Tube Tech International Ltd v Technip-Coflexip SA & Ors

Where a consortium creates and controls a project through companies using the consortium’s name, its members may hold those companies out as authorised to contract in the consortium’s name. Ostensible authority may arise even though the signatories lack actual authority and the counterparty believes it is contracting directly with the consortium.

Fixed contractual prices are not generally subject to later revaluation by reference to personnel or equipment costs merely because the price is described as estimated. Approximate staffing figures may be descriptive rather than contractual obligations. Express adjustment clauses govern the circumstances in which additional charges or reductions arise.

Tube Tech supplied specialist pipe-cleaning services for a liquefied natural gas plant in Nigeria. It claimed unpaid sums under four contracts against five defendants associated with a project publicly known as TSKJ.

The principal issues were the identity of the contracting parties, whether the first four defendants were bound through ostensible authority, the construction of the pricing and staffing provisions, liability under an early-completion incentive arrangement, the enforceability of an alleged interest term, and the defendants’ counterclaims for overpayment and lack of substantiation.

1. Contracts 1 and 2. The documents and surrounding circumstances established that Tube Tech contracted with the first four defendants, understood collectively as TSKJ. The fifth defendant’s signatories lacked actual authority to sign for the consortium, but the consortium had created the project structure, operated it through London management, and allowed its name to be used by the Madeira companies and TSKJ Nigeria. The fifth defendant and its authorised signatories were therefore held out as having authority to contract for TSKJ.
2. Construction and pricing. The contracts were for specialist services, not merely the supply of labour and equipment. References to estimated prices did not create a general obligation to revalue the contracts by reference to man-hours or materials. Approximate personnel numbers were descriptive and were not conditions of entitlement to daily charges. No general term requiring documentary justification, cost accounting and final reconciliation was implied.
3. Contract 2A. The early-completion incentive arrangement was made with TSKJ, which was liable for the £35,000 payment. The evidence showed that TSKJ regarded itself as a party and processed the invoice through its established approval arrangements. In any event, having received the relevant money, it would be liable to pass it to Tube Tech.
4. Contract 3 and interest. An oral agreement required payment of £10,000 per day for retaining specified equipment on site. The proposed 8 per cent monthly interest term was never agreed.
5. Counterclaims and consumables. The defendants’ pro-rating arguments failed. Payment of one invoice waived any failure of substantiation and gave no entitlement to repayment absent a pleaded restitutionary or set-off claim. Consumables were recoverable only to the extent permitted by the contractual wording and actually applied, or reasonably sent to site for the contract. The court allowed £76,994.98 for contract 2 consumables.

Judgment was entered for Tube Tech against the first four defendants for £538,791.67 plus interest. The claim against the fifth defendant and the counterclaims were dismissed.