| Date | 6 June 1996 |
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| Judgment | Kimbell Construction Ltd -v- National Rivers Authority, 29 April 1996 |
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| The Issue | The use of Bills of Quantities and the failure to observe defined measurements rules. |
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| Implication |
Normal rules for interpretation of the contract may be inadequate to resolve disputes concerning the valuation of work where bills of quantity have been carelessly prepared. |
printThe use of bills of quantities for building projects is on a decline largely as a consequence of the increasing use of management forms of contracting and contractor design. In the civil engineering industry, however, bills of quantities remain in widespread use and unfortunately, disputes concerning their use are quite common. The essence of contracting upon bills of quantities is that they will be prepared in accordance with a standard method of measurement which both parties understand and agree, and which brook no potential for misunderstanding over the scope of works being quoted within any item in the bill. This unfortunately cannot always be said to be the case with the civil engineering standard method of measurement which continually causes difficulties in interpretation on civil engineering projects. The case of Kimbell Construction Ltd -v- National Rivers Authority illustrates the type of problem which can arise. The contractors entered into an ICE 5th Edition contract for flood defence work along both banks of a stretch of the River Glen at Pinchbeck in Lincolnshire. The dispute arose in relation to the appropriate payment for the removal and replanting of reeds along the banks of each side of the river. The appropriate bill item read "Reeds lifted, stored and replanted on berm near water level, total length approximately 470 metres" quantity 2000 number at £4.25, total £8,500.00. Although the length of the river bank did not alter, the contractor's demand for payment against this item certainly did. Instead of £8,500.00, the contractor wanted a payment of £865,725.00. It will come as no surprise, therefore, that the matter ended up in front of an Arbitrator and that the Arbitrator's award was appealed to the High Court. The ultimate question was what unit of work was the bill of quantity item 'number' to be applied to. The contractor was clear in his argument. He said the word reeds used in the bill description and also on a note on the appropriate drawing must relate to single reeds; if that was not intended, the appropriate unit of measurement would have been one of area. In their view, a reed was a single stem with one or more leaves or shoots emerging from a viable root system. The employers saw the bill item in quite a different light. They said the counting of single reed stems would be quite impracticable. They considered that the contract made provision for 2,000 separately identifiable points at which reeds were to be placed together with weighted stones within hessian bags. There were, however, two difficulties with this argument. The first was that the contractor had sought, and obtained, relaxation of the requirement to replant the reeds in weighted hessian bags. In fact the works had been carried out by a mechanical excavator. Secondly, if the bill item was to be interpreted in this way, there seemed to be nowhere in the contract where one could determine how big the clump or bag of reeds was expected to be. Enter our Arbitrator who clearly was not going to shrink from chopping the baby in two. He recorded that in arriving at his decision, the parties had agreed that he might "use his expertise limited to his special knowledge if it assisted in determining the definition of reed or reeds." It is not clear from the subsequent decision whether his special expertise is in Botany, Agriculture or Train Spotting. The following is an extract from his award. "The bill of quantity item provided for 2,000 points to be identified over 250 metres placed in separate 5 metre lengths x 0.5 metre width of berm. At this density, the measuring points would have been 8 per linear metre, each occupying an area of about 200mm x 280mm which I find to be a practical spacing for two viable reeds to develop at each point within one season to form an acceptable reed bed, assuming one reed in a group of three failed. Taking the spacing into account, I hold that the Contractor could have expected to provide three reeds at each identifiable point of the 2,000 enumerated in the item and paid for at the rate of each reed of £4.25". His award was therefore for 2,000 locations at £4.25 each, making £25,000; a definite improvement upon the bill of quantities, but some way short of the contractor's claim. Challenging this finding on Appeal to the High Court, the contractor's question was clear: where on earth under the contract did he get it from? Not that the parties have fared muchbetter in the High Court. The Judge concluded that the quantity in the bill related to the number of bags which would have been needed before bags were omitted, and thus he acknowledged that this unit quantity was no longer directly applicable. He helpfully however commented that the need to value the work remained. With water now lapping over his waders, the Official Referee decided to remit the matter back to the Arbitrator, advising him that valuation on the basis of single stems was wrong and that valuation according to the manner set out previously by the Arbitrator was also wrong. We may never know, unfortunately, how it should be done.
CJ-9621
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