Acotec UK Ltd v McLaughlin & Harvey Ltd

[2016] CSOH 134

This was a Scottish case where Acotec raised an action against McLaughlin & Harvey (“M&H”), seeking payment of the balance of hire charges and the cost of repairs to a cofferdam. Acotec was a specialist contractor in marine works which had leased a cofferdam to M&H to carry out construction work at Hatson Pier, near Kirwall, for Orkney Islands Council. When M&H first used the cofferdam, after its assembly and testing, the seal failed and it filled with water. As a result of problems with the cofferdam, the hire period became extended. M&H counterclaimed against Acotec, seeking recovery of overpaid hire charges. M&H also sought damages in respect of loss and damage said to have arisen through Acotec’s breaches of its obligations under the hire contract.

Despite Acotec agreeing to provide temporary works design calculations and a temporary works design certificate to show that the cofferdam would meet all the necessary health and safety requirements, this information or its equivalent was not provided to M&H prior to the commencement of the cofferdam hire. Lord Doherty held that there was an implied term that design information was to be provided by Acotec to M&H to comply with its obligations under the Construction (Design and Management) Regulations 2007 (SI 2007/320). This information had to be provided a sufficient period in advance of the commencement of the project to enable M&H to comply with its obligations under the Regulations. The Judge went further and outlined that:

“Without the information the defender’s use of the cofferdam would be illegal. I am satisfied that such a term was necessary in order to give the contract business efficacy. I am also satisfied that reasonable hypothetical contractors in the position of the parties at the time of contracting would have regarded it as being so obvious that it went without saying.”

Alongside the 2007 Regulations, M&H had also referred to section 9 of BS 5975:2008+A1:2011, “Code of practice for temporary works procedures and the permissible stress design of falsework”, which also referred to the provision of design information. The Court acknowledged that the information needed to comply with the 2007 Regulations was the same, or substantially the same, as the information which M&H needed in order to comply with the guidance in section 9. However, the requirement under the British Standard was non-mandatory and no similar term could be implied.

M&H had, however, established breach of contract on the part of Acotec and was entitled to damages to recover overpayment of some of the hire charges. M&H had argued that Acotec had been required to supply a fully operational cofferdam in “all conditions”. The Court disagreed. Acotec did not undertake that it could be used in all weather conditions. Given what was said to be the unusual nature of the proposed term, the Court considered that it was the type of clause that the parties would have been careful to specify in writing. Further, when calculating the total hire charge to which Acotec was entitled, even though it had spelt out details of the damages due for breach of contract, M&H had not treated Acotec as being in breach on days when the cofferdam could not be operated due to bad weather.

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