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England and Wales High Court (Technology and Construction Court) Decisions
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Matiere SAS v ABM Precast Solutions Ltd [2025] EWHC 1434 (TCC) (11 June 2025)
URL: http://www.bailii.org/ew/cases/EWHC/TCC/2025/1434.html
Cite as:
[2025] EWHC 1434 (TCC)
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Neutral Citation Number: [2025] EWHC 1434 (TCC) |
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Case No: HT-2022-000255 |
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
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Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL |
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11 June 2025 |
B e f o r e :
ALEXANDER NISSEN KC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
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Between:
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MATIÈRE SAS (a company incorporated under the laws of France)
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Claimant
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- and -
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ABM PRECAST SOLUTIONS LTD
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Defendant
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Jonathan Lewis KC and Caroline Ziebart (instructed by Wallace LLP) for the Claimant
David Streatfeild-James KC and Marc Lixenberg (instructed by Barton Legal Ltd) for the Defendant
Hearing dates: 5, 6, 7, 11, 12, 13 November 2025 and 16 December 2025
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
This judgment was handed down by the court remotely by circulation to the parties' representatives by email and released to The National Archives. The date and time for hand-down is deemed to be 11 June 2025 at 10.30am.
Alexander Nissen KC
Introduction
- The Claimant (described hereafter as "Matière") is a designer, fabricator and installer of civil engineering structures, including cut and cover tunnels and bridges. Although it is a French company it carries out work internationally. The Defendant (described hereafter as "ABM") is an engineering company that specialises in the manufacture and installation of pre-cast reinforced concrete products including concrete tunnel components. It is based in the UK.
- This case primarily concerns a fallout between two companies that had sought to bid together for work as a joint venture subcontractor on the troubled HS2 rail project. The bid failed. ABM blames Matière for this and, particularly, contends that Matière acted in breach of good faith during the lengthy and complicated bid process. Its principal claim is for the loss of the chance in winning the bid, which it says was originally 'virtually certain' but became "nil or virtually nil" after the alleged breaches. It evaluates the lost chance at 90%, applied to its claim for lost profit, pleaded at £18.92m alternatively at £16.62m. There is an alternative, secondary, claim for an account of profits in the sum of £2,249,399. The principal and secondary claims are relied on by way of set off against Matière's modest claim for fees, most of which is admitted.
- By way of further background, the relevant parts of the High Speed rail link with which this case is concerned were known as lots C2 and C3. They are located at Wendover in Buckinghamshire, and at Chipping Warden and Greatworth in West Northamptonshire. The proposed works to be carried out under the subcontract were the manufacture, supply and installation, including waterproofing, of three 'cut and cover' tunnels along the route. The works have been described as the 'Green Tunnels Project'. The main contractor for the Green Tunnels Project was, itself, a joint venture. Originally it comprised Eiffage Genie Civil (described hereafter as "Eiffage") and Kier Infrastructure and Overseas Ltd (described hereafter as "Kier"). The joint venture between those two was described as "EKJV". Subsequently, the joint venture between Eiffage and Kier was further joined by Ferrovial and BAM, then described as "EKFB JV". However, for simplicity, I shall continue to refer only to EKJV.
- The division of responsibility between ABM and Matière under the proposed joint venture bid was as follows. Matière would create the design for the Green Tunnels and would then co-ordinate their installation. ABM was to be responsible for the manufacture of the tunnels themselves. The proposed joint venture was not to be financially integrated. Thus, there was no intention to share the profits and losses. Rather, Matière would make what profits it could on the work which it priced and undertook. ABM would do the same. Each was taking the risk that the other had priced the work as competitively as possible in order to win the work but neither appeared to have contemplated how things would play out financially if the project, once underway, did not go well.
The Contracts
- Since both the claim and counterclaim are contractual claims, it is appropriate to identify and introduce the relevant contracts between Matière and ABM at least in outline. More detailed analysis of the terms will follow.
- In January 2019, Matière and ABM entered into a Consortium Agreement. It is undated. It is not well drafted. Of the alternatives identified in Wood v Capita Insurance Services Ltd [2017] UKSC 24 at paragraph [13], this contract is one which is relatively informal, brief and prepared without skilled professional assistance, rather than one which is sophisticated, complex and prepared by lawyers. As such, greater emphasis on the factual matrix may be required to construe its terms.
- The following provisions of the Consortium Agreement are relevant:
Recitals A, B and C
"(A) The parties wish to act on a basis governed by this Agreement as a co-operative enterprise in relation to the Project.
(B) The terms of this Agreement will in the manner set out herein incorporate terms (referred to herein as Co-operative enterprise) by virtue of which the relevant parties will undertake pursuant to this Agreement to undertake the Scope of Work agreed by them in the execution of the Project.
(C) This agreement sets out the terms and conditions upon which the parties have agreed that the Project shall take place."
Clauses 1.1, 1.2 and 1.3:
"1.1 Eiffage Kier Joint Venture, (The Contractor), an unincorporated joint venture between Eiffage Genie Civil and Kier Infrastructure and Overseas Limited has entered an agreement with High Speed Two Limited for the design and construction of Lots C2 and C3 of High Speed Two (The Project)."
"1.2 The Contractor has agreed to appoint ABM Precast Solutions Limited and Matière SAS (Jointly acting as The Consultant) to provide specialist advice and support to the pre-construction phase of it's obligations."
"1.3 ABM Precast Solutions Limited and Matière SAS agree to act as a co-operative enterprise to undertake the duties of The Consultant, as the first part of a contract to design, manufacture & install the Green Tunnels."
Clause 2.1
"2.1 This Agreement shall commence on the date when it has been signed by each and all of the parties (the "Commencement Date"), and shall continue, unless terminated earlier in accordance with this Agreement upon the termination of any associated Professional Services Contract."
Clause 3.1
"3.1 ABM and Matière shall co-operate and collaborate with one another in accordance with the terms of this Agreement and in the course of their performance of their obligations pursuant to any associated PSC each of ABM and Matière shall act in good faith toward the other and use reasonable endeavours to forward the interests of the co-operative enterprise."
Clause 4
"Nothing in this Agreement shall restrict the right of either ABM or Matière to continue to conduct its business activities or arrangements that existed on the Commencement Date or that otherwise come into being outside the scope of and/or without breaching the terms of this Agreement."
Clause 6.1 and 6.2:
"6.1 ABM Precast Solutions Limited will apply for payment from EKjv in accordance with the provisions of the relevant Professional Services and will, when paid, be responsible to Matière SAS for payment of Matière's fees at the rates detailed within the PSC."
"6.2 Any invoice issued and sent as provided in clause 10.2 above will include VAT where required and will be a VAT invoice."
- Various provisions of the Consortium Agreement, such as Clauses 2.1, 3.1 and 6.1, refer to a Professional Services Contract or PSC. In about February 2019 EKJV employed Matière and ABM jointly as "the Consultant" to provide professional services to EKJV. The following provisions of the Professional Services Contract are relevant:
Recital (b)
"The Contractor has agreed to appoint the Consultant to act as its strategic partner providing professional and specialist knowledge and judgement, assisting and advising the Contractor in the Preparation of Stage Two Proposals for Submission to HS2 for Pre-cast Concrete Double Arch Cut and Cover Tunnels including associated Waterproofing Earthworks in respect of the Project."
Clause 1.1 and 1.2
"1.1 The Contractor and the Consultant shall act as stated in this Appointment and in a spirit of mutual trust and co-operation.
1.2 The Consultant shall carry out the services set out at Schedule One of this Appointment ("the Services"), in a regular and diligent manner, and in accordance with the timeframe/s envisaged in Schedule One (where specified) or any timescale/s agreed with the Contractor in writing."
Clause 1.3
"1.3 In carrying out the Services the Consultant shall exercise all the reasonable skill and care to be expected of a professionally qualified and competent consultant (appropriate to the Services) experienced in projects of a size, scope and complexity similar to the Project."
Clause 3.1
"3.1 The Contractor shall pay to the Consultant the fee set out at Schedule Two of this Appointment ("the Fee"). The Fee is inclusive of all costs, expenses, disbursements and overheads but exclusive of VAT."
Schedule 1
"SCHEDULE ONE – THE SERVICES
The Provision of Professional and Specialist Knowledge to Eiffage Kier Joint Venture in respect of the Preparation of Stage Two Proposals for Submission to HS2 for Pre-Cast Concrete Double Arch Cut and Cover Tunnels including associated Waterproofing for C2 and/or C3 in whole or in part and specifically the following in accordance with the Memorandum of Understanding and Confidentially Agreement executed in and around the time of this Appointment:
a) Review and constructively challenge the current Scheme Design for the Pre-Cast Tunnels and associated Waterproofing.
b) Integrate and contribute positively to the Innovation and Optimisation initiatives currently being carried out on the Project.
c) Identify constraints and define methodology, programme and price based on constraints.
d) Identify and agree extent of indirect scope of works including all expected attendances.
e) Identify interfaces and the impact this may have on the cost model, programme and methodology.
f) Mobilisation Plan (Site)…."
- On 23 June 2020, Matière and ABM entered into the Collaboration Agreement. Compared to the Consortium Agreement it is an altogether more sophisticated document which was prepared by solicitors. A draft of it was in existence at the time of the Consortium Agreement, albeit in slightly different terms. One of the issues which falls for consideration in due course is the extent to which the Consortium Agreement should be construed against the factual matrix of that earlier draft. An important feature of the Collaboration Agreement is that it was entirely prospective in nature. Pursuant to Clause 2.1, the Collaboration Agreement was to commence on the date upon which it was signed.
- The following provisions of the Collaboration Agreement are relevant:
Recitals A, B and C
"(A) The parties to this Agreement wish to establish the framework to govern their respective rights and obligations in relation to the Project in respect of which they wish to co-operate.
(B) The parties wish to act on a basis governed by this Agreement as a consortium in relation to the Project and to enter as a consortium into the Main Sub-Contract.
(C) The terms of this Agreement will in the manner set out herein incorporate terms (referred to herein as Consortium Contracts) by virtue of which the relevant parties will undertake pursuant to this Agreement to undertake the Scope of Work agreed by them in the execution of the Project".
Definitions
"Main Sub-Contract
a contract or a series of contracts to be issued by EKFB JV to each of ABM and Matière (either together in the form of the Consortium on such basis of joint and several liability as is set out in the relevant contract or to each individually) in accordance with the processes contemplated by the provisions of this Agreement providing for the supply of the Production Elements by ABM and of the Installation Elements by Matière (and where applicable other contractors) in respect of a 6.5km "cut and cover" tunnel on the HS2 project in respect of which EKFB JV is principal contractor."
"Production Elements
Those elements of the supply of goods and services under the Main Sub-Contract to be supplied by ABM in relation to the Project pursuant to any Consortium Contract or by such other means as the parties may agree in accordance with this Agreement as specified in the relevant Scope of Work and/or contract documents but anticipated by the parties to consist (in outline) of (1) the construction of a factory facility for the manufacture of precast concrete elements by ABM, (2) the production of precast concrete elements and reinforcement bars including rebars for cast in situ for the Project, (3) the transportation and delivery of the same to site for the purpose of the Project and (4) such ancillary goods and/or services as may be agreed between the parties."
"Project
The project in relation to which the parties will collaborate in accordance with this Agreement, comprising the Production Elements and the Installation Elements to be provided pursuant to the Main Sub-Contract, comprising the following steps:
a) putting forward a joint offer to EKFB JV for the award of the Main Sub-Contract;
b) negotiating with EKFB JV to agree the terms of the Main Sub-Contract;
c) entering into and performing the Main Sub-Contract; and
d) performing where applicable any Consortium Contract."
Clause 2.1 and 2.2
"2.1 This Agreement shall commence on the date when it has been signed by each and all the parties (the "Commencement Date")."
"2.2 This Agreement shall continue, unless terminated earlier in accordance with this Agreement, until the date on which the Main Sub-Contract and any and all obligations arising thereunder together with any Consortium Contract and any and all obligations arising thereunder have been discharged by the performance by the respective parties to the same of their obligations arising under the same to the extent necessary for the Project to have been deemed completed in accordance with the terms of the Main Sub-Contract and/or any Consortium Contract, and the period for which any right of retention any party has in respect of any payment to be made pursuant to any such Main Sub-contract or Consortium Contract has expired, at which point this Agreement shall terminate automatically without notice."
Clause 3.1 and 3.2
"3.1 ABM and Matière shall co-operate and collaborate with one another in accordance with the terms of this Agreement in relation to the Project and/or where applicable any Other Project."
"3.2 Each of ABM and Matière agrees with the other that it will not (directly or indirectly, alone or with others):
3.2.1 seek to enter into any contract or engagement in relation to the Project or its subject matter.
3.2.2 pursue any opportunity arising in relation to the Project or its subject matter.
3.2.3 make any communication with EKFB JV in relation to the Project or its subject matter
save under and in accordance with this Agreement for so long as this Agreement remains in force."
Clauses 3.3 and 3.4
"3.3 In the course of their performance of their obligations pursuant to this Agreement each of ABM and Matière shall act in good faith toward the other and use reasonable endeavours to forward the interests of the Consortium including in relation to bids for Other Projects where the Consortium has agreed to make a bid."
"3.4 Each of ABM and Matière agrees for the avoidance of doubt without prejudice to clause 3.2 that outside the scope of the Main Sub-Contract there are opportunities for them respectively, alone or together, to do further work and enter into further arrangements or contracts in connection with the HS2 project, and agrees that the terms of this Agreement are not intended to and shall not restrict either ABM or Matière from being free to pursue such opportunities and/or to enter into further agreements in respect of the same alone, together and/or as members of any other consortium or venture."
Clauses 5.1 to 5.5
"5. Proposals and the Project
5.1 The parties agree that the terms of this Agreement shall apply to the Project and shall be subject to further negotiation in accordance with the terms of this clause 5.
5.2 Each of ABM and Matière shall consult with the other and negotiate in good faith with the other (by way of their respective Key Personnel at all levels within their respective organisations and by way of the Board) and use its best endeavours to make available all reasonable personnel and facilities in order to achieve agreement of any documents to be submitted to EKFB JV in reply to its invitation to tender and otherwise in respect of any information, tendering or due diligence process or procedure required in respect of the award of the Main Sub-Contracts and/or any other contracts or appointments relating to the Project. No document or communication of any nature shall be issued on behalf of the Consortium or either of ABM and/or Matière in respect of any such process or procedure save where the same has been agreed in writing by the respective Project Managers of both ABM and Matière.
5.3 On receipt of any Draft Main Sub-Contract, each of ABM and Matière shall consider the same, disclose the same where applicable to the other, provide the other with its comments on the same, and each of ABM and Matière shall then discuss and negotiate in good faith with the other without delay with a view to formulating an agreed response to the same. The parties agree that such negotiations may include, without limitation:
5.3.1 any amendments required to the terms of the said Draft Main Sub-Contract (including any Scope of Work);
5.3.2 any provisions where applicable of any Consortium Contracts (including any Scope of Work); and
5.3.3 any variations, additions or amendments to the terms of this Agreement reasonably required by either party as a consequence (whether directly or indirectly) of the terms of the said Draft Main Sub-Contract and/or any amendments to the same proposed by either party.
5.4 Each of ABM and Matière shall consult with the other and negotiate in good faith with the other (by way of their respective Key Personnel at all levels within their respective organisations) and use its best endeavours to make available all reasonable personnel and facilities in order to achieve agreement of any documents to be submitted to EKFB JV by way of response to any Draft Main Sub-Contract. No document or communication of any nature shall be issued on behalf of the Consortium or either of ABM and/or Matière in respect of any Draft Main Sub-Contract save where the same has been agreed in writing by the respective Project Managers of both ABM and Matière.
5.5 While the parties shall act at all times in good faith and shall negotiate in good faith with one another nothing in this Agreement shall oblige either party to execute any document or enter into any agreement of any nature (including, without limitation, any Main Sub-Contract and/or any Consortium Contract) save where it has agreed to do so by way of agreeing the terms of any documents and/or communications to be issued on behalf of the Consortium and/or either party pursuant to clause 5.3 and/or 5.4."
Clause 23.1.1 and 23.1.3
"23.1.1 in the event that EKFB JV at any time withdraws any offers or proposals in respect of the Main Sub-Contract and/or confirms at any time that the Main Sub-Contract will not be awarded to the Consortium.
…
23.1.3 in the event that the Main Sub-Contract is not awarded to the Consortium and/or not executed by the parties to the same for any reason."
Clause 31.4
"31.4 Subject only to any amendments which may be agreed following the date of this Agreement between the parties in respect of the form of the Consortium in accordance with the terms of this Agreement, ABM and Matière hereby agree that they do not intend to share profits and losses (whether the same be calculated on a gross or net basis). Each party shall be responsible for the performance of their Scope of Work allocated to it in accordance with the terms of the Consortium Contract applicable to it and to be solely entitled to the proceeds of, and solely responsible for the costs of and in relation to, the input it provides save only in so far as the parties agree in accordance with the terms of this Agreement for their respective contributions towards any costs of and relating to the Consortium and/or the Project."
The Claim
- Matière's claim is for £373,295.06 for sums due pursuant to the Consortium Agreement. The arrangement was that, for services performed for EKJV by Matière under the Professional Services Contract, ABM would be responsible for invoicing EKJV, together with the cost of its own services, and, when it was paid in respect of Matière's claim, it would pass on payment to Matière. The Particulars of Claim allege that Matière issued various invoices, that ABM made various payments and that a balance of £373,295.06 remained outstanding.
- M.Matière's witness statement gave general evidence that the pleaded invoices were due but had not been paid.
- In respect of the claim, ABM's pleaded position had been that £157,241.91 was due to Matière. However, at the point when witness statements were exchanged and thereafter throughout the trial, ABM's position was as set out in its Opening Submissions. Subject to set off, ABM only challenged £35,000 of the sum claimed but now admitted that the rest was due. As to that small element of difference, ABM relies on Mr Buckley's evidence at paragraphs 22 to 31 of his witness statement. In essence, he says that Matière's Invoice 9 contained no breakdown as to how the figures were created. He said this caused confusion as the sum claimed in the invoice did not match the sums claimed within the Application for Payment to EKJV. He says: "I believe that they guessed how much they are owed and I think they are over in their estimation by around £35,000." In his view, Matière would not have been able to provide a breakdown of the costs incurred in Invoice 9 and he did not know where the sums claimed had come from.
- Probably due to the small amount in issue, no witness on either side was cross examined in a manner which enabled me to identify, still less determine, from where the supposed difference of £35,000 identified by Mr Buckley may have come. The alleged over estimation was not investigated.
- The burden is on Matière to prove its claim and I conclude it has sufficiently discharged that burden. In circumstances where the invoiced sums were (belatedly) admitted to be due in large part, I conclude that it was for ABM to identify and demonstrate where the supposed difference lay. It did not do that. I allow Matière's claim in full.
The Counterclaim
- The rest of the trial concerned the Counterclaim. ABM's principal pleaded case was that Matière was in breach of the Agreements in two material respects. The first concerned a factory at Scunthorpe. To manufacture the pre-cast concrete, ABM planned to build a bespoke factory at Scunthorpe. That plan formed part of the original proposal which was pursued by ABM and Matière together and with EKJV. It was also included in the bid which was made to HS2 Ltd. ABM complains that Matière subsequently undermined that plan in a variety of ways which I will, in due course, consider. It is said that the actions in undermining the plan for the Scunthorpe factory was a breach of Clause 3 of the Consortium Agreement. Separately, the same conduct is also said to be a breach of Clauses 3.1 to 3.3 of the Collaboration Agreement. The second pleaded allegation is that in late 2019, or early 2020, Matière gave a slide presentation in respect of the Green Tunnels Project to a company by the name of Stanton Bonna, a key competitor of ABM. That was said to be a breach of Clause 3.1 of the Consortium Contract.
- Those are the two breaches which ABM contends give rise to the claim for loss of chance, which is ABM's primary claim.
- Separately, ABM contends that Matière was in breach of Clause 3.2 of the Collaboration Agreement in two respects. Firstly, that shortly after termination of the 2019 Professional Services Contract, Matière alone entered into a new professional services agreement with EKJV to continue exactly the same work as had been the subject matter of the original Professional Services Contract with the ABM/Matière JV. Secondly, that Matière subsequently entered into a subcontract with EKJV, without ABM, for installation work relating to the Green Tunnels. These breaches are not pleaded as having given rise to the loss of a chance. Instead, they are relied on in support of ABM's claim for an account of the profits arising from the installation works contract that Matière undertook. The claim for the account is ABM's secondary claim.
- In opening, Mr Lewis KC, for Matière, made clear his intention to hold ABM to its three pleaded breaches. That was because, on Matière's case, the evidence in the proceedings, and the criticisms of Matière, ranged wider than the pleaded breaches described above. For his part, Mr Streatfeild-James KC, for ABM, made no application to amend the pleading at any point during the trial. Instead, during closing submissions he sought to explain why the issues fell within the scope of the existing pleading. Thus, the Court was not pressed during the trial to make a ruling, one way or the other, as to the scope of the pleadings and whether, if amendments were required, permission to make them should be given. The decision not to seek a definitive ruling was no doubt a sensible one. There was no suggestion that Matière was prejudiced by those complaints which ABM was now making. The evidence was all there in the witness statements, documents and ABM's written opening and the trial was subsequently conducted without difficulty. If pressed, I would likely have considered that the pleading did need to be amended to encompass some of the particular allegations that ABM was maintaining, not least because these were allegations of breach of good faith for which specificity should be required. On the other hand, it is likely that permission would have been given. In the event, no contemporaneous ruling was sought and the question now seems to me to be moot, since I have made my findings on the basis of all the evidence adduced.
The factual witnesses and their evidence
- Given the nature of the dispute, it is particularly important that I should set out my views of the factual witnesses who were called to give evidence and my conclusions on the core of their evidence. I should also make brief observations on those who were not called as witnesses.
- The first witness for Matière was M.Blanc. M.Blanc is the Managing Director of Matière and has worked for the company for the whole of his professional career. In the period relevant to the dispute he was the Financial Director or CFO. He gave his evidence with the assistance of an interpreter but most of the time he spoke in English and showed a pretty good command of the English language. ABM invited me to treat his evidence with great care because he had spent his entire working life with Matière and was close to M.Matière. In my view, his evidence was not pivotal but I am inclined to agree that I should not accept the entirety of his evidence as accurate.
- The second witness for Matière was M.Vignon. By professional training he is a civil engineer. Originally retained by Matière as a consultant, acting as liaison between EKJV, Matière and COWI, the tunnel designers, he became a direct employee of Matière in August 2021. When he made his witness statement, he was the Project Manager for Matière and, as the subsequent review of the facts will show, he was at the heart of the facts giving rise to this dispute. He was located in offices with EKJV until lockdown in March 2020 so was privy to information in the form of grapevine talk and chat that would not necessarily have been known about had he been remotely located. By the date of the trial, he was no longer working for Matière although the circumstances in which he left were not specifically explored. Much of the conduct of which ABM complains is attributable to things said and done by M.Vignon, in the form of lies, deception and double-dealing. M.Vignon did not deny much of this. As ABM submits, he accepted, repeatedly and inevitably, that he had behaved badly over a long period of time by lying and deceiving ABM and that it was very much to his credit that he did so. Nonetheless, ABM submits that, even so, he was not always a truthful witness when giving evidence, pointing out that his witness statement was not, itself, accurate, full or true and his conduct, now accepted to be improper, impugns the quality of his evidence. My own view was that M.Vignon was a compelling witness in the hearing. I agree with ABM that he found giving evidence traumatic and emotional. He was both disarmingly frank and ashamed by what he had done. His shame was most acute in respect of his relationship with Mr Sanderson of ABM, a man with whom he went to the pub and socialised. There was this exchange:
"You discussed things including work, but in the day-to-day work you were deceiving them, weren't you? Yes."
- Having left Matière, he was no longer a 'company man' and had no reason to cover up or hide what he had done. That probably explains the shift between his written and oral evidence. Compared to many witnesses I have seen, he was also refreshingly unprepared. He skimmed documents presented to him in the witness box that he had not seen before or could not recall and, in my judgment, gave candid answers about them even where they caused him embarrassment.
- In light of his evidence, there were two central questions of fact for the Court to determine. Firstly, was M.Vignon's conduct known about and endorsed by his employer, Matière, and, in particular, by M.Matière? Secondly, was M.Vignon's conduct (with or without the encouragement of Matière) initiated by him, or was it reactive to suggestions and requests from EKJV? At this point, it suffices to say that, on both of those two central questions, I unhesitatingly accept M.Vignon's evidence that he acted with the knowledge and endorsement of M.Matière and the company itself; but he did so at the behest of EKJV.
- The third and final witness for Matière was M.Matière himself. He was the CEO and is now the President of the company that bears his name. It is a family business established by his grandfather in 1932. He describes the business as international, employing about 500 employees and with a turnover of €130m in 2023. In his witness statement he described the award to him of both the "Ordre National du Merite" and the "Legion d'Honneur", the latter having been the result of more than 20-years' public service for the benefit of the French nation. He explained that both of these high-level awards are only conferred following a thorough assessment of moral value and professional and personal conduct.
- I regret to say that, notwithstanding the awards to which he referred, I did not find much of M.Matière's evidence helpful or credible. He was, in many respects an unsatisfactory witness prone to giving long speeches made up of self-serving statements. This was usually to avoid giving plain and simple answers that would have assisted the Court and would have aided his credibility. Generally, I can place only limited reliance on his evidence save where it is consistent with the documents. In the unusual circumstances of this case, which requires me to evaluate conflicting evidence from two witnesses called by the same party, I prefer the evidence of M.Vignon to that of M.Matière where their evidence is in conflict.
- The first witness for ABM was Mr Minihane. He is a director of ABM which he founded with two other partners in 1993. By qualification he is a civil engineer. I saw him in the witness box for more than a day. He is, if I may say so, a clever and commercially astute man. However, I did not feel I got as much assistance from his evidence as I might have done. Concessions that ought to have been more freely made were, instead, limited and tightly circumscribed. There were many instances of this but I will give just two. When it was put to him that an email from Mr Lowery should have been taken seriously given his leadership role in EKJV, Mr Minihane simply replied: "Yes, that's who sent it". When it was put to him that he deliberately omitted from a paragraph in his witness statement an important matter from his account of a telephone call, a proposition which I considered to have been justified and which omission called for an explanation, he merely said: "There is no reference in that paragraph to the factory proposal. I think you are correct. Yes, you are correct".
- A central question in respect of his evidence was whether, as he sought to portray, the ultimate failure of the joint venture bid came as a huge surprise to ABM or whether there were sufficient warning signs to him of it looming, even if he had not known the full extent of what Matière had been doing behind ABM's back. On that central question, I was not able to accept his evidence. If he was as surprised as he claimed to have been, I conclude that he had not been remotely realistic about the position.
- The next witness for ABM was Mr Sanderson. He is a consultant for ABM. His role was that of business development and the winning of business in a marketing and sales capacity. Management of the preparation for the bid was within his remit. His oral evidence was limited but he struck me as an honest witness. For example, he accepted that, in a conversation he had with M.Martin of EKJV on 8 September 2020, there was an implied threat to the success of the joint bid and that he may have had misplaced optimism of where ABM stood in relation to it.
- The third witness for ABM was Mr Buckley. He is both a civil engineer and QS. He worked as a consultant for ABM in relation to the Green Tunnels Project, dealing mainly with M.Vignon at Matière. His cross examination was limited in time but he was the person who gave evidence about Matière having made a presentation to Stanton Bonna, which is one of the pleaded breaches. I make findings about that below.
- The final factual witness for ABM was Mr Gormley. His cross examination was also brief and did not really bear on the central issues of liability.
- From this list it will be readily apparent that neither party called any witness from the main contractor joint venture. There were numerous individual participants within EKJV who played a role, often a key one, in this story. These include Mr Swift, the delivery director; Mr Gilbert, the commercial director; and Mr Lowery, the managing director and leader of the senior leadership team. In the Contract Data annexed to the contract with HS2 Ltd, Mr Lowery is described as the JV Project Director with responsibility for leading the delivery of Stage 2 and was to be the main contractor's focal point of contact for the Project Manager. In the narrative which I set out below, Mr Lowery played the most influential role and, in the end, it was his recommendation which the EKJV board followed. Others within EKJV who were also involved were M.Martin, M.Garnier and M. Rossignol.
- The fact that neither party called any of the members of EKJV as witnesses means I have to make important findings about what they did or said without them having an opportunity to comment on those matters. I was left with the impression that EKJV was itself dysfunctional at least as regards the subject matter of this trial. In particular, different individuals sometimes pulled in different directions and purported to speak on behalf of the whole of the joint venture when I very much doubt that was the case. Views also changed over time. Some individuals were plainly more supportive of ABM's participation in the bid than others, who had serious reservations about it. Again, the nature of this case requires me to reach conclusions about these matters despite the individuals not giving evidence. I must also form a view as to the collective mind of EKJV at any given time, insofar as there was one. As I have indicated, that is largely whatever was Mr Lowery's position.
- The dysfunctionality within EKJV to which I have referred has another consequence. The relevant communications between each of Matière, ABM and EKJV, whether by email, text or correspondence, were extensive. Lines of communication ran between various different individuals each with their own particular agendas. As ABM submitted in a wider context, there is no single, simple account of what was happening. Simply reciting each and every strand of exchange would, undoubtedly, provide a comprehensive narrative but does not give a clear impression of what was happening in overview. For that reason, I have not sought to recite every exchange but have tried to focus on the main events wherever possible.
The Contractual Issues
- I now turn to the contractual issues. I am required to construe the agreements in accordance with conventional principles established in the well known cases such as Wood v Capita Insurance Services Ltd [2017] UKSC 24. These principles were not in dispute. The approach is to ascertain the objective meaning of the language in which the parties have chosen to express their agreement. This is not a literalist exercise but requires consideration of the contract as a whole. The factual matrix in which the agreements were signed must be taken into account. Textualism and contexualism are tools which can be deployed to ascertain the objective meaning of the language.
Background
- Briefly stated, the factual background against which the agreements were signed is as follows. Initially, ABM and Matière signed a Memorandum of Agreement on or about 17 November 2017. It recorded the award to a Joint Venture between Carillion[1], Eiffage and Kier of Lots C2 and C3 of the HS2 project and their request to Matière to tender for the design, build, supply and erect the Green Tunnels. Matière and ABM agreed to work together to tender for such works. It was expressly envisaged that the agreement would later be replaced by a Consortium or Joint Venture Agreement. By April 2018, ABM and Matière had worked up version 2 of a draft Collaboration Agreement. In different ways, both parties have relied on the draft Collaboration Agreement as relevant background which informs the proper construction of the Consortium Agreement. ABM relies on the fact of it, whereas Matière relies on some of its terms which were not used in the Consortium Agreement. ABM and Matière submitted their tender to EKJV in July 2018. They described themselves as "currently an unincorporated Joint Venture" and annexed a copy of the draft Collaboration Agreement. Although not legally binding, ABM and Matière's bid indicated they would operate in a legal, truthful and decent manner and that they had exceptional standards of moral and ethical behaviour.
- In January 2019, EKJV, as Contractor, signed a Memorandum of Understanding with Matière and ABM, together as Subcontractor, which was effective from 26 November 2018. Only some of the provisions were legally binding. The ambit of the agreement was set out in Recital D which stated:
"The Subcontractor wishes to enter into a strategic alignment with the Contractor to assist the Contractor in the performance of the Stage One Services and the production of the Main Contract Proposals in connection with the Relevant Activity and, if the Employer decides to award Stage Two to the Contractor and the Parties are able to agree terms, the performance of certain Relevant Activity works for C2 and/or C3."
- In February 2019, EKJV appointed Matière and ABM as Consultant pursuant to a Professional Services Contract, to which I will later need to refer. The Consultant is described in the recitals as EKJV's "strategic partner". This ties into the prior reference to "strategic alignment" in the Memorandum of Understanding, set out above.
- This was the background against which the Consortium Agreement came to be signed. For a long time the draft Collaboration Agreement remained unexecuted. In the meantime, ABM and Matière were apparently content for their legal relationship to be governed only by the Consortium Agreement. Ultimately they came under pressure from EKJV to execute the Collaboration Agreement as an indication of the robustness and legal efficacy of their Joint Venture. Thus, on 10 May 2020, M.Garnier of EKJV asked for evidence that ABM Matière was, indeed, a joint and several joint venture. The next day, Mr Buckley of ABM replied that a provisional copy of the agreement had been provided at the outset with the tender (as I have identified) and that its terms had not changed. He explained the intention was to finalise it once the final price and contract conditions for the bid were known. Thus, the shared approach of ABM and Matière had been that their dealings were to be regulated by the Consortium Agreement until such time as the terms of their bid had been finalised, whereupon the Collaboration Agreement would be signed. That approach did not satisfy EKJV who said they needed the legal entity comprising ABMM JV to exist and that the JV agreement should be put in place now i.e., before finalisation of the price and terms of the bid. Thus, the Collaboration Agreement was finally signed, with prospective effect only, on 23 June 2020. It was not very different from the draft which had been annexed to the tender response but, materially, added in a new Clause 3.2.
Consortium Agreement
- In respect of the alleged breach of the Consortium Agreement, ABM relies on Clause 3.1. This requires me to construe that particular provision. As I construe it, there are three parts to it. First, that ABM and Matière shall co-operate and collaborate with one another "in accordance with the terms of this Agreement". That element of the provision is somewhat circular or unnecessary because it depends on other provisions to render it meaningful. It adds nothing of substance on its own. In any event, no separate breach of the first part is alleged. It is fair to say that the parties were not agreed that what I have described as the first part was, in fact, separate from the second and third parts. It depends on whether "and" is disjunctive. But either way, I do not believe it adds anything because it all depends on "the terms of this Agreement", which begs the question. The second part requires the parties to act in good faith towards the other. The third part requires the use of reasonable endeavours to forward the interests of the co-operative enterprise. Both the second and third part are constrained in their ambit in that the two obligations attach to the performance of their obligations pursuant to any associated professional services contract ("PSC"). In fact, ABM does not allege a breach of the third part. In short, ABM confirmed that its claim for breach of the Consortium Agreement was focused entirely on the express "good faith" obligation.
- A key point in respect of construction is that Matière contends that ABM cannot identify any relevant obligation under the PSC to which the express obligation to act in good faith attaches. On its case, the functions performed by each of ABM and Matière in their endeavour to win the Green Tunnels Project were not co-extensive with the performance of obligations under the PSC. Anything about which ABM complains as constituting a breach of good faith must, necessarily, attach to the performance of an obligation under the PSC in order to be actionable. As expressed in closing, Matière's case is that the Consortium Agreement is limited to governing ABM and Matière's co-operative enterprise as Consultant under the PSC and not their collaboration for the purposes of submitting a tender for and thereafter negotiating the terms of a potential subcontract. In essence, the mere business of working together to bid jointly for the Green Tunnels Project was not within the scope of obligations under the PSC and, for that reason, activities of that sort are not subject to the express duty of good faith. ABM does not allege any implied duty of good faith in respect of actions outside the scope of the obligations under the PSC.
- ABM pleaded that the Consortium Agreement was not limited to governing the fulfilment of obligations under the PSC. It contended that it covered ABM and Matière's entire collaboration for the Green Tunnels Project. This contention is based on the content of the recitals, the definition of "the Project" and Clause 1 of the Consortium Agreement, all viewed against the broad background to which I have referred, including the existence of the draft Collaboration Agreement. Having regard to the various agreements in place, ABM submits there was a contractual scheme which covered all aspects of their relationship. Matière submits that this broad contention is unsustainable.
- I accept Matière's submission that the obligation in Clause 3.1 is inexorably tied to the scope of professional obligations within the PSC and reject ABM's case that the Consortium Agreement independently covered the entire collaboration for the Green Tunnels Project. The recitals do not prescribe the scope of the Consortium Agreement but simply place the operative provisions in their context. The "co-operative enterprise" in recital A is reflected in Clause 1.3, namely the undertaking of duties as a consultant. The operative provisions in Clauses 1.2 and 1.3 refer to ABM and Matière's appointment as Consultant and their duties in relation thereto. The co-operative enterprise in Clause 1.3 comprises the undertaking of duties as the Consultant. This ties in with Clause 3.1, which deals with the performance of obligations pursuant to the PSC. Clause 2.1 links the duration of the Consortium Agreement to the lifetime of the PSC. Invoicing and payment was also linked to the PSC.
- In January 2019, the parties must be taken to have deliberately decided not to enter into the Collaboration Agreement in the terms of the then current draft. Instead they chose to use the language and structure of the Consortium Agreement. Similarly, whilst the fact of the Memorandum of Agreement concluded in November 2017 forms part of the background, its detailed terms are not relevant to the proper construction of the Consortium Agreement since the intention was that it should be fully replaced by a subsequent agreement.
- Although ABM's position is that the relevant obligations under the Collaboration Agreement were not materially different from those under the Consortium Agreement, that position must be tested by reference to the provisions under each separate agreement. It must take into account that the parties elected not to enter into the Collaboration Agreement in the form of the draft which existed at the time of the Consortium Agreement. It is notable that when the parties did, in the end, enter into the Collaboration Agreement, they decided not to backdate it to encompass the period covered by the Consortium Agreement. That fact cannot, however, inform the proper construction of the Consortium Agreement when it was signed.
- On behalf of Matière, Mr Lewis KC submitted that the activities identified in Clauses 5.1 to 5.3 of the Collaboration Agreement, which clearly showed the object was the negotiation and tendering for the proposed Main Subcontract, had no equivalent in the Consortium Agreement. At the time of the Consortium Agreement, he suggested that Matière was therefore performing those activities voluntarily. He said it was not necessary to have a contract in place in order to collaborate to formulate a tender and enter into negotiations in respect of it. Each party would, in any event, have been motivated by the principle objective of being awarded the subcontract. In the absence of an earlier demand from EKJV, both parties were content to operate on an informal basis. Negotiations and bid discussions between ABM and Matière and between both of them and EKJV was not part of any professional service.
- At the trial, Mr Streatfeild-James KC developed what I consider to be a new, alternative, case, namely that the subject matter of its claimed breaches, relating to the preparation and submission of the joint bid, formed part of the fulfilment of obligations which arose under the PSC and was, for that reason, within the ambit of Clause 3.1 of the Consortium Agreement if it had to be. He submitted this was clearly so in light of the factual background which included, amongst others, the Memorandum of Understanding between EKJV and Matière/ABM. Whilst Mr Lewis KC later complained that such a case had not been pleaded, he confirmed in opening that he had assumed it to be ABM's case that the submission of a bid fell within the ambit of the PSC. What constitutes the scope of Services under the PSC is, essentially, a matter of law and, viewed in that way, the merit of any pleading objection falls away. The substance of ABM's position remained that the matters about which it complained were breaches of Clause 3.1.
- Under the PSC, the Consultant agreed to carry out the services set out in Schedule 1. These were defined as "the Services". Schedule 1 defines the Services as follows:
"The Provision of Professional and Specialist Knowledge to Eiffage Kier Joint Venture in respect of the Preparation of Stage Two Proposals for Submission to HS2 for Pre-cast Concrete Double Arch Cut and Cover Tunnels including associated Waterproofing for C2 and/or C3 in whole or in part and specifically the following in accordance with the Memorandum of Understanding and Confidentiality Agreement executed in and around the time of this Appointment."
- What followed was a list which included these activities:
"a) Review and constructively challenge the current Scheme Design for the Pre-Cast Tunnels and associated Waterproofing.
…
c) Identify constraints and define methodology, programme and price based on constraints.
…
e) Identify interfaces and the impact this may have on the cost model, programme and methodology.
f) Mobilisation Plan (Site)."
- ABM's case is that the Services described in (c), (e) and (f) are broad enough to encompass questions about the type and location of a factory. In other words, the PSC envisaged the joint provision by ABM/Matière of all professional and specialist knowledge which was necessary to enable EKJV to submit its Stage 2 Proposals to HS2, covering matters such as where and how the concrete segments will be made and transported to site and at what cost. Negotiations and bid discussions between ABM and Matière, and then between both of them and EKJV, were an inherent part of that which was ultimately necessary to enable EKJV to submit its Stage 2 Proposals to HS2. It would have been impossible to disentangle particular types of activity, treating some as within the professional service, and others as outside it. The obvious expectation was that the professional advice in relation to the Stage 2 Proposals, so far as it related to the Green Tunnels, was at the same time going to amount to ABM/Matière JV's bid. The build-up of the Target Cost was not being undertaken in a vacuum, isolated from the fact that ABM/Matière JV was expected to bid for, and then undertake, the work.
- Matière submits that the Court can take account of the parties' decision not to incorporate reference to tender negotiation and bidding, as appeared in the draft Collaboration Agreement. It says that the PSC does not extend to the making of any response to the ITT nor the submission of any bid to EKJV, nor the negotiation of any bid or terms. Matière points to practical difficulties arising from the conflict between the duty to use reasonable skill and care on the one hand, as required by the PSC, and seeking commercial advantage on the other.
- Both parties relied on the way in which the payment provisions in the PSC were structured and in fact implemented. For its part, ABM pointed out that Ganetime (essentially a time-based recording system) covered all work undertaken by ABM/Matière and drew no distinction between different types of activity. M.Vignon was embedded in EKJV's premises and was providing assistance for EKJV in various respects. He charged all his time to Ganetime, even when fulfilling requests of EKJV to look at alternative options. For its part, Matière pointed out that there was no permissible time-charge for Mr Minihane or M.Matière who were the persons with primary responsibility for the negotiation of the bid. Matière relies on the fact that EKJV later stripped out claims for negotiation of contracts but, as ABM pointed out, those were legal costs.
- In my judgment, ABM's essential submission is correct. The activity of negotiation and bid preparation as between ABM and Matière, and as between both of them and EKJV, was inextricably linked to the ultimate preparation of EKJV's Stage Two Proposals, as required by the PSC. I do not see how, practically speaking, it would have been possible to separate out these activities as one was an obvious precursor to the other in this particular case. By reference to the Memorandum of Understanding, signed shortly before execution of the Consortium Agreement, it was clear that the common thinking was that ABM/Matière JV would be the successful subcontractor if the Employer, HS2, decided to award Stage 2 to EKJV: see, for example, Recital D thereto, cited earlier. This recital intertwined the strategic alignment of the Subcontractor and Contractor with the assistance which was to be provided in the production of Main Contract Proposals. Thus, the shared understanding was that the contribution to the preparation of the Stage Two Proposals would be undertaken by the entity that would be the successful subcontractor. The Services provided for in Schedule 1 to the PSC cross- referred to the Memorandum of Understanding. All parties had a shared interest in the most competitive price being offered to HS2. To achieve that, it was a necessary prior step that ABM and Matière should work together to produce a joint bid.
- As Mr Streatfeild-James KC submitted, if Matière were right that negotiation and bid preparation as between Matière and ABM were excluded from the ambit of Clause 3.1 on its proper construction, the consequences would be stark indeed. It would mean that Matière (or ABM) would be entitled concurrently to prepare alternative tenders, including tenders involving other sub-subcontractors, whilst at the same time jointly providing Services to EKJV. That is not a business-like construction.
- By reference to the Fee Structure in the PSC, there was no expectation that individuals such as M.Vignon, who was embedded at EKJV, and Mr Sanderson of ABM should apportion their time in any particular way. Instead, the anticipated arrangement was that their entire time on this project was chargeable on an all-inclusive daily rate. If the intention had been to separate out time spent on anticipated negotiations and bidding from time spent in the provision of Stage Two Proposals, the parties would have been expected to spell out how that arrangement would work in practice. I do not regard it as material that Schedule 2 of the PSC made no provision for the time incurred by Mr Minihane and M.Matière. Their time was likely to have been part of the overhead cost included within the fee but, in any event, their expertise and input formed part of the overall service which had been commissioned, whether chargeable or not.
- I quite see that how a conflict between the duty in Clause 1.3 of the PSC to act with reasonable skill and care and the desire of a party to act in its own commercial interests could arise in theory but I doubt that this potential difficulty was a consideration which impacted upon the common intention of the parties. If the conflict did arise, it might sensibly be resolved by application of a "best for project" objective identified in (non-binding) Clause 2.4 of Memorandum of Understanding. At all events, any suggestion of conflicting duties would have to be resolved on the facts.
- I also see that the existence, but not the terms of, the draft Collaboration Agreement might in theory form part of the factual matrix for construing the Consortium Agreement but there was no objective evidence as to why it was that the parties had not signed it. Accordingly, not much assistance is gained from the mere fact it existed. Nor do I consider it to be right in principle that regard should be had to the decision of the parties not to adopt the particular wording about negotiations and bidding contained in the then draft Collaboration Agreement. As Mr Streatfeild-James KC submitted, there is no authority to suggest that one agreement, namely the Consortium Agreement, should be construed by reference to what was not taken from another draft agreement, namely the Collaboration Agreement. In any event, the point becomes circular. The parties may have concluded that the words they did use within the Consortium Agreement were sufficient to cover the same ground, even if they were not as explicit as they had appeared in the draft Collaboration Agreement.
- EKJV's subsequent rejection of certain claims for time spent by ABM/Matière is quite irrelevant. Not only was it for lawyer's time, which is conceptually different from time spent on negotiation and bid formulation, but it came years later after the Consortium Agreement was signed, and has no bearing on the proper construction of the agreement.
- In summary, I consider the activities of negotiation and bidding were part of, and inseparable from, the Services contemplated by the PSC and, for that reason, were subject to the express duty of good faith set out in the Consortium Agreement.
Collaboration Agreement
- The position under the Collaboration Agreement is altogether more straightforward. Clauses 3.1 and 3.2 are clear. Clause 3.3, upon which ABM founds its main complaint, contains an express duty to act in good faith in the course of the performance of obligations under it. Pursuant to Clause 5.2, each of ABM and Matière agreed to consult with each other and negotiate in good faith with the other, in order to achieve agreement of any documents to be submitted to EKJV in reply to the invitation to tender. There are other provisions in Clause 5 which link negotiations with the duty of good faith. However, Clause 5.2 itself is not relied on.
The Duty of Good Faith
- In respect of both the Consortium Agreement and the Collaboration Agreement, ABM relies entirely on alleged breaches of the express term of good faith for its principal claim.
- The core meaning of a duty of good faith is to act honestly. However, bad faith may include conduct which would be regarded as commercially unacceptable to reasonable and honest people, even if not necessarily dishonest: see Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 at [141], [144] and [147], as applied in Mid-Essex Hospital Services NHS Trust v Compass Group [2013] EWCA Civ 200 at [1150]. See also Chitty on Contracts, 35th edition at 2-060. The content of the duty is heavily conditioned by its context: see Mid-Essex Hospital Services NHS Trust v Compass Group [2013] EWCA Civ 200 at [109].
- In Mid-Essex, Beatson LJ cautioned at [154] that, where a contract makes specific provision for eventualities, care must be taken not to construe potentially open-ended obligations, such as to use good faith, in a manner which cuts across those specific provisions. That point, to which my attention was drawn, perhaps matters less in this case because the good faith obligations in both the Consortium Agreement and the Collaboration Agreement were themselves tied to the performance of the obligations provided for elsewhere.
- Both parties drew my attention to the recent guidance in Re Compound Photonics Group Ltd [2022] EWCA Civ 1371. ABM summarised the principles established by that case as follows:
(1) When considering the interpretation of an express good faith clause in context, cases from other areas of law and commerce turning on their own particular facts may be of limited value and should be treated with considerable caution: see [148].
(2) An obligation of good faith might comprehend fidelity to the bargain between the parties or adherence to the spirit of the agreement where the common purpose and aims of the parties could be objectively ascertained from the express or implied terms of the contract: see [212] and [243].
(3) In such cases, the essence of the concept might be captured by reference to the prohibition of "cynical resort to the black letter" or the prohibition of conduct which "undermines the bargain entered or the substance of the contractual benefit bargained for".
- The following passages from the Court of Appeal's judgment, given by Snowden LJ, are material:
"The general approach
147. In approaching the interpretation of clause 4.2, the first, and most important, point to emphasise is that like any question of interpretation of a contract, an express clause in a contract requiring a party to act in "good faith" must take its meaning from the context in which it is used. That point has been made very clearly in many cases, including by Jackson and Beatson LJJ in Compass Group UK and Ireland Ltd (t/a Medirest) v Mid-Essex Hospital Services NHS Trust [2013] EWCA Civ 200 ("Compass Group") at [109] and [150]- [151].
148. The second, and related, point is that when considering the interpretation and meaning of an express good faith clause in context, cases from other areas of law or commerce, which turn upon their own particular facts, may be of limited value and must be treated with considerable caution. That point was made very clearly by Auld LJ in Street v Derbyshire Unemployed Workers' Centre [2004] EWCA Civ 964 ("Street") at paragraph [41], which was cited with approval by Jackson LJ in Compass Group at [110],
"Shorn of context, the words "in good faith" have a core meaning of honesty. Introduce context, and it calls for further elaboration. Thus in the context of a claim or representation, the sole issue as to honesty may just turn on its truth. But even where the content of the statement is true or reasonably believed by its maker to be true, an issue of honesty may still creep in according to whether it made with sincerity of intention for which the Act provides protection or for an ulterior and, say, malicious, purpose. The term is to be found in many statutory and common-law contexts, and because they are necessarily conditioned by their context, it is dangerous to apply judicial attempts at definition in one context to that of another." (Emphasis is that of Snowden LJ)
…
- I respectfully agree with the point made by Auld LJ in Street and the doubts expressed by Newey LJ. Whilst the concepts and ideas advanced in other cases might well be useful analytical tools in the process of interpretation of a particular contract, in my view it is not appropriate simply to apply them in a formulaic way in every case, irrespective of the context and the other terms of the agreement in issue."
…
"212. Understood in this way, even where thought to be inherent in an obligation of good faith, the concept of fidelity to the bargain or adherence to the spirit of the agreement could only operate to support the common purpose and aims of the parties as objectively ascertained from the express or implied terms of the contract. Depending on context, the essence of the concept might be captured by Barrett J's reference in Overlook to the prohibition of "cynical resort to the black letter" or by Allsop P's reference in Macquarie to the prohibition of conduct that "undermines the bargain entered or the substance of the contractual benefit bargained for". On any footing, however, the shared aims of the parties must be identified by interpretation of the other terms of the agreement, or by implication of terms according to the usual test outlined in Marks & Spencer plc v BNP Paribas Securities [2016] AC 74."
…
"243. As I have explained, I accept the argument that apart from the "core" duty of honesty and (depending on the context) a duty not to engage in conduct that could be characterised as bad faith, any further requirements of an express duty of good faith must be capable of being derived as a matter of interpretation or implication from the other terms of the contract in issue in the particular case. However, I do not think that it helps to describe those other requirements as "derivative" of the core duty of honesty."
- In summary, ABM submits that the content of a contractual duty of good faith is Protean, and can only be determined by reference to the relevant commercial context and the terms of the contract in which the duty is to be found. It will comprise at least a duty to act honestly but may, depending on the factual background, extend to wide obligations of fidelity to the bargain which had been made, not undermining that bargain or the substance of the commercial benefit, and prohibit cynical reliance on the black letter of the agreement. In an appropriate case, the obligations may be wider enough to limit a party's freedom to act in its own best interests.
- ABM referred also to Al Nehayan v Kent [2018] EWHC 333, a case about an implied term of good faith, in which Leggatt LJ summarised the usual content of the obligation of good faith:
"175. … as an obligation to act honestly and with fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained."
- In the particular context of Joint Ventures, Leggatt LJ had said:
172. Hewitt on Joint Ventures (6th Edn, 2016) at paras 11-09 to 11-17, a book edited by practitioners who specialise and have extensive experience in this area of commercial activity, contains a lengthy and helpful discussion of duties of good faith between joint venture parties. I note with interest the authors' conclusion that "'good faith' and 'fair dealing' are concepts that at root seem entirely appropriate to very many joint venture relationships" and that:
If findings of fiduciary duties in the fullest sense between joint venture parties will continue to be rare, principles relating to 'good faith' seem to fit a relationship between parties to a joint venture where mutual trust and commitment are crucial to the success of the venture …"
See Hewitt on Joint Ventures (6th Edn, 2016), para 11-17."
- The latest edition in respect of the same text of Hewitt says at 11-17:
"principles relating to good faith seem to fit a relationship between parties to a joint venture where mutual trust and commitment are crucial to the success of the venture – and often explicit in the terms establishing the relationship at the outset. (Indeed, irrespective of the formal legal analysis as to enforceability, one should not underestimate the importance of such expressions of trust, good faith and commitment to the relationship between the parties)…good faith and fair dealing are concepts that at root seem entirely appropriate to the very many joint venture relationships..."
- I have set these submissions out in full because I understood them to be uncontroversial and, in any event, I consider them to be correct. The one qualification which Mr Lewis KC, for Matière, was keen to emphasise was that, by reference to Re Compound Photonics Group Ltd at [173], merely acting in self-interest or without fidelity to the bargain would not amount to a breach of duty of good faith unless the effect of it was to undermine or substantially reduce the value of the contract (my emphasis). I do not agree that breach can be assessed by reference to its actual effect if that was the intent of the submission. As Mr Streatfeild-James KC submitted, that would confuse the obligation with breach and causation. In fact, [173] says:
"Vos J then referred to the New South Wales case of Overlook v Foxtel [2002] NSWSC 17 ("Overlook"). As a preliminary matter, Vos J commented at paragraph 238 that the particular relevance of the Overlook case was that it dealt with the inter-action between an obligation of good faith and the parties' pursuit of their own commercial or other interests. As Vos J subsequently pointed out in paragraph 243 of his judgment, this raised a particular type of issue as to the extent to which a good faith clause might inhibit the defendant's ordinary freedom to act in its own interests if to do so might render the contract worthless or significantly less valuable for the claimant." (my emphasis)
- Thus, in circumstances where fidelity to the bargain, or adherence to the spirit of the agreement, falls within the ambit of the good faith obligation, a relevant consideration may be whether the action complained of might, at the time, be expected to render the contract worthless or less valuable. Consideration of the subsequent actual effect would not be material to the question of breach.
Narrative of Events
- As mentioned above, it is neither helpful nor necessary to recite every single exchange between the participants although I have sought to take all of the evidence into account. The narrative is largely chronological. From that chronology I have extracted, and dealt separately with, two self-standing topics, namely the Luton Airport project and fire testing.
- In 2017, a project manager at Eiffage who had worked with Matière on Le Mans Rennes project approached Matière's M.Villaret to provide an indicative costing if EKJV were to employ Matière as subcontractor in respect of the pre-casting for the Green Tunnels Project for HS2. M.Blanc put together a budget, which was not a fully costed proposal, in the order of €7m. It assumed the use of a temporary factory for the casting. Temporary factories are sometimes referred to as 'flying factories'. Matière had no experience of pre-casting in the UK and M.Matiere thought of Sean Minihane of ABM as a potential partner for this job. Matière and ABM had already had a long-standing and profitable relationship on other projects, their relationship having started as long ago as the early 1990's. Matière explained to ABM that an indicative estimate had been given. The parties agreed to work together to get a more realistic English price.
- For some time before this opportunity arose, ABM had been looking for a possible permanent site for the expansion of its own business and concluded that this would be best obtained and set up on the back of a particular job. ABM's existing permanent factory in Tuxford was not large enough to accommodate the proposed Green Tunnels Project. Scunthorpe had been identified as the principal focus for such a site. The proposal to use Scunthorpe as the pre-cast factory on this project had been in existence from at least March 2018. Mr Sanderson explained that careful consideration had been given to this and that particular site had been identified. There was no secret about this. There was a presentation to Matière about it in October 2017 and a visit to the proposed Scunthorpe site by EKJV in December 2017. Factors relevant to the evaluation of the Scunthorpe site included its nature and location, the availability of labour, the supply and storage of materials and transport to the Green Tunnels locations.
- In November 2017, Matière and ABM signed a Memorandum of Agreement through which they agreed to work together in respect of the tender for the Green Tunnels Project. It is unnecessary to refer to its terms because the parties agreed that it would be replaced by a consortium agreement or Joint Venture agreement in due course.
- In mid-2018, there was some suggestion that Stanton Bonna, a French company, might also become involved, so as to share the manufacturing workload. This suggestion had initially come from Eiffage and was made to M.Matière. ABM was informed of this suggestion. Despite neither ABM nor Matière being keen, this option was further explored by both Matière and ABM visiting Stanton Bonna together and separately. This was in about July 2018. In the end, nothing came of this suggestion because Stanton Bonna was not sufficiently interested. Below, I make further findings about the interaction with Stanton Bonna in this period.
- After this suggestion ran into the ground, M.Blanc explained that the tender process then continued on the basis that the work would be completed by ABM and Matière only.
- In August 2018, Matière and ABM jointly replied to an Invitation to Tender for the Green Tunnels Project for Lots C2 and C3. They described ABM Matière JV as an unincorporated joint venture. The Executive Board comprised Sean Minihane and Phillipe Matière. The tender unequivocally identified the proposed manufacturing facility as being located in Scunthorpe and explained why. It was said that a planning application had been submitted on 17 July 2018 and, subject to consent, construction of the factory would commence in early 2019 and be complete within six months.
- In January 2019, Matière and ABM entered into the Consortium Agreement.
- On 28 January 2019, a Memorandum of Understanding was executed between EKJV as Contractor on the one hand and both Matière and ABM as Subcontractor on the other. It is a curious document. Not all of it is intended to be legally binding. However, the recitals identified that the Subcontractor had extensive interest and specialist knowledge in pre-cast cut and cover tunnels and was seeking the opportunity to be considered by the Contractor to carry out work on Stages C2 and C3. The intention was that the Subcontractor should assist in the production of the Main Contract Proposals (being the final proposals) for the delivery of the Main Contract Works. As ABM points out, this MOU was signed at a time when the status quo was that the pre-casting would be carried out at Scunthorpe, as mentioned in the tender.
- In or about February or March 2019, EKJV appointed Matière and ABM under a professional services contract. It carried the title: "Appointment in relation to the Provision of Professional and Specialist Knowledge and Judgement to Eiffage Kier Joint Venture in respect of the Preparation of Stage Two Proposals for Submission to HS2 for Pre-Cast Concrete Double Arch Cut and Cover Tunnels including associated Waterproofing". The agreement named Matière and ABM as "the Consultant". The recitals identify it as EKJV's strategic partner "assisting and advising the Contractor in the Preparation of Stage Two Proposals". Once again, it is right to record that, at the time of the PSC, the proposal to build a factory at Scunthorpe remained as set out in the tender.
- An early sign of possible concerns about Scunthorpe within EKJV was given in M.Blanc's email of 2 April 2019. He reported that Mr Swift was not in favour of the Matière/ABM pre-cast solution and preferred a CIP (meaning 'cast in place') solution. An expressed concern was the length of time and prior work that would be required for an off-site factory. Mr Sanderson replied to M.Blanc that time and resources continued to be spent on factory costing and planning. At an informal meeting on 10 April 2019, Mr Swift said that Matière/ABM's position was "extremely strong" and that HS2 had accepted that a pre-cast solution was the best and preferred option.
- In August 2019, the Prime Minister ordered a review of HS2's future. Pending that review, work on the bid to EKJV did not stop.
- Offers 5 and 6 were submitted by Matière/ABM in September and October 2019 respectively.
- On 15 November 2019, Mr Sanderson of ABM produced an initial proposal for financing the proposed factory at Scunthorpe which he sent to M.Martin at EKJV. He expressed enthusiasm for progressing the development of the plant and proposed a separate agreement might be entered into with EKJV in respect of it. The scheme was a land purchase by ABM, rental to EKJV, construction funded by EKJV and buy back by ABM at the end of the project.
- On 27 November 2019, there was a meeting between EKJV, ABM and Matière. Difference of views about the factory funding and location were expressed. M.Martin thought a temporary factory at the site may be better but Mr Gida, a more senior person within EKJV, reported that HS2 was in favour of the joint venture plan to undertake the pre-casting off site so as to spread the benefit of the project.
- Approved commercial terms for the land and factory at Scunthorpe were provided by EKJV on 12 December 2019 but these were not acceptable to ABM or Matière.
- A meeting took place on 17 December 2019 between EKJV, ABM and Matière. A delta in the ABM/Matière prices of £35m was identified. Focus on bridging the gap was required. It was recorded that ABM/Matière was now included by EKJV as a key supplier/subcontractor. Factory funding and construction was also discussed.
- The next day, Mr Buckley of ABM provided M.Martin of EKJV with a proposal for the factory funding including a model. On the following day, 19 December 2019, a commercial meeting to discuss this took place. EKJV did not accept the proposal. EKJV emphasised that the £12.5m cost for the factory was very high and had continued to increase from the beginning of the discussions.
- In early January 2020 Mr Rossignol of EKJV raised a suggestion of whether a flying factory close to the Green Tunnels was a good idea. M.Matière told Mr Minihane about this. Mr Minihane emailed M.Matière to say it would need to be considered if requested but that it was not a good idea for reasons he gave. He said they needed to stand together in their JV on this and explain to Eiffage that, whilst alternatives would be reviewed, the best proposal was the one which had been worked on for two years now, i.e. a permanent factory at Scunthorpe. ABM submits that, if Matière had followed the approach of standing together at this point, there was every likelihood that the idea of reconsidering a flying factory would have died then and there. I do not agree. It was inevitable that this feature of the project would be revisited at some point. From the outset, there had been concerns about it and, rightly or wrongly, it was part of the difference in the bid cost which would always have had to be resolved.
- On 14 January 2020, Mr Sanderson reported internally that he had taken a call from someone at EKJV in which he was told that an instruction for the land purchase at Scunthorpe had been issued. (In fact it was later clarified that it had not been released but was due for issue). The terms upon which the purchase may occur were discussed internally.
- On 28 January 2020, Mr Minihane sent M.Matière a draft mobilisation contract which EKJV had sent him. He described it as "good news" showing "serious intent on their behalf". He said the signal was good that EKJV was finally willing to commit to issuing some instructions. The attachment was a letter from EKJV dated 24 January 2020 which set out terms but envisaged subsequent agreement on a Mobilisation Contract. The letter itself was not a commitment to enter into a Mobilisation Contract or a subcontract with the ABM/Matière joint venture.
- I interpose to say that ABM's case is that this was the last period when it was virtually certain that ABM/Matière would succeed in winning the subcontract and that it would have been on the basis of a new factory at Scunthorpe. As I have said, however, doubts about a factory at Scunthorpe had been raised by various individuals within EKJV for a few months now.
- For the reasons I shall in due course explain, I largely agree with M.Vignon that "everything" (by which I believe he meant the downfall of the ABM/Matière JV) started on 12 February 2020, accelerating after 17 February 2020 with the development of alternative options.
- This aspect of the chronology begins with a meeting between EKJV and ABM/Matière which was proposed for 7 February 2020 but was rearranged for 12 February 2020. There are minutes of the meeting in Birmingham and various witnesses were asked about it. The Oakervee Review on the future of HS2 had been published. It concluded that HS2 should proceed in full. This was reflected in the minutes. The terms of the mobilisation for the land purchase at Scunthorpe were discussed. Discussions included the provision of an advanced payment bond of £10m to £15m which Matière/ABM would be required to repay. Matière/ABM was also asked to clarify the total budget within their 6th Offer so that EKJV could see where the cost of the factory was within the price. At this point there remained a significant financial gap between ABM/Matière's bid price and EKJV's budget of c.£35m although this is not mentioned in the minutes.
- There are differences in recollection about the meeting. Mr. Minihane's evidence was that EKJV requested a review of having a temporary factory in Scunthorpe. He recalled many and varied considerations being discussed but not their detail. He did not specifically recall temporary or flying factories in other locations being mentioned. I accept M.Vignon's evidence that there was some discussion, albeit more limited and less trenchant than he suggests, about other sites on which a temporary factory could be set up in locations other than Scunthorpe. M.Matière said that EKJV clearly disagreed with the notion of a permanent factory at Scunthorpe and that this meeting was the point at which it became clear to him that they were on the cusp of losing the project. I reject the suggestion that Matière/ABM was in that position. In my view, M.Matière overplayed the extent to which EKJV was openly hostile to the permanent factory at Scunthorpe at this point.
- Of greater potential significance is what happened just after the meeting. The evidence about that was controversial. M.Matière says he spoke with Mr Lowery of EKJV, who had not been at the meeting, but who expressed particular concerns about the cost of the Scunthorpe factory. M.Vignon says that, whilst he was not party to any relevant conversation with anyone from EKJV, M.Matière later reported to him that, on their way to lunch after the meeting, M.Martin and M.Garnier of EKJV had discussed with him the price of the permanent factory and wanted to push instead for a temporary factory at a cheaper price. M.Matière reported to M.Vignon that he had said he would look into it. He gave an indication that a cheaper option could be obtained.
- I am satisfied that M.Vignon was accurately reporting to his colleague, M.Villaret, on 17 February 2020 that EKJV "has a serious problem with ABM and their precast factory". I am also satisfied that M.Matière had given an indication to EKJV that an alternative solution, in the form of a flying factory, would be cheaper. That was an inappropriate thing for him to have said without first discussing it with ABM.
- A factual issue had been whether the initial suggestion of any alternative to a permanent factory at Scunthorpe first came from Matière (the making of which, on ABM's case, would have amounted to a breach of the Consortium Agreement) or from EKJV, with Matière merely aligning itself with the suggestion by offering to investigate alternatives (which may still amount to a breach but where causation may be an issue). The end result was the same, namely that other options were to be investigated. Nonetheless, I conclude that the post meeting discussion about temporary factories other than at Scunthorpe was first raised by Matière but only because it had just been openly discussed by EKJV at the meeting. There was a considerable financial gap between the parties and this appeared to be one way of making inroads into it.
- ABM's submission is that M.Matière's private conversation with Eiffage in which he indicated that he would support a different scheme from that involving a permanent factory at Scunthorpe, caused a change of heart within EKJV and the slow-down in the negotiations which followed. I do not agree. This was a view which EKJV was in the process of reaching of its own accord. Matière did not cause EKJV to change heart.
- On 17 February 2020, M.Martin emailed M.Vignon and Mr Sanderson to discuss the issue about the factory location. He posed two options: continuing to progress the permanent factory including the commercial terms on which that may be carried out; or proposing an alternative solution in the form of the initial plan back in 2017, namely a light flying factory. It suggested that a decision was an urgent action. I would regard this email as an open and clear hint to ABM (and Matière) that M.Martin would prefer a flying factory.
- M.Vignon's internal email to M.Villaret of 18 February 2020 reported that there had been huge discussion at Eiffage about the price of the ABM factory. He said that Eiffage had been complaining about ABM's price and their aggressive behaviour in negotiating the contract. I agree that this reflects what Eiffage thought. Eiffage was only part of the JV but, looking at later emails, it seems M.Vignon's reference to Eiffage was shorthand for EKJV. He identified a Plan B, which was to reduce the scope of ABM's work by removing the prefab plant from their scope. M.Vignon told M.Villaret of EKJV's Plan B, to reduce ABM's scope, but not to inform ABM about the Plan. It would result in ABM providing a management service for the plant. M.Vignon explained that he was working on this without ABM's knowledge.
- This email reinforces my conclusion that the initial source of open suggestions about other sites discussed at the meeting was EKJV but, in any event, EKJV would have hardly needed persuading for Matière to look into them. I am also clear that the investigation by Matière into Plan B was done without ABM's knowledge. Insofar as M.Matière suggested otherwise, I reject his evidence.
- On 19 February 2020, M.Vignon emailed M.Villaret and M.Blanc about the fire test. Written in French, it says that EKJV was looking very seriously at "descoper" ABM. This was translated for the purposes of the trial as "taking down" ABM but, having understood the context, I consider it is a reference to the reduction in ABM's scope, as mentioned in the email of 17 February 2020. At that point, it was not a suggestion to remove ABM from the proposed subcontract entirely. The email confirmed, as I believe to be the case, that M.Vignon had been asked to work on a comparative cost analysis between the ABM plant at Scunthorpe and Eiffage's Plan B. That this request was being implemented without ABM's knowledge is clear from the final line:
"The situation is "bizarre", Ek asks me to work against our JV. Let's hope ABM doesn't find out."
- On 20 February 2020, M.Vignon emailed M.Villaret internally. The email, entitled "Warning signal from Eiffage", said that he was receiving a lot of warning signals regarding ABM. M.Vignon reported on the request that he work on the alternative option to Scunthorpe, which promised some very substantial savings. He reported that the issue was now a wider one than the mere question of where the factory would be located but went to the very point of whether ABM would be retained at all. Kier had seized on the concreting problem (part of the fire test) to warn Eiffage that they had "massive problems with ABM" at Luton Airport in terms of quality and delivery. He had heard discussion that "ABM could be rejected from this project" but that "the good news is that EK will keep Matière for the installation, waterproofing but also the management of the production of the precast elements.".
- M.Vignon described the idea of replacing ABM entirely as Plan C. He says, and I accept, that Plan C was being driven by Kier. After the February meeting, M.Vignon began discussing Plans B and C more explicitly with M.Martin and M.Garnier. Options considered by him included a temporary factory in a warehouse near Banbury and at Greatworth near Brackley. These enquiries took some time and M.Vignon did not have the resources to make them alone. EKJV itself prepared a pack of materials and cost estimates for him and asked him to comment on them.
- As part of the investigation into Plan C, M.Vignon contacted an alternative pre-caster to ABM, namely Pacadar, whom he had encountered previously. The enquiry of Pacadar by two emails of 3 March 2020 was a clear example of Plan C in action. M.Vignon invited Pacadar to quote for the ABM works, including the setting up of a precast factory in Banbury. Appendix 3, the Bill of Quantities, contained confidential details of the pre-cast design, unit by unit, together with a schedule of production. In essence, it contained all the information which a competitor to ABM would need to produce a rival price for ABM's work (except ABM's own prices). M.Vignon accepted in cross examination that this should never have happened. He was right in this respect.
- M.Vignon was pressed to accept that this enquiry was made by him on behalf of Matière but he resisted that. He said he was in the EKJV office, that they asked him to contact Pacadar and organise it and he did what he was asked by EKJV. I accept that, at this specific point, M.Vignon did not tell Matière or, for that matter, ABM that he had contacted Pacadar. But that is of no consequence because, by email dated 6 March 2020, M.Vignon told M.Matière and M.Blanc in terms that he had been asked to look at both Plan B and Plan C. In that email, M.Vignon told them both that Kier wanted to remove ABM from the equation and to keep Matière. He told them he had been asked to contact a new pre-caster and new supplier. Neither of them suggested in a reply email that M.Vignon should not have done this, or that he should not continue to pursue that line of enquiry. As M.Vignon accepted, M.Blanc and M.Matière had known about aspects of this for some weeks already.
- In a question, to which he never got a written answer, M.Vignon said:
"My question is: ….How far are you prepared to go? Are you prepared to save ABM but have the factory in Banbury? Are you prepared to abandon your partner ABM in favour of a new sub-contractor? EK asked me these questions; I replied that Matière does not and cannot carry out the project alone; cannot manufacture the green tunnels precast elements alone."
- On 6 March 2020, M.Vignon also contacted Cemex in connection with the possibility of setting up a precast yard in Banbury. The scheme envisaged was a different, separate way of doing the pre-casting. The enquiry was marked confidential and Cemex was told that ABM was not in the loop. An offer for this Plan B was invited. M.Vignon admitted in cross-examination that he had made this enquiry at EKFB's request and "it was not good to do it". When asked why, he admitted that:
"I was working somehow against ABM and ABM/Matière interest, the JV I mean."
- I agree that is exactly what M.Vignon was doing. M.Vignon spoke tellingly of his discomfort undertaking this work in secret, and him being unable, first, to tell Mr Sanderson of it when they were together and, second, to tell Mr Buckley of it even though he was sitting next to him.
- On the other hand, Matière did not hide EKJV's unhappiness with the Scunthorpe proposal from ABM, nor the idea that cost estimates for an alternative scheme were being sought. Instead, it passed on "indiscretions" about Eiffage/Kier's thinking. M.Blanc described "indiscretions" as something that Eiffage had told Matière only, by way of information. On 6 March 2020, M.Blanc emailed Mr Minihane to tell him that:
"It is obvious today that Eiffage and above all Kier is unfavourable to the installation and construction from scratch of the precast plant as you envisioned it In the North East of England.
Eiffage/Kier JV seems to consider that the investment is too important and that more economical solutions exist and need to be considered. Eiffage/Kier also thinks that by reducing transport distances, substantial savings will be made at the logistical level. It's hard to contradict them.
For your information, Eiffage/Kier has evoked a precast plant in Banbury which is 12 km far from the first two tunnels to be built. Eiffage/Kier plans to rent directly this warehouse. According our Eiffage contact, there is enough space for the precast green tunnels. It seems that there are also office spaces where EK plans to set up their main office.
Eiffage wanted us to work on the cost estimate for this plant and to compare with the solution we have proposed including logistics
Personally I think that, like Judo, we should push together on the way Eiffage wants or the risk is to be excluded definitively from this project. Phillipe MATIÈRE had sensed this reaction on the part of Eiffage-Kier who for the past 6 months has been making many allusions to the costs required for the installation of the precast plant.
We are all aware that Eiffage-Kier's sole objective is to reduce costs because obviously we are not in the budget announced to HS2."
- M.Blanc said in evidence that the information conveyed here was already known but the situation had worsened. I agree. ABM submits that elements of this email were misleading. In my judgment, whilst there were features of the narrative which were not explained in the email (namely that it stopped short of saying, in terms, that Kier would like to remove ABM from the equation completely but keep Matière, and that alternative cost estimates were actually being procured by Matière from ABM's competitors) this email to Mr Minihane told him pretty much everything else that was going on in the minds of EKJV.
- On reading this important email, Mr Minihane should have appreciated that there were real risks to the JV if ABM was to persist with the Scunthorpe factory. Alarm bells should have sounded when words such as "excluded definitively" were used. Mr Minihane merely replied that the update was "disappointing" and that more work was required to evaluate the costs and risks. He said he was happy to look at the costs and risks of the alternatives.
- Mr Minihane did not comment on this email exchange in his witness statement and was inclined to minimise its significance to the narrative in his oral evidence. In my view, he was wrong not to take the warning of definitive exclusion from the project sufficiently seriously at the time. ABM submits that it was wrong and unfair for Matière to criticise Mr Minihane for regarding the position as generally positive in circumstances where Matière was deliberately withholding information about what was actually happening from ABM. I disagree. What was being withheld by Matière was, I accept, a more developed position along a road without ABM but the central threat to the viability of the JV if the Scunthorpe proposal was maintained was sufficiently clear and, yet, was seemingly downplayed by Mr. Minihane.
- At about this time, Mr Sanderson called M.Vignon. He was upset that M.Vignon had been deceiving him and asked what was going on. M.Vignon gave a verbal explanation but followed it up with an email dated 10 March 2020. M.Vignon accepted that the email explanation he gave in the email was, itself, a lie. That was because, within it, he covered up the extent of what he had been asked to do. WhatsApp messages between Mr Sanderson and Mr Minihane at that time considered next steps. Mr Minihane wanted to show EKJV that adding the factory cost was not such a big deal. The extent of secrecy on the Matière side led Mr Sanderson to say of their pairing: "some JV!!!".
- M.Vignon met with Pacadar on 10 March 2020. Notably, EKJV also attended, namely M.Martin and Mr Meadows who was the precast and concrete manager at EKJV. This was at the Banbury site.
- On the same day as the visit to Banbury, M.Martin sent the ABM/Matière JV team some details of the Banbury depot, asking whether the units could be manufactured there. Internally, Mr Minihane circulated this within ABM, suggesting that any contrast with Scunthorpe which could be made in respect of planning, cost etc. would be good. This was a signal to his own team to highlight the benefits of Scunthorpe at the expense of the Banbury option, wherever this could be done. On the same day, Mr Minihane emailed Mr Lowery and Mr Gilbert to say that the proposed alternative (at Banbury) raised many questions over its suitability. In other words, he was openly and privately pushing back on anything other than a permanent factory at Scunthorpe.
- Pacadar discovered that ABM was actually in a joint venture with Matière and, on 18 March 2020, sought an explanation from M.Vignon. M.Vignon replied with an explanation which was not an honest one. In the end, M.Vignon emailed them to tell them in broad terms at what price they should be aiming, projecting:
"a potential of £20/25 Million gross margin (fee) for you guys"
- That led to this exchange in the evidence of M.Vignon:
"A. It is not good?
Q. It is more than just not good, it is rather bad, isn't it. Were you working for the joint venture at this stage or against them?
A. Against."
- M.Blanc suggested that contact with Pacadar behind ABM's back could be justified on the basis that it was in the joint interest of the Matière/ABM JV to have a price against which it needed to be more competitive. M.Matière said something to similar effect. I do not accept that as a coherent explanation or retrospective justification for what M.Vignon did.
- M.Blanc and M.Matière denied that M.Vignon's implementation of the Plan C investigation, namely the replacement of ABM entirely, was done with the approval of Matière. In my judgment, Matière was plainly aware of Plan C from no later than 6 March 2020 and could have put a stop to Matière's participation in it had it wanted. It did not want to and did not do so.
- On 13 March 2020, Mr Lowery the overall director of the Main Works Civil Contracts, wrote to Matière/ABM JV, and Mr Swift, in respect of the pre-cast factory. He made two important points. First, that EKJV could not move forward until the delta between the budget and the current forecast had been resolved. Second, that his view was that:
"I am not a factory or a precast expert, however, I would expect that we have the best chance of success the closer we are to our operations."
That was not an expectation which was supportive of the Scunthorpe proposal. He asked for an assessment of the factory and pre-casting strategy, a revised commercial model and alignment of the ABM/Matière offer. It was a signal from a senior person at EKJV to move away from Scunthorpe and reduce the bid price. In cross-examination, Mr Minihane down-played the significance of this email, merely saying that it raised some interesting considerations which would have to be considered. In his reply to Mr Lowery on the same day, copied to others in the chain, Mr Minihane pointed out the advantages of Scunthorpe ("designed to handle the scale and size of this large project") and the problems with Banbury ("Banbury does not have any of these advantages"). He expressed willingness to look at alternatives and to review prices. He expressed full commitment of both ABM and Matière to reach agreement with EKJV.
- Internally within ABM, however, Mr Minihane expressed caution about giving EKJV too much information on the cost of cranes and moulds given that EKJV was keeping open the prospect of alternative plans. He encouraged his colleagues, Mr Buckley and Mr Sanderson, to be very strong on convincing them of Scunthorpe and to:
"continue to denigrate the unrealistic prospect of casting outdoors".
- In short, whilst openly ABM agreed to look at alternative options, the reality is that it was implacably wedded to Scunthorpe.
- ABM developed an idea that it would buy back the factory from EKJV at the end of the project for the sum of £7.25m on the basis of which Mr Swift personally opined that the decision had swung back to Scunthorpe. In the event, that option was not pursued for reasons that Mr Minihane said he could not recall.
- On 18 March 2020, M. Vignon emailed M.Matière, M.Blanc and M.Villaret to say that ABM had learned that he was working on Eiffage's Plan C. His email included the following:
"ABM has learnt that I'm meeting with Pacadar to ask them for an offer for the prefabrication of the tunnel elements….Should I have said No to Eiffage-Kier? But on the other hand, nobody in Matière asked me to stop….Now ABM is asking me to justify my action."
- In a telling reply, M.Matière said:
"You have done nothing wrong."
- On the same day, M.Matière emailed Mr Minihane and asked for an urgent discussion. He forwarded an extract from M.Vignon's email which reported that Eiffage/Kier was looking into Plan C for prefabrication without ABM, mentioning Pacadar. The subject title of the email was: "Eiffage Kier Plan C sans ABM". In reply, Mr Minihane said this was a shock. He asked that Matière acted in the spirit of the JV agreement which they had signed. He said the two of them should win the job together or not at all, and that this required much closer cooperation and better communication. He said:
"As we will look together at alternatives including site cast options, I also need your continued full support for the option of the Scunthorpe factory, which we have together proposed and worked on for the past 3 years. To me this option presents the most security for us and the least risk of failing on this massive project."
- On 23 March 2020 there was a Teams meeting between EKJV and ABM to discuss the Gateway 6 price. Minutes of the meeting were forwarded to M.Vignon by Mr Sanderson who explained they had been dragged into an exercise to re-study the price on new assumptions and facts. The figure passed to HS2 Ltd in respect of the Green Tunnels element was £165m.
- It is appropriate for me to summarise my key factual findings at this point in the chronology:
(a) As early as April 2019, it was apparent that there was no uniformity of view within EKJV about having a permanent factory built at Scunthorpe. This was despite it having formed part of ABM/Matière's response to the invitation to tender.
(b) The first developed notion of not having a permanent factory built at Scunthorpe, despite that having been the basis of the ABM/Matière JV bid for many previous months beforehand, was raised by EKJV in February 2020. Without discussing it with ABM, Matière went along with the suggestion by agreeing to look into other options and positively indicating that those other options would probably be cheaper.
(c) Matière then shared with ABM some of EKJV's dissatisfaction with the Scunthorpe factory proposal but, at first, did not tell ABM that it was actively investigating either Plan B (production at other sites, and reducing ABM's scope) or Plan C (replacing ABM entirely).
(d) The period between the evolution of Plan B and Plan C was very brief. This shows that, whilst EKJV's dissatisfaction with a permanent factory at Scunthorpe was the initial factor which undermined the Matière/ABM JV bid, a significant further feature was the involvement of ABM itself. On the question of causation, it is highly material that Plan C was EKJV's own suggestion.
(e) ABM was given warnings directly from EKJV that it was unhappy with the proposal to use Scunthorpe and it was directly encouraged to look at other sites. Warnings also came from Matière. ABM was ultimately made aware of Plan C and, ultimately, even told of it by Matière.
(f) Both Plan B and, especially, Plan C were plans which operated against the interests of the Matière/ABM JV. That is because they involved reducing ABM's scope or removing ABM from the Green Tunnels project. The pursuit by Matière of those plans was against the interests of the JV.
(g) The contact with Pacadar was part of Plan C, which plan had been initiated and encouraged by EKJV. Very soon after contact had been made with Pacadar, M.Vignon told M.Matière about Plan C and what he was doing in that respect. Matière never told him it was inappropriate to pursue this route or that he should stop it. Matière, as a company, was therefore endorsing M.Vignon's conduct although the initial request to pursue this route had come from EKJV. Indeed, M.Matière told M.Vignon he had done nothing wrong.
(h) Throughout the whole period from the meeting in February 2020 onwards, Matière was plainly trying to ride two horses at the same time. Thus, it tried to warn ABM that both of them might lose the subcontract if ABM was wedded to the Scunthorpe factory. This was to encourage ABM to soften the line adopted by Mr Minihane that it was the right (and only) course to adopt. If Matière had succeeded in persuading ABM of this, it would have increased the prospect of an award to Matière/ABM JV of the subcontract but, even then, may not have been enough to do so. On the other hand, knowing that EKJV wanted to work with Matière whatever happened, Matière was also keen to placate EKJV and, to the extent needed, to do its bidding. That involved both looking into alternative factory proposals (Plan B, descoping ABM) and dropping ABM entirely (Plan C). Viewed in that way, it is unsurprising that M.Matière never provided a written response to the question of "How far are you prepared to go". He and his company wanted to keep both options open.
(i) Mr Minihane was far too optimistic in his persistence with the Scunthorpe factory and advising strongly against other options such as Banbury. The prospects of ABM ever being retained, let alone on a basis that did not include Scunthorpe, were already in doubt from mid-February onwards. That over-optimism was not a product of Mr Minihane being told half-truths, and untruths, by Matière though both were undoubtedly the case. He was seemingly blind to the fact that EKJV, and Kier in particular, did not want ABM involved at all and that the financial gap between their price and that which EKJV had tendered for the work was too large. The general consensus (amongst everyone except for ABM) was that the Scunthorpe factory proposal was an area in which that gap could be reduced. Mr Lowery, the managing director and team leader, was concerned about it. ABM did, at least, agree to look at options other than Scunthorpe but was both privately, and openly, undisposed to the temporary site at Banbury. Overall, Mr Minihane was not paying sufficient regard to the risk that the entire JV could be excluded definitively from the subcontract.
(j) The absence of active support from Matière for a permanent factory at Scunthorpe (and even its direct investigation into alternative options) was not the reason that EKJV was not disposed towards Scunthorpe. Mr Minihane himself repeatedly sought to advance the cause of Scunthorpe to EKJV. Mr Minihane said this in evidence:
"And it was my strong contention, as I laid out repeatedly to many people, that any alternative temporary/flying factory wasn't suitable."
Despite that, it appeared to have no real impact. I cannot conclude that any active support of Matière for a factory at Scunthorpe would have made any difference in the eyes of EKJV.
- ABM submits that, at the start of April 2020, a decision appeared to have been made by EKJV that ABM/Matière JV should be appointed and that Scunthorpe should be the chosen site for pre-casting. It relies on some of the exchanges identified below to support that submission. I do not accept the position was as clear or settled as ABM suggests.
- ABM's Stage 1 report into alternative pre-cast sites was issued on 3 April 2020 and summarised to ABM/Matière in an email of that date. Mr Minihane forwarded it to Mr Swift of EKJV on the same day. On 6 April 2020, Mr Minihane emailed M.Blanc, noting that the decision about what to do rested with EKJV. Mr Minihane also noted that EKJV wanted the Matière/ABM JV to reduce its price by £30m but "this will not be possible".
- Also on 6 April 2020, M.Vignon emailed internally within Matière to report that EKJV had signed its contract with HS2 Ltd. Amongst the recipients was M.Prigent, a lawyer at Matière. As I detail below, the contract with HS2 Ltd contemplated that the Green Tunnels work would be undertaken by ABM/Matière JV using the facility at Scunthorpe. This necessarily required consideration to be given to the terms of the subcontract. In the email, M.Vignon set out the principal terms thereof, including that it was to be a JV with ABM, albeit one not yet formed, on NEC3 type C 'cost + fee' basis. In cross examination, M.Vignon accepted that the decision by EKJV to enter into a contract with HS2 Ltd on the basis described meant that, after a lot of work had been done by him and EKJV, a decision had finally been taken that the work would be undertaken in a Matière/ABM joint venture based at Scunthorpe. He agreed the expectation was that everything was going to go towards Scunthorpe. For reasons I give below, I doubt his evidence on these points is correct.
- On 8 April 2020, Mr Minihane offered Mr Swift two options: to proceed with the Stage 2 report into alternative pre-cast sites or to focus only on Scunthorpe. From those two options, Mr Swift told Mr Minihane not to proceed further with alternative pre-cast sites. He said focus needed to be on Scunthorpe and confirming the price for that. He said further focus should be on reducing the target price. In light of that, M.Garnier at EKJV emailed Mr Sanderson in order to understand what the price of a factory at Scunthorpe would be. Although a moving target, the idea was to have a mobilisation contract and an advance payment secured by bond.
- As M.Vignon explained, Mr Swift's suggestion to focus on Scunthorpe was not the uniformly held view within EKJV. Whereas that was Mr Swift's position, others within Eiffage, such as M.Garnier, M.Martin and M.Rossignol, had a different view on the merits of Scunthorpe.
- On 14 April 2020 M.Matière emailed Mr Minihane with reference to Mr Swift's email about Scunthorpe. He warned:
"What is written is that mail is clear. What is their real position is not clear.
…
The most important for me at that time is that we have a major issue: we do not agree with E.K. on the sales price of the tunnels! And we cannot keep working as if we had that agreement!
We also know that their are looking for alternate solutions for the precasting of the concrete elements."
- The email warned that the price needed to come down and the location of the pre-casting was secondary to that and, unless price was addressed, "we are working for nothing". He apologised for being brutal and rude. In his reply on the same day, Mr Minihane said he accepted these points in good faith. He said he agreed "we need to 'tie-in' EK to Scunthorpe" (which was not what M.Matière had been saying). He hoped that, with further work he described, M.Matière's "valid concerns" would be satisfied. He said they needed to be honest with each other especially where they had differences of opinion.
- The Notice to Proceed to Stage Two, being the instruction from HS2 Ltd to EKJV to deliver, had been anticipated by the end of March or early April. In due course, it was issued to Mr Lowery of EKJV on 14 April 2020, whereby HS2 accepted EKJV's Final Proposals for Stage Two letter dated 31 March 2020. The letter instructed EKJV to continue to design, execute, construct, commission and complete the works in accordance with the Agreement. The Contract Data which accompanied the Notice to Proceed identified ABM/Matière JV as a "key subcontractor" in respect of the Pre-cast Green Tunnels activity. It also described a Green Tunnels pre-casting facility at Scunthorpe as one of the working areas.
- In his witness statement, Mr Minihane said that, to him, these factors "spoke volumes as to the confidence of HS2 and EKFB" and that he really thought it meant "game on". If that was his view, I consider he was wrong to hold it. Given the actual state of play between EKJV, Matière and ABM, those parts of the Contract Data to which I have referred might fairly be said to be unreliable and far less certain than they appeared. However, it is, perhaps, commercially understandable why EKJV had chosen not to inform HS2 Ltd of the actual position, particularly as it was still in the process of establishing who would be undertaking the works and, allied to that, where the casting would take place. Revealing those 'domestic' uncertainties to HS2 Ltd might have risked creating a negative impression over the reliability of its own bid. It is for that reason that I do not accept M.Vignon's evidence that a decision to employ ABM/Matière in a JV using a facility at Scunthorpe had actually been made by EKJV at this point. Behind the scenes there were other indicators to the contrary. I would accept, though, that M.Vignon may have assumed such a decision had been taken. In any event, M.Vignon's evidence was that, after that, the position changed anyway, perhaps two or three times.
- On 15 April 2020, Mr Lowery wrote to Mr Minihane and M.Matière to tell them about the Notice to Proceed to Stage 2. He thanked them both for their dedication and application in reaching that milestone and for their considerable efforts in achieving an objective that he said had been the primary focus for some time. Noting a need to bring a swift and clean close to negotiations and contractual issues, he identified a significant 8 to 12 week period ahead in which all parties needed to deliver and looked forward to closing the outstanding matters. As ABM acknowledges, it seems very likely that this was a standard form of communication to a number of proposed EKJV subcontractors. I rather doubt that Mr Lowery privately had a realistic expectation this would be achieved in the case of ABM/Matière. That did not mean that efforts should not be made to try.
- On 22 April 2020, Mr Minihane told his colleagues within ABM that he had been advised by lawyers not to sign the land letter in respect of Scunthorpe without first having the mobilisation contract in place. He accepted in evidence that, until he had reached agreement with EKJV on all the important issues such as the construction, how payments would be made in relation to the funding of construction costs, security etc., all of which would form part of the mobilisation contract, it would have been commercially imprudent to purchase the land. Matière submitted that the failure by ABM to sign the land letter at this time meant that EKJV was equally free from the commitment to indemnify ABM in relation to any losses arising where the land had been purchased and yet the Green Tunnels Project did not proceed with ABM/Matière JV. I agree.
- The ABM/Matière JV was working on Offer 7 in April 2020. Mr Minihane said that each party to the JV needed to have the opportunity to examine the other's price and discuss it before it was issued to EKJV. On 28 April 2020, M.Blanc pointed out to Mr Minihane that their two prices added together were just less than £200m, which was very far from EKJV's target, and that even the cost prices exceeded their target. Mr Minihane agreed and said both of them needed to look for a discount in their prices. Offer 7 was submitted on 30 April 2020. The £35m gap was highlighted in a meeting between EKJV and ABM/Matière on 14 May 2020. Of that, c.£17m was attributable to the pre-cast factory unit. About £8m was the cost of buy back of the factory which was not included in the offer.
- In the meantime, M.Vignon had been continuing his exchanges with Pacadar. On 15 April 2020 he emailed them to say he was happy to get their price confirmation the following week. He reported that Matière was not willing to use the Banbury warehouse but would rent a field near the Green Tunnels to set up a temporary pre-cast yard. In reply, Pacadar said they were content with this. Pacadar was even given a broad hint of ABM's own price. It hardly needs saying, but the pursuit of a direct arrangement with Pacadar (part of the Plan C option) was directly contrary to the aspiration that the Green Tunnel works should be undertaken in a joint venture between ABM and Matière since it left no scope of work for ABM and was allowing Pacadar to bid in competition. The dialogue with Pacadar was being undertaken with the approval of M.Matière personally. As M.Vignon said, he was instructed to do this by M.Matière who, in turn, had been asked to do so by M.Rossignol. On that basis, M.Vignon was undoubtedly acting on behalf of Matière, the company, and was not on a frolic of his own. In that respect, it is notable that, later, on 29 May 2020 M.Matière offered a face to face or virtual meeting with Pacadar in respect of the HS2 project.
- ABM submits that the dialogue with Pacadar at this time is extraordinary because it runs straight across the period when EKJV had apparently decided that it would contract with ABM Matière JV and that the factory was to be in Scunthorpe. It submits that there had been no change of direction from what had happened in February and March 2020. It submits that is also inconsistent with the instruction from Mr Swift on 8 April to focus on Scunthorpe. Whilst the dialogue was extraordinary for the reason I have given immediately above, I do not accept ABM's submission. In my view, EKJV had not yet finally decided to contract with ABM Matière JV using Scunthorpe, despite what the Contract Data used in the contract with HS2 Ltd had said. There remained significant and unresolved issues between EKJV and the proposed ABM/Matière JV. These included Kier's clear reluctance to employ ABM at all; the substantial financial gap between the price which had been advanced upstream (£165m) and the offers from Matière/ABM (£200m), which had not reduced; and the antipathy of many within EKJV, including Mr Lowery, to the use of Scunthorpe. I have earlier described the prospect of ABM ever being retained, let alone on a basis that did not include Scunthorpe, as in doubt from mid-February onwards. Since then, whilst there was Mr Swift's instruction to focus only on Scunthorpe, rather than alternative sites, and the Notice to Proceed had been issued on terms including the Contract Data to which I have referred, the doubt had materially increased. It is also worth pointing out that, if ABM's premise is correct, namely that a decision by EKJV to employ Matière/ABM using Scunthorpe had been taken at this point, no (alleged) breach by Matière prior to this time would have had causative effect.
- By way of overview, the following series of exchanges in M.Vignon's evidence are important. The questioning initially arose out of the period in early April, but M.Vignon's evidence went rather wider.
"Q. So some people within the JV, even within the same company, think Scunthorpe?
A. Yes.
Q. And some people think something else?
A. I know where you are going because after we reinvestigate again this temporary factory, end of April or May, I don't remember exactly, and we stop and after it has been resurrected again in June and be stop again, and in July, it came back again. I don't know maybe two three times, four times it happened."
…
A. But once again, we get the information from one side of Eiffage, the client side…and then, at that time, from March to June let's say, ABM/Matière was working on(e) time, two times on this option temporary factory. I remember. So we have got, we receive the instruction from these people I mention. We are looking at that one, two three weeks after the other people of the EKFB JV was telling us the opposite and stop us. So it was a pure waste of time, this kind of exercise…"
…
Q. Just as there was a split in EKFB…
A. Yes.
Q. …there was also, obviously, a split in the Matière/ABM joint venture, wasn't there?
A. Somehow, yes. Somehow, yes.
Q. Because you were working with Eiffage on these ones without ABM and ABM were saying Scunthorpe?
A. Yes.
Q. So the joint venture just weren't united at all?
A. EKFB created that situation, yes.
Q. But the result of going along with it was that the joint venture was doing different things and going in different directions?
A. It was a mess, yes."
…
Q. You were describing very vocally that Mr Swift had one view. Other people within Eifffage had another view.
A. Yes.
Q. And that one day it was "let's do what Mr Swift says and then Mr Martin and Mr Rossignol had another idea"?
A. Yes.
Q. And you found, not only were you keeping all this secret from your joint venture partner..
A. Yes.
Q. …but you found you were going round in circles?
A. Yes.
Q. And you were very frustrated by that?
A. Yes."
- I regard these exchanges as telling in three respects. Firstly, because they confirm that, in the month of April and following, Matière was continuing to work on options that were contrary to ABM's interests. Secondly, because they show that both EKJV and Matière/ABM JV were internally split. Thirdly, because the pursuit of options that were contrary to ABM's interests were being driven by EKJV.
- I earlier identified that ABM's case is that a decision to appoint ABM/Matière JV with a factory at Scunthorpe as the manufacturing facility was taken at the start of April. It further submits that, sometime around the middle of May, EKJV's view changed such that progress with any contract with ABM/Matière JV was, again, very limited. Its case is that Matière's conduct was causative of that change in position. I do not accept the premise. My conclusion from the evidence is that the prospects of ABM/Matière JV ever succeeding in a bid using Scunthorpe in this period were materially in doubt but, to the extent that the prospects appeared to briefly rise in early April, they soon fell again. This was not by reason of Matière's undermining of the merits of Scunthorpe to EKJV, directly or by looking at other options.
- Returning to the chronology, I have already mentioned the meeting with EKJV to discuss the gap in price on 14 May 2020. Mr Minihane emailed M.Blanc and M.Matière on that day. He shrugged off the view expressed by EKJV as "not a surprise". He saw this as simply a negotiation, albeit one in which they, ABM/Matière, had a "fight on our hands". In cross examination he refused to accept he was not properly reading the mood music at this time. However, this was a fair summation of his position, in my view. I conclude Mr Minihane remained over-confident about the chances of EKJV accepting the use of a factory at Scunthorpe at this time.
- All parties met on 20 May 2020. EKJV said that a joint venture agreement between ABM and Matière would need to be in place and the Green Tunnel Fees agreed before any mobilisation contract could progress.
- On 26 May 2020, there was a private exchange of emails between M.Thibaut of EKJV and M.Prigent, Matière's lawyer. M.Thibaut expressed concern at the lack of progress in entering into the subcontract with the ABM/Matière JV. Based on what ABM had said, M.Thibaut doubted that a JV agreement would be concluded soon. He lacked evidence of ABM's commitment to the project. He said these were the reasons why EKJV would neither enter into a mobilisation agreement, nor the main subcontract. He asked if Matière had signed an exclusive agreement with ABM. In reply, M.Prigent said he thought both parties to the JV intended to work together but there had been a lack of organisation. He was initially unable to answer the question about exclusivity but later explained that whilst there was no express reciprocal exclusivity commitment between Matière and ABM there may be an implied one. He said the JV agreement had not been finalised because that, in turn, depended on the award of the subcontract. Mr Lewis KC submitted that M.Prigent's response was supportive of the joint venture and did not seek to undermine it. Any suggestion that there had been ambivalence or positive undermining of the joint venture would be wrong. In my view, this careful email from M.Prigent sought to keep both options open: simultaneously indicating that the JV parties intended to work together but also that a deeper conversation might be interesting, and not answering any question of exclusivity.
- On 28 May 2020, M.Vignon sent an email to his colleagues within Matière titled "Eiffage Kier doesn't want ABM – continuation of the February-March episode". It was not sent to M.Matière but he became aware of it. M.Vignon noted that only Mr Swift was aligned with Mr Minihane. He identified a change in strategy at EKJV. The change was that, not only might ABM be rejected by using clause 26 of the main contract between EKJV and HS2 but that Matière might also be dispensed with. If Matière did not support EKJV's concerns about ABM then Matière itself will have its own interests dismissed. If ABM was to stay involved then both Eiffage and Kier would be uncompromising with the JV on all aspects, such as commercial, quality and financial matters. The email ended:
"I'm just the messenger, and don't want to get involved like I did at the beginning of the year. My honeymoon with ABM is over now ABM knows that I've worked against their interests. Following Andy Swift's agreement to carry on as before after this small pause in searching for a Plan B; ABM will try to prioritise their new factory. The priority being to save Matière's interests and satisfy EK, our Customer. So you have my point of view."
- This email confirmed, if ever it was needed, that M.Vignon had been working against ABM's interests and that this was now known to ABM. Matière's attempt to ride both horses throughout the long period of negotiation appeared to have a new dynamic. The risks to Matière's future involvement were such that it was being asked by EKJV to align itself with EKJV, not with ABM.
- On 29 May 2020, there were various calls between Mr Minihane and each of M.Matière, Mr Gilbert of EKJV and Mr Swift of EKJV. Both Mr Gilbert and Mr Swift warned Mr Minihane that EKJV was reviewing its options in respect of the Green Tunnels Project because of a concern about the price and fee. Mr Minihane remained of the view that Scunthorpe was the best option and said in his witness statement that he found what they told him puzzling given ABM/Matière JV's involvement since 2017. In a demonstration of what I consider to be a complete lack of realism, Mr Minihane said about these calls:
"I did not consider there to be any threat to the ABM/Matière bid." (my emphasis)
- Also on 29 May 2020, M.Matière sent a draft email to Mr Minihane that was to be sent by M.Matière (alone) to Mr Lowery. It was sent for Mr Minihane to comment on. The draft identified discrepancies within different members of the EKJV team about the pre-casting operations conditions. It added that he, M.Matière, had got recent information telling him that EK's management could use clause 26 of the contract with HS2 to "pull ABM out of the game". It also revealed that Stanton Bonna had apparently been contacted by Mr Lowery's team.
- The latter was true but did not fairly or fully explain Matière's own participation in the contact with Stanton Bonna. On 21 May 2020, M.Vignon had sent M.Martin information to enable Bonna Sabla (the French arm of Stanton Bonna[2]) to price for works that would otherwise be undertaken by ABM, including the Appendix 3 attachment which had been provided to Pacadar. That divulged quantities consistent with the design prepared by ABM/Matière. M.Martin was asked to keep the matter between themselves. As M.Vignon said, Eiffage had wanted to get Bonna Sabla involved ever since 2017. He also accepted that seeking a comparable price from Bonna Sabla should not have happened, just as it should not have happened with Pacadar.
- M.Vignon's provision of information to M.Martin for onward transmission to Bonna Sabla so they could price in competition to ABM formed another activity within Plan C, EKJV's plan to replace ABM. M.Vignon had Matière's authority to pursue Plan C. It was plainly contrary to the interests of the joint venture between ABM and Matière for Matière to do this. In closing submissions, Matière pointed out that M.Vignon did not contact Bonna Sabla himself. Nor did he, personally, provide them with pricing information. He only provided EKJV with information it already had on its servers. Those points do not seem to me to matter. They were steps taken which undermined the JV. However, I do accept that they were steps taken at the behest of EKJV.
- Limited visibility over the fact that contact had been made with Bonna Sabla was provided to ABM by M.Matière in the email of 29 May 2020 but not Matière's role in it. The email also contained other features which concealed what had been going on. In my judgment, one of the reasons M.Matière sent this draft to Mr Minihane was in an attempt to hint strongly to ABM that there was a real risk that it (or they) would not end up being party to a subcontract with EKJV.
- The final version of the email that was sent by M.Matière (alone) to Mr Lowery on 29 May 2020 did not expressly refer to Bonna Sabla or the contractual provision that could be used to replace ABM but it did emphasise a desire to work on this project. As in the draft, it talked of echoes and discrepancies between different members of Mr Lowery's team about the pre-casting operations and the location of the factory, including whether it would be temporary or permanent, near the job site or remote. Mr Lowery's email in reply to M.Matière (alone) later the same day was an important one in the overall narrative. One of the reasons it is important is because Mr Lowery would not have known that his reply would be sent on to ABM, as it was. I regard it as an honest expression of his true thoughts. He said:
"I will be honest with you, the main issue is with ABM. We do have some commercial challenges and we do need to reduce the overall cost. However, we believe the cost issues are primarily associated with manufacture of the units.
We are looking at different options with regards to manufacture, some of which I think the Matière team may be aware. We have some serious concerns over ABMs ability to manufacture and deliver the pre cast units, both in terms of cost, efficiency and at the right quality, We also have issues with their profit expectations.
I understand this is difficult, but, I very much value our relationship. You will pleased to know that all of our considerations include Matière, and as I have detailed above, it is the manufacturing and associated factory that is our primary concern.
I am happy to arrange the video conference between our teams, and maybe we can catch up on a 1 to 1 basis to review how we can change the approach of ABM or at least discuss our options in this space."
- Transparently within the ABM/Matière JV, M.Matière sent the email from Mr Lowery on to Mr Minihane on 1 June 2020 who, in turn, sent it on to Mr Sanderson. Despite the obvious importance of this email string, Mr Minihane did not even discuss it in his witness statement. There is force in Mr Lewis KC's submission that, when preparing his witness statement, Mr Minihane simply ignored exchanges which did not fit with the optimism contained in his own narrative. In cross examination, he only reluctantly agreed that Mr Lowery's email had, indeed, expressed points of concern about ABM. Mr Sanderson was more forthcoming: he accepted this was a significant email because of the serious concerns it expressed. Indeed, he realistically accepted that by 1 June there was a clear threat to ABM's position.
- M.Matière replied to Mr Lowery that he fully shared the points made by Mr Lowery and would fly to Birmingham to meet with him to find a cost efficient solution which respected the schedule. He forwarded the email exchange internally within Matière, marked "Tres Confidentiel".
- On 1 June 2020, M.Vignon reported to Mr Sanderson that he had been asked by M.Matière to re-open the costing exercise on the airfield site, apparently at EKJV's request. Internally Mr Sanderson said to Mr Minihane that he did not know how much to believe of what M.Vignon was telling him but he was sure there was "no smoke without fire" i.e. that there was at least some truth in it. M.Matière's decision to re-open alternatives to Scunthorpe was consistent with his realisation of the change in strategy at EKJV. Although M.Matière's evidence was that the message from M.Vignon simply reinforced his desire to be part of a JV with ABM, I reject that.
- At this point in time, I conclude the position is as follows:
(a) Despite the differences of view held by individuals within EKJV, Mr Lowery (being the senior director and team leader) was reflecting the overall and senior view of EKJV in his email of 29 May 2020.
(b) His email was a clear warning that ABM could be ousted entirely from the Green Tunnels Project, since other options were being looked at and "serious concerns" about ABM were held. This was a position and opinion which EKJV had adopted for itself and was not the result of anything which Matière had secretly done either alone or in conjunction with EKJV. That the serious concerns were genuinely held, and not merely expressed as a bargaining tool, is clear from the fact that Mr Lowery did not write this in the expectation it would be passed to ABM. Mr Sanderson was right to accept that there was a clear threat to ABM/Matière at this point.
(c) On the other hand, in contrast to ABM's very precarious position, Matière's own position on the Green Tunnels Project was secure as far as EKJV was concerned.
(d) Matière revealed this precariousness to ABM itself as part of its continued attempt to warn ABM of the risks, so that it might, after all, adjust its firm position that the work should be undertaken using Scunthorpe as the manufacturing facility and make other attempts to reduce the gap in price.
(e) In forwarding on the email of 29 May, the only real missing piece of the story was that Matière did not tell ABM of its own role in actively supporting Plan C. But I do not consider that failing to pass on that additional information would have made any material difference to what actually happened.
- ABM submits that what happened in late May or early June 2020 was that Matière capitulated to EKJV entirely. In particular, it says Matière made plain it did not support the Scunthorpe proposal and did not support its own joint venture partner. In my view, that puts the position too high. Matière was riding both horses, and to that extent, did not capitulate to EKJV entirely. It tried to warn ABM of the risks it faced if it was too wedded to a factory at Scunthorpe and would have supported ABM if a deal satisfactory to EKJV could be reached.
- A conversation between M.Martin and Mr Sanderson on 1 June 2020 should have reinforced the jeopardy that ABM genuinely faced. Mr.Martin had told him that he was working on a plan B[3] (and indeed, various plans) in case the job did not go to ABM. M.Martin pointed out that things had moved too slowly over the last six months, not all of it ABM's fault, although he noted an apparent back-track by ABM on the £7.5m buy-back that had been discussed with Mr Swift. This was important, as Matière submitted, because the buy-back had been the very thing which had swung the decision back towards Scunthorpe at the start of April. M.Martin warned that his plan B would continue until something happened at Scunthorpe. This assessment of ABM's prospects might not appear quite as terminal as Mr Lowery's private email to which I have referred but, as M.Martin said, things happened above his head which made things impossible. I interpose to note that the internal ABM email containing this information was only disclosed by ABM during the trial and, by the end of the trial, no reason or explanation for the failure to have disclosed it sooner was provided.
- There was a phone call between Mr Minihane and Mr Lowery later on 1 June 2020, after Mr Minihane had received Mr Lowery's private thoughts in the email forwarded by M.Matière. The call is referred to in Mr Minihane's subsequent email of 1 June 2020 to Mr Lowery, copied to M.Matière, where he described the discussion as having been positive and forthright. Amongst other things, he agreed to work to close the gap on price and expressed confidence in that happening. He said that a previous look at local casting had not reduced the cost but would be reviewed again. Mr Lowery's email in reply did not suggest that ABM's prospects were as bleak as he had expressed privately but did, at least, say the situation was at a "critical point and we need some significant movement in the week ahead". He said he would "need to review our options for this package" if there was insufficient movement. Mr Minihane reported on further progress the next day.
- Once again, I consider Mr Minihane was overly optimistic, to a high degree, about the prospect of ABM ever being retained on the Green Tunnels Project, let alone being retained on a basis that included production from Scunthorpe. His strongly expressed preference for a permanent factory at Scunthorpe, even in the face of the cost and other practical difficulties attached to it, is most surprising in light of his knowledge that Mr Lowery had privately expressed "serious concerns" held by EKJV about ABM and that it was actively looking at other options which did not include using ABM at all. If Mr Minihane did not believe there to have been "any threat" to the joint bid on 29 May 2020, he cannot possibly have been realistic to have retained that view on 1 June. I reject his oral evidence that he had conversations with each of Messrs. Gilbert, Swift and Lowery:
"all of whom also said that we were in pole position, or words to that effect."
That is simply not reflected in the email from Mr Lowery and casts doubt on such other conversations as he may have had with others.
- Mr Minihane's over-optimism about ABM's prospects was apparent in the way he rebuffed M.Matière's warning in a WhatsApp exchange on 2 June 2020. M.Matière fairly commented on the email reply to Mr Lowery when he said, amongst other things:
"With all friendship and respect towards you, let me tell you that you are not in the right way when you try to over-push the permanent factory solution. This could have certainly been the right solution if the price gap was not what it is, and if Stanton-Bonna and Pacadar were not now in the loop…..We are not in the mood of what D.Lowery and E.Rossignol want at present time. Sean, in the name of our relations, I must warn you that we are not following the customer's direction…they do not want this solution and we are now on a slippery slope if we do not follow what they want."
- Despite that broadly accurate summary of what I consider to be EKJV's position at that time, Mr Minihane simply said in reply that he wanted he and M.Matière to be honest with each other, that the Scunthorpe proposal was a far better solution which would provide the best solution at the lowest risk and that he considered EKJV would accept this if it had the support of Matière, as had been agreed. I consider that Mr Minihane was completely misplaced in that opinion. The additional and express support from Matière in respect of Scunthorpe would have made no difference to EKJV's own view. At a core level EKJV was antipathetic to working with ABM at all and there was simply no evidence satisfactory to EKJV that the financial gap could be bridged if the Scunthorpe factory was to be retained. As if that was not enough, EKJV was in the process of obtaining competitive prices from two other sources, as Mr Minihane now knew. Once again, the fact that Mr Minihane may not have known the precise extent of Matière's role in Plan C is nothing to the point. He knew there was a Plan C and that EKJV was plainly implementing it.
- In his witness statement, Mr Minihane blamed Matière for trying to re-open the issue of the Scunthorpe factory which he said had been 'closed' in April 2020 when the instruction from Mr Swift at EKJV to focus only on a permanent facility at Scunthorpe was received. I disagree with this. The issue of whether to have a permanent factory at Scunthorpe was never really 'closed' in April 2020. It could not have been 'closed' because its adoption was inextricably linked to the question of price, in respect of which there remained a significant gap. If it was 'closed', it was only briefly so, as different views on the pre-casting location were maintained and, by June, it looked highly unlikely that the pre-cast units would be manufactured at Scunthorpe, even if ABM was retained. Moreover, it was not Matière that was opening the issue of Scunthorpe. It was EKJV that was doing so. I reject Mr Minihane's explanation of events.
- On 1 June 2020, M.Vignon resurrected contact with Spantech who had earlier been asked about setting up a prefabricated concrete component factory. He asked for quotation details that had been given by them to ABM so that they could be compared with the offer to him. He said Matière was resuming full control of the project and would not be copying ABM into any communications, which Spantech acknowledged.
- On 2 June 2020, M.Martin emailed M.Vignon to ask why he was not revisiting the Banbury or Bicester option. M.Vignon replied that M.Matière wanted a flying factory next to the project. Other possible sites were also investigated.
- On 3 June 2020, M.Matière emailed M.Blanc to say that they needed to consider the Spanish solution (i.e., not working with ABM) or it risked losing the project.
- On 3 June 2020, M.Vignon received rebar prices from SAMT Korail that had been provided direct to ABM previously. The request had been as agreed in confidence with M.Matière.
- On 4 June 2020, on behalf of M.Matière, M.Vignon asked M.Martin of EKJV to investigate setting up a precast factory near the Green Tunnels sites, forgetting the Scunthorpe option until further notice. He identified the three locations he wanted EKJV to investigate. M.Martin said he didn't have the resources to undertake the investigation but Matière should "feel free to propose us these solutions if you think it could be interesting for the project".
- All of these exchanges at the start of June 2020 show that Matière was privately (i.e. without ABM) promoting exercises to work directly with EKJV, without ABM in joint venture. As M.Vignon accepted, this was because M.Matière was concerned that Matière may not get the job at all. These exercises were being promoted with EKJV's approval.
177. Between 9 and 12 June 2020, there were some direct email exchanges between M.Garnier and ABM in connection with mobilisation and pricing for the Scunthorpe factory. Matière was not involved in all these exchanges. There are also internal emails within ABM over the same period in respect of M.Garnier's email of 12 June 2020. Mr.Garnier's impression was that costs were rising, not falling, as he said of the factory prices that "the cost is not under control and confidence in your prices is being lower and lower…". Internally, at the time, ABM did not appear to be concerned by EKJV's position, even making jokey offhand comments about it, and thought it was simply part of a negotiation. However, in oral evidence, Mr Minihane accepted that M.Garnier was actually expressing a real concern about ABM's prices and a loss of confidence in them. Mr Minihane was keen to blame the apparent rise in cost on the changing requirements from EKJV but that is to miss the point. What mattered was EKJV's perception of ABM's pricing.
- M.Blanc sent an internal email within Matière on 12 June 2020 to say that confirmation that the factory "will be located in Scunthorpe" has been received from EKJV. ABM submits that confirmation should be treated with some care. I agree. There is nothing else to suggest it is correct. It may be that what is being reported here is that ABM's confirmation that it planned to proceed with their factory in Scunthorpe, regardless of the factory's cost, had now been received and acknowledged by EKJV.
- In evidence, M.Vignon described this period as:
"a total mess, changing every day… What was the direction to take."
He wrote to similar effect in an internal email of 25 June 2020.
- I accept the situation was complicated and had been changing. Multiple strands of exchanges had indeed been taking place. Different lines of enquiry were being pursued concurrently and at different levels. The weight of double dealing must have been difficult for M.Vignon to manage and I consider that, in that respect, he lacked an overview of where things were heading. My impression is that EKJV was, largely, stringing ABM along at this time in June because it never really expected the substantial gap in ABM's pricing to be bridged but was, at least, content to give it the opportunity to try. However, its primary focus and preference was in allowing, and encouraging, Matière to undertake investigations about alternative sites and alternative fabricators to ABM. Matière was willing to play its part in this respect.
- ABM undertook some investigative work into alternative sites during June but my impression is that it did so without any enthusiasm and was more than content with the reported outcome that they would not produce the cost savings that EKJV was hoping for. Mr Minihane's expressed expectation that Matière would now agree that Scunthorpe should be the only focus was optimistic.
- Matière submits that it cannot have been a breach of the Consortium Agreement for it to have explored alternatives to a permanent facility at Scunthorpe if ABM was itself investigating alternatives. I do not agree. Matière's investigations were premised on the basis that ABM would not be the manufacturer at all. I return to that point below. They were also undertaken in private.
- The parties signed the Collaboration Agreement on 23 June 2020. One might ask why this had not been done sooner or why it was only being done now, given the state of play. Some pressure on ABM had apparently been applied by a Mr Stevenson at EKJV. That was because the very absence of a contractual document reflecting the joint venture was itself an indicator that ABM and Matière were not capable of functioning as a joint venture. However, shortly after the Collaboration Agreement was signed, Mr Stevenson, who was influential within EKJV, reported concerns from EKJV's lawyers as to its adequacy, noting that, within it, there was no JV board mentioned, nothing about decision making and no mechanics for funding the JV. It was "talk in very general terms". EKJV wanted to see a single JV entity with an obligation on both parts of the JV to fulfil the obligations of the other should one fail, and provision for risk sharing. It is worth mentioning here that ABM/Matière never subsequently satisfied EKJV's requirements in this respect. Mr Lewis KC submitted that the fact Matière signed the Collaboration Agreement when it did was extraordinary on ABM's narrative because it was directly contrary to the notion that Matière was undermining the joint venture. I do not agree. It is consistent with Matière keeping its options open.
- Offer 8 was submitted by the ABM/Matière JV on 2 July 2020. It included an offer to buy back the factory. It included savings against the earlier offers.
- Mr Minihane's evidence was that, by around this time, things were back on track to a large extent, with contract discussions progressing and a lot of the senior leadership team involved. If he was right about this, then whatever Matière may have done before that was probably water under the bridge. But, as before, I consider his assessment of the position to be over-optimistic.
- According to Mr Minihane, he had an important call with Mr Lowery of EKJV. He said he had a distinct recollection of it and that he had no doubt about what he was told. In the pleading, this call was expressed to have taken place on or around 3 July 2020 but in his witness statement he dated it on or around 13 July 2020. In his written evidence, Mr Minihane records being told by Mr Lowery on the call that M.Matière had earlier told Mr Lowery that the Scunthorpe factory "was all wrong and that Matière did not want to go ahead with it". This is one of the particulars of breach which is pleaded against Matière. Mr Minihane says he recalls being "really disappointed" by what he had been told, because it meant M.Matière had been undermining him behind his back. In evidence he said was "to an extent shaken by it". Mr Minihane said that Mr Lowery also expressed concerns that EKFB had over a project that ABM was working on at Luton. Mr Minihane commented that Mr Lowery was a "respectable, straight talking guy".
- There is an email between Mr Minihane and both M.Matière and M.Blanc recording a call between Mr Lowery and Mr Minihane on 3 July 2020 (the pleaded date). It makes no mention of what M.Matière was alleged to have said. Mr. Minihane says there would have been no point in challenging M.Matière about it so he did not do so. The email records optimism having been expressed by Mr Lowery on the price gap but that EKJV still required a Plan B using Stanton Bonna for its client (i.e. HS2) if ABM/Matière, the preferred option, was not selected.
- Mr Minihane sent an email to M.Matière late in the day of 13 July 2020 (the date mentioned in the witness statement). It also makes no mention of any call with Mr. Lowery having taken place that day. The email records a conversation between Mr. Sanderson and M.Martin of EKJV. Mr Minihane said their good relationship was needed in order to redeem "this now-serious situation". Mr Sanderson accepted in evidence that what M.Martin had said to him amounted to an explicit threat to the success of the proposal, which makes Mr Minihane's description an apt one. According to the conversation, EKJV was concerned that ABM and Matière were not working together in true JV spirit. As a solution, Mr Minihane proposed a single line of communication with EKJV, via Mr Sanderson. Mr Minihane identified urgent actions, which (amongst other things) recognised it faced competition from Stanton Bonna. He said the proposed factory was "one of our key advantages" and, in relation to it, ABM would re-assess its price by including provision for buy back of the factory by bonding or by funding the residual cost.
- M.Matière replied to Mr Minihane the next day. In respect of the factory, he was blunt:
"Let me put it black on white: EKBF doesn't want to pay more in terms of factory installation than what is strictly necessary for the green tunnles jobs. That is to say that the idea of a permanent factory, of which a part only would be invoiced to them, must be forgotten. I am sorry to be brutal, but this is a message I got from Emmanuel Rossignol since last December, then from his Eiffage Guys, when I met them in February."
- M.Matière did not necessarily suggest that a factory at Scunthorpe was out of the question. What mattered was the price of the proposed solution. He identified that the costs of transportation from a close site, proposed by Stanton Bonna, would be compared to the costs of a remote site proposed by ABM, namely Scunthorpe. He asked if transport costs could be removed from the price. M.Matière made clear that the overall choice of what to do was that of Mr Minihane but said that it was that choice which would win or lose them the project. Mr Minihane accepted that M.Matière had set out his views with reasonable clarity. He also accepted that M.Matière was right to express the issue in terms of price, saying that "Price was constantly an issue on the table.". That is an important point of common ground – the location of the manufacturing only mattered to the extent it fed into the price. It was for ABM to show EKJV that they would not pay more, overall, for the pre-casting at Scunthorpe than they would at a local facility. Mr Minihane agreed that the situation was such that, for the first time, he considered removing the cost of construction from the bid and ABM funding the cost itself.
- I must now return to the pleaded allegation. I am not satisfied that M.Matière told Mr Lowery that the Scunthorpe factory "was all wrong and that Matière did not want to go ahead with it" as reported by Mr Lowery either on or around 3 or 13 July as alleged. I accept Matière's submission that this statement, had it been made to Mr Lowery, would have featured somewhere in the many internal emails and WhatsApp messages passing within ABM at the time. Mr Minihane's explanation for not challenging M.Matière as to whether he said it was not convincing given that, on his own evidence, he was shaken by what he had been told.
- In any event, I am doubtful that the statement would have made any real difference even if M.Matière had made it. Mr Lowery and some others within EKJV already had real concerns of their own about Scunthorpe, which had been shared with ABM, and were actively considering a rival manufacturer who would not require the construction of a permanent factory.
- By mid-July 2020, the over-arching position for the ABM/Matière JV was not back on track, as Mr Minihane suggested. On the contrary, there was a "now-serious situation" which needed to be redeemed. Internally, ABM did not consider their position to be back on track either. In an email sent by Mr Sanderson to Mr Minihane on 16 July 2020, following a call he had had with M.Martin, Mr Sanderson summarised the position thus:
"either, i. we've got a mountain to climb with Jeremie or ii. He's a very clever player manipulating us to get the price down and get his 'share price' up or iii. no one knows what's going on. I think that it's probably a bit of each!"
- In my view, ABM's latest approach, of agreeing to finance the cost of the Scunthorpe factory itself, was effectively a last throw of the dice. Mr Minihane said it was ABM's response to the wishes of the customer, as it undoubtedly was. It is a little surprising that there is no internal written record of the decision within ABM to change the approach but I am satisfied that such a decision was reached. However, the new approach created a different problem for ABM: how to finance it. I am satisfied that ABM did not begin to investigate this issue until August/September which is as Mr Minihane said in his witness statement. In oral evidence, he suggested that this might have started to occur much earlier, in July, but I do not accept this. There is no written evidence of communications between ABM and potential lenders at that earlier time. ABM did not pursue enquiries with the banks sooner, or as swiftly as it might, because it still remained a route that ABM did not want to go down. It may have suspected what later became apparent, namely, that finance was very difficult to obtain.
- Offer 9 was made on 24 July 2020. This was premised on the basis that ABM would fund the Scunthorpe factory. This change was a primary source of the cost reduction within the offer. In the email which sent Offer 9, Mr Sanderson said that ABM was negotiating with external lenders to partially fund the project but, as I have said, there is no evidence that that was actually taking place. Mr Sanderson explained that ABM required the support of EKJV and that substantial advance mobilisation funding was essential to ensure the success of the project. Offer 9 introduced the concept of a Factory Utilisation Charge.
- There was an exchange at the end of July in which EKJV (through Mr Lowery) expressed concern (to, amongst others, Mr Minihane) that Offer 9 was seeking to unravel a prior agreement on the Fee. Mr Lowery described it as a backwards step in the process and Mr Minihane suggested internally that this was "Not great". Others within ABM were more optimistic. They considered that, if a decision to replace them with Stanton Bonna was such an easy option, then EKJV would never have been that upset about the Fee. M.Matière appeared to share Mr Minihane's view and urged ABM to resolve the Fee issue urgently. He said the JV was no longer a leader but was, more and more, a challenger for the Project.
- In early August, Mr Lowery was in direct contact with M.Matière. The clear impression from the Teams exchanges is that they were discussing EKJV working with Matière alone, since the exchange was said to be highly confidential. That must have meant confidential from ABM. I reject M.Matière's evidence that their discussion was all on the hypothesis that Matière would only be directly retained to ensure there were no tunnel collapses such as had occurred at Gerrards Cross. The discussion was about Matière being retained for all of that for which it was bidding within the ABM/Matière JV. Mr Lowery said he would be warning Mr Minihane that an alternative option was being looked at but that he would not say what that option was. Mr Lowery did want Mr Minihane to understand the seriousness of the position before a final decision was reached. On 5 August 2020, M.Matière also referred Mr Lowery to Article 3.2 of the MOU signed between the three companies (itself not a binding clause) and Article 24.4 of the Collaboration Agreement it had signed with ABM. These provisions were both relevant to the question of what obligations each of EKJV and Matière owed to ABM. Of those provisions, M.Matière said they could then "be optimistic" but it must be kept confidential.
- At the same time Mr Minihane had some direct Text/SMS exchanges with Mr Lowery between 4 and 6 August 2020. As he indicated to M.Matière that he would, Mr Lowery warned Mr Minihane that time was running out on the Joint Venture Agreement and that the "noise from Luton" was not helping. (This was a reference to the issue on the project between ABM and Kier at Luton airport, considered below.) Mr Lowery indicated that things were not looking good for ABM and that the board at EKJV had asked to present an alternative package to the ABM/Matière JV for the Green Tunnels Project. He gave the reasons for this, which included contract/commercial issues and quality as big driver issues. Mr Minihane said that was "certainly disappointing".
- M.Matière and Mr Minihane then exchanged direct emails, following Mr Minihane's call with Mr Lowery. M.Matière had expressed concern at the messaging from EKJV and said that they needed to be very careful. In reply, Mr Minihane reported that he was told by Mr Lowery that ABM/Matière remained the preferred option but that other options were being looked at. He told Mr Lowery that the issue with Kier at Luton had been resolved.
- My analysis of this period is that, whilst Mr Lowery was speaking separately to both Matière and ABM, he was giving a clear (and honest) warning to ABM that the position of the ABM/Matière JV was precarious. EKJV was in a better commercial position to contract with Matière and Stanton Bonna than ABM believed to be the case. Matière, in the meantime, continued to ride both horses, retaining sufficient flexibility to contract with EKJV directly or via the JV. Whilst the prospect of Matière working with EKJV without ABM was contrary to the joint endeavour envisaged in the agreements between ABM and Matière, those discussions would not have been possible without the encouragement and agreement of EKJV, namely Mr Lowery. At this time, ABM was not actually in a position to follow through on Offer 9 as it had not begun to contact any lenders to see how the factory at Scunthorpe could be funded.
- Mr Minihane spoke with Mr Lowery on 12 August 2020 and emailed M.Matière and M.Blanc to report on it. Mr Lowery told him that an alternative option was being considered by the board and would be discussed the following week. Concerns remained about timing, the status of the JV and maintaining price and fee level.
- Offer 10 was made on 14 August 2020. It was the last one submitted by ABM/Matière. Other information was provided later.
- As I detail further below, at around this time questions about the ABM/Matière JV structure were still being discussed and remained unresolved. Similarly, discussion over the detailed terms and conditions of the proposed subcontract between ABM/Matière JV and EKJV were still ongoing. There were exchanges about this on 17 August 2020.
- Whilst the decision of the board was awaited, Mr Minihane emailed M.Matière and M.Blanc on 17 August 2020 to say he did not really understand what was going on. He posited that either EKJV had another offer and was setting the JV up to fail in getting the Green Tunnels Project or that EKJV did not know what they were doing and were under pressure to award ABM/Matière the work. M.Blanc replied that EKJV certainly had another offer from a company that had all the facilities they want, in order to compare with ABM. This was, presumably, a reference to Stanton Bonna. M.Matière added that he had already told Mr Minihane that EKJV was in serious discussions with other competitors.
- The EKJV board met, although the date of the meeting is not clear. It was probably on 19 August 2020. There is no first-hand account of what was discussed but Mr Lowery reported to M.Matière on the outcome. I conclude that the board was asked to review comparisons between the Green Tunnels work being undertaken by ABM/Matière JV on the one hand and by Matière and Stanton Bonna (under separate contracts) on the other. Mr Lowery's presentation, which was key, was a recommendation for the pre-cast manufacturing to be undertaken by Stanton Bonna and for the installation to be done by Matière. The board agreed with that recommendation. One outcome was that HS2 Ltd agreed to add Stanton Bonna as a preferred subcontractor. Another was that Mr Lowery asked M.Matière for details of the Collaboration Agreement between Matière and ABM. He was plainly interested in checking how Matière could safely extract itself from its JV obligations. M.Matière obliged by providing a copy of the agreement. He had also been contacted by M. De Guinaumont from Eiffage, who was Mr Lowery's own boss.
- M.Matière says that, in this period, he tried to get EKJV to change its position. He says he wanted to be loyal to the joint venture and resolved to push the bid but would ensure Matière was well placed if it failed. ABM says this is all untrue and that M.Matière was positively deceiving ABM and undermining its bid. In fact, M.Matière did, at least, suggest to M. De Guinaumont the possible co-ordination of the works using ABM and another for the fabrication works. There is evidence that M.Matière was concerned about Matière's possible legal liability to ABM once it had notified it was unsuccessful, which might have explained why Matière expressed support for ABM at least to some degree. Ultimately, though, Matière expressed itself to be at the side of EKJV whatever its chosen scope was.
- In my view the EKJV board's position at this time was now conclusively and, absent anything totally unexpected, irreversibly against ABM playing any part in the Green Tunnels Project. That is to say that an 'in principle' decision was taken at that board meeting not to employ the ABM/Matière JV even though the formal letter of termination was sent a month later. M.Martin, who had not been at the board meeting, told Mr Sanderson of ABM that he, personally, had not been in favour of the Stanton Bonna option and that ABM should continue to "fight like a lion" to keep the work. In my view, the moment for that had essentially passed.
- On 26 August 2020, M.Matière had private exchanges and a call with M. De Guinaumont. Mr Minihane had learned of the board's approach (as reported to him) and was contemplating legal action against EKJV. He was told to await the final decision. All this was reported to M. De Guinaumont.
- On 25 and 26 August 2020, ABM made presentations to Nat West and the Bank of Ireland in respect of the funding it was seeking for the factory. On 7 September 2020, the Bank of Ireland sent out its indicative terms and conditions but no offer. There seems to have been no equivalent from Nat West. Mr Minihane claimed to have lost interest in Nat West but it is more likely that Nat West was not interested in ABM. At all events, Mr Minihane said in evidence that the Bank of Ireland was its best opportunity for funding. It is clear that a considerable amount of due diligence would have been required in order to secure a formal offer from the Bank of Ireland. Internally within ABM, Mr MacConmara, who was ABM's CFO, said he would draft a note of what needed to be confirmed or done.
- On behalf of Matière, Mr Lewis KC forcefully criticised ABM for not disclosing any such note. Indeed, he submits that I should draw adverse inferences from ABM's failure to do so, namely that the note was unhelpful to ABM. (A similar approach was taken in relation to other documents too.) I agree it is odd that no such note has been disclosed given that the email suggested one would have been prepared. I would, in any event, have expected some form of document to be created in response to the terms offered by Bank of Ireland had ABM been of a mind to pursue that route. No explanation was given for what happened in respect of any note. Mr MacConmara was not called as a witness. ABM submits that the absence of documents alone does not justify the allegation that disclosure has not been properly performed. That is true. However, it is unnecessary for me to make findings about non-disclosure in this particular context because I am satisfied that, if there had been evidence to suggest that ABM got close to being able to satisfy the Bank of Ireland's requirements for funding, such a document would have been disclosed. There is no evidence to show that ABM had begun to get to that point. There never was a binding offer of funding capable of acceptance in place.
- Separately, ABM was also investigating an advanced payment bond from Nationwide, which had also been discussed with the Bank of Ireland. Nationwide was not interested in providing this without a cross indemnity from Matière, which was not realistic. Thus, the suggested route of an advanced payment bond seems to have foundered.
- On 9 September 2020, Mr Minihane sent an email to Mr Lowery, but copied to many others, with a view to persuading EKJV to stick with the ABM/Matière JV. He said ABM could start very quickly, preserving the contractual dates, and that any alternative proposal would be unable to satisfy that critical requirement. There was a veiled threat that advice had been taken. The email was signed by both him and M.Matière but had not in fact been approved by M.Matière. Mr Minihane had scanned M.Matière's signature without his agreement. In reply, M.Matière expressed his displeasure about that and told him they may not be winners if Mr Minihane did not stay calm. Ironically, M.Matière privately sent his confidential reply to Mr Lowery.
- On 9 September 2020, Mr Scott of ABM prepared a timeline for the commencement of work, including work on the pre-cast factory, which he shared with Mr Gilbert (but not Mr Lowery). Without, it seems to me, any real basis he said that "we are now extremely close to agreement". Cold water was poured over the proposed timeline by Mr Gilbert of EKJV in his reply. In a further reply, Mr Scott (adopting drafting prepared by Mr Minihane) said that ABM/Matière was working with its "funding partners" to provide step in rights for EKJV if the need arose. Mr Minihane accepted this was clumsy wording but it was, in reality, simply untrue, not least because Matière was not involved with funding partners at all. Mr Scott also said ABM was in final discussions with two large financial institutions regarding factory funding. That statement was also not borne out by the contemporary evidence, as I have noted. Mr Minihane did not accept it was gross exaggeration but, in my judgment, he was wrong not to. Optimistically, given the long history, the email also said that funding of the factory within the subcontract (i.e., paid by EKJV) could also be discussed. There is force in Mr Lewis KC's suggestion that the resurrection of this suggestion reflected ABM's realisation that it was going to face real difficulties in obtaining its own funding for the factory.
- M.Matière messaged Mr Lowery on 10 September 2020 to inform him that he had participated in the official ABM/Matière letter that was being issued. He offered his help as required. Mr Lowery thanked him and agreed that Mr Minihane's earlier email had not been a good move. He recorded that progress with the other option was going very well. The official letter itself, dated 10 September 2020, was addressed to Mr Lowery. It recorded that ABM and Matière had become increasingly concerned that negotiations were not progressing as necessary to reach a satisfactory conclusion. It said that the Professional Services Contract had contained an agreement for exclusive discussions to be undertaken in good faith but that EKJV was understood to have been in parallel negotiations with another supplier. It said that ABM/Matière JV was acting in good faith. It identified that EKJV was considering using Stanton Bonna as an alternative supplier, either as subcontractor or on a supply only basis. A meeting was requested.
- Mr Lowery replied on 14 September 2020 expressing disappointment that negotiations had not progressed. He (rightly) identified significant fundamental contractual and financial matters where agreement had not been reached. He pointed out that it had not been possible to demonstrate that ABM/Matière (but ABM in reality) had the financial means to deliver the proposal, which was to the detriment of the programme. Mr Minihane drafted a reply and asked M.Matière to agree it. In reality, it was all too late.
- By now, EKJV had established with sufficient certainty that it was in a position to go with its alternative option. It could therefore implement the 'in principle' decision which had been reached at the board meeting a month earlier. A formal termination letter was issued to ABM/Matière on 18 September 2020. It was signed by Mr Lowery. A number of reasons were given for the termination. It said:
"EKFB are now some five months into Stage Two of our Main Works construction contract. However, EKFB have been unable to agree terms with your organisations in respect of the above opportunity and there remain unresolved differences between us on fundamental matters, including (by way of example):
- Your latest revised proposed financing, title and bonding arrangements for the construction of a dedicated pre-casting facility.
- Clarity and agreement on your recent proposal regarding adjacent reinforcement facility;
- Your commitment to a properly integrated, full delivery and risk sharing arrangement between ABM/Matière;
- Agreement of subcontract terms, including (but not limited to): options X1, X5, X7, X14, X18.
- Concerns on the technical delivery capability arising from the failed fire test.
- Concerns on operational delivery arising from a recent EKFB JV partner contract.
In the circumstances, we have not been able to agree terms with you in relation to the opportunity and EKFB are not satisfied that your proposal demonstrates that you have the available resources and/or the financial and technical means to delivery the opportunity (and ultimately the works required)."
- ABM submits that I should treat the termination letter with some care because, on 5 August 2020, M.Matière had identified for Mr Lowery some of the contractual provisions which may be relevant in this context which Mr Lowery had then reflected in the language he had used. ABM also says the termination letter is curious because of its lack of detail. The reasons given for termination, it says, are slight, insignificant and in places just plain wrong. ABM says the reasons, particularly in respect of the fire testing and Luton Airport, amounted to scraping the barrel and that the letter was no more than a device adopted, with M.Matière's assistance, to achieve what EKJV wanted to achieve.
- These are 'high' allegations to make against Mr Lowery, the senior Director at EKJV who Mr Minihane had described in evidence as a "respectable, straight talking guy". Whilst I accept that Mr Lowery's language may have drawn on the contractual provisions to which his attention had previously been drawn by M.Matière, that is unsurprising since they were the appropriate ones to have in mind. He would have wanted to ensure his letter was framed by the appropriate criteria. I am satisfied that Mr Lowery would not have included reasons within the letter that he did not genuinely consider to be fair reasons for EKJV to have brought the relationship with ABM/Matière JV to an end. This is not a trial of EKJV's entitlement to terminate the relationship. Nor does it matter whether Mr Minihane or ABM agrees with the reasons, or their adequacy. It suffices to say that EKJV was entitled to take those matters into account in reaching its own decision.
- Although I have concluded that EKJV was entitled to take the listed items into account, I intend to deal with the fire testing and Luton Airport points separately below and to reach my own conclusions in respect of them. In the same vein, I will now address one of the other points raised by Mr Lowery in his letter, namely the failure to commit to a properly integrated risk sharing agreement within the ABM/Matière JV. As I mentioned above, on 29 June 2020, shortly after the Collaboration Agreement was signed, EKJV's legal team pointed out various deficiencies in the legal structure and risk sharing arrangement between ABM and Matière. ABM pushed back on these points in an email on 30 June 2020. These issues were never resolved. Mr Minihane's evidence is that EKJV's legal team may in fact have comprised individual lawyers from each of the joint venture partners and not all of them were working collaboratively. Mr Milne of Kier appeared to think less was required than the lawyers referred to in Mr Stevenson's email.
- In an email dated 14 August 2020, lawyers within Lupton Fawcett, acting for ABM/Matière, discussed what they considered was needed to resolve "the current impasse". They identified the remaining issue which needed to be resolved: the difference between the model adopted by EKJV and the cost sharing approach of ABM/Matière. They said this issue remained problematic, because EKJV had not felt that the resulting structure lead the ABM/Matière parties to have sufficient commitment to the joint delivery of the project, adding:
"If one party gets into trouble in the delivery of its portion of the Project, EKFB feel that our structure fails to provide sufficient incentive to the other to ride to its rescue."
- A solution proposed to Mr Milne of Kier had resulted in a preliminary indication that it would be acceptable but Mr Milne was than occupied with a crisis elsewhere. The lawyers summarised the position thus:
"…the next task, provided all remains as anticipated, will be to establish what we have to do in relation to the creation of a joint venture company, how that can be used as a medium to achieve a deal which has the same essential characteristics as that set out in the attached Collaboration Agreement, and how much time we have to get there. After that there is the job of getting there."
- In short, the position was unresolved. Mr Minihane claimed it was a "shock" to him to see this issue raised in Mr Lowery's termination letter but I reject that evidence. Only two days before, he had replied to the lawyers in Lupton Fawcett saying:
"I might underline to you that EKFB has been muttering various points of discontent in concluding a contract with us, of which the continued delay in closing a 'suitable' jv is one important element."
- My conclusion is that, over time, Mr Minihane had not sufficiently appreciated what was being sought by at least some lawyers within EKJV. To them, it was not a mere question of drafting. What was missing was any agreement between ABM and Matière that reflected legal allocation of risk sharing (including liability for losses) on a properly integrated basis. There was, as yet, still no legal entity in place sufficiently to satisfy EKJV. The Collaboration Agreement had not clearly addressed these matters sufficient to satisfy EKJV. In particular, Clause 34.1 confirmed that ABM and Matière did not intend to share profits and losses but that each should be responsible for the performance of their own scope of work. The concerns that EKJV had were never displaced.
- I am satisfied that EKJV was entitled to pray in aid the failure by ABM/Matière to reach agreement on these issues for some months.
- There are two further points to make about this topic. The first is that no complaint is made that Matière alone contributed to the failure to resolve this issue to EKJV's satisfaction. The second is that much has been made by ABM of the point that Matière's failure to support the building of a factory at Scunthorpe meant that the ABM/Matière JV presented as dysfunctional. However, the failure to resolve the integration of the JV was a rather more fundamental point.
- Returning to termination more broadly, Mr Sanderson had originally said he was not aware of any explicit threat to the ABM/Matière proposal in the period prior to termination but accepted in cross examination that this was an over-optimistic perception. Mr Minihane said he was surprised and shocked to have received the termination letter. If so, it is a reflection of how far he had overplayed his hand in the negotiations. In truth, I doubt he was that surprised.
- It is worth restating that, at the date of termination, ABM had still not raised finance to construct the Scunthorpe factory. There is no evidence that the terms of the indicative offer from Bank of Ireland had been followed up, still less satisfied. In that respect, at the date of termination ABM was not even in a position to actually deliver on the ABM/Matière offer which had been made. ABM certainly lacked the means to be able to satisfy EKJV that it would obtain funding for the construction of the Scunthorpe factory.
- ABM submits that, for at least the whole of August and September, M.Matière was acting for Matière's own advantage and to the disadvantage of the ABM/Matière JV, and that he had done so dishonestly by deceiving ABM and Mr Minihane about what he was doing. I accept the thrust of that submission, in that Matière was seeking to ride both horses simultaneously, one of which was entirely inconsistent with the essential purpose of the ABM/Matière JV. M.Matière did so without letting Mr Minihane know what he was doing. But, as I have earlier indicated, these actions were all performed with the encouragement and acceptance of EKJV and I do not believe it would have made any difference to the ultimate outcome if M.Matière (and Matière) had not acted in this way. Moreover, the 'in principle' decision not to appoint the ABM/Matière JV had already been reached in mid-August so Matière's conduct after that date was causally irrelevant to ABM's central complaint.
- It was not long before EKJV entered into a direct arrangement with Matière, as had been envisaged in the earlier discussions between Mr Lowery and M.Matière. Thus, on 29 September 2020, M.Vignon reported internally that he had had a discussion with EKJV about a new Professional Services Contract. He reported that EKJV would be proposing one shortly. Thereafter, he said there would be discussion about stage 2 i.e., installation. The draft Professional Services Contract was sent by EKJV on 9 October 2020. It bore the same title and subject matter as had been agreed between EKJV and Matière/ABM JV in 2019. M.Blanc said in evidence that the new draft PSC was to be deployed for a limited purpose, namely to enable Matière to provide help to EKJV for a short period in respect of particular problems that had been identified. There is nothing in the draft agreement to suggest this and I do not accept it. The new PSC was dated 26 October 2020.
- On 27 May 2021, ABM submitted its Final Account to EKJV on behalf of itself and Matière.
- Much later, on 29 November 2021, EKJV entered into an agreement with Matière UK Ltd. It was in the form of the NEC3 Engineering and Construction Subcontract: Option C for the installation of the Green Tunnels for the C2 and C3 sectors of the HS2 Project.
Fire testing
- Unsurprisingly, samples of the concrete for the Green Tunnels Project had to be cast and then subjected to a fire test. Casting began on 13 February 2020. Unfortunately, problems were experienced with the casting process. The framework (or mould) was opened on 14 March 2020 and showed multiple defects in the cast block. On 18 February 2020, Mr Sanderson of ABM reported the difficulties that ABM had experienced in relation to the casting. The decision was taken to suspend production, which he described as "regrettable". EKJV (and Mr Lowery, in particular) wrote to ABM/Matière JV to complain, recording that production of the precast units had been suspended. EKJV asked for ABM/Matière JV to come back with details as to why the casting had failed, whether it would affect the Green Tunnels design and what actions were being taken to deliver the fire testing on time. EKJV made clear that it held ABM/Matière responsible for this incident since the concrete mix design resulted from a professional service that EKJV had commissioned. It was necessary for EKJV to warn that any consequence that EKJV itself suffered would be laid at ABM/Matière's door. M.Vignon reported internally on this issue on 19 February 2020. He said it came at a bad time for ABM, given their negotiations over the prefabrication factory.
- As reported in an email from ABM on 3 April 2020, casting of the fire samples was completed on 27 March 2020. (This was right at the start of the pandemic.) The issues with the concrete itself had therefore been overcome. In reply to ABM's email, the Project Manager from HS2 was complimentary about that successful achievement, given the major logistical challenge that ABM had faced as a result of the pandemic. He said he would inform HS2's management. The casting issue had caused delay to the start of testing of about 3 weeks, as M.Vignon accepted. The testing itself was delayed by about 5 weeks, as M.Vignon also accepted, but was ultimately successful. There were no further issues with the quality in relation to the test pieces.
- This part of the story matters because M.Vignon's evidence was that the need to suspend casting of the fire test blocks caused a deterioration in the perception of ABM within EKJV. I accept that evidence even though the specific issue was ultimately overcome, causing a delay of just over a month. The question over ABM's technical delivery capability arising from the failed fire test was one of the items listed by Mr Lowery in his termination letter of 18 September 2020. Mr Sanderson said that neither M.Martin, nor M.Garnier, nor anyone else he dealt with, ever mentioned the failed concrete casting, so reference to it in the termination letter came as a surprise to him. That may be so, but Mr Lowery had clearly not forgotten it. Whilst not directly referring to the fire testing, EKJV had previously expressed serious concerns about ABM's ability to manufacture and deliver, for example in Mr Lowery's email on 29 May 2020, which was forwarded to Mr Minihane and Mr Sanderson.
- Mr Minihane sought to explain in evidence how the failure had come about and why it was not really ABM's fault. Whilst recognising that the failure had been disappointing, ABM submits that it is in the nature of a test that it might fail. Those points seem to me to be irrelevant. What mattered was EKJV's perception of the issue, namely that the fault for the failure lay with ABM. Whilst HS2 Ltd was complimentary of the steps taken to resolve the casting issue, that seems to have been a recognition of the challenges created by the pandemic, rather than absolving ABM of responsibility for the initial failure. In any event, it did not impact on EKJV's own perception of ABM's technical delivery capability, as the termination letter shows.
- The negative perception which this issue caused had nothing to do with Matière.
Luton Airport
- Another concern regarding ABM arose at about the same time. ABM (alone) was working on a contract for VolkerFitzpatrick and Kier (one of the JV members) at Luton Airport. Kier had apparently been unhappy with ABM's work on that job. M.Vignon heard personnel from Kier expressing dissatisfaction, saying that they did not want to have ABM working on the Green Tunnels Project.
- A payment dispute had arisen in respect of Luton, with each side blaming the other for past delays. Volker/Kier said that, contrary to ABM's assurances, it had become clear that ABM was not able to meet the programme. In a letter dated 22 July 2020, Volker/Kier noted ABM's refusal to commence work on remaining panels until such time as its price increases were agreed to. Volker/Kier clearly felt they were being held to ransom and said they would not allow the stalemate, which had started in February 2020, to continue. They said that ABM's refusal to recommence work would be treated as a repudiation.
- Volker/Kier sent ABM another strongly worded letter dated 27 July 2020 in which ABM's claimed increases were described as "speculative, unwarranted and grossly exaggerated". Relations had clearly deteriorated quite badly over a long period.
- When he finally appreciated what damage the dispute at Luton was causing to the Green Tunnels Project, Mr Minihane moved to resolve it. (He had had earlier warnings but had not seen their significance). On 31 July 2020, he also sent an email to Mr Lowery, headed "Quality" because he understood Mr Lowery had heard about legacy issues on other contracts including Luton. Mr Minihane's explanation sought to minimise their significance.
- As recorded earlier, on 5 August 2020, Mr Lowery had said that the "noise from Luton" was not helping ABM's position. Mr Minihane tried again to put the dispute into context for Mr Lowery, saying that the new order for the units which unlocked the issue was worth only £87k. He said it was overblown and was commercial, not quality based. However, he accepted in cross examination that he did not explain to Mr Lowery that ABM had sought a price increase of over 100%. Nor did he report that a threat of repudiatory breach had been alleged. I accept the submission that Mr Minihane sought to downplay the ambit of the dispute generally and did not give Mr Lowery the full context. In submissions, ABM contends that there is almost no evidence to show that anyone held a negative opinion about ABM resulting from Luton (or the fire test, considered above). I do not agree. The negative view resulting from Luton was held within Kier and then shared. The very fact that Mr Minihane needed to explain the position to Mr Lowery in an email headed "Quality" demonstrates that it was a concern which had been raised with ABM and needed answering.
- Mr Minihane got the person at Kier on the Luton Airport job to speak to the Kier person on the EKJV board to say that there was now no issue and that the parties were working together. However, I conclude that the position remained that, rightly or wrongly, ABM's stance on the project at Luton Airport had caused long-term damage to EKJV's perception of ABM. The damage occurred over a long period of time because, as I have said, ABM's refusal to fully perform until its financial demands were met had begun months earlier, from February 2020. It was noticeable that, in describing the dispute with Kier in his witness statement, Mr Minihane did not record that the stand-off had started in February. The ultimate resolution of the dispute did not wash away the negative perception created by ABM over that whole period. In the termination letter of 18 September 2020, Mr Lowery referred to "concerns on operational delivery arising from a recent EKFB JV partner contract", which was an obvious reference to Kier in relation to the Luton Airport contract.
- Once again, none of this was Matière's responsibility.
- ABM submitted that the fire testing story and the Luton Airport story cannot have played any material part in reducing the prospects of ABM/Matière JV being awarded the subcontract by EKJV because ABM had for some time been named by EKJV, along with Matière, as a strategic partner in the PSC in 2019, and was listed by HS2 as an approved subcontractor in April 2020. Close consideration must have been given to select and identify ABM in those ways and, it suggests, such acknowledgment would not have lightly been undermined. However, both events manifested themselves at a similar time (February 2020) and the evidence shows that, whatever may have been the earlier perception of ABM, they both played a part, over time, in reducing the prospects of ABM/Matière JV being awarded the subcontract by EKJV.
The alleged breaches
- The alleged breaches fall into three categories:
(1) Undermining the Scunthorpe factory;
(2) Presenting the project to Stanton Bonna in 2019; and
(3) Entering into a further PSC and Sub-Contract for the same Green Tunnels Project.
- Drawing on the narrative above, I propose first to deal with the relevant findings of fact. Insofar as necessary I will then turn to the contractual provisions, identifying the scope of the relevant obligations and then address the question of whether ABM has established any relevant breach.
Undermining the Scunthorpe factory
- The first breach alleged is that Matière undermined the Scunthorpe factory in a number of different ways and over time. ABM alleges that, throughout 2019 and 2020, Matière continuously expressed criticisms of the Scunthorpe factory to EKJV and suggested that on-site casting would be more cost effective. It alleges that Matière suggested to EKJV that transport costs for the Scunthorpe factory were too high, such that on-site casting should be considered. It says that Matière actively searched for alternative production sites in February and March 2020 and presented such options to EKJV. ABM complains that Matière continued to raise concerns about Scunthorpe without ABM being present, leading to EKJV expressing concern about a divide within the JV over the factory. The call between Mr Lowery and M.Matière which is said to have occurred on or around 3 July 2020 is relied on. Disunity within the ABM/Matière JV, particularly in respect of the Scunthorpe factory, was identified by EKJV in the Summer of 2020. All of these matters are said to be a breach of the duty of good faith.
- In a nutshell, Matière's defence is that it was representatives of EKJV who expressed concerns to Matière about the proposal to build a factory at Scunthorpe, not the other way around. Whilst Matière liaised with Mr Lowery, any significant information resulting from that was passed on to Mr Minihane. Matière also raised its own concerns about Scunthorpe directly with ABM. Matière would have been content with Scunthorpe had it been acceptable to the JV. Matière submits that the duty of good faith which it owed to ABM did not mean it was prevented from raising any criticisms or concerns as to the other's approach. It suggests that ABM's position appeared to be that each party was required to subordinate its own view to the view of the other.
- I agree that, quite often, representatives of EKJV expressed concerns about the Scunthorpe factory. I also agree that Matière expressed its own concerns directly to ABM. I am also satisfied that, by riding both horses as it continued to do, Matière would ultimately have been content with a factory at Scunthorpe if it had been acceptable to EKJV.
- But, I also find that Matière deliberately undermined the choice of the Scunthorpe factory to EKJV. It did so by criticising its suitability and by commenting on matters such as the additional transport costs that would be incurred by using Scunthorpe. These criticisms were made directly to representatives of EKJV. It is no answer (on breach) that these may have been responses to the same or similar points being made by EKJV itself. It would not have been wrong for Matière to look at alternative options jointly with ABM and present agreed outcomes, even ones critical of Scunthorpe, in respect of those investigations. But it was wrong to directly criticise the Scunthorpe factory to EKJV without speaking jointly on behalf of ABM/Matière. Matière also undermined the use of Scunthorpe by looking at alternative production sites and other providers and presenting those options to EKJV. One of the most egregious examples was the investigation into using Pacadar, which began in March 2020, using an alternative approach to a permanent factory at Scunthorpe. This formed part of Plan C, the whole of which was contrary to the interests of the ABM/Matière JV. Another was providing assistance to EKJV in May 2020 by giving them cost information which could be passed to Stanton Bonna. The fact, if it be so, that EKJV could have found this information for itself is not the point. It was an action which undermined the object of the JV. Another example was M.Vignon's request of EKJV to identify other sites. M.Vignon admitted that on occasions he was working against the interests of the JV.
- On the other hand, I am not satisfied that M.Matière specifically said to Mr Lowery that which ABM contends on or around 3 or 13 July 2020. I agree that the different views held by ABM and Matière respectively about the merits of the Scunthorpe proposal would, to a degree, have created an impression of disunity in the minds of EKJV but that is really a consequence of the different views that ABM and Matière held, and EKJV's knowledge of those views, rather than an independent ground of complaint.
- These actions went much further than the mere expression of criticism or concern by Matière of ABM's approach. Nor do my conclusions proceed on the premise that Matière was required to subordinate its views to those held by ABM. It was required to discuss the position with ABM, not EKJV.
- I must now consider whether those matters which I have found proven are breaches of Clause 3 of the Consortium Contract, properly construed.
- The first task is one of construction, in order to establish the scope and extent of the good faith obligation. I do that having regard to the general principles identified earlier. In this case, the good faith obligation in Clause 3 is quite self-explanatory. It arises during and attaches to the entire performance of obligations under the PSC. It sits alongside the obligation to use reasonable endeavours to forward the interests of the co-operative enterprise. The co-operative enterprise is also the undertaking of the duties of the Consultant under the PSC. As I have earlier concluded, the obligations under the PSC constituted the provision of specialist knowledge in preparing Stage Two Proposals which included the preparation of the joint bid by ABM/Matière. On behalf of ABM, Mr Streatfeild-James KC laid emphasis on the point (which he said applied to both agreements) that the proposed bid was a single offer by the two parties. He pointed out that the contract did not contemplate a split offer but was, instead, intended to be a joint proposal being produced for EKJV jointly. He submitted that informed the nature and scope of the obligation. I agree.
- I am satisfied that Clause 3.1 contained a requirement that each of ABM and Matière would act honestly with each other and would not conduct themselves in a manner which would be regarded as commercially unacceptable to reasonable and honest people. I am also satisfied that this is a contract in which the obligation includes keeping fidelity to the bargain. That is because the common purpose and aim of the parties is apparent from the other terms of the contract, namely the requirement to submit a joint bid to EKJV that formed part of the overall Services and which complied with the terms of the PSC. A joint bid is one on which ABM and Matière are agreed. ABM and Matière expressly agreed to act in good faith with each other in the fulfilment of that purpose and aim.
- On behalf of Matière, Mr Lewis KC submitted that the review of alternatives to a permanent factory in Scunthorpe was part of the evaluation exercise being undertaken and, in those circumstances, was part and parcel of the co-operative enterprise. By way of example, as I have found, it was EKJV who initially asked for a review of alternatives sites in February 2020. He says it cannot have been a breach of the Consortium Agreement for Matière to have explored alternative options, not least because ABM itself also co-operated in doing so when asked. This point is expressed in a number of different ways but the theme of it remained constant. Mr Lewis KC said it followed from this that the mere fact that part of that review was being done without ABM's involvement did not mean that it suddenly offended the co-operative enterprise. I do not accept these points because they do not face up to the detail of what actually happened. I quite accept that it would have been proper for ABM/Matière to jointly investigate other sites than Scunthorpe, including temporary ones, as part of the common endeavour to find the most appropriate bid to be jointly submitted to EKJV. But it was not proper for Matière to go it alone in respect of those lines of enquiry without ABM's knowledge or input. Moreover, it was never part of the co-operative enterprise that the use of alternative sites should be considered in the context of ABM not being employed at all. As Mr Streatfeild-James KC submitted, this was not just a general chat between Matière and EKJV about alternatives. It included consideration of reducing ABM's scope (Plan B) and then excluding ABM from the joint venture entirely (Plan C) both of which, on any view, offended the co-operative enterprise. The actions which Matière undertook stood in the way of, and did not promote, the ability of the ABM/Matière JV to submit a joint bid. M.Vignon was clear in his acceptance that the steps he took, at EKJV's behest, worked against the interests of the ABM/Matière JV.
- In evidence, M.Matière suggested that the gathering of information about alternatives was only done secretly by Matière for an initial period, with the intention that it later be shared with ABM. I reject that evidence. It found no support in M.Vignon's evidence. Nor was the information in fact shared.
- Matière's submission that it was not in breach of its good faith obligation includes reliance on those emails which it sent to ABM, emphasising the need to work together in the face of EKJV's concerns. The email of 14 April 2020 is an example of that. Mr Lewis KC said this showed Matière being motivated to work with ABM, by suggesting a reduction in the price for the benefit of their joint venture. I do not accept this submission. As I have said, Matière was riding both horses. The fact it was prepared to work with ABM does not mean that it was not also prepared to take steps, in breach of its good faith obligation, to work solely with EKJV.
- I am satisfied that Matière's actions described above constitute a breach or breaches of the good faith obligation in Clause 3.1. I reach that conclusion because Matière's conduct viz a viz ABM in respect of the undermining of Scunthorpe was, on occasions, either dishonest or was of a type that would be regarded as commercially unacceptable to reasonable and honest people. I would also find that Matière did not keep fidelity to the bargain it made with ABM and that its actions had the potential to render that bargain worthless or significantly less valuable. For the reasons given, I uphold the general complaint that Matière undermined the Scunthorpe factory. It is not necessary for me to expressly address each specific paragraph in the Amended Defence and Counterclaim although, as set out above, I do not find the specific facts alleged in paragraph 33 to have been proven.
- I must also now consider whether those same matters which I have found proven are also breaches of Clauses 3.1 to 3.3 of the Collaboration Agreement. Since this Agreement was only effective from 23 June 2020, I must disregard any allegations of breach which pre-date that. Since the decision by EKJV to terminate was, effectively, taken at the board meeting on 19 August 2020, it is only potential breaches between those dates which could ever be material. The narrative above includes events within that window, including particularly the discussions between Matière and EKJV in early August about EKJV working with Matière alone.
- Matière submitted that, on a proper construction of the Collaboration Agreement, there was no obligation on the part of ABM and Matière to advance offers that had within them a factory proposal for a permanent factory in Scunthorpe. This submission was pursued on the basis that the definition of Main Sub-Contract drew a distinction between the Production Elements to be provided by ABM and the Installation Elements to be provided by Matière. In respect of the former, the definition referred only to the construction of a factory but not where it was to be located or whether it was permanent or temporary. In response, ABM pointed out that the definition of Project envisaged the provision of a joint offer, even though it related both to the Production Elements and the Installation Elements. I agree with that and reject Matière's submission. The requirements in Clause 3 attached to the factory at Scunthorpe because that had been the subject of the joint offers (thereby rendering it part of the Project in that context). It is not a matter of interpretation flowing from the definition of Main Sub-Contract (or Production Elements in particular) but results from an application of the facts to the other provisions, including the Project as defined.
- Clause 3.1 obliged Matière to collaborate with ABM in relation to the Project. The definition of the Project was broad and included the putting forward of a joint offer to EKJV for the award of the Main Subcontract. I am satisfied that, by conducting itself in the manner identified above, Matière was not collaborating with ABM in relation to the Project. By Clause 3.2, Matière agreed it would not, directly or indirectly, pursue any opportunity or make any communication with EKJV in relation to the Project or its subject matter save in accordance with the Agreement. I am satisfied that, by conducting itself in the manner identified above, Matière was in breach of this provision because the Agreement did not contemplate private exchanges with EKJV of the type which occurred. In each case, the provisions are bolstered by the requirement for good faith, in Clause 3.3, which attaches to the obligations in Clauses 3.2 and 3.3.
- Once again, I am satisfied that Clause 3.3 contained a requirement that each of ABM and Matière would act honestly with each other and would not conduct themselves in a manner which would be regarded as commercially unacceptable to reasonable and honest people. I am also satisfied that this is a contract in which the obligation includes keeping fidelity to the bargain. That is because the common purpose and aim of the parties is apparent from the other terms of the contract, namely the entering into the Main Subcontract as a consortium, and the wide definition of the Project. The parties agreed, as part of this, to submit a joint bid which was one upon which they were both agreed.
- I am satisfied that Matière's actions described above constitute a breach or breaches of the good faith obligation in Clause 3.3 in the respects earlier identified. I reach that conclusion because Matière's conduct viz a viz ABM in respect of the undermining of Scunthorpe was, on occasions, either dishonest or was of a type that would be regarded as commercially unacceptable to reasonable and honest people. I would also find that Matière did not keep fidelity to the bargain it made with ABM and that its actions had the potential to render that bargain worthless or significantly less valuable.
- In summary, Matière was in breach of its good faith obligations under both contracts.
Presenting the project to Stanton Bonna[4]
- Although Stanton Bonna has featured very heavily in the narrative, the particular breach of the Consortium Agreement alleged by ABM in respect of their involvement is actually quite narrow and specific. In particular, it is pleaded that in or around late 2019 or early 2020, Matière gave a slide presentation to Stanton Bonna, setting out ABM and Matière's role and plans in relation to the Green Tunnels Project. ABM points out, correctly, that Stanton Bonna was a key competitor of ABM and was ultimately engaged by EKJV for the production of the concrete elements for the Green Tunnels.
- The basis for this plea was evidence in Mr Buckley's witness statement. He said that, on his first trip to EKJV's office in late 2019 (not early 2020 as pleaded in the alternative), he met M.Vignon who verbally admitted that he had been asked by Alain Villaret to do a presentation for Stanton Bonna, saying that Matière showed Stanton Bonna everything in relation to the Project including costs. In oral evidence, Mr Buckley stood by what he had said and added that the meeting to which he referred, when the alleged admission was made, took place on 6 November 2019. Mr Buckley says his reaction to this admission was limited as he was new to the Project and the relationships within it. When Mr Buckley's written evidence was put to M.Vignon he completely denied it and said it was impossible. M.Vignon suggested Mr Buckley might have misunderstood what he said. He said that because the idea of Stanton Bonna being a replacement for ABM did not occur until later, in 2020.
- Matière and ABM had met Stanton Bonna much earlier, as Mr Buckley accepted. M.Vignon could not recall how far back this was but Mr Buckley agreed it was in 2018. That was also Mr Minihane's evidence. It seems this was at a time when a tri-partite arrangement was in contemplation whereby the pre-casting element was to be shared between ABM and Stanton Bonna. Mr Minihane explained that ABM had been asked by EKJV to review bringing in a third party to help with the bid for the Green Tunnels Project. There was one tri-partite meeting at which Mr Minihane attended. Mr Buckley also accepted that Mr Sanderson had been in attendance at those meetings with Matière and Stanton Bonna but, according to Mr Minihane, he and Mr Sanderson attended a separate meeting with Stanton Bonna. At all events, by August 2018, Stanton Bonna had said they were not going to commit. It therefore seems probable that there was at least one meeting with ABM, Matière and Stanton Bonna in 2018. At that time, there may also have been one meeting without ABM and another one without Matière. However, there was no question of Matière having revealed anything at those meetings which it ought not to have done, as ABM was not then in competition with Stanton Bonna. Stanton Bonna was shown some pricing information in the context of this joint arrangement and signed non-disclosure agreements with each of Matière and ABM.
- If Stanton Bonna was mentioned by M.Vignon at all to Mr Buckley in November 2019, the most likely explanation is that he was referring to those discussions which took place in 2018. I do not accept Mr Buckley's evidence about M.Vignon's admission that, in 2019, he had showed Stanton Bonna everything, including costs, and prefer the evidence of M.Vignon. I did not find Mr Buckley to be a convincing witness on this topic but it is also notable that Mr Sanderson, who was said to have been present at the time of this exchange in November 2019, said nothing about it in his witness statement. Nor was there any subsequent email exchange or other communication within ABM suggesting that M.Vignon's 'admission' had been a revelation of something which should not have occurred. I therefore reject this particular of breach on the facts. There was no separate presentation by Matière to Stanton Bonna in 2019 at which Stanton Bonna was shown everything relating to the project including costs. Nor did M.Vignon so admit.
- I make a further point in relation to this issue. It became apparent during Mr Buckley's cross examination that the significance of this issue to ABM had been overblown. Mr Buckley said that, at the time of this supposed admission, he was not worried about what he heard. It was only "low level revelation" and "a minor beef". It follows that, even if this breach had been established, it would not have played any significant role in causal terms.
- In any event, I dismiss the claim for the breach pleaded at paragraphs 36 and 37 of the Amended Defence and Counterclaim since ABM has not established the facts on which it was based.
Entering into a further PSC and Sub-Contract for the same Green Tunnels Project
- ABM says that, shortly after termination of the 2019 Professional Services Appointment, Matière entered into a new agreement with EKJV to continue the same work as that which had been terminated. I have found that to be the case since I rejected Matière's evidence that it related to different work. The agreement was concluded with effect from 26 October 2020, the date it bears, even if it was only signed in June 2021.
- ABM also says that Matière subsequently entered into a subcontract with EKJV, but without ABM, for the installation works relating to the Green Tunnels Project. In fact, the entity which contracted with EKJV was Matière UK Ltd. Other than that, the plea is factually correct. The agreement was concluded on 29 November 2021.
- It is important to note that neither of these actions is said to be a breach of the Consortium Agreement. Instead, breach of Clause 3.2 of the Collaboration Agreement is pleaded: see paragraph 38 of the Amended Defence and Counterclaim.
- Moreover, these two breaches are not said to give rise to any claim for damages for loss of a chance: see paragraph 39 of the Amended Defence and Counterclaim. Instead, they form the basis of ABM's separate claim for an account of the profits made by Matière's entry into the subcontract for the installation works with EKJV: see paragraph 40 of the Amended Defence and Counterclaim.
- I accept that Clause 3.2 of the Collaboration Agreement precluded Matière (directly or indirectly) from entering into any contract or engagement in relation to the Project or its subject matter for so long as the Collaboration Agreement remained in force. I would also accept that entering into the two agreements would, prima facie, breach that obligation if the Collaboration Agreement was still in force. Matière's central defence to the alleged breach is that it was not. It contends that the whole Collaboration Agreement terminated pursuant to Clauses 2.2, 23.1.1 and/or Clause 23.1.3. Alternatively, it says that each of ABM's and Matière's obligations under Clause 3.2 of the Collaboration Agreement terminated. Its case is that the underlying basis for the Collaboration Agreement had fallen away.
- Mr Minihane did not accept that the Collaboration Agreement was officially terminated upon receipt of the termination letter. He said he believed that Matière was still bound to ABM beyond that point. He is correct to an extent. Clause 24.1 identifies those provisions which survived termination, which include payment, but notably they did not include Clause 3.
- ABM submits that Matière's termination argument ignores the reality of the position. It argues that for some time M.Matière had intended for Matière to work with EKJV, without ABM. In particular, from at least July 2020, M.Matière explored with EKJV the means of escape from their contractual arrangements with ABM. On ABM's case, it would be an absurd construction of the Collaboration Agreement to hold that Matière was not in breach by entering into a new Agreement with EKJV in such circumstances.
- In my judgment, Matière's position is the correct one. I agree that, in substance, if not in form, the basis for the Collaboration Agreement had completely fallen away once the letter of termination had been issued. Within the termination provision in the Collaboration Agreement, ABM and Matière had defined the termination criteria reflecting that the substance and purpose of the agreement had fallen away. Those criteria depended on a decision by EKJV to withdraw, or not make, any offer and/or to confirm that no award would be made. In each case, those were EKJV's decisions to reach, not Matière. The letter of termination was confirmation that the Main Subcontract would not be awarded to the Consortium of ABM/Matière. It was also obvious that the Main Subcontract was never going to be awarded to the Consortium. As Matière submits, it was no longer possible for ABM/Matière JV to negotiate with EKJV from this point. In those circumstances, I agree that a right to terminate accrued pursuant to Clause 23.1.1 and Clause 23.1.3. I would not accept that Clause 2 applies.
- ABM's grievance is that it was Matière who helped to bring about the decision made by EKJV. But the fact remains that it was EKJV that took the decision, as only it could, and that brought Clause 23 into operation. ABM did not plead or develop any principle of construction that Matière was not entitled to rely on the time limiting provision in Clause 3.2 ("for so long as this Agreement remains in force") where, on its case, it was Matière that had helped to bring EKJV's termination about. In such a case, proof of causation would have been difficult as I am satisfied that EKJV would had reached its own view on termination irrespective.
- All that was strictly required to complete contractual termination of the Collaboration Agreement was the giving of written notice by Matière to ABM: see Clause 23.1. In the circumstances, fulfilment of that requirement was both unnecessary and a mere formality. That both ABM and Matière were of one mind that their joint involvement in the Green Tunnels Project was over is clear from the fact that they (through ABM) provided a Final Account Submission to EKJV on 27 May 2021. ABM did not develop a responsive claim that the Collaboration Agreement was not lawfully terminated for want of written notice. In any event, damages would only ever be awarded to ABM on the basis that Matière could have issued a written notice of termination. The claim for an account would have to take that same approach into consideration.
- In all those circumstances, I conclude that Matière was not in breach of Clause 3.2 of the Collaboration Agreement because that provision was no longer effective from the date on which the termination letter from EKJV was received. It follows that it was not a breach of the Collaboration Agreement to have entered into the agreements dated 26 October 2020 and 29 November 2021.
- In those circumstances, I dismiss the claim for breach pleaded at paragraph 38 of the Amended Defence and Counterclaim. The claim for the account accordingly fails.
- In any event, I would observe that it is difficult to see how entering into a new PSC, which is the subject matter of ABM's first complaint, could ever have given rise to a claim for an account of profits made under the NEC3 contract, which is the subject matter of ABM's second complaint.
- It is not necessary for me to address the question of whether it makes any difference that it was Matière UK Ltd, rather than Matière, which entered into the NEC3 Contract.
Causation
- I must now return to those breaches of both the Consortium Agreement and of the Collaboration Agreement which I have upheld, namely the undermining by Matière of the Scunthorpe factory in various ways, and determine the question of causation in relation to them.
- The first point to identify is the nature of the loss claimed because, until that has been properly characterised, it is not possible to test whether Matière has caused that loss. Here, there is common ground between the parties as to what is claimed. ABM's case is that Matière's breaches have caused a loss of the chance to win the bid for the Green Tunnels Project. ABM does not claim that Matière caused the loss of the bid itself. Nor does it need to show this in order to prove its claim. It is common ground that the law recognises the loss of a chance as a head of loss which is, in principle, recoverable. That is so where the outcome is one which depends upon what others would have done: in this case EKJV.
- As expressed in McGregor on Damages, 22nd edition at 11-049:
"Losses of a chance appearing in the process of quantification do not fall within the loss of a chance doctrine. Loss of a chance proper, as it may be termed, has a more limited field. It comes in before we get to quantification; indeed it comes in at the causation stage. How is this? It is because there are situations where the law has recognised, and has treated, the loss of a chance as a form of loss, an identifiable head of loss in itself. To take Lord Hoffmann's way of putting it in Barker v Corus (UK) Ltd "the law treats the loss of a chance of a favourable outcome as compensatable damage in itself". Causation is then established by showing that the claimant has lost the chance. This is shown on the balance of probabilities. This then makes for three stages in the enquiry: first, it must be ascertained whether loss of a chance is recognised as a head of damage or loss in itself; secondly, it must be shown that on the balance of probabilities the claimant has lost the particular chance; thirdly, the lost chance must be quantified and the quantification is expressed in percentages and proportions."
- In this context, the parties between them appropriately cited Spring v Guardian Assurance plc [1994] 3 WLR 354, Allied Maples Group Ltd v Simmons & Simmons [1995] WLR 1602; Gregg v Scott [2005] UKHL 2 and Perry v Raleys Solicitors [2020] AC 352. It is unnecessary to analyse these cases in detail but I cite Lord Nicholls from Gregg v Scott in which he said at [17]:
"In adopting this approach the law does not depart from the principle that the claimant must prove actionable damage on the balance of probability. The law adheres to this principle but defines actionable damage in different, more appropriate terms. The law treats the claimant's loss of his opportunity or chance as actionable damage. The claimant must prove this loss on balance of probability. The court will then measure this loss as best it may."
- Beyond the common ground, the approach that each party submitted should be followed in the present case was different. Matière identified three principles:
(1) The claimant (here ABM) must prove on a balance of probabilities that it had a real or substantial chance of securing the benefit that it claims has been lost, in this case the contract for the Green Tunnels Project. The 'real or substantial chance' should be assessed qualitatively rather than quantitatively. The identification of a threshold percentage between a negligible, as opposed to real or substantial, chance was apparent from some first-instance cases. Thus, in Thomas v Albutt [2015] EWHC 2187 at [461], Morgan J suggested that prospects of 10% or less should be regarded as negligible, an approach which was noted by Proudman J in Harding Homes (East Street) Ltd v Bircham Dyson Bell at [167]. Waksman J also said in PCP Capital Partners LLP v Barclays Bank plc [2021 EWHC 307 at [559] that he found it difficult to see how a chance of anything less than 11% could be regarded as a real and substantial one. He followed those two earlier cases: see [561]. However, Matière did not accept that any assessment of prospects of success above 10% must necessarily be seen as a real and substantial chance.
(2) If the Court was to conclude that ABM would never have been awarded the contract for reasons other than the breach, the claim fails at this point. A speculative chance can be ignored.
(3) The claimant must provide on a balance of probabilities that the breach was causative of that loss of chance. ABM would have to show that the breach was the effective or dominant cause of the loss of chance.
(4) The claimant did not need to prove on a balance of probabilities that it would in fact have secured the benefit had there been no breach of contract. The question of whether it would or not falls to be evaluated as part of the exercise of quantifying its loss and a consideration of the prospects of securing the benefit but for the breach.
- Beyond that, Matière added reliance on the following two authorities. In Wellesley Partners LLP v Withers LLP [2016] Ch 529, Floyd LJ said at [99]:
"All the claimant has to show in such cases is that the chance is a real or substantial one. Having done so he must still show on a balance of probabilities that the defendant's act has caused the loss of the chance."
If the court is not satisfied on a balance of probabilities that the loss of chance was caused by the alleged breach, the assessment of loss of chance becomes irrelevant. Matière cited Pill LJ in BCCI v Ali (No.3) [2002] All ER 750 at [25]:
"Upon the judge's findings, to which it will be necessary to refer in some detail, he was not obliged to assess the loss of a chance: he found on the evidence that stigma played no part in the failure to obtain employment. Had there been evidence in Kitchen that that claim against the original wrongdoer had no chance of success or in Allied Maples that the vendor would in no circumstances have renegotiated, the judges in those cases need not have applied the loss of a chance principle as they did."
- Applying those principles, Matière submits that, if found to be in breach in respect of the undermining of the Scunthorpe factory, the Court should find that it was EKJV who had concerns about it and who raised it. Those concerns were not caused by Matière but came from within EKJV. EKJV required options to be explored of its own volition. Matière adds that there were other significant multi-faceted issues than the Scunthorpe factory that had been raised by EKJV which remained unresolved, as identified in the letter of termination, including the JV structure, concerns about performance following the fire testing and events at Luton, and the funding of the factory proposal. Taking causation as a whole, EKJV decided it did not want to proceed with ABM because of its perception of ABM and its own preference for Stanton Bonna. The likelihood is that ABM was perceived negatively within EKJV and, increasingly so throughout 2020, for reasons for which Matière was not responsible.
- Adopting its three stage analysis set out above, Matière suggests that if the Court were to conclude that Matière's breaches were not causative of EKJV's decision to terminate the relationship, the substantiality or otherwise of the chance becomes irrelevant and the Court is not required to assess it, citing BCCI above. Subject to that, the question of whether ABM had a substantial chance of being awarded the subcontract in the bid, and the extent of that chance, falls to be determined at the point of each breach. On the other hand, Matière also submitted that I should also assess whether, at the point when Offer 10 was made, there was a substantial, as opposed to negligible, chance of it being accepted. In circumstances where ABM had no means of funding the Scunthorpe factory, it said there was no substantial chance at that point.
- In this case, the breaches I have found to have existed occurred over a period of time. That presents a difficulty when it comes to causation. Matière pointed out that an early breach may not have caused the loss of chance (perhaps because the playing field still remained open at that time or because other causes were operating) whereas a later breach may not have caused loss either if, by then, the chance of winning the subcontract had reduced to such a point that it was no longer substantial for unconnected reasons. In between, the position should be assessed at the time of each breach.
- ABM's approach to causation was focused on the application of principles to the facts of this case, rather than on any difference about the law. It also recognised the difficulty of how to assess the causative effect of breaches which occurred over time as arose on the facts of this case. For example, it pointed out that, on its case, it would almost certainly have been possible to overcome any difficulties resulting from Matière's breach in mid-February 2020. Thus, it accepts it would be difficult to say that, taken in isolation, a breach on (say) 12 February 2020 caused the significant damage which later occurred. Equally, ABM accepts that M.Matière's contact with Mr Lowery in September 2020 was unlikely to have been causative since, by then, the damage had already been done. Understood in this way, it suggests that the correct approach is not to consider each individual breach and its consequence on a chronological basis but see it as a whole course of conduct, akin to a single continuing breach, which had the cumulative effect contended for. It would be wrong in principle just to go to the end of the story and conclude that, by reference to the letter of 18 September 2020, the prospects of success in winning the subcontract were negligible (a finding which, of course, it resisted in any event). On its case, there was a single course of conduct by Matière in undermining the factory at Scunthorpe, which manifested in a continuing set of breaches over time. It submits that the Scunthorpe factory became an issue because of Matière and remained an issue because of Matière. Since it was a course of conduct akin to a continuing breach it was appropriate to stand back and conclude that between February 2020 and September 2020, ABM's prospects of securing the subcontract went from extremely high to virtually nil. A loss of chance in the order of 90% is suggested.
- Matière submits that this approach assumes what it seeks to prove, namely that, but for the breaches, the chance that ABM might have had at the outset of negotiations would have continued intact despite all the other matters that arose for which Matière was not responsible. ABM's prospects were never "almost certain" because they depended on EKJV being satisfied as to ABM's competence, the price and funding risk. When considering breaches by Matière, it submits that I should also take into account that ABM would not have acted differently but would, instead, have continued its aggressive commercial negotiating strategy, focused on Scunthorpe and, until a very late stage, requiring EKJV to fund the cost of building it. Moreover, since ABM was unable to show on a balance of probabilities that it was or would have been able to secure a bond necessary to secure advance factory funding, or the finance to fund the factory itself, there never was any real or substantial prospect of it being awarded the subcontract, since there was no prospect of EKJV agreeing to do so.
- In terms of the law, I am satisfied that the approach identified by Matière which I have earlier set out above is correct. Overall, I must be satisfied that ABM had a real or substantial chance of winning the subcontract. That is a chance which is neither non-existent nor negligible. Anything with prospects of less than 10% would be negligible. The burden lies on ABM to prove that it had a real and substantial chance and that a breach, or breaches, by Matière were the effective or dominant cause in a reduction of that chance. Evaluation of the lost chance then follows, if it arises.
- At the time of the earliest breach alleged, in February 2020, I am satisfied that ABM/Matière had a real and substantial chance of winning the subcontract. Indeed, that must have been so given the fact it had been named as subcontractor in the draft Main Contract with HS2 Ltd. The common expectation at the time of the Consortium Agreement was that ABM/Matière would be successful in their bid. However, I do not accept that ABM/Matière was 'virtually certain' to win either then or at any time subsequently. I am also satisfied that by no later than the EKJV board meeting on 19 August 2020, it had no real prospect at all of winning the subcontract. Indeed, the prospects had already been reduced to negligible by the end of May/early June.
- For the reasons that I have largely expressed in the narrative above, I do not consider that ABM has proved that any of the breaches by Matière played a material part in the reduction of ABM's prospects of being appointed with Matière under the subcontract. I reach that conclusion whether by looking chronologically at each of the breaches individually or by aggregating their effect. There are, essentially, three reasons for that conclusion. The first is that whenever Matière undermined the Scunthorpe factory, it did so in response to, or at the behest of, EKJV and with its encouragement. The problems that EKJV had with the factory at Scunthorpe were problems that it had already identified, and would have done with or without assistance from Matière. ABM submits that, if Matière had held fast and rejected EKJV's overtures or encouragement to look at alternative manufacturing locations then a reconsideration of Scunthorpe would never have happened and the overall prospects of success for ABM/Matière would not have reduced in this way. There is an element of 'chicken and egg' about that submission but, overall, I reject it. EKJV was the master in all of this and Matière was its servant. Matière chose to keep its options open in response to whatever it was that EKJV asked for. It is plain to me that EKJV was, for much of the time, unhappy with ABM's element of the joint offering, whatever Matière said. Plan C was EKJV's own suggestion. Mr Lowery's email of 29 May 2020, which I have found to be an honest expression of his true thoughts, is an example of the unhappiness. I conclude EKJV would ultimately have made its own equivalent investigations into other sites and other contractors irrespective of whether Matière went along with it or not. Matière did not push back on these initiatives, as it plainly should have done pursuant to its contractual obligations owed to ABM, but its failure to do so made no ultimate difference. In short, Matière's breaches did not cause the diminution in the chance of winning the bid.
- By broad reference to the time-slices relied on by ABM in its closing submissions, my analysis is as follows:
Early January 2020
ABM submits that the difficulty which emerged in early 2020 was the price of the Scunthorpe proposal. It suggests that, had ABM/Matière JV stood together to explain why Scunthorpe was the best idea, there was every likelihood that the idea of reconsidering the flying factory, which by then had arisen, would have died then and there. Reasons for this include that there was no alternative to a factory at Scunthorpe. I have already said that I do not agree with the premise. The idea of constructing a permanent factory at Scunthorpe would inevitably have had to be revisited at some point. The discussion in the meeting with all parties on 12 February 2020 would have taken place in the same or similar way whether or not Matière stood together with ABM at the meeting or after it. Contrary to ABM's submission, there were alternative options that had to be investigated (as history showed) and those options are the sorts of things EKJV asked to be looked at. ABM's alternative position is that, if ABM/Matière had worked together in a united way, other sites would have been located as part of a search but none would have been identified as suitable. Instead, the Scunthorpe proposal would have been the only suitable site available. Again, I disagree. I would add that it was not possible to separate the location and type of factory from the price and EKJV did not intend to separate the two as part of its reconsideration.
February/March 2020
ABM submits that, but for the discussion after the meeting on 12 February 2020, the position would have been entirely different. It suggests that there would have been real commercial pressure on EKJV to proceed on the basis of Scunthorpe and there would have been no pretext to stop the negotiations. I do not agree. EKJV would always have been intent on looking at other options with a view to reducing the financial gap in price. In any event, it is difficult to reconcile ABM's own case on causation in this period with its further case, set out below, that Mr Swift's decision in favour of Scunthorpe in his email of 8 April should have been an end to the matter, but for subsequent breaches of contract by Matière.
March/April and thereafter
ABM's case is that the position could have been retrieved had Matière not behaved as it did in March and April, and thereafter. Had Matière supported Mr Swift's decision on 8 April 2020 then, in all probability, it would have been an end to the matter. It points to the absence of alternative sites and the increasing commercial pressures on EKJV. I do not agree. As I have said, I do not accept that the effect of Mr Swift's email was as clear or settled as ABM suggests. Mr Swift himself said that there needed to be focus on price, thus linking the two. Others within EKJV had a different view on the merits of Scunthorpe, and on ABM itself, irrespective of Matière's actions. The door was never closed to other options.
April/May 2020
In this period ABM suggests that, had Matière remained part of the ABM/Matière JV in more than name, there would have been a very real prospect that EKJV would never have contacted Bonna Sabla or asked for an alternative tender. I disagree. The option of looking at alternative contractors was being driven by EKJV irrespective of Matière. Stanton Bonna itself had long been in EKJV's sights as suitable for this Project. Matière points out that Mr Minihane's failure to sign the land letter and, later, the backtracking on the buy-back would have provided EKJV with further justification for looking at alternative options. I agree.
Late May/early June
In this period ABM submits that Matière capitulated to EKJV. It now accepts that there was almost no chance of a contract for the JV at this time. As I have held, Matière did not capitulate to EKJV but continued to ride both horses. I agree that there was almost no chance of the JV winning the bid at this time. Serious concerns about ABM were held within EKJV for reasons unconnected with Matière. ABM suggests that Matière threw away a negotiating chip held by ABM/Matière JV, namely that Matière would never work for EKJV without ABM, and made it plain it had no real wish to continue with ABM. Matière is right to say that this is not a pleaded complaint but, in any event, I do not agree that Matière expressed a preference for abandoning its JV partner.
June to August 2020
As Mr Minihane accepted, in mid-June there were concerns that ABM's costs were not under control and confidence in its prices were getting lower and lower. These were not matters for which Matière was responsible yet they presented a real concern to EKJV. By mid-July, the position for ABM/Matière JV was a serious one which needed to be redeemed. ABM appreciated the need to close the financial gap and find a way, as only it ever could, of making Scunthorpe more palatable to EKJV. It was slow to reintroduce the buy back proposal and then, as its last throw of the dice, the agreement to finance the cost of construction itself. But by now, it seems clear that EKJV had been in active discussion with Stanton Bonna for some time, which it would have done with or without Matière. On any view, by 19 August 2020, the 'in principle' decision not to contract with ABM/Matière had already been reached.
- The second reason for my conclusion on causation is that there were other factors which occurred over time so as to diminish to non-existent such prospects of ABM/Matière winning the subcontract as ever previously existed. They are the matters listed by Mr Lowery in the termination letter, as set out above. Although what mattered was EKJV's perception of the position, rather than whether that perception was objectively justified, it is clear that at least some of those matters were well founded.
- The third reason for my conclusion is that ABM was never actually in a position to fund the construction of the factory, by means of a bond or otherwise, despite that having been the basis of Offer 10. In my judgment, Mr Minihane grossly exaggerated the position in drafting for inclusion in an email to Mr Gilbert of EKJV on 10 September 2020, a statement that: "We are in financial discussions with 2 large financial institutions with who ABM has had strong relationships and co-operation for many years". In truth, Nat West had come back with nothing and the Bank of Ireland's indicative terms had not been followed up. There is no evidence before the Court that it could ever have obtained funding at the time of Offer 10 or in the future either. Thus, for the entire period in which Offer 10 was live, ABM could never have actually fulfilled it. By the time of the decision to terminate, EKJV had still not been satisfied by ABM that it could have fulfilled it and that was a cause of the decision to terminate. Responsibility for that lay entirely within ABM's hands. An alternative approach is to conclude that, at the time of termination, ABM lost no substantial chance of winning the bid in joint venture with ABM because, on a balance of probabilities, there is no evidence to show it could in fact have fulfilled Offer 10 on which the bid was based.
- I should add, for completeness, that had I found Matière to have been in breach of the Consortium Agreement by presenting the project to Stanton Bonna in 2019, I would not have found such a breach to have had any causative effect in reducing the chances of ABM/Matière JV's success. As I have noted, Mr Buckley accepted the alleged presentation by Matière (whenever it was) was only a "minor beef". Moreover, later on, it was subsequently EKJV's own wish for Matière to liaise with Stanton Bonna, which it did, as part of Plan C. This would have been the case with or without any earlier private presentation by Matière.
- For these reasons, I conclude that ABM has failed to prove that breaches by Matière caused it to lose a real and substantial chance of winning the subcontract. It follows that the counterclaim fails.
Quantum
- The trial of this action required me to consider the profit level of the subcontract to which an appropriate percentage loss of chance was then to be applied. It raised some interesting questions including whether the assessment should take into account that history subsequently showed that the actual project only involved the erection of two tunnels, not three as originally envisaged. Quantification of the loss depended on expert evidence from a quantity surveying expert on each side. In circumstances where I have dismissed the claim on causation grounds, I do not need to consider quantum and do not do so.
Summary
- For the reasons set out above, there will be judgment on the claim. The counterclaim is dismissed.
- I take this opportunity to thank leading and junior counsel for their helpful submissions and to both legal teams for the smooth conduct of the trial.
- I invite the parties to draw up an order reflecting the above once consequential matters such as interest and costs have been addressed.
Note 1 Carillion later dropped out of the picture. [Back]
Note 2 I use the names interchangeably without significance. [Back]
Note 3 This is not the specific Plan B earlier described by M.Vignon of which ABM had then been unaware. In the present context, it is just a plan that did not involve ABM. [Back]
Note 4 Once again, for convenience I draw no distinction between Bonna Sabla and Stanton Bonna. [Back]