Van Oord UK Ltd and another v Allseas UK Ltd [2015] EWHC 3074 (TCC)

This case concerning ground conditions is an important decision which impacts on several areas of construction law.  Of particular significance is the strict approach taken by the Court to the claim notification provisions of the Contract.  This article explores the potential pitfalls when notifying claims for ground conditions and how these might be avoided.

Facts of case

Contractor Allseas UK (AUK) engaged subcontractor Van Oord UK and Sicim Roadbridge (OSR) to carry out onshore works relating to laying of a gas export pipeline in the Shetland Islands.

OSR made the following claims against AUK:

  • Disruption and prolongation arising from AUK’s alleged failure to obtain permission for temporary crossings and delay in obtaining related proximity  agreements
  • Disruption and prolongation arising from alleged unforeseen ground conditions
  • Additional supervision costs from AUK’s alleged delay in supplying a 55 ton beach valve and cabin

In relation to ground conditions and change orders under Articles 12 and 22, the subcontract provided that, should OSR discover differing ground  conditions (reasonably unforeseeable by an experienced Contractor), then notice should be given by OSR to AUK in accordance with the above Articles.  

The specific provisions concerning notification were as follows:-

  • Notification of any event that may delay the works or cause OSR to incur additional costs was to be made within 5 days of the occurrence of the relevant event;
  • Provision of a second notice, fully substantiating this claim, within 12 days of the relevant event occurring (i.e. additional 7 days); and
  • If the relevant provisions were not complied with by OSR, it would disentitle them to any claim.

OSR's case was based upon the fact they had discovered alleged unforeseeable ground conditions around 11 -12 October 2011 and the notices they relied upon were letters dated 19 October and also 22 and 28 November 2011.

Issues decided by Court

  1. OSR failed to comply with notice provisions under the subcontract and were two days out of time (notice should have been given on 17 October, not 19 October).
  2. OSR’s further notices in November were also out of time.
  3. Even if the notice given by OSR on 19 October had been within time, it still would have been considered inadequate as it made no reference to Articles 12 or 22 (notwithstanding that the subcontract did not require reference to specific provisions).
  4. The notice provisions had to be complied with by OSR to allow their claims to proceed i.e. they were treated as condition precedents.

Practical points for Claimants

This case serves as a further reminder of the need for Claimants to observe the particular notification requirements of their construction contract.  The Courts in recent times have displayed an increased willingness to uphold conditions said to be conditions precedent to entitlement.

The main points that Claimants should take away are:-

  • Ensure project teams are fully familiar with the notice requirements of the contract;
  • Should a claim arise, comply strictly with those provisions, in terms of content, format and timing; and
  • Remember, the burden is on the Claimant to issue timely and adequate notices.