Privy Council dismisses contractor’s claim against WASA

The Privy Council has allowed an appeal by the Water and Sewerage Authority (WASA), setting aside a multimillion-dollar award in favour of a St Augustine-based contractor and restoring the High Court’s dismissal of its original claim.

In a judgment delivered on January 22, the apex court overturned a 2023 decision of the Court of Appeal, which had awarded Uniform Building Contractors Ltd (UBC) $13.9 million, together with interest and costs, arising out of a dispute over a pipe-laying contract.

The case concerned a design-and-build, lump-sum contract signed in May 2007 under which UBC agreed to design, supply and install approximately 28 kilometres of pipeline from Rio Claro to Mayaro. The project, valued at just over $28 million, was divided into two packages. WASA terminated the contract in 2009, and UBC later brought proceedings claiming additional payment for what it said were variations to the works.

In its claim, UBC said there were many variations to the project which fell outside the agreed contract price and led to its having to do additional work, resulting in additional costs.

The contractor also said on February 27, 2009, it was asked to submit a schedule and method statement for the passing of pipelines on the bridge crossing at the Mafeking River, and on March 5, 2009, it told WASA it could not meet the March 6, 2009, deadline because its main engineer was seeking medical attention.

On March 6, 2009, the authority terminated its contract with UBC.

On May 27, 2013, UBC filed its claim for $13.9 million for variation works it did before the contract was terminated.

In its defence, WASA said no money was due, since UBC had failed to comply with the conditions of the contract. It also said any delay was caused by UBC, and the works done were not variations but were within the contract terms. The authority also filed a counterclaim, which alleged UBC was indebted to it for payments made for work that was “unperformed.”

In 2017, Justice Nadia Kangaloo dismissed UBC’s claim and WASA’s counterclaim, finding that the works complained of were covered by the contract and that UBC had failed to comply with the contractual procedures governing variations and claims.

UBC appealed, and the Court of Appeal reversed that decision, holding that four items of work – laying pipes in the roadway rather than the verge, disposal of unsuitable excavated material, importation of backfill, and night work – amounted to variations approved by WASA’s engineer, with contractual requirements having been waived in practice.

WASA appealed to the Privy Council, arguing that the Court of Appeal had erred in law and in its approach to the contract.

Delivering the judgment, Sir Peter Coulson held that the Court of Appeal’s reasoning was fundamentally flawed. The ruling emphasised that whether work constitutes a variation is primarily a matter of contractual interpretation, not the opinion of the engineer on site. On a proper analysis of the FIDIC Yellow Book contract and the associated specifications and bill of quantities, the Privy Council found that all four disputed items were expressly or impliedly included in the lump-sum contract.

The Privy Council concluded that cutting and excavating asphalt roadways, disposing of unsuitable material, importing suitable backfill, and carrying out night work were all contemplated by the contract documents and priced by UBC as part of its tender. As such, none could qualify as variations entitling UBC to additional payment.

The Privy Council also rejected the Court of Appeal’s reliance on waiver, fairness, and estoppel, noting that these issues had not been pleaded, evidenced, or addressed at trial. In addition, the Privy Council held that UBC had failed to comply with mandatory procedural requirements under the contract, including notice and determination provisions that operated as conditions precedent to any entitlement to extra payment.

In restoring the High Court’s decision, the Privy Council dismissed UBC’s claim in its entirety, reversing the Court of Appeal ruling while also declining to hear WASA’s arguments on causation and quantum.

The judgment noted, “On any fair reading of the contemporaneous documents, the claim for items as variations under the contract was unclear and tentative. That provides further support for the view that these were not, and were not seen at the time as being, legitimate claims for variations.

“The Board concludes that items were not variations to the Employer’s Requirements or the Works. On that basis, the Board would set aside the decision of the Court of Appeal and dismiss the claim in full.

“However, it is appropriate to go on to address two other elements of the Court of Appeal’s judgment, that is to say, their conclusions as to the procedural requirements of the contract, and as to fairness,” Sir Peter wrote, concluding that the Court of Appeal’s judgment on these two aspects of this case was also erroneous.

“In short, if UBC had wanted to make a claim for any of the disputed variations, and they could not make progress due to the engineer’s alleged failure to play his part in the variation process, it was up to them to make a claim…They failed to do so.

“The items were all known to UBC shortly after the works began and certainly by the end of 2007. On any view, therefore, the 28-day period in which to bring a claim had expired long before the termination of the contract in June 2009.

“Having failed comprehensively to comply with the condition precedent, UBC were therefore prevented by the terms of the contract from making any claim in respect of these variations and/or WASA were discharged from any liability to pay for them.”

The judgment also emphasised that termination operated prospectively rather than retrospectively.

“The Court of Appeal indicated that the way around this problem for UBC was that, because the contract was subsequently terminated, clause 20.1 did not apply. The terms of clause 20.1 cannot, however, be so circumvented for two reasons. First, it is well-established law that the contract terms govern the conduct of the parties up to termination, and that termination does not wipe out those rights and obligations already accrued.

“Upon termination, both parties are discharged from any further performance of the contract, and the party in breach may be liable to pay damages for future non-performance: But the consequence of termination having a forward-looking effect is that rights and obligations that have already been unconditionally acquired remain unaffected.

“Secondly, the Court of Appeal’s solution ignores the 28-day cut-off…That critical element of clause 20.1 was not referred to by the Court of Appeal. Neither is it referred to, let alone dealt with, in UBC’s written case.

“For the reasons previously given, the Board concludes that the time for making a claim under clause 20.1 had expired long before the termination of the contract. The eventual termination could not, in law, resurrect claims that had not been made in time and were therefore no longer open to UBC.

“The purpose of the contractual regime was to ensure certainty so that, if there were claims for additional monies (whether under clause 2.5 for the employer, or clause 20.1 for the contractor), they were clearly set out and promptly made.

“In relation to UBC’s claim for the four disputed items, neither of those things happened. That was UBC’s responsibility: in particular, they failed to comply with the condition precedent set out at clause 20.1.

“In those circumstances, UBC had no entitlement under the contract to be paid…Where a contractor fails to comply with the procedural requirements of a contract, it is not uncommon for them to argue that it would be unfair or inequitable for the employer to have the benefit of additional work without paying for them.

“Such an argument is usually based on principles of waiver and estoppel. It appears that this was one of the arguments deployed by UBC, which found favour with the Court of Appeal. In the Board’s view, these concepts had no application to the facts of the present case.”

Anand Ramlogan, SC, Kate Temple-Mabe and Ganesh Saroop represented WASA, while Irshaad Ali and Adam Razack represented UBC.