Cleveland Bridge UK Ltd v Severfield - Rowen Structures Ltd [2012] EWHC 3652 (TCC)

[2012] EWHC 3652 (TCC)

Case No HT-11-427

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

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

Date 21 st December 2012

Before

MR JUSTICE AKENHEAD

Between

CLEVELAND BRIDGE UK LIMITEDClaimant

SEVERFIELD – ROWEN STRUCTURES LIMITEDDefendant

Simon Henderson and Adam Temple (instructed by Eversheds LLP) for Claimant

Alexander Hickey and George Woods (instructed by DAC Beachcroft LLP) for Defendant

Hearing Hearing dates: 8-11, 15-18, 22-25 October, 1 November 2012

JUDGMENT

Introduction

[1]This case relates to steelwork for the Shard, currently the tallest building in Europe, which is designed to represent a shard of glass. Cleveland Bridge UK Ltd ("CBUK”) was the fabricator and supplier of steelwork for the first nine levels of steelwork, engaged by Severfield-Rowen Structures Ltd ("SRS"). The primary issues between the parties relate to alleged delays on the part of CBUK in the provision of such steelwork and to the impact of any such delays on the progress of SRS in erecting the next 31 levels of steelwork.

[2]SRS was and is the largest steelwork contractor in the country and was carrying out major projects, amongst many others, in parallel with the Shard. These included the Olympic Stadium and the Heron Tower. CBUK was itself a substantial steelwork contractor, part most recently of a Middle Eastern group; it had extensive experience in the fabrication and erection of steel. It was also extremely busy on other substantial projects throughout the country including a major motorway project in the Glasgow area and a project on the A46. The Shard and its Construction

[3]Broadly, the construction of the Shard was based around a concrete core which was to be formed by a slip form method which is a speedy way of casting reinforced concrete vertically with the fixed steel formwork being moved upwards as the lower level is cast. Around and connected to the concrete core, the structure was to be steelwork with some at lower levels, known as the “Early Works” comprising what came to be called “Priorities” 1-7, not specifically tied into the core. The columns from the ground to the fifth floor were substantial single sloping columns with a number of kinked columns. Much of the other steelwork was directly or indirectly connected into the core. The steelwork on the outside of the building was sloped as it went upwards. On the east side there was more steelwork comprising what was known as the “Backpack” with which this dispute is not concerned. The steelwork was to be clad in glass. The floors were to comprise metal decking, with reinforced concrete to be cast on top. The steel work was to go to the 40th floor above which there was to be a different form of construction with which these proceedings are not directly concerned.

[4]The parties used a number of expressions to describe different parts of the steelwork construction. The floors were known as “Levels”; thus Level 9 is the 9th floor. Most of the levels were split into three Phases, 1, 2 and 3, which were simply areas on each floor; Phase 1 being to the east, Phase 2 to the north –west and Phase 3 to the south-west of the core. Sub-phases on each Level were identified as for instance Phase 801, 802 and 803; the only complication about this is that from Level 6, the 01, 02 and 03 Phases described steelwork to two floors, because the columns served two floors or levels; thus Phases 801, 802 and 803 relate to the steel work for levels 8 and 9 in the three Phases or areas. Priorities described the sequencing priorities provided for or dictated by the various programme or programming requirements laid down by Mace or SRS. Later, batches of steel to be delivered to site were known as “Lots” which were broadly a lorry load’s or some 20 tonnes worth of fabricated steel. The Lots would need to be predetermined to provide steel to the restricted site to enable the erection sequence.

[5]There were to be five relevant tower cranes, TC1 located in or on the central concrete core, TC2 in Phase 1 at the western edge, TC3 in what was called the “Backpack” area, TC4 at the northern end of Phase 2 and TC5 at the western edge of Phase 3. Under its contract with Mace, SRS was entitled to 80% of the working hour usage of TC2, TC4 and TC5 and 60% of TC3.

[6]Logistics at the site were restricted. There was a one-way system with lorries delivering materials to come in from the east side and to deliver their materials to various "Pick-up Points” on the south side from which the cranes could offload materials. There was little or no storage space for steel which needed to be off-loaded by one of the adjacent cranes and then directly or via another crane to its location in the right phase at the right level for erection. The steel would be erected by steel erectors often standing in a type of cherry picker, a Static Elevating Working Platform (“SEWP”), who would receive each piece of steel as it was manoeuvred into position by the crane and locate and fix it into position. Once sufficient of a floor or Level was completed, the decking would go onto the floor beams, the SEWP could be relocated onto it and steel work above it could be started.

[7]So far as the logistics of steel fabrication in this case are concerned, full design information needed to be provided to CBUK which had to produce detailed fabrication drawings for approval; the steel then had to be fabricated by CBUK to the right size and shape, painted with a primer and then delivered from the CBUK works at Dalton to SRS’ premises in Thirsk. There SRS would "shake out" the delivered steel into the sequential erection Lots, send the steel through its own paint shop for painting and curing as necessary and then store it or load it onto a truck for delivery to site. The Witnesses

[8]I did not get the impression that any of the witnesses were dishonest, although some were more impressive than others. My impressions about the factual witnesses were as follows:a. A. CBUK

(i) Andrew Hall: he was at the relevant time the Operations Manager, well-educated and a chartered civil engineer. He was in charge of overseeing this project. There was a certain amount of opinion evidence in his written statement. I felt that he was fairly straight talking but that he was particularly unconvincing in his explanations about delays to CBUK and about the lack of complaint by CBUK about factors which were said to have delayed CBUK in its performance (for instance information and free issue material said to have been delivered late).

(ii) Ben Robinson: although he no longer works for CBUK, he was the project manager for the Shard steel fabrication contract with SRS. He came over in correspondence as straightforward and as one who was just trying to get on with the job as best he could. When giving oral evidence, his memory was not very good (which was not surprising given the lapse of time and his job move) and he was somewhat faltering.

(iii) Brian Rogan: he was the managing director of CBUK at the time of this project but unfortunately for much of the time he was having to deal with cancer and the accompanying treatment; for considerable periods he simply was not directly involved although he was generally kept informed from time to time. He could therefore give little relevant first-hand evidence. Although he was a decent, straight talking down-to-earth man with a sense of humour, most of his evidence was second-hand, involving retrospective reconstruction of what may or may not have been happening or was opinion evidence to which I can attach little weight. In so far as he commented on correspondence or other documentation, the Court can draw appropriate inferences as well as he could.

(iv) Don Underwood: he was the company commercial manager of CBUK who gave his evidence, so far as it went, reasonably satisfactorily. He was unconvincing in some respects particularly in connection with the claims for loss of fabrication and production and acceleration.

b. B. SRS (i) David McBride: he was the Coatings Manager for SRS, in effect in charge of the paint shop at Thirsk. I was particularly impressed with him as being down-to-earth, sensible, experienced and patently honest. (ii) Thomas Haughey: he was the Chief Executive Officer of SRS’ holding company and a director of SRS who gave some evidence about his relatively limited and high-level involvement in various aspects of the history between these two parties. He gave his evidence confidently and was convincing about what he did know but he did not know much about the detail. (iii) Douglas Willis: although I felt that he gave his evidence in a reasonably honest way, he sometimes in a rather laconic way would not initially answer the questions albeit would after some equivocation answer the questions directly and honestly. He was particularly vague and general about events after April 2010. I found him unconvincing in relation to the post April 2010 events, although that may have been down to a lack of detailed knowledge and analysis of such events. (iv) Gerry Rennison: he was the site manager of Steelcraft, SRS’ wholly owned steel erection company which carried out the steel erection on the Shard. I felt that he was essentially a decent person, albeit a little vague in some of his answers (albeit that was down to a lack of knowledge I suspect rather than anything else) but his evidence about what he actually knew was reasonably convincing.

(v) Martin Pyle: he was also employed by Steelcraft and was involved with “wrapping up” operations, which describes the follow-on operations after the principal steel erectors have fixed the steel pieces into position, such operations involving final adjustments or remedial work to the steelwork and its connections. I thought that he was a very good witness and indeed I wrote down "salt of the earth"; he was highly experienced, straightforward, decent and unruffled despite a stringent albeit polite cross-examination.

(vi) Charles Bogg: he was the quantity surveying director of SRS and, although he had limited knowledge of much of what was in issue, he was reasonably straightforward. What I found completely unconvincing, although it was not his direct fault, was his unbelievable evidence that there was no documentary record of the settlement made between Mace and SRS in about April 2012. It was not credible because a settlement which apparently addresses a multi-million pound final account must have been evidenced in writing even if it was only by way of e-mail or handwritten notes. This was a highly relevant area of dispute between the parties because it went at least in part to whether there had been a settlement between Mace and SRS which encompassed SRS paying or allowing a very substantial sum for tower crane use which is sought to be passed on by SRS to CBUK. It was not his direct fault because he was not involved in the settlement but he was the witness in effect put up to deal with the settlement and I would have expected him to have found out a lot more about it.

[9]So far as the experts are concerned, Mr Barry, the planning and programming expert for SRS was very impressive: he is extremely experienced in this field. He was sensible, reasoned, clear, logical and made concessions as appropriate. However, I found that Mr Holloway, his opposite number for CBUK, was inexperienced at least as an expert, his first report was confusing and he was nervous and confused although he tried to be open, even when faced with a slightly aggressive albeit polite cross-examination. I felt that he went back on things which he had agreed in the Joint Statements with Mr Barry, such as the appropriate basis to carry out programme and delay analysis. He carried out no real analysis of why or how CBUK was delayed in its performance, judged against either the June or December programmes; he simply albeit enthusiastically asserted that late information, variations and late release of free issue materials delayed CBUK but did so without any analysis of the facts at all. I have no difficulty in preferring the thrust of Mr Barry’s evidence, albeit that, as will be seen, I do not accept, in logic, all of it.

[10]The Quantity Surveyor experts, Mr Davis and Mr Gurnham for CBUK and SRS respectively, were very different characters and gave their evidence in a different way. Mr Davis was down-to-earth whilst Mr Gurnham was somewhat more cerebral, genial and canny. Both were experienced and helpful to the Court and, whilst I do not agree with everything which each said, they were both reliable witnesses. The History

[11]Mace Limited (“Mace”) was the main contractor employed to build the Shard. Initially Mace retained CBUK in or about 2008 pursuant to a letter of intent to secure steel and to carry out various initial steel works. In early 2009 however, Mace invited several steel work contractors including CBUK and SRS to tender for the steelwork overall. Tenders were submitted and there clearly was liaison between Mace on the one hand and SRS and CBUK on the other. In March 2009, CBUK and SRS were separately invited by Mace to provide a revised tender on the basis of revised tender documentation dated 12 March 2009. Both were referred to the proposed Contract Programme, then Revision 8, and to the requirements and general location of where the various cranes were to go as well as the allocation of crane time to the steelwork sub-contractor which included the allocation during the normal working hours for the Main Tower which were Monday to Friday 8 am to 6 pm and Saturday 8 am to 1 pm.

[12]SRS was successful and CBUK was not. On 30 April 2009 Mace instructed SRS to proceed initially with what were called the "Early Works" which included "material transfer", "raw steel production" and the commencement of the fabrication of ground to Level 9 steelwork, pending a final negotiation of the sub-contract. It was a "letter of intent" and envisaged a start date on site of 23 November 2009. The "material transfer" related to the transfer of steel from CBUK which it had secured pursuant to its earlier letter of intent.

[13]On 1 May 2009, CBUK tendered to SRS for the fabrication of steelwork up to and including Level 9. It quoted for 3,826 tonnes of steelwork at £617 a tonne, together with drawing office work and blasting and priming all steelwork. It excluded "shelf angles and decking". It anticipated completion by the end of November 2009. It identified that "detailed contract specific terms and conditions [are] to be agreed". The tender had been based on 250 specific drawings.

[14]By e-mail dated 7 May 2009, SRS sent to CBUK a letter of intent for the steelwork fabrication up to Level 9. The e-mail anticipated that the "formal order will be forwarded during the next few days". The scope was to include all fabrication and the basic steelwork necessary to be considered as having been procured by CBUK under its previous arrangement with Mace; other "black steel" would be provided "free issue" by SRS. Rates were identified, as quoted for.

[15]On 9 May 2009, Mr Robinson of CBUK sent a fabrication programme which showed fabrication commencing towards the end of June 2009 for the lowest levels completing Levels 8 and 9 by 25 November 2009.

[16]A meeting was held on 20 May 2009 attended by Messrs Haughey, Emerson, Bogg and Willis for SRS and Underwood, Hall and Robinson for CBUK, among others. As Mr Haughey said, there was no sense or intention that a formal sub-contract with CBUK would be entered into at that time not least because it was important that SRS first entered into a formal contract with Mace. Topics on SRS’ written agenda did not as such include programme but did identify "edge beam details" which, as everyone knew was to be treated as a variation but which had not been finalised. Programme was on CBUK’s agenda. The minutes were incorporated into the eventual sub-contract. They identify that CBUK was to forward to SRS the "X-Steel model” a computer programme which CBUK had been using. Paragraph 10 in relation to the edge beam detail stated:

“CBUK confirmed that the current model includes for the slab edge detail that is detailed on WSP latest drawings, with the inverted tee, decking, double edge trim etc, but have made no allowance for the halfen ski assembly or for any temporary edge protection sockets. SRS advise that it was their intention to incorporate all of the above into one composite member if at all possible. CBUK are to advise SRS of a ‘last ditch drop dead’ date for receipt of information to have the model updated to include these prior to fabrication.”

The minutes record no discussion, let alone agreement, on a programme although there was some discussion about what was to happen over the next few days. There was however listed nine items of information required by CBUK. There was no discussion of any relevance about terms and conditions for any sub-contract although it was noted that payment was to be monthly.

[17]On 28 May 2009, Mr Robinson sent to Mr Willis an "off-site programme which now identifies the drop dead dates we require information by"; this was FAB 002 Rev 1. This showed all information for Levels 0 to 4, 5, 6-7 and 8-9 by 5, 12, 26 to and 10 July 2009 respectively with fabrication commencing for the lower levels on 22 June and all to be completed by 25 November 2009. This was reviewed by SRS over the following few days.

[18]Mr Robinson enquired on 9 June 2009 of Mr Willis for an update on the contract status as he thought the letter of intent was supposed to be only a short term measure. However CBUK in June submitted to SRS several applications for payment, for instance on 18 June 2009 noting that it had not yet received the formal order documents.

[19]SRS by letter dated 12 June 2009 to CBUK disagreed with FAB 002 Rev 1 saying that more time for information provision was required, the X-model was awaited, freeze dates for information release needed to be established and because General Arrangement (GA) drawings provided by CBUK had insufficient information on them. A further meeting was called. It took place on 24 June 2009 and it was attended by Mr Willis and Mr Robinson amongst others. No minutes were prepared. Such notes as were taken were vestigial. It does appear that programming was discussed and it was envisaged that there would be a "soft start" in relation to steelwork on site for Levels 0 to 4 on about 10 November 2009 with a "hard start" from Level 5 upwards on 18 January 2010. CBUK was informed that completion of the tower steelwork (Level 40) was expected to be in October 2010. Mr Willis told Mr Robinson that SRS required a 2-3 weeks turnaround period at its works after delivery to its Thirsk works by CBUK to arrange for amongst other things painting prior to dispatch to the Shard site. There was some discussion about information release dates. I am wholly satisfied that there was no agreement as to programme which anyone attending ever believed would be binding if and when any sub-contract was entered into. Such discussion as there was did not descend into the level of detail which emerged in what has come to be called the "June Programme”, FAB 002 rev 02. I am wholly satisfied that if it was ever intended that what was discussed at that meeting should be incorporated in the contract, not only would the parties have exchanged draft minutes about the meeting but also there would have been an insistence that they were incorporated into the Sub-contract that was eventually negotiated; the fact that at best there were some scrappy notes suggest that neither side considered that what was discussed at that meeting amounted to an agreement, let alone one which was ever intended to bind or to have some sort of contractual effect. What however was anticipated was that a further draft programme would be prepared by CBUK for consideration by SRS. That is indeed exactly what happened.

[20]On 26 June 2009, Mr Robinson sent to Mr Willis the June Programme “for review/comment”; that itself suggests that it was not agreed albeit that the e-mail continued: “Hopefully it accurately reflects our discussions, however, please advise if there is anything we have missed or wrongly interpreted." The e-mail does not suggest that it was agreed, let alone agreed in any way which was to be considered as binding or ultimately binding. There was no response to the e-mail.

[21]The June Programme is a detailed programme which has a box identifying "Information required from SRS" and "Information required from Design Team" for the different Levels as well as different types of information with start and finish dates for each such information requirement. There then followed "Detailing/Draughting" in effect to be done by CBUK at all levels, beams and columns, and “Fabrication” to be started on 24 August 2009 and be done in stages relating to the different levels until 11 February 2010. SRS sent it together with its own proposed programme to Mace on 30 June 2009.

[22]I am satisfied that the June Programme was never agreed. It was not agreed to orally, let alone in writing. It was not even accepted by the mutual conduct of the parties. For instance, there were many respects in which SRS did not comply with the programme requirements for the provision of information. Even CBUK was not in reality working to the June Programme; indeed Mr Hall conceded in evidence that from about the beginning of September and certainly thereafter CBUK was not working to the June Programme.

[23]On 15 July 2009, SRS sent to Mr Hall of CBUK "a draft copy of your subcontract agreement for perusal". This contained Appendix A which was similar, albeit not identical, to the Appendix A attached eventually to the Sub-Contract. It specifically at this stage did not mention the June Programme but the programme details were to follow. That again suggests that SRS, at least consciously, did not believe that the June Programme had been agreed. This was responded to on 29 July 2009 by Mr Underwood with suggestions that there should be several important amendments; he looked "forward to receiving the formal contract paperwork" thereafter. He was aware that the formal order would not "come out until" SRS had agreed its contract with Mace (as appears in his e-mail on that day to Mr Rogan) and that, pending this, CBUK was proceeding pursuant to the letter of intent.

[24]On 20 July 2009, Mr Willis sent to Mr Robinson 23 pages of calculations comprising the "composite edge beam design" detail for incorporation into CBUK’s detailing computer model. This was to be treated as variation work. There still remained some information outstanding relating to the positioning of the “Halfen channel ski brackets and the hand railing sockets/stiffeners”. Mr Robinson passed that on immediately to Oakwood, CBUK’s detail drawings designer. There was no complaint from CBUK or Oakwood that this information was not enough to be getting on with.

[25]On 20 July 2009, CBUK sent in its payment Application No 3 which again confirmed that it had still not received "formal order documents". This was repeated on 17 August 2009 with Application No. 4.

[26]On 22 July 2009, Mr Robinson wrote to Mr Willis chasing up some outstanding queries which had been raised two months before. With regard to the specific queries, they had in fact been provided six weeks before, as was pointed out by Mr Willis on 23 July 2009. However, it is the case that in many respects, the "Information Required" dates in the June Programme were not complied with and there were no complaints levelled at such non-compliance, which again suggests that no one regarded the June Programme as in some way to be treated as binding.

[27]There continued to be an exchange of information. For instance on 7 August 2009 there was released to Mr Robinson from Mace’s Design Team the latest Scheldebouw drawings and on 13 August 2009 Mr Robinson sought from them some clarifications of various answers given to various Requests for Information. On 18 August 2009, the Design Team e-mailed Mr Robinson directly with a further sketch detail showing the typical folded plate detail around the more columns; this related to the edge beam.

[28]In early September 2009, CBUK began fabrication. On 25 August 2009, Mr Robinson had raised with Mr Willis the possibility that SRS might carry out the priming. This offer was not taken up. Indeed on 15 September 2009 SRS asked CBUK to apply one coat of primer to the fabricated steel to a thickness of 75 µ.

[29]So far as programme was concerned, on 14 September 2009 SRS asked CBUK if it could deliver to enable erection of some steel to start on site on 5 October 2009. On 16 September 2009 Mr Robinson replied attaching a "very basic programme for your review", based on "the fact that we are not waiting for approval of fabrication drawings and that there are no handrail requirements”. Although there was reference to the “original programme”, there was no complaint that the new requirements either were by way of variation or involved a breach of contract. The "basic programme" showed the "soft start" steel fabrication starting on 21 September 2009 and being completed between 12 October and 2 November 2009. It was from about late September 2009 that the parties began to adopt a "Priority" basis of proceeding with fabrication, which was dictated by what the priorities for erection were at the site. On 2 October 2009, Mr Hall wrote to Mr Willis following a meeting which addressed what were then Priorities 1, 2, 3 and 4 with deliveries for Priority 1 on 12 October 2009. He did record that, based on the June programme, CBUK was due to get all outstanding information by 27 July 2009 but "this obviously did not happen and is still ongoing"; he went on to say that this was the "reason behind the lateness of the fabrication”. No complaint or claim was intimated.

[30]On 8 October 2009, CBUK emailed SRS saying that there were 8 RFIs outstanding. On the same date Mr Willis e-mailed Mr Robinson saying that, although there were some changes to the edge beam which had been called for, he was "amazed that we are being told that there are still outstanding queries on the first area of the level 5 steelwork” because SRS had "made it clear that…folded plate/stiffeners/handrail sockets etc were to be progressed to the information provided and any discrepancies or queries that were found during the modelling would be dealt with as and when they occur”. Mr Robinson replied later to recognise "that the edge detail has been in existence for some time but we had never completed the modelling to the beams at level 05”; he explained that the intention was "to start fabrication of the main beams and then the once the edge detail is finalised we can look at putting the bent plate details on the beam”. On 15 October 2009, SRS sent to CBUK revised calculations in respect of the edge beam detail which were to replace those sent in July 2009 albeit that the changes were not major.

[31]Throughout the period from July 2009 onwards, CBUK was submitting detailed fabrication drawings for approval to SRS and the Design Team.

[32]On 15 October 2009, SRS sent to CBUK the formal order dated 2 June 2009 together with an altered Appendix A. There was some evidence that a copy of this order might in some way informally have made its way into the possession of CBUK, albeit that no such copy was disclosed by CBUK during the proceedings. I am satisfied that this did not happen as the evidence for it is at best sketchy and I accept the explanation given by SRS witnesses that the date on the order was simply generated electronically, albeit in one sense misleadingly.

[33]There was some discussion in mid-October 2009 about free issue materials and in October, as before, CBUK produced what it called "fittings” lists which identified in some detail what was required. These lists became more noticeable by their absence in the November 2009 to March 2010 period.

[34]In mid-October 2009, Mace altered its programme requirements for the steelwork so that main tower steel erection was required to start three weeks later than the 18 January 2010 start.

[35]CBUK began to deliver steel to SRS’ works at Thirsk in or about mid-October 2009. On 6 November 2009, Mr Willis e-mailed Mr Robinson referring him to an electronic document entitled "Early & Main Works Programming" as well as various other programming documents. This classified the CBUK steelwork into three categories:

"Early Works", “Main Tower" and "

Remaining Steelwork". For the purposes of this case the latter category can be ignored as it does not feature in the disputes. This gave each Area and Phase final delivery dates of the CBUK steel to SRS together with the “Site Start Delivery Dates” which is the date when SRS needed to get the steel in question to site. So far as is material, for Phases 801,802 and 803 which related to Levels 8 and 9 steelwork, final delivery dates were to be 12 February, 12 February and 19th February 2010 respectively. The Site Start Delivery date for Phases 501 and 502 which were the first of the main tower works was 8 February 2010 which was reflected in the amended Mace programme. Mr Willis asked Mr Robinson to confirm that the delivery and site start dates given could be met by CBUK. Mr Robinson reviewed these documents and passed them on to Oakwood for review from its standpoint.

[36]Mr Robinson did not come back to Mr Willis specifically on the contents of the latter’s e-mail of 6 November 2009 but on 24 November 2009 he indicated that he was finalising "the fabrication programme to completion" saying that CBUK was "confident that we can achieve your required dates for all steelwork and our programme will reflect this", continuing that "we have carried out a detailed review of the remaining work content and considered current efficiency levels in the factory” and noting that there had been "recruited additional shop floor workers to increase the output" so that CBUK was confident "we have an achievable programme".

[37]Erection of steel began in November 2009 and SRS sub-contracted the steel erection work to its own wholly-owned subsidiary, Steelcraft, albeit that there was some management at a site level by SRS personnel.

[38]By the end of November 2009, it had become apparent that there was a serious problem with regard to the quality of fabrication of steel by CBUK. In an internal e-mail, CBUK’s Mr Smedley wrote as follows:

“We have now received a formal complaint from our clients with regard to the quality of fabrication being produced. We have in the last week had one column returned 15 mm out of square, a column rejected at site with the bearing area underground and two loads rejected yesterday for unacceptable welding. It is difficult to argue that these occurrences are isolated and do not demonstrate a failing of our quality system as all items are allegedly inspected 100%, the requirements are clearly shown on the dimensional reports and the required weld finish on the drawings. Please provide an explanation on how and why these failing[s] occurred and what measures have been put in place to prevent a re-occurrence…”

[39]A further internal responsive e-mail from Mr Wright was circulated to work team leaders on 27 November:

“The attached is totally unacceptable! In general, our quality standards are dropping and it is concerning. We have well bedded systems in place that had been successful for years, so we have no excuses… It is your responsibility to ensure we deliver a quality product, of which Cleveland Bridge has built its reputation on, so do not let us down and put the business at risk…”

At least some of the responses accepted that there were problems (for instance "contamination in tapped holes"). One response suggested that there was very little inspection on the nightshift work and that there had not been a corresponding increase in inspection personnel notwithstanding substantially increased recruitment. The problems had not been sorted out because, for instance, on 7 December 2009 internal e-mails within CBUK were reporting out of tolerance work.

[40]On 30 November 2009, Mr Robinson sent to Mr Willis a further fabrication programme through to completion, referenced FAB 003, which showed a final issue of drawings for Priorities 6 to 15 (up to Levels 8 and 9) to be carried out between the week commencing 23 November 2009 and the end of January 2010 with fabrication and delivery running from the week commencing 30 November 2009 and the week commencing 15th February 2010. Mr Willis indicated orally, fairly promptly, that this proposed programme was unacceptable not least because deliveries of steel by CBUK as late as the third week of February would automatically mean that SRS could not comply with Mace’s revised programme for the Main Tower. Essentially, he made clear what SRS’ requirements were.

[41]On 10 December 2009, Mr Robinson sent to Mr Willis what has become known as the December Programme, FAB 004. The December Programme reflected the requirements of SRS at that stage. This programme had no details about the need for information to be received or for the production of fabrication or general arrangement drawings by CBUK. What it did show was fabrication and delivery dates for all the remaining steel starting with Priority 5 on 14 to 16 December 2009. The fabrication and delivery to be carried out for Phase 801 was to be 20 January to 10 February and between 6 to 12 February respectively, for Phase 802 28 January to 10 February and 11 to 16 February and for Phase 803 5 to 23 February and 16 to 22 February, 2010. This programme was put forward in the light of all the available information and in the firm belief that it could and would be complied with by CBUK, subject to any unforeseeable problems. There is no doubt that the December Programme was acceptable to SRS. There was no formal, written or oral acceptance as such of this programme, although it clearly represented SRS’ communicated requirements.

[42]In December 2009, SRS prepared a "Status Report" which identified that virtually all design works were complete in relation to the steel to be designed and fabricated by CBUK, that the Early Works were on programme with regard to fabrication schedules and that the cantilever section of the gantry hoist structure was to be erected in the New Year. It attached FAB 004 and information about site start delivery dates in relation to the CBUK steel of 1 March, 1 March and 8 March 2010 respectively for Phases 801, 802 and 803.

[43]There was from time to time communication between Mr Robinson (principally for CBUK) and SRS about the provision by SRS of free issue steel particularly what were called "bent plates". An example was in Mr Robinson's e-mail of 5 January 2010 relating to Priority 6 and 7 steelwork politely asking when CBUK was likely to get the bent plates from the supplier; this particular request was complied with within a few days. On the same day he e-mailed Mr Willis saying that he was concerned at the number of man-hours it was taking to complete the edge detail on the perimeter beams and columns; this impacted on the detailed design drafting activities as well as fabrication. On 7 January 2010, Mr Robinson e-mailed Mr Willis referring to various lots of steel which were complete but indicating that various pieces of free issue steel were still awaited. No complaint is made about this; it is simply a recorded matter of fact.

[44]In an internal e-mail of 11 January 2010, Mr Wright of CBUK e-mailed Mr Hall, Mr Robinson, Mr Underwood and others highlighting a major and serious fabrication problem within CBUK:

“As you are aware the Works forward load has indicated an extraordinary overload since October 2009. We have expressed concern over this, in particular the Shard programme and have requested that we sublet some of that work to reduce the load, of which to date we have not [been] able to achieve. We understand that we have managed to have some movement in other programmes that has assisted, but the Shard programme has actually increased (due to changing priorities, late issue of drawings and generally not meeting the specified tonnage). We have been trying to recruit, with little success and have been working excessive overtime. The RRP suggests that we employ a further 135 men, but this is a period of 2 months of which, you can appreciate, is impossible/impractical. I am looking at introducing 12 hour shifts, throughout the works, but this is at great expense and we will need to negotiate with the union. Our best option is to move the Shard programme out, but I am unsure what our contractual arrangements are. I suggest we review all of the programmes, as there has been further favourable movement on M74 and A46…”

[45]On the same day, there was a meeting between Mr Robinson and Mr Willis amongst others to discuss programme, this being followed up by an e-mail from Mr Robinson on 12 January 2010: “…I am concerned that we will have priorities 8, 9, 10 complete by 25th January with deliveries commencing w/c 18th starting with priority 8. As discussed yesterday we are struggling to meet the overall programme, due to a number of factors. We have explored all the options in house to increase resources, coupled with working extensive overtime and we are still struggling to meet the programme. As you are aware we worked through the xmas break to pull things around but this was not as productive as we had hoped. The weather has played a significant part and we have lost a lot of labour over the past couple of weeks due to non-attendance. We were expecting the site programme to drift out slightly due to the recent bad weather that will no doubt have hindered the core build. As this is not the case, we have to resolve the current programme position. We had a meeting with our production team yesterday afternoon and the conclusion was that we need to sub-let or (return to yourselves) Phase 601 (approx 400Te). In the short term that would allow us to concentrate on the fabrication of 602/603. Depending on progress, we would then review Phases 801, 802, 803. At present, if we continue at the current rate of progress then we would not complete the fabrication of 803 until the end of March. When we were fabricating the heavy box section columns we were achieving 200-250 Te or week comfortably, however, now we are fabricating a high number of beams were content per tonne has increased. The edge detail is far more labour-intensive than originally envisaged which is slowing productivity. We are currently only achieving 150-175 Te per week with no mechanism to increase this further without subletting. We have approached Allerton who are keen to take some work should this be an option to go down. …Please digest the above and I'll give you a ring this afternoon to discuss what the options are."

[46]The following day, an internal e-mail within CBUK identified some beams being “on hold awaiting main section material from" SRS and there being "a number of other issues with bent plate and fitting materials which we are assessing now after today's delivery". Mr Wright said to Mr Smedley and Mr Robinson that CBUK "need to use this as an opportunity to buy some grace in programme" and asking them to advise SRS on delay. This suggests that delays were not being caused as such by any delay in the provision of free issue steel, but the bent plate was really simply going to be used as an excuse to secure some extra time, whilst the real reasons for delay were otherwise. CBUK did not however tell SRS that it was being delayed by the late provision of free issue material.

[47]There was a programming meeting on 18 January 2010 attended amongst others by Mr Willis and Mr Robinson at which Mr Robinson tabled another programme FAB 003 Rev 01 which showed the deliveries of fabricated steel being pushed out until late March 2010. Mr Willis made it clear, as confirmed in an e-mail on the following day, that this new programme was unacceptable and that SRS required CBUK to hold to the December programme "as the agreed programme", this correlating "with the site dates that we need to achieve for the project to succeed". He awaited CBUK’s "continued plans for recovery in achieving the required delivery dates the steelwork to ourselves as agreed". He noted that CBUK was already late with deliveries for Priorities 6 to 9 and Priority 10 deliveries were likely to be late; these were having a detrimental effect on site performance creating standing time on delays and continuing: “Should this be allowed to continue we run the risk of being in a failing position at the front end of the job, with all the programme and cost implications that we are both fully aware of."

[48]In January and February 2010, there were e-mail exchanges between CBUK and SRS relating to the provision by SRS of various items of free issue steel, particularly "bent plates" with CBUK asking for deliveries, on the basis that it was mutually understood and expected that two weeks notice should be provided by CBUK. It is a feature of these exchanges CBUK never complain to or criticise SRS about the delivery being late or even affecting progress.

[49]On 22 January 2010, Mr Robinson wrote to Mr Willis indicating that fabrication drawings were due on 29 January 2010 (801), 5 February 2010 (802) and 12 February 2010 (803) with the steelwork being fabricated as to 225 tonnes by 5 March 2010 (to be done by a sub-contractor), 440 tonnes to be fabricated by CBUK before the end of February 2010 and the remaining 201 tonnes to be sublet. This clearly suggests that CBUK did not itself have the capacity on its own to fulfil SRS’ requirements.

[50]On 25 January 2010, there was a meeting between Mr Haughey the Chief Executive of SRS, Dr Emad Kamil a controlling director of CBUK and Mr Hall of CBUK at which progress was discussed, with Mr Haughey expressing his concern about progress. On 3 February 2010 Mr Haughey wrote to them asking for a short summary of actions and progress required to recover the programme. Mr Hall replied on the same day saying that additional draughtsmen had been deployed and that CBUK was attempting to recruit 30 platers and welders on short term contracts. In relation to Levels 8 and 9, deliveries were expected to start that week with some work being sub-let and some done by CBUK.

[51]Mr Hall wrote to Mr Willis on 5 February 2010 saying that the proposed "price" for the edge beam variation would be £387,670 and that "with regard to programme this has added a three weeks minimum on drafting and around three weeks on fabrication period". Somewhat oddly, this e-mail was not raised by either Counsel in cross-examination. The response from SRS called for a full analysis of substantiation with regard to the money claim and also saying:

“You will also need to fully demonstrate any programme implications relating to this matter rather than simply states that three weeks have been added to the programme???”

No such demonstration was provided.

[52]There were problems behind the scenes at CBUK. For instance on 10 February 2010, Mr Robinson wrote to one of the sub-contractors, Allerton Steel, asking them to pull various deliveries forward. He told them that they were running “1 week behind schedule due to late deliveries of steel from ourselves." He provided various dates for delivery saying that these were the "absolute latest dates or we will incur massive penalties". Also on 10 February 2010, Mr Hall was indicating delivery dates for the steel for Levels 8 and 9 between 22 February and 22 March 2010; this indicated that CBUK’s programme had slipped by a fortnight or more. Mr Haughey’s reaction on 12 February 2010 to this was that these projections were "very alarming" and that consequently the project would be "in significant difficulties"; he said that these promised deliveries were unacceptable and he implored CBUK do "take radical action to improve upon the dates quoted” and to make "absolute and extraordinary efforts to retrieve" the delay. Mr Hall replied on the following day expressing confusion referring to the programme FAB003 Rev 01 and saying that his latest dates actually showed some improvement against that programme. He made the point that he was on site the day before: “…and you are still erecting levels 4 and 5 and no metal deck has been erected at the level 5. We need to work together can I suggest you urgently (say Monday) send us your detailed site erection programme and we can work together to meet your requirements. I can guarantee you that we are pulling out all the stops to produce the steel as quickly as possible actions taken are as follows… The other big problem is SRS delivery of the folded plate for the edge detail. We are still receiving items for levels 6 and 7. We are [being] told minimum turn around from issuing detail is 2 weeks, this cannot be right, we have a shop full of beams waiting for folded plate to complete the. Could you please push your end. Can you please send the site erection programme on Monday." Can you please send the site erection programme on Monday."

[53]Mr Haughey replied on 15 February 2010 asking CBUK to help retrieve the project and saying that "we genuinely need all of the stops out on this." As for the folded plate, he said that this had been supplied up to Priority 12 (603). For 801 and 802 this would be supplied by the end of that week; for 803, he asked CBUK to furnish its requirements by return.

[54]Mr Willis e-mailed Mr Robinson on 19 February 2010 complaining about late deliveries in relation to Priority 11; this was said to be totally unacceptable as was the fact that fabrication and delivery were not being completed in the sequences identified on the schedules. Complaint was made that lesser priority items were being fabricated before greater priority items. Mr Robinson replied on 22 February 2010 referring to “material problems and logistical difficulties that have resulted from the sublet of certain members” and seeking to explain why there had been slippage. He explained that 12,000 hours of variation work had been absorbed. He also said that CBUK was trying to achieve the dates on the December programme.

[55]From late February or early March, SRS began to institute extended hours working which included some night-time working as well as some extended weekend working. It seems that at least some of this work was done without formal approval from Southwark Council, with regard to noise and other restrictions. As will be seen, the Council later did give permission towards the end of May 2010.

[56]On 8 March 2010 Mr Willis wrote to Mr Robinson complaining that delivery dates were slipping. On 12 March 2010, an internal SRS e-mail suggested that there was “a huge amount of work” in the edge beam trays. This was referring to previous indications from CBUK about the likely cost of the edge beam variations.

[57]On 9 and 10 March 2010, Mace called in some consultants called “Leanconsultant” to analyse some data about how well the steel fixing operation by SRS’s sub-contractors, Steelcraft, was going. Duplication of work, insufficient preparation of steel, quality issues and other matters were observed; fixing plates being in the wrong position were noted. These were passed on to Steelcraft but matters were taken no further in this regard.

[58]By 17 March 2010, Mr Willis was reporting to Mr Robinson that Phase 801 deliveries were falling behind, adding that the latest promised delivery in full by 19 March 2010 was not to be completed until 25 March 2010. Two days later, CBUK wrote to its sub-contractor, Steelridge, expressing “extreme” disappointment at the programme slippage.

[59]On 26 March 2010, Mace wrote to SRS noting that SRS “have done very little in order to prepare for the advancement of Levels 8 & 9 that is imminent to be installed”; it was said that no fin “plates have been welded to the core in preparation for the installation of Phases 801, 802 and 803”. As was pointed out by SRS on the same day, some had been welded 3 to 4 weeks before.

[60]In a progress report to Mace of 29 March 2010, SRS reported a delay of 2 to 3 weeks in relation to Level 9 erection. The report raised the prospect of a “recovery plan" whereby through working night shifts and extended weekends the three-week delay could be recovered in 8 to 10 weeks.

[61]On 31 March 2010, Mr Willis again wrote to Mr Robinson recording that recent indications from CBUK about deliveries for Priorities 13, 14 and 15 had not been followed, with Priority 13 being completed that day, Priority 14 incomplete and Priority 15 also still substantially incomplete. Mr Robinson was however on holiday. By 2 April 2010, all Phase 801 steel was available to be called to site, four out of many other loads available for Phase 802 and none for Phase 803. The last pieces of steel for Phase 803 were delivered by CBUK on 1 April 2010.

[62]Although SRS’ paint shop worked on Good Friday and the following Saturday morning (2 and 3 April), it did not work the following week due to an unavoidable but pre-planned shutdown. However, some steel erection work continued in that week.

[63]On 16 April 2010, SRS wrote a letter to CBUK referring to “Non-conformance reports” (“NCRs”) relating to fabrication defects said to be the responsibility of CBUK. A list comprising 22 NCRs had been dispatched on 31 March to CBUK and a full technical appraisal was called for. 9 of these NCRs were said to involve faults in fabricated steel found on site.

[64]There is little doubt that particularly Phases 802 and 803 were delayed at SRS’ works at Thirsk by reason of the shutdown of the paint shop. Many of the pieces of steel delivered in late March simply could not be addressed until the paint shop personnel had returned from the planned shutdown. There were few deliveries of steel between early April and 19 April 2010.

[65]On 19 April 2010, SRS delivered to the site some steel for Phase 803. However, steelwork erection could not proceed by reason of two events, the erection of the new grillage for the TC1 crane which was located within the ever rising concrete core and the erection of what was called the hoist gantry canopy on the south side of the new building. TC3 had to be used to load the steel for the gantry and the location of the gantry was such that the already restricted access for deliveries became so restricted that few if any bulk deliveries could be made to site while much of that work was going on. This gantry and canopy was to be used to base a hoist to enable mostly cladding materials and personnel to access the higher levels. This work started on 20 April and was completed probably on 23 April 2010, at least sufficiently to release TC3 for other lifting work and to enable substantial access to the site for the offloading of materials generally. So far as can be ascertained, TC1 was out of action whilst the new grillage was erected within the concrete core at a higher level than previously. This operation lasted broadly over the same period of time.

[66]Mace wrote to SRS on 22 April 2010 complaining that against the original Mace programme SRS was seven weeks in delay although this was measured against the concreting of the seventh floor. It called for a detailed fabrication and delivery programme for all remaining steel members up to Level 9 and for a detailed erection recovery programme for the remainder of the steelwork erection.

[67]On 23 April 2010, SRS’ steelwork erection sub-contractor began to call for specific loads to be delivered to site from Thirsk. Other loads were called off over the following few days.

[68]As against the December programme, deliveries of fabricated steel for Priorities 8 to 15 (excluding Priority 10 which is not relevant) were completed by CBUK on the following dates: Priority Phase December Programme Delivery Actual deliveries 8 501 7 Jan 2010 15 Dec 2009 - 3 Feb 2010 9 502, 503 12 Jan 2010 4 - 8 Feb 2010 11 601 26 Jan 2010 15 - 24 Feb 2010 12 602, 603 5 Feb 2010 26 Feb - 11 March 2010 13 801 12 Feb 2010 5 - 29 March 2010 14 802 16 Feb 2010 24-31 March 2010 15 803 22 Feb 2010 30 March to 1 April 2010 Thus, delivery of Phase 803 steel was 38 days later than the December programme allowed for.

[69]Actual steel erection for the relevant Phases was as follows: Phase SRS’ programmed erection- 2010 Actual erection-2010 501 8-10 Feb 8 – 17 Feb 502 8-10 Feb 11 - 17 Feb 503 11-16 Feb 16-23 Feb 601 15 Feb – 2 March 26 Feb – 21 Apr 602 15 Feb- 2 March 8 - 16 March 603 23 Feb-5 March 16-25 March 801 3 – 16 March 30 March – 30 Apr 802 3 – 15 March 6 Apr – 7 May 803 19 – 30 March 30 Apr to 13 May On 14 May 2010, erection of Phase 103 (Levels 10 and 11) commenced, it having been programmed to commence on 19 March 2010. Thus commencement of Phase 103 was 56 days later than programmed.

[70]SRS set about producing the "recovery programme" called for; this essentially involved acceleration measures achieved by extended working hours. Mr Willis produced such a programme in draft on 5 May 2010. This suggested that there would be a recovery of the eight weeks delay then anticipated achieved by extending site working hours on weekdays from 6 pm to 11 pm and by starting work one hour earlier at 7 am and on Saturdays again by starting work one hour earlier at 7 am and extending from 1 pm to 4 pm. This was sent to Mace on 6 May 2010.

[71]There were clearly some organisational problems encountered by SRS in its erection of Phase 803 with Mace for instance complaining on 6 May 2010 to SRS about a "severe downturn and unproductive use of resources".

[72]SRS wrote to CBUK on 14 May 2010 a letter which with hindsight precipitated the current disputes between them. It referred to CBUK’s latest application for payment and declined to make any further payment. Complaints were made in somewhat general terms about the quality of CBUK’s work at and about CBUK’s “failure to deliver the steelwork in a timely manner" which had led to overall delays. On the same day CBUK indicated that it was awaiting a full report on alleged structural steel defects. Later, Mr Willis provided what he called a further "update" of various NCR locations together with an updated schedule of NCRs; this ran to some 64 complaints.

[73]Unsurprisingly, CBUK reacted strongly against the refusal to pay sums which it considered due. Its legal department wrote a five page letter on 19 May 2010 complaining at this "unreasonable approach" and anticipating "an expensive and time-consuming legal dispute". It criticised the lack of detail about the complaints and concluded that there was no "merit in the confrontational approach adopted" by SRS, seeking a meeting at senior level to resolve this matter on an amicable or commercial basis. It wrote also on 20 May 2010 to Mace complaining about the "unreasonable and confrontational approach adopted by" SRS. Another direct e-mail was written to Mace by a Dr Kamil of CBUK’s holding company on 22 June 2010 complaining that it had not been paid by SRS. It is quite unusual for such letters to be written directly and it is often considered to be a very aggressive move.

[74]By 26 May 2010 the NCR list had grown to 94 items which were reviewed at a site meeting on that day by CBUK and SRS personnel.

[75]SRS wrote back to CBUK on 28 May 2010 responding to the latter’s letter of 19 May, complaining that the interim application had not been properly "tabulated". "Numerous and significant defects" were referred to and a copy of the latest NCR register was provided with some backup. It asserted that it was a "matter of record that CBUK were late in delivering significant parts of the steelwork" but that the effect of late deliveries together with the defects would be "demonstrated separately".

[76]Some time before 28 May 2010 the London Borough of Southwark had approved night-time working in relation to steelwork from Mondays to Saturdays. SRS had done night-time working in March but had withheld full night-time working until it had been formally approved. Steelcraft sub-contracted the night time and extra weekend working to 2 companies, MCS and K-Len, although the former had been retained in March 2010. Much of the acceleration claim relates to their costs.

[77]There were in May and June 2010 a number of complaints by Mace to SRS about poor performance. An example is its e-mail of 4 June 2010 to Mr Willis in which it complains about temporary props not being installed, holes being left, redundant bolts/washers/nuts left on the deck, inappropriately positioned temporary brace strops, and general complaints about incompetence relating to handover of floors. Mr Veal of Mace referred to SRS’ performance in this context as being "an absolute disgrace". He wrote several days later on 7 June 2010 complaining about SRS’ focus "of throwing steel numbers up at high-level to increase your weekly piece count as a way to report an improvement in productivity does not conceal the actual event that SRS are not completing your required works below". Mace complained again at a meeting on 10 June 2010 about the "lack of quality in works being handed over" and that they were “extremely dissatisfied with the quality control of handover product being received". Mace’s focus was often on the floors not being handed over on time and in a ship-shape manner such as to enable following sub-contractors to proceed.

[78]On 14 June 2010, CBUK wrote in some detail to SRS in answer to the SRS letter of 28 May 2010. It asserted that the NCR list was "vague and lacking important information" with no actual dimensions identified or cross-referred and that the reference numbers of the pieces of steel complained of were not identified. It awaited detail of the complaints about delays and lack of progress and generally challenged the assertions made. Mr Bogg of SRS replied on 23 June 2010; the letter does not add very much more than had been provided before although it enclosed "schedules of the steelwork and dates received" from CBUK; it did refer to the December programme as being agreed. In its response on 13 July 2010, CBUK challenged much of what was said but did not challenge the assertion that the December programme had been agreed.

[79]By 29 July 2010, internally SRS (Messsrs Bogg and Earl between them) had produced what was called a valuations spreadsheet identifying broadly that it accepted that CBUK was entitled to a gross sum of £2,618,833.08, with the main differences between that figure and what CBUK was claiming (£3,005,082.67) relating to the valuation of variations particularly in respect of the revised edge beam. The document identified a number of "Contra charges" including £582,000 for “additional nightshift erections squads to mitigate the seven-week delay to the contract caused by late steel deliveries and incorrectly fabricated steelwork", £274,000 for "additional site staff to manage the nightshift and snagging works", £50,000 for "additional office staff to manage the same", £372,471.65 for squads to "correct defects in CBUK steelwork" (this being itemised in an 11 page schedule of NCRs) and £120,865.79 for "delay and disruption to metal decking installation caused by the fragmented nature of working due to numerous errors in the fabricated steelwork".

[80]There were problems with the continuing steelwork above Level 9. An example is that on 2 August 2010 steel erection above Level 17 was suspended "due to a lack of safety control and the imminent risk of injury". By 3 September 2010 Mace was complaining about "more and more incomplete works of handover with SRS spread over numerous levels mopping up connections" and that this "is stretching your labour & management resources…”

[81]On 3 August 2010, CBUK wrote to SRS complaining that it had not received costs information about the NCRs and expressed disappointment with the lack of progress in the resolution of the final account. SRS replied on 9 August 2010 saying that, once remedial works were completed, SRS would be "able to further ascertain and present the final costs, loss and expenses of the defects, the rectification works and their consequences". CBUK answered on 13 August 2010 complaining that SRS’ conduct was "wholly unfair, unreasonable, unacceptable and intolerable" and threatening the initiation of legal action if a payment on account was not made. On 18 August 2010, CBUK submitted its payment application No 16 claiming a gross sum of £3,013,580.45, claiming the balance of £1,226,264.82 as the outstanding sum due for payment.

[82]On 20 August 2010, SRS challenged what CBUK was saying was due and attached its "current view on the damage, loss and expense incurred and anticipated to be incurred" in relation to delays and defects. A summary schedule was attached which identified, amongst other things, "addition of nightshift erection squads" (£598,000), "addition of dayshift erection squads to mitigate the delays" (£234,000), "addition of snaggers/wrap up squads to correct defects" (£390,000), “additional site staff to manage the night shift works (£128,000), “Mace tower crane costs & site attendance costs [for] the nightshift working and increased day resources” (£236,464.50) and "projected Mace tower crane and attendants costs to recovery programme" (£500,000). Some other costs such as "delays and disruption to follow on trades and other Mace costs" and "SRS fabrication and paint shop & subcontractor costs rectifying fabrication/painting errors before delivery to site" were "to be advised".

[83]Internally, SRS was reporting problems. For instance on 21 September 2010 Mr Willis reported to Mr Emerson: “(3) Our recovery was very much on track by the middle of June (as noted in my previous letter regarding crane times - we stated in the meeting of 22-06-10 that we were within 48 hours of the recovery programme) and one of the major factors contributing to the late handover of floors since this juncture is the large amount of crane downtime or disruption due to the operations involved in the timing of the cranes. (4) Over a 12 week period we have recorded a 30% loss of total daytime craneage. (5) We have continued to receive variations instructed by Mace, resulting in some instances of site works/disruption."

[84]In this context, Mace wrote to SRS on 15 September 2010 notifying it that "the regular progress of the Main Contract Works continues to be materially affected by the late installation of steelwork". These complaints related more to the late handover of the floor decking rather than delays in the erection of the steelwork itself. SRS replied on 28 September 2010 denying that these slippages were "entirely the result of matters [for] which we have responsibility". It complained about a loss of 30% usage of daytime craneage, almost entirely the consequence of crane climbing." It identified that works had been delayed and disrupted "as a result of variations" and identified "the introduction of substantial crane time requirements" as directly affecting on-site progress. It explained that NCRs between Levels 5 and 15 did not create critical delays for following trades. Mace replied in part by an e-mail of 13 October 2010 challenging much of what was said.

[85]It is common ground that not only was the 56 day delay at the commencement of Phase 103 (Level 10) never recovered notwithstanding the mitigation efforts applied by SRS but also that the delay was increased to nine weeks with Phase 403 (Level 40) steel work being completed on 6 December 2010. Little of what happened during the remainder of the construction phases of the Shard has any direct relevance to the disputes between the litigation parties in this case.

[86]By 5 October 2010, CBUK had instructed solicitors who wrote then to SRS a Pre-action Protocol letter as a prelude to proceedings. This ran to 11 pages plus various attachments. Much of the letter is concerned with what the Sub-contract was, highlighting that the June Programme was the material one. It identified a claim in the gross sum of £3,013,580.46 which after payments made left a net sum said to be due of £1,226,264.83 plus VAT. This claim expressly excluded any claims “for disruption, prolongation and additional overheads in connection with the extended duration of the Sub-contract". One of the attachments purported to analyse the then current list of NCRs, totalling 189 in number.

[87]SRS’ response was on 15 December 2010. It challenged the assertion that the June Programme was agreed or relevant but it put forward the December programme as the relevant one, asserting that there were substantial delays against that programme. It valued the gross sum due as £2,612,179.02 subject to its "Counterclaim" which was based on delays measured against the December Programme, together with defects. It highlighted a set off and counterclaims totalling 3,342,973.65. This was made up as follows: “Addition of day/night shift erections squads to mitigate the nine week delay…. £1,053.838.14 Addition of snaggers/wrap up squads to correct defects…as scheduled NCR’s enclosed…£473,975.20 Additional site resources to manage the day/night shift and snagging works… £353,607.95 Senior Management deployed on-site… £111,333 Delay and disruption to metal decking installation… £500,000 Mace tower crane costs and site management costs the nightshift working as Mace valuation to end October 2010… £626,925.50 Delays to follow on trades and other third-party costs…TBA SRS fabrication and paint shop costs rectifying fabrication/painting errors before delivery to site… £99,800" Addition of snaggers/wrap up squads to correct defects…as scheduled NCR’s enclosed…£473,975.20 Additional site resources to manage the day/night shift and snagging works… £353,607.95 Senior Management deployed on-site… £111,333 Delay and disruption to metal decking installation… £500,000 Delays to follow on trades and other third-party costs…TBA SRS fabrication and paint shop costs rectifying fabrication/painting errors before delivery to site… £99,800"

Delays to follow on trades and other third-party costs…TBA

[88]CBUK issued these proceedings in April 2011. In its original Particulars of Claim, it set out for the first time a quantified claim for "breach of contract and loss and damage-loss of fabrication, production; and acceleration measures”. This added £908,815.90 to its previously notified claims. The Sub-Contract

[89]There is, rightly but belatedly, no issue between the parties that the Sub-contract between them was the document signed by them in early November 2009, that is the Purchase Order, nominally dated 2 June 2009 and the Appendix A, signed as a deed by directors for both parties. The face of the Order calls for the “Fabrication of steelwork up to and including Level 9 as per the details set out in Appendix A”. Although the face of the order talks about delivery being "required for" 4 June 2009, this is accepted by all that it must and would obviously have been seen as a mistake. As indicated elsewhere in this judgment, I am satisfied on the balance of probabilities that, although the Order was dated 2 June 2009, it was in fact generated in October 2009 and that it is unlikely that a copy was sent or dispatched informally or otherwise to CBUK at an earlier stage. In any event little or nothing turns upon that, contractually or otherwise.

[90]Important parts of Appendix A were as follows:

“Scope of Works:- • All things necessary for the fabrication of all tower steelwork between the ground and ninth floor levels, including all connection details the temporary works and other trades… • All ‘black’ steelwork necessary for the above works is deemed to have been procured under the terms of your previous agreement with Mace Ltd and is held at your works… • Delivery of all fabricated steelwork to our works to suit a pre-agreed programme and sequence-details to follow… Exclusions:- • Procurement of any further ‘black’ steelwork (any additional requirements which may arise will be provided free issue by ourselves)… Price:- A final account value is to be determined partly by re-measurement and partly by the inclusion of lump-sum values, comprising the following six items:- 1) Fully fabricate and deliver approximately 3826 tonnes of structural steelwork up to level 9, including forming all service penetrations (remeasured at £617.00 per tonne nett) 2) Design and detailing to completion up to level 9 (£85,000.00 lump sum nett) 3) Blast and prime steelwork (remeasured at £6.00 per m2 nett)… Programme:- Programme details to follow… Materials:- …Any further main bar or plate materials required to levels 0-9 required by CBUK will be requisitioned through SRS. All fittings material required by CBUK…will be supplied by SRS. Listing of any CBUK materials requirements to be issued in good time without detriment to the programme dates. Specifications and documents:- …Structural Specification-Section G… Movement and Tolerance Specification…”

Exclusions:- Price:- Programme:- Programme details to follow… Materials:- Specifications and documents:- …Structural Specification-Section G… Movement and Tolerance Specification…”

…Structural Specification-Section G…

[91]In addition to other specific documents, there were also incorporated CBUK’s letter of 1 May 2009, and minutes of meetings on 19 and 20 May 2009. Additionally Conditions of Sub-contract for off site works known as SRS1 were incorporated and there was specific reference to the main contract referred to in those conditions. The Structural Specification at paragraph 638 specified a dry film thickness of 75 µ nominal for shop priming of the steelwork in this case. The Structural Specification contains a reference to tolerances for fabrication and erection.

[92]SRS1 provided materially as follows in Clause 3:

“(1) Save where the provisions of the Sub-Contract otherwise requires, the Sub-Contractor shall carry out, complete and maintain the Sub-Contract Works such that no act or omission of his in relation thereto shall constitute, cause or contribute to any breach by the Contractor of any of his obligations under the Main Contract. (2) The Sub-Contractor shall carry out, perform and provide the Sub-Contract Works fit for purpose described in the Main Contract. Materials, goods and workmanship shall be the specified quality and to the satisfaction of the Contractor… (4) The Sub-Contractor shall commence, carry out and complete the Sub-Contract Works in accordance with the Contractor’s requirements in accordance with the Programme forming part of the Main Contract. Notwithstanding the foregoing, the Sub-Contract Works shall be performed at any time and/or in any sequence and with any degree of continuity of working as may be required from time to time by the Contractor and generally to suit the progress of the Works. (5) The Sub-Contract works are to be completed within the period specified in the Programme subject to such fair and reasonable extensions of time as the Contractor shall allow where the Sub-contract works are delayed by causes which resulted in an extension of time under the Main Contract.”

[93]For reasons which I have indicated in the "History" of this judgment, I am satisfied on a balance of probabilities that the parties did not agree, at least in any contractually binding sense, either the June or the December programmes. That is not to say that they are irrelevant to the history of events. However, there was no and no evolved contractual (as such) programme for the fabrication of steel by CBUK. Indeed, SRS1 does not actually envisage that there will be a Sub-contract Programme, albeit that it does envisage in Clause 3(4) that CBUK shall commence, proceed with and complete in accordance with the Main Contract Programme which in this case does not, as such, programme the fabrication activities but merely the start and complete dates for the steelwork erection; it does not highlight or even identify the start or complete dates for individual Levels of steelwork.

[94]The primary obligation must therefore be to fabricate and to deliver to SRS the fabricated steel so as to enable it to comply with the Mace Programme which called for erection of the main Tower Steel to commence on 8 February 2010. That primary obligation is in effect to be read with the further obligation in Clause 3(4) to perform “at any time and/or in any sequence and with any degree of continuity of working as may be required from time to time by the Contractor and generally to suit the progress of the Works”. It is, rightly, common ground that this obligation must, sensibly and commercially, be subject to a reasonableness constraint in that on say Day 2 of the project SRS could not use its power to require the delivery of 3000 tonnes of steel that afternoon. It is subject to the constraint of the progress of the Works so that if, for instance, the foundations upon which the steel was to be placed were not to be constructed for 12 months, the obligation to comply with the Contractor’s requirements that all the steel should be delivered in the first of these months would be tempered by there being no need for the steel for some months.

[95]The contractual relevance of the December Programme however is that it represented a realistic and reasonable programme which was not only reasonably achievable as recognised by both parties at the time) but was one which could reasonably be called for by SRS and it reflected the requirements of SRS as communicated to CBUK in November and December 2009. Responsibility for Delay in Fabrication and Delivery of CBUK Steel

[96]CBUK’s money claim relating to delays is predicated only upon the basis that the June Programme was agreed and was in effect binding. It was neither, in my judgment for the reasons given above. That claim therefore fails.

[97]It is therefore necessary to turn to the December Programme, which, although not agreed in a binding sense as an express contractual programme, did however reflect in fact a programme which was not only reasonable and achievable but also the requirements of SRS as communicated to CBUK. In effect therefore as at the date of its issue, CBUK was obliged to comply with the December Programme, albeit that that de facto obligation was and would have been subject to adjustment to reflect any delay-causing breaches of contract or variations issued thereafter. Thus, if CBUK was in fact delayed overall by one week in February 2010 by the late delivery then of free issue steel, it would not nonetheless be bound to complete in accordance with the December Programme; it would in effect be entitled to an additional week to complete. However, the December Programme was predicated upon the information mutually available to the parties at the date of its issue such that it took into account both the fact that the edge beam variation, as specified up to that stage, would and could be accommodated within the timetable shown in the December Programme and the state of information release. Mr Hall properly accepted in evidence that there was no outstanding information needed to get on with fabrication and delivery. It is noteworthy that CBUK did not put into the December Programme any information release or drawing approval dates and that, on the facts, was because these factors were considered unlikely to delay or disrupt further progress.

[98]Although this issue will not in fact turn on the question of burden of proof, that burden is on CBUK in relation to establishing grounds for non-compliance or for, in effect, an extension of time in relation to the December Programme: it seeks to excuse its non-compliance with that programme by reliance upon various events. CBUK relies on three things as delaying it: the edge beam variation, late instructions and information and late release of free issue steel. The job of proving such delay would, whilst arguably tedious, not be a difficult one; it would involve identifying the particular aspect of the variation or the key late receipt of information/instruction which impacted on progress and providing explanatory evidence as to how it did impact. A similar exercise could be done in respect of late issue of materials with evidence showing how the fabrication programme was put back and when by such material not being available. CBUK has chosen not to try to prove any such delay in this way but simply to rely upon assertions that variations were issued, that information was provided somewhat later than the December Programme might infer was appropriate, that free issue steel was issued in January to March 2010 and ultimately upon an inference that it must have been delayed by these factors. That, in my judgment, is simply not anywhere near enough. In all these delay cases, it is necessary to show that the claiming party was actually delayed by the factors of which it complains; it simply does not follow as a matter of logic, let alone practice, on a construction or fabrication project, that, simply because a variation is issued or that information is provided later than programmed or that free issue materials are issued later in the programme than envisaged originally, the claimant is delayed. If the real cause of the delay is, say, overwork or disorganisation within the claimant, the fact that there have been variations, late instructions or information or late issue of materials is simply coincidental.

[99]Mr Holloway’s evidence on the topic was largely unhelpful. He had not analysed production rates at CBUK’s fabrication shop nor had he carried out any analysis of fabrication dates or of what was going on in the fabrication shop. He did not analyse the Oakwood design drawings, the CBUK drawings, the drawings or other information released by the overall structural engineers and he did not try to establish logically or at all how fabrication at CBUK’s fabrication shop was actually delayed by late information, variations or the belated provision of free issue steel.

[100]So far as the allegedly late issue of free issue materials is concerned, this is affected by the provision in Appendix A of the Sub-contract that listing “of any CBUK materials requirements [is] to be issued in good time without detriment to the programme dates”. This imposed on CBUK an obligation in practice to give written notice of its requirements for free issue materials sufficiently far ahead to avoid the programme being affected. In practice, the parties proceeded on the basis that generally at least two and possibly three weeks notice was required. It is a matter of comment that the first time in which the late issue of such materials was raised as a cause of delay to CBUK was in the Reply by way of response; it was not put forward in the Particulars of Claim as a reason why the June Programme was not met. However, irrespective of that, it is noteworthy that CBUK did not in reality communicate any complaint to SRS during the fabrication that it was materially and critically being delayed by the late provision of free issue materials. I am satisfied on the balance of probabilities that CBUK was not delayed at all by any such late provision. In any event, I am satisfied that the large bulk of the free issue materials were delivered within approximately 2 to 3 weeks of the written requests.

[101]So far as the edge beam variation is concerned, by and large this had been instructed well before the December Programme came into effect and therefore that programme would and did necessarily allow an appropriate period of time for that variation to be accommodated. There has been no and certainly no reliable evidence that any further changes to the edge beam variation (of which there appear to have been several minor ones) materially impacted upon the progress of the fabrication.

[102]Similar considerations apply with regard to allegedly late instructions or information issued after the December Programme was issued. In his final submissions, Counsel for CBUKput forward the receipt of information about “ski fixings” (provided on 7 and 8 January 2010) and about Priority 7 (dispatched on 15 January 2010) as the late information said to have delayed fabrication progress materially. There was no complaint communicated by CBUK to SRS about either of these items of supposedly late information and, even more tellingly, there was no concern expressed internally within CBUK about this at the time and any instructions or information delaying fabrication. It is simply not credible that progress was delayed thereby. Whilst I have no doubt that some further information was issued thereafter, I am satisfied that it did not delay progress.

[103]It is of interest in January 2010 particularly, that there was a realisation within CBUK that it was unlikely to comply with the December programme. That is why it produced a revision within the first half of January 2010 showing completion of deliveries towards the end of March 2010 and also why internally (for instance on 11 January 2010) CBUK was talking of the need "to move the Shard programme out". Even when it was arguable that some free issue material was late and, internally, there was talk within CBUK of buying "some grace” in the programme as a result (see e-mail of 13 January 2010), Mr Hall and Mr Robinson had the honesty not to use that as some excuse for delay. There was no doubt that SRS was maintaining that the December Programme had to be complied with and there would doubtless have been a need and a wish on the part of CBUK to identify any factors which genuinely were causing critical delay to that programme, and which were the risk or fault of SRS. No such factors were identified, either internally or to SRS. It is telling that even when CBUK did raise its new programme on 12 January 2010 it did not identify late design information or materials as a factor causing delay.

[104]What the evidence reveals however is that the causes of the delay were within the control and the responsibility of CBUK. It is clear that by the last quarter of 2009 and going into 2010 CBUK had simply taken on more work than it had the capacity to deal with. Its internal memorandum of 11 January 2010 talked about “an extraordinary overload since October 2009”. There was evidence of very substantial contracts involving the motorway system around Glasgow, the A46 and half a dozen other substantial projects. There was a lack of organisation within CBUK to cope with this overload. Thus, it was only belatedly that CBUK decided to sub-let a substantial amount of steel fabrication to sub-contractors; whilst subletting was inevitable given its workload, the decision and the implementation of the sub-letting (in January and February 2010) was too late to avoid delay. Evidence of the overload is reflected in the significant quality problems which CBUK experienced particularly in that last quarter of 2009 (see the history above) and indeed in relation to the Shard steelwork. Whilst of course CBUK is not to be criticised for having a very healthy order book, an overload on its fabrication capability as a result is within its sphere of contractual responsibilities if that overload leads through to it being unable to comply with its contractual progress or programme requirements.

[105]I therefore find that CBUK was in breach of its Sub-contract with SRS to complete deliveries in accordance with the December Programme. There was no entitlement in effect to an extension of time in relation to this failure on the part of CBUK which, in truth, was attributable to its "extraordinary overload" of work. For that reason also, CBUK’s claim in effect for damages for delay is unsustainable. CBUK’s Money Claim

[106]CBUK’s money claim is simply for the outstanding sums due to it for the original specified work, as varied. There is no issue that the gross sum due for measured works and variations excluding the edge beam and excluding VAT, is £2,545,393.38 (measured works) and £42,483.23 (for such variations). The only issues remaining relate to VAT (17.5% or 20%) and the value of the edge beam variation.

[107]I will address the edge beam variation first. The claim pleaded by CBUK is for £328,788.09, of which £69,218.06 is admitted by SRS. Mr Davis supports the figure of £295,068.16 whilst Mr Gurnham would endorse a figure of £124,264.40 (adjusted or as reduced in argument down to £122,267) or, alternatively, £238,538.93. I bear in mind that in this context the burden of proof is on CBUK.

[108]The claim as formulated by CBUK was broken down into the following components: Item CBUK SRS 1. Welding and fabrication £245,537.95 £80,679.56 2. Drafting £82,132.31 £12,636 3. Premium rate 20% of hours £13,607.00 Nil 4. Project management £9,292.32 Nil 5. Quantity surveyor £2,599.20 Nil 6. Unloading/storage of free issue materials £1,075.00 £1,062.50 7. Uplifting steel for delivery £1,075.00 £1062.50 8. Rounding £0.31 Nil Sub-total £355,319.09 £95,440.56 9. Deduct measured work £26,531.00 £26,222.50 Total £328,788.09 £69,218.06 It is unnecessary to consider Items 3 and 8 which are not supported by Mr Davis.

[109]I turn first to Item 1 which is the actual welding and fabrication cost. This is calculated by identifying man-hours said to have been involved in the different welding and fabrication operations for 13 different items, such as bent plates, deck angles and stiffener tubes. This is then multiplied by a rate of £36.09, which is a rate in fact agreed by both quantum experts. The real issue relates to the number of hours. The total of 6,803.50 hours claimed is, very loosely, supported by Mr Underwood. I say "very loosely" because in his first statement he refers to all the variations, then in issue, including the edge beam variation in general terms and to a set of files containing full detail of the build-up to CBUK’s assessment of the appropriate value. He does not expressly support or even explain the hours claimed, although he does refer in general terms to the fabrication time to manufacture the edge beams and explains that there were some difficulties in the work.

[110]Bundle V6 was one of the bundles referred to by Mr Underwood. This contains an assessment of the hours involved in relation to each of the items of work. Thus, for example in relation to the "bent plate", there is an assessment of the total number of welding man hours involved in longitudinal and transverse welding (308.09 hours), the hours involved in setting up welding for each bent plate (100.40 hours) and the hours for preparation cutting and assembly (874.19 hours), totalling 1282.677 hours. These hours are not calculated by reference to actual records. Mr Underwood does not even say that these are reasonably accurate assessments; they are simply the assessments put forward by CBUK.

[111]Both parties and their quantum experts have however adopted various forms of assessment by reference to standard outputs. There has been no attempt however as a matter of evidence to identify how long any of these particular operations actually took either within CBUK or the various sub-contractors who did some of the edge beam variation work. Neither expert has professed any particular expertise or experience to support such assessments. Extraordinarily, Mr Davis was reduced to seeking information from an engineering "chat room" on the Internet; he seems to have based his views on welding outputs on what one participant said to another in November 2011 in relation to petrochemical/oil and gas welding work in Malaysia. On the basis of some perceived complexity in the welding in this case, he takes an output per hour at the lower end of the range put forward by his client as opposed to the range put forward by SRS. Mr Gurnham at least adopts a more sensible approach because he discussed matters in detail with a chartered engineer and welding expert Mr Krancioch, a former employee of SRS (but latterly employed by the well-known testing house, Sandbergs) and therefore not entirely independent; Mr Krancioch supported somewhat higher outputs. To the extent that there are differences attributable to welding outputs, CBUK has simply not begun to prove its case. Apart from some general assertions by Mr Underwood as to the complexities, he does not in fact on analysis seek to support the hours claimed; Mr Davis does not have the expertise or experience to do so (and he was frank about this): Mr Davis’ Internet chat room source is hardly or obviously reliable.

[112]Mr Gurnham did however do a very useful crosscheck which involved an analysis of the cost of fabrication, namely the preparation, cutting and assembly of the steel members (in his Appendix 3.2) and then identify likely fabrication costs for all bar one of the steel members involved with this variation. This exercise shows that the CBUK overall rate of £3,715 per tonne is grossly excessive. He points, fairly, in the absence of any let alone any authenticated records of actual productivity times, to a range of reasonable costings between about £77,000 and £196,000 for the welding and fabrication charge. I will however allow the sum of £80,679.56 as the admitted sum due in respect of this cost. In essence, CBUK has not proved its case, particularly in circumstances when it would not have been difficult for it to produce direct evidence from its fabrication shop as to how long the welding and fabrication work actually took, at least typically.

[113]The next item in this variation relates to the drawing office hours, incurred by CBUK’s sub-contractor, Oakwood. There is no doubt that Oakwood claimed an additional 1943.50 hours for the edge beam variation and that that was not as such challenged by CBUK in the period up to the agreement of the final accounts. A breakdown was provided in Bundle V6 which shows the hours being worked between 24 July 2009 and 12 March 2010. Worksheets from Oakwood supporting these hours were provided in Bundle V6 albeit some of the work descriptions were vestigial. There was no evidence other than documentary to support this claim. Disclosure by CBUK during the trial hearings disclosed that there was a final settlement between it and Oakwood whereby the variation account was reduced by 80% as a whole; there was no reliable evidence as to the basis for this reduction. Mr Gurnham identified 10 of the worksheets which may well have contained hours for which no claim (as additional work) could be justified. He ultimately produced an evaluation which allowed 1778.25 hours multiplied by the agreed rate of £35 an hour due to Oakwood plus a mark-up of 15% for CBUK’s overheads and profit. In my judgment, not only is the resulting figure of £71,574.56 a reasonable sum but also CBUK has simply not proved or established any entitlement to a higher figure.

[114]With regard to each of the charges for unloading and uplifting steel, Mr Gurnham comes to £1,073.25 by reference to 42.93 tonnes at a rate of £25 per tonne. That compares with £1,075 forward by CBUK. I prefer Mr Gurnham’s approach as logical and supportable. Mr Gurnham allows nothing for project management and quantity surveying, because that is covered, he says, by CBUK’s overhead charges elsewhere. I agree. For instance, Mr Gurnham’s assessment for the Oakwood charges includes 15% for overhead and profit. There has been no attempt in evidence to prove in any event that specific quantity surveying and management resources, other than those covered by the overhead allowances within the valuation of the variation work, were deployed.

[115]The final item in the valuation for the edge beam variation is the allowance to be made for the fact that within the overall measurement for all the steel tonnage provided there will be an allowance for the steel, in weight terms, which was the subject matter of this variation. The contract rate was £617 per tonne; there were, it is agreed, 42.93 tonnes of steel added by the edge beam variation; the resulting sum of £26,489.05 represents the appropriate amount to deduct.

[116]Accordingly the sum due up for the edge beam variations was £127,911.57, made up as follows: Item Sum allowed 1. Welding and fabrication £80,679.56 2. Drafting £71,574.56 3. Premium rate 20% of hours Nil 4. Project management Nil 5. Quantity surveyor Nil 6. Unloading/storage of free issue materials £1,073.25 7. Uplifting steel for delivery £1,073.25 8. Rounding Nil Sub-total £154,400.62 9. Deduct measured work £26,489.05 Total £127,911.57

[117]The total sum due to CBUK, subject to any set of and counterclaim is £929,477.55, made up as follows: Measured work: £2,545,393.38 Other variations: £42,483.23 Edge Beam variation; £127,911.57 Gross sum due: £2,715,788.18 Less paid: £1,787,315.63 Net sum due: £928,472.55

[118]So far as VAT is concerned, the issue in simple terms is whether the VAT rate should be 20% (as CBUK suggests) or 17½ % as SRS argues. In reality this issue probably matters very little because, if there is a net balance due to CBUK, the VAT payable by SRS will be paid by SRS and recovered by it from the Inland Revenue. In my judgement the answer is underlined by the HMRC Notice 708 which identifies at least in the building construction context that the tax point is the earlier of receipt of payment or the issue of a VAT invoice. Obviously, CBUK has not received payment said by it to be outstanding or indeed the lesser sum referred to in the preceding paragraph. CBUK has not yet issued a tax invoice and it has not received payment therefore VAT is not yet due at all. Assuming that there is a net sum due to CBUK following the final resolution of all the remaining issues, VAT at 20% will be due, unless Parliament has by then amended the VAT rate. The Counterclaim

[119]SRS’ counterclaim falls broadly into two categories, costs and losses associated with the delay in deliveries by CBUK and defects; it now accepts the figures put forward by Mr Gurnham. I will first consider the delay costs which can be broken down, in the figures finally put forward by Mr Gurnham, as follows: Heads of claim Sum Claimed Delay (prolongation costs 22.2.10 to 30.4.10) £141,366.35 Disruption (8.2.10 to 13.5.10) £122,547.33* Disruption to metal decking operation £73,529.63 Acceleration: Day/night shift squads Management for such resources Senior management at site £1,682,011.76* £441,559.27* £252,417.41 Mace Tower Crane cost £812,917.00 * higher than originally pleaded Several claims for haulage, fabrication shop acceleration and third party claims are no longer pursued.

[120]Before one comes to the quantum, it is necessary to review and make findings in relation to the delay, such as it was, to SRS caused by the late fabrication and delivery of steel by CBUK. I have found that CBUK was in breach of its progress obligations by reason of its failures to comply with the December Programme in that it was late for Priorities 8, 9 and 11-15. Ultimately, on Phase 803, it was late to the tune of 38 days.

[121]The science or art of delay analysis is one which is based in logic, albeit in a construction context. Thus, on a simple house construction, a delay in the provision of the foundations will, generally and obviously, cause delay to all the following trades so that for instance the brickwork and blockwork which may rest on the foundations in question cannot commence and the windows and the roof can not go on until the brickwork and blockwork are done; that is logical and to be expected. However, the position becomes much more complex when one is looking at a building like the Shard. Certain it is that at least some steelwork has to be in place before follow on trades, such as concrete flooring and glazing or curtain walling, can be commenced; it is not the case that all the steelwork needs to be in place before such follow on trades can commence. Thus, the fact that the steel work is finished late does not, necessarily, mean that the overall project would be late.

[122]Even within the steelwork itself, the fact that some steel is fabricated and delivered late would not mean necessarily that the steelwork erection is delayed, although this operation obviously can be delayed if deliveries are late. What is necessary in this case in effect is to determine what is or was the critical path for the steelwork erection in the period up to, initially 1 April 2010, when the final delivery of steel by CBUK took place and in the period up to the completion of Phase 803 which, so far as is material, was the last phase of steelwork erection which was serviced by steelwork fabricated and delivered by CBUK.

[123]The programming experts, Mr Holloway and Mr Barry, agreed in their first Joint Statement that the "commencement of steel erection to Levels 8/9 (i.e. phases 801, 802 & 803) will represent the key milestones against which any delay to SRS’s works caused by a delay in the supply of CBUK steel should be assessed" and that the "commencement of steel erection to Levels 10/11 (i.e. phases 101, 102 & 103) will represent the key milestones against which(a) the critical path of SRS’s works can be assessed and

(b) any delay to SRS’s works caused by fabrication errors should be assessed." Although the two experts disagreed as to which Programme should be used against which to measure delay, they did agree that "at the most appropriate method for delay analysis is As-Planned versus As-Built Windows Analysis” as “this method allows us to identify the actual critical path" and it "is the longest path that the actual delays to completion will be located."

[124]Having agreed this, Mr Holloway then abandoned this sensible agreement, which was unfortunate and indeed unhelpful. Mr Barry, however, broadly stuck to the agreement and analysed the delay at least up until the commencement of Phase 103 at Levels 10/11. Neither expert either did or was readily able to analyse the delays to the remainder of the steelwork erection up to Level 40. This is because the history and the facts were all very confused and confusing because SRS implemented a substantial acceleration programme to try to make up the lost time as at April 2010 and because not only was that acceleration ultimately unsuccessful in that no time was made up but also additional delay occurred.

[125]I have no difficulty in accepting Mr Barry’s lucid and logical evidence that the critical path up to and including Level 9 ran through Phase 803. Unless and until the steelwork on each level was sufficiently and substantially completed to enable(a) the decking to be placed and

(b) the corresponding phase of steelwork above to be commenced, steelwork was inevitably being delayed. If one followed that logically up to Level 40 and assuming that Phases 401, 402 and 403 were being done in that order, the steelwork would not and could not be completed until Phase 403 was completed. That is consistent with what both programming experts had initially agreed. Mr Holloway, however, departed from the agreement and went off on a tangent to argue that it was delay in the completion of Priority 7 which really caused the delay ultimately; this was not promoted by Counsel for CBUK in closing. He instead promoted another argument (not itself supported by Mr Holloway) that it was erection delays in relation to Phase 801 which caused critical delay. By this stage of the trial, CBUK’s case was terminally undermined, albeit that the burden of proof on delay to SRS’ steelwork erection did not rest on CBUK. Mr Holloway openly accepted that he had carried out no critical path analysis albeit that he did try to comment on it when giving evidence; he suggested that this had proved difficult to do by reason of the absence of information about decking and netting, which was not a viable explanation since at the very least information about what decking was done and when was in fact available on disclosure (it being referred to for instance by Mr Barry in his report); insofar as he had not seen information about netting (applied under a floor as a safety measure), he could have called for it (but he had not done so). Mr Holloway was forced to accept under cross examination that Phase 803 was critical as it was the last phase of CBUK fabricated steel to be completed and that the right explanation for most (at least) of the delay to the direction of Phase 803 was and must have been the non-availability of steel.

[126]I accordingly conclude that Phase 803 was the critical phase of work for which fabricated steel needed to be delivered by CBUK on time in accordance with the December programme to prevent overall delay.

[127]A very substantial amount of time was spent in terms of trial time in the consideration of the assertion by CBUK’s factual and expert witnesses and Counsel that, because there was always steel being erected and available to be erected before 1 April 2010, there could have been no delay; this was the so-called “erectable steel” argument. This assertion is completely undermined by the finding (see above) that the critical path ran through Phase 803. It also ignores the fact that it is hardly surprising that SRS was erecting steelwork later than programmed in relation to earlier Priorities because CBUK was also late in the deliveries for many of those earlier Priorities. It is pointless to speculate what would have happened and where the critical path would have run in fact if, say, Phase 803 steel had been delivered by CBUK on time but all the other Phases were finished when they were finished.

[128]It follows from the above that the culpable delay in the delivery of fabricated steel, on the part of CBUK, in relation to Phase 803 delayed steelwork erection overall initially by at least 38 days. It matters not that steelwork erection on Phase 101 on Level 10/11 was started before Phase 103.

[129]Mr Barry then analysed what happened thereafter, that is after the delivery on Maundy Thursday, 1 April 2010. He split this period into 3 further Windows (Window 1 being up to 1 April 2010). In relation to Window 2, which ran from 1 to 19 April 2010 when the first Phase 803 steel delivery to site was made, he said that this was affected by the planned closure of SRS’ paint shop. Because SRS indicated in evidence that it needed broadly 14 days to complete preparation and painting works at Thirsk but it turned round the first loads of Phase 803 steelwork in about 1 week and two days, he concludes, allowing for the paint shop closure over Easter week (Easter Monday, 5 April at least to and including the Friday of that week), that erection was put back by four clear working days. I accept his evidence and the evidence underlining his views. This additional four days of delay is in reality the responsibility of CBUK because its failures to deliver all steel by 22 February 2010 prevented SRS from preparing, painting and delivering it to site no later than a fortnight thereafter; its preparation and painting of the CBUK steelwork then would have been done well before the practically unavoidable planned shutdown of the paint shop and no delay to erection would have been occasioned by that shutdown. Put another way, CBUK’s breach of contract in failing to deliver fabricated steel in accordance with its contractual requirements pushed SRS into a period (the Easter Week) when it could not reasonably avoid a further four days delay.

[130]Different considerations arise in relation to Mr Barry’s Window 3, which relates to the period between 19 and 30 April 2010 when it is said that steelwork erection of Phase 803 was delayed by the need to erect the TC1 grillage and the hoist gantry canopy. He suggests in effect that an additional 11 days of steelwork erection time were lost, through no fault of SRS, by the effective standstill caused by the need to carry out this work. He is right to say at least that a significant part of this period of delay was caused by these two events. It follows in logic and in fact that, if these works prevented, as they did, steel deliveries to site whilst they were going on, or if they inhibited deliveries by cranes around the site (as they did) whilst they were going on, overall progress on steel erection must have been delayed. I am not satisfied however on the balance of probabilities that the whole of the period was spent by SRS and others carrying out these two items of work. Whilst there is evidence that the gantry was largely done between about 20 and 23 April and that the grillage was being done broadly over that period as well, there was insufficient evidence to satisfy the Court on a balance of probabilities that these factors prevented any relevant steel erection by SRS in effect to the whole of the period. I would accept that at least four days delay has been established on a balance of probabilities as being caused by these two events. More than that, SRS has not proved its case on delay in this period.

[131]However, the timing of these events was largely out of the control of SRS and was primarily determined to suit Mace’s convenience; indeed it had been floated at various times earlier than April 2010. Both Mr Rennison and Mr Willis accepted in evidence that this was the case. No work had been done on the concrete core since mid-March 2010 and there appears to have been no good reason why Mace could not have called for the TC1 grillage to be installed at a time to suit SRS and to avoid any further delay.

[132]The problem for SRS’ case on this point is that this work would have had to have been done at some time in any event and it would have delayed SRS irrespective of any probable delays on the part of CBUK. I have no doubt that, if, for instance, it had been done in February or March 2010, it would have delayed the steelwork erection in any event. Certain it is that SRS has not proved on a balance of probabilities that it would not have been delayed in any event at some stage. Mr Willis asserted that, if it had been done in February or March 2010 or even earlier, it could have been largely done at a weekend or overnight (which would not have been worked by SRS if there had been no delays by CBUK) but that is challenged in effect by the fact that the two operations actually took a continuous period of some 4 working days in any event; it could not have all been done over a weekend or at night.

[133]Accordingly, SRS has not established on the evidence that it was delayed an additional 11 days or indeed by any days delay by reason of the events which took place in Mr Barry’s Window 3.

[134]Turning to Mr Barry’s Window 4, which ran from 30 April (when Phase 803 steel erection commenced)) to 14 May 2010 (when Phase 103 steel erection commenced on Levels 10/11). Steel erection of Phase 803 took three days longer than programmed. Neither Mr Barry nor the Court found or were presented with any evidence, let alone any reliable evidence, explaining the three additional days delay. It could not be seen that any of the NCRs (or putting right of alleged defects) said to have caused delay impacted on progress during this period. Accordingly, the three further days of delay are not attributable to and were not caused by the culpable delay on the part of CBUK in its late delivery of steel.

[135]In conclusion, CBUK’s culpable delay did cause 42 days of delay, that is six weeks, made up of 38 days up to and including 1 April 2010 (attributable to the late delivery of Phase 803 steel) and 4 days thereafter caused by the planned Easter shutdown of SRS’ paint shop. Whilst steel erection was overall 56 days behind as at 14 May 2010, 14 days or one quarter of it was attributable to factors which were not the responsibility of CBUK or caused by its late delivery.

[136]The history of delay becomes somewhat confused after mid-May 2010. Although SRS instituted extensive accelerative measures in terms of night-time, weekend and extended hours working which, all things being equal, should have had the effect of recovering all or some of the 56 days delay, SRS in fact finished even later. Mr Barry identifies that Phase 401 finished 67 days late, Phase 402 54 days late and Phase 403 69 days late. Not only was the acceleration in the result wholly unsuccessful, matters deteriorated. He has provided at Paragraph 207 of his report a helpful analysis which demonstrates however that on 14 of the phases steelwork was completed in less than or the same as the planned durations. However on all the others work took longer than the planned duration; in some instances, there were very substantial delays. For example Phase 342, planned to take nine days, took 34 days, a delay of 25 days; Phases 362 and 381 were each delayed by 21 days over the planned durations. No explanation or evidence was provided to explain why these extended durations happened or whether they would have happened in any event irrespective of CBUK’s original default.

[137]Mr Barry for instance has carried out no critical path analysis, suggesting that it would be disproportionate in terms of time and cost to do so. He explains that he has tried to understand from the available records "the events that substantially rendered the recovery programme unsuccessful". He identifies that the steel for Levels 10/11 and above was fabricated and painted by SRS or its other sub-contractors but that there were occasions when there was no contingency gap between fabrication and painting and indeed there were occasions when fabrication and painting for a particular phase were very close in time to erection (for instance Phases 281 to 303). Essentially what he concluded was that "unexpected/unforeseen crane downtime was the fundamental reason why the recovery programme was unsuccessful." He analysed the crane records, particularly between 18 June and 6 December 2010, and identified various types of crane related delay within the dayshift: Phase Crane Weather Climbing Other Misc Total days 1 TC2 18.43 27.70 5.80 1.30 53.23 2 TC4 14.58 20.08 4.45 2.60 41.70 3 TC5 14.43 13.58 20.22 7.63 55.85 TC3 11.83 35.98 19.65 5.20 72.65 Total 59.25 27.33 50.12 16.73 223.42 He attached an Appendix 11 which provided a more detailed breakdown of the days on which the events happened. An example of the "other" category is claimed to be cranes being deployed to allow another contractor to use it. An example of "miscellaneous" would be a crane being taken out of service due to a need to inspect its base or grillage. "Climbing" relates to the operation, as the construction moves upwards, whereby the tower crane is moved or "climbs" upwards also. The "weather" downtime is self-explanatory albeit that the downtime is usually associated with excessive wind such that it is not safe to operate the crane; this is sometimes referred to as "winding".

[138]Mr Barry then seeks to identify what might reasonably have been allowed within any sensible programme for downtime with a view to ascertaining the excess amount of crane downtime occurring during the erection of Levels 10 to 40. The balance he then attributes to the original CBUK delay on the basis that CBUK’s delays have been such that SRS has been pushed into a period in which by reason of its acceleration measures (in particular working at nights and weekends) it has been subjected to a higher than reasonably allowable amount of crane downtime; this is attributed to CBUK because, as suggested by various factual witnesses for SRS, particularly Mr Willis, the acceleration was primarily required by reason of CBUK’s culpable delay, the accelerative measures resulting in the nights and weekends not being available for most of the climbing, other and miscellaneous reasons and the programme was being pushed into a period (particularly September through to December 2010) when cranes were more prone to downtime due to weather than would otherwise be the case. To be fair to Mr Barry, under cross-examination and indeed some questioning from the Bench, he did accept that some potential reservations can be made to his thesis on this.

[139]For instance, there were a significant number of phases in the July to September 2010 period when significant time was lost against the recovery programme, notwithstanding favourable crane availability. Although Mr Barry identified some (documentary) evidence which suggested possible causes of the delay during this period, he was not able to be particularly positive about this stage of the steel erection as to why it was being delayed. Additionally, when it was pointed out to him that a number of the events which caused crane downtime actually took successive days to address, he had to accept (properly) that, irrespective of whether there was a need for acceleration, extra delays would in any event have occurred.

[140]Although not supported by any expert evidence, Counsel for SRS sought to argue that it was a reasonable inference that defects in the steel fabricated by CBUK which had to be remedied at site provide some explanation for some of the delays. Apart from the fact that Mr Barry felt unable to support this assertion, the evidence relating to NCR items said to have caused such delay did not adequately explain why and what overall delay to the steelwork was caused thereby. There was a very effective cross-examination by CBUK’s Counsel of Mr Pyle and Mr Rennison based on the documents relied upon by SRS (the N Bundles) to demonstrate, leaving aside the issue of liability for the pleaded defects, as to why the remedial works to the fabricated steel is unlikely to have delayed overall progress. I address this in the section of his judgment dealing with defects and NCRs.

[141]Essentially, I find it difficult on the evidence to conclude that delay caused by any of the crane downtime was, on the balance of probabilities, attributable to CBUK’s late delivery of steel. Some of it may have been so attributable but it has simply not been proven. Counsel for CBUK highlighted in cross-examination a number of other factors which could have caused delay and further disruption. For instance, there was reference within Mace documentation and indeed within SRS’ disclosure to variations issued after April 2010 at least possibly delaying progress. In circumstances where (even for understandable reasons), there has been no critical path analysis and in reality no detailed and sequential evidence explaining what happened as the steelwork went up to Level 40, it would be wrong for the Court to infer that in effect the large bulk of the factors which in truth led to the recovery acceleration programme not being achieved and indeed to further delay can be causatively attributed to CBUK’s failure to deliver steel by the last week in February 2010. In practice, SRS has not proved that these other factors such as crane downtime would not have occurred in any event, irrespective of any fault on the part of CBUK. SRS has not proved that the need to remedy defectively fabricated CBUK steelwork caused any overall delay or even that it disrupted the accelerative effort embarked upon by SRS.

[142]That said, I have no doubt and I find that it was sensible and reasonable for SRS to institute its recovery programme by way of mitigation to try to recover the delays totalling 42 days which had been caused by CBUK’s breach of contract. It was reasonable because SRS was faced with a very substantial liquidated damages liability to Mace (£500,000 a week) and a six week delay (attributable to CBUK) could potentially have cost SRS some £3 million. To that one would have to add an additional six weeks’ worth of site related and overhead costs which SRS would have had to incur. Therefore a concerted effort to work additional hours to try to recover the delay was at every level reasonable. Ultimately, it was not seriously argued otherwise on behalf of CBUK. I have regard to the authorities relating to mitigation of damage, one of the more well-known beingLord MacMillan’s dictum in Banco De Portugal v Waterlow & Sons Ltd

[1932] AC 452

at page 506:

"Where the sufferer from a breach of contact finds himself in consequence of that breach placed in the position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the costs of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken."

[143]It follows that the reasonable costs incurred by SRS in implementing acceleration measures to overcome the 42 days delay caused to the steel erection programme by CBUK’s failures to deliver steel in accordance with the December Programme should be recoverable. The fact that the acceleration was not ultimately successful due to factors which SRS can not establish are attributable to those failures can not and should not prevent or limit recovery of such costs. However, there are necessarily on the facts of this case some qualifications:(a) One needs to take account of the fact that the recovery programme was adopted to overcome not only the 42 days delay caused by CBUK’s breaches but also the further 14 days delay which is not attributable to those breaches. Both parties’ experts and indeed Counsel accepted that the appropriate way to proceed in this context was to determine the overall figure attributable to acceleration and then discount it, in the context of these findings, by 25%.

(b) There must have come a time between April and December 2010 when the acceleration measures (extended, night-time and weekend working), which continued throughout this period, were not in fact being deployed to overcome the 42 days delay caused by CBUK’s breaches but were being deployed to prevent the delay becoming worse for other reasons not attributable to CBUK. There has been no direct evidence as such which identifies precisely when this "tipping point" was actually reached. However, in principle the costs of the acceleration after this point can not be said to be attributable to CBUK’s breaches; rather, they were attributable to whatever other factors, such as crane downtime or Mace instructed variations, were actually operating to prevent the programme being recovered and in fact producing further delays.

[144]Both parties have through Counsel accepted that their quantum expert’s latest positions should be considered as their clients’ respective positions in relation to SRS’ quantum. I will deal with each headed claim in the order as set out in Paragraph 120 above. Delay (prolongation costs 22.2.10 to 30.4.10)

[145]SRS claims in its pleadings a total of £213,713.81 in relation to the critical delay period of 56 days, made up as follows:(a) Steelcraft: £102,898.66

(b) SMD: £16,000

(d) Steelcraft overheads: £19,915.65

(e) Steelcraft profit: £10,917.95 Mr Gurnham has approached the quantum on this in a somewhat different manner, illustrated by a table in his main report: Item 22 Feb -1 Apr (38 days delay) 1-19 Apr (4 days delay) 19-30 Apr 10.5 days delay) Steelcraft prolongation costs £67,237.40

£8,053.29

£20,695.63 Addition for weekly paid supervision for pension, life assurance and holiday & sick pay £5,599.48

£701.02

£1,766.75 Steelcraft overhead supervision £26,934.16

£2,863.65

£7,514.97 TOTAL £99,771.04

£11,617.96

£29,977.35 He has not accepted that there should be anything for SMD or for Steelcraft profit under this head. CBUK’s Counsel initially took a pleading point about Mr Gurnham’s second and third heads but it seems to me that all that he has done largely has been to recast the pleaded supervision and overhead claims which are pleaded; in any event, this was regularised by permission to amend being granted on 1 November 2012 to enable SRS to bring its claim in line with what Mr Gurnham was promulgating. He and indeed Mr Davis inspected and analysed the Steelcraft books and indeed there was a large measure of agreement as to what those costs were. What Mr Gurnham discovered and this has not been effectively challenged is that Steelcraft kept records in such a way that basic labour and on site control costs were within records which covered the prolongation costs but the senior supervision, which was not necessarily wholly resident on site all the time were kept in a record which was so to speak labelled “overhead".

[146]Since I have formed the view that CBUK is not responsible for the delays occasioned in the last period (19 to 30 April 2010, when the site was being affected amongst other things by the waste gantry and the crane grillage issues), no part of the sum of £29,977.35 set out by Mr Gurnham is recoverable.

[147]Steelcraft’s labour costs for the period from 22 February to 19 April 2010 have been audited and checked by Mr Gurnham and, indeed, on a “figures as figures” basis are agreed by Mr Davis. Thus, both experts are agreed that Steelcraft’s costs for the whole period from 22 February up to 14 May 2010 total the sum of £102,898.66, pleaded by SRS. The logic of the claim for delay is that Steelcraft was on site longer erecting steel up to Level 9 than it would have been if CBUK had delivered in accordance with the December Programme. I accept this logic and, indeed, it is accepted by Counsel for CBUK and Mr Davis.

[148]The exercise therefore becomes one simply of quantification. As indicated above, Mr Gurnham has rationalised the "prolongation costs" (which are essentially labour costs) down from the £102,898.66 pleaded by SRS; the total for the three periods comes to £95,986.33, albeit that Mr Davis has come to a figure of £93,182.96. I am satisfied that Mr Gurnham’s figures are correct and represent the real cost to Steelcraft (paid by or due from SRS). Therefore the sums of £67,237.40 and £8,053.29 are proved and due by way of damages.

[149]The third sub-head is for the supervision cost for Mr Ashton and Mr Rennison; these two people were undoubtedly involved in the direct supervision at least at a senior level; in Mr Rennison’s case, he was on site for most of the time and Mr Ashton visited site on a regular and frequent basis. There is no doubt, and I find, that these costs were incurred. The logic for recovering them, which is supportable, is that the labour on site needed to be supervised at a senior level, particularly with a project which was going wrong in terms of delay, in circumstances in which the first nine levels of steel erection took a lot longer than would have been the case if CBUK had delivered its steel on time. As for the quantum for the first two periods (set out in the table above), I am satisfied that these costs have been proved. Mr Gurnham has audited the Steelcraft costs and, so far as Mr Ashton and Mr Rennison are concerned, these are what he describes as "dedicated overheads" in that, although these people were partly based at the head office all or most of their time was necessarily dedicated to supervise and manage the project on site. Accordingly, in principle, these costs are recoverable. Mr Gurnham properly excludes what he calls "unabsorbed overheads" which relate more generally to company overhead costs such as rent and running of the head office. It follows that the sums of £26,934.16 and £2,863.65 are proved and recoverable as damages.

[150]The second sub-head of claim is an addition for weekly paid supervision for pension, life assurance and holiday and sick pay. The logic is that on top of the salary costs of Mr Ashton and Mr Rennison there will probably be other payroll costs which Mr Gurnham has identified, including holiday pay and sickness (accounting for 34.4 days based on the national average for manual workers in the private sector), pension (3%, applicable to some 53% of staff), group life assurance (said to be 0.222% of earnings) and travel (5%). This produces, he says, an uplift of 21.63% on the base salary cost. Whilst I can see that there may well be some additional payroll cost payable by Steelcraft in relation to Mr Ashton and Mr Rennison, I am not satisfied that it has been proved on the balance of probabilities. It would have been perfectly possible and indeed easy for evidence directly to have been produced by Steelcraft and by SRS, its sister company, to show that these additional payroll charges were in fact applicable. A number of the elements which go to make up the 21.63% are related to manual workers or to a bare majority of staff. The travel percentage of 5% is at best an educated guess. It remained unclear whether for instance Mr Ashton and Mr Rennison claimed or were paid travel costs or had 3% of their earnings paid into some pension pot.

[151]Accordingly, SRS has proved damages under this head in the sums of £67,237.40 and £8,053.29 in relation to Steelcraft prolongation costs between 22 February 19 April 2010 and £26,934.16 and £2,863.65 in relation to actual overhead supervision costs. A total therefore of £105,088.50 is due. Disruption

[152]SRS’ pleaded claim is in the sum of £94,500.50 and is predicated upon the basis of "the increased labour costs incurred by SRS as a result of inefficiencies caused by intermittency of working because of the delayed delivery of steel" (Paragraph 36 of Further Information). SRS goes on in that it can not "say which individual events caused which individual periods of disruption" but that the "delayed and piecemeal delivery by CBUK to SRS at Thirsk of all pieces of steel to each particular phase to SRS resulted in disruption to progress and inefficient workings of the steelwork subcontractor and the metal deck installation subcontractor”. The pleaded quantum is predicated upon “Steelcraft’s planned erection resource for the steelwork floors 5 to 9 [being] 786.67 man shifts over the period from 8 February 2010 to 18 March 2010" and "the actual resource level being 1137.65 man shifts", with the resulting balance of 350.98 man shifts at a rate of £219.43 per man shift producing the largest element, £77,015.54. Apart from that claim, there are claims for plant (estimated at 5% of labour costs-£3,850.78), and for Steelcraft overheads and profit (£8,806.35 and £4,827.73 respectively). This pleading was amended, belatedly, on 1 November 2012 to increase the disruption claims to £225,055.43 based on there being 1145.83 man shifts as against 630 shifts planned by SRS.

[153]Essentially, Mr Gurnham has assessed this claim as follows: ITEM SUM Additional labour - additional shifts 515.43 (1145.43 -630) @ £217.84 £112,371.55 Addition of 21.63% £24,305.97 Addition for plant@ 5% of labour costs £5,618.58 TOTAL £142,296.10 From this he has deducted £19,748.77 as relating to factors which he would not attribute to CBUK. This leaves a balance for disruption of £122,547.33.

[154]Mr Gurnham was clearly in a quandary about this claim. He accepted openly in his report that he had not been able to use any of the normal approaches to evaluating disruption. For instance he had not been able to use the “measured mile” or “earned value” approaches, these being commonly used to assess disruption loss. He did not have appropriately detailed timesheets or daily record sheets to enable standing or non-productive time to be identified. He could not tell from the documentation whether the steelwork deliveries to site resulted in downtime and lost erection hours. He could not find a resource schedule or resource planning documentation within SRS or indeed Steelcraft to see what was allowed for. Finally, he says unequivocally in his first report at Paragraph 10.12.23 that he had not located detailed records for Steelcraft labour that would facilitate any, or any meaningful disruption analysis. He accepted in cross-examination that it was at least logically possible that the reason for the increased number of shifts was inadequate planning, inefficient use of cranes or even that Steelcraft was not very good at its job. There is limited reliable contemporaneous evidence that the so-called planned resource of 630 shifts was the planned resource; it was supported by Mr Willis but without reference to any contemporaneous document and it was contradicted by the original pleading which identified a higher planned resource.

[155]Against all these difficulties, it is inevitable that there must have been some disruption to erection progress in the February to April period. Deliveries by CBUK were late and in some respects out of sequence. This led to delays and piecemeal deliveries to site. There must have been disruption in the sense of reduced productivity. It is beyond doubt that Levels 5 to 9 should have been erected within the weeks commencing 8 February and 15 March 2010. I accept also that there is reliable evidence that the planned resource was related to using 20 men per week on 5½ days per week. There were thus going to be 110 man shifts per week. Within the erection programme, the steelwork up to and including Level 9 should have been erected and capable of erection utilising 630 man shifts identified by Mr Willis; this has been verified by Mr Gurnham. However, 808.50 man shifts were deployed up to 18 April 2010. I disregard the period after this because the further delays were caused by factors for which CBUK are, in the light of my other findings, not responsible.

[156]It follows that the disruption attributable to CBUK can not have exceeded the difference between 808.50 and 630 man shifts, that is 178.50 man shifts. It would be wrong however to base any assessment of the probable disruption cost on this balance by reason of the absence of detailed evidence attributing a lack of production or productivity to CBUK’s breaches of contract. What the Court can and should do in circumstances where it is satisfied on a balance of probabilities that some (more than de minimis) disruption must have occurred as a result of CBUK’s breaches is to make a reasoned assessment albeit based on the minimum probably so attributable. I am satisfied that a minimum of 40 man shifts’ worth of time must have been wasted. One has to bear in mind that not only were there 20 or so Steelcraft men working the steel erection during this period but also there were deployed other steel erectors at night and at weekends; therefore, notwithstanding that there were substantially more man shifts worked in this period even than the 808.50 attributed to Steelcraft alone, progress nonetheless remained painfully slow, the whole operation ended up taking a minimum of 42 days longer than it should have done by reason of CBUK’s breaches. Mr Barry gave evidence that the erection programme was achievable and I accept that evidence. There was some limited complaint by Mace about SRS’ activities and there was some tangential evidence (the Leanconsult report) about some incompetence but it is inconceivable that there would not have been more complaint from Mace which was closely supervising the work if SRS steel erectors were "dragging their feet" unduly. 40 man shifts represents the average of about half of one week’s worth of man shifts during this period.

[157]Accordingly, I find that 40 man shifts’ worth of disruption cost was incurred the rate established by Mr Gurnham (which I accept), namely £217.84, and that £8,713.60 consequentially represents the disruption labour cost attributable to CBUK’s breaches of contract. As for the addition of 21.63%, elements of this at least are more obviously recoverable with regard to ordinary labour to which this disruption claim relates. Mr Gurnham analysed this in his Appendix 3.4 to his first report and I broadly accept what he says there, based as it is on an analysis of accounting information from Steelcraft. I can accept that holiday pay and sickness and group life assurance costs were additional payroll costs and that the labour which will have travelled would be entitled to some travel costs; so far as travel cost is concerned, although Mr Gurnham identified 5% as reasonable, there is no direct evidence about this and a reasonable minimum of 3% is a realistic assessment. I disregard the pension cost because it has not been established that the Steelcraft erectors were entitled to a pension (it being acknowledged that only 53.25% of Steelcraft’s personnel were members of the relevant pension scheme). I therefore consider that an allowance of 17.71% to the labour disruption cost represents the overall additional payroll cost incurred by Steelcraft and paid or payable by SRS to it: Holiday pay and sickness: 14.847% Group life assurance: 0.222% Travel cost: 3.00% Total: 17.71%

[158]it will follow that SRS has established an entitlement to £10,256 (£8,713.60 +17.71%). SMD Disruption

[159]SRS counterclaimed £372,951.76 for disruption caused to its metal decking subcontractor, SMD, and the additional £40,500 for haulage by SMD. This has been reduced in practice to the sum of £73,529.63, based on Mr Gurnham’s evaluation. Although the higher sums represent what was apparently claimed at least at one stage by SMD against SRS, there is no doubt that a final account and claims settlement was reached between SMD and SRS in the sum of £1,591,157.95, as against the sum of £1,968,589.56 claimed by SMD. This settlement is complicated by the fact that SMD was engaged to carry out decking not only to the main tower but also to the "backpack" part of the Shard (with which these proceedings are not concerned) and there were claims in relation to the backpack.

[160]I am not satisfied that this claim has been proved by SRS. The SMD claims were, on the face of contemporaneous documents, addressed and dealt with by different SRS personnel (Mr Evans and Mr Earl, neither of whom was called as a witness), settled either for £60,000 (Mr Evans) or for £91,246.34 (extrapolated by Mr Bogg from an e-mail from Mr Earl). On a balance of probabilities, in those circumstances I would have had to accept the lower figure, this then representing the maximum that this part of the counterclaimed amount could be worth. However, the overall claims included not only for delays to the backpack but also for delays to the higher Levels. Any amount attributable to the backpack delays would fall to be deducted from the £60,000. Without any analysis or evidence in relation to the delays to SMD’s decking operations at the higher Levels, I would need to have deducted an allowance for such delays. If one then couples those factors with the fact that little or no evidence was provided as to how SMD was impacted by the late delivery of steel between February and April 2010 both then or later, it is impossible to say that any part of this £60,000 settlement related or at least necessarily related to CBUK’s breaches. The fact that the Court has a nagging feeling that this part of the claim could have been capable of proof and that it would not be surprising if some part of the £60,000 settlement, albeit a relatively small part, related to such breaches is not enough to make an award of damages for it. SRS Acceleration

[161]I refer to my findings above in relation to acceleration. It therefore falls to the Court to decide on the evidence what were the actual and the reasonable costs incurred by SRS in accelerating the work in what turned out to be an unsuccessful attempt to recover the delays which had occurred. Essentially, what happened was that from late February 2010, Steelcraft and its sub- sub-contractors began to work double shifts up to 11 pm with additional time over the weekend, this being implemented to seek to recover and mitigate those delays which had already been caused by the late deliveries of steel by CBUK; further night-time working began in or about March although it appears that at least initially proper consent had not been obtained from Southwark Council. There were noise trials carried out in April 2010 going into May and approval from the Council was received later in May. The recovery programme was initially based only on the extended hours (7 am to 8 am and 6 pm to 11 pm during weekdays and 7 am to 8 am and 1 pm to 4 pm on Saturdays). It is clear however that full night-time and weekend shifts were being worked over and above this recovery programme. It must be understood that working on a site such as this at night is and was necessarily less productive primarily because there is a need to keep noise down and steel erection can be a very noisy business; there were restrictions on using hammers at night. This meant that SRS could only fix steel members into position often only pinning them together with one bolt as a temporary measure until the connections were finally and fully fixed by the wrapping up team the following day. Remedial works could not be done at night if they required hammering.

[162]To carry out the acceleration steel erection, Steelcraft, with the knowledge and consent of SRS, sub-sub-contracted the acceleration work to MCS and K-Len and, indeed, much of the acceleration costs claim incorporates the costs incurred in relation to and by these two sub-sub-contractors. Mr Barry said, and I accept, that the originally planned erection resources were adequate to secure compliance with the planned erection programme. In broad terms, the planned erection resources continued to be deployed but the acceleration resources were also required simply to seek to recover the critical delays which had already occurred.

[163]Mr Gurnham has evaluated this claim as follows (with the pleaded figures in brackets): Item Amount allowed [claimed] Day/night shift squads £1,682,001.76 [£1,700,142.98] Management for resources £441,559.27 [£406,937.72] Senior management on site £252,417.41 [£419,549.70] NCR Management Nil [£135,151.98] Total £2,375,988.44 [£2,661,782.38] Mr Gurnham allocates £233,451.57 to the period up to 13 May 2010 and the completion of Level 9 and the balance, £2,142,526.87, to the period thereafter up to Christmas 2010 when Level 40 was completed. He excludes the NCR costs which he evaluates in fact at £193,249.96 on the basis that it is not to do with acceleration.

[164]The figure of £1,682,001.76 is made up as follows: Item Amount MCS day/night/weekend shifts £1,182,688.68 K-Len dayshift £279,921.55 Steelcraft overheads at 9% £131,634.92 Steelcraft profit at 6% £87,756.61 Total £1,682,001.76 These figures are predicated upon the recovery essentially of all the main tower steel erection cost of acceleration measures provided by MCS and K-Len up to the completion of steel work at Level 40.

[165]However, these figures do not, understandably, take into account the findings that I have made which have the effect of not attributing to CBUK the further causes of delay which occurred from May onwards and which prevented the recovery programme from being achieved. As indicated above, there came a point when the acceleration resources were being deployed not to make up the delay which had been caused by CBUK (42 days) but to counteract the further events (be they variations, crane downtime or whatever) which were in fact causing more delay and which can not be proved to have been caused by or attributable to CBUK’s breaches.

[166]The problem for the Court therefore is how to assess or otherwise find what acceleration course actually incurred were caused by or attributable to the mitigation measures embarked upon as far back as March 2010 to overcome the delays caused by CBUK. It would be wrong just simply to take the total costs and artificially reduce them by some percentage because that would be simply arbitrary.

[167]Mr Davis in a supplementary report (entitled "Note") put in at a late stage during the trial came up with a method of assessment which is of interest, albeit that he abandoned part of his initial calculations (Tables 1 to 3 - Transcript 24 October 2012- page 107). His Tables 5 and 6 considered what the likely costs were in the period May to October 2010 to reflect either the recovery programme (Table 6 - with no additional nightshifts) or the actual additional dayshifts, weekend working and nightshifts actually worked in the period. In effect he says that this is a sensible way of assessing the acceleration costs attributable to any culpable CBUK delays as it reflects either the recovery programme which, all things being equal, he suggests, should or at least could have recovered the delays or the recovery programme plus the nightshifts actually worked. He compares that with what in effect would be the equivalent case as pleaded (Table 4). Table 4 produces a total sum of £881,756.05, Table 5 £731,496.42 and Table 6 £161,810.84, albeit elsewhere in his second report he adds an overhead at 10% to these figures. There is no issue between the experts in relation to the number of shifts worked by MCS and K-Len but different rates are used by the experts with Mr Davis assessing actual shift rates at a lower level than those pleaded by SRS (Table 5) and in Table 6 he uses a much lower rate because he assumes that the additional shifts should be costed by reference to the recovery programme (that is, say, only up to 11 pm at night rather than for a full night shift of 11 to 12 hours. He qualifies what he says by saying that the figures would need to be reduced (on the basis of my findings) by 25% to reflect the 14 days delay which is not the responsibility of CBUK. His figures however do not allow for the period prior to the formal adoption of the recovery programme towards the end of May 2010.

[168]So far as the rates are concerned for these acceleration shifts, it is likely that the rates were agreed between the parties with dayshift agreed at £279.20 a night shift at £356.07. It is likely that the nightshift rate applied was applicable to weekend working; I accept Mr Gurnham’s evidence that these rates are reasonable and realistic and also they represent what was effectively paid or payable by Steelcraft to MCS and K-Len; the detailed breakdown was provided which Mr Gurnham has checked. Mr Davis adopts lower rates for the day shifts (£228.09) and weekend and night shift working (£297.71); he says that the rates used by SRS in this claim are "high".

[169]I have formed the view that the reasonable costs of seeking to mitigate the impact of the culpable delays caused by CBUK can and should be assessed as follows:(a) MCS and K-Len were primarily deployed by Steelcraft with SRS’ consent and knowledge to seek to overcome the delays to the steelwork erection which had started to be generated by the end of February 2010. By the time that the recovery programme was put in place in May 2010, that delay was 56 days or 8 weeks of which 6 weeks was attributable to the breaches of CBUK.

(b) As from May 2010, these resources were deployed and were initially effective; indeed in June 2010 some time had been recovered. However, by September 2010 other factors had probably combined to cause further delay and as from the end of August 2010 these other factors represented the dominant reason or cause for the need to continue to retain these additional accelerative resources. Therefore as from then it cannot be said that there is any or certainly any sufficient causative link between CBUK’s breaches and the need to continue to deploy the accelerative resources.

(c) Mr Davis’ approach based by reference to the recovery programme is a reasonable and realistic one, albeit that his exclusion of nightshift and his rates are unrealistic. It seems to me that, although the recovery programme only extended day shifts and Saturday working, SRS was always intending to and needed to deploy what it actually deployed which was full nightshifts and full weekend working as well to seek to recover the time which had been lost.

(d) Therefore the proper amount to allow to SRS and what it was liable to pay its sub-contractors is reflected in the following table: Shift type Month Shift Nos Rate Sum Add day shift May 30 £279.20 £8,376.00 June 242 £279.20 £67,566.40 July 291 £279.20 £81,247.20 August 239 £279.20 £66,728.80 W/e work May 0 £356.07 Nil June 35 £356.07 £12,462.45 July 15 £356.07 £5,341.05 August 42 £356.07 £14,954.94 Night May 189 £356.07 £67,297.23 June 290 £356.07 £103,260.30 July 211 £356.07 £75,130.77 August 291 £356.07 £103,616.37 TOTAL £605,981.47 Less 25% £151,495.38 Sum allowable £454,486.13

[170]To this should be added Steelcraft’s overhead and profit at 9% and 6% respectively, given that it was asked to provide the accelerative resources and that it was not to blame in any way for the six weeks delay caused by CBUK which those resources were deployed to overcome. This also reflects Steelcraft’s entitlement to be paid a reasonable sum for providing the accelerative resource. This produces a total of £522,659.05.

[171]I now turn to the acceleration costs said to have been incurred in the period between the end of February and May 2010 and which are not encompassed by the above assessment. This was a period in which, although there is evidence of nightshift working in the period starting in the week commencing 15 March 2010 and one weekend worked (week of 8 March 2010), for which generally see Mr Gurnham’s Appendix 3.10, there is some real doubt as to whether all the recorded nightshift work was actually done at night. An examination of the time sheets for March and April show that much of the time was spent installing stairs and handrails; there has been no reliable evidence to explain why the costs of dealing with this work (for which CBUK did not do the fabrication) needed to be dealt with during night shifts (assuming that that is what they were). There is something which is not wholly credible about the additional nightshifts in April 2010 because there was, unsurprisingly, given CBUK’s serious delays in the delivery of Phase 803 steel, rather less to do then, such as would not obviously involve nightshifts. I am therefore not satisfied that any substantial part of the nightshift or the single weekend worked in this period is attributable to any acceleration measures which can be laid at the door of CBUK. As before at least on one claim addressed earlier in this judgment, the fact that there is a nagging feeling that some part of these extra measures might well have been attributable to the CBUK breaches is not enough to justify an allowance of damages. I bear in mind that it would have been easy for SRS to prove at least by way of representative evidence why these overtime shifts had to be worked; for instance, some evidence could have been deployed as to why MCS worked on the one weekend in the week commencing 8 March 2010: SRS did not do this. I therefore allow nothing in respect of acceleration costs in this earlier period.

[172]Turning to the other elements of the acceleration claim, additional site resources and senior management, these will all fall to be reduced to exclude costs claimed as being associated with the period after August 2010 and before the date in May when the recovery programme was undoubtedly initiated, albeit with full night shift working as well as weekend working. The additional site resources claim was supported by Mr Gurnham under the following heads: Item Amount Steelcraft supervisors/engineers dayshift £155,852.53 Steelcraft supervisors/engineers nightshift £52,979.35 Arthur Hudson Site Engineers Ltd £51,435.10 Byrnes Construction Services Ltd £46,580.00 Cotech Engineering Ltd £54,269.00 Williamson Technical Services Ltd £22,848.60 Sub-total £383,964.58 Steelcraft overheads at 9% £34,556.81 Steelcraft profit at 6% £23,037.87 TOTAL £441,559.27 Mr Gurnham has adjusted the first two items upwards and the overheads and profit has been adjusted down and up respectively, compared with the pleaded case. As I understood Counsel for CBUK, no pleading point is taken with regard to these adjustments.

[173]Mr Gurnham in relation to the first item has identified three supervisors and one engineer (Messrs Adams, Fairhurst, Lyon and Matthews) whose salaries for the period between 1 March and 13 December 2010 total £128,136.59 to which he has added 21.63%. For the reasons given earlier in this judgment in the chapter “Delay (prolongation costs 22.2.10 to 30.4.10)”, the 21.63% addition simply has not been proved in relation to these more senior supervisors.

[174]I can and do accept that the accelerative measures needed to be and must have been supervised at a moderately or higher senior level, particularly in the context of this project being a high profile one which was going wrong. It is therefore necessary to ascertain the salary costs of these people and then to reduce them to take into account the weeks prior to May and after August to take into account the fact that it has not been proved that accelerative costs associated with CBUK’s breaches are attributable thereto. That produces a total sum of £46,123.90 (made up of £15,854.89, £15,971.94, £4,899.75 and £9,397.32 in respect of the four men in question), relating to the week commencing 24 May to the week commencing the 23 August 2010. The point is made that there are no specific time sheets which allocate these men's time to the accelerative efforts and I accept that they must have been spending a substantial part of each day on the non-accelerative work which was going on during the day. Doing the best that I can, I assess that one third of their time must have been spent on servicing and supporting the accelerative efforts and therefore allow one third of the sum, namely £15,374.63.

[175]I do the same exercise in respect of the nightshift where a Mr Farley was the supervisor. His salary costs are £18,603.13 for this comparable period but because the nightshift was entirely accelerative the whole of his salary costs of this period is allowable.

[176]Against both these sums, £15,374.63 and £18,603.13 totalling £33,977.76, 25% should be deducted, leaving the net sum of £25,483.32, to reflect the fact that the accelerative effort was deployed to overcome 56 days delay of which only 75% was attributable to CBUK.

[177]I see no reason in principle why Steelcraft should not have been entitled to a percentage mark-up on these costs to reflect its overhead and profit given that there has been no suggestion that Steelcraft itself was responsible in any way for the 42 days delay to the project caused by CBUK’s breaches. Steelcraft was asked and required by SRS to institute the acceleration process and that must have been by way of additional work for which it was entitled to be paid a reasonable sum which would include overhead and profit. I accept the figures put forward by Mr Gurnham of 9% and 6% respectively.

[178]Accordingly, with profit and overhead added, I find that £29,305.82 has been proved.

[179]The remainder of this claim relates to specialist sub-contractors retained by Steelcraft to carry out an array of engineering, surveying and other technical services in relation to steel erection. The Court has not been shown (in one sense mercifully) the numerous invoices which support these costs which Mr Gurnham has audited and, indeed, there is no issue that the costs were incurred by Steelcraft. Mr Gurnham frankly accepts that he is unable to say one way or another whether these sub-contract resources were anything to do with acceleration. There is no witness evidence which seeks to explain the extent to which any of them was involved in the acceleration measures. On that basis, SRS has simply not proved its case in relation to these sub-contractors.

[180]Turning to the third head of claim within acceleration, the provision of senior management, there can be no doubt in my judgment that Steelcraft did deploy Mr Ashton and Mr Rennison amongst other things to manage the acceleration. In that context I accept the evidence of Mr Willis to that effect. There are two problems however relating to this claim, the first being to determine how much of their time was applied in effect to dealing with CBUK’s delay and more importantly the accelerative efforts introduced to overcome those delays, a corollary of which is the extent to which they would have been deployed in any event irrespective of CBUK’s delay, and secondly whether particularly in the case of Mr Ashton his time as managing director can be dealt with as anything other than as a head office overhead.

[181]Mr Gurnham’s analysis, now adopted by SRS, produces the following: Item Amount Mr Ashton £142,883.01 Mr Rennison £76,610.39 Total £219,493.40 Steelcraft overheads at 9% £19,754.41 Steelcraft profit at 6% £13,169.60 Total £252,417.41

[182]Whilst Mr Ashton as the managing director is in one sense part of the head office overhead, there is no doubt that he spent a disproportionate amount of his time in dealing with the delays and the accelerative measures at the Shard site. He was therefore being deployed in effect as a specific and dedicated resource and therefore his time in that respect could properly be charged by Steelcraft to the project, other than as a head office overhead. The very fact that he was extensively so deployed demonstrates that. However, it was accepted in evidence that he was not full time and therefore, doing the best that I can, I assess that half of his time allocated to this project was and must have been closely related to the extensive acceleration effort that was required from May onwards. So far as Mr Rennison is concerned, he was undoubtedly allocated to this project as the site manager and would have been on the site for much of the time in any event. I have no doubt however that a significant part of his time, like Mr Ashton, was and would have been concerned with the acceleration effort and therefore it is appropriate to allocate part of his salary costs during the relevant period to that effort; but for the acceleration, he could have been deployed elsewhere. Again, I assess that half of his time was and must have been intimately associated with the extensive acceleration effort required from May onwards.

[183]As before, these items fall to be reduced in any event to relate them to the period May to the end of August 2010. Mr Ashton’s and Mr Rennison’s audited salary costs amount to £3,247.34 and £1,741.15 respectively per week. Accordingly given that there are 14 weeks between the weeks commencing 24 May 2010 and 23 August 2010 the total salary cost is £69,838.86 (£4,988.49 times 14). This falls to be reduced first of all by half to reflect the matters in the preceding paragraph which produces a total of £34,919.43 which in turn should be reduced by 25% to reflect the two weeks delay which was not the responsibility of CBUK. The resulting total of £26,189.57 is due as damages.

[184]For reasons given earlier, there is no good reason why profit should not be added to this sum. However only so far as Mr Ashton’s salary cost is concerned, there is a real risk of double counting if a head office overhead percentage which already includes something for his salary is added on. I therefore will utilise a lower figure than the 9% overhead percentage used by Mr Gurnham to avoid such double counting. A safe figure therefore to use overall for the overhead is 7%. Accordingly there will be an addition of 13% for overheads and profit on top of the figure of £26,189.57, to produce a total of £29,594.21. Mace Tower Crane Cost

[185]It has been proved, and I accept the evidence of SRS to the effect, that the sum of £812,917 has been deducted by Mace from sums otherwise due to SRS to reflect reasonable costs incurred by Mace in allowing to SRS a greater amount of use of cranes (by or for the benefit of SRS) than had been contractually agreed between them in relation to the steel erection up to and including Level 40. I also find that during 2010 the sum of £626,905.50 was deducted and indeed not (seriously if at all) challenged by SRS as a deduction in respect of such craneage. This lower figure related to the period for the week commencing 11 February 2010 up to week commencing 14 October 2010, as is evidenced by a breakdown provided towards the end of 2010. That highlights in relation to each of six cranes (TC1 to TC6) overtime hours deployed in terms of crane operator and crane time. There is no challenge to and both experts accepted as reasonable the rates used for each crane (£63 per hour) or for the various personnel involved (traffic marshals, gate guards, welfare, night manager and hoist driver). It is clear that this breakdown relates to night given the reference on every occasion to them being a night manager. It therefore, in my judgment, relates to the additional time necessarily utilised by the cranes to support the accelerative measures being deployed at night time. The sum of £626,905.50 has been extrapolated by Mr Gurnham to support the higher eventual figure in relation to the period between mid-October 2010 and the time in December when the Level 40 steel work was completed.

[186]It is unnecessary to consider the Mace Tower Crane cost in relation to the period up to and including the week commencing 13 May 2010 or after the week commencing 26 August 2010 because, as indicated earlier, I do not consider that CBUK’s breaches can be proved to have been causative of the need to accelerate in those periods. Therefore I am concerned to consider only those costs booked against SRS for the intervening period. I disregard the first of these weeks (week commencing 20 May 2010 in which the breakdown indicates that these were shared with Byrne Bros who were concerned with other aspects of the work, given the absence of any evidence about this sharing. The resulting total is £286,884.50 which represents the maximum which could be attributed to the acceleration effort and related costs which CBUK is liable.

[187]There is little or no evidence as to what the cranes were doing specifically although it is a reasonable inference (which I do draw) that much of the deployment of the cranes, operators and related staff must have been to support the accelerative measures at night, given that most of the accelerative efforts at night or at weekends and cranes were needed at night to support the accelerative efforts. There are however some anomalies. For the last three weeks in this period, the crane hours deployment goes up from much lower total hours figures for the weeks (for instance in the week commencing 5 August a total of 228 crane hours were logged) to over 300 hours with no explanation on the evidence as to why such a large increase occurred then; 324, 300 and 338 hours are logged for the weeks commencing 12, 19 and 26 August 2010. No evidence was given as to why all six cranes were deployed, for instance in those last three weeks.

[188]It is therefore incumbent on the Court to make some assessment in circumstances where it must have been the case that cranes were being deployed to support the acceleration (at night) and that SRS must have incurred cost in terms of what it has accepted (properly) it is liable for to Mace. I make my assessment on the following basis:(a) I disallow any usage of TC1 and TC6 over this period as the expert evidence reveals that it was essentially only TC2, TC3 TC4 and TC5 which were necessarily involved in the steel erection (see Paragraph 56 of Mr Barry’s report). This equates to 388 hours of crane time and to a money sum of £23,280.

(b) In addition, I reduce the total crane hours for the weeks commencing 12, 19 and 26 August 2010 to a total of 228 hours, which allowing for the reductions made in the preceding sub-paragraph takes out an additional 48 hours at £63 per hour, nearly £3,024. The 228 hours allowance comes from the preceding two weeks and is not inconsistent with some of the other total hours in some of the preceding weeks.

(c) I exclude the hoist driver’s costs because I can not see (and there is no evidence) why the hoist driver is required in circumstances where such evidence as there is suggests that the hoist was being used to enable materials other than steel to be lifted to higher parts of the building. This would remove four weeks worth of his time valued at £1,350 per week, that producing a deduction of £5,400.

(d) It is appropriate however to make a further more general reduction to reflect the absence of specific evidence as to what these cranes were actually doing and, for instance, whether opportunities were being taken to do work which was not in reality part of the accelerative effort. It is necessary, in the absence of such detailed evidence, to make a reduction which the Court can be confident adequately takes this into account. In my judgement, an adequate and safe further reduction is 50% of the balance.

(e) I therefore assess the amount attributable to CBUK as: Cost for period: £286,884.50 Less (a): £23,280.00 (b): £3,024.00 (c) £5,400.00 Sub-total: £255,180.50 Less 50% £127,590.25 Total: £127,590.25

[189]From this figure of £127,590.25, sum of 25% needs to be conducted reflect the delays which were not the responsibility of CBUK, leaving a balance of £95,692.69. Defects and the NCRs

[190]Essentially, there are two areas of defects, the first relating to the alleged painting and other defects (sometimes referred to as the “Contra Charges" claim) and secondly NCRs.

[191]Mr Gurnham’s "primary" evaluation for the Contra Charges is as follows: Item Sum allowed Material sent to SRS in error/sent back to CBUK: 3 loads @ £258.20 (40 ft) £774.60 Beams painted incorrectly: 904.5 hours @£17.10 + 20% for paint and plant £18,560.34 Transfer beam returned for shot blast and paint:1 load @ £358.40 (60 ft) £358.40 Corner columns with protruding welds on Wintergarden box beams: 100 hours @ £17.10 + 20% for materials and plant £2,052.00 Make good external decorative columns delivered in a poor state: 494 hours @ £17.10 + 20% for paint and plant £10,136.88 Total £31,882.22 His "secondary valuation” contains an allowance on the second, fourth and fifth items above of a substantial mark-up for overheads and profit.

[192]I am satisfied and I accept the evidence of Mr McBride to the effect that there was a very high level of poor workmanship in the steel delivered by CBUK. This is consistent with the internal evidence from CBUK in November and December 2009 that there were serious quality issues being experienced within CBUK and that is likely to be attributable to the overload of work, which was clearly not accompanied by an increase in the quality control resources.

[193]Dealing with the largest contra charge relating to poor paintwork, Mr McBride pointed to failures to apply primer at all and to failures to apply it to the contractually specified dry film thickness of 75 µ. He said in evidence that complaints applied to every piece of steel, there being 1342 pieces of steel (beams and columns). He described the application of primer by CBUK as exceptionally poor even from the start. There are a number of photographs which illustrate the poor workmanship in this regard. There was little contemporaneous written complaint although hints of complaints emerge from some of the contemporaneous documentation. Mr McBride and his team however were practical people who found it easier and simpler to deal with these extensive deficiencies themselves rather than send all the steel back again to CBUK which would simply have added to the ever-growing delays. The time estimate is based on Mr McBride’s estimate. I am satisfied on the evidence that these complaints are established and that the hours identified above were spent at the very least in putting right this bad workmanship and that the quantum put forward by Mr Gurnham is reasonable.

[194]I am satisfied that the other complaints are made out and that the quantum put forward is reasonable. For instance, as the photographs reveal and Mr McBride identified, there was a substantial amount of poor welding work in and around architectural perimeter column sections as well as on decorative columns and what were called the Wintergarden box beams with scrappy welding, for instance protruding when it should have been flush.

[195]Finally, as to Mr Gurnham’s secondary case, the claim for all the Contra charges was based on a rate of £61.25, made up of a Labour cost of £18, £37 for overheads and £6.25 for a charge being charged to subsidiary companies and also for profit. He concludes that this rate is a "charge out rate", namely what SRS would, all things being equal, charge to customers for such work. He has identified from analysis of SRS’ audited accounts that are the latter two charges might be identified at £34.10 and £3.55 hour respectively. He goes on to say that SRS would need to show that it had in fact incurred a loss in recovery of the overhead. SRS has not adduced any reliable evidence about this. The object of damages is to compensate and it is not to produce windfalls (at least not generally). Whilst I would have been sympathetic to allowing something for profit and overhead to reflect other profitable work turned away in the October 2009 to April 2010 period, there has been no evidence about this and accordingly it would be wrong to find as a fact that there has been any lost profit or overhead as a result of having to do the remedial works in question.

[196]I therefore award the sum of £31,882.22 with regard to the Contra Charges.

[197]The NCRs with which this trial was concerned were only those identified by SRS as possibly having an impact on the delays. There were 37 NCRs so identified, 1, 3a, 26, 30, 31, 33, 36, 44, 46, 48, 52, 53, 57, 61, 97, 98, 106, 107, 108, 124, 127, 137, 139, 142, 151, 159, 161, 165, 167, 168, 173, 174, 177, 178, 179, 186, and 197 For each of these, a file was produced which purportedly provided backup documentation to support the complaint in question (the N Bundles). Mr Pyle and Mr Rennison dealt with many of these in their witness statements but, particularly in the case of Mr Pyle, he cross referred to the NCR files generally prepared within 2010 which he said set out the exact location, the drawing on which each defect can be found, the description of the defect and the proposed an actual remedial solution. It is clear that these files were initially prepared to ensure that appropriate remedial works were done and that everything was properly logged as between Mace and SRS; indeed they were placed on Mace’s computer network (its Business Information Warehouse). I have already found that the evidence that these NCRs and the subsequent remedial works actually caused critical delay was insufficient to justify any finding that they did cause such delay, Mr Barry indeed felt unable to attribute any delay to them.

[198]It is only necessary for me in this judgment to consider liability with regard to these NCRs because all other issues relating to NCRs including quantum have been deferred.

[199]As indicated earlier in this judgment, I was particularly impressed by Mr Pyle as a witness, albeit somewhat less so in respect of Mr Rennison. I broadly and unconditionally accept the evidence of Mr Pyle as a person of integrity who had a detailed knowledge of the subject matters of the NCRs, albeit that this must be qualified by reference to the NCR files. I will address these defects in the same categories as identified by Mr Pyle and Mr Rennison; indeed this is the way in which Counsel for CBUK dealt with them in closing. Apart from describing the type of defect alleged, together with some of the evidence relating to it, in the interest in proportionality I will indicate my findings on each of the NCRs in short order, although if the parties wish greater reasoning, they can ask me to provide it.

[200]The first category is "Shear Key Plates welded out of position" and relates to NCRs 1, 48, 61, 106, 107, 167, and 168, although Mr Pyle himself did not address Nos. 48 and 61. He explained this defect as relating “to column/beams…welded out of position (too high), below twin fin plate connections”. He explained that these plates were important because they act as a “failsafe for beams” so that if "the bolts holding a beam should shear, the shear key plates support the beam from below and prevents it from falling". He explained that that in "certain instances, the shear key plate was welded 5-6 mm too high" which "resulted in the connection holes between the beam and column failing to line up properly, which meant the bolts to make the connection could not be fitted". He explained the remedial work which was required; this involved "notching of the part of the beam that sat on the shear key" so that "when the beam was reinserted, it could be lowered over the shear key plate and achieve the correct height on the column so that the bolt holes lined up properly”. Much of the contemporaneous documents describes there being no tolerance in the fabricated steel and if that is right and if the shear key plates were welded 5-6 mm too high then there must have been non-compliance by CBUK. In relation to the seven NCRs in question, my findings are as follows: NCR 1: this has not been proved. The file does not really describe the defects in anything other than the most general detail. There was clearly confusion in categorising this defect and for some undisclosed reason it was "moved to NCR 001” after the event (see Daily Record Sheet). NCR 48: this has been proved. The file identifies that no tolerance was allowed in the shear key connection which resulted in misaligned holes. There are photographs which illustrate this and a contemporaneous e-mail on 13 May 2010 which supports "this generic problem". The remedial work is consistent with what Mr Pyle has attested to. NCR 61: this has not been proved. The defect description in the file does not match what Mr Pyle describes. NCR 106: this has been proved. The file description is consistent with what Mr Pyle describes and the remedial works are consistent with the defects. There are helpful photographs and contemporaneous e-mails. NCR 107: this has been proved on a similar basis to NCR 106. NCR 167: this has been proved on a similar basis to NCR 106, albeit that there are no photographs or contemporaneous documents in the file. NCR 168: this has been proved on a similar basis to NCR 167.

[201]The next category of NCR relates to web cheek plates welded too closely together. Mr Pyle describes this defect as present where column web cheek plates were welded too closely together so that floor beams could not readily be bolted to the structure. As a first fix, he said one of the cheek plates would be removed from the column which at least allowed the beam to be bolted in place and the wrap-up team would have to go back later to weld the removed cheek plate back onto the column. He describes this as being, from Level 5-7 upwards. In relation to the 12 NCRs identified as being possibly in this category, my findings are as follows: NCR 3a: this has been proved. Sufficient contemporaneous information has been provided in the file which identifies fabrication errors which prevented the placing of the incoming beam. The comments on the drawings indicate that the gap at the top of the cheek plates was less than the width of the incoming beam. In those circumstances there must have been a breach of the fabrication tolerance requirements in all probability. NCR 26: this is proved. The file indicates that the gap between the plates was narrower than the beam width which strongly suggests that it must have been defectively welded in fabrication; that narrowness is inconsistent with anything other than welding the plates well out of tolerance. The documentation demonstrates a lack of perpendicularity within the fabrication which demonstrates shoddy workmanship. NCR 30: this is not proved. All that the file shows is that the web cheek plates prevented the erection of beams. That does not, without more, prove that the fabrication was probably defective. NCR 33: this is not proved for the same reasons as set out against NCR 30. NCR 46: this is proved in relation to the cheek plates referred to on page 122 in Bundle N1 for the reasons given for NCR 26 but it is not proved for the remainder of the cheek plates for the reasons given for NCR 30. NCR 53: this is proved in relation to the cheek plates referred to on pages 152 and 153 in Bundle N1 for the reasons given for NCR 26 but it is not proved for the remainder of the cheek plates for the reasons given for NCR 30. NCR 124: this is not proved for the same reasons as set out against NCR 30. NCR 127: this is proved in relation to the cheek plates referred to on pages 309, 310 and 311 in Bundle N1 for the reasons given for NCR 26 but it is not proved for the remainder of the cheek plates for the reasons given for NCR 30. NCR 137: this is proved in relation to the cheek plates referred to on pages 331 and 332 in Bundle N1 for the reasons given for NCR 26 but it is not proved for the remainder of the cheek plates for the reasons given for NCR 30. NCR 151: this is proved in relation to the cheek plates referred to on pages 384 in Bundle N2 for the reasons given for NCR 26 but it is not proved for the remainder of the cheek plates for the reasons given for NCR 30. NCR 165: this is proved in relation to the cheek plates referred to on pages 405 and 406 in Bundle N1 for the reasons given for NCR 26 but it is not proved for the remainder of the cheek plates for the reasons given for NCR 30. NCR 177: this is not proved for the same reasons as set out against NCR 30.

[202]The next group of NCRs relates to column twin fin dates welded at incorrect angles resulting so Mr Pyle said, in beams not sitting between them during erection. Generally, the remedial work involved the removal of one of the fins and then heating the other in situ and hammering it to correct its alignment; the other fin plate would be fabricated, bolted to the beam and welded back to the column. My findings in this category are as follows: NCR 36: one fin plate was welded 180° out of position and therefore must have been bad workmanship (page 89 of Bundle N2, Beam 16131). This part of the claim is proved. The other complaint relating to the twin fin plate holes on Column 16103 being misaligned with Beam 16257 is also proved; if the misalignment was as bad as suggested, which I accept that it was, then there must have been poor workmanship in the fabrication. NCR 57: this has not been proved. The NCR describes there being a clash with a connection fin plate on Beam 18277. Other documents such as the daily record sheet (page 157 of Bundle N1) suggest that the plates were welded too close together whilst the e-mail dated 18 May 2010 (page 161) suggests that the fins were too far apart. There is simply confusion here as to what the problem really was. NCR 97: this has not been proved. The remedial work sheet (page 195 of Bundle N1) suggests that the work is "housekeeping". There is little or no description of there being any defect identified although page 202 talks about a "clash". There is insufficient evidence. NCR 159: this has not been proved, save in one respect. It has been proved that the defect highlighted at page 384 of Bundle N2 namely a lack of perpendicularity and an inconsistent gap within the fabrication demonstrates shoddy workmanship. Otherwise the complaint about web cheek plates fouling a beam is insufficiently explained by the file or Mr Pyle. NCR 161: this has not been proved. The file suggests that a top/bottom notch had to be enlarged but no explanation is given in the evidence, documentary or otherwise why this might be a tribute of all to pour fabrication. NCR 173 and 174: although the Claimant's Counsel classified these as falling within this categorisation, they relate on their face to beams being supplied 15 mm over the required length. That, in my judgement, represents bad workmanship in the fabrication and can not simply be explained by reference to tolerances. This is proved. NCR 178, 178a: this has been proved. Mr Pyle gave evidence that the defects present in two perimeter tray beams were that the bottom flanges were not fabricated with a notch to allow them to connect to the adjoining fin plate. I accept that evidence. NCR 197: the file indicates two defects, one which is said to relate to NCR 186 which I have rejected (see below). The other annotation is "hold “holes in fin plates misaligned with connecting beam”. No other detail is provided. I am not satisfied that this defect has been proved.

[203]The remainder of the NCRs raise miscellaneous defects. My findings on them are as follows: NCR 31: this was addressed in some detail by Mr Pyle who said that Beam 16214 was simply fabricated without allowing for any erection tolerance and that the beam end plates had been welded to the wrong ends of the beam and were upside down. I accept his evidence which is supported by the file of documents. This has been proved. NCR 44: I am confused by the evidence which suggests that there was a setting out problem in relation to a particular beam. That is not obviously the fault of CBUK and it appears that the remedial works, albeit involving cutting a beam, evolved to overcome the setting out problem. The claim in this regard is not proved. NCR 52: the file talks about web plates welded onto columns being "out of position" but little if any detail is provided. This claim has not been proved. NCR 98: the complaint is that connection holes on twin fin plates were "misaligned" on a column and a beam. Little if any detail is provided. This claim has not been proved. NCR 108: the complaint is based upon there being "a clash" between a column and the beam and, elsewhere, there is talk in the file about the misalignment. There is insufficient evidence. This claim has not been proved. NCR 139: the complaint is that skirt beams had been fabricated without being preset and the quality of welding was not as specified. Nearly £22,000 is claimed for those which is one of the larger NCR claims. Mr Pyle repeats information received from Mr Adams of Steelcraft about the preset or camber not being to specification but does not speak to this personally. There is no evidence in the file about poor welding. This claim is therefore not proved. NCR 179: Mr Pyle gave some detailed evidence in relation to this NCR. He said that there were two defects, the first being present in two columns with the splice plates on the lower columns being too far apart from one another, resulting in a clash between the splice plate on the lower columns and the upper columns shaft when the erectors tried to make the connection. This meant that the upper column would not fit over the splice plates on the lower column, so the connection could not be made. I accept his evidence to the effect that there was a workmanship defect in these respects in the fabrication. The second defect present on three remaining columns was that too much weld was present where the splice plates were welded to the lower column. This meant that when the upper column was lowered into position, it sat on the weld rather than sitting flush against the top of the lower column resulting in a misalignment between the connection holes. He said that there was a 6 mm discrepancy between the connection holes in the upper and lower column in these cases. I accept that evidence as demonstrating poor workmanship in the fabrication. This second defect is proved against CBUK. NCR 186: this is similar to NCR 98 and for similar reasons this claim has not been proved.

[204]As the quantification of these NCRs has been ordered to be dealt with at a later stage, I make no findings in that regard. Summary of Counterclaim Entitlement

[205]Consequential on the findings set out above, the total sums due to SRS by way of damages are as follows: Head of Counterclaim Sum Allowed Prolongation – 22 Feb to 19 April £105,088.50 Disruption –February to 18 April £10,256.00 SMD disruption Nil SRS Acceleration:a. A. Acceleration costs

b. B. Additional site resources

c. C. Senior Management £522,659.05

£29,305.82

£29,594.21 Mace Tower Crane cost £95,692.69 Contra charges £31,882.22 Total £824,478.49 Conclusion and Decision

[206]On the basis of the findings above, CBUK is entitled to £928,472.55 plus VAT from SRS by way of sums due under the Sub-contract against which SRS is entitled to by way of damages in the sum of £824,478.49 for delay and defects. In addition there are as yet unquantified findings of liability against CBUK for various NCRs. The VAT due to CBUK will only be due on any net balance after taking into account all damages due to SRS.

Cited in 1 later judgment

Trident House Development Limited v Mohammed Yousaf 2025