‘Neutral Citation Nomber: [2015] EWCA Civ 712 Case No: AI20 14/1684 INTHE COURT OF APPEAL (CIVIL DIVISION, ‘TECHNOLOGY AND CONSTRUCTION COURT [HE HON. MR JUSTICE AKENHEAD HY-165 )UBEN'S BENCH DIVISION, Royil Courts of Justice ‘Strand, London, WC2A 2LL w: onja7/2015 Before LORD JUSTICE JACKSON LADY JUSTICE GLOSTER aia LORD JUSTICE FLOYD Between : OBRASCON HUARTE LAINSA, Clima ‘Appellant and - HER MAJESTY’S ATTORNEY GENERAL FOR Defendant GIBRALTAR Respondent ‘Mr Stuart Catchpole QC xd Mr Andrew Fenn (instrcied by Pinsent Masons Lip) fo the ‘Claimant/ppellant Mer Nicholas Dennys QC and Ms Fiona Parkin QC (insiiced by Corbett & Co International Construction Lawyers and by Tviay Stagnetto Neish) forthe DefendantRespondent ‘Hearing dates : Tuesday 19" Muy 2015, Wednesday 20° May 2015 and Thursday 2" May 2015 Approved Judgmentduet aoe om che, cy AGat ae Lord Justice Jackson: “This judgment is in nine parts namely: Part 1 Inodacin Pungzphs 108 | _| Part 2.The fects Paragraphs 91069 (0 Bockgroun sory an th once Pagans 91030 Gi) The couse of events from contract to) Paragraphs 3110 69 termination Part 3, The presert proceedings Paragraphs 70 to 78, ‘Part, The sppeal tothe Court of Appeal Paragraphs 79 10 82 Part 5. Ground 1: Unforesesable physical | Paragraphs 83 10 100 conetions within clase 4.12, Pat 6. Grounds ? and 3: The draft fil guidelines | Paragraphs 101 to 112 and the June 2011 letters Part. Ground 4: Termination under clase 15.22) | Paragraphs 113 40 130, Part 8, Grounds 5 and 6: Termination under clauses | Paragraphs 131 to 147 15.20) and 152(00) art 9. Executive summary and conclusion Paragraphs 148 to 151 Part. 1Intoduction “This is an appeal by a Spanish civil enginecring conracor, which was engaged upon constricting a road around Gibraltar Airport, agsinst & decision of Mr Justice ‘Akonhead (the juige") tht the employer effectively terminated the contact under Clause 15 of the FDIC Yellow Book Conditions, The contact also challenges the judge's decisions that the amount of ground costamination was reasonably oresceable by an experienced contractor and that certain documents issued by the Engineer did not constitute variation instructions. ‘The principal issues in this appeal ae i) whether the judge's decision about the actual and foreseeable amounts of contamination are open to challenge; (i) whether the fmployer was enitled to terminate in citcamstanees where the contacter had ba 82180020 npett Ans te sat ee on, oy acetate embarked upon an unnecessary re-design, obtained approval in principle forthe re- design, but did no work while wating for thers to cet the re-desin, ‘The contractor was Obrascon Hoare Lain SA (‘OHL"). OH is claimant in the action and appellant inthis court. The employer wes the Government of Gibraltar (GoG") ‘GoG, represented by Her Majesty's Atlorney General for Gibralter, is defendant in the action and respondes in this cout, (Other onpanistions which wil feature in the narative of events ae ‘Agus ¥ Estructura SA ("Ayesa"), Spanish firm of structure Engineers; Donaldson Associates Ll (*Donadson"), a British firm of structural Engineers Environmental Gain Lid (*Bngain", a British finn of environmental engineers; Gilford Li (“Giffon”), a British Hm of civil engineers; Gibvaltar Land Reclamation Lid CGLRC),a company tepstred in Gibralter Laboratorios Himalaye SL (*Himalays"), an Andalusian company specialising in ‘ecuptional hygiene and environmental analysis Sergeyco, « Spanish rm which carries out geotechnical investigations, In this Judgment I shll use the following abbreviations: AIP" means approval in principle, “CEMP” means constuction environmental management plan, “PIDIC” means Fédation Internationale Des Ingénieurs-Consels “ED” means Engineer's instruction. MOD" means Ministry of Defence. “PAH” means polyesclic aromatic hydrocarbon. “PEE” means pavement exposed excavation, an operation explained in paragraph 44 below. "ST Vs" means Soil Target Values, TAA" means Technical Approval Authority Anyone seeking a fall narative history of events should read the comprehensive judgment of the judg, which canbe found on the Bill website as Obrascon Huarte Lain SA y Her Majesy's Attorney General for Gibraltar (2014) EWHC 1028 (TCO), ‘That judgment spans 170 pages. My own prévis ofthe story is foewsed upon matters ‘which are relevant othe appeal ‘Alter these introductry remarks Ems now tara to the facts, Part 2. The facts (Background history and ke contract 9. {In 1713 Spain ceded Gibratar 10 the United Kingdom under the Treaty of Utrecht ‘The UK and the ioc! population have occupied Gialtar continuously since that sie. The teritory was attacked and hesioged by Spain during the eighteenth century. 11 became an importnt naval bese for Britain during the Napoleonic Wars, the (Crimean War and the vo World Wars. The long military history ofthe tersitory has an impact onthe issues in the present Htigaton, ma 950.29 pestve abe ss ats, om Ante 10. 1. 2. 18. 1. 15, 16. A relatively narrow isthmus a the northern end of the tettory connocts Gibraltar to the mainland of Spain, Gibraltar Aiepor sits on the flat part of the isthmus. A main road ealled Winsten Caureill Avene leads southwards from the Spanish border (0 the centre of Gibraltar. That road runs over the airport runway. This meuns thatthe road hus to be closed whenever aircraft are landing or taking of. That in tum causes ‘congestion 1 2005 GoG deciced to resolve this problem by constructing @ new dual cariageway road whieh would skit round the side of the aiport ad ran down the east coast of the isthmus, The plan was forthe road to passthrough a twin bore tunnel under the ‘astern end of the runway. 1 2006 GoG retained Giliord us consulting engineers to advise on the project. GoG retsined GLRC as project manager forthe design and constuction of the new road and tunnel ln April 2007 Gittrd produced » contaminated Jand desk study ("the desk study"), ‘which reviewed th history of the site and the degree of contamination likely to be present. A plan annexed (0 the desk study shows the site divided into six areas forming & semi-citle around the north, east and south sides of the airport. Area 1 is & sieip along the sou of the aisport. Area 2 is atthe southeast corner. Areas 3 and 4 ‘un up the cast side of the airport to the northeast comme, Areas $ and 6 form sip ‘long the nomh se of the sipor. The desk study oulies the history of each area, Provious uses of the ste include a racecourse, a rifle range a the eas! end of the ‘racecourse and mush military activity, The bats ofthe nineteenth century rifle range ‘were in Areas 3 and 4. The Royal Navy established an emergency landing buse on the site in 1939, Aer the Seoond Word War the airfield was pot to civilian use. The ies study identifies a wide range of likely sources of contamination. The desk study also ideale the seed to protec: the groundwater passing beneath the site. This is a source of drinking water forthe popalation of Gibraltar. GoG engaged Sergeyeo to carry out» grownd investigation atthe site. Sergeyeo sunk number of boreholes and tial pits. They extracted samples which they tested for ‘contamination, Sergeyco set out the results of their investigations in a report dated Sly 2007, In onder to proceed with the project, GoG was required to carryout an environmental impact asessment and obtain planning permission. Like any other developer GoG fad to comply vith the ‘Town Planning (Environmental Impact Assessmeat) Regulations 2000 and the EC EIA Directive 85/337/GEC (az amended by Directive ST/LWEC), Por tis purpose GoG engaged Engain to prepare an Environmental Statement Engain produced is Environmental Statement in November 2007. The Environmental Statement is essentially an interpretation of, and commentary oa, the information ‘whieh had boon gathered concerning the site, The Fnvironments Statement estimates thatthe project will equi excavation of approximately 200,000" of spoil. This will come principally fom wo sources, namely sipping the surface of the site and excavation forthe anno together with ramps leading down othe tunnel at each end ‘The Environmental Statement estimates that approximately 10,000m of the spoil me 930)2050020 ntut ns sn ann, tL Asatte 0. 18. 19. a. excavated will be contaminated. The Environmental Statement uses the STVs set out ‘nan appendix a the criteria fos contamination. ‘The Favironmental Statement describes the 200,000m of spoil as “not significant, ‘This means that if all the materia is tansported olan sites in Spain, i will not Ihave & significant environmental impact That is because 200,000m is a relatively small quantity competed fo the toll volume of material disposed of in Spain every sear Paragraphs 35 and 36 of chapter 10 ofthe Environmental Statement say “3.5 Wherever possible construction waste will be re-ised on sie or on other development projects in Gibraltar. ‘Where constuction waste has 1 he disposed of it may be taken to registered landfill in Spain. This will be based on the most commercially and environmentally advantageous option. 36 The prediced limited quantity of contaminated material may be left in-situ and capped with a boundary layer (based on good practice guidance) to prevent contamination spread, However, the contaminated. waste may also be disposed of at approved facilities in Spain, These options are assessed jn the Land Contaminated Chapter (Volume 2: ‘Technical Reports)” ‘The plarase “may be left in-sia’” in paragraph 3.6 is shorthand for removing and subsequently re-using on-site | November 2007 GoG invited number of contractors to tende forthe design and ‘onstruction ofthe Gibraltar Airport and Frontier Acoess Rosd, including the tunnel ‘under the eastern end of the runway. The invitation to lender included copies ofthe ‘desk study, the Sergeyeo report and the Environmental Statement, Tender Bulletin ‘number 1 informed tenderers thatthe contactor would be responsible for disposing of spoil and that no offsite storage area had heen identified. In other words it was expected that all or most waste materials from the ste would be removed to lanl slies in Spain, O1TL emerged as the succesful tenderer, On 21" November 2008 GoG snd OIL. ‘entered into @ written agreement, under which OHL would design snd construct the Gibraltar Airport and Frontier Access Road for the sum of £30.281,068.36. The time for completion was two years eter the commencement da, 1* December 2008, The ccontrct documents included an Ilustative Design prepared by Gifford, The ‘contactor was not otigd to adopt the Mustrative Design, Subject to some amendments, the General Conditions of Contract were the Conltions ‘of Contract for Plant and Design-Build, published by FIDIC, frst edition, 1999. This is sometimes knows as the FIDIC Yellow Book. The Conditions included the following:nen apn he hig ex Aah “1.1.68 Unforeseeable” means not reasonably foreseeable by aa experenced contactor by the date for submission ofthe Tender 4.10 Site Data ‘The Employer shall have made available tothe Contractor for his information, prior to the Base Date, all relevant data n the Employer’s possession on sub-surface and hydrological conditions at the Site, including ‘environmental aspects. The Employer shall simiasly make available t0 the Contractor all such dat which come into the Employer's possesion after the Base Date ‘The Contacior shall be sesponsible for intexpreting all such data To the extent which was practicable (aking account of ost nd time), the Contractor shall be deemed to have obtained all” necessary information as to risks, contingencies and. other citcumstances which may influence or affect the Tender or Works. To the sume exten, the Contractor shall be deemed to have inspected ‘and examined the Site, its surroundings, the above data fand other available information, and’ 10 have been Satisied before submitting the Tender as to all relevant mates, including (without imitation) (@) the form and nature of the Site, including sub- surfsce conditions, (ie hydrological and elimatie codicons, (© the extent and nature of the work and Goods necessary forthe execution and completion of the ‘Works an the remedying of any defets, (@) the Laws, procedures and labour practices of the County, and {e) the Conteactr’s requirements for access secommodation, faites, personnel, power, transport, water and other services. 4.1 Sulfiency of the Accepted Contract Amount ‘The Contractor shall be deemed to: (0) dave siisied himself as to the correctness and sufficiency ofthe Accepted Contraet Amount, andIn Ard ect ade, 42 (0) have based the Accepted Contract Amount on the ata, interpretations, necessary information, inspections, examinations and satisfaction as to all re-evant matters referred to in Sub-Caused 4.10 [Site Dual and any further data relevant tothe Contractor's design, Unless otherwise stated in the Contract, the Accepted Contract Amount covers all the Contactors obligations under the Contract (including those under Provisional Sums, if any) and all things: necessary for the proper Aesign, execution and completion of the Works and the remedying of any defects ‘Unforeseable Physical Conditions In this Sub-Ciause, ‘physical conditions” means natural physical conditions and man-made other — physical obstrucions end pellutans, which the Contactor encounters at the ‘Site when executing the “Works, including, sub-surface and hydrological conditions but Ifthe Contractor encounters adverse physical conditions which he considers to have been Unforesceable, the Contzacor shall give notie to the Engineer as soon as practicable, ‘This notice shall describe the physical corlitions, so that they ear be inspected by the Enginecs, and shall set out the reasons why the Contractor considers them 10 be Unforeseable. The Contactor shall continue executing the Works, using such proper and resonable measures 3s are appropriate for the physi! conditions, and shall comply with any instructions which the Engineer may give. If an instruction constitutes a Variation, Clause 13 [Variations and Adiustmont] shal apply If any to the extent that the Contactor encounters physica nitions which are Unforeeceable, gives such noice, ma suffers delay andor incurs Cost de to these cconctions, the Contactor shall be entitled subject to Sub- ‘Clause 20.4 [Comtactor's Claims) to: (a) an extension of the time for such delay, if completion is orwill be delayed, under Sub-Clause 8.4 [Extension of Tne for Completion}, and (©) payment of any such Cost, which shal! be included in the Contract Price,Intute ec hm, tL AGet Ghae ‘After receiving such notice and inspecting and/or investigating these physical conditions, the Engineer shall provoe in accordance with SubClause 3.5 [Determinations to apee or dotermine () whether and (if fo) 1) what extent these physical conditions were Unforesecale, and (i) the malters described in sub- paragraphs (a and (b) above related to this extent However, before additional Cost 8 finally agreed or determined under sub-paragraph (i), the Engineer may also review whether other physial condions in similar pans of the Works GF any) were more favourable than ‘ould seasonably have been forescen when the Contactor submited the Tender. If and f0 the extent that these mare favowable conditions were encountered, the Engineer may proceed in accordance with Sub-Clause 3.5, [Determinations to agyee or determine the reductions in Cost which were due fo these conditions, which may be Incluced (as deductions) in the Contact Price and Payment Centficates, However, the net effect of all fdjustments under sub-paragraph (b) and all these reductions, for all he physical conditions encountered in Similar pants of the Works, shall not esult in a net Fedicton in the Contact Price ‘The Engineer may take account of any evidence of the physical conditions foreseen by the Contractor swhen Submiting the Tender, which may be made availble by the Contractor, but shall not be bound by any such evidence. 5.1 General Design Obligations ‘The Contractor shall carry out, and be responsible for, the design of the Works. Design shall be prepared by ‘qualified designers who are engineers or other professionals who comply with the criteria (any) stated ‘he Fmplover’s Requirements. Unless otherwise stated jin the Contract, the Contractor shall submit to the Engimer for consent the name and particulars of each proposed designer and design Subcontractor ‘The Contactor warrants that he, his designers and design Subcentractors have the experience and capability nocestey forthe design. ‘The Contactor undertakes that the designers shall be available to atlend dseassions with the Engineer atoll easonsble times, until the expiry date of the relevant Defects Notification Period. 942150920 ratenet eee ot bs Aste ‘The Contractor shall be responsible forthe design of the Works. The Contractor will take responsiblity for the Employer's Requirements as if they were Contractor's Documents. The Contractor is deemed to have checked that the Employer's Requirements are free of errors, omissions and inaccuracies and will have 0 claim in respect of anything contuined inthe Employer's Requirements, Any data or information reesived by the CContracor, whether fom the Fployer or otherwise shall rot reliove the Contractor from responsiblity for the the correct principles to be applied to the (quantiticaion of each party loss as a consequence of 2. In respect of the question in paragraph 1(b) above, the purpose is te examine the bases each party bas pleaded for ‘quantifying is claims for termination ard determine which of those Bases are correct. It is not intonded to include an ‘examination of the actual quantification itself or any matters regacing beterment, mitigation or any ober factors that may limit or zed the quantam of any damages payable.” ‘The court ordered the parties to prepare alist of sub-isues which wore “entra” to the determination of those two questions. The lawyers set about tha task with gosto ‘They produced a list of thiay eight sub-issues which they regarded as central tothe ‘ovo questions before the court ‘The tral of the preliminary issues and sub-issues took ple before Me Fustice ‘Akenbead in November and December 2013. There was a final day for oral closing submissions in Fanory 2014 ‘OH. caled the following fastul witncase: Me Dosce, OIIL's project manager; Me Garcia, the construction manager; Mr Castellano, the technical manager; Mr Portal, design’ manager; Mr Alcazar, @ technical architect who was concsrned with ‘occupational health and who commissioned the Himalaya report; Mr Major, partner St Himalaya: Mt Herne, «decor of OH GoG called seven factual witnesses namely: Mr de la Paz, who was Engineer under the contract from December 2009 onwards; Mr Gi, who was Go's Chief Technical Officer and the TAA under the contract, Mr Soiza, GoG's Senior Environmental Officer; Mr Cail, an environmental engineer with Clarke Bond, a firm which assisted GoG in the later period; Mr Nuljen, an aeronautical enginect, who was concerned withthe safety of the airport; Mr Oriel, the managing director of GLRC;Jotun Aad Ac hi ow, ‘m.v Ac wone 6, n. %8. Mr Pardo, a propery developer who asised GoG on the project. GoG relied upon the witness statement of Mr Garrat, who was the Engincer under the contract ustil December 2009, Mr Garratt was unable to attend the trial duet lines, “The judge heard expert evidence in five disciplines namely design, geotechnical cengincoring, contamination, health & safety and programming, For present purposes 1 need only refer tothe contamination experts. They were Mr Wouters for OHL and Mr Hall for GoG. The judge found Mr Wouters to be an unsttisfactory witness. in several respects. The judge found Mr Hall 1 be an excellent witness, who was well, prepared and protired well-reasoned views. The judge prefered the evidence of Mr Hall to that of Mr Wouters on all points where they disagreed "The judge handed down his eserved judgment on 16" April 2014, He found in favour ‘of GoG on the preliminary issues. T would summarise the judge's findings and ‘conclusions a follows: (The amomnt of contaminated soil which OHIL encountered was not more ‘han an experienced contractor should have foreseen, Therefore OHL is not cnlledta-an extension of time or addtional payment under clause 4.12 of ‘he Conditions in respect of contamination (G) _There was no health and safety problem which necessitated abandoning the original taal design. I was neither necessary nor reasonable for OH. 10 undertake the re-sign (ii) ta relation to the notes to correct dated 16" May 2011, GoG was ented to rely upon he matters identitied in paragraph 56 above as 1(a), 1(D), 2 and 3. (OHI. fake to take the rectification sleps required. Those matters were sufficiently serious to justify termination, iv) OFL’s flue to comply with the second notice to correct, dated S July 2011, was not sufficiently significant to justify termination. (©) As at 28" July 2011 OH was entitled w only one day's extension of time, ‘That extension was due in respec f rack which was unfocseeable. (ei) Prom 20€9 onwards untt 28" July 2011 OHL, in breach of cause 8.1, failed to proceed with ve expedition and without delay. (il) GG teraineed the contract permaat 19 clause 15.2(0), 15.200) and 15.2(0K. (ill) Pollowing that termination, GoG is ented to the relief provided for by ‘clauses 153 and 154 of the Conditions. (OWL. was uparived by the judge's decision. Accordingly it appealed to the Court of Appeal at 2180920 neeoe Ang a ata, OL» AD tae 1%. 80, 81 #3, 4, Pu 4 The appeal tothe Court of Appeal [By an appellant's note fled on 28" May 2014 OHI. appealed tothe Court af Appeal fon seven grounds, “hose grounds were pruned to si in the appellant's skeleton argument In summary OHL's grounds of eppeal are as follows 1, The judge erred in holding that the quantity of contamination which OHL ‘encountered ws foresceable by an experienoed contractor. He wrongly rejected ‘OHIL's claim for unforeseeable physical conditions within clause 4.12 of the ‘Conditions of Contract. 2. The issue of the draft il guidelines constituted a variation instruction, The judge cred in failing t0s0 hold 13. The Engineer's letters dated 1" and 8 June 2011 concerning the disposal of excavated materials constituted variation instructions The judge erred in ung to so bold 4, ‘The judge ered in holding that GoG lnad terminated the contract pursuant to clause 15.2) of the Conditions 5. The judge erred in holding that GoG had termined the contract pursuant 10 clause 15,20) ofthe Conditions 6. ‘The judge erred in holding that GoG had terminated the contract purseant to clause 15.2(€() of the Conditions. The appeal was head on 19, 20" and 21* May 2015, Mr Start Catehpole OC, leading Mr Andrew Fenn appeated for OHIL. Mr Nicbolas Dennys OC, leading Ms ona Parkin OC appeared for GOG. am grateful wo all counsel fr their assistance, 1 am also grateful tte solicitors on both sides for limiting the bundle to documents ‘which we actly nesded must now address the individual grounds of appeal, starting with the issue of unforeseeable physicl conditions under clause 4.12. ‘Par S. Ground 1:Uinforeseeable physical conditions within cause 4,12 ‘The ground contamination arose from the military activites on the site over previous ‘centuries and ftom te use of the site an airfield inthe twentieth century. Soldiers shooting onthe rifle range inthe nineteenth century would have discarded fed waste ‘rom bullets. Ainfiekl atvities would have generated forher contamination, for camp, sitcraft fuel and subsinces wsed for de-icing runways. All these matters ‘were clearly spelt ou! in the desk suudy provided to tenderers in 2008. Indeed one of the plans annexed tote desk study showed the rifle ange atthe ort east comer of ‘he isthmus, with the buts in Areas 3 and 4. ‘That was where the tunnel was due 0 be bait Fr the most part the contamination was confined ta the made ground, although some of the hydrocarboas penetrated deeper, Inthe tunnel area (where the most sigaificant at ays pesume ape ct hg AGF Grae 7 68. 0. on ‘excavation was required) the depth of made ground varied between 1 mete and 5.4 ‘mclzes, with an average depth of 2.5 mietzes: see puragraph 2.14 ofthe judgment. Ii ean be seen frm the borehole logs that even the made ground was not uniformly contaminated. Some areas were free from contamination, Other aeas were ‘contaminated at levels in excess ofthe STV. This is illustrated most clearly ia the ‘rawing joinly prepared by Mr Hall and Me Wouter, which summarises the findings ofall site investigations between 2007 and 2011 "The depth to which OHI inital stripped the site was a matter for their choice. Inthe event OHL chose strip the top layer of the whole ste toa depth of 2 metres. After thatthe principal ea of excavation was te tunnel and the ramps leading down to the ‘uel at both ends, ‘The CEMP which OHL prepared in July 2009 stated shat there would be “comet separation of wasts” and that contaninated materials would be “removed off sit, stored and dispersed 1 a liconsod site". Unfortunatly OHL did not adhere to the CEMP, Instead they stockpiled all excavated materials indiscriminately, withost any attempt to differentiate between contaminated and inert materials. inevitably there ‘was cross-contaminaton. The result was that during the currency of the Stockpile ‘Agreement all the stockpiled excavation materials were progressively being exported to lane sites in Spain, ‘Against this backyound Mr Hall and Mr Wouters, the v0 contamination experts, faced no easy task when they came to prepare their epors. They both altempied to estimate the actual quantity of contamination on the site. Doing the best that he could fon the evidence, Mr Hall calculated the tots volume of contaminated soils to be 15,245m", Mr Wouters arived at a much higher figure, but that may not be relevant, ‘since on al points where the two experts differed the judge preferred the evidence of Mr Hall: sce paragraph 326) ofthe judgment ‘Turing to the question of what contamination was “resonably foreseeable by an experienced contactor” atthe date of tender (be test under clases 1.1.6.8 and 4.12 Of the Consthions) Mr Hal rived ata figure of 15,000m. His reasoning was a follows. An expersosd contactor would not lavishly accep the igre af 10,0000 in the Envionmentl Statement. Instead it would make its own assessment of the information contained. in the desk study, the Sergeyeo 2007 report and the Envitonmentl Sivzment. Mr Hal conducted his own analysis ofthe data and rived athe gure of 15.00 ‘The judge accepted the approach of Mr Hal. He held that an experienced contractor would make is ov assessment ofall available data. In that respect the judge was plainly right. Clauses 1.1 and 4.12 ofthe FIDIC conditions require the contractor at tendor stage to mzke its own independent assessment of the available information ‘The contractor must draw upon is own expertise an its experience of previews civil engineering projets. The contracior must make « reasonable assessment of the physical conditions which it may encounter. The contractor cannot simply accept Someone else's interpretation of the data and say that sal that was foreseeable. ‘The judge approsched the expert evidence critically. He also made his own assestment of the information contained in the desk study, the historical mapsnat one en tr, Ly Abeta 93 annexed to the desk study, the Sergeyeo 2007 report and the Environmental Statement. That was =nrely appropriate, The Techaology and Construction Courts & specilist court with ong experience of cases such a this one, The judees are not prisoners ofthe expe: evidence. ‘The judge set out his final concusion on the contamination issue in paragraph 227 of ‘he judgment as follows: “Lam satisfied hat OHI did not in fact encounter physical conditions in elation o contaminated soil over and above that Which an experienced contractor could retsonably have foreseen by the date af submission of is tender. The primary contaminants encountered were lead and hydrocarbon, paticlarly FAH, which were reasonably foreseeable atthe tate of tender as likely to be encountered patcalaty along the line of the tunnel and the tunel ramps and within the made ‘round which extended down in places to over Sm below existing ground level. In terms of the quantities of eontaminan’s| to be foresee, its difficult to put any precise figure on what should have een foreseen but in my judgment the amount ‘would be very substantially above 10,000m’. I: is similarly impossible to determine with any precision what quantities of contaminated materials were actually encountered or were present. [am not saisied on a balance of probabilities that (OF. to apply the wording in the operative clause, Clause 4.12 of the conditions ofthe Contract) in fact encountered either in tens of type or quantities or location “Unforesceable” physical conditions, namely contaminated materials in the soil. I find thatthe quanties actually encountered and present were likely tw have been ss than cold have heen reasonably foreseen by an experienced contactor and it has certainly ‘aot been ‘established otzerwise.” “Mr Catehpoe is storaly cial of this paragraph and the paragraphs leading up it Fe submits that the judge hus filed in his duty to make Findings about the amour of ‘contamination preseit and the amount which was foreseable, Therefore a re required | do not spree. The evidence of Mr Hall (ibe judge's prefered expen witness on Contamination) plainly forms a basis for holding thatthe amount of contamination actually present did not exceed that which was foreseeable. Unlike the expert \itesses, however, the judge was not prepated to put precise figures on the acta and foreseeable quantes of contamination. Furthermore he gave goos! veasons fr his reluctance. OHL's method of excavation and distegtsd of the CEMP, abliterated ‘much of the relevant evidence: see paragraph 225 of the judgment. Furthermore the histovieal material provided to the contactor made it clear that very extensive ‘contamination sas foreseeable across the site. The contractor needed to make provision for a posible worst case scenario; the contractor should have made allowance for proper investigation and removal of all contaminated material: see paragraph 223 ofthe dgment mt 9 50900 eatome apo ya can nL Acetone 95, 96, o. 38, 100, Fo the reasons sated by Burnet LI (with whom Arden and Pitchford LI agee) in Watson Parcy and Wiliams Ichak Ostroviky 2015] EWCA Civ 457 the Cour of Appeal i flict ovenurn findings of fact made at fst stance, This is pattcularly tue inthe ate of appeals fom the Techaclogy and Cossrution Court forthe reasons sted by May I (with whom Jonathan Parker Land Sie Petr Gibson agreed) in Yorkshire Water Services Lid v Taslor Woodrow Construction Northern Lat [2005] EWCA Civ 894; [2005] BLR 385 at [28}32) Tn my view the judge's findings of fact in paragraph 227 ofthe judgment were open to him onthe evidence. tis aot permissible fo this court co interfere with those findings of fit Mr Catchpole in the course of bis submissions took us through the Gibraltar legisiation relating to Environmental Statements as well ap the EU Directives with ‘which GoG was obliged to comply. This was an interesting and well researched ‘exposition of the law applicable in Gibraltar I. certainly shows that the author ofthe Environmental Stlement was under @ duty to make a proper assessment of the amount of contamination present and its likoly impact. That, however, i not suflicient tw establish OHL'sease, The Environmental Satement set out certain obligations with whieh the conten hd «0 comply. For example, it specified the STV levels which ‘were to be the criteria of eontiminaton ander the conics. But where the Environmental Stiement contained statements of opinion, those were not binding ‘upon the contractor. Ax Mr Dennys observed in his submissions, the estimate of 10,000m! of contaminated materials contained in the Environmental Statement was ‘one person's interpretation of the data. Tenderers were bound to take that assessment into” account, but they remsined under a duty to make their own independent assessment ofthe physical conditions likely tobe encountered, Mr Catetpole submits thatthe judge erred in weating the igure of 10,000m? in the Environmental Staement as being an in stu quanlty. He submis that when ope reeds the Environmental Slement in context, i is lear tat the figure of 10,000m° relates to contaminated mutrial end surrounding material which is bound to be excavated 3 the same time, “That isa good pois. In my view the judge did misread the Environmental Statement in tat respect: See paragraph 222 of the judgment. On the other hand this slip by the judge doesnot invalidate fis conclusions onthe contaminstion issue. Since the judge held that OH wete obliged to make their own independent assessment, rather than simply adopt the 10,000m° estimate in the Environmental Statement, the precise scope ofthat ential imanatesi Let me now drew the threads together. OHL cannot establish a claim for unforeseeable ground conditions onthe basis ofthe incorrect estimate of 10,000 of ‘contamination in the Environmental Staerent. The judge's findings of fact in paragraph 227 of bis judgment were justified on the evidence and are not open to attack in this court. On the basis of those findings of fact OHL’s claim for unforeseeable grovnd conditions under clause 4.12 of the FIDIC conditions most fil therefore reject tke fist ground of appeal.net Art ct ling fom. aset inter 101 102, 103, 104, 105, 106, 107, 108, Ps the tune | ake these two grounds of appeal together, because they ae alesse importance and ‘ceupied relatively litle time daring the heating. In each ease the appellant contends that certain documents provided by the Engineer to the contractor constituted variation instructions within clause 13.1 of the Conteact Conditions. The judge erred in failing to so hol. So fur asthe draft fl guidelines are concerned, this was a document wich proposed Slricer etera for contamination than the STs which were incorporated into the contact. On the othor hand the Engineer never required OHL to remove from site ‘material which was contaminated by reference to the thresholds in the draft fll _Bidelines, During Nay’and June 2010 OHL were stockpiling excavated maevials on Site. During July, August and September OHL were emoving all excavated material (whether contaminated or not) pursuant to the terms of the Stockpile Agseement, GoG ‘ore most of the cst ofthat exercise. ‘After the Stockpile Agreement came to an end OHI. transported excavated material to ‘Aerial Farm, But even during that period OHL were not requized to remove to landfill, sites material which was contaminated by reference tthe raf fil guideline, is quite comec, ss OHL point out, that paragraph 3.5 of chapter 10 of the Environmental Statement envisaged the possibilty that excavated material trom the site might be re-used within Girata. Inthe event that did not prove practicable. No ‘one suggests that Got was under any obligation lo make avaiable sites in Gibraltar a ‘which spoil fom th Airport and Frontier Access Read Project could be deposited. 1 is also conrect, as OHL cbserve, that paragraph 3.6 of chapicr 10 of the Environmental Statement permitted OHL to re-use contaminated material on sit, provided that it was capped within a boundury layer to prevent the spread of ‘contamination, This provision was permissive not mandatory. OHT. chase at to tke advantage of this provision, Their CEMP, produced in July 2009, stated that all ‘contaminated materiel would be removed to licensed lndfil sit At no time during he currency of the contact did OHL ct upon the deat fl guidelines in conjunction with the CEMP so as to remove from site contaminated ‘material defined by mference to the draft ill guidelines. Aecordngly the issue of the ‘raf fil guidelines dal not constitu a varation instrvesion, Tow move onto June 2011. Ihave set out the relevant part of Engineers letter dated "June 2011 in Pat 2 above, OHL contend tht this letter constituted a variation insirvtion. They als» contend that ths instruction prevented them from performing the eontact curing the final period when GoG had initiated termination procedures by serving a notice under clause 151 ofthe Contract Conditions. ‘The judge held that after the withdtawal of Aerial Farm, OHE still bad sufficient space om site to stockpile materials arising from excavation: see paragraphs 303 to 304 ofthe judgment. Mr Catehpole submits that the judge's findings of fact in those ‘so paragraphs are contrary othe evidence at yas p33uae As tes hatin, Ly AG tte 108, 110, un 12 113, m4, us. 116, 1 eanaot accep these submissions for three reasons. Fits, Aerial Farm was an aren of land outside the st. The permission which GoC granted for OHIL to vse that land for stockpiling was a concession, Therefore the wthieawal of dat concession could not be a variation iustuction, Sooondly, OL ceased using Acrial Farm after they had suspended work in December 2010, OHL did not remove any excavateé material to ‘Atal Farm durin February, March, April or May 2011, ‘Thirdly, the judge's Findings in prsgraphs 303 and 304 of the judgment are findings of fact which are aot open to challenge. The judge recounts that there was “head discussion daring the tal” about how muck material could be stockpiled on site ‘uring the period Jane to August 2011. The jude reached his Findings of fect after hearing vigorous cros-examination of the factual witnesses shout the extent of available space onsite. Thee is no question of this court re-opening those findings of fact. Finally, there isthe Engince's letter dated 8 June 2011, I have quoted the relevant part ofthat leer in Part 2 above, That letr required OHL to comply with their own CEMP. That was tee contractual obligation in any event. Accordingly I reject the seoond and thd grounds of appeal. ‘The documents relied "upon in thse grounds of appeal did not constitute variation instructions, nor di they prevent OHI {rom performing the contrat, art 7, Ground 4: termination under cause 15.28) (On 16 May 2011 the Engineer sent to OHL a notice to correct under clause 15.1 of the Contract Conitions, [have st out the tems of that notice in Pat 2 above, using the sime numbering and layout asthe judge. The judge has held that de reqizements Set out in items 1(), 1(b, 2 and 3 were proper requirements with which OH filed to comply, thus eniling GoG to ierminate under clause 15.2(a). OHL challenge each of these findings. ‘The judge reviewe! the relevant authorities and set out the legal principles governing the operation of chuse 15 ofthe FIDIC Conditions in paragraphs 317 to 325 of bis judgment. Thre isno challenge to the eorretnass of that analysis. Items 1(@), 1(b) and 2 in the notice to correct all ete to OHL"s fale t proceed with the tunnel works. OHI bid suspended tunnel excavation work since 20° December 2010, OHL had suspended work on the disphagm walls since 21” January 2011 Mr Catchpole submits that by May 2011 the parties were locked into the so-design ‘process, The Engiteer gave his approval in principe for the re-design on 20 May 2011. Mr Gil 26 TAA countersigned the approval in principle on 31” May. The next ‘steps under the cofratual procedure were: (@) OMT. to obtain and submit Donaldson's category 3 check cetfcae, as required by paragraph 10 of Part lof Volume 3 of the Employer's Requirements. (Gi) The Engineer, runt to paragraph 11, t consider Donaldson's eetiticate and, itsatisfed, to endorse upon it accepted bv 9 yas 0020 Pryns ee esos ae, Ly AG ete ur. 18, us, 120. 12. 122, 123, Mr Ctchpote submits that the effect of the last sentence of paragraph 10 in ‘conjunction with paragraph 11(@) of Part 1 of Volume 3 of the Employer's Requirements is that OH were not ented to start implementing the re-design untt then, Furthermore by May 2010 the original design had been superseded. Therefore ‘OFL were ented, indeed obliged, to continve doing nothing, ‘This is not an atractne submission, despite the dexterity with which it was advanced ‘The orginal design was perfectly satisfactory. The re-design was unnecessary. There ‘was no certainty as to whether Donaldson would ever provide the required ceficat. In Jute and July 2011 Donaldson was not prepared to do so beeause it was concerned that the diaphragm walls would be overstessed in th serviceability limit sate and the ultimate limit stake [ pressed Mr Catchpole in argument as to what would happen if Donaldson never issued the category 3 chock eerifieate, Would the projet simply remsin in limbo forever? I understod Mr Catchpole’s ease tobe that there might come a time when the redesign was iteffective, but that hypothetical state of affairs lay well in the future. ‘The postion in May 2011 was that GoG and the Engincer had elected to prooved withthe redesign and reject the original design. Therefore at that stage OFL's obligation wae to do nothing. In relation to the issue of election, Mr Catebpoe relies upon the judgment of Aikens 13 in Tele2 international Card Company $A v The Post Office Lad [2009] EWCA Civ 9 at [49] to [58 a8 a convenient restatement ofthe relevant principles, Richards and ‘Ward LU both agreed with tat judgment. In essence, a party makes an election when, with knowledge ofthe relevant facts, it acts in a manner which is consistent only with ithaving chosen one or other of Wo inconsistent courses of action. When one applies those principles to the present cso, it is clear that neither GoG nor the Engineer made an election which commited them to adopting the redesign and rejecting the original design of the tunnel. The Engineer made it pln that the original ‘design was perfeily stisfactory and capable of being oastrcted without any risk to health or Safety. The Engineer was simply considering the re-design as a modification put forward by OFIL under clase 5.2(0) of the Contact Conditions, for their own ‘reasons andor convesience. See the Engineer's letter of 4 May 2011 set out in Part 2 above, “The postion in May 2011 was that there was one design forthe tunnel which ha ull certificatinn ed apqraval. There wan another emerging design fr the tunnel, hil (@) id not yet have ull certification and approval, (#) may ot may not aehieve fu cxtification and approval inthe futre In those eieamstances iis impossible to say thatthe Engineer’s approval in principle of the re-esign pursuant to paregreph 2:3 of Part 2 of Volume 3 ofthe Employer's Requirements consituted an election. Nor did the subsequent approval of the TAA pursuant to paragraph 2.3 have that effect, Mr Catchpole submits that i he re-design was unnecessary, the Engineer should ave rejected it because itwas going to eause delay. Ido not agree. Whea the Engineer is reviewing the contractor's design under clause 52 of the FIDIC Conditions, he is ‘considering whether ‘be design is technically acceptable and whether, if the design is implemented, the completed works will accord with that which the contrat requzes, soy 51920 eseee cn tg, one acee come 124 1s, 126, 1m. 129, If the re-design is satishictry in all those respects, i snot forthe Engines to reject the design because he thinks it will ake too long to build, TLeome now to the notice fo correct contained in the Engineer's letter dated 16" May ULL, This letter requited OHL to get on with he work Which would have to be done in any event, reqaaless of whether the original design or the redesign was implemented. ith way, the PEE excavation work would need to be done and the Aiapheagm walls would need to be exopped and repaired, Interestingly, inthe course of their submissions botk Mr Catehpole and Me Dennys. referred 0 the Ergineer trying to “ride wo horses". It seems to me that that is precisely what the Engipeer was trying to do during May 2011, including when he ‘wrote the leter dated 16" May containing the notice o correct. ‘When considering the May 2011 correspondence it is important to bear in mind the historical context. OHL had suspended work on the tunnel in December 2010 and they had suspended work on the diaphragm walls in Janvary 2011. Since then OHL. had effectively dooe 10 work, asserting that they had embarked upon a re-design GoG believed, and the judge has subsequestly held, that that re-design was ‘unnecessary. The perimeter of the airport had become a disused building site, The runway had been temporarily shortened, in order to make room for tunnel works ‘whieh were not preceeding, Both GoG and the Engineer wanted o see some action on the sit, Thece Was plenty of work available which would have t be dove in any event. Accordingly items 1(@, Ifo) and 2 in the notice to corect were properly included. The time allowed for rectifying those matters was reasonable, a6 the judge has held, OH filed to cary out the rectification works required by items 1(@, 1(8) and 2 in the notice to cort. The fact that OH had not obiained the category 3 check cenifiate or final approval ofthe re-design was aot an excuse for this inaction, as OHI now conten. OFL should have proceeded with the tunnel work which was required in any event as specified in the notice to comrect. OHL's non-compliance ‘with the noice was a serious breach of contact 1 now turn to itm 3 in the notice to comet, There has heen some debate at the earings to wheter of not OHL carted out the de-watering works rquied by item Sof the notice to erect beyond doubt that OHL did some de-watering works see the ctosexaninatin of the Engineer at day LI page 53. In my view, however, there i short anower fo this pont. In eter of teinaton dated 28" uly 2011 {Go made It ler tat twas noc eying ypon OMTL'snon-compiance with tem 3 ot the nie to comet asa ground of termination: See the first ine onthe Second page ofthat eter. “There was therefore a slip by the judge in paragraph 344 of his judgment, where he treated fale t0 proceed with de-watering as a relevant non-compliance with the notice to correct. In my view, however, this sip by the judge does not undermine bis ‘conclusion that GaG effectively terminated the contract for non-compliance withthe notice On any view OHL's principal breaches were thir failures to proceed with the tunnel works, Those matters were sufficiently serious (0 justify termination of the130, 13h 132, 133. 134 135, 136, 137, 138, For ll these reasons I eject the fourth ground ofthe appeal. GoG was ented to, and id, terminate the contract pursuant to clause 15.2() ofthe Contract Conditions feamination under clases 5.2) and 5.26) ‘These two grounds of appeal are closely linked and itis convenient to deal with them together ‘The obligation und: clause of the FIDIC Conditions to “proceed with the works with due expedition and without delay” is not dicted to every task on the contactors to-o li. tis principally crested to activites which are or may become critical. See the reasoning of Stuat-Smith J in Sabie UK Pewockemicals Lid (formerly Huntsman Petrochemicals (UK) LTD) ¥ Pun) Liovd Lid (a company incorporated in India) [2013} EWHC 2916 (TCC); [2018] BLE 43 in particular at [206 Mr Catchpote submis thatthe critical activity inthe period May to July 2011 was ‘oblaining the category 3 check cetficate from Donaldson and final approval of the re-design ftom the agiaeer, Therefore other delays, in particular delays on tune] ‘works, were immaterial do not agree. The tunnel was on the eritical path ofthe whole project. The next sage ‘of work on the tunnel was tie PEE excavation, together with cropping and repairing ‘of the diaphragm walls. These asks were very much onthe critical path. (OFIs lak of significant activity onsite between 21° Janvary and 28" July 2011 was in my view a failure “to proceed with the works with due expedition and without delay”, Tat was a serous breach of clause 8.1 of the Conitions, ‘The next question to consider is whether there was “reasonable exeuse”, within the ricaning of clause 15.2(¢) of the Conditions, for OHL's failure to proceed with the works, on rely upon the fellowing as “reasonable excuses” (@ Lack of space upon which to stockpile spoil a a result of the Engineer's insruetions dated "and 8" Tune 2011 (i) The discovery of hydrocarbons ia the groundwater and the need for a bydrogeologion. survey. (Gi) The need to comply with E120. (Gv) The Fngincer’sinstrocton to stop dewatering on 29" June 2011, (0) ‘The difficulties encountered by OH in dealing withthe contamination, even if that contamination wes foreseeable (vi) The lack of Donatdson’s category 3 check cetifiate and the tack of final approval forthe re-design, T shall ofr to these matters as “excuse (“excuse (i), and so forthnee Ae on og, Lv Att Ge 139. 0, 142, 143, 144 us, 146, 7. ‘As to excuse (), the judge held that there was sufiient space for stockpiling, That ‘decision stands as explained in Par 6 ahove, As to excuse (i), the likelihood of groundwater being contaminated must have been obvious to any experienced contractor for the reasons stated by the judge in paragraphs 229 to 235 ofthe judgment. The Environmental Statement expressly sated that beavy metals, oluene and PAH contaminants above the threshold levels had been found in groundvater. Unfortunately OHL failed to carry out a “detailed bydrogcolopical sidy” a the start of the works in accordance with their contractial ‘obligation. In so far 38 the concerns set out in OHL's etter of 13" July 2011 were valid reasons for élaying work, OHL ought to have identified and resolved these matters long before excavation state. 1 should also be noted that, s a matter of fact, the aquifers were not contained “The agoiters wore regularly monitored and thee was no evidence at tral ro suggest that they had becone contaminated, [As to excuse (ii) the instruction to expose areas of diaphragm wall in order to identify the extent ofa construction defect cannot be ajustitication for doing no ther work ‘AS to excuse (jv), the Engineer's instruction o stop de-watering on 29! June 2011 related to the MOD drainage diversion works: see paragraph 184 ofthe judgment ‘That was ao reason to suspend any other works onsite, ‘As to excuse (v), have dealt with the contamination issue in Par $nbove. Save in So far as OHL had an approved scheme to re-use contamineted material (properly ‘capped) on sit, it was ther obligation to remove all excavation material contaminated hove the STVS to andl sites in Spin, [As to excuse (vi), itis quite true, as OHI say in their skeleton argument, that “Donaldson was an independent engincering firm that was outwith the appeliaat’s contol". The fat remains, however, that if OHL wished to proceed with their (unecessary) re-design, i vas their obligation to produce a redesign which was sufficiently robust 0 satisfy the independent checker whom OHL had sppointed, ‘OBL's failure (ater two and a half years of this two year contrat had elapsed) to secure Donaldson's certification of the tunnel re-design, cannot be a valid excuse ‘within the meaning of clause 15.2(¢) ofthe FIDIC Conditions “The conclusions reached in relation to clause 15.2(6\) ofthe Conditions ure dicey applicable to elaose 15.2(H, OFIL's fale over many months to proceed with the ‘Works (a flare which continued in defiance of the notice to correct dated 16° May 2011) did "plainly demonstrate” an intention not to continue peeformance of thait ‘contractual obligations. 1 therefore conclude that GoG was ented 1, and did, terminate the contract under clase 15.20) and 15.2(6Ki) af the Conditions. I reject the fifth and sixth grounds of appealoat oe eo Se tent ibe ABet cinta 148, ao, 150, 151. Lady Justice Gloster: 152 :xccutive summary and conclasion ‘On 21% November 2008 Obrascon Huarte Lain SA (“OHL") contracted ith the Government of Gibraltar (“GoG") to design and construct a road around the perimeter ‘of Gibraltar Airport eluding a tunnel under the east end ofthe runway. The eontract {ncomporaed the FIDIC Yellow Book Conditions. ‘The project el bend schedule, In December 20101Tanuary 2011 OHL stopped work and proposed t© redesign tbe tunnel because of excessive and unforeseeable contamination. I July 2011 GoG served notice tenminating the contract, essentially because of OHIL's lak of progress and non-compliance with a ntie to cote. OH ‘maintained that GoG had thereby repudiated the contact In tigation to determine which party had terminated the conract, Akenhead J hel (The amount of contamination was no more thaa OHL should have foreseen, (@) Certain instructions given by the Engineer relating to treatment of contarsinated _materials and locations for stockpiles were not variation instructions. (GoG had terminated the contract under clause 15 ofthe FIDIC Conditions. ‘OL appeals to the Court of Appeal. In my view the Judge was correct in all three ‘mailers identified i the previous paragraph. Accordingly, if my Lord and my Lady gree his appeal wil be dismissed. Tegie,