QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
133-137 Fetter Lane
London, EC4A 1HD
B e f o r e :
| MAERSK OIL UK LIMITED
KERR-MCGEE OIL (UK) PLC
|- and -
|DRESSER-RAND (UK) LTD
Philip Boulding QC and Gaynor Chambers (instructed by Faegre & Benson LLP) for the Defendant
Crown Copyright ©
His Honour Judge Wilcox
|The Process Flow Equipment||150|
|Scott Schedule 3.2 1st Stage Recycle||187|
|Scott Schedule 3.4 Knockout Drums: liquid removal||259|
|Scott Schedule 3.3 GDU||270|
|Scott Schedule 3.5 Condensate Drainage||305|
|Scott Schedule 3.8 Condensate pump/valve seals||317|
|Compressor Control shortcomings||323|
|Scott Schedule 5.2 Control Interface||327|
|Scott Schedule 5.4 Parallel operations||331|
|Scott Schedule 5.6 Parallel operations||334|
|Scott Schedule 6 Motor failures||341|
|Vibration Scott Schedule 1.1||382|
|Scott Schedule 1.3 Process Safety Valves||465|
|Scott Schedule 1.4 SBB and Pipe Cracking||478|
|Scott Schedule 1.5 Dampener Crack failure||492|
|Scott Schedule 1.6 Thermowell failures||509|
|Scott Schedule 1.7 Cooler Crack failures||520|
|Scott Schedule 1.8 Process and Temperature switching||550|
|General Quantum issues||618|
|Limitation of liability||620|
|Supplementary services and spares claim||695|
|SUMMARY OF DAMAGES||730|
In the event of any inconsistency or discrepancy between the Contract, the Sections and the Appendices the Section 1 shall take precedence.
" Work shall mean the goods, equipment, plant and machinery, materials, documentation, drawing manuals work and/or services specified in the scope of work, including such particulars and details not expressly defined, but which are necessary and customarily provided for in the performance of the obligations and liabilities as described herein"
This scope of supply relates to the Janice Field development project and is specific to the following documents with which the contractor shall fully comply. This documentation includes:-
functional specification for gas compression package document number PMD-SPC-3049 Rev 02.
In clause 2" Scope of Specification "the detailed requirements include US-Gas Compressor Package comprising two separate skids as follows:-
2 x 50% skid mounted compressor trains, including pre-treatment units mounted on the skids. Each train shall be completely self-contained and shall include but not be limited to, the following…….
complete process design
complete mechanical design
procurement of all materials
"1.1 The contractor warrants and guarantees that the Work shall be performed in a first-class and workmanlike manner, in accordance with good and sound industry practices, and within the requirements and conditions of the contract and shall be free from defects, and that the Works and all materials to goods and equipment incorporated into the Work and all parts thereof shall be of prime quality, in new condition, suitable for the purpose and use, which they are intended and shall per formed in accordance with the requirements and conditions of the contract"
11.2 Irrespective of whether any designs, data or information, prepared by the Contractor will have been approved by the Company. The Contractor undertakes and guarantees and warrants the engineering, workmanship and all materials and equipment fabricated or provided by it or any of its subcontractors against all any and all defects for a period of twenty four(24) months from the date of the Inspection Release Note as per Clause 30 3.1. The Contractor shall promptly execute, at its own cost, all such work or repair, replacement, making good of defects, imperfections and other faults in the Work attributable to the Contractor or any of its subcontractors, and/or all materials and equipment provided by the Contractor or any of its subcontractors, or failure by the Contractor to comply with any obligation, express or implied under the Contract, which becomes apparent within the said twenty four( 24) month period as may be required by the Company.
11.3 The Contractor further and similarly warrants and guarantees for a period of 24 months from delivery thereof, each and every replacement parts and workmanship.
11.6 If the contractor fails to do any of the Work or states, or by its actions indicates that it is unable or unwilling to proceed with corrective action in a reasonable time as aforesaid as required by the Company, the Company shall be entitled to have such work carried out by its own personnel or other contractors, without giving prior notice to the Contractor. If such work would have been carried out at the Contractor's own cost the Company shall be entitled to recover from the Contractor the total cost to the company, or may deduct the same from any monies due or which might become due to the Contractor. If no sums or insufficient sums are available for offset by the Company then the Contractor upon receipt of the Company's written notice of Contractor's obligations hereunder shall promptly remit to the Company all sums due and owing pursuant to the terms of this Clause.
11.5 The foregoing warranty shall be additional to and not in substitution of warranties and other rights provided at the law.
11.7 At the end of the warranty period for the Work, including any repairs, rectifications replacements having being carried out to meet the Contract requirements and the requirements of Article 35 hereof having been satisfactorily met, the Company shall issue a certificate of Final Acceptance, as set out in clause 32 .2
11.8 The provisions of this article shall, where applicable continue in full force notwithstanding the earlier expiration or termination of the Contract.
11.9 No equipment or part furnished by the Contractor shall be deemed to be defective by reason of normal wear and tear. Failure to resist erosive or corrosive action or company's failure to properly store, install, operate or maintain the equipment in accordance with good industry practices or specific recommendations of Contractor.
The Contractor makes no other warranty or representation of any kind or other warranties, express or implied, statutory or otherwise, are hereby disclaimed.
33 MECHANICAL AND FINAL ACCEPTANCE
33.1 Mechanical Acceptance
When the Contractor considers all the manufacturing work, cleaning, function testing and pressured testing as defined in the Factory Acceptance Test is complete, satisfying the Contractual Specification and the equipment is ready the dispatch, the Contractor shall notify the Company Representative. The Company shall at its option inspect the work and if in compliance with the requirements of the Contract shall issue an Inspection Release Note. If all or part of the work does not conform to the Contract, the Company shall notify the Contractor of such non-compliance and the Contractor shall take corrective action in accordance with the Contract and nonconforming work shall be re- inspected by the Company and when such work is to the satisfaction of the Company, the Company shall issue to the Contractor an Inspection Release Note which shall be the commencement of the warranty period as provided under article 11. If the Company or their representative fail to attend any scheduled inspection and/or test the Contractor shall proceed in their absence and shall provide the Company with properly Certified results of such inspection or test. The certified copies of the test results shall be deemed to be a correct record thereof.
33.1 The Contractor shall not commence preparation for the transportation until the company has issued said Inspection Release Note…….
33.2.1 No later than 60 days prior to the expiration of the warranty period, as provided for under article 11 the Contractor shall give notice to the Company that the warranty period is about to expire. Upon receipt of the notice the Company shall at its option and discretion
establish a final inspection date, notify the Contractor of such date and carry out an inspection on that date, whether the Contractor or is duly authorised representative is present or not; or
decide that an inspection is unnecessary and issue the Contractor a certificate of final acceptance.
If the Company has found the work or part thereof not to have been performed in accordance with the contract the Company shall detail in writing, the specific nature of the defect and the section, article clause or part of the Contract, identifying the obligation which the Contractor has failed to meet. The Contractor shall immediately take all action necessary to remedy the defect so as to enable the Company, subject to articles 11 and 19 to issue a Certificate of Final Acceptance to the Contractor. The cost of such remedial work shall be to the Contractor's account.
If the Company has found the Work or part thereof not to have been performed in accordance with the Contract and the Contractor refuses to remedy the defect the Company shall in respect of such defective work, issue a notice of discontinuance in accordance with Article 28 and the Company shall be entitled to the rights and remedies set out in that Article without prejudice to its rights at law in respect of the remaining work. The Company shall also either notify the Contractor under sub clause 33 .2 .21. or shall issue a Certificate of Final Acceptance.
33.2.3 If the inspection reveals that no further corrective work is retention or bank guarantee issued by the Contractor is required and that the Contractor has discharged all of its obligations under the Contract the Company shall issue to the Contractor, a Certificate of Final Acceptance and will return any retention or Bank guarantee issued by the Contractor.
33.3.4 The Company's Certificate of Final Acceptance shall be final and conclusive, except in the case of latent defect, fraud or such gross mistakes as amount to fraud.
The parties hereby agree that the Contractor shall reimburse the Company in the form of liquidated damages for each full week of late delivery at the rate of 1% of that of the delayed portion of the equipment up to a maximum of 7% of the value of the delayed Equipment.
The above liquidated damages comprise the sole and exclusive remedy of the company and the sole liability of the Contractor regarding late delivery.
LIMITATION OF LIABILITY
The remedies of the company set forth herein are exclusive as stated. In any event, the total liability of the Contractor with respect to any claims under this Contract whether based in contract, indemnity, tort, ( including negligence and strict liability) or otherwise shall not exceed the purchase price of the unit of equipment or part(s) upon which such liability is based.
"NOW; it is hereby agreed that in consideration of the announcement of the forthcoming closure of the manufacturing operations of the Contractor at Wythenshawe, and in recognition of both the Contractor's and the Company's desire to complete the compressor packages in accordance with the Contract conditions the Contract shall be amended as set out below:
1(a) In recognition of the Company's commercial position, and the contractor's inability to complete the contract in accordance with the original delivery date, as specified in the Contract the Company will accept delivery FCA Wythenshawe of the incomplete compressor packages on the 18th and 19th of April 1998 and transport them at the Company's cost to Aker McNulty Ltd's Module yard. (The Module yard). The Company and the Contractor shall prior to the delivery of the compressor packages agree a list which shall set out the outstanding work under the Contract, that is to be performed at the Module yard, and all outstanding ancillary equipment, and the material to be supplied by the Contractor.
All other miscellaneous equipment and materials leaving Wythenshawe after the main consignments of the two compressor packages shall be transported C I F Module yard ( not offloaded) at the Contractor's expense. The timing of the delivery of the miscellaneous equipment and materials to the Module yard shall be agreed between the Company and the Contractor, ancillary equipment and materials returned to Wythenshawe shall also be transported and insured at the Contractor's expense.
(b) On a mutually agreed date after delivery of the compressor packages to the Company the Contractor shall dispatch to the Module yard the required supervisory personnel, who will assist and advise the Company to facilitate the completion of the compressor packages. The Contractor shall advise the name of the leading supervisory personnel. All expenses including wages travel, accommodation and subsistence associated to the provision of these personnel shall be paid by the Contractor.
(c), The Company shall provide personnel, plant and equipment, sufficient for the completion of the compressor packages at the Module yard and shall advise the Contractor of these personnel with job title and hourly rat together with the name of the prime contact and sample of the module yard typical worksheet. The Company's prime contact shall present on a timely basis time booked against work performed on the compressor packages to the Contractor's leading supervisor and the Company's prime contact shall also provide on a timely basic basis details of any other costs incurred by the company in relation to this work.
(d) Upon Mechanical Acceptance both parties shall document the agreed date of reaching this milestone, and at this time, the Contractor's site personnel shall be released from the work"
" Clear words are necessary before a court will hold that a contract has taken away any right or remedy which one of the parties would have had at common law" and further that " where a contract does purport to exclude a remedy, that exclusion clause should be narrowly construed."
38.1 A Notice under the Contract shall be in writing. Notices and copies thereof to either parties shall be given at the addresses specified in the Contract…….
38.2 Such notice shall be effective:
if delivered by hand at the time of delivery;
if sent by telex at the time of receipt of the telex in normal working hours on a business day at the place of receipt;
if sent by first mail postage pre-paid, four days after the mailing provided however that telex advice is given of the mailing.
"The Claimant seeks to recover the above sums, £7,927,487.32. Subject to the limit of liability under the contract
1. As a sums payable under clause 11.6 of the purchasing contract. And
2. As damages for breach of the warranty at clause 11.1. And
3. As damages for breach of the warranty at clause 1 1.2 (defects emerging in the warranty period) "
The obligation in article 11.1 is to ensure that "the works and all materials, goods and equipment incorporated in the Work in all parts thereof shall be of prime quality, in new condition suitable for the purpose and use for which they are intended"
The contractor is responsible by performing the Work in accordance with the Contract. The Contractor being an experienced and competent Contractor, familiar with North Sea oilfield practices shall be deemed to have obtained a full understanding and knowledge of the nature and extent of the work and the quality and quantity of resources and corporate support required for the satisfactory performance of the work and any failure by the Contractor to take account of all matters which may affect the performance of the work shall not relieve the contractor from its obligations under the Contract.
"On mechanical acceptance, both parties shall document the agreed date of meeting this milestone, and at this time, the Contractor's site personnel shall be released from the work."
"in any event, the total liability by the Contractor with respect to any claims under this contract, whether based in contract, indemnity, tort, ( including negligence and strict liability), or otherwise, shall not exceed the purchase price of the unit of equipment or part(s) upon which such liability is based."
2a. The first three milestone payments of 10% 30% and 30% inclusive of variation orders 1 through 3 have been invoiced unpaid, in accordance with the terms of the Contract
2b(i). The fourth milestone payment of 25% is hereby amended as follows: this25% milestone payment shall be subject to a deductible capped sum of £450,000, which is to cover the cost of completion of the compressor packages at the module yard by the Company's personnel and other costs incurred in relation to the work
2b(ii). in the event that the costs incurred by the Company at the module yard for the of completion of compressor packages is less than the capped sum of 450,000 pounds the balance shall be paid to the contractor, without deduction of any retention within 60 days of Mechanical Acceptance.
2c.The fifth milestone payment of 5% shall be paid in accordance with the terms of the Contract.
"The document PMD-PFD-2001 Rev 02- Overall Process Flow Diagram marked up in the BCM [Bid Confirmation Meeting] dated 23/24. 6.97 attached to the MOM [Minutes of Meeting] shall form the basis of the development of the Contractors P.& I.D…"
Each train shall be completely self-contained and shall include, but not be limited to the following:-
…… Complete process design…
"The Gas Compression Package is required to compress gas from the first stage separator be used as a fuel gas, lift gas, and for gas export. The package comprises two 50% gas compression trains, including individual pre- treatment equipment. The pre-treatment of the gas stream is required to maximise the liquids recovery in the field. After the second stage of compression, the complete gas stream from both compression trains will be routed to the Gas Dehydration Package (supplied by others) for dehydration and the removal of a fuel gas stream. The dehydrated gas stream, less fuel gas, will then be returned to the Gas Compression Package for further compression.
The location of the gas compression package within the processing flow scheme is detailed on the document PMD-PMF-2001-Overall Process Flow diagram. Additionally, this details the major process inputs and outputs to the package. The Contractor will be responsible for all the required controls within the package (not detailed on the process flow diagram) to ensure safe and stable operation of the unit within the operating range as defined below.
4.2 Process Requirements
This section defines the pressures, temperatures and flows required by or provided to the process boundaries of the gas compression package.
4.2.1 Summary of gas flows, pressures and temperatures at the package boundary
Refer to Heat and Material Balance tables PMD-PFD-2014.01/02/03Rev.04….
22.214.171.124 Gas flows
a)…….Refer to Heat and Material Balance Table PMD-PFD-20 14, Stream 21 for the gas composition of throttled gas to compression.
4.9 Other constraints
The gas fed from the compressed interstage system to the Gas Dehydration Package is required to be liquid free. Of particular concern is the possibility of oil mist carryover. In order to eliminate oil mist carryover in knockout vessel, incorporating a high efficiency or oil mist eliminator shall be installed in the feed line to the Package.
The reference in paragraph 2 of the Functional Specification to" complete process design" is to the design of the process equipment within the DR. package. It cannot relate to the complete process design since this would require information on the conditions and performance of the upstream equipment, namely the first stage separator, and would require detailed knowledge of the design conditions for parts of the package for which they had no responsibility.
"Upon Contract Award the revision status of all specifications, recommended practices, data sheets , basis of design documents design reports and other relevant documents will be frozen."
"The Contractor shall submit to the Company for review and comment, all relevant documents including but not limited to sketches, drawings, calculations, reports, technical notes and recommendations. These documents shall be submitted to the Company, in sufficient time to review and comment upon them without delaying the performance of the work by the Contractor, and in accordance with the master schedule. The acceptance by the Company of any such relevant documents shall not relieve the Contractor of any obligations under the Contract or constitute the Company's assumption of responsibility for the work.
"This form of estoppel is founded, not on a representation made by representor and believed by representee, but on an agreed statement of facts or law, the truth of which has been assumed, by the convention of the parties , as the basis of their relationship. When the parties have so acted in their relationship upon the agreed assumption that the given the state of facts or law is to be accepted between them as true, that it would be unfair on one for the other to resile from the agreed assumption, then he will be entitled to relief against the other…"
"..this increase in the liquid concentration on the feed to MV 0804 may have profound effects on the condition of the gas leaving the second stage of this knockout drum, the filter condenser MV 0814. The first stage of separation relies upon a vane separator in MV0804. This was designed for much lower gas flow rates than will be achieved with gas recycle. Again, my calculations suggest that the gas handling capacity over and above the original design ratio is modest. The separation fluxes achievable under operating conditions are low, principally because of the low surface tension of the liquid at this stage in the process. An increase in gas flow and liquid flow is likely to result in a greater than expected carryover of liquid in the gas entering into MV 0814.
Filter coalescer elements, as used in MV 0814 have a much smaller operating envelope in relation to liquid concentrations than all other 'primary' devices(vanes, meshes, axial flow cyclones, etc) and therefore these may well approach a 'flooding condition' at the higher gas and liquid flows experienced at high gas recycle ratio."
" the package comprises two complete 50% gas compression trains, including individual pre-treatment equipment…After the second stage of compression, the complete gas stream, from both compression trains, will be routed to the Gas Dehydration Package( supplied by others) for dehydration and the removal of fuel gas stream…"
149. Paragraph 68 is admitted save that it is denied the DR's design was defective, as alleged or at all."
" If the lagging is 100% efficient, and it is a long line it still might drop its temperature. It needs lagging and tracing. Or trace heating and lagging, I should say, you put the trace heater on first."
" Well, you would definitely have to drain it and I hope you are not going to suggest to me that these low point drains, and these low point drains, and being able to drain them, are going to satisfy the performance of or the duty of a third stage suction drum, are you"?
"The overall control system for the compressors is within the package supply. The Contractor is responsible for the design and supply of all necessary instrumentation and control systems for the safe operation, start up and shutdown of the gas compression package. This includes the ability to start and stop one compression train without at affecting the operation of the other train." (emphasis provided)
7.2.The interface and communication with external third parties shall be managed by the Company, unless the Contractor is specifically requested to contact a third party on the company's behalf or legislation requires the Contractor to make it this contact.
7.3 The responsibilities for the interfaces between different Contractors supplying products and services shall be as follows:-
The initial development of the global interfaces between Contractors and the documenting of the assumptions on which his interfaces have been determined, will be the responsibility of the
Company and are as defined in the Functional Specifications.
The assessment of the system design which results from the interface of that one contractor's system and another shall be performed by the Company with the individual contractors providing whatever assistance is appropriate.
It shall be the responsibility of the individual contractors to discuss and agree that detailed physical interfaces between their areas of supply. These agreements shall be subject to review by the Company.
The responsibility for coordinating the Contractors in relation to interface issues are is that of KMG. The final responsibility for achieving a coordinated control system is expressly reserved to KMG.
A sum of £55,709 is claimed under this head. It relates to a claim for work performed by IGL by way of an HYSYS investigation. It is evident that the model was for the whole process. Compression however is only part of this. Mr van Voorst pragmatically apportions this figure which he agrees is the cost of the application of the HYSYS programme to the whole platform process. He agrees £22,832.50. I accept that the defects warranted the HYSYS investigation. I am not persuaded that it was necessary to model the whole system. I award £22,832.50 under this head.
Q. If you want to be sure that in this hypothesis that I was putting to you that that package will have no harmful pulsations, no vibration, free from defects and suitable for its purpose, he would need to use API 618, would you not is?
A. Well, I do not think so because, obviously, there are a lot of compressors designed that do not even have any analysis. I mean, seriously, I mean, it does not say you have to do the analysis. I mean, some compressor manufacturers-- I mean purchase -- excuse me, I'm getting all my words mixed up here-- some fabricators packagers-- that is the word,' packagers'-- they do not spend the money to do the analysis. I mean, there are a lot of little small manufacturers-- packagers that do not even do it any analysis. So you will be kind of like rolling the dice, if you do not do the analysis. Sometimes it works.
Q. That is the point. You are rolling the dice if you do not do the analysis, are you not? You are taking the risk that it will not work out?
A. And that is why they tell you to do the analysis, and so then the purchaser has the opportunity to say "we want this analysis". And so when people contact us to do the analysis, even if it is like a high-speed machine like this, they'll come to us and say," Even though it says we should do an 11P analysis, we really want an API design approach 3"
A. " The compressors induced excessive vibration in the pipework and/or vessels.
B. Robert Campbell believes that the compressors induced excessive vibration in the pipework and detrimental loadings in the vessels within and out with the compressors skid supplied by Dresser- Rand. The compressors generated pulsation and running speed Harmonics, which were the source of the excitation.
C. Donald R. Smith agrees that the compressor induced excessive vibration in the pipework and/or vessels, but from the following qualifications:
D. the compressors generated pulsation and unbalanced shaking forces which were the sources of excitation
E. the pulsation levels measured by Development Engineering International (DEI) were below the level specified in the contract, except on the third stage discharge, which was slightly above the contractual level.
F. Low amplitude pulsation is generated by the compressor can result in high-level piping vibration if the pulsation is coincident with the piping mechanical natural frequency. Also, high-level pulsation can create high-level vibration with or without the coincidence with the piping mechanical natural frequency.
G. The piping vibration levels can be further increased if the piping is not properly supported or restrained.
H. The vibration levels were excessive on some of the small bore piping. It was reported that some of the small bore piping was not properly clamped and there were heavy unsupported valves at the ends of some of the piping. These problems were corrected by properly clamping/supporting the small bore piping and replacing the original heavy valves with smaller lighter valves.
I. Robert Campbell, clarifies some points that in his opinion, whether the levels of vibration resulted in a breach of the contract is alleged by the claimant is not a matter on which he can comment. He believes that the majority of the small bore branch connections (SSB's) were clamped/supported " in plane " or " out plane " or " smaller, lighter valves fitted (or a combination), dependent on analysis findings, whilst others were left or minimally modified due to the quantification of their Fatigue Life or perceived" Threshold Limit".
J. In reference to " piping, piping fittings(small bore branches, thermowells etc.) and pressure vessel- heat exchanger components, it was agreed at that excessive vibration caused fatigue failures. That the excessive vibration created the risk of more fatigue failures, and that the risks due to failures were Hydrocarbon leaks and associated dangers such as Injury to personnel, Damage to Platform, Loss of Production and Loss of Revenue.
"The remedial work carried out in relation to excessive vibration generally comprised mobilisation of personnel, investigation surveyors, measurements, modelling, finite element analysis and recommendations for modifications."
Invoice DEI 1276 of February 2000 in the sum of £13,914. This refers to services in respect of vibration pulsation and dynamic stress surveying.
Part of the invoice refers to time when DEI personnel were not off-shore but equipment relating to the investigation was. There is no explanation for the necessity to have the equipment off-shore whilst DEI were not there. There could be acceptable reasons such as minimum hire periods or weather why the equipment was not de- mobilised and hire charges not incurred. No reason was advanced in evidence. The burden of proof is upon KMG. I am satisfied that £11,492 is properly recoverable in consequence of DR proven breaches.
DEI invoice 1422 of April 2000 in the sum of £8,539 relates to similar services to those in 1276. A similar point arises as to why equipment was not de-mobilized. It is not for the court to draw the inference that there must have been a good reason. I was satisfied that the work was referable to compressor and small bore pipework and that £3,595 is recoverable but not the hire charges when DEI personnel were not on the platform.
DEI invoice 1900 of October 2000 in the sum of £4,359 is referable to compressor and small bore pipework and dynamic stress survey and is wholly recoverable.
DEI invoice 895 relates to equipment hire in August and September 1999 and is a corrective invoice reflecting apparent undercharging for equipment hire at a time when no DEI personnel were off-shore. The sum of £2,472 claimed is not recoverable.
a) Agreed £391,667.
b) Alco Hi-Tek £2,759.
c) Whitaker Engineering £15,289.
d) Caledonian Petroleum Services £415.
e) DEI 1276, £11,492.
f) DEI 1422, £3,595.
g) DEI 1900, £4,359.
h) IDEAS, £8,078
Q. Can I suggest that, having regard to that, no failure is due to thermal expansion. By doing this sort of analysis you appear to be approaching the Janice as though it is some sort of research project.
A. Not at all. This is every day work. This is common. On every oil platform that I have worked on, every refinery, this is common day work. It is the only method available for which you can quantify if something is fit for service. If we had not completed this analysis and shown that the pipework was grossly overstressed then there would have been a major issue, a really major issue before we even looked at vibration.
Q. So far as the thermal analysis was concerned, it was carried out on the major piping, was it not?
A. It was carried out on most of the pipework, yes.
Q. The major piping?
Q. It was not carried out, was it, on the small bore pipework and the PSV tubing? That was not the subject of your thermal analysis, was it?
A. That is correct.
"The IGL engineers were required, as things were so bad with the gas compression system that the Operations Supervisor could not cope with the package, and everything else, without assistance of dedicated process engineers. IGL were recruited to monitor on a 24 hour seven days a week basis, the compressors. The reason we went for professionally qualified engineers, is that the problems were so technically challenging that we needed dedicated hands-on personnel for our own criteria of safety, and in deed, the use of IGL was endorsed by the HSE."
"DR personnel were good at the mechanical side of the compression package, i.e. they had a good knowledge of the mechanical side, with the problems went beyond mechanical problems and, while I respect their ability to do with maintenance and servicing of the compressors, they were unable to deal with the vibration and process problems we were experiencing."
" we feel very strongly that should the transmitters remain in their present condition during the operation of the units there is no doubt that the failures will occur, which could result in prolonged shutdown of the units and problems to DR.
the only long-term solution that we can see is replacing the existing instruments and repositioning off the compressor pipework.
We realise that to implement this modification is major, but given past experience this may well be the only effective long-term solution."
"My recollection is that these valves were particularly problematic even after they had been oriented in the correct position. The vibration was so bad that it caused a number of failures on the valve positioner feedback control arms, which wore away the metal on the arm. In an attempt to stop this vibration and improve the operation of the recycle valves I remember large amounts of bracing being fitted to the valves. Eventually the valves were changed out in an attempt to improve reliability. I recalled that once new valves were fitted reliability significantly improved."
A. "3.0 Normative References
B. All equipment supplied under this Functional Specification shall conform where applicable to the following :-
C. The topsides production and process/ utilities facilities shall be designed to meet the mandatory requirements for operation in UK waters. The design will comply with the following codes and standards for the applicable equipment:-
E. (b) in addition the following industry codes and standards are to apply three youths in the package design:
F. ASME/ANSI B31.3 Chemical Plant and Petroleum Refinery Piping
H. Upon Contract award the revision status of all specifications recommended practices, Data sheets, Basis of Design Documents, Design reports and other relevant documents will be frozen. "
"The fundamental basis is as compensation, the pecuniary loss naturally flowing from the breach; that the first principle is qualified by a second, which imposes on the claimant the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and bars him from claiming any part of the damage, which is due to his neglect to take such steps "
"However reasonably the plaintiff acts he can only recover in respect of loss actually caused by the defendant. If, therefore, part of the plaintiff's claim does not arise out of the defendant's wrongdoing, but due to some independent cause the plaintiff cannot recover in respect of that part… The event may take the form of negligent advice upon which the plaintiff has acted. Another way of expressing the matter might be that the defendant could not reasonably have foreseen that the plaintive would act on negligent advice."
" The question here is whether, when an employee, who is injured in the service, and by the negligence of her employer, his liability to her is terminated by the intervening negligence of a doctor brought in to treat the original injury but who in fact made it worse."
"53. Unsurprisingly, there is no general rule on this question. As Laws LJ said in Rahman v Arearose Ltd…' It does not seem to me to be established as a rule of law that later negligence always extinguishes the causative potency of an earlier tort. Nor should it be. The law is that in every tortfeasor should compensate the injured claimant in respect of that loss and damage for which he should justly be held responsible.'
The same question was considered in the High Court of Australia in Mahoney v Kruschick (Demolitions) Pty Ltd.(1985), 156 CLR 522…We get from the headnote :
'Held, that the employer was liable in damages to the workmen, it might be able to prove, that if the doctor had been sued by the workmen, the doctor would be liable to some of the damages recovered by the workmen, and in that event, the employer would have been entitled to an order from contribution under s. 5(1)(c) of the Act.
Whether a tortfeasor can avoid liability for subsequent injury tortiously inflicted by a second tortfeasor depends on whether the subsequent tort and its consequences are themselves foreseeable consequences of the first tortfeasor's negligence. Per Curiam. Where any injury is exacerbated by medical treatment, the exacerbation may easily be regarded as a foreseeable consequence, for which the first tortfeasor is liable. If the plaintiff acts reasonably in seeking or accepting the treatment, negligence in the administration of the treatment need not be regarded as a novus actus interveniens, which relieves the first tortfeasor of liability for the plaintiff's subsequent condition. The original injury can be regarded as carrying some risk that medical treatment might be negligently given."
Finally, we agree with the editors of Clerk & Lindsell on Torts, when they say: Moreover, it is submitted that only medical treatment so grossly negligent as to be a completely inappropriate response to the injury inflicted by the defendant should operate to break the chain of causation.(18th edition, 2-55)"
" It is trite law that the onus of proof on the issue of mitigation lies on the defendant; see Roper v Johnson(1873) LRCP 8 167, confirmed by the House of Lords in Ganac Grain Company v Faure & Fairclough (1968) AC 1130 at 1140. The interrelation of that issue with the general obligation upon the plaintiff to prove his damage has been clearly and succinctly stated by Sir Owen Dixon CJ in the High Court of Australia Watts v Rake (1960) 108 CLR 158 as follows:
' The law of course places upon the plaintiff who sues in tort for liquidated damages the burden of satisfying, the tribunal of fact of the damages he has suffered both special and general and of the quantification in money that should be adopted in the sum awarded. That is the legal burden of proof, which rests upon him throughout. Only in one respect is the burden of proof upon the defendant and this is when he sets up matters in mitigation of damages. If it appears satisfactorily, that damage in a particular form or to a particular degree has been suffered by the plaintiff as a result of the wrong, but the defendant maintains that the plaintiff might have avoided or mitigated that consequence by adopting some course, which it was reasonable to him to take, it seems clear enough that the law places upon the defendant the burden of proof upon the question whether by the course suggested the damage could have been so mitigated and upon the reasonableness of pursuing that course…'(emphasis added)
" There remains, however, the assessment of damages which the employer is entitled to recover if the contractor does repair the defects, then no loss will be suffered apart possibly from consequential losses, which both parties agree are not barred by clause 2 .5. If he does not, then the measure of loss will be the cost of the employer of having the defect repaired, unless in special circumstances the diminution in value of the property in question is appropriate. The cost of employing a third-party repairer is likely to be higher than the cost to the contractor of doing the work himself would have been. So the right to return in order to repair the defect is valuable to him. The question arises whether, if he is denied that right the employer is entitled to employ another party and to recover the full cost of doing so as damages for the contractor's original breach.
In my judgment, the contractor is not liable for the full cost of repairs in those circumstances. The employer cannot recover more than the amount which it would have cost the contractor himself to remedy the defects. Thus the employer's failure to comply with clause 2.5, whether by refusing to allow the contractor to carry out the repair or by failing to give him notice of the defects, limits the amount of damages which he is entitled to recover. This result is achieved as a matter of legal analysis by permitting the contractor to set off against the employer's damages claim the amount by which he the contractor has been disadvantaged by not being able or permitted to carry out the repairs himself or more simply, by reference to the employer's duty to mitigate his loss."
"because the turbines that drive the generators that power the platform normally burn reservoir gas at high pressure. Without compression the gas could not be burned in the turbines. In the absence of compressed reservoir gas, diesel fuel has to be burned in the turbines. The former is free." …it therefore follows that if diesel fuel is burned while the compressors are down due to a defect amounting to a breach of contract KMG incurs a cost, and therefore suffers a loss"
"Notwithstanding any other provisions in the Contract to the contrary, the Company and Joint Venture Partners and the Contractor shall each indemnify and hold harmless, and the other against and from any liability for, loss of production, loss of business, or any other indirect losses or consequential damages arising during and/ or as a result of the performance or non-performance of the Contract regardless of the cause thereof, including but not limited to that caused or contributed to by the negligence and/ or other legal fault of the party seeking to allow this provision."
JUDGE DAVID WILCOX: The reason given is not that you tried it and it would not be successful but that it is onerous. That is the sole reason you give there.
A. Yes, by 'onerous', it entailed obligations beyond the advantages.
Q. I do not know what you mean by that?
A. In other words, the term 'onerous', I take it to mean excessively burdensome in the sense that the effort in doing the work would not necessarily produce the benefits required.
Q. They being what?
A. The benefits potentially providing a more accurate attribution, but not necessarily so, than the one produced by the baseline approach.
Q. You mean it would be equally unreliable?
A. There would be no guarantee that it would produce a more accurate or correct figure.
"Such a procedure may be appropriate in a case where the causes of the loss are truly concurrent in the sense that both operate together at the same time to produce a single consequence…….
Apportionment in this way on a time basis is relatively straightforward in cases that involve any delay. Where disruption to contractors work is involved matters become more complex. Nevertheless, we are of the opinion that apportionment will frequently be possible in such cases, according to the relative importance of the various causative events in producing loss. Whether it is possible will clearly depend on the assessment made by the judge or arbiter, who must of course approach it on a wholly objective basis. It may be said that such an approach produces a somewhat rough and ready result. This procedure does not however seemed to us to be fundamentally different in nature from that used in relation to contributory negligence or contribution among the joint wrongdoers. Moreover, the alternative to such an approach is the strict view that, if a contractor sustained a loss, caused partly by events for which the employer is responsible and partly by other events he cannot recover anything because he cannot demonstrate that the whole of the lost is the responsibility of the employer. That would deny him a remedy even if the conduct of the employer or the architect is plainly culpable… It seems to us that in such cases the contractor should be able to recover for part of his loss and expense, and we are not persuaded that the practical difficulties of carrying out the exercise should prevent him from doing so.
An apportionment procedure of this nature has been used with apparent success in the United States in cases before the Court of Claims. Thus in Lichter v Mellon-Stewart Company the plaintiff's total cost claim on one contract was rejected on the ground that a substantial amount of their loss was the consequence of factors other than breaches of contract by the defendants. Nevertheless the Court of Claims allowed a claim based on another contract between the same parties to succeed in part and its decision was upheld about United States Court of Appeals for the Third circuit. The Court of Claims had held that part of the Plaintiff's extra cost on this contract was attributable to the fault of the defendant and part was attributable to the other non-compensable factors……
The important point that emerge from this decision are, first, that the Federal Courts in the United States are willing to undertake an apportionment exercise and, secondly, that any such apportionment must be based on the evidence and carried out on the basis that is reasonable in all the circumstances. In our opinion, a similar procedure should be available in Scots law. We stress, however, that the allocation must be based on the evidence, and that under Scottish procedure the evidence must be based on a foundation in the pleadings."
1.2 Such services may include, but shall not be limited to:
1.2.1 All erection installation testing and commissioning of the work delivered under the Purchasing Contract (the goods) and
1.2.2 Warranty work in accordance with the requirements of the Purchasing Contract.
DR counterclaim £166,000. KMG successfully defended this claim and the retention monies should be credited against the judgment sum.
Ist Stage Recycle
Liquid Removal Knockout Drum
Compressor control shortcomings
Liquid Handling General
Electrical motor failures
Vibration (General) 1.1
Cracking Pipes/SBB 1.4
Dampener Crack Failures 1.5
Thermowell Failures 1.6
Cooler Crack Failures 1.7
Pressure and Temperature switching 1.8
Vibration – valve fitting
Counterclaim – credit £166,000 to DR
Counterclaim – credit £166,000 to DR