Subcontractor wins High Court case against Morrison Construction

Morrison Construction has lost a High Court case against one of its subcontractors regarding changes made during the development of a gas processing plant in Shetland.

Steel firm BHC Ltd successfully argued that change orders issued by Morrison should be re-measured and re-valued based on “final construction drawings”.

Total E&P Limited had engaged Petrofac Facilities Management Limited to carry out the construction of the gas processing plant, for the processing of hydrocarbon from the Laggan and Tormore gas condensate fields off the coast of the Shetland Isles.

Morrison had been appointed by Petrofac as a sub-contractor to carry out civil engineering and building works as part of the construction of the plant and had in-turn engaged BHC to carry out structural steelwork (including associated design works), roof and wall cladding, and precast concrete flooring works for buildings to be constructed as part of the project.

The original contract provided for only three buildings to be constructed, namely, the administrative building, the gatehouse and a workshop, but it was anticipated by the parties that additional buildings would be required to provide shelter for items of plant. During the project, 33 additional shelter buildings were instructed by change order instructions (COIs) issued under the contract

The dispute arose between the parties as to the basis on which the works carried out pursuant to the COIs should be valued or measured.

The principal issue was whether these variations, properly construed, provided for re-measurement of the entire works contained in the change order, or alternatively whether the starting point for measurement was to take the lump sum quote and to make additions to and omissions from that quote, a process known as ad-measurement.

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 COI.

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.”

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