Construction law – Damages – Defects – Expert evidence

Multiplex Constructions (UK) Ltd v (1) Cleveland Bridge UK Ltd (2) Cleveland Bridge Dorman Long Engineering Ltd: QBD (TCC) (Mr Justice Jackson): 29 September 2008

The claimant contractor (M) claimed damages against the defendant sub-contractor (B) for breach of contract.

M was the main contractor for construction of the new national stadium at Wembley. B was the steelwork sub-contactor. Matters did not proceed smoothly and each party lost confidence in the other. B’s role under the subcontract was substantially reduced first by heads of agreement and then by a supplemental agreement, both of which varied the original subcontract.

Under the supplemental agreement, B was to attempt to complete the works for a new fixed price. M and B then parted company in acrimonious circumstances. The Court of Appeal held that it was B which had repudiated the subcontract. M employed another contractor (H) to perform B’s outstanding obligations to fabricate steel for the bowl of the stadium. H fabricated the steel at a much lower cost than B so that M made a substantial gain as a result of B’s repudiation.

The court had decided preliminary issues but the parties could not agree quantum and asked the court to determine the total sums owed by M to B for work done and materials supplied, and to determine the damages owed by B to M for defects and for repudiation.

M submitted that the evidence of one of B’s witnesses (T) was inadmissible because he purported to give expert evidence although not called as such. B submitted that M’s claim for damages for B’s failure to complete the erection engineering and the design and drafting of temporary works failed as a matter of causation, since H rather than B would have carried out the works so that M would have incurred those costs in any event.

Held: (1) T was called as a factual witness. He had no experience of giving expert evidence and no knowledge of the requirements for giving expert evidence. He was not independent of B. Permission had not been obtained or sought under rule 35.4 of the Civil Procedure Rules to call expert evidence in relation to the issues which T addressed. However, T was a highly qualified and experienced engineer who was involved for many months in the Wembley project.

As a matter of practice in the Technology and Construction Court, technical and expert opinions were frequently expressed by factual witnesses in the course of their narrative evidence without objection being taken. Having regard to that practice and the guidance of the Court of Appeal, in construction litigation an engineer who was giving factual evidence could also proffer statements of opinion which were reasonably related to the facts within his knowledge and relevant comments based upon his own experience, Lusty Architects v Finsbury Securities 58 BLR 66 CA (Civ Div) and DN v Greenwich LBC (2004) EWCA Civ 1659, (2005) 1 FCR 112 considered. The court would have regard only to those parts of T’s statements which were admissible by reference to those principles.

(2) M was entitled to recover damages of £151,305.39 in respect of defects. Those damages for pre-repudiation defects were not to be set off against M’s gain from B’s repudiation of its obligation to fabricate the bowl steel.

(3) The total sum which B had earned for work done and materials supplied up to the date of repudiation was assessed at £46,656,509.22. Because that valuation was higher than the adjudicator’s valuation of B’s work, B had to repay to M part of the moneys previously paid to B pursuant to adjudication awards.

(4) M had to give credit for the money saved by employing H to fabricate, paint and deliver to site the steel which B had been obliged under the subcontract to fabricate, paint and deliver but which B had failed to fabricate, paint and deliver by reason of repudiating the subcontract.

As a result of the repudiation, M had avoided the need to pay £2,765,680.43 to B. That saving exceeded the sums paid to H for fabricating, painting and delivering the repudiated subcontract steel. Accordingly, M had in that respect made a gain of £1,384,500.47 as a result of B’s repudiation. Similarly, in respect of design and drafting the gains for which M had to give credit exceeded the damages which M would otherwise be entitled to recover by £230,203. If a contractor repudiated at a time when the employer had resolved to remove certain of the contractor's obligations, and had already engaged another contractor to perform those obligations, the court in assessing damages should disregard the contractor's failure to perform those particular obligations, Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) (1971) 1 QB 164 CA (Civ Div) and Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) (2007) UKHL 12, (2007) 2 AC 353 applied.

It was clear that, absent B’s repudiation, M would still have engaged H to do erection engineering and would still have incurred the various costs claimed as damages. Therefore, B’s causation defence to that claim succeeded. M failed to prove that B’s repudiation caused any delay to the project or any loss of production at the relevant time. M failed to prove any loss arising from B’s repudiation because its gains from the repudiation exceeded its losses.

(5) The overall result was that B had to pay the total sum of £6,154,246.79 to M in respect of overpayments previously made by M, damages for breach of contract and interest.

Judgment for claimant.

Roger Stewart QC, Paul Buckingham, Gideon Scott Holland, Alice Sims (instructed by Clifford Chance) for the claimant; Adrian Williamson QC, Simon Hargreaves, Lucy Garrett (instructed by McGrigors) for the defendants.