| Date | 12 February 1997 |
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| Judgment |
Havant Borough Council -v- South Coast Shipping Co Ltd; 11 January 1996, 1996 CILL 1146 |
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| The Issue | Effect of a method statement submitted under an ICE contract. |
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| Implication |
Where methods of constructing the works described in a method statement prove impossible, the contractor may be entitled to a claim for variation under clause 51. |
printContracting arrangements in the construction industry are filled with potential problems for the unwary. In almost all cases an attempt to obtain advantage by one party can cause an equal and opposite effect to occur elsewhere in the contract. The best advice is always to ensure that an experienced and independent mind is applied to the development of complex contract terms. An example is where a client seeks to impose particular methods of working upon the contractor. The 1985 case of Yorkshire Water Authority -v- Sir Robert McAlpine showed how unexpected results for an employer could occur. The normal approach under the ICE contracts is to require the contractor to propose a method statement under clause 14. Had this occurred the method of working would have remained the responsibility of the contractor under clause 14(7) of the 5th edition. Instead the employer had, for its own reasons, effectively made the contractor's tendered method statement a contract document. The project was the construction of a reservoir and the method statement contained the sequence of construction of a culvert which in the event proved impossible to fulfil. The contractor's response was to tell the engineer that the engineer had a problem, which is always a good way to commence debate on such issues. The engineer remained unmoved in his view that the problem should not be his. However, an arbitrator found, as a fact, that the carrying out of the works as originally specified in the method statement was impossible, and on that finding, on appeal, a judge held that the contractor was entitled to a variation order under clause 51. Similar problems have been examined in the more recent case of Havant Borough Council-v- South Coast Shipping Company Ltd (SCS). Havant engaged SCS under an ICE contract to undertake beach replenishment works at Hayling Island. The work involved the screening of sands and aggregates and was expected to be extremely noisy. The specification accordingly required the contractor to minimise disturbance to those living nearby. SCS's method statement indicated that they would work from 6.00am to 11.00pm during the day which might have been anticipated to cause problems, and indeed it did. During the execution of the works a local resident obtained an injunction restraining SCS's subcontractors from making any noise audible from the plaintiff's house between the hours of 5.00pm and 9.00am. SCS saw how this dramatic reduction in working hours would affect their ability to carry out and complete the contract and so therefore sought a variation under clause 51 to cover the additional costs of the works resulting from the injunction. In the event the matters were put before an arbitrator and in turn to the commercial court by way of appeal. The first question was whether a method within the contractor's method statement, which had not been made a contract document, could nonetheless be considered part of the 'works' for the purposes of the contract. It was therefore necessary to determine whether the method statement was merely an approved set of procedures for carrying out the works, or whether it effectively specified the temporary or permanent works themselves. It was considered that the word 'specify' related to something which contractually was required to be done with the result, for example, that a failure by the contractor to follow that method would be a breach of contract. The judge held that a 'specified' method of working fell within the definition of temporary works. Accordingly if the mechanical screening of material was specified in their method statement and proved to be impossible, then SCS were entitled to a variation order under clause 51. Significant though this improbable decision is, this only answered part of the question. The contractor's claim was not simply that the mechanical screening was impossible, but that in the context of their method statement as a whole, the reduced hours now made those methods of working impossible. The judge however preferred to separate the question of working hours as if it were a distinct matter to be considered apart from the operational methods and resources contained within the method statement. He decided that the method statement did not impose upon SCS strict compliance with the working hours but that these hours were 'permissible'. In other words, he found that although SCS were permitted to work early or late during the hours of daylight, they were not obliged to do so. This may be described by some as an intellectually dishonest way of looking at the problem. Leaning heavily on the arbitrator, Mr Ian Menzies, to decide the matter in this compartmented way, the judge remitted the award back to him solely for his determination as to whether the hours of working of the screening plant being permissive, it would have been a 'legal impossibility' to carry out the works. We must now all hope that Mr Menzies so thoroughly offends one or both parties in his decision that on appeal we may all learn the proper answer to this important question.
CJ-9706
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