Galliford Try’s Scottish construction arm, Morrison Construction, has lost a High Court case against one of its subcontractors.
The dispute related to the valuation of a series of changes made during work on a gas processing plant in Shetland.
The contractor unsuccessfully defended claims from its subcontractor BHC, in which the steelwork specialist called for a number of change orders handed to it by Morrison to be re-measured and re-valued based on “final construction drawings”.
Justice Farrell concluded that the price quoted by Morrison in each change order should now be re-measured and re-valued in accordance with the agreements made by both parties in each of the Change Order Instructions.
In 2011, Morrison Construction was chosen by Petrofac to carry out civil engineering and building works on its gas processing plant off the coast of the Shetland Isles.
Morrison recruited BHC for structural steelwork, roof and wall cladding and concrete flooring, as well as all associated design work.
The contract initially included the construction of three buildings, but it was signed under the understanding that additional buildings would be required over the course of the scheme.
An additional 33 buildings were constructed, with Morrison giving BHC 24 change order instructions.
BHC completed the works in 2016 and submitted a final claim totalling nearly £28m, based on re-measured valuations from the final “as built erection drawings”.
Morrison disputed this claim and said BHC had wrongly “re-measured” five of the 24 change orders to arrive at that sum.
Morrison’s valuation for the work was just over £14m.
In August 2017, BHC commenced ‘Part 8’ legal proceedings after both parties were unable to agree on whether the change orders in question should be re-measured against BHC’s finalised construction drawings.
Morrison objected to BHC bringing the case in front of court, saying it would “serve no useful purpose”.
Morrison claimed that while the total dispute on the contract was over £10m, the difference in respect of the change orders was only £1.2m, well under BHC’s valuation of £5.3m.
Morrison also said that an ad-measurement valuation, as preferred by the contractor, would produce the same result as re-measurement valuation.
BHC said Morrison’s argument that an ad-measurement would produce the same valuation as a re-measurement was “flawed”, and the re-measurement would ensure that BHC was suitably compensated for design and quantity changes between tender and final construction drawings.
Justice Farrell said the fact that the amount of money in dispute between both parties was above £1m, as shown in Morrison’s evidence, justified the proceedings from BHC.
She also said all of the change orders in dispute had the term “re-measurement” included in them to determine the price of the final contract.
Justice Farrell ruled to support BHC declarations that the works carried out following the change orders should be valued by the method of re-measurement based on the finalised construction drawings.
A Morrison Construction spokesman said: “Morrison Construction treats all its subcontractors in a fair and professional manner and we will take cognisance of the court’s decision.”