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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		30th November 2010

 


Mr Justice Akenhead:

1. The Claimant, RWE Npower PLC ("RWE") brings Part 8 proceedings to seek to establish the scope and extent of its and the Defendants' obligations and rights arising out of an agreement in writing dated 28 October 2005 ("the Contract") by which RWE employed the Defendants, a consortium of companies, ("the Contractor") to carry out extensive works at Aberthaw Power Station in South Wales. As is not uncommon, as the arguments drew to a close, the parties were not as far apart as it appeared that at one time they were.
2. Although the project is now substantially complete, there are outstanding claims by the Contractor which total many millions of pounds and certain cross claims from RWE. Responsibility for delay features in these claims. The issues for decision revolve around the responsibility for certain groundwater conditions and the need and ways in which to deal with them.

The Site and the Works

3. The Site is on the coast and adjoins on two sides (west and south) the sea, which, at that location, is the Bristol Channel (or, as some have called it, the Severn Estuary). The River Thaw runs out in the sea along a third side (east) of the Site. On the Site was an existing and working Power Station. This was coal-fired with three 500 MW generating units. Flue gases from each of the generating units were exhausted to atmosphere via a dedicated flue within a single chimney. There was an existing flue gas treatment plant which removed the majority of particulate matter in the flue gases but did not have any effect on certain gaseous pollutants, particularly some sulphur-based ones. RWE's operation team operates the power station.
4. Seawater was drawn from the Bristol Channel (about half a mile out) and drawn and pumped through the open circuit water cooling system for the main condensers. It was then returned to the sea. The seawater came in from the sea into a roughly triangular shaped structure called the Forebay. When it had passed through the power station process, it was returned to what was called the Seal Pit. There were extensive surface water drains and indeed a foul water drainage system. Essentially, the seawater and the foul and surface water was let out into the sea, the seawater (and some surface water) through Outlet No 2 and the remaining surface and foul water to Outlet No 3. The Seal Pit is a substantial structure which, connected to Outlet No 2 by substantial pipes, is flooded with sea water (from the sea) at various tidal stages.
5. By reason of EC Large Combustion Plant Directive (2001/BD/EC), there came to be a requirement for power stations, particularly fossil fuel run ones, to reduce pollutants, including sulphur dioxide, to acceptable levels. RWE decided to construct Flue Gas Desulphurisation ("FGD") units utilising seawater as part of the process. Essentially, seawater is alkaline and can absorb sulphur dioxide; an "absorber" is used in which flue gas is sprayed with the seawater which converts it into sodium sulphate and calcium sulphate; the seawater becomes acidic in the process. Apart from other units and equipment, the proposed FGD process involved the acidic seawater effluent flowing to a Seawater Treatment Plant ("SWTP") where it would be mixed with larger amounts of seawater to reduce and dilute the acidity. The seawater then is aerated, in order to oxidise the absorbed sulphur dioxide into sulphate ions. The treated seawater was then to be discharged via the Seal Pit and returned to the sea through Outlet No 2. It is believed that this process achieves the desulphurisation process whilst returning effectively unpolluted seawater back to the sea. Environmental and ecological criteria played an important part in RWE's considerations and as, will be seen, in the contract documentation.

The Contract

6. The Contract was of an EPC (Engineer, Procure and Construct) type although not in a standard form albeit traces of some standard forms are present. The Works included constructing substantial foundations for three concrete absorbers as well as excavating for and constructing six large diameter seawater pipelines to carry the seawater to and from the absorbers and the SWTP. The SWTP was to be about 130 by 45 metres in plan and up to about 12 metres deep. It was to be connected to the Seal Pit and works were required within the Seal Pit in terms of new channels and the like to accommodate these connections.
7. The Contract was amended by a Deed of Amendment dated 7 June 2006 and comprised the Agreement, the Deed, Conditions of Contract, the Purchaser's Specification and the Contractor's Specification. Clause 1.3.7 of the Conditions provided as follows:

"Nothing contained in the Specification shall override or modify the application or interpretation of that which is contained in the Agreement or the Conditions of Contract"

Apart from this, the Contract documents were to be read together and to be considered as mutually explanatory of each other; this was subject to the priority to be given to the documents in the order set out in the first sentence of this paragraph.

8. The Conditions contain a number of clauses which need to be considered in the context of the issues to be dealt with:

(a) Clause 1.1

"1.1.27 "Contractor's Permits" means those consents, licences, permissions, assessments, orders and approvals or variations thereof required from an authority whether statutory, public, local, European or otherwise which are required for the performance of the Works as set out in Contract Schedule 5 and any non planning related or temporary consents, licences, permissions, assessments, orders and approvals required in relation to the construction of the Works and the Contractor's construction methodology but not including any Purchaser's Permits.

1.1.81 "Permits" means the Contractor's Permits and the Purchaser's Permits.

1.1.85 "Presumed Physical Ground Conditions" means the presumed physical ground conditions as set out at Contract Schedule 15.

1.1.92 "Purchaser's Permits" means all consents, licences, permissions, assessments, orders and approvals or variations thereof required from an authority whether statutory, public, local, European or otherwise including (without limitation) those as may be required by the Environment Agency to be obtained by the Purchaser or as set out in Contract Schedule 5 and any other planning related consents, licences, permissions, assessments, orders and approvals required in relation to the permanent development of the Project but not including any Contractor's Permits.

1.1.111 "Specification" means the Purchaser's Specification and the Contractor's Specification and any modifications thereto made hereunder.

1.1.127 "Works" means all Plant to be provided and all Plant, work and things to be commissioned, designed, manufactured, supplied, executed, constructed, installed, completed, carried out, undertaken, tested or done by the Contractor to fully realise and put into commercial operation the Modified Units, all in accordance with or as reasonably inferred by the Contract and any reference to the "Works" includes a reference to a Section or part thereof."

(b) Clause 9.9.2

"Subject to Sub-Clause 13.3.4 the Purchaser does not warrant the accuracy or sufficiency for any purpose of the Purchaser's Information or any part thereof. The Contractor shall be responsible for verifying the correctness and sufficiency for any purpose of the Purchaser's Information and for any errors, omissions or discrepancies in the Purchaser's Information and accepts entire responsibility for any design contained in the Purchaser's Information."

The "Purchaser's Information" is defined in Clause 9.9.1 as the "Purchaser's Drawings, the Purchaser's Specification and any other information provided by the Purchaser or the Purchaser's Representative whether before or after the Contract Date".

(c) Clause 13.1

"The Contractor acknowledges that the gross generation output of each Unit will increase if and to the extent that the Purchaser renews and/or modifies the steam turbines at Aberthaw Power Station… Notwithstanding any such renewal and/or modification the Contractor warrants to and undertakes with the Purchaser that the Works will be carried out and that it will otherwise perform its obligations under the Contract:

(a) with all the skill, care and diligence as should be exercised by a suitably qualified, experienced, competent contractor, fully skilled and experienced in the carrying out of work similar in nature, complexity and extent to the Works; and

(b) in accordance with the Purchaser's Specification: and

(g) so that the Works and each Section shall when complete meet the relevant Guaranteed Performance Criteria; and…

(j) otherwise in all respects in accordance with the Contract.

Clause 13.2.1

"The Contractor shall obtain:

(a) the Contractor's Permits"

(d) Clause 13.3

"13.3.1 The Contractor warrants that prior to entering into the Contract, he has fully satisfied himself as to all local, regional, national and Site conditions including the nature, location and condition of Aberthaw Power Station and the Site which could affect the Works, including:

(a) the form, condition, nature and location of the Site and its surroundings and the services, artificial obstructions or hazards in or on the Site (including but not limited to ground, hydrographical, hydrological, climatic, geological, geotechnical, chemical and physical and subsoil conditions including all services, pipelines, cables and the like)…

(c) the coastal location and any associated coastal and marine conditions;

(d) the adequacy (including the load capacity) of access roads and all means of transportation and access to and from the Site;

(e) the equipment, facilities and resources (including accommodation) needed for the carrying out of the Works;

(f) the extent and nature of the work and materials necessary for the performance of its obligations under the Contract; and

(g) generally, or in any other local conditions including climatic and weather conditions and/or other conditions of or affecting the Site and all other risks, conditions and circumstances that affect or may affect the Contractor's ability to carry out the Works or the performance of its obligations under the Contract or both.

13.3.2 No failure on the part of the Contractor to discover or foresee any such condition, risk, or circumstance whether the same ought reasonably to have been discovered or foreseen or not shall entitle the Contractor to an addition to the Contract Price or to an extension of the Time for Completion.

13.3.3 The Purchaser gives no warranty and makes no representation as to the condition of the Site or of Aberthaw Power Station or of any services in or under the Site or Aberthaw Power Station or as to the accuracy or sufficiency of any survey data or other data contained in any document provided to the Contractor and any such representation previously made by or on behalf of the Purchaser is hereby withdrawn.

13.3.4 Notwithstanding Sub-Clauses 9.9.2, 13.1.1 and 13.3.3:

(a) if any of the following necessitates an alteration in, an amendment to, and omission of, an addition to or otherwise a variation of any part of the Works, then the Purchaser shall be deemed to have issued a notice pursuant to Sub-Clause 30.2.1 in relation thereto and the provisions of Clause 30 shall apply:

(i) any error in the Presumed Physical Ground Conditions…"

(e) Clause 13.4

"On agreeing the Contract Price the Contractor shall be deemed to have satisfied itself and taken account of:

(a) all the conditions and circumstances affecting the Contract Price including compliance with any relevant Law;

(b) carrying out the Works as described in the Contract;

(c) the general circumstances at the Site and Aberthaw Power Station…"

9. Attached to and forming part of the Conditions of Contract are 15 Schedules of which only two are relevant to the issues:

(a) Schedule 5

This listed seven specific consents or approvals required to be or already procured by RWE, including under the Electricity Act for the construction and operation of the FGD plant, a Deemed Planning Permission for Construction of the FGD plant dated 16 June 2004, "together with any other planning related consents, licenses, permissions, assessments, orders and approvals required in relation to the permanent development of the Project.". The Contractor's Permits were to comprise:

"1. Consent to discharge from site (if required) under Water Resources Act 1991

2. Special orders for abnormal load movements

3. Waste Management Licence during construction

4. Consent under Town and Country Planning Act for erection of signage

together with any non-planning related or temporary consents, licenses, permissions, assessments, orders and approvals require[d] in relation to the construction of the Works and the Contractor's construction methodology but not including the Purchaser's permits."

(b) Schedule 15

"The Presumed Ground Conditions are those described by items 1 to 6 of the Agreed Conclusion to Tender Questionnaire Item AA 010b, which is included in Part 4 of the Purchaser's Specification"

10. I will address the specific parts of the Purchaser's Specification in dealing with the four issues for decision by the Court.

The Issues and Part 8

11. The background to the Part 8 proceedings arises out of various claims which have been intimated by the Contractor to RWE over the past three years. These claims relate to what are said to be difficult water conditions on the site. For instance an application for extension of time submitted by the Contractor in September 2007 identified (at Paragraph 1.6) that "greatly increased volumes of water were encountered leading to a situation such that it could not be controlled by sump pumping" in circumstances in which it was asserted that the Contractor had understood prior to the Contract that "the volume of water affecting the excavations and works within the excavations would be small" (Paragraph 1.5 (b)). It was suggested that RWE imposed "severe onerous tests and quality conditions" before the water could be discharged into the Site "drains" and the Seal Pit and that RWE "did not obtain necessary Purchaser's Permits in time" (Paragraphs 5(c) and (d)). The causes of water being in the excavations, it was suggested, included groundwater, flooding as a result of the drainage system within the Power Station discharging into the excavation (Paragraph 3.12), heavy rain (Paragraph 3.52), the influence of high tides (Paragraphs 3.68 and 3.79), water from the Seal Pit (Paragraph 3.91) and the like. It seems to be uncontroversial (although I make no findings) that very large quantities of water entered the Works. The main area said to have been affected was the very substantial excavation for the SWTP.
12. There clearly have been substantial discussions between the parties, some of which may have been privileged, since then. There has been at least one adjudication, the adjudicator being Dr Robert Gaitskell QC who issued a decision on 4 June 2010 apparently in favour of the Contractor in respect of various variation claims. The Contractor wrote to RWE on 27 July 2010, threatening a further adjudication in relation to some (at least) of the issues raised in these Part 8 proceedings. Consequently, RWE issued these proceedings on 16 August 2010 seeking answers to a number of questions in relation to two Issues on which arose several sub-questions.
13. The issues are set out in Paragraph 10 of the document entitled "Details of the Claim" served by RWE:

"Issue 1: Discharge

10.1 Subject to compliance with the remaining provisions of the Contract, was AA [the Contractor] entitled under the Contract and/or was RWE obliged physically to permit AA, by reference to paragraph 8.4.1 of the Environmental Statement at page 1312 Purchaser's Specification or otherwise to discharge water from the Sea Water Treatment Plant excavations via the existing outfall structure(s) identified in the Environment Agency Variation Notice, Table 3.1, page 2272 Purchaser's Specification?

10.2 If AA was so entitled and/or RWE so obliged under the Contract

(a) was such entitlement and/or obligation subject to any limit on suspended solids in the discharge water, and if so what? In particular was there

(i) by reference to Table 3.3 page 2273 Purchaser's Specification, a concentration limit of 50 mg/l?

(ii) by reference additionally to the table following page 770 Purchaser's Specification, a higher limit of 73 mg/l, 117 mg/l or otherwise (and if so what)?

(b) Was RWE obliged (by reference to the definitions of Purchaser's Permits and Contractor's Permits in sub-clauses 1.1.92 and 1.1.27 of the Conditions and to Contract Schedule 5, or otherwise) to secure any (and if so what) license or permit permitting the discharge by AA of water from the excavations from any (and if so what) discharge point? In particular-Was RWE obliged to obtain permission from the Environmental Agency for AA to discharge water from the SWTP excavations into the Seal Pit?

(c) If so, did any such obligation arise only upon AA making of RWE request, accompanied (by reference to sub-clauses 1.1.4.12, 2.1.2.12.1 of the Conditions or otherwise) by all technical and other information necessarily and/or reasonably required to enable RWE to make such an application?

Issue 2: Control by Sump Pumping

10.3 Do the "Presumed Physical Ground Conditions" (sub-clause 1.1.85 of the Conditions and Contract Schedule 15) include that inflow of water into the excavations would be "little more than seepage" as set out at paragraph 7 of AA 010a Tenderer's Response on page 83 2444, Purchaser's Specification, Volume 2?

10.4 if so-

(a) if the inflow of water into the excavations were to be significantly more than seepage, would that operate as an "error in the Presumed Physical Conditions" for the purposes of sub-clause 13.3.4 (a) (i) of the Conditions?

(b) does "water" for this purpose mean ground water only or does it also include

(i) seawater entering excavations by flooding or operation of tides, and/or

(ii) surface water entering excavations, and/or

(iii) water from any other source."

14. Unsurprisingly, neither party seeks any factual findings as such. For instance the Court is not asked to determine whether any inflow of water into the excavation was more than "seepage". I must and do resist the temptation to speculate on any factual area of dispute including but not limited to the factual matrix other than that which I can determine and to which I had been directed within the contract documentation itself.
15. These issues appeared, at first blush, to be exceptionally complex and abstruse but, as the hearing proceeded and the area of issue between the parties narrowed, they reduced to a relatively narrow compass.
16. I will deal with Issue 2 first because, logically and historically, the problems are said to have arisen by reason of the presence of substantial quantities of water from one or other sources in the excavation for the SWTP; these problems are addressed within Issue 2. As these problems are said to have arisen and following, as I was told, efforts to deal with the water, for instance by soakaways, RWE did permit the Contractor to discharge water into the Seal Pit and thence into the Sea through Outlet No 2 only on condition that a particular pollution limit was observed; Issue 1 addresses this area of dispute.
17. There is little "law" involved other than the well known cases which deal with contractual interpretation.

Issue 2

18. The Purchaser's Specification runs to 2444 pages and is contained in five files (at least in this litigation). Issue 2 revolves around what meaning is to be given to what is called in Schedule 15 to the Conditions of Contract the "Agreed Conclusion" and in particular to Paragraph 5 of that document. As is not uncommon, the parties agreed to incorporate in the Contract (arguably with one priority or another) various questions raised by RWE during the tender process and the answers given by the Contractor or the agreed conclusions of RWE and the Contractor.
19. The Agreed Conclusion (at Page 86 of 2444) materially states:

"The Contract is based upon the following assumptions…

5. Water Table: For open excavations, inflowing groundwater will not affect the stability of the excavation and can be controlled using sump pumping provided by the Contractor…

The tenderer confirms that no other assumptions regarding the existing ground conditions at the Site have been necessary in arriving at the design of the Works…"

20. This Agreed Conclusion followed an exchange of questions and responses which are also contained in the Purchaser's Specification on the preceding pages starting at Page 81:

"QUESTION TITLE: GROUND CONDITIONS: "CURRENT UNDERSTANDING"

PURCHASER'S QUESTION: In Part O, Tender Schedule 4, the tenderer states: "Should ground conditions prove to be different from our current understanding we reserve the right to revise our price."

Setting aside the issue of potentially "contaminated ground", the tenderer is requested to define comprehensively what constitutes his "current understanding" of "ground conditions" as they affect the design and construction of various parts of the works-inter alia, the sea water treatment plant…

AA10 TENDERER'S Response:

We confirm that our proposal is based on the ground conditions and site services indicated within the ITT [Invitation to Tender].

An interpretive geotechnical report has not been prepared at this stage, however, based on our knowledge and experience of the ground descriptions used in the site survey we have developed a design which we consider will be suitable.

Should the ground conditions proved to be different, or the descriptions inaccurate, we reserve the right to revise our price."

21. This prompted the next question (Page 82) from the Purchaser:

"The tenderer's response to Questionnaire Item No. AA 010 advises that he has based his design upon certain conditions derived from the information supplied in the Enquiry Document. In the tender, Part O, Tender Schedule 4, the tenderer indicates that prior to commencement of design work he will obtain additional information regarding ground conditions, validate the accuracy of reports across the entire FGD area and prepare an interpretive geotechnical report. In order to allow the effects of such work on the tenderer's design to be assessed, the tenderer is requested to describe in detail the following design parameters used in it, and in each case state whether they are based on data in the Enquiry Document or other assumptions…7. water table…9. All other design parameters influenced by ground conditions."

22. The Contractor responded materially as follows:

"The Site Investigation included within the Tender Enquiry Documentation is unclear and, in some instances, contradictory. Assumptions have therefore been made based on the exhibited investigation but supplemented by engineering judgement and previous experience…

7) Water Table

Water strike records within the enquiry document boreholes are contradictory-most boreholes have no indication of water at all. The ones that do vary from a depth of 0.9m to 7.5m below EGL. Even so, inflows appear to be little more than seepage.

For open excavations, it has been assumed that any water will be little more than seepage, will not affect the stability of the excavation and can be controlled using sump pumping. Photographs taken during previous contracts at Aberthaw seem to indicate dry excavations."

23. RWE posed a further question (at Page 85), calling for a specification for a further site investigation of ground conditions but the Contractor responded that the use of "a generic specification to answer this question would be unhelpful" and that it was "unable at this time to develop a specification as you request".
24. It must follow that, since there was an "Agreed Conclusion" to this debate, some further discussions or communications took place to enable such an agreement to be reached.
25. Since Schedule 15 to the Conditions of the Contract is part of those Conditions, it follows that the Agreed Conclusion (on Page 86 of the Purchaser's Specification) expressly referred to in Schedule 15 is part of those Conditions. The impact of Clause 1.3.7 of the Conditions is that nothing in the Specification (which by definition includes the Purchaser's Specification) can override or modify the application or interpretation of Schedule 15 and Page 86 incorporated expressly in it. One therefore must interpret Page 86, the Agreed Conclusion, without its meaning being overridden or modified by the earlier pages of question and response. Accordingly, one must interpret the Agreed Conclusion for what it is.
26. In simple terms, the assumption set out in Paragraph 5 of the Agreed Conclusion means what it says. The assumption is that for open excavations "ground water" which is "inflowing" will not affect the stability of the excavation and can be controlled using sump pumping provided by the Contractor. It is accepted, properly, on both sides that there are effectively two disjunctive assumptions in relation to open excavations, the first relating to the effect on stability and the second on the ability of the water to be controlled using sump pumping. The words "little more than seepage" do not appear in Paragraph 5.
27. There was a debate in Court about what was meant by "ground water". It is obviously water in the ground and in the context of the assumptions in Paragraph 5 it must be "inflowing". Rain, as rain, is not "ground water" nor is water pumped directly in to an open excavation from elsewhere. If a sea wave crashed over the top of an excavation, the water that thus went in to the excavation would not be "ground water". It is also properly accepted that the sources of "ground water" may be rain, in the sense that it can fall on and then soak through the ground. Similarly, it may be the case that sea water, including tidal effects, can penetrate the ground and become ground water at some stage. It would be wholly wrong for this Court at this stage, in Part 8 proceedings, to speculate at what point water introduced onto or into the ground becomes ground water.
28. A particular and insuperable difficulty is the determination at this stage by way of contractual interpretation what level of "inflowing ground water" can or can not be "controlled using sump pumping provided by the Contractor." There is a theoretical choice ranging between the two extremes of one small gauge sump pump set into a sump in the middle of the (nearly) 6000 m² excavation for the SWTP and several thousand sump pumps of large gauge. I can not and will not speculate on the information made available to the Court what was intended by the identified use of the words "sump pumping". There are references in British Standards, for instance BS6031: 1981 (at paragraph 3.4.53) and in CIRIA C515 2000 ("Groundwater control design and practice") to the meaning of "sump" and to "sump pump". However, the meaning intended by the parties will have to be determined as a matter of contractual interpretation. That will and must be informed by a number of different considerations. Expert evidence may be necessary to assist in determining what would be envisaged by parties in the positions of RWE and the Contractor at contract formation stage as to what was meant by "sump pumping". That could include references to the British Standard and to publications such as CIRIA C515. The tribunal determining this may sensibly be informed by all the admissible factual matrix which could include the site investigation and other ground conditions information actually or generally available to both parties at that stage as well as what the civil engineering industry and professions would understand by the expression. It may be relevant to investigate what the parties were mutually expecting in terms of ground water. I am not seeking to impose on any future tribunal what it must consider or what may be admissible on this area of issue.
29. This investigation should not be one which offends Clause 1.3.7 in that one needs to determine what the parties must have meant as a matter of interpretation by referring to sump pumping in Paragraph 5 of the Agreed Conclusion. By referring to factual matrix known, actually or constructively, to both parties at tender formation stage, even if that does involve looking at what is in the Specification, one is not seeking to "override or modify the application or interpretation of that which is contained in the Agreement or the Conditions of Contract"; one is simply seeking to determine what the parties meant by the term "sump pumping".
30. The answers to the questions raised in Issue 2 therefore are as follows:

10.3 The relevant Presumed Physical Ground Condition is, for open excavations, inflowing ground water such as will not affect the stability of the excavation or such as can be controlled using sump pumping provided by the Contractor. Inflowing ground water in whatever quantities or of whatever type which affects the stability of the excavation or which can not be controlled using sump pumping is not within the Presumed Physical Ground Condition.

10.4 Since I have not answered Question 10.3 with a simple "yes" or "no", Issue 10.4 does not or does not necessarily follow but nonetheless I answer as follows:

(a) if there was an inflow of ground water which was significantly more than or even equivalent to seepage, that could operate as an "error in the Presumed Physical Ground Conditions" for the purposes of Clause 13.3.4 (a) (i) of the Conditions of Contract. However, the inflow would either have to affect the stability of the excavation or be such as could not be controlled using sump pumping. I specifically decline to speculate as to what scope and extent of any such sump pumping is envisaged by Paragraph 5 of the Agreed Conclusion.

(b) It is only "ground water" which is referred to in the Presumed Physical Ground Condition set out in Paragraph 5 of the Agreed Conclusion. It does not include seawater or other surface water directly entering the excavations. Again, I decline to decide the point at which water from any given source becomes "ground water".

Issue 1

31. It is uncontroversial that water from whatever source which arrived at the excavations of the SWTP might have been or could become laden with silt or other soil suspended in the water. It is wholly possible, albeit I make no factual finding, that water laden with silt or other soil is pollutant although whether any given level of such pollution always or invariably offends against the anti-pollution legislation will remain a matter of debate.
32. Again, it is not controversial that, on a site such as the Site in this case, a contractor has a variety of ways of disposing of silty water. These ways could, at least theoretically and subject to what the Contract allows, have included pumping or piping the water into the Bristol Channel, directly or indirectly through foul or surface water sewers or through the Seal Pit and Outlet No 2, tankering (putting the water into water tankers which are then driven off the site for disposal elsewhere) or the use of soakaways or the like to discharge the water into the groundwater systems. Any of such methods could also have involved measures to remove or reduce the silt content, such as silt traps, settlement lagoons or flocculants.
33. A number of the Contract documents cast light over the matters in dispute between the parties within this Issue. The Purchaser's Specification contains a number of clauses relied upon by the parties:

(a) Clause 1.1.4.2

"The Contractor's responsibilities shall include but not be limited to the following.

The overall and complete responsibility for project management, design, coordination and general management and security of the Works. This shall include the management of all interfaces between the respective stages of the Works, and all other work intended to be carried out including manufacture, procurement and delivery to the Site by or on behalf of the Purchaser.

Subject to and in strict accordance with the provisions of the Conditions of Contract and the Purchaser's Specification the design, manufacture, supply deliver, construct, erect, test and commission the Works [sic], and provide defect rectification for the Defect Liability Period.

The provision of all necessary plant, labour and materials, construction plant, temporary works, equipment, auxiliaries and accessories, special tools, and performing all operations and work required for design, fabrication, furnishing, delivering, transporting, installing, finishing, painting, testing and putting into commercial operation of the Plant…

The construction of all foundations, structures and buildings, together with the erection and installation of all equipment, auxiliaries and accessories, putting the plant into operational service, making all adjustments required to ensure entirely satisfactory operation under all specified conditions. This element of work includes:

the carrying out of studies, including air quality and water sampling, Site and soil investigations, necessary to establish the design of the Works and all other studies including noise studies and surveys and modelling required to complete all parts of the Works…

the obtaining and maintenance of all necessary permissions and approval from local and other authorities with the exception of those major consents and licences which will be obtained by the Purchaser.

All work not expressly called for in the Purchaser's Specification, but necessary for the complete and proper installation and operation of the equipment and accessories, which shall be performed and furnished by the Contractor at no additional cost to the Purchaser."

(b) Clause 1.1.4.4.4

"The scope of supply associated with the aforementioned plant, equipment and systems will include all necessary items as follow…

Above- and below-ground civil works including but not limited to:

excavations and disposal of arisings…

temporary works…

On-Site disposal of the waste arising from demolition work, in so far as such waste can be used in the construction of the Works, landscaping or other purposes at the direction of Purchaser

Off-Site disposal of waste arising from demolition work, in so far as such waste cannot be so used."

(c) Clause 1.1.4.12

"The application for consent to construct under Section 36 of the Electricity Act 1989 was approved on 16 June 2004, together with Deemed Planning Consent Conditions…

The Plant shall be designed and constructed in such a manner as to comply with the Consent Conditions and Deemed Planning Consent Conditions during both construction and subsequent operation.

The tenderer shall make himself fully aware of the consent conditions and other relevant information details in Part 3.01 especially in relation to the anticipated layout of the plant…, noise control during construction, dust control, general drainage arrangements, approved routes are construction traffic and landscaping agreements…

The Contractor shall provide the necessary technical information and full support for the Purchaser, including presentations to local, statutory and other authorities, community groups and the Local Liaison Committee as necessary, in order that the Purchaser can meet these obligations and responsibilities, and satisfy the relevant authorities.

The Contractor shall be responsible for providing information required by the Purchaser for the various consents, the Integrated Pollution Prevention and Control (IPPC) Permit and related purposes in sufficient time to enable submissions to be prepared and approvals obtained by the Purchaser to meet the Contractor's own programme.

The Contractor shall be responsible for obtaining all other consents, licences and certificates during the construction period including, but not limited to, the following:

Temporary consents, licences and agreements specifically required during the construction work, such as those associated with: heavy loads transport; drainage from the Site…"

(d) Clause 1.1.6.1

"The principal terminal points to the Works are defined below and detailed in Table 1.1.8. It shall be the responsibility of the Contractor to ascertain the suitability of these terminal points with regard both to the performance requirements of the plant and equipment supplied under the Contract, and the continued integrity of the existing plant. The definitions of terminal points in the following are provided to indicate to the tenderer the proposed physical location of interfaces between the Works and the existing power station"

Table 1.1.8 identified in effect the connection points between new work and plant to be supplied by the Contractor and the existing plant at the Power Station. Thus, it indicated where in the Seal Pit the Contractor was to break into in order to provide the Seawater inlet and discharge, running to a from the SWTP. There was no indication that these "terminal points" were to be or could be used for temporary works. However, various process water drains, sewerage, foul drainage and surface drainage points (connecting to existing systems) were identified.

(e) Clause 1.1.11.1

"The Plant shall be designed with due consideration to the maintenance of environmental quality and the impact that the Plant will have on the environment."

(f) Clause 1.3.2.3 provided that the Contractor was to arrange for the "design, supply, installation and testing of a separate dedicated water supply system for the Site…". Clause 1.3.2.4 provided for the drainage of surface water and for foul drainage.

(g) Clause 2.1.2.1.1

"Civil work shall include design, supply, erection and construction of all civil, structural, building services, landscape and architectural works reasonably implied and necessary the proper completion of the Works. Such definition shall include:

Underground facilities including surface water and process drainage…"

(f) Clause 2.1.2.6.1

"Groundworks shall be executed in accordance with BS 6031:1981…

The Contractor shall properly dispose of water from the Site from whatever source during the construction phase. All contaminants whose presence would render water unsuitable for discharge into drains or watercourses external to the Site shall be effectively removed prior to discharge and, where appropriate, such extracted contaminants shall be transported to a licensed disposal site."

(g) Clause 2.1.2.12.1

"The Contractor shall design and construct all necessary drainage systems within the Site including surface water run-off…foul drainage and ground water…

Drainage systems shall efficiently collect, transport and process effluent prior to discharging it at a suitable disposal point(s) which will be proposed to the Purchaser (taking account of Part 1.1, Table 1.1.8). There shall be no discharge of surface water that prevents it being collected for use in the operation of the power plant, including during the construction of the Works.

The Contractor shall provide all necessary conditioning, treatment, sampling and protection facilities to ensure that all effluent leaving the Site conforms to the requirements of the relevant IPC Authorisation or to other national regulatory authority requirements, as appropriate. The disposal of contaminants removed from effluent or by-products of treatment or conditioning processes shall be fully considered in the Design. The Contractor shall obtain all necessary licenses/consents/authorisations for the discharges from drainage systems during the construction phase and shall fully support the Purchaser in obtaining licenses/consents/ authorisations for the operational phase."

(g) Clause 2.1.2.12.9

"The Contractor shall provide sufficient lavatories and ablution facilities across the Site to meet the requirements of all personnel engaged on the Works.

The Contractor shall install, operate and maintain all necessary drainage and sewerage systems during the construction of the Works, including those for Contractors' areas..."

34. The Deemed Planning Consent referred to in Clause 1.1.4.12 was incorporated as part of the Purchase Specification (starting at Page 1160 of 2444). The Consent was at least in part, based upon the "Environmental Statement" submitted by RWE in August 2003 and supplemented in January 2004. Clause 6.1 indicated that the Secretary of State consented to the Development on condition (amongst others) that the development was to be in accordance with the submitted particulars (including the Environmental Statement). The formal Consent imposed restrictions in relation to construction traffic (none at night or after 13:00 hours on Saturday at the weekend). Some requirements were laid down relating to contamination:

"(23) Except for the Permitted Preliminary Works, the commencement of the Development shall not take place until there has been submitted to, approved in writing by, and deposited with the Council [Vale of Glamorgan], in consultation with the Environment Agency, a scheme showing the method and working on drainage facilities on the Site. Such facilities shall be put in place in accordance with the approved scheme.

(24) The scheme referred to in Condition (23) shall include:

(i) measures to ensure that no leachate or any contaminated surface water from the Site shall be allowed at any time to enter directly or indirectly into any watercourse or underground strata or onto adjoining land…

(25) Any surface water contaminated by hydrocarbons which are used during the construction of the Development shall be passed through oil/grit interceptor(s) prior to being discharged any public sewer or watercourse or to any other surface water disposal system approved by the Environment Agency."

35. There then follows (again as part of the Purchaser's Specification) the Environmental Statement referred to in the Planning Consent. This detailed the results and conclusions of an Environmental Impact Assessment (Paragraph 1.2 -Page 1211). In the "Non-Technical Summary", there is reference to the fact that "no additional seawater is brought on to the site; the seawater required is taken from the water being returned to the sea after being used in the existing station cooling system." Whilst much of this document is concerned with the impact which the Permanent (or completed) Works will have, not wholly insignificant parts relate to the construction phase; for instance, it identifies a construction and commissioning timescale of "around 34-36 months" (Page 1197) and transport implications in relation to construction traffic. It talked only of "a small number of abnormal load movements to the site during the construction phase" (Page 1198). In terms of water quality, page 1199 says this:

"The seawater discharge temperature is expected to increase by about 1°C above current operation. This temperature rise produces negligible changes relative to current operation. No environmental standards are compromised. The discharge pH is expected to change from a background value of 8, to a value of 6.6 under difficult conditions and 6 under worst case conditions. Due to rapid dilution and the natural characteristics of seawater, the low pH of the discharge is only evident very close to the outfalls. At this location, the discharge complies with all relevant standards for the protection of marine life. Increased nitrate concentrations are similarly evident very close to the outfall but comply with standards and are extremely unlikely to result in adverse water quality."

This is clearly a reference to what can be expected following completion of the FGD process works. There are relatively brief descriptions (for instance at Paragraph 2.4) of the construction stage. There is mention (at Paragraphs 5.2 and 5.3) of the potential for the use of waste materials arising from the construction for landscaping on the Site or if appropriate for it to be taken off the site. Paragraph 5.2.1 states:

"The construction of the FGD plant…will inevitably result in the generation of spoil and other waste materials. Where possible, the spoil will be used in landscaping purposes on the power station site. Should this not prove applicable, surplus material will be transported off-site and utilisation elsewhere or, as a last resort, the disposal at a site licensed for its receipt. Similarly, other waste streams produced during construction will be dealt with in line with current waste management practice and only sent for disposal where other options, such as reuse, recycling and recovery, prove impossible."

A large chapter deals with transport to and from the Site. Chapter 6 identifies that the site is, immediately, served by the B4265. Paragraph 6.8 identifies that the estimated construction traffic is no more than six vehicles in and six vehicles out at the morning and evening peaks respectively.

36. Paragraphs 8.3 and 8.4 are relied upon by the Contractor in this case:

"8.3 Design Mitigation

8.3.1 Construction Phase

It is not anticipated that there will be any environmental impact or effect on the marine environment associated with the construction of the Seawater FGD Process, hence no mitigation is proposed…

8.4 Predicted Impacts and Effects

8.4.1 Construction Phase

The Seawater FGD Process will use the existing outfall structures to discharge waste water to the marine environment. Hence there will be no construction impacts."

There were comparable provisions under the heading in Paragraph 8.5 of "Evaluation of Effects" that the Seawater FGD Process would use the existing outfall structures to discharge waste water to the marine environment and that there would be no impacts during the construction and commissioning phases.

37. Chapter 14 dealt with "Marine Ecology" and Clause 14.5.1 address the evaluation of effects of the Construction Phase:

"The construction phase will not result in any releases or disturbance to the marine environment. There will therefore be no impact during the construction phase."

It is clear that large bulk of this Chapter is concerned with the potential impact on marine life during the phase when the Power Station and the FGD Process are up and running.

38. Appendix 8A is concerned with Water Quality and reviews the statistically measured quality of water in the Bristol Channel, amongst other things.
39. The final document incorporated in the Purchaser's Specification was the "Variation Notice" issued on 26 January 2000 under the Environmental Protection Act 1990 which varied the conditions of an earlier authorisation issued to RWE to operate the combustion process at Aberthaw Power Station. This Variation Notice anticipated the construction of the new FGD process. It dealt with "Releases into Air" and, in Part 3, "Releases into Controlled Waters". I set out the relevant parts of the text and the Tables:

"3.1 A release from the Authorised Process into controlled waters from a release point specified in Table 3.1 shall arise only from the source specified in that Table and shall be released only into the receiving waters specified in that Table.

TABLE 3.1

Outlet Number	Location	Effluent	Receiving waters
2	Twin concrete discharge structures [grid references given]	Releases from B station: Water treatment plant, condenser cooling water, boiler blow-down combined with water from dirty drains within B Station power plant building discharge via underground oil interceptor pit and, surface water run-off.	The Severn Estuary
3	0.9 metre (36'') diameter pipe at [grid reference]	Surface water drainage from fuel oil storage via the tilting plate oil separator and coal plant areas and associated road drainage	The Severn Estuary

3.3 The determinands measured in releases from the Authorised Process into controlled waters shall not exceed the relevant limits or criteria specified in Tables 3.2 and 3.3.

TABLE 3.2

Discharge reference	Location of Outlet	Nature of Discharge	Daily Volume (m)
1B	Twin concrete outlets at [Grid reference]	Condenser cooling water	-
2B	Twin concrete outlets at [Grid reference]	Water treatment plant effluent	540
3B	Twin concrete outlets at [Grid reference]	Storm water and surface drainage	Dependent on weather
4B	Twin concrete outlets at [Grid reference]	Boiler blow down water	1705
5B	Twin concrete outlets at [Grid reference]	Boiler gas side washings dust and acidic deposits	455
6B	Twin concrete outlets at [Grid reference]	Dirty water from drains within B power plant building	-

TABLE 3.3

Determinands	Outlet No 2	Outlet No 3
Suspended solids determined as the differential concentration between incoming and outgoing water (mg/l) (a)	50	-
Suspended solids ((mg/l) (a)…	-	200

(a) One sample shall be taken and analysed each week. Suspended solids are to be measured following drying at 105°C…"

"Authorised Process" was defined in Part 9 as meaning "the process subject to this authorisation", which clearly meant the power station process.

40. I made it clear during the course of argument and I repeat that it is not possible, practicable or fair for the Court to decide on a Part 8 basis the whole of Issue 10.1 because RWE wants a decision as to whether there is any basis for an assertion that under the Contract the Contractor is entitled or RWE is obliged physically to permit AA to discharge water. The use of the words "or otherwise" in the Issue as drafted is objectionable at this stage simply because there may be other routes, based on fact or indeed implied terms, by which it might be arguable that the Contractor could reasonably expect to be permitted to discharge water through the Seal Pit and Outlet No 2. I therefore proceed solely on the basis of an interpretation of the express words used by the parties.
41. I have formed a very clear view that there is neither any express contractual right available to the Contractor to discharge water from its excavations into the Seal Pit or through Outlet Nos. 2 or 3 nor any express obligation on the part of RWE to permit the Contractor so to discharge water. My reasons are as follows:

(a) There is a very wide ranging obligation on the Contractor in effect to do all that is necessary to design and carry out the Works. For instance, Clause 13.1.1 of the Conditions of Contract imposes a warranty on the Contractor that, amongst other things, the Works will be carried out in accordance with the Purchaser's Specification. Clause 1.1.4.2 of the Purchaser's Specification imposes upon the Contractor responsibility, amongst other things, for the

"provision of all necessary plant, labour and materials, construction plant, temporary works, equipment, auxiliaries and accessories, special tools, and performing all operations and work required to design, fabrication, furnishing, delivering, transporting, installing, finishing, painting, testing and putting into commercial operation of the Plant".

(b) It is, rightly, uncontroversial that the removal of water from an excavation which is to house permanent works (such as the SWTP) and which is necessary to enable those permanent works to be done involves "temporary works"; similarly, work done to prevent water getting into the excavation, such as banks of earth or possibly dewatering, will be "temporary works". This type of work is necessary to enable the permanent work, often concreting, to be done.

(c) The effect and impact of, amongst other terms, Clause 13.3 of the Conditions of Contract is that the Contractor takes the risk for problems associated with ground (physical and sub-soil), water (hydrographical and hydrological) and geotechnical conditions except for the matters set out in Clause 13.3.4 (such as an error in the Presumed Physical Ground Conditions).

(d) Thus, unless there is some wording in the Contract documentation which suggests otherwise, the Contractor has the responsibility for the disposal of water within the excavations. Indeed Clause 2.1.2.6.1 expressly says that the "Contractor shall properly dispose of water from the Site from whatever source during the construction phase." That Clause goes on to require contaminants to be effectively removed prior to discharge into drains or watercourses.

(e) The question then arises as to whether water which the Contractor is required to dispose of, in effect to enable it to carry out the Works, can be "properly" disposed of through the Seal Pit and Outlet Nos. 2 and 3.

(f) Whilst the Contractor was required to design and construct the Works (including the Plant) so as to secure compliance with the Deemed Planning Consent plus Conditions (Clause 1.1.4.12 of the Purchaser's Specification), and whilst effectively this required compliance with or at least observation of the terms of the Environmental Statement, it is clear that this latter document is mainly concerned with the overall Seawater FGD Process and what is expected of it once it has been provided. Although there are references to the construction phase or stage and as to what will be done then, there is nothing, on analysis, in the terms relied upon by the Contractor (all relevant ones being set out earlier in this judgement), which suggests that the Contractor will be entitled during the construction phase to pump untreated or indeed any water present in its excavations into the Seal Pit or through the Outlets into the sea. The references in Paragraphs 5.2.1 and 5.3.1 of the Environmental Statement are not apt to describe such water.

(g) Primary reliance has been placed by the Contractor on Paragraphs 8.3 and 8.4 of the Environmental Statement. Paragraph 8.1 says that the chapter concerns "the impact of the discharge from the Seawater FGD Process at Aberthaw Power Station on the Bristol Channel/Severn Estuary." Clause 8.3.1 simply says that no environmental impact or effect on the marine environment was "anticipated"; this anticipation may be right or it may be wrong but that language does not give to the Contractor a contractual right as such to discharge directly or indirectly into the Bristol Channel. Clause 8.4.1 involves simply a statement that, in effect because the ultimate Seawater FGD Process would use the existing outfall structures to discharge wastewater to the marine environment, there would be no construction impacts. One can not read into this a right on the part of the Contractor to dispose of water generated as a product or consequence of the construction activities through the existing outfall structures. The reference to "wastewater" in Paragraph 8.4.1 is obviously to that generated by the completed Process. Similar considerations apply to the wording in Paragraph 8.5.1.

(h) Finally reliance is placed upon the Variation Notice which, in my judgement, is largely irrelevant to the issues in these Part 8 proceedings. The Variation Notice is clearly talking about releases (amongst others) into the sea ("Controlled Waters") from the Authorised Process, which is, in context, the completed FGD Process. That is clear from the wording of Clause 3.1 and also from the Tables which identify expressly that the "effluent" which can be discharged into Outlets Nos. 2 and 3 is that from specific parts of the Power Station such as liquid or other material from the "water treatment plant" or "condenser cooling". There is nothing in these Tables which allows or permits water from excavations (created to enable new work to be constructed) to be put through either Outlet.

42. Thus, the answer which I give to Issue 10.1 (reformulated with the words "or otherwise" substituted by the words "or other express terms of the Contract") is "No".
43. In the light of that, it is unnecessary, strictly speaking, to move on to deal with the issues raised in Issue 10.2. I can however make the following observations:

(a) Assuming that I am right on Issue 10.1, there was no express entitlement on the part of the Contractor or express obligation on the part of RWE to discharge or permit the discharge of water with or without suspended solids in it into the Seal Pit or otherwise into Outlet Nos. 2 or 3. Therefore the question of whether RWE was entitled to impose a concentration limit of 50 mg/l or 73 mg/l or 117 mg/l is immaterial.

(b) Different considerations might apply if, via another legal route (say an ad hoc agreement, an estoppel by convention or an implied term as to reasonable co-operation), the Contractor was able to establish that it could reasonably expect RWE to assist in the disposal of water which had arisen as a result of an error in the Presumed Physical Ground Conditions, a Variation or a breach of contract on the part of RWE. I consider that it is inappropriate to speculate in those circumstances as to whether it was reasonable or unreasonable or otherwise a breach of contract on the part of RWE for RWE to impose restrictions on the water which was in fact permitted to be discharged into the Seal Pit or through Outlet No. 2.

(c) It also becomes hypothetical and speculative to determine whose obligation in practice it was or would have been to secure any "Permits" to enable such water to be discharged. In fact, I was told during the hearing, although RWE told me that it obtained approval of some sort on an ad hoc basis,, that neither the Contractor nor RWE obtained any new permits to enable the water from the excavations to be discharged into the Seal Pit or through Outlet No. 2. I would not want to speculate in a Part 8 judgement as to whether a permit would have been required from some agency or authority in any event or if the restrictions said to have been imposed by RWE on the water which it did permit the Contractor to discharge had not been imposed. Similar considerations apply to whether the Contractor had to make some request to RWE to encourage or secure that RWE sought or obtained any permit which it was required to obtain.

(d) There was substantial argument as to whether the Contractor was or may have been in breach of criminal provisions of the Water Resources Act 1991 in discharging silt laden water into the Seal Pit and onwards into the sea through Outlet No. 2. Section 85 of that Act provides as follows:

"(1) A person contravenes this section if he causes or knowingly permits any poisonous noxious or polluting matter or any solid waste matter to enter any controlled waters.

(3) A person contravenes this section if he causes or knowingly permit any trade effluent or sewage effluent to be discharged-(a) into any controlled waters…"

I am most reluctant to rule in the absence of expert evidence whether water laden with silt or otherwise with silt suspended in it would in the circumstances of what happened in this case be "poisonous noxious or polluting matter" or "trade effluent". One is of course conscious that the water from many rivers and streams which flow into the sea may naturally carry soil and silt. I am by no means convinced, although I make no ultimate finding, that, as RWE asserts, "any liquid, including even settled or filtered construction water, discharged via the Seal Pit, is trade effluent for the purpose of the Act." If that was the case, then in theory both RWE who permitted, and the Contractor who caused, the discharge of such water could be guilty of an offence.

Decision

44. The answers are

(a) to Issue 10.1, which I reformulate as:

"Subject to compliance with the remaining provisions of the Contract, was AA [the Contractor] entitled under the Contract and/or was RWE obliged physically to permit AA, by reference to paragraph 8.4.1 of the Environmental Statement at page 1312 Purchaser's Specification or other express terms of the Contract to discharge water from the Sea Water Treatment Plant excavations via the existing outfall structure(s) identified in the Environment Agency Variation Notice, Table 3.1, page 2272 Purchaser's Specification?"

"No".

(b) to Issue 10.3:

The relevant Presumed Physical Ground Condition is, for open excavations, inflowing ground water such as will not affect the stability of the excavation or such as can be controlled using sump pumping provided by the Contractor. Inflowing ground water in whatever quantities or of whatever type which affects the stability of the excavation or which can not be controlled using sump pumping is not within the Presumed Physical Ground Condition.

(c) to Issue 10.4:

(a) if there was an inflow of ground water which was significantly more than or equivalent to seepage, that could operate as an "error in the Presumed Physical Conditions" for the purposes of Clause 13.3.4 (a) (i) of the Conditions of Contract. However, the inflow would either have to affect the stability of the excavation or be such as could not be controlled using sump pumping.

(b) It is only "ground water" which is referred to in the Presumed Physical Ground Condition set out in Paragraph 5 of the Agreed Conclusion. It does not include seawater, or other surface water, directly entering the excavations.