and supporting summaries which incorporated the contents of these underlying spreadsheets and time sheets. All these documents comprised documents that could be tendered in evidence without further proof as business records and all were hearsay in the sense that their contents were admissible as evidence of the facts stated without the need to adduce supporting oral evidence.
3. Hearsay evidence may be relied on at trial if the party relying on it identifies to the other party the hearsay evidence and informs that party intends to rely on the hearsay evidence at the trial and gives the reasons why the maker of the statement is not being called as a witness (CPR 33.3).
4. A party who wishes to call evidence to attack the credibility of the maker of a hearsay statement must give notice of his intention to the party proposing to rely on the hearsay statement in evidence (CPR 33.5).
5. In estimating the weight (if any) to be given to hearsay evidence the court shall have regard to any circumstances from which any inference can reasonably be drawn as to its reliability or otherwise. Regard may be had in particular to the following:
(a) whether it would have been reasonable and practicable for the party by whom the evidence was adduced to have produced the maker of the statement as a witness;(b) whether the original statement was made contemporaneously with the occurrence or existence of the matters stated;
(c) whether the evidence involves multiple hearsay;
(d) whether any person involved has any motive to conceal or misrepresent matters;
(e) whether the original statement was an edited account, or was made in collaboration with another or for a particular purpose;
(f) whether the circumstances in which the evidence is adduced as hearsay are such as to suggest an attempt to prevent proper evaluation of its weight (section 4 of the Civil Evidence Act 1995)
3.5. DEFRA's Difficulties in Responding to the Crisis
3.6. DEFRA's Labour and Plant Financial Recording System
3.7. DEFRA's Inadequate Financial Procedures
"We had a major problem with staffing, ... we ran out of vets; we did not have enough technical staff; ... we had to find administrative staff .. we have had a serious resource problem."
The administrative staff in Disease Control Centres and elsewhere worked punishingly long hours and had to adapt rapidly to changing circumstances and to assimilate and carry out new instructions. Great reliance was placed on outsiders including the contractors themselves. It was clear from the totality of the evidence that I heard that these problems were all seriously affecting the Disease Control Centres with which JDM was working.
3.8. DEFRA's Efforts to Improve Financial Procedures
3.9. Reasons for Delays in Payment to JDM
4. JDM's Contract
"HQ have told us if it can't be signed, to find another contractor, so hope sincerely that you find terms acceptable."
Mr Ratcliffe was prepared to sign the contract and, on 19 March 2001 both he and Ms Williams signed it. The contract is backdated to 9 March 2001 and is in 4 parts. These are: (1) a one-page Agreement; (2) General Conditions of Contract; (3) a Specification; and (4) a Pricing Schedule. The contract was for a one year period. It might have been a moot point whether the contract ran from 9 March 2001 when it was dated or 19 March 2001 when it was signed but nothing turns on this potential ambiguity. The contract provided that during that one-year period, JDM would provide the services in relation to foot and mouth of the general type described in the specification attached to the contract at each site specified in a purchase order which would provide a more detailed specification of work. The generic description of those services contained in Annex A: Specification was as follows:
"Provide equipment and labour as necessary to deal with operations in relation to Foot and Mouth Disease, including an Infected Premises (defined as 'the location where the services are to be performed as specified in the purchase order). JDM to provide foreman to oversee operations on site. ... JDM to be responsible for Health and Safety of their operatives on site."
"10 Payment10.1 Unless otherwise stated in the Contract, payment will be made within 30 days of receipt and agreement of invoices, submitted in arrears on completion of the Contract or as otherwise agreed by the Minister. Services completed to the satisfaction of the Minister. No interest shall start to run in respect of any payment due before the expiry of the 30 day period."
The contract also provided that the failure of either party at any time to enforce any provision of the Contract should in no way affect its right thereafter to require complete performance by the other party, nor should the waiver of any breach of any provision be taken to be a waiver of any subsequent breach of any such provision or be a waiver of the provision itself (clause 25).
1. General Introduction
a) [JDM] will provide the Services as detailed in Annex A and the Minister shall pay [JDM] in accordance with procedures set out in Condition 10 of the General Terms and Conditions of Contract.
b) The Contract Rates exclusive of VAT detailed in Table 1 below shall be firm for the initial Contract period of one calendar year from the date this agreement is signed.
Labour schedule and MAFF Plant schedule as attached. Plant delivery extra - suppliers charge plus 121/2%. Single rate applies for 8 hours per day Monday to Friday 8 am to 5 pm. This includes travelling time back and forth to base.
For Monday to Friday outside the hours 8 am - 5 pm labour rate paid at time and a half rate. Saturday working paid at time and a half rate. Sunday working paid at double time rate. For working away from base overnight accommodation rates can be claimed if they are comparable to or less than the cost of travelling time. B & B rate-actuals and no more than £51 per night. Supplementary expenses rate £25 per night to cover incidental expenses and cost of evening meal. MAFF to book and pay for accommodation where possible. Otherwise if JDM book - actual cost (plus 12 1/2%) [words in brackets were subsequently agreed to be deleted].
Travel - At the rates in the attached schedules and relevant discounts.
Car travel at rates in the MAFF labour schedule.
All other plant or equipment hired to be charged at 72% of the rates in the attached schedule of "dayworks carried out incidental to contract work".
Standing time for off-hired equipment to be agreed in advance and charged at 60% of normal rates.
Plant not covered in either the MAFF plant schedule on (sic) the attached schedule of "day works carried out incidental to contract work" at cost plus 12 1/2%.
2. MAFF Labour Schedule
Single time rates and x 1.5 and x 2.0 rates were given for Electrician, Plumber and labourers and a mileage allowance for electrician and plumber but not for labourers.
MAFF Plant Schedule
The schedule contained 16 items of plant and provided a rate per hour or per week for their hire. These items were taken from the DEFRA schedule that JDM had priced in February 2000.
3. CECA Schedule
This consisted of 37 categories of plant, many of which were clearly inappropriate for this contract but were included because no-one had gone through the schedule removing such categories. The schedule contained such potentially relevant categories for use on the farm clean up work as compressors, concrete mixers and similar plant, dumpers, excavators, generating sets, lorries and vans, pumps and pumping equipment, rammers, compactors, shoring, shuttering and tractors and scrapers.
"In all honesty, I do not think anybody in their wildest imagination had envisaged what happened in 2001. There were a number of factors in that. One was that we never imagined Foot and Mouth could exist in the country for so long and go undetected and was therefore spread around the country, and the other thing we had not bargained on was the Contiguous Cull, which was introduced part way into the Foot and Mouth outbreak, which resulted in us having to slaughter animals and clean up a lot more premises than we would have had to do otherwise."
Ms Williams then described DEFRA's method of responding to, and the resources deployed to deal with, the crisis:
"So we had enough staff for the initial outbreaks but the way things went, it snowballed very, very rapidly and we struggled to get sufficient staff in and train them properly to keep up with the events. ... We had based our local divisional plans on there being a few cases, cases being recognised early so that we could stamp on them early. We had not taken account of the fact that there might be a contiguous cull because that was not part of the policy early on. ...We had a certain number of permanent staff, veterinary, technical and administrative in the Animal Health Division office and people who were working on other things such as TB, and immediately had to stop what they were doing and take up FMD duties. We then drew in administrative staff from other departments, departments that had no knowledge of animal health at all, and we took in temporary veterinary inspectors from local practices abroad, commerce and industry and all sorts of backgrounds. ... We tried to draw in people from organisations where they would have had some experience of agriculture ... when it became obvious that, even with people from that sort of background, we were not coping with the workload, we had to go out and recruit through other means. ..."
Finally, Ms Williams explained how these developments affected the intention of having day to day, on site verification and authorisation of every daywork sheet by a DEFRA representative:
"What I thought I had agreed [on 27 February 2001] was that we would provide somebody on the infected premises who would make a note of the hours that the contractor worked and that that would then be used to confirm the invoices from the contractors. In fact, I was never made aware of any problems with any invoices from the contractors during the time that I was responsible for the contracts [from about 22 March 2001]. ...Initially we put, I think it was something like one, possible two, veterinary officer and three animal health officers onto the premises. As the number of infected premises grew, we were unable to provide that level of support and, with hindsight, it appears in some places we were able to provide perhaps no people on some days but at the time I wasn't aware of how that was impinging on the JDM invoices, or indeed on anybody's invoices."<1>
1. Whether JDM is entitled to charge DEFRA for the time of the labourers travelling time between the sites on which they were working and their bed and breakfast accommodation on those occasions on which the journey to and from work was not made via JDM's depot in Shrewsbury.
2. Whether JDM is entitled to charge DEFRA for the period during the day (or night when a night shift was being worked) that their labourers were, or could have been, taking a meal in the middle of their shift. If not, what allowance for this meal break should be made?
3. If JDM has to make an allowance for meal breaks, how should plant on hire be charged for at the time that its driver is having a meal break for which no charge is being made?
4. What rate is JDM entitled to charge for plant operatives? The question arises because the only labour rates provided for in the contract are for an electrician, a plumber or labourers and there is no direct rate for such drivers provided for in the contract. However, heavy plant with accompanying drivers was required to undertake the work JDM was instructed to carry out, particularly at the burial sites and this was hired in by JDM. Thus, is one of these contract rates to be taken as the applicable rate for plant drivers? If not, how should the appropriate rate by ascertained?
5. What were the contractual requirements for preparing and submitting invoices and for their checking, authorisation and payment by DEFRA?
5. Questions of Contractual Interpretation Answered
5.1. Introduction
1. The contract was not used as a call-off contract but as the sole contract for all work actually required. This ultimately extended to over 100 farms and work valued by JDM at nearly £37m.
2. There were no written instructions, no definition of the work required at any site, no tender and no or little on site verification of daywork sheets by DEFRA's personnel.
3. JDM had to call on a huge volume of labour from outside the Shrewsbury area and to utilise many subcontractors. The resources devoted to the contract were far in excess of anything envisaged by the parties at the time it was negotiated and entered into. Moreover, the number of sites being simultaneously worked on and the call for labour and materials and for management and invoicing services generally far exceeded anything envisaged by the contract.
4. Invoicing and payment was not operated on a site by site basis but on a weekly invoicing system covering the entirety of JDM's work over all sites.
5. The scope of the work increased enormously. The most significant additions were the civil engineering work at burial sites which was not within the scope of the contract at all since it was not "operations in relation to Foot and Mouth Disease including an Infected Premises".
The relevant terms of the contract must be given effect to notwithstanding these changed circumstances. However, as with any contract to provide work and materials of a remedial nature, it is open to the employer to vary the work content and scope of the contract. If the contractor accepts an instruction which varies the work content or work scope in this way, he is entitled to reasonable additional remuneration for those additional services. If the contract rates or prices do not reasonably cover the enhanced scope of work undertaken as a result of the variation to the contract, the contract rates or prices must be supplemented by whatever additional rate or price reasonably provides for and remunerates the contractor for the enhanced element of the work resulting from the variation in question.
5.2. Travelling Time
5.2.1. Accommodation to Site
Single rate applies for 8 hours per day Monday to Friday 8 am to 5 pm. This includes travelling time back and forth to base.
For Monday to Friday outside the hours 8 am - 5 pm labour rate paid at time and a half rate. Saturday working paid at time and a half rate. Sunday working paid at double time rate. For working away from base overnight accommodation rates can be claimed if they are comparable to or less than the cost of travelling time. B & B rate-actuals and no more than £51 per night. Supplementary expenses rate £25 per night to cover incidental expenses and cost of evening meal. MAFF to book and pay for accommodation where possible. Otherwise if JDM book - actual cost (plus 12 1/2%) [words in brackets were subsequently agreed to be deleted].
Travel - At the rates in the attached schedules and relevant discounts.
Car travel at rates in the MAFF labour schedule.
1. The alternative meaning could result in absurdities. For example, an operative working ten minutes away from JDM's JDM Shrewsbury base would entitle JDM to twenty minutes travelling time whereas an operative accommodated one hour's travelling time away from site would entitle JDM to no claim. In such cases, JDM would make a substantial loss if it accommodated its men away from home so that it would have no incentive to adopt this working practice notwithstanding the desirable outcome it would achieve.
2. The phrase "back and forth to base" is, in context, a reference to the individual operative's base on the day in question. Where and what that base might be on any particular day would be a question of fact. It might be the operative's regular base or it might be a temporary base set up for a site a long distance from home base. Thus, "base" in that context means "base from which the operative set forth from that day".
3. The parties clearly intended that travelling time would be paid for. They also clearly intended that accommodation which resulted in saved travelling time would be paid for in lieu of travelling time saved. In consequence, they intended, or must be taken to have intended, that any residual travelling time still needed despite the use of overnight accommodation would still be paid for in addition to that accommodation being paid for. This arrangement would not cost DEFRA anything extra since the cost of accommodation plus travelling time would be equal to or less than the alternative, namely the notional daily cost of travelling back and forth to the operative's home depot to site.
4. An operative's travelling time between his home and his overnight accommodation is to be paid for as travel. It would make no commercial sense if travelling time between that accommodation and site is not to be remunerated at all, particularly as the resulting saving would be made at JDM's option since JDM is not obliged to use overnight accommodation but could, instead, insist on the operatives being bussed every day between their home base and site notwithstanding the huge distances involved. It makes sense for DEFRA to be allowed the savings resulting from the travelling time that does not take place because of the use of overnight accommodation, it makes no sense that it can also be allowed as a saving the residual travelling time involve in the use of such accommodation.
5. Generally, DEFRA decided which accommodation would be used and itself made the bookings and the necessary payments. It was therefore in DEFRA's sole control how great would be the travelling time between accommodation and site. The reverse of such an arrangement would reasonably have been taken to be that any resulting travelling time would be paid for by DEFRA.
1. Where an operative was accommodated away from home in Bed & Breakfast accommodation, JDM can claim the cost of accommodation up to a maximum sum of £51 per night and, in addition, the travelling time involve in travelling back and forth from that accommodation to site.
2. Travelling time from accommodation to site includes any time travelling to a depot or to a pick up point and the additional travelling time back and forth from that depot or pick up point.
5.2.2. Waiting Time
5.3. Meal Breaks
Single rate applies for 8 hours per day Monday to Friday 8 am to 5 pm. This includes travelling time back and forth to base.
1. JDM would provide its operatives with a break during the working day of a kind which would enable it to comply with Regulation 12 of the Working Time Regulations. That break would be for a minimum period of 20 minutes and for a maximum period of 60 minutes. However, the customary period in the civil engineering industry is 30 minutes.
2. The precise length of the break would be decided on site. In the absence of a formal decision or direction from DEFRA site based staff, the industry custom of taking a 30 minute break would prevail.
3. The Working Time Regulations were not applicable to JDM's work. However, a break would only occur if it was taken in a way and in a location which allowed an operative to rest and to be isolated from his working environment. Walking time to and from that location did not count towards the timed length of this break.
4. For the timed period whilst on a break, JDM would not charge DEFRA for that operative's time. If no break was in fact taken, or one of less than 30 minutes was taken, no deduction would be made or the actual period of the break would be deducted.
5. If a break was taken and the precise length of the break was not ascertained, it would be assumed that the deductible period was 30 minutes unless evidence to the contrary was available.
5.4. Meal Breaks for Plant and Plant Operatives
1. Plant operators' time was deductible whilst they were engaged in their main meal break in the same way as other operatives.
2. Plant which came with an operator was not chargeable to DEFRA during its associated operator's deductible meal break for the identical period that was deducted for the operator but was chargeable during any associated operator walking time. However, if no deductible operator time occurred, no deduction would be made for associated plant hire.
3. If the parties had agreed in advance to a plant standing time or plant hire charge regime during operators' meal or walking times, that agreement would prevail over the contractual provisions summarised in subparagraphs 1 - 2 above.
5.5. Invoicing and Payment
5.5.1. Introduction
1. How much time was spent travelling to and from each sample site was made by each operative for whom a claim was made and the starting point of that journey on each day worked?
2. How much time was spent on the main meal break and the nature and location of that break by each operative on each site on each day worked?
3. How much time was each item of plant left idle whilst its operator was engaged in a deductible meal break?
1. Each operative filled out on site on a daily basis an individual time sheet recording the chargeable hours worked and travelled on the day in question. This record would be signed by a site based foreman or would be used as the basis of separate time sheets prepared by the site based foreman.
2. A site base foreman filled out a time sheet using his knowledge or the individual time sheets provided by the operatives working on that site. This would be filled out on a daily basis.
3. The site record would be forwarded to the office of the subcontractor or, if the operatives were directly employed by JDM, to JDM's office and used by office staff as the basis of the spreadsheet or similar document which tabulated the chargeable hours worked on foot and mouth clean up operations on a weekly basis and which formed the basis of invoices submitted to respectively JDM or DEFRA.
4. JDM's office staff would use the spreadsheets from subcontractors and their own spreadsheets to prepare invoices on a weekly basis that would be submitted to DEFRA.
5. DEFRA would receive JDM's weekly invoices and supporting time sheets and spreadsheets broken down site by site. The invoices would cover all sites on which JDM had been working.
1. What, if any, travelling time from what base was included in the chargeable hours claimed? If such time was included, was the correct time included? If excessive time was included, what time, if any, should have been included?
2. Was the chargeable time on any day for any operative, including plant operators, arrived at having first made a deduction from the total number of hours worked on site for a meal break? If no such time was deducted, what meal break time, if any, should have been deducted? If such time had been deducted, was the correct amount of time deducted and, if not, what time should have been deducted?
1. Conclusive nature of payments actually made.
2. Absence of contemporary verification.
3. Estoppel
4. Approach to the evidence
5.5.2. Conclusive Nature of Payments Actually Made
1. The scope of services to be required at a particular site would be identified to JDM and JDM would prepare a tender, priced using the schedule of rates annexed to the contract (clause 3.1).
2. A separate contract for that site would be entered into, based on a purchase order submitted by DEFRA which would incorporate a specification of the work to be performed and would be based on the submitted tender of JDM (clause 1).
3. The starting date would be specified in the purchase order and a detailed programme of work would be supplied by JDM (clause 9). The parties envisaged, at the date the overriding call-off contract was signed, that each individual contract for a particular site would involve a relatively short contract running to days or, at most, a few weeks (see the factual matrix discussed and made the subject of findings in paragraphs 47 - 59 above).
4. Payment would be in one payment pursuant to an invoice from JDM which would be submitted in arrears on completion of the Contract ("or as otherwise agreed by the Minister") (clause 10.1). Payment would be within 30 days of receipt and agreement of the invoices (clause 10.1).
5. For 3 years after completion of work, JDM was to retain in its possession all records and documents relating to services (clause 12.1). The purpose of this requirement was to enable the NAO for National Audit Act purposes concerned with auditing government expenditure to ascertain whether it had obtained value for money.
"repair or maintenance of buildings, repair or maintenance of works forming part of the land, external or internal cleaning of buildings so far as carried out in the course of their repair or restoration, painting or decorating the internal or external surfaces of buildings, site clearance, earth moving, excavation, site restoration, landscaping and the provision of roadways and other access works" (section 105 of the HGCRA).
To the extent that the works were not Construction Operations, the contract had to be split and the elements of the works which were Construction Operations would be, and the remaining works would not be, subject to the HGCRA (section 104(5)).
5.5.3. Absence of Contemporary Verification.
5.5.4. Estoppel
1. Where a party represents that a contractual relationship will be conducted on a particular basis or the parties agreed to conduct it on an agreed assumption, both parties will be held to that assumption (Johnson v Gore Wood [2002] 2 AC 1, particularly per Lord Goff at page 38).
2. A party will only be held to a particular assumption where it would be inequitable to allow that party to resile from it and where it would cause detriment to the other party if that party was allowed to resile (National Westminster Bank plc v Somer International Ltd [2002] QB 1286).
3. The estoppel will only operate to the extent necessary to avoid the detriment and not to any additional extent (Scottish Equitable plc v Derby [2001] 3 All ER 818, Phil Collins Limited v Davis Limited [2000] 3 All ER 808).
5.5.5. Approach to the evidence
1. JDM was an experienced service provider for central and local government and had no reason to, and every reason not to, inflate or overcharge one of its major long term clients, namely DEFRA. I accept that Mr Ratcliffe's summary of JDM's approach is an accurate one:
"... we work closely together with our clients. We are in for the long haul, we are not a contractor where they are here today, gone tomorrow in for a quick kill. So [we] are used to working long term with people, honestly with integrity and that's the nature of the company."<3>
2. The time sheets were prepared under the contract and pursuant to a contractual requirement of accuracy and reliability. The relationship between JDM and DEFRA was one tantamount to one of partnership or good faith and the records were also being made to enable JDM to fulfil its statutory obligations under the Working Time Regulations.
3. JDM had no reason to think that any particular time sheet would not be verified or authenticated by DEFRA so that it would have neither the motive nor the means of organising a systematic process of overcharging. Thus, it would be unlikely that any overcharging would have been other than the result of ad hoc errors by individual operatives who might themselves have benefited from the overcharging. At worst, there might have been an isolated group of operatives on a particular site who, sensing that their timesheets would not be checked, might have agreed to overcharge on that site. This consideration would not arise on the larger sites. Equally, it would be unlikely to arise on those where a DEFRA representative was present albeit not signing the time sheets since the operatives would not know what contemporaneous record that representative was separately making and providing to DEFRA.
4. It was neither reasonable nor practicable for JDM to produce the individual makers of the time sheets and those that were produced could not be expected to add any significant evidence to that contained on the particular time sheets he had made up.
5. The time sheet were made up contemporaneously. There was no evidence of any after the fact make up of time sheets based on an estimation or assumption of the hours worked and travelled.
6. The original time sheets used as the basis of the spread sheets and invoices were based on first hand evidence.
7. There was no obvious motive to conceal or misrepresent matters save, on isolated sites unmanned by DEFRA personnel, to inflate pay packets already swollen by the large and unprecedented weekly working time.
8. The time sheets were not edited accounts nor was it likely that they were made in collaboration with others. The particular purpose for which they were made was to enable JDM to obtain payment and comply with its contractual and statutory obligations.
9. There was no attempt or intention to rely on the time sheets as a means of preventing a proper evaluation of the evidence as to the number of chargeable hours arising on any particular site or occasion. Instead, the production of the time sheets in evidence was the only reasonable means for JDM to assert and prove its entitlement.
5.6. Plant Operators' Rate
5.6.1. Introduction
(1) On its true construction, did the contract provide, without variation, a remuneration rate for plant operators and, if so, was that the rate for labourers, an electrician or a plumber?
(2) Was the contract varied by adding a new rate for plant operators and, if so, what was the basis on which JDM's entitlement to remuneration for plant operators had been agreed?
(3) Did the parties reach an ad hoc agreement during the work as to what the appropriate rate should be and, if so, what was that rate and are they now bound by it?
(4) If no agreement was reached, did the experts reach an agreement as to the appropriate rate and, if so, what was the agreed rate and should that rate now be adopted?
(5) If the appropriate rate is still at large, what rate should be fixed by the court?
5.6.2. Contract Provision for Plant Operators' Rate
1. JDM undertook heavy civil engineering work on burial sites. This work was significantly different, more onerous and much larger in scope from the civil engineering work envisaged in the farm clean up work provided for in the contract.
2. The civil engineering work involved the extensive use of heavy plant including some very heavy plant which was so large that it did not feature in either the MAFF or CECA contract schedules. Some of this plant was only available to JDM by hire from plant hire companies who would only hire out the plant with a skilled operative so that JDM had to pay its plant hire subcontractors a composite rate that included the appropriate rate for skilled plant operators.
3. Even where the additional plant did not come with an operative, JDM's own labourers could not have operated it over the extended periods of time and for the type of use for which the plant was used for, given their limited skill in and experience of plant operations and given also the huge demand for plant operators arising from the variations to the contract instructed by DEFRA.
4. These variations to the contract could only be met by using plant operatives. Thus, the scope of work was enlarged and the manner of working the contract, using only labourers, was varied by using in addition large numbers of plant operatives.
5. Moreover, the demand for heavy plant of the kind referred to in the CECA schedule increased significantly in view of the contract variation which added a large number of separate farms to the scope of JDM's clean up work to be worked as one composite contract and which greatly extended the proposed length of time over which the contract was to be performed. JDM was only able to operate all the civil engineering plant required by hiring in or making use of skilled plant operators.
5.6.3. Basis For Fixing a Reasonable Rate
5.6.4. Agreement Fixing of the Plant Operators' Rate.
5.6.5. Expert Agreement and Fair Rate
1. The CIJCWR Agreement and analogous contract rates should form the basis of the calculation of a reasonable hourly rate for a plant operator.
2. Since the JDM breakdown of the contract labourers' rate is not available, it can reasonably be assumed that the CIJCWR labourers' rate was used. The appropriate labour rate would be £4.78 per hour within the overall contract rate of £15.80, the balance being JDM's uplift.
3. There were 5 appropriate skill rates for plant operators in the CIJCWR Agreement. These were, respectively, £5.15, £5.46, £5.83, £6.05 and £6.35. If each of these rates is used instead of £4.78 and the overall rate is increased by the same proportion as each of these rates bears to £4.78 (eg £5.46/4.78 x £15.80), the new plant operators' rates would be £17.02, £18.05, £19.27, £20.00 and £20.99. If these are averaged arithmetically, the resulting rate would be £19.07.
4. If, as an alternative, plant operators' rates are taken from Laxton and the same methodology is used, the resulting rate would be £19.15.
5. These rates are very similar to the rate contended for by JDM of £18.70.
"Accordingly, we conclude, on the basis that the court finds option one to be the correct methodology, that a reasonable rate for the supply of plant operators might be £18.70 with the appropriate adjustments being made in accordance with the Maff Labour Schedule for prices up to 31 March 2001 (3%) and prices from 1 April 2001 (a further 3%)".
The experts also agreed that the appropriate contract rate for plant operators to be paid to JDM when plant operators were being paid at single time x 1.5 and single time x 2.0 labour rates should be determined by a factoring process using the factors 1.1796 and 1.3588 for the x 1.5 and x 2.0 rates respectively.
"Q. [Do] you stand by the last sentence [of the experts' agreement] 'On the basis that the court finds option one to be the correct methodology, a reasonable rate for the supply of Plant Operators at 'original rate 24/02/00 might be £18.70 per hour with appropriate adjustments being made in accordance with the Maff labour schedule for 'prices up to 31/03/01' and 'prices from 01/04/01'?. A. Yes, in the context of this report".
6. The Specific Sites
6.1. Throckmorton
6.1.1. Trade Off - Travelling Time for Meal Breaks
"I discussed [the cancelling out of travelling time and meal breaks] with Hugh Hanmer and Andrew Knock who was a quantity surveyor and I believe that at the time he was a representative from DEFRA or MAFF at the time and they were introduced to the site within the first couple of weeks to check, as I saw it, all our procedures, that were doing everything correctly and as I was a manager for the site it was important for me that everything was done correctly and I believe that they were aware of the situation."
He also, he stated, discussed the arrangement with other DEFRA representatives from time to time without any disagreement or statement of dissent from any of them.
"Q. So it was known to you, that, the fact that JDM were not charging for travelling time and balancing them against meal breaks?A. That was my understanding of the situation.
...
Q. When you did find - so you allowed that [the "trade off" arrangement] to continue?
A. Absolutely, having discussed it. As my reporting officer was the Regional Operational Director, that would have been discussed or taken back to Worcester and pointed out: "Leave well alone".
Q. [judge] Was the well-known maxim of "swings and roundabouts" applied?
A. Absolutely."
6.1.2. Meal Breaks
"would have to go whenever the army requested them to go out. ... Q. Would the personnel have to stay in those vehicles? Would they be able to go away for half an hour? A. No. They would be in their vehicles or by their vehicles in case they got a call to go."<4>
6.1.3. Conclusion
6.2. Ashmoor
6.2.1. Introduction
"I say that the time and effort that was put in was terrific".
6.2.2. Conclusion
6.3. Nibley Mill Farm
6.4. Love's Farm
6.5. Longswood Farm
6.6. Hill Farm
6.7. Calcot Farm
6.8. Upper Cwm Farm
6.9. Small Farms
6.10. Conclusion - Claims for Labour Including Plant Operators
6.10.1. Quality of Evidence
6.10.2. Overall Conclusion
7. Approach to Claims for Labour Including Plant Operators at Other Sites and Farms
8. Aggregates
8.1. Introduction
"Q ... I am asking specifically about 225mm to 75mm. If one takes that terms, isn't it right that the normal expectation would be that, would be rock between those two sizes?A. It may be the layman's interpretation, but it is certainly not a quarry industry or construction industry interpretation.
Q. Your understanding, the usual construction industry understanding of that is different, is it?
A. Yes.
Q. Different in what way?
A. In that we have a limited product description range, and within each of our quarry functions and with each of our customers, we would determine finite gradings to suit the particular customer's demand at that particular time, albeit the terminology and the nomenclature on the actual product code will remain the same."<5>
"the effort [of JDM's witnesses] to help the court, by recalling precisely what happened, has played tricks with their recollection".
8.2. The Evidence
8.2.1. Introduction
8.2.2. Quarry Personnel's Evidence
"My lorry drivers wouldn't have taken as-blasted material because, as we previously heard, it would have damaged the butts of the lorries."<6>
8.2.3. JDM's Site Personnel's Evidence
8.2.4. Third Party Site Personnel's Evidence
8.2.5. Expert Evidence
"John Knapton has concluded based upon his site investigation, upon his visits to Meldon Quarry and upon his conversations with staff involved in the construction of the facilities that the capping material comprises two processed materials viz:-225mm to dustRip Rap
He believes this for all the reasons set out in his report of 11 March 2003 but wishes to highlight the discovery of rip-rap size at the bottom of those trial holes where rip-rap was reported to have been used."
8.3. DEFRA's Case
8.4. JDM's Case
8.5. Conclusion
9. Overall Conclusion
9.1. Issues
1. Issue 1.What part of JDM's claim is irrecoverable as representing payment for non-chargeable time spent by JDM's direct and subcontract labour on meal breaks?
Answer:
None at the twelve sites in question.
2. Issue 2.
What part of JDM's claim is irrecoverable as representing payment for time spent by JDM's direct and subcontract labour travelling to and from site or whilst waiting at JDM's base prior to being transported to site?
Answer:
None at the twelve sites in question.3. Issue 3.
What part of JDM's claim for supplying aggregate is irrecoverable as representing:
(a) quantities of aggregate that were not supplied at all; and(b) the difference in price between the reasonable price claimed by JDM, being the reasonable price payable for the quality of aggregate JDM claimed it had supplied from Meldon Quarry, and the reasonable price contended for by DEFRA, being the reasonable price of inferior quality aggregate that DEFRA allege was actually supplied from that Quarry?
Answer:
None.4. Issue 4.
Can DEFRA recover or claim credit for sums paid against specific invoices where such sums were not due, particularly where these sums can be shown to have had been paid for:
(a) time spent on meal breaks or in travelling to orfrom, or whilst awaiting transport to, site; or
(b) aggregate that was never supplied or which represented the difference between the price of the aggregate that was charged for and the reasonable lower price for the inferior quality supplied?
Answer:
Yes, in principle but not at any of the twelve sites in question or in relation to aggregate supplied for use as sub-base at the Ashmoor site.5. Issue 5.
1. Can JDM charge its claimed rate for plant operators because:
(a) this was the subject of an oral agreement; or(b) DEFRA is estopped from denying JDM's entitlement to that rate; or
(c) JDM is entitled to be paid at a reasonable rate?
2. If the basis of JDM's entitlement to payment is a reasonable rate, what is that rate?
Answer:
JDM is entitled to be paid a reasonable rate but not an agreed rate or a rate which is the subject of an estoppel. That rate is £18.70 per hour plus 3% plus 3% or £x per hour.9.2. Monetary Recovery
9.3. The Parties and Their Legal Teams
HH Judge Thornton QC
Technology and Construction Court
16 January 2004
1 Transcript, Day 6/86 - 95/passim.
2 See XX Day 4/91/18 - 22 & /95/19 - 24).
3 X Day 4/45/23 - /46/16.
4 XX Day 3/14/2; XXX Day 3/22/19.
5 XX D8/49/12.
6 XX Day 7/151/7.