Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd (No. 2)

Contractual responsibility for temporary works depends on construing the agreement as a whole in its commercial and factual context. Where schedules are incorporated into the contract, their categories and descriptions may allocate different elements of work between lump-sum and cost-plus payment. A concluded antecedent agreement may be used where it gives clear guidance on the meaning of the later agreement. Commercial common sense may require a court to reject a literal construction which produces an impractical or commercially incoherent result. Design, drafting and fabrication of roof temporary works were connected with erection and therefore fell within the cost-plus provision, whereas temporary works for the bowl and arch fell within the lump-sum provision.

This was the trial of the eleventh preliminary issue in litigation concerning the Wembley Stadium project. The parties had entered into a Heads of Agreement and later a Supplemental Agreement which reduced the defendant’s lump-sum work and placed specified activities on a cost-plus basis.

The issue was whether, after 15 February 2004, the design, drafting and fabrication of temporary works for the bowl, arch and roof fell within the lump-sum provision for all remaining works, the cost-plus provision for erection and site works, or the schedule item described as “temp works – roof props”. The court determined the contractual allocation of those responsibilities.

1. Construction of the incorporated schedules. The schedules referred to in the Heads of Agreement became contractual documents. The category 1 schedule covered the design, drafting and fabrication of temporary works relating to the bowl and arch. Those works therefore fell within the £12 million lump sum.

2. The category 2 description “temp works – roof props”, read in context, meant all design, drafting and fabrication of temporary works for the roof, not merely the conversion of the toblerone sections. The quotation of £3.053 million, the absence of roof temporary works from category 1, and the practical connection between temporary works and erection supported that construction.

3. A concluded antecedent agreement may be considered when it gives clear guidance on the point in issue. Applying that principle, the Heads of Agreement confirmed that roof temporary works were outside the lump-sum scope. See Ladbroke Group plc v Bristol City Council [1998] 1 EGLR 126.

4. Clause 3.1 of the Supplemental Agreement was construed in accordance with the reasonable-person and commercial-context approach stated in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, and supported by Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] UKHL 54; [2004] 1 WLR 3251. Its effect was that fabrication of the listed items was excluded from the lump sum, but remained within the subcontract and was payable on a cost-plus basis unless replaced by a new agreement or notice under clause 8.

5. The words “erection and site works” in schedule 1 paragraph (c) were broad enough to include off-site costs connected with erection. Roof temporary-works fabrication, design and drafting were intimately connected with erecting the roof and could not sensibly be separated from it. They therefore fell within paragraph (c), as well as within “temp works – roof props”.

6. The court answered preliminary issue 11 by allocating bowl and arch temporary works to paragraph (b), and roof temporary works to paragraph (c) and schedule 3 Part A. CB succeeded on responsibility for payment for the roof temporary works.

The judgment records that the decision on the first ten preliminary issues was under appeal, but the present judgment was given at the parties’ request without waiting for the Court of Appeal’s decision. No appellate decision on the present issue is stated.