Summary: Reflecting on his experience, Simon Liddiard considers why the NEC drafting committee expressed the ground conditions compensation event in terms of what an experienced contractor would have judged reasonable to allow for, rather than what it would have been reasonable for an experienced contractor to have allowed for.
I have recently been reading the dire predictions of legal futurologist, Richard Susskind, once more claiming that lawyers’ days are numbered and that pretty soon computers will take over the world.
For my sins, some of my youth was spent gently snoozing through lectures on inference engines, fuzzy logic, and learning computer systems. One thing that I do recall was the challenge faced by learning computer systems trying to form an internally consistent understanding of the world when faced by contradictory statements such as “vampires come from Transylvania” and “vampires do not exist”.
What does this have to do with the law, you ask? Well, I have found that reasonable experienced contractors have a lot in common with vampires.
Ground conditions and experienced contractors
A few years ago I ended up helping a main contractor with a ground conditions claim under an NEC sub-contract. Approaching the case with a lawyer’s mind-set it seemed pretty much open and shut. Each side had instructed geotechnical experts and it was clear that the experts all agreed that the ground conditions were essentially what you would have expected from the site investigation reports. However, from the worried faces round the table it was also clear that I was alone in my optimism.
Puzzled, I asked why. The answer surprised me.
The sub-contractor was claiming a compensation event under clause 60.1(12) of the NEC3 engineering and construction subcontract (a similar provision is also found in the ECC). This provides for a compensation event where:
“The Subcontractor encounters physical conditions which
• are within the Site,
• are not weather conditions and
• an experienced subcontractor would have judged at the Subcontract Date to have such a small chance of occurring that it would have been unreasonable for him to have allowed for them.”
It seemed obvious to me that if the ground conditions encountered were in line with what should have been expected from the site investigations, then there could be no question of a compensation event.
“Ah” the contractor said, “but you are a lawyer, not an experienced contractor. I, on the other hand, am an experienced contractor and I would not have allowed for the ground conditions encountered”.
Indeed he had not made any such allowance in the main contract, nor had the (equally experienced) sub-contractor in the sub-contract, hence the present dispute. I turned to our technical expert, another experienced contractor, for support, but he just glumly shook his head in agreement with the contractor.
I pointed out that the language explicitly gives the contractor relief only for physical conditions which had a “small chance” of occurring, not for physical conditions which were expected, and that the geotechnical experts all seemed to agree that the physical conditions were in line with expectations.
“Ah”, he said, “but I am an experienced contractor, not a geotechnical expert. As a contractor, I would read the geotechnical borehole surveys differently. A geotechnical expert might see sporadic hard ground in the borehole data as evidence of variable ground. As a contractor, I would argue that this variability was merely inconsistency within the Site Information. On that basis, clause 60.3 entitles me to assume that the more favourable boreholes are representative.”
It was at this point that our geotechnical expert nearly choked on her tea.
The contractor continued,
“I know that this approach is not correct from a geotechnical perspective, but it is arguable. If there is an arguable case that hard ground was not foreseeable then it would be unreasonable for me to have allowed for it. If I had allowed for it, then we would not have been awarded the contract. What is more, if I had allowed for it then I would not have been entitled to a compensation event when we did encounter hard ground.”
Our technical expert nodded sagely in agreement.
Fortunately, not being a computer, my brain was able to cope with this explanation of what an experienced contractor would have judged reasonable to allow whilst simultaneously processing the dawning realisation that reasonable experienced contractors may not, in fact, exist. Just.
So, how did it turn out?
The adjudicator appointed was not an experienced contractor but was instead an eminently reasonable QC.
He disregarded the sub-contractor’s testimony of what he claimed to have actually foreseen and allowed for; the test is of course an objective one, not subjective. He turned then to the geotechnical experts’ evidence for guidance as to what a hypothetical experienced contractor should reasonably have allowed for, concluding that if a contractor had indeed ignored the unfavourable borehole data he would have done so at his own risk.
This must surely be right as an experienced contractor must be assumed to be reasonably well versed in the interpretation of borehole data or, failing that, advised by someone who is.
However, since that day I have occasionally pondered why the NEC drafting committee had expressed the test in terms of what an experienced contractor would have judged reasonable to allow for, rather than what it would have been reasonable for an experienced contractor to have allowed for. Does this open up a lacuna in the interpretation of the NEC?
I wonder too what Susskind’s robo-lawyers would make of this. Perhaps there is still some use for good old-fashioned wetware in the profession.
PS: I should perhaps state for the record that I do actually believe that reasonable experienced contractors exist. Oh, and could someone pass the garlic, please.