In June 2020 the UK Technology and Construction Court handed down its judgment in the case of Blackpool Borough Council v. Volkerfitzpatrick Ltd (2020)1. In this article the author reflects on the court’s decision and the lessons to be learnt when preparing the ECC contract documents and the importance of writing clear and concise scope (or works information in NEC3).
Background to the case
The council had appointed the contractor using an amended NEC3 Engineering and Construction Contract to design and build a landmark tram depot as part of a major upgrade to Blackpool’s historic tramway system. Work to build the tram depot was completed in May 2011 and in Spring 2012 the new tram service began operating. The defects certificate was issued in June 2012. A storm in January 2015 caused the depot roof to became detached. Following repairs and subsequent inspection, the council discovered corrosion of the steel components in the roof space (purlins and cladding rails) connecting the main structural frame to the roof and wall panels.
Design-life dispute
The Council claimed that significant parts of the depot did not comply with the 50 year design life as required by the contract and that the depot as designed and constructed was not suitable for an exposed coastal marine environment. The Council relied on its works information, identified in contract data part one, which specified a design life of 20 years unless otherwise stated in the Functional Procurement Specification (FPS). The FPS, included in an appendix to the Council’s works information, stated the ‘building structure’ should achieve a 50-year design life. The contract did not provide a definition of design life or ‘building structure’.
The contract also included works information provided by the contractor referenced in contract data part two. Attached to the contractor’s works information was a ‘technical design log’ stating a ‘minimum design life’ of 50 years for the ‘structural frame’ and 25 years for the ‘external shell’. The contractor contended that the design life of the wall cladding panels was 25 years and 20 years for the steel components.
The contract included an amendment to the standard form of the ECC3 stating that in the event of an inconsistency, the Council’s works information took priority over the contractor’s works information. The Council argued there was an inconsistency between the works information provided by the parties so the contractor’s obligation was to ensure the steel components complied with a 50 year design life as stated in the Council’s works information (FPS). The court did not agree. The problem was that there was no definition in the contract to clearly identify that the steel components were part of the “building structure” and no legal precedent or decisive British Standard for the court to rely on. HHJ Stephen concluded there was no inconsistency so the contractor’s works information prevailed and the design life of the steel components should be 20 years.
Discussion and lessons learnt
Works information is defined in clause 11.2 (19) of the NEC3 Engineering and Construction Contract (ECC3) as,
- ‘information which either
- specifies and describes the works or
- states constraints on how the contractor provides the works.’
The works information is a contract document identified in contract data part one and is therefore the employer’s works information. A main responsibility of the contractor is to provide the works in accordance with the works information (clause 20.1).
For a design and construct contract, the works information should state what design the contractor is to do, otherwise the default position is the employer provides the design (clause 21.1). With contractor design, the employer sets out its requirements which may be in the form of a performance specification providing standards and a description of what the final product must be capable of doing.
As in the Blackpool case, the employer may invite the contractor to submit its design proposals at tender stage by identifying, ‘Works information provided by the contractor for its design’ in contract data part two.
The ECC3 does not expressly state a hierarchy of contract documents. After the contract is signed, if the project manager or contractor becomes aware of an inconsistency between the employer’s works information and the contractor’s works information, they must notify the matter. The project manager is then required to give an instruction to resolve the inconsistency (clause 17.1). If the project manager decides the contractor’s works information is wrong an instruction may be given to change it to comply with the employer’s works information. This instruction is not a compensation event and therefore gives effect to the employer’s works information taking precedence over the contractor’s works information (clause 60.1(1)).
With design and construct contracts there is a risk that the contractor’s design, where provided, may not comply with the employer’s works information. Time should be spent reviewing tender submissions and correcting any differences before entering into contract. However, some employers amend the contract to include an order of priority with the intention for it to operate as a fallback position in the event of an inconsistency.
The difficulty, as demonstrated in Blackpool and other cases,3 is an order of priority clause cannot be relied upon where there is no inconsistency. The problem in Blackpool was that the employer’s works information was not sufficiently clear as to its requirements leaving a gap which was filled by the contractor’s works information affirming the position taken by the courts that the contract should be read as a whole.
Conclusion
Works information can be a substantial document comprising separate parts prepared by different people. Employer’s should take great care and time when preparing its works information to ensure requirements are unambiguous and consistent. NEC publish excellent guidance on how to prepare works information.4 Without proper co-ordination and alignment of the employer’s and contractor’s work information at tender stage there a risk of inconsistency. Amending the contract to include an order of priority clause may give the employer a false sense of security and should not be seen as an alternative to spending time getting the works information in order before entering into contract.
David Hunter
Daniel Contract Management Services Ltd
July 2020
1 Blackpool Borough Council v Volkerfitzpatrick & Ors [2020] EWHC 1523 (TCC).
2 This article refers mainly to the NEC3 ECC form of contract. Matters discussed here are materially the same under the NEC4 form noting that ‘Works Information’ is termed ‘Scope’.
3 RWE Renewables v JN Bentley [2014] EWCA Civ 150; Northern Ireland Housing Executive v Dixons Contractors Ltd [2019] NIQB 19.
4 NEC3 How to write the ECC Works Information (April 2013); NEC4 User Guide: Preparing an engineering and construction contract vol. 2.
An edited version of this article was first published in the NEC User Group newsletter Issue No.108 September 2020 (page 9) and can be downloaded here.