Henry Boot Construction v Alston Combined Cycles

Under Clause 52(1)(b) of the ICE Conditions, rates and prices in the Bill of Quantities must be used as the basis for valuing dissimilar varied work so far as may be reasonable. The enquiry concerns the reasonableness of using the rate or price for the changed work, not whether the rate was intrinsically reasonable or was calculated by mistake. Contractual rates cannot generally be corrected through the variation valuation process. The scale and nature of the variation may justify a fair valuation under Rule 3, but the Engineer or arbitrator may also consider whether the available information permits a reasonable use of the relevant rate or price. The award was remitted for reconsideration on that basis.

Henry Boot Construction Ltd appealed from an arbitrator’s valuation of additional temporary sheet-piling works under the ICE Standard Conditions of Contract, 6th Edition. Boot’s tender price contained an error, and the arbitrator declined to use the relevant price as the basis for valuing dissimilar work in other parts of the power station. He instead made a fair valuation under Clause 52(1)(b) and Rule 3.

The High Court answered the certified question in Boot’s favour and remitted the award for valuation under Rule 2. The employer appealed. The central issues were whether the mistake in the original price could be considered and whether difficulties in extracting and applying a rate from the available information could justify declining to use it.

1. Appeal allowed and award remitted. The arbitrator was required to reconsider the valuation under Clause 52(1)(b), applying the Court’s construction of Rule 2.
2. Lord Lloyd and Lord Justice Beldam held that the phrase “so far as may be reasonable” concerns the use of the rates or prices as the basis for valuing the changed work. It does not permit the Engineer or arbitrator to disregard a rate because it was inserted by mistake, is intrinsically too high or low, or produces an unfair result. Clause 55(2) confirms that errors, omissions and wrong estimates in the contractor’s Bill of Quantities are not rectifiable.
3. Clauses 52(2) and 56(2) provide limited exceptions. They permit alteration of rates where the nature, scale or quantity of the variation itself makes their use unreasonable or inapplicable. They do not authorise correction of the constituent error in the original rate.
4. Lord Justice Ward disagreed with that wider exclusion. He considered that the magnitude of a mistake and the consequences of using the resulting price could be relevant to whether its use as a valuation basis was reasonable. He nevertheless agreed that the award should be remitted if the Court rejected that approach.
5. The Court agreed that the arbitrator could investigate whether the available information was sufficient to extract and relate a rate to the dissimilar work. The award was therefore remitted so that he could reconsider the use of the price while treating the existence of the mistake as irrelevant.

• Court of Appeal (Civil Division): Henry Boot Construction v Alston Combined Cycles [2000] EWCA Civ 99. Appeal allowed and the award remitted for reconsideration.
• Queen’s Bench Division: The certified question was answered in the negative. The award was remitted with a direction to value the work under Clause 52(1)(b) using the relevant contract price as the basis.
• Arbitration: The arbitrator had made a fair valuation under Rule 3 after declining to use the contract price under Rule 2.