National Paediatric Hospital Development Board v Bam Building Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Michael Quinn
• Judgment Date: 27 February 2024
• Neutral Citation: [2024] IEHC 114
• Docket Number: [2020 2502 P]

Between

National Paediatric Hospital Development Board

Plaintiff

and

Bam Building Limted

Defendant

[2024] IEHC 114

[2020 2502 P]

THE HIGH COURT

Judgment of Mr. Justice Michael Quinn delivered on the 27th day of February 2024 (Discovery of documents)

1 . On 14 August 2017, the parties entered into a contract for the construction by the Defendant of a new children's hospital at the St. James Hospital Campus in Dublin 8.

2 . The contract divided the works into two phases. Phase A was the basement, substructure, underground and enabling works. Phase B comprises the superstructure and all other works.

3 . The Plaintiff seeks a declaration of validity of an instruction given by it to the Defendant on 8 January 2019 (“the Instruction Date”) to commence the Phase B Works. The validity or otherwise of the Phase B Instruction is of central importance for both the timing and the final cost of the project.

4 . The contract provided that Phase A works would commence on 2 October 2017. Clause 9.1.3 provided that the Phase B Works would commence when the Plaintiff issued the Phase B Instruction. I shall return to the terms of that clause in more detail later. However, the importance of a valid Phase B Instruction is as follows:-

(a) it obliges the Defendant to commence the Phase B Works and to proceed diligently to substantial completion by a programme of dates provided for in the contract.

(b) it records the ‘Adjusted Contract Sum’ and ‘Guaranteed Maximum Price’ under the contract.

(c) the Defendant could commence the Phase B Works and receive payments in respect of those works only after the Phase B Instruction has been given.

(d) prior to the giving of a valid Phase B Instruction the Plaintiff is not prohibited from seeking tenders or engaging with other contractors for all or part of the Phase B Works.

5 . The Plaintiff claims that the Instruction was validly given and that the necessary preconditions for doing so, identified in Clause 9.1.3 had been complied with.

6 . The Defendant says that the Plaintiff purported to issue the Phase B Instruction on 8 January 2019 at a time when the preconditions for doing so had not been complied with. In particular it asserts that a pre – Phase B Engagement Process which required final coordination of the design for the Phase B Works had not been completed.

7 . This judgment relates to an application by the Defendant for an order for discovery of documents. The parties have reached agreement as to a number of categories, but disputes remain in relation to two categories and disputes as to the date range applicable to discovery remain in respect of eight categories.

The contract

8 . Clause 9.1.3 of the contract is of such central importance to the case and to the identification of issues relevant to discovery that it is appropriate to quote the clause in full. The second sub-paragraph below is the most important for the issue I am determining.

9 . Clause 9.1.3 provides as follows:-

“ On the Starting Date [2 October 2017], the Contractor shall start the Phase A Works under the contract, provided that the Contractor may start the Enabling Works and Works under the Letter of Intent prior to the Starting Date.

The Contractor shall start the Phase B Works under the contract when so instructed by the Employer's Representative [Provided that the Adjusted Contract Sum has first been ascertained by the Parties or determined by the Expert], the Employer's Representative may issue such an instruction at any time after the Starting Date. (On this application the parties have attached no importance to the parenthesis, and treat the proviso has applicable).

The Contractor shall, unless the Employer's Representative directs otherwise, proceed regularly and diligently in order to achieve substantial completion of the Works and each Section by its Date for Substantial Completion.

For the avoidance of doubt, the Contractor shall not commence and shall not have an entitlement to commence or receive payment for the Phase B Works unless and until instructed to commence in writing by the Employer's Representative.

Nothing in this Contract shall prohibit the Employer from seeking tenders for all or part of the Phase B Works and/or Facility Maintenance Services and/or engaging another contractor to carry out Phase B Works and/or Facility Maintenance Services prior to an instruction to the Contractor to start the Phase B Works.

If, after the end of the first nine (9) months after the Starting Date, the Employer's Representative instructs the contractor to proceed with the Phase B Works (subject to sub – Clause 10.7.2) there shall be added to the Contract Sum an amount for the expenses for the Contractor's procurement team (excluding profit and loss of profit and any costs associated with the Works) unavoidably incurred by the Contractor to provide the support and cooperation required by the Employer from the end of the first nine months after the Starting Date until the conclusion of the pre – Phase B Engagement process”.

10 . It was envisaged that the pre – Phase B engagement process would last for no more than nine months. The relevance of the last sub – paragraph quoted above is that if this process took longer than nine months, as it did, the Plaintiff would compensate the Defendant for expenses associated with the extended time.

11 . The Plaintiff's case is that it complied with the proviso “that the Adjusted Contract Sum has first been ascertained by the Parties or determined by the Expert”, in that the Adjusted Contract Sum was ascertained prior to giving the Phase B Instruction. The Defendant says that the Adjusted Contract Sum and Guaranteed Minimum Price cannot be ascertained unless the design of Phase 2 is complete, and says that this had not occurred on or before 8 November 2019.

12 . The contract contains two appendices which are said to be relevant to the giving of the Phase B Instruction. Appendix 2 governs the Pre – Phase B Engagement Process, with an exhibit which is described as the “Process for Determination of Adjusted Contract Sum”. Appendix 3 is described as governing the “Adjusted Contract Sum and Guaranteed Minimum Price”.

13 . The Adjusted Contract Sum is defined as the Phase A Initial Price (as adjusted prior to issuing the Phase B Instruction) plus the “Ascertained Phase B Final Sum”.

Chronology

14 . Since there are disputes as to the date range for 8 categories of discovery, the chronology is important.

15 . Following the signing of the contract on 14 August 2017 and commencement of works, the parties engaged to progress the pre – Phase B engagement process.

16 . The Plaintiff says that in a meeting on 1 November 2018, attended by representatives of both parties, the Adjusted Contract Sum and Guaranteed Maximum Price were ascertained by agreement.

17 . On 2 November 2018, the Plaintiff emailed the Defendant confirming a “record of the agreement” which recorded the Adjusted Contract Sum at €887,722,679.76 and the Guaranteed Maximum Price at €909,915,756.2.

18 . The parties engaged further over the following weeks and on 29 December 2018, the Plaintiff issued a draft of the Phase B Instruction. It says that on 2 January 2019 the Defendant replied on the draft with “a single comment to correct a typographical error”.

19 . A meeting of the parties took place on 8 January 2019. The Plaintiff says that the final document to comprise the Phase B Instruction was updated in the course of that meeting, culminating in the issue of the Phase B Instruction letter that evening.

20 . The Phase B Instruction is a letter to the Defendant dated 8 January 2019 from the Plaintiff's Representative, Claire White, a director of O'Connell Mahon Architects. It confirms that the Plaintiff, the Defendant and certain named sub-contractors “have now completed the Pre-Phase B Engagement Process”.

21 . The letter continues:

“BAM and the Employer each have acknowledged and accepted that:

(a) the Adjusted Contract Sum under the Main Contract is €887,772,697.10; and

(b) the Guaranteed Maximum Price under the Main Contract is €909,915,764.53.

The Adjusted Contract Sum under the Main Contract and the Guaranteed Maximum Price under the Main Contract is in respect of the works which are the Works described in the Works Requirement in the Main Contract (being the contract of 14 August 2017) as amended by the documents listed in Schedule One.”

22 . The Instruction identifies the Date for Substantial Completion as 29 August 2022.

23 . The Plaintiff relies on the Phase B Instruction letter as a record in writing of the following:-

(a) that the parties had completed the Pre – Phase B Engagement Process;

(b) that the parties have acknowledged and accepted the Adjusted Contract Sum and the Guaranteed Maximum Price;

(c) that the Defendant had acknowledged and accepted that documents listed in the schedule to the letter “reflect the agreed basis of the Adjusted Contract Sum”;

(d) that each of the Adjusted Contract Sums (including adjusted contract sums for sub-contractors) referred to in the Instruction included a number of provisional sums set out in pricing documents and that the scope programme and preliminaries for these items were agreed by each party.

Events after 8 January 2019

24 . Representatives of the parties attended a “collaboration workshop” on 17 and 18 January 2019. The Defendant says that in the course of this meeting it became clear to it for the first time that certain aspects of the design of the project were not complete.

25 . In a meeting on 19 February 2019, the Defendant informed the Plaintiff that it intended to challenge the validity of the Phase B Instruction.

26 . On 24 May 2019, the Defendant gave notice to the Plaintiff pursuant to the dispute resolution clause in the contract (Clause 13.2) that it intended to refer to conciliation a dispute as to whether the...