Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 138
CA1/11	OPINION OF LORD HODGE in the cause CARILLION UTILITY SERVICES LIMITED Pursuers; against SP POWER SYSTEMS LIMITED Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuers: Ellis, Q.C., Hawkes; MacRoberts LLP

Defenders: Reid, Q.C., Richardson; Shepherd & Wedderburn LLP

18 August 2011

[1] In 2003 the pursuer ("Carillion") entered into a framework agreement with the defender ("SP") for Carillion to carry out excavation, backfilling and reinstatement works and the installation of electric and ancillary cables. Carillion's predecessor, Alfred McAlpine Utility Services Limited, tendered for the works by tender dated 30 January 2003 and SP issued a letter of appointment dated 12 June 2003. The framework agreement comprised (a) the tender, (b) the letter of appointment, (c) SP's Conditions of Contract ("Conditions"), (d) a works specification ("Specification") and (e) a schedule of rates ("Schedule"). The framework agreement was initially for three years but was extended by an extension agreement dated March and May 2007 until December 2007. It provided that a contract between the parties comprised the documents mentioned above together with a work order. Approximately 35,000 works orders have been issued under the framework agreement. SP has paid Carillion over £84 million for the various works and in this action Carillion claims over £8 million.

[2] Carillion claims to be entitled under the contract to payment in relation to the lamping and guarding of excavations, which involved the provision of traffic cones, warning lights and barriers, during the period between its completion of the excavation works and the completion by SP of cable jointing operations in the excavations. Carillion avers that there was a three-stage process. First, Carillion received a work order to excavate a site and carried out those works ("the excavation period"). Secondly, SP carried out the cable jointing works ("the repair period"). Only SP engineers could carry out the joining of cables. Carillion averred the repair period could last from between one day and several months. Thirdly, on intimation by SP that the repairs were completed, Carillion sent a team to backfill the excavation, reinstate the site and remove the lamping and guarding ("the backfill period").

[3] SP has paid Carillion for lamping and guarding during the excavation period and the backfill period. The parties dispute is focused on the issue whether Carillion is entitled under the framework agreement to payment for the supply of lamping and guarding during the repair period. SP argues that it is not and seeks to have the action dismissed as irrelevant.

[4] This is one of two actions which Carillion has raised against SP. The other (CA 165/10) is to enforce an adjudicator's award in relation to substantially the same dispute and I am issuing an opinion in that case at the same time as this opinion.

The relevant contractual provisions
[5] To assist an understanding of the contractual provisions, it is useful to record certain of Carillion's averments. In article 3 of condescendence it averred:

"Excavations varied considerably in practice. That part of an excavation intended for a joint was referred to as a Joint Bay. Joint Bays varied in size depending on the types of joint and cables. One of the variables was the voltage of the relevant cable. The excavations often linked two or more Joint Bays. The part of an excavation between but outwith Joint Bays is referred to hereinafter as a trench."

Carillion also averred and it was admitted that it undertook three distinct types of work under the framework agreement. First, it undertook District Network Improvements ("DNIs") which were planned works of varying scope to reinforce or improve the existing network. Secondly, it worked on Connections, which were planned works to provide customer-led connections. Thirdly, it performed Fault Works, which were reactive works in response to faults.

[6] The Conditions contained certain definitions. I set out the relevant definitions in the Appendix to this opinion. It also contained a precedence clause (clause 1.8.1) which provided that in the event of inconsistency between the contract documents, the documents were to have a specified order of precedence, starting with the work orders. Parties did not refer to specific work orders and agreed that that the precedence clause did not assist the construction of the contract in relation to the issues in dispute.

[7] The framework agreement provided for the placing of orders for the execution of specific works, thereby creating individual contracts. See the definition of "Contract" in the Appendix. Clause 7 of the Conditions provided:

"Work Order Procedure

7.1 As and when the Purchaser requires the Contractor to perform the Works, the Parties shall comply with the following procedure.

7.2 The Purchaser shall advise the Contractor of the details of the Works to be performed, complete a Work Order reflecting the agreed details and issue the same to the Contractor.

7.3 The Work Order shall also contain any additional terms which the Parties agree should apply only to that particular Work Order. Such additional terms shall include any agreed changes to any of the documents forming part of the Contract.

7.4 The Purchaser shall not be liable for the payment of any part of the Contract Price in relation to any Works, unless and until a properly completed Work Order has been issued by the Purchaser."

[8] The three types of work which Carillion performed were paid for on differing bases. First, in relation to DNIs, Carillion averred that this was generally priced and paid for using joint bay rates (item numbers L14 to L19 in the Schedule) In the Extension Agreement of March and May 2007, it was provided that from 10 July 2006 a 2-man squad including vehicles (Schedule, Bill Item 39) would be used for DNI works. Carillion averred that, when it used Item 39 for excavation in relation to DNIs, it charged and was paid for reinstatement works under Schedule, Items 50-59, which page of the Schedule was headed "Additional Items" and specified charges for the reinstatement of excavations of various areas. Secondly, connections were generally priced using joint bay rates. Thirdly, fault works, which Carillion averred constituted 66% of the work which it undertook under the contract, were paid for at hourly rates for the provision of 2 or 3-man rapid response fault repair teams which were Items FM2 and FM 3 in the document headed "Enquiry 1930", which formed part of the Specification. Carillion averred that reinstatement of such works was recognised as a separate stage and that it was paid for works carried out during the backfill period using the Schedule Item numbers 50-59, following measurement of the works. Carillion also averred that approximately 77% of the work which it carried out had been instructed and paid for on a dayworks basis. Although it is not entirely clear, I take the reference to dayworks to mean, at least principally, the fault works and Items 39 and 50-59.

[9] The Conditions contained certain provisions which imposed an obligation on Carillion to provide lamping and guarding. Clause 9.1 provided:

"The Contractor shall in all matters arising in the performance of the Contract observe and perform such of the obligations and restrictions imposed on the Purchaser or any Group Company in the capacity of undertaker by the New Roads and Street Works Act 1991, or any other statute or by any order, regulation, or by-law made with statutory authority as apply to or affect the Contractor or anything done or omitted by the Contractor in the execution of the Works."

Clause 19 provided:

"19.1 Unless otherwise stated in the Contract, the Contractor shall, at his own expense, provide all Contractor's Equipment and all other materials, labour, haulage, and power necessary to execute and complete the Works.

19.2 Without prejudice to any other obligations hereunder, the Contractor shall while on the Site provide and maintain all equipment necessary to comply with Condition 22.1 (Liability for Accidents and Damage) and Condition 20.1 (Safety Precautions)."

The definitions of "Contractor's Equipment" and "Works" in clause 1.1 of the Conditions, which are set out in the Appendix, were sufficiently broad to cover lamping and guarding. Clause 22.1.1 imposed on the Contractor an obligation to take every reasonable precaution to protect the Works against loss and damage until the date when they were taken over by SP on completion (clause 24). Clause 20.1.2 imposed on the Contractor an obligation to conform with all Acts of Parliament and other laws which were applicable to the Works.

Clause 24.1 provided:

"As soon as the Works have been completed in accordance with the Contract .... and have passed the Tests on Completion, the Contractor shall issue a measurement sheet to the Engineer in which he shall state the date on which the Works have been so completed and have passed the said tests and the Purchaser shall be deemed to have taken over the Works on that date. ..."

It was not disputed that one of the principal legislative provisions which formed the backdrop to the framework agreement was the New Roads and Street Works Act 1991, which, together with codes of practice issued under its aegis, imposed strict rules for the signing, lighting and guarding of such works.

[10] The Conditions also had provisions relevant to payment. First, there was the obligation on the Contractor in clause 19.1 (above) to provide Contractor's Equipment at its own expense. SP founded on this provision. Clause 33 concerned the measurement of works and clause 33.4, on which Carillion relied, provided:

"33.4 The sum payable in respect of each such part of the Works shall be ascertained according to the price or rate appropriate thereto as specified in the Contract. If no appropriate price or rate has been specified the price or rate shall be a fair or reasonable price or rate taking into account any prices, rates or quantities that may be specified in the Contract for similar plant or work. ..."

Clause 38 required Carillion to send SP an invoice stating the amount claimed in accordance with an approved measurement sheet setting out in detail, in accordance with the Schedule, particulars of the Works executed on the site pursuant to the contract.

[11] The parties disputed whether the framework agreement provided for continuous working by Carillion on any site. The relevant provisions of the Conditions were as follows. Clause 14, which related to engineer's decisions, provided:

"14.1 The Contractor shall proceed with the Works in accordance with the decisions, instructions, and orders given by the Engineer in accordance with the Contract, provided he can do so with safety ..."

Clause 23.1.1 provided:

"Time for Performance

The Works shall be performed in a timely and professional manner and in accordance with the timescales set out in the Specification and/or any relevant Work Order, or as otherwise reasonably stipulated by the Purchaser."

Clause 26.4 provided:

"Unless otherwise provided in the Specification the Purchaser shall give the Contractor facilities for carrying out the Works on the Site continuously during the working hours normal to the type of work concerned. The Engineer may, after consulting with the Contractor, direct that work shall be done at other times if it shall be practicable in the circumstances for work to be so done, and the reasonable extra cost of work so done shall be added to the Contract Price unless such work has, by the default of the Contractor, become necessary for the completion of the work within the time fixed by the Contract, or, if no time to be fixed, within a reasonable time."

Finally clause 29 provided that Carillion would give the engineer written notice of a date when it would be ready to make the test on completion which would, if successful, lead to SP taking over the works under clause 24. Clause 29.1 stated that unless otherwise agreed, the test would take place within ten days after the specified date on a day or days which the engineer specified in writing.

[12] It appears that clause 26.4 envisaged a norm of continuous working but that SP could reasonably stipulate otherwise (Clause 21.1.1) and that there would be a period when Carillion personnel were not working before SP took over the works (clause 29.1). Paragraph 7.4(f) of the Specification, which I set out in the next paragraph, also envisaged that part of the site would be taken over by the engineer when SP's staff carried out jointing works.

[13] The Specification also had provisions which were relevant to the obligation on Carillion to provide lamping and guarding. The Specification on page 1 stated that it detailed SP's "requirements for the excavation, laying cables and/or ducts, back filling, and reinstatement of trenches used for the installation of electric and ancillary cables." Paragraph 7.1, which was not definitional, stated that

"In general the works may consist of the excavation, laying of cables/ducts, backfilling and reinstatement and may include but not be limited to any or all of the following".

It then listed tasks to be performed or things to be provided, which did not include lamping and guarding. But paragraph 7.4, on which SP founded, set out the contractor's responsibilities, so far as relevant, as follows:

"7.4 Contractors Responsibilities

(a) The Contractor shall provide all supervision, labour, transport, plant and materials (except those supplied by the Company) required to complete the work in accordance with all the requirements and specifications.

(b) The Contractor shall at all times manage the site and execute the work in a thoroughly safe manner in accordance with the relevant legislation,

(c) The Contractor shall be entirely responsible for the safety of their employees, those of any subcontractors, and any other person connected with the site and the general public. ...

(e) The contractor shall be entirely responsible for each section of the work until it has been taken over by the Company.

(f) In the case where the Purchaser requires to carry out jointing works, the Engineer will take over responsibility for that part of the site associated with jointing only, and only for the period when the Purchaser's staff are on

site.

(g) The Contractor shall be responsible for attending, where appropriate, any site meetings arising from defects in his work under the New Roads and Street Works Act. ...

(j) The Contractor shall provide such facilities as are required for the

efficient execution of work during normal hours and shall make adequate provision for maintaining the works on a 24 hour emergency basis. ....

(n) The Contractor shall ensure that in all circumstances the work is carried out in accordance with the relevant legislation, regulations, codes of practice etc. and that staff are competent and suitably qualified to carry out the work. ...

(p) The Contractor shall comply fully with the requirements of Chapter 8 of the Traffic Signs Manual (revised 1991) and the Code of Practice for Signing and Guarding of Roadworks under the 'New Roads and Street Works Act 1991'. ....

The rates shall include for the provision and maintenance throughout the duration of the works of all necessary signs, barriers, cones and traffic control or traffic lights. ....

(s) The Contractor shall ensure completion of the Works in accordance with Condition 23 of the Conditions of Contract."

Paragraph 7.13 imposed on Carillion an obligation to ensure that the excavations were safely shored and paragraph 7.15 provided:

"The company has a policy of zero defects due to Signing and Guarding at works. This performance is achievable provided all staff are trained and accredited and apply the guidance contained within the Code of Practice termed Safety at Street Works and Road Works, effective from the 1 January 2002 and applicable throughout the UK.

Under no circumstances must an excavation be left without Signing and Guarding. ..."

[14] The relevant terms of the Specification in relation to payment were as follows. First, paragraph 7.4(p), which I have set out in the preceding paragraph, contained the statement on which SP founded, that

"The rates shall include for the provision and maintenance throughout the duration of the works of all necessary signs, barriers, cones and traffic control or traffic lights."

Secondly, paragraph 8.1 provided:

"8.1 Schedule Requirements

The rates in the price schedule shall include for:

...

(e) the supply, installation, guarding and subsequent removal of all plant necessary for the execution of the works.

(f) watching and lighting.

(g) the supply, installation, operation and subsequent removal of all necessary traffic signs and traffic control measures. ..."

Thirdly, paragraph 8.2, which comprised definitions which were stated, where applicable, to help define the requirements of paragraph 8.1 by clarification, contained the following relevant provisions:

"8.2.13 Joint Bays

The rates quoted per joint bay shall be used exclusively for the excavation, backfill and reinstatement of joint bays. Joint bays shall be to the minimum dimensions detailed in document CAB-15-003. No payment will be made for any additional width or depth for items C9, C10, C23 and C24.

8.2.14 Exposure Bay and Joint Bays

(a) The cable between the joint bays shall be installed at the appropriate comprehensive schedule rates.

(b) The joint bays shall be charged at the appropriate joint bay rate

(c) ...

The joint bay rates shall also include the guarding and lamping of joint bays, including any necessary traffic controls, commencing from the opening of the joint bay."

Finally the document, "Enquiry 1930", which formed part of the Specification, defined certain faults and also the 2 and 3 man rapid response fault repair teams. In relation to each such repair team it provided:

"Rates shall include for all necessary plant, machinery transport, consumables and other items required to complete the Works to the Engineers satisfaction."

[15] The Schedule listed, among other things, daily and weekly rates for dayworks and plant, and flat rates for equipment and squads. In item numbers L14 to L19, which were the joint bay rates, it listed rates for different sizes of joint bays and different surfaces types. Thus, for example, Item L14, which applied to joint bays for 33KV single core cables and measured 2m x 1.1m x 1.4m, had rates per square metre ranging from £102.68 for unmade ground to £347.86 for type 3/4 roads. Items L1 to L13, which were the rates for laying cables, listed differing rates for different cable specifications. At the foot of the table for L items, it stated that it was "Comprehensive price per metre excavated, Cable or Duct laid, backfilled & reinstated in accordance with the "Approved Specification". In the table of flat rates for specified items (Items 20a to 45) it provided, among others, as follows:

Item	Type	Unit	Comprehensive Price/Unit
26	Lamping and Guarding (See Clause 8.2.14)	Per Joint Bay/Day	£8.03
39	2 Man squad inc vehicle (up to 6 tonnes)	Squad/Hour	£39.57

The notes at the foot of the table stated:

"All Item 39 rates to be comprehensive rates and include for signing, guarding, pumping (as required) and all ancillary tools and equipment ..."

Finally, Items 50 to 59 were, as stated above, listed as "Additional Items" and provided rates per square metre for the reinstatement of different depths of excavation and different surface types.

Carillion's claim

[16] Carillion's claim is essentially simple. It accepted that it had a responsibility for providing lamping and guarding so long as there was an excavation in order to comply with statutory regulations; but it contended that the inclusive rates, which paid for its personnel and equipment, did not cover that provision when its personnel were not on site. In relation to DNIs it averred that those contract rates made no provision for the lamping and guarding of joint bays during the repair period and accordingly that Item 26 of the Schedule applied, entitling it to a daily rate. Further, because that daily rate did not apply to the trenches between the joint bays or outwith the dimensions of the joint bays provided in the contract, it was entitled to a fair and reasonable rate for lamping and guarding such works. In relation to the connection works, as nothing was paid for lamping and guarding during the repair period, Carillion claimed payment under Item 26 in relation to joint bays and a fair and reasonable rate under clause 33.4 for trenches. In relation to fault works, the contract provided for payment of hourly rates for fault repair teams and separately for reinstatement works in the backfill period. But because Carillion was not paid for lamping and guarding during the repair period it again sought payment under Item 26 in relation to joint bays and a fair and reasonable rate for trenches. Payment was sought for (a) the provision of the lamping and guarding and (b) the daily expenditure on manpower to ensure that sites remained safely lit and guarded.

[17] Mr Ellis QC for Carillion denied SP's contention that he was attempting to alter the terms of the contract. He referred to the following authorities on the construction of contracts: Luminar Lava Ignite Ltd v Mama Group plc 2010 SC 310, Emcor Drake and Scull Ltd v Edinburgh Royal Joint Venture 2005 SLT 1233, and Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989. Whatever duties were imposed on Carillion, the rates did not include the provision of lamping and guarding when it was not working on an excavation but was waiting for SP to complete connection works.

SP's challenge

[18] Mr Reid QC for SP invited the court to dismiss the action on the basis that the averments to support the claim were irrelevant because they depended on a fundamentally unsound construction of the contract.

[19] In support of his contentions he referred to familiar authorities on (a) the objective approach to the construction of agreements: Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, at paragraph 14; (b) the adoption of a commercially sensible construction: Multi-Link Leisure Developments Ltd v North Lanarkshire Council 2011 SC (UKSC) 53 at paragraphs [19] to [21]; and (c) the incompetence of the courts altering contractual provisions to remedy what one contracting party later sees as a bad bargain: Credential Bath Street Ltd v Venture Investment Placement [2008] Hous LR 2 at paragraphs [24] and [36]. He also referred to Kookmin Bank v Rainy Sky SA [2010] EWCA Civ 582 at paragraphs 41 to 44, warning that the court would indulge in guesswork if it sought to alter the obligations which the parties had agreed to undertake.

[20] The case which Carillion pleaded was irrelevant for two reasons. First, the contract required Carillion to provide lamping and guarding throughout the period until the works had been completed and taken over; and it provided that the lamping and guarding was deemed to be included in the Schedule of Rates: see clause 19.1 of the Conditions, and paragraphs 7.4(p), 8.1 and 8.2.14 of the Specification. It was for Carillion to take account of this expense in fixing its rates. If it failed to do so, it had simply made a bad bargain. That is irrelevant to the construction of the contract. It was obvious from the contract that there might be a gap between the completion of the excavation on the one hand and its backfilling and reinstatement on the other. The deemed inclusion of lamping and guarding within the other rates in the Schedule of Rates was not inconsistent with the Item 26 rate for lamping and guarding as the latter applied where lamping and guarding was the only activity which SP in a work order had instructed Carillion to carry out. Carillion did not aver any discrete instructions to provide lamping and guarding on their own, If what Carillion claimed did not fall within the definition of "Works", it had no entitlement to payment.

[21] Secondly, the contract made no reference to a "repair period". That phrase was coined by Carillion's advisers in its pleadings. Clauses 23 and 24 of the Conditions provided that SP would provide Carillion with work in accordance with the Specification and any Work Order and that the Works were not complete until SP had taken them over. Neither those conditions nor paragraph 7.4 (b), (c), (e) or (f) of the Specification supported the view that the works were divided into stages including a "repair stage". On the contrary, paragraph 7.4 imposed on Carillion the responsibility for the safety of a site until SP took it over under clause 24. Paragraph 7.4(b) imposed on Carillion a duty to comply with the statutory obligations under the New Roads and Street Works Act 1991 which required the protection of an excavation until it was reinstated.

[22] As Carillion's construction of the contract was inconsistent with its terms, the action as pleaded was irrelevant and should be dismissed.

Discussion

[23] It was a matter of agreement that many of the contracts which Carillion and SP entered into under the framework agreement occurred in the context of the New Roads and Street Works Act 1991. But it appears that Carillion carried out work not only on roads and streets but also on undeveloped and agricultural land. I therefore cannot assume, as Mr Reid urged, that SP was obliged in every case under section 125(1) of that Act to "complete the works with all such dispatch as is reasonably practicable." On the contrary, Carillion's claim suggests that, on many sites, excavations were left open for prolonged periods.

[24] There was no dispute that the framework agreement imposed obligations on Carillion to lamp and guard excavations and so comply with the 1991 Act throughout the period that an excavation was open. The only issue between the parties was whether the cost of the provision of lamping and guarding when Carillion's personnel were not on site was included in the various rates which it could charge for the works.

[25] As set out above, payment for DNIs was initially made using joint bay rates and, after 10 July 2006, using Item 39 for excavation and Items 50-59 for reinstatement. Connections were paid for using joint bay rates. Fault works were charged using hourly rates for two or three man fault teams and subsequent reinstatement using rates per square metre under Items 50 to 59. Carillion asserted and SP did not dispute that SP had prepared the Schedule, which included the bases on which various works were to be paid for, and that Carillion had simply filled in the figures for the appropriate rates. Thus it was clear from the outset that certain works would be paid for by reference to time and others by reference to area.

[26] In my opinion the framework agreement did not provide, as SP contended, that lamping and guarding costs when Carillion's personnel were not on site were in all circumstances included in the rates to which I have just referred. This is particularly clear in relation to works which were to be charged by reference to the time which Carillion's personnel took to perform their tasks. It would to my mind be counter-intuitive to structure an agreement so that a contractor in fixing an hourly, daily or weekly rate for his staff would be expected to factor in a sum for the cost of the provision of lamping and guarding for an indeterminate period when the staff were not on site. Thus charges for fault teams under Items F2M and F3M in the Schedule, which were hourly rates, and charges for a two man squad under Item 39-39ii which were per squad/hour, squad/day or squad/week and were relevant to DNIs after 10 July 2006, do not appear to have been designed to cover costs incurred when the staff were not on site. It is also not clear, if SP were correct in its interpretation, how lamping and guarding throughout the period of the open excavation would be included in both the dayworks rates for excavation (F2M and F3M or Item 39) and also in the charges for reinstatement (Items 50-59) or how the contractor was expected to fix his rates to achieve that result.

[27] On a proper construction the framework agreement does not have that counter-intuitive result. In reaching this view, I have had regard to the approach which Lord Hoffmann advanced in Chartbrook Ltd (at paragraph 14) and have asked myself

"what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean."

[28] The central issue in dispute between the parties is the scope of Item 26 of the Schedule. It is a rate in the price schedule within the meaning of paragraph 8.1 of the Specification (paragraph [14] above). I am not persuaded that it was included in the framework agreement to cover only a circumstance in which SP ordered only the lamping and guarding of a site which it or some other person excavated. There was no suggestion in the framework agreement that parties envisaged Carillion performing such work. Item 26 appears to me to have been included in the Schedule as a flat rate per joint bay/day to deal with any circumstances where the provision of lamping and guarding for joint bays was not otherwise covered by the rates. It recognises that there might be circumstances or phases in which Carillion would not be paid under other rates for any other activities but would provide lamping and guarding.

[29] The reference in Item 26 to paragraph 8.2.14 of the Specification is a reminder that the cost of lamping and guarding a joint bay is already covered within joint bay rates in terms of paragraph 8.1 and 8.2.14. I discuss in paragraph [32] below the contention that the joint bay rates are applicable to periods when Carillion did not have staff on site. Item 26 might also for clarity have referred to paragraph 8.1 as Carillion did not dispute that the time-based rates (Items 39 and F2M and F3M) included the elements of lamping and guarding in paragraph 8.1(e)-(f) which occurred during the time which was paid for by those rates. Similarly, when reinstatement was being undertaken and paid for by Items 50 to 59 of the Schedule, it was not disputed that paragraph 8.1 included within those Items, which were measured by area, the provision of lamping and guarding during the reinstatement works.

[30] In my opinion there is nothing in the framework agreement to support the view that the rates in Items 39, F2M and F3M, and Items 50-59 include the provision of lamping and guarding at times when Carillion's personnel were not on site performing the tasks covered by those rates. SP however founded on paragraph 7.4(p) (paragraph [13] above) to support the contention that the rates (other than Item 26) were inclusive of the provision of lamping and guarding throughout the duration of the works. In my view that contention is unsound for two reasons. First, I see no reason to exclude from the reference to "rates" in paragraph 7.4(p) Item 26 which forms part of those rates. Secondly, it is necessary to bear in mind the terms of clause 33.4 of the Conditions (paragraph [10] above) which recognises that there may not be a rate for every part of the works and specifies the use of a fair or reasonable rate. Paragraph 7.4(p) does not have the exclusionary effect for which SP contended.

[31] Clause 19.1 of the Conditions (paragraph [9] above) does not support SP's contention as the requirement that Carillion provide all Contractor's Equipment at its own expense is "unless otherwise stated in the Contract". Thus if Item 26 has the meaning which I suggest, the contract does not require Carillion to supply lamping and guarding at its own expense when its provision is not covered by other rates.

[32] SP's strongest case that there was an all-inclusive rate which covered lamping and guarding when Carillion's personnel were not on site relates to the joint bay rates. The rates are, as we have seen, charged by reference to the voltage of the cable and the size of the hole and varied by reference to surface type. Unlike the parties' practice in relation to DNIs after 10 July 2006 in relation to Items 39 and 50-59 of the rates, there appears to be no separation of excavation from reinstatement but that the L14-L19 rates cover both. In this context paragraphs 8.1(e)-(f) and 8.2.14 of the Specification support the view that the joint bay rates are to include all lamping and guarding of the joint bays. I am therefore inclined towards the view that Carillion's claim so far as it seeks to charge for lamping and guarding of works which were paid for by reference to joint bay rates is irrelevant. But I am aware that in each case the individual work order constitutes the contract and that the work order may override contrary contractual provisions. It was suggested in parties' submissions that SP gave separate work orders for excavation on the one hand and backfill and reinstatement on the other. It would therefore be premature for me to exclude such averments from probation.

[33] I am also not persuaded by Mr Reid's submission that Carillion's claim was invalid because it could not point to any clause in the contract which required it to provide lamping and guarding and a related payment provision which entitled it to payment. He referred to clause 7.4 (paragraph [7] above). In my view it is clear that the contract obliged Carillion to provide lamping and guarding throughout the works and I consider that a work order to carry out excavations brought that obligation into being. Thereafter Item 26 entitles it to payment in relation to joint bays in circumstances in which the other rates do not apply.

[34] I accept Mr Reid's point that the framework agreement does not speak of any "repair period". But that does not advance his case. Mr Ellis explained that Carillion used the expression to explain what the parties must, to some extent at least, have envisaged, and what had occurred. There was no dispute that Carillion was obliged to maintain lamping and guarding throughout the period that there was an open excavation. But the parties must have known that there would be a time when SP's engineers would work in an excavation joining the cables, which was work which they alone could do, and when Carillion's personnel would not be on site at the joint bay other than on visits to maintain the lamping and guarding. The framework agreement recognises this in paragraph 7.4(f) of the Specification. The practice of issuing a work order for excavation on the one hand and a later work order for backfilling and reinstatement on the other is also consistent with this understanding.

[35] I do not think that I can address as a question of relevancy the question whether Carillion is entitled to claim payment for the lamping and guarding of the residue of trenches which it did not fill in during the repair period. I recognise the existence of clause 33.4 (paragraph [10] above) but cannot form a view on the pleadings as to whether Carillion's practice was consistent with the contract without hearing evidence about that practice.

[36] Mr Reid also submitted that Carillion's approach involved double-counting as lamping and guarding involved four elements, namely supply, erection, maintenance and dismantling. On Mr Ellis's approach the initial supply, erection and dismantling would be covered by rates other than Item 26 yet Carillion would be paid again for these elements under Item 26. That may or may not be the case. For aught yet seen, the Item 26 flat rate may turn out to be a rather broad brush means of compensating Carillion for lamping and guarding, whatever the size of the joint bay and any items of double-counting may offset any under payment for larger joint bays. In my view, questions of the quantification of Carillion's claim and the reasonableness of its rates, if the latter is relevant at all, cannot be dealt with as matters of relevancy.

[37] SP also raises a plea of prescription in relation to Carillion's second conclusion which relates to excavations which it had omitted in its initial claim but for which it applied for payment by letter dated 11 January 2011. This also falls to be dealt with in further procedure.

Conclusion

[38] SP's challenge to the relevancy of Carillion's action fails at this stage. While I do not accept as accurate SP's assertion in Answer 5 of its defences that Item 26 has no application, I recognise that an issue remains in relation to its non-application in the context of joint bay rates (paragraph [32] above). I therefore do not propose to delete any averments at this stage but to give parties an opportunity to consider their pleadings in the light of my findings. Further challenges in relation to specific bases of claim will require to be dealt with after some form of proof. I will have the case put out by order to hear parties on further procedure.

APPENDIX

Clause 1.1 of the Conditions contained the following relevant definitions:-

1.1 Definition of Terms

In this Contract unless the context otherwise requires the following words and expressions shall bear the following meanings:

"Contract" shall mean the agreement between the Purchaser and the Contractor for the execution of the works comprising:

(a) the Letter of Appointment;

(b) these Conditions of Contract Ref SP05 11.12.02(2) (including for the avoidance of doubt any schedules or appendices attached thereto);

(c) the Specification; and

(d) the Work Order(s)

together with (in each case) any documents incorporated therein by reference.

"Contract Price" shall mean the sum fixed in accordance with the Schedule of Rates.

"Contractor's Equipment" shall mean tools, tackle, stores and other things required by the Contractor (including those brought upon the Site) for the purposes of the Works but not for incorporation therein.

"Plant" shall mean cables, machinery, apparatus, materials, articles, and things of all kinds for incorporation in the Works.

"Purchaser" shall mean SP Power Systems Limited.

"Schedule of Rates" means the schedule of rates contained in Schedule 2.

"Site" shall mean the route or place indicated by the Purchaser to which Plant is to be delivered or where work is to be done by the Contractor, together with so much of the area surrounding the said place as the Contractor shall, subject to any limitations imposed by the Specification, reasonably require for use in connection with the Works otherwise than merely for the purpose of access to the said place.

"Specification" shall mean the specification defined in Schedule 1.

"Tests on Completion" shall mean such tests to be made by the Contractor on completion of installation as are provided for in the Contract or otherwise agreed between the Purchaser and the Contractor.

"Works" shall mean all Plant to be provided and work to be done by the Contractor under the Contract.

"Work Order" means a document to be issued by the Purchaser containing such information as is required by the Contract.