Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd & Anor [2007] EWCA Civ 1372

[2007] EWCA Civ 1372

Case No A1/2007/0452

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE QUEEN’S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

MR JUSTICE JACKSON

HT-04-314

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 21/12/2007

Before

LORD JUSTICE PILL

LORD JUSTICE MAY

LADY JUSTICE SMITH DBE

Between

MULTIPLEX CONSTRUCTIONS (UK) LIMITEDAppellant

(1) CLEVELAND BRIDGE UK LIMITEDRespondents

(2) CLEVELAND BRIDGE DORMAN LONG ENGINEERING LIMITEDRespondent

Roger Stewart QC and Paul Buckingham (instructed by Clifford Chance LLP) for Appellant

Adrian Williamson QC and Lucy Garrett (instructed by Reid Minty LLP) for Respondents

Hearing Hearing dates : 13 th December 2007

Judgment

Introduction

[1]There is, as the parties to this appeal agree, a limit to the amount which may be written or said as to the meaning of the words “Temp Works – Roof Props”, which is one of essentially two issues before the court on appeal from the characteristically comprehensive second judgment of Jackson J in the Technology and Construction Court on 31st January 2007 –

[2007] EWHC 145 (TCC)

. The other main issue is said to pose a conundrum as to the construction of one short clause of a one-off construction contract.

[2]The judge’s judgment decided issue 11 in a complicated series of disputes between Multiplex Construction (UK) Ltd as appellant and Cleveland Bridge UK Ltd and its parent company as respondents. Multiplex were the contractor and Cleveland Bridge were the original steelwork subcontractor for the reconstruction of Wembley Stadium. The judge had already decided issues 1 to 10 in his first judgment of 5th June 2006 –

[2006] EWHC 1341 (TCC)

. This court has already on 27th April 2007 dismissed certain grounds of appeal by Cleveland Bridge against some of these issues –

[2007] EWCA Civ 443

. Cleveland Bridge then withdrew certain other grounds of appeal. In consequence, the judge’s decisions in his first judgment stand. One such decision, on issue 8, was that Cleveland Bridge were in repudiatory breach of contract by giving notice that they would stop work on 2nd August 2004, and by then stopping work. Issue 11 concerns an element of Multiplex’ claim for damages arising from this repudiation.

[3]On 20th December 2006, Smith LJ and I had given Cleveland Bridge permission to appeal certain of the judge’s decisions in his first judgment. Our judgments on the permission applications, which set out a summary of the facts, may be found at

[2006] EWCA Civ 1834

. As with my judgment of 27th April 2007, I do not propose to rehearse again matters which may be found or are referred to in earlier judgments of the judge and this court. The issues on this appeal, important as they are to the parties, are again issues of one-off construction of a written Supplemental Agreement of 16th June 2004. They raise no point of principle and it is not therefore necessary to fashion a potentially reportable judgment which recites all the very complicated factual background. The relationships between the parties, the background facts and much of the written contractual material may be found in paragraphs 2 to 94 of the judge’s first judgment. A digest of this is in paragraphs 1 to 16 of my judgment of 20th December 2006.

The Sub-Contract and the Heads of Agreement

[4]By the original subcontract dated 26th September 2002, Cleveland Bridge were obliged to design, fabricate, supply, deliver and erect structural steelwork for Wembley Stadium. In a general context of dispute, in which Cleveland Bridge were claiming large additional payments and Multiplex were resisting such claims and blaming Cleveland Bridge, the parties negotiated and entered into a Heads of Agreement dated 18th February 2004. The terms of this agreement are reproduced in paragraph 50 of the judge’s first judgment. In summary, the Heads of Agreement recited that Cleveland Bridge had made claims which Multiplex disputed, and that the parties had agreed to settle the claims. With some exceptions, Cleveland Bridge’s contractual responsibilities were to remain untouched. The agreement expressed an intent that a Supplemental Agreement formally adjusting the contract should soon be concluded, with an effective date of 15th February 2004, incorporating the points in the Heads of Agreement. There was to be a new fixed price of £12m. for Cleveland Bridge’s work from 15th February 2004, payments for site-related costs and off site administration and overheads. Cleveland Bridge were to complete the works in accordance with a programme, which included raising the Wembley arch by 21st April 2004. If there was no agreement of the fixed price or programme at the end of 3 months, Cleveland Bridge were to agree an orderly handover.

[5]Clause 4 of the Heads of Agreement provided that:

“Future Fabrication is to be outsourced by MPX as per schedules handed by B Rogan (BR) to A Muldoon (AM) on 11/02/04 with any changes to be agreed by them.”

The judge found in paragraph 151 of his judgment that the schedules referred to in this clause of the Heads of Agreement, and in clauses 6 and 7, were what he and the parties had referred to as the top half schedule, the category 1 schedule, the category 2 schedule and schedules showing permanent steelwork to be fabricated by Multiplex and Cleveland Bridge respectively.

[6]The category 1 schedule and the category 2 schedule are referred to, and their contents set out or described, in paragraphs 20 to 26 of the judge’s issue 11 judgment. The top half schedule is page D24 in the bundles before the court. Some of its contents are related to entries in the category 1 and category 2 schedules. The top half schedule includes a column totalling £12.045m. which is agreed to have been a figure from which the fixed price of £12m. was derived.

[7]Thus some of the fabrication of steelworks was to be removed from Cleveland Bridge’s responsibility. By clause 5 of the Heads of Agreement, they were to retain responsibility for the remaining fabrication. By clause 6, Cleveland Bridge retained responsibility for “… design and fabrication drawings, Bought Out Materials and Subcontracts according to schedule handed by BR to AM (11/02/04) with any changes to be agreed by them.” Clause 7 of the Heads of Agreement provided for Cleveland Bridge’s new fixed price of £12m. for their future retained work (other than work for which they were to be reimbursed at cost under clause 8). The judge found (paragraph 151) that the effect of clause 7 was that buyouts and subcontracts listed in the category 1 schedule were included in the £12m. lump sum, but that buyouts and subcontracts listed in the category 2 schedule were not. This superficially cryptic conclusion was (I believe) because the amount of £2.421m. in column 8 line 5 of the top half schedule (which is part of the £12.045m. from which the £12m fixed price was derived) is the product of deducting the amount in column 6 from the amount in column 7 – and the amount in column 7 derives from the sum of the 5th column (headed “Forecast against Supplemental Agreement”) in the category 1 schedule alone. I note in passing that the top half schedule has in lines 1 and 2 amounts for Design and Drawings, which in column 8 make significant contributions to the £12.045m.

[8]The Heads of Agreement was the product of negotiations between the parties in the first fortnight or so of February 2004. Important among these were meetings on 11th and 12th February 2004. The judge heard evidence about these negotiations which he summarised in paragraphs 50 to 133 of his judgment. He made factual findings in paragraphs 134 to 145. These included importantly (paragraph 144) that at no point during the meetings on 11th and 12th February 2004 was there any specific discussion about where temporary works for the roof fitted into the various schedules.

[9]The period between 18th February 2004, the date of the Heads of Agreement, and 16th June 2004, the date of the Supplemental Agreement, has been referred to as the interregnum. There was much activity, controversy and negotiation going on in this period. Much of the detail may be found in the judge’s first judgment. The arch was not raised by 21st April 2004, the date in clause 9 of the Heads of Agreement. An adjudicator subsequently held that it had been raised on 29th June 2004, 13 days after the date of the Supplemental Agreement. On the date of the Supplemental Agreement, erection of the roof steel was still to be carried out.

The Supplemental Agreement

[10]The Supplemental Agreement was executed by the parties as a deed. It replaced the Heads of Agreement which ceased to have effect – see paragraphs 533ff of the judge’s first judgment. It is a considered formal document which looks as if it was drafted by, or with the material assistance of, lawyers. It is reproduced in full (with the exception of a two page steelworks schedule, which is part of Schedule 3, and the detailed programme in Schedule 4) in paragraph 74 of the judge’s first judgment. (The paragraph number (64) in paragraph 12 of my judgment of 20th December 2006 is an error).

[11]It is now uncontroversial that the Supplemental Agreement determined the parties’ rights and obligations with retrospective reference to the watershed date of 15th February 2004. It is accordingly permissible to look at how things then stood between the parties as context.

[12]For present purposes, the most important provisions of the agreement are: Clause3.1 “The Sub-Contract Works shall be varied post 15 February 2004 only by the omission of the fabrication and supply to the Site of the items specified in Schedule 3, Part A.” Clause

3.2 “Notwithstanding Clause 3.1, the Sub-Contractor shall retain responsibility under the Sub-Contract for all design and fabrication drawings. In addition, the Sub-Contractor shall retain responsibility under the Sub-Contract for bought out materials and sub-contracts remaining in its scope after execution of this Agreement.” Clause 4 “Save as may be subsequently adjusted in accordance with the terms of the Sub-Contract …, it is agreed that (taking account of all matters referred to in Clauses 2.1, 3.1 and 3.2) the adjusted Sub-Contracts Sum (exclusive of Valued Added Tax) shall be as specified in Schedule 1.” Clauses

6.1 and

6.2 provided for the payment of two lump sum amounts. Clause 8 “In the event that the parties fail to reach such agreement in accordance with Clause 7 on or before 29th June 2004 …, the Contractor shall be entitled to give 28 days written notice … to the Sub-Contractor further varying the Sub-Contract works to remove from the Sub-Contract the unperformed reimbursable cost items referred to in Schedule 1, paragraph (c).” Clause 9 “In the event that the unperformed reimbursable cost items (referred to in Schedule 1, paragraph (c)) are removed from the Sub-Contract Work in accordance with Clause 8, it is agreed that: .... Clause 9.2 “there shall be no adjustment to the Sub-Contract Sum or other payment to the Sub-Contractor arising for such Variations other than the additional payment referred to in Clause 9.3.” Clause 9.3 gave Multiplex an option to use for a consideration “all temporary buildings, plant, tools, equipment and temporary works necessary for the carrying out and completion of the unperformed reimbursable cost items”. Clause 10 “The Sub-Contract shall be amended in accordance with the provisions of Schedule 2 and, save as amended by this Agreement, the Sub-Contract shall continue in full force and effect.” One of the amendments in Schedule 2 made the Supplemental Agreement itself the prime sub-contract document after the Articles of Agreement.

[13]Schedule 1 provided that The adjusted Sub-Contract Sum shall comprise:-(a) …

(b) “A fixed, lump sum of £12,000,000 for the completion of all remaining works, services and other obligations under the Sub-Contract (save for those reimbursable cost items referred to in paragraphs (c) and (f) below and those lump sum items referred to in paragraphs (d) and (e) below …

(c) All costs reasonably and properly incurred by the Sub-Contractor from 15th February 2004, in connection with the erection and site works (being site staff, direct labour, cranes and other site related costs), plus a fixed amount for off site administration and overheads at a rate of £80,000 per month from 15th February 2004, subject to the deduction of Retention and other deductions permitted under the Sub-Contract.”

[14]Schedule 3 was headed “Varied Sub-Contract Works”. Part A of this Schedule had a sub-heading “Agreed omissions to the Sub-Contract Works”. Part A provided:

“The Contractor will carry out the following Sub-Contract Works: “(i) Attached A4 Schedule (2 pages) entitled “Schedule 3 MPX Fabrication responsibility including MPX sublet, China steel returned unmade and 667T CBUK sublets; (ii) Attached A4 Schedule entitled “Schedule 3 varied Sub-Contract Works Part A – Document 2””

. The 2 page schedule referred to in (i) is a schedule consisting of a significant part of the remaining permanent steelworks. The schedule referred in (ii) is a reproduction of the first column of the February 2004 category 2 schedule – compare the relevant part of paragraph 74 of the judge’s first judgment with the identical material in paragraph 23 of the judge’s second judgment. “(i) Attached A4 Schedule (2 pages) entitled “Schedule 3 MPX Fabrication responsibility including MPX sublet, China steel returned unmade and 667T CBUK sublets; (ii) Attached A4 Schedule entitled “Schedule 3 varied Sub-Contract Works Part A – Document 2””.

[15]Part B of Schedule 3 provided that the responsibilities retained by Cleveland Bridge should be those arising under the primary Sub-Contract save as amended by the Supplemental Agreement.

[16]Document 2 – the reproduced list from the category 2 schedule – includes as one of 13 items under the heading “Project Buyout” the item “Temp Works – Roof Props”. Also included here is for example, “M & E Package for moving roof”.

Steelwork erection

[17]When a steel structure of any consequence is to be erected, it will always be necessary to have, in addition to the fabricated steelwork itself and the permanent means of securing it in position, the means of bringing the steel into position and holding it there while the process of erection is effected. A steel roof structure in particular will need temporary support until it is fully erected. This support may be, and was at Wembley Stadium, by means of temporary steelwork. The nature, configuration and details of this temporary steelwork, which is to form no part of the permanent works, has to be designed. It has, no doubt, to be sufficiently strong and sufficiently configured to do the job of holding up the permanent steelwork in the course of its erection. There may well be a number of different design methods which could be used.

[18]Under the original Sub-Contract, it was for Cleveland Bridge to design, fabricate, supply and erect, not only the permanent steelwork, but also any necessary temporary steelwork. This concentration of task in a single specialist sub-contractor is very common and avoids demarcation difficulties. However, there is no intrinsic reason why it all has to be done by the same person or organisation. Another common arrangement is for permanent steelwork to be designed by a consulting engineer, the steelwork to be fabricated, supplied and erected by a specialist sub-contractor. The sub-contractor would then be responsible for the temporary support works which he would design and fabricate. There is then nothing intrinsically wrong, if a consulting engineer were also to design the temporary works for the sub-contractor to fabricate and supply; nor even if a sub-contractor were to design the temporary works, but have their fabrication sub-let to an outside fabricator, perhaps because of under capacity at the sub-contractor’s own steel fabrication works. The sub-contractor would then be erecting permanent steelwork using temporary support steel of his own designing, the fabrication of which he had sub-let.

[19]In the present case, the judge found (paragraph 161 of his judgment) that the fabrication of temporary works, even though carried out off site, was intimately connected with the process of erecting the roof. This finding, no doubt generally correct taken in isolation, was referable to evidence of Mr Muldoon of Multiplex accepting that it would be unusual for the responsibility for temporary works to be separated from responsibility for erecting the permanent steelworks; and on the uncrossexamined witness statement evidence of Dr Mann, a civil and structural engineer of 40 years experience. The judge recorded part of this evidence as follows: (132-133):

“132. Temporary works design is not intrinsically linked to permanent works design. There are a number of ways of constructing steelwork to a given design. There is considerable scope for the ingenuity of different teams over how such erection will be achieved. In relation to temporary supports, different teams will have their own preferences, partly dependent on the equipment available to them. 133 Therefore temporary works are generally inseparable from permanent works. This was especially so on the Wembley project, where the temporary works required were extraordinarily complicated.”

[20]These paragraphs are a near verbatim transcription of paragraphs 11 and 12 of Mr Mann’s witness statement. But the first sentence of the judge’s paragraph 133 is not an exact transcription, and the difference is material. The first sentence of paragraph 12 of the witness statement has “Temporary works are therefore generally inseparable from erection methodology”. Mr Mann had also stated that “temporary works” are the totality of the concept and methodology of how to support the permanent steelwork in the course of its erection plus the physical works that are necessary to implement the strategy.

Multiplex’ claim

[21]In the context of Multiplex’ claim for damages for Cleveland Bridge’s repudiation, Multiplex claim what they say were huge additional costs which they incurred in completing the steelwork. So far as is relevant to issue 11, they claim damages of approximately £25.4m. This includes approximately £11.1m. for fabrication of temporary works and approximately £5.2m. for designing the temporary works. They say that all this work fell within the scope of work for which Cleveland Bridge were to be paid the fixed sum of £12m. under paragraph (b) of Schedule 1 of the Supplemental Agreement, and which would, but for the repudiation, have been performed by Cleveland Bridge. Amounts of damages in excess of £6m. are academic, because Multiplex accepts that their claim is irrecoverable in excess of £6m. Cleveland Bridge’s essential case is that under the Supplemental Agreement the design and fabrication of temporary works formed part of the works which they were to carry out on a cost plus basis under paragraph (c) of Schedule 1 of the Supplemental Agreement. As Cleveland Bridge did not carry out these works, they were to be commissioned and paid for by Multiplex, and so there would be no additional cost.

Issue 11 judge’s decision

[22]The eventual formulation of issue 11 was:

“In the period post 15 February 2004, did (i) the design and drafting, and (ii) the fabrication of some or all temporary works relating to the bowl, the arch and/or the roof fall within: (a) ‘all remaining works’ (in paragraph (b) of Schedule 1 to the Supplemental Agreement); and/or (b) ‘erection and site works’ (in paragraph (c) of Schedule 1 to the Supplemental Agreement); and/or (c) ‘temp works – roof props’ (in Schedule 3 Part A to the Supplemental Agreement)?”

[23]The judge decided (paragraph 163) that, in the period after 15th February 2004, the design, drafting and fabrication of temporary works relating to the bowl and arch fell within “all remaining works” in paragraph (b) of Schedule 1 of the Supplemental Agreement; that the design, drafting and fabrication of temporary works relating to the roof fell within “erection and site works” in paragraph (c) of Schedule 1 and within “Temp Works – Roof Props” in Part A, Document 2 of Schedule 3.

The appeal

[24]Multiplex appeal against the judge’s decision relating to the roof temporary works. There is no appeal by either party against his decision for the temporary works for the bowl and arch. That decision depended on his finding (paragraph 147) that, in the context of the situation existing in February 2004, a combination of 8 temporary works items in the category 1 Schedule embraced the design drafting and fabrication of all temporary works relating to the bowl and the arch. The category 1 Schedule does not reappear in the Supplemental Agreement. Cleveland Bridge had in February 2004 already completed much of these works. What remained would form part of the lump sum. Multiplex say that the judge was technically wrong about the category 1 Schedule embracing the design and drafting (as opposed to the fabrication) of the temporary works for the bowl and the arch. For other reasons, however, they do not quarrel with this part of the judge’s conclusion. Cleveland Bridge do not quarrel with the conclusion either, although Mr Williamson QC, for Cleveland Bridge, was not sure about the apparently correct finding that the 8 temporary works items in the category 1 Schedule embraced all the temporary works relating to the bowl and the arch.

[25]Multiplex first say that “Temp Works – Roof Props” did not extend to the whole of the temporary works for the roof, but was limited to the “toblerone sections” referred to in paragraphs 7 and 8 of the judge’s judgment. These were triangular trusses which had been used as part of the temporary steelwork to raise the arch. Cleveland Bridge had a plan to modify the toblerones to use them again as part of the central section of the towers which were to be part of the temporary works for the roof. Mr Muldoon’s evidence was that he understood “Temp Works – Roof Props” to refer to these toblerones, which were there on site to be seen in February 2004. If it were correct that “Temp Works – Roof Props” refers to the toblerones alone, Multiplex would say that at least all the remaining temporary works for the roof were unaffected by Clause 3.1 of the Supplemental Agreement and remained part of Cleveland Bridge’s works to be carried out under para (b) of Schedule 1 for the £12m. fixed price.

[26]The judge decided that “Temp Works – Roof Props” in the Category 2 Schedule could only refer to all the temporary works for the roof, and was not limited to the toblerones. The expression must have the same meaning in Schedule 3 to the Supplemental Agreement as it did in the Category 2 Schedule. The judge’s reasons are in paragraphs 148 and 149 of his judgment, which also embraced the wider decision that “Temp Works – Roof Props” means “the design, drafting and fabrication” of all temporary works for the roof.

[27]Leaving aside for the moment the disputed question whether the expression in Schedule 3 of the Supplemental Agreement extends to design and drafting, as well as fabrication, the judge’s reasons for rejecting the toblerone part of Multiplex’ case, which they maintain in this appeal, are compelling. Temporary works for the roof were not in the Category 1 Schedule. Therefore you would expect to find them in the Category 2 Schedule. An amount of money in the Category 2 Schedule of £3.053m. in a column which represented an amount which Cleveland Bridge would offer to receive if these temporary works were moved from Category 2 to Category 1 was far too great to refer only to converting already fabricated toblerones. In the circumstances existing in February 2004, it would have been nonsensical to interpret this sum as a quotation for converting the toblerones. Multiplex attempted to counter this by saying that Cleveland Bridge were adept at trying things on, and that the £600,000 in the preceding column of the Category 2 Schedule against this item under the heading “Forecast against Supplemental Agreement” was more realistic. Mr Stewart QC, for Multiplex, was inclined to agree with the judge that this column with its delphic heading contained estimates of the amount remaining within the original Sub-Contract sum – which is unhelpful in the present context. The judge also said that the phrase “roof props”, although over-simplistic, was a convenient shorthand for roof temporary works. He might also have said that “roof props” does not start as a description of already fabricated toblerone sections which were to be modified and used as part of the temporary support for the roof. Since, as the judge found, the temporary works were not discussed in February 2004, there is no evidence, even if it were admissible, to help interpret the 3½ words in Schedule 3.

[28]Mr Stewart’s economical submissions in support of this part of Multiplex’ appeal were not, to my mind, persuasive. I would uphold the judge’s decision that “Temp Works – Roof Props” does not refer to the toblerone sections, but to all temporary works for the roof.

[29]As I have said, the judge’s decision was that the design, drafting and fabrication of temporary works relating to the roof fell within “erection and site works” in paragraph (c) of Schedule 1. It was thus part of the work which Cleveland Bridge would have carried out on a cost reimbursable basis. The judge’s reasoning, which Mr Williamson submitted was correct, included that “erection and site works”, in the context of steelwork for the roof, extended to all matters required for the erection of the roof steelwork, including the design and fabrication of the steelwork required as temporary works. The judge held (paragraph 160) that the wording in paragraph (c) of Schedule 1 was not limited to costs incurred on site. It also included costs incurred in connection with erection, and to costs incurred in connection with site works. The words in brackets appeared to be illustrative of the preceding phrase rather than words of limitation. The phrase “other related site costs” is a broad one. It is not limited to costs incurred on site. The judge then held (paragraph 161) that the fabrication of temporary works (even though carried out off site) is intimately connected with the process of erecting the roof. Therefore it fell within the terms of paragraph (c). Because, as the judge had held, pursuant to clause 3.1 of the Supplemental Agreement fabrication of roof temporary works fell outside the scope of the works covered by the lump sum price, it could not fall within paragraph (b). The effect of the Heads of Agreement, which was a concluded antecedent agreement, was that the fabrication of the roof temporary works fell outside the scope of the works covered by the lump sum price of £12m. This last point, I agree, may be shown to be correct, by reference to the February 2004 schedule. However, the fact, if it is so, that the fabrication of roof temporary works was not within paragraph (b) of Schedule 1 only puts it into paragraph (c) to the extent that it remains part of the sub-contract works.

[30]As to the design and drafting of the roof temporary works, the judge concluded that this was also within paragraph (c) of Schedule 1. He gave four reasons. The design of temporary works is intimately connected with the process of erecting the roof. It would be bizarre and impracticable for the design of the roof temporary works to be part of the lump sum works, while their fabrication was not. The fabrication would be transferable to another contractor under Clause 8, while the design would remain with Cleveland Bridge. Cleveland Bridge would be required to carry out for a fixed price design work of unknown scope to suit the future erection methodology of some other contractor. As a matter of commercial sense, whoever erects the roof must also be responsible for the design and fabrication of the temporary works. None of the witnesses had ever known the arrangement to be otherwise. The effect of the Heads of Agreement, a concluded antecedent agreement relevant to the interpretation of the Supplemental Agreement, was that the design of the roof temporary works was outside the scope of the lump sum works.

[31]Mr Williamson supported the judge’s reasoning under six heads which in substance restated and elaborated what the judge had said. Mr Williamson referred to certain passages in the oral evidence in support of the judge’s conclusion that whoever erects the roof must also be responsible for the design and fabrication of the temporary works. No doubt this is usual, but neither the evidence nor intrinsic commonsense seem to me to dictate it as an imperative. I have already indicated that the judge materially mistranscribed or altered a relevant sentence in Dr Mann’s witness statement. Further, Mr Stewart showed us that Hollandia, the company which was eventually to carry out the erection of the roof, did actually quote for erecting the steelwork to Cleveland Bridge’s erection methodology, that is using temporary steelwork designed by Cleveland Bridge. Mr Muldoon’s evidence (day 20 page 73 – E053) was that in May 2004 there were or had been three scenarios. The second of these was that Hollandia would take over in accordance with Cleveland Bridge’s methodology. The third was that Hollandia would take over using their own methodology. By 14th May 2004, Multiplex and Hollandia had moved to scenario three, but at least scenario 2 had been contemplated to the point of a quotation. As Mr Stewart said, as it turned out this was not a normal steelwork sub-contract and the Supplemental Agreement was a one-off modification.

[32]The judge’s reasoning with reference to Clause 8 of the Supplemental Agreement again supposes that it is senseless to divorce erection of the roof from the design of the temporary roof works. Mr Williamson had an extension of the judge’s reasoning to the effect that, if site erection only were in paragraph (c) of Schedule 1, there would need to be a financially difficult reduction of the £12m. fixed sum, if the design and fabrication of the temporary roof works were removed. On that hypothesis, however, Multiplex would have no contractual power to remove the design and fabrication, since Clause 8 is limited to unperformed reimbursable cost items in paragraph (c) of Schedule 1.

[33]Mr Williamson submitted in the alternative and additionally that the judge was correct to decide that “Temp Works – Roof Props” embraced all of the design, drafting and fabrication of all temporary works for the roof. He supported the judge’s reference to the Heads of Agreement as permissible for the limited purpose of getting at the meaning of “Temp Works – Roof Props”. He referred to paragraphs 81 and 83 of Rix LJ’s judgment in HIH Casualty and General Insurance Limited v New Hampshire Insurance

[2001] 2 Lloyds Rep 161

. He said that the judge’s reasoning in paragraph 149 of his judgment was correct. This is the same paragraph in which the judge gave his reasons for concluding, correctly as I would hold, that “Temp Works – Roof Props” does not mean the toblerone sections. The conclusion that the expression includes design and drafting as well as fabrication rests on much the same reasoning as the conclusion that design, drafting and fabrication of the roof temporary works all fell within paragraph (c) of Schedule 1.

[34]Cleveland Bridge make some reference to what happened in the interregnum as indicating an understanding between the parties as to what the intention of the Heads of Agreement had been, and therefore what their understanding of the Supplemental Agreement must have become. Mr Stewart submitted and was prepared to demonstrate that none of this was clear. Mr Williamson limited his oral submission to pointing out that the factual background was alluded to by the judge, but was of no great significance.

Clauses 3.1 and 3.2

[35]The trouble with Cleveland Bridge’s case and the judge’s conclusion that all the design, drafting and fabrication of the temporary roof works are within paragraph (c) of Schedule 1 lies in Clauses3.1 and

3.2 of the Supplemental Agreement. By Clause 3.1, the sub-contract works are “varied post 15 Feb. 2004 only by the omission of the fabrication and supply to the site of the items specified in Schedule 3, Part A.” On the face of it, no design or drawing is omitted, and this is expressly confirmed by Clause 3.2, by which “Notwithstanding Clause 3.1, the Sub-Contractor shall retain responsibility under the Sub-Contract for all design and fabrication drawings”. “Temp Works – Roof Props” appears in the Second Part of Schedule 3, and since, as the judge found, that expression refers to all temporary roof props, not just the toblerones, it should follow that the fabrication and supply (but not the design and fabrication drawings) for the temporary roof steelwork was omitted from the Sub-Contract works altogether. This is reinforced by the opening words of Schedule 3 – “The Contractor [Multiplex] will carry out the following Sub-Contract works”. That was uncontentiously so for the two page schedule of permanent steelwork in the first part of Schedule 3, and also for all other items (I think) in the second part of Schedule 3, of which the “M & E package for the moving roof” is the most obvious example.

[36]This construction is fortified by the use of the words “only” in Clause 3.1 and “all” in Clause 3.2. On this construction, the design and fabrication drawings for the temporary roof steelwork, which will put on paper the erection methodology, remained Cleveland Bridge’s responsibility. Mr Stewart suggests that this is not senseless, when Cleveland Bridge continued under the Supplemental Agreement to be responsible for designing the permanent steelwork, for erecting it, and for the supply of part of it.

[37]On this analysis, the retained responsibility for design and fabrication drawings cannot come within paragraph (c) of Schedule 1, because(a) what is retained is all design and fabrication drawings, which must be taken together and include drawings for permanent steelwork which cannot possible be squeezed within the words “erection and site works” in paragraph (c); and

(b) because Mr Williamson’s analysis based on paragraph (c) by itself breaks down when fabrication and supply are omitted. “Erection and site works” might possibly (as the judge held) embrace all the design, fabrication and erection of the temporary roof works. But it cannot, I think, embrace design and erection, but not fabrication.

[38]Accordingly, on the literal, but to my mind quite plain meaning of Clauses 3.1 and 3.2, the fabrication and supply of the temporary roof steelwork was omitted from Cleveland Bridge’s Sub-Contract works, but its design and fabrication drawings remained to be paid for as part of the £12m. fixed price under paragraph (b) of Schedule 1. Mr Stewart supports this as the correct construction with reference to Lord Hoffmann’s fifth principle in Investors Compensation Scheme v West Bromwich Building Society

[1998] 1 WLR 896

, and to passages in Lord Hoffmann’s speeches in Jumbo King Ltd v Faithful Properties Ltd

[1999] HKCFAR 279

and BCCI v Ali

[2001] 1 AC 251

, to the effect that the court will not readily accept that people have made linguistic mistakes, particularly in formal documents. If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, the court will give effect to that language, even though the consequences may appear hard to one side or the other.

[39]The judge referred at some length in paragraph 155 of his judgment to the very well know passage in the opinion of Lord Hoffmann in Investors Compensation Scheme at pages 912-913, which includes the fifth principle relied on by Mr Stewart. He said that, following guidance of the House of Lords, he must attribute to Clause 3.1 the meaning which that clause would convey to a reasonable person having the background knowledge which was available to Multiplex and Cleveland Bridge at the relevant time. Such a reasonable person would interpret Clause 3.1 as meaning that fabrication work in respect of the items listed in Part A of Schedule 3 was not included in the lump sum price of £12m. That so far as it goes is correct, because the words of Clause 3.1 and the inclusion of “Temp Works – Roof Props” in Schedule 3 omit the fabrication and supply of the temporary roof steelwork from the Sub-Contract works altogether.

[40]The judge, however, did not so hold. He said in paragraphs 158 and 159 of his judgment:

“158. The effect of clause 3.1 is that the fabrication referred to in that clause is not excluded altogether from the subcontract works. On the contrary, that fabrication work is to remain part of the subcontract works, but is to be paid for on a cost plus basis until such time as a new contract is agreed between the parties or, alternatively, Multiplex serves notice under clause 8. 159 Let me turn now to clause 3.2. If the phrase “all design and fabrication drawings” includes design and fabrication drawings for temporary works, then the clause makes perfectly good sense. CB retains responsibility for all designs and fabrication drawings, even though certain of those drawings are to be paid for on a cost plus basis. Alternatively, the phrase “all design and fabrication drawings” may be a somewhat clumsy reference to all design and fabrication drawings for the permanent works. However clause 3.2 is interpreted, it is not inconsistent with the conclusion that the design of roof temporary works falls outside the scope of the lump sum works.”

[41]Mr Williamson agrees that, taken alone, the judge’s conclusions(a) in paragraph 158 that the temporary roof fabrication work remained part of the Sub-Contract works to be paid for on a cost plus basis; and

(b) in paragraph 159 that certain of Cleveland Bridge’s retained responsibility for design and fabrication drawings were to be paid for on a cost plus basis, or that the phrase “all design and fabrication drawings” was a clumsy reference to all design and fabrication drawings for the permanent works, are unreasoned leaps. The leap is justified, says Mr Williamson, because Clauses

3.1 and

3.2 make sense for permanent works, but present a conundrum for temporary works. The leap is also justified by the judge’s analysis, in his paragraphs 160-162 to which I have already referred, of paragraph (c) of Schedule 1. However, the analysis in those paragraphs is predicated on the earlier finding that fabrication of the temporary roof steelwork was not excluded altogether from the Sub-Contract works and that certain of the design and fabrication drawings were to be paid for on a cost plus basis. An analysis of paragraph (c) of Schedule 1 alone cannot sustain a construction of Clauses 3.1 and 3.2 which is contrary to the plain words of the clauses themselves.

[42]Mr Stewart disclaims the suggestion that it was Multiplex’ case that the temporary roof works remained within the Sub-Contract works. This was only partly so because it was Multiplex’ case that “Temp Works – Roof Props” meant the toblerones. If that had been correct, Multiplex’ case was that the toblerones were omitted, but the remaining temporary roof works which were not omitted remained within Cleveland Bridge’s responsibility to be paid for under paragraph (b) of Schedule 1. On the judge’s correct construction of “Temp Works – Roof Props”, the whole of the fabrication and supply of the temporary roof works is omitted, but their design and fabrication drawings are not.

[43]I am not persuaded that the judge’s leap in his paragraph 158 and the derivative leap in paragraph 159 are sustainable. The words of Clauses3.1 and

3.2 are plain. The fabrication and supply of “Temp Work – Roof Props” is omitted, that is the fabrication and supply of all the temporary roof steelwork. Granted that this is steelwork for temporary use, not permanent steelwork, it is nevertheless fabricated steelwork, just as the permanent steelwork, also omitted by Clause 3.1 and Schedule 3, is fabricated steelwork. Although the temporary works are generally inseparable from the erection methodology (Dr Mann), the person who designs and erects the permanent steelwork can also sensibly design the temporary steelwork to support the permanent steelwork in the course of erection. There is no intrinsic reason why the fabrication and supply of the temporary steelwork should not be sublet or otherwise done by another person. After all, the fabrication and supply of some of the permanent steelwork was to be done by others under Clause 3.1 and Schedule 3; and there is not much difference between fabricating and supplying items of permanent steel and fabricating and supplying items of temporary steel. By the same token, there is not much difference between the person erecting the steelwork receiving permanent and temporary steelwork, each fabricated and supplied by someone else, onto the site.

[44]Of the judge’s other reasons in paragraph 161 of his judgment, the fact that what was omitted by Clause 3.1 was not covered by the fixed price lump sum of £12m does not put it into paragraph (c) of Schedule 1; nor does the fact that fabrication of roof temporary works was outside the scope of the lump sum in the Heads of Agreement. On Multiplex’ construction of Clauses 3.1 and 3.2, problems with Clause 8 of the Supplemental Agreement do not arise, since none of the relevant temporary roof works are within the unperformed cost reimbursable items in paragraph (c) of Schedule 1.

[45]As will have appeared, I am not persuaded that the evidence or intrinsic informed commercial commonsense imperatively dictate that whoever erects the roof must also be responsible for the design and fabrication of the temporary work. But in this case that is by the way. I can see a fairly strong case that it might be desirable for the design of a complicated roof structure and the design of temporary steelwork to support it in the course of construction to be done by the same person; and a further fairly strong case that it might alternatively be desirable for the person erecting the roof steelwork to design its temporary support. But Cleveland Bridge retained all these responsibilities on Multiplex’ construction of Clauses 3.1 and 3.2. I do not see an intrinsic imperative for the fabrication and supply of the temporary steelwork to be done by its designer, who is also the designer and erector of the permanent steelwork. Omitting the fabrication and supply of the temporary steelwork is not materially different from omitting some of the fabrication and supply of permanent steel, or of subletting its fabrication and supply to another steel fabricator.

[46]I should say in conclusion, that I was not convinced by Mr Williamson’s argument of construction of “erection and site works” in paragraph (c) of Schedule 1 taken alone. There was, I thought, a heavy strain on the meaning of “erection” even with the help of “site works” and “in connection with” in the context of a Sub-Contract in which Cleveland Bridge were originally responsible for design, fabrication, supply, delivery and erection. To load the word “erection” also with design and fabrication even of temporary steelwork was, to say the least, difficult. But that part of the argument took no account of Clauses 3.1 and 3.2, which, in my judgment, have the effect which I have indicated.

[47]For these reasons, I would allow the appeal in part and hold that the fabrication and supply of all the temporary roof steelwork was omitted from Cleveland Bridge’s Sub-Contract works; and that design and fabrication drawings for that work remained Cleveland Bridge’s responsibility as part of their remaining works in paragraph (b) of Schedule 1.

Lady Justice Smith:

[48]I agree.

Lord Justice Pill:

[49]I also agree.