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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Tube Tech International Ltd v Technip-Coflexip SA & Ors [2005] EWHC 2 (TCC) (12 January 2005) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2005/2.html Cite as: [2005] EWHC 2 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		12/1/2005

Judge Richard Havery Q.C. :

1. The claimant, Tube Tech International Limited ("Tube Tech") is a company that specializes in the cleaning of industrial pipework. This claim arises out of work done by Tube Tech in the cleaning of pipes in condensers and heat exchangers in a plant for the production of liquefied natural gas on Bonny Island in Nigeria. Bonny Island is an island in the Niger delta. The plant is owned by a company known as Nigeria LNG Limited ("NLNG").
2. The claim is made under four contracts, which have been called contract 1, contract 2, contract 2A and contract 3. The claim is for the unpaid balance, £643,295.11, of sums invoiced under those contracts, plus interest. The defence is that some of the sums invoiced are not due and some invoices have been overpaid. It is denied that the defendants were party to contract 2A. Damages are counterclaimed for breach of a contractual condition as to the provision of personnel. The total liquidated sum counterclaimed is £176,032.49, or alternatively £831,982.49. There is, however, no criticism of the work done by Tube Tech or of the speed with which they did the work.
3. One major issue in the case is the identity of the party or parties with which Tube Tech contracted. Tube Tech's primary contention is that it contracted with a consortium of the first four defendants known as TSKJ. The first four defendants in their defence contend that neither individually nor collectively have they ever contracted as TSKJ with any person, including Tube Tech. They also deny that they were ever collectively called (except possibly in some publicity releases) or traded as TSKJ. The exception was added by way of re-amendment to their defence. The defendants contend that Tube Tech contracted with the fifth defendant. The fifth defendant was joined to the proceedings by way of amendment.
4. Among the publicity material that has been put before me, the following statements are made. In publicity material of NLNG there is reference to the Base Project and the Expansion Project. The Base Project was for a two-train gas liquefaction plant and much else. The Expansion Project was for a third LNG (sc., liquefied natural gas) train of similar design to the two Base Project trains, and again much else. The publication states that NLNG awarded the Base Project engineering, procurement and construction contract, with construction commencing in November 1996, to (and I quote)

TSKJ, a consortium of four engineering companies. The name TSKJ is derived from the initials of the four engineering companies making up the consortium. The 'T' stands for Technip, a French firm, 'S' for Snamprogetti an Italian firm, 'K' for M. W. Kellogg an Anglo-American company and 'J' for Japan Gas Corporation…..the [Expansion Project] contract was awarded on 6^th March 1999 to TSKJ.

(The third of those named companies is not the third defendant).

5. In publicity material dated April 1999 JGC Corporation announced that

Consortium TSKJ (JGC Corporation and its associates Technip of France, Snamprogetti of Italy, and Kellogg Brown and Root of the U.S.) has won a lump sum, turnkey contract from [NLNG] to construct a third LNG train for NLNG's large LNG complex planned at Bonny Island, Rivers State, Nigeria.

6. In a press release dated 1^st March 2000, Halliburton Company stated:

Four major companies have joined forces to design and build one of the world's largest liquefied natural gas plants…..Called TSKJ, the partnership represents Technip Group of France, Snamprogetti of Italy, Kellogg Brown and Root of the United States, and JGC Corporation of Japan. The project site, located offshore Port Harcourt in Bonny Island, has the tenth largest proven gas reserves…..in the world…..

To execute such a massive undertaking in a remote, underdeveloped area in Africa, Nigeria Liquefied Natural Gas Limited selected the team of TSKJ. Industry leaders in their own right, each company has more than 40 years of worldwide experience…..in the hydrocarbon processing business.

The Technip Group is the leading engineering and construction organization in France…..

Snamprogetti, established in 1956, is the international engineering contractor and technology company of the Italian ENI Group…..

Kellogg Brown and Root is an international, technology-based engineering and construction company…..Founded in 1919, Halliburton Company is the world's leading diversified energy services, engineering, construction, maintenance and energy equipment company…..

JGC is Japan's leading engineering and construction company…..

7. By another press release of the same date, Halliburton announced that the first phase of the two-train LNG plant had been completed by "a joint venture team of Technip, Snamprogetti, Kellogg, Brown and Root, and JGC (TSKJ)". It also stated

"This milestone demonstrates TSKJ's ability to bring world class engineering, construction, and project management skills to complex projects," said Lou Pucher, TSKJ's executive director for the project. "We are pleased and proud that the first shipments of LNG are leaving Nigeria on schedule, considering the numerous obstacles and difficulties which TSKJ has overcome during the course of execution".

8. By a further press release dated 31^st October 2001, Halliburton announced that NLNG had awarded a preliminary letter of intent for initial works for the realization of the trains 4 and 5 expansion project to "Halliburton KBR, formerly Kellogg Brown and Root, and joint venture partners Technip, Snamprogetti, and JGC Corporation affiliates (TSKJ)".
9. By a press release of 22^nd March 2002 Halliburton announced that NLNG had awarded the engineering, procurement and construction (EPC) contract for the realization of the trains 4 and 5 expansion project (and I quote)

to a joint venture team, which includes KBR, the wholly-owned engineering and construction subsidiary of Halliburton…..The partners of the equal joint venture team, known as TSKJ, include Technip-Coflexip, Snamprogetti, KBR and JGC Corporation……TSKJ was awarded the EPC contract for trains 1 and 2 and the necessary site infrastructure in December 1995.

10. I mention the above publicity material by way of background. It is not suggested that the claimants saw any of it before the contracts which are the subject of these proceedings were made. Indeed, most of it came into existence after those contracts were performed.
11. The EPC dated 15^th December 1995 was made between NLNG and three Madeiran companies collectively called the Contractor. Those three companies ("the Madeira companies") were:-

TSKJ – Serviços de Engenharia, Limitada;

TSKJ II – Construções Internationais, Soçiedade Unipessoal Limitada; and

LNG – Serviços e Gestão de Projectos, Limitada.

The precise names of the first two of the above-named companies vary as between the defence of the first four defendants, the defence of the fifth defendant, and the evidence. Nothing turns on that. The names given above appear in the defence of the fifth defendant. The last-mentioned company is the fifth defendant. The three companies have been respectively called Madeira 1, Madeira 2 and Madeira 3; and also TSKJ 1, TSKJ 2 and TSKJ 3. Mr. Leighton Williams described those names as nicknames. I shall call the work required by the EPC "the project".

12. There was also an agreement dated 25^th April 1997 between the fifth defendant and its wholly-owned subsidiary Bonny Project Management Company Limited ("BPMCO"). Under that agreement, the fifth defendant appointed BPMCO as its representative for purposes of administration of the engineering design, equipment supply, construction and other services to be provided by the Contractor under the EPC. BPMCO was an English company whose registered office was at Kellogg House, Greenford, Middlesex.
13. For performance of on-site activities on behalf of the Madeira companies, project management and administrative services were also subcontracted by one of the Madeira companies to TSKJ Nigeria Limited ("TSKJN"), a company substantially wholly owned by TSKJ 2.
14. There is abundant evidence from the defendants' witnesses, which I accept, that the term "TSKJ" was used by persons involved in the project as meaning any or all of the Madeira companies, or at the Nigerian site to denote TSKJN or its management. I consider that evidence further below. There is no evidence that the expression was not used to refer to the consortium of the first four defendants, though Mr. Peter Edwards in a witness statement said that to the best of his knowledge defendants 1 to 4 had never traded under the name "TSKJ". Mr. Edwards was a project manager working for M. W. Kellogg Limited and had worked for BPMCO and for TSKJN.
15. The company structure is as follows:-

Company	Shareholders	Comment on shareholder
TSKJ 1	Kellogg Brown & Root Inc. JGC Corporation Snamprogetti Netherlands B.V. Technip	Third defendant Fourth defendant Wholly-owned subsidiary of second defendant First defendant
TSKJ 2	TSKJ 1
Fifth defendant	M. W. Kellogg Limited Snamprogetti Netherlands B.V. Technip	Wholly-owned subsidiary of second defendant First defendant
BPMCO	Fifth defendant
TSKJN	TSKJ 2 (with one share held at the material time by a Nigerian national and at present by TSKJ-US LLC)
Third defendant	Halliburton Company
M.W. Kellogg Limited	Kellogg Brown & Root Dresser Holdings Limited JGC Corporation JGC Corporation Europe B.V.	Subsidiary of Halliburton Company Fourth defendant
Snamprogetti Netherlands B.V.	Snamprogetti SpA	Second defendant

Preliminary dealings
16. The first communication between the parties (I use the word 'parties' without prejudice to the question who were the true contracting parties) was a telephone call from Mr. Cavan MacDonald of M. W. Kellogg Limited to Mr. Watson, managing director of Tube Tech, made in October 1999. Mr. MacDonald said that he thought that Tube Tech might be able to help with the cleaning of some 8,000 fouled condenser tubes. As a result of that call, Mr. Watson entered into discussions with Mr. Dimmock and Mr. Demar, whose offices were in Kellogg House. Those two gentlemen appeared to Mr. Watson to be the men in the United Kingdom who were in charge and who had authority to deal with the matter. On 18^th October 1999, Mr. Watson received from Mr. Dimmock a written instruction to proceed with the supply of the relevant equipment and services. The instruction contained the following words:

Terms and conditions of purchase will be generally as PROC-4 terms and Conditions for Supervisory Services, however, these are still to be handed to, and agreed with, [Tube Tech].

Detailed Servicemen rates, overtime, etc are still to be agreed, however until a formal contract is in place, all reasonable costs and expenses incurred by [Tube Tech] as from [18^th October 1999] and until the services have been completed, will be reimbursed by LNG – Serviços e Gestão de Projectos, Limitada to [Tube Tech].

Martin Dimmock, Principal Buyer,

Bonny Project Management Company Limited,

For LNG – Serviços e Gestão de Projectos, Limitada.

17. I am satisfied on the documentary evidence and the evidence of Mr. Dimmock that BPMCO did not have authority to act for the fifth defendant in relation to the instruction to proceed of 18^th October. Mr. Dimmock initiated the paperwork to obtain such authority, but acted in advance of obtaining it in view of the urgency of the matter. He has not been criticized for that. Mr. Dimmock's evidence, which I accept, was that it was sufficient to obtain authority from the BPMCO committee since that committee was made up of the four companies of the TSKJ name (sc., the first four defendants). Such authority would have been sufficient via the fifth defendant to make a commitment.
18. On 18^th October, Mr. Dimmock sent to Mr. Watson for his information a copy of an e-mail sent to Mr. MacDonald by Mr. Amarjeet Sidhu of TSKJN of which the following is an extract:

We have been informed that NLNG are planning to make train 2 available to us on Monday 8^th November at 7 a.m. They have given us till 14^th November Sunday midnight to carry out the cleaning exercise of the exchangers…..

Could you please organize to have the personnel from the specialist cleaning company mobilized and ready to start work on 8^th November. We will need them to arrive on site probably a week before then, I assume.

Mr. Watson replied the following day in these terms:

Please confirm the exact day and time we are expected to fly out and date to finish cleaning. I have just read this email and it seems that the duration has extended, correct/incorrect? I realize things are constantly changing.

19. On 20^th October a meeting was held at Tube Tech's premises at Rayleigh. Those attending were Mr. Watson, Mr. Byford, general manager of Tube Tech, Mr. Bryan Cooper of NLNG, and Mr. David Andrews of M. W. Kellogg Ltd. Mr. Cooper attended in order that NLNG could satisfy itself as to the technical competence of Tube Tech. Neither Mr. Andrews nor Mr. Cooper was a witness in this case. I am satisfied on the evidence of Mr. Watson and Mr. Byford that Mr. Andrews told them at the meeting that Tube Tech would be working for TSKJ, that TSKJ's client was NLNG, and that "TSKJ" was an abbreviation for a consortium of companies, namely Technip, Snamprogetti and Kellogg. He said that "J" stood for joint venture.
20. Mr. Cooper and Mr. Andrews were evidently satisfied that Tube Tech had the competence to carry out the necessary work. They instructed Tube Tech to undertake a site survey in Nigeria as a matter of urgency. The trip to Nigeria had already been booked. It was arranged for the week-end of 22^nd to 24^th October 1999.
21. On 21^st October, before they flew to Nigeria, Mr. Watson and Mr. Byford attended a technical briefing at Kellogg House, attended also by Mr. Demar, Mr. Andrews, Mr. Dimmock and by two or three others. The meeting was chaired by Mr. Demar. Mr. Byford gave evidence that his understanding was that all those attending the meeting, except himself and Mr. Watson, were employed by TSKJ and based in the United Kingdom.
22. Mr. Dimmock in his first witness statement, made on 19^th February 2004, described his employment as follows:

I have been employed by [BPMCO] as their senior principal buyer, having previously been their principal buyer. BPMCO are principal agents for the Madeira companies. I am currently working for [TSKJN] as their procurement manager. I have never held any position with, nor have I ever held myself out as having, any authority to act on behalf of the first four defendants.

23. Mr. Dimmock did not state in either of his witness statements by whom he was employed in the period from October 1999 to December 1999. However, it emerged in his cross-examination that what he described as his ultimate employer was M. W. Kellogg Limited, but that at the material time he was assigned to BPMCO. I am satisfied that at some time before 25^th October 1999 Mr. Dimmock told Miss Whitford that he worked for M. W. Kellogg Limited. The source of that information is a contemporary note made by Miss Whitford of a telephone conversation between Miss Whitford and Mr. Dimmock. The substance of the note is as follows:

Martin Dimmock works for M. W. Kelloggs who formed an alliance with [Snamprogetti], [Technip] and some other company beginning with J to form TSKJ who work on projects for Shell, AGIP and ELF in Nigeria.

This contract has been with TSKJ since 1995 and they are on train 3? now and it will continue into the future for some time.

…..

TSKJ have split this venture and spread it over 3 companies for tax and security/liability purposes.

TSKJ 1 – is company who provides materials and services outside of Nigeria

TSKJ 2 – is company who provides services in Nigeria (is liable to Nigerian tax)

TSKJ 3 – provides services outside of Nigeria

We are working for TSKJ 3 even though our contract is within Nigeria as this will avoid declaring works to Nigerian authorities. We will be paid from Madeira, Portugal for tax purposes as is under EU trading laws

…..

TSKJ have a management company set up on the refinery called Bonny Project Management Company.

24. I admitted Mr. Demar's witness statement, dated 23^rd February 2004, under the Civil Evidence Act. He did not give oral evidence before me. He stated that he was retired. He stated that he had been employed at the material time as the Home Office Construction Manager for NLNG Project. He did not state by whom he had been employed. On the evidence of Mr. Byford as to his understanding, I am satisfied that Mr. Byford had been told at the meeting, probably by Mr. Demar, that Mr. Demar was employed by a member of the consortium or by M. W. Kellogg Limited.
25. Mr. Byford said in evidence, and I accept, that at the meeting of 21^st October he became aware that the TSKJ consortium included the Japanese company. I revert to this point in paragraph 39 below.
Contract documentation
26. On 27^th October 1999, Mr. Dimmock sent a fax message to Miss Whitford asking for Tube Tech's formal quotation for the provision of services and equipment.
27. A document headed Proposal and Questionnaire ("proposal 4070") was sent to Mr. William Knight, an administrator working for M. W. Kellogg Limited at Kellogg House, under cover of an e-mail dated 29^th October 1999 expressed to be from Mr. Watson but in the form of a letter from Mr. Byford. A copy of the e-mail was sent to Mr. Dimmock. The e-mail stated that an official purchase order accepting Tube Tech's terms and conditions was required urgently. Proposal 4070 was addressed to TSKJ/MW KELLOGG Ltd. at Kellogg Tower, Greenford. It described the work and stated the total price as £735,000.00. Payment terms in the form of three numbered paragraphs appeared in a box. All that appeared on the front page. The whole document consisted of seven pages. The second page consisted of 24 terms and conditions. The expression TSKJ appeared in several of those conditions, including conditions where certain expenses were stated to be "to TSKJ account". It is manifest that it was upon TSKJ that the obligations contained in those conditions were intended to be imposed. If that page stood alone, there could be no doubt whatever that TSKJ was intended to be the party contracting with Tube Tech. No other possible candidate appears. The third page included the proposal number, 4070/MW/eh. I can here pass over the fourth to sixth pages. The seventh and last page contained in a box the legends "Signed by Customer" and "Name in block capitals", with spaces for writing to be inserted beside each legend.
28. Proposal 4070 was accompanied by a draft confidentiality agreement. That was addressed to TSKJ c/o M. W. Kellogg Ltd., Kellogg Tower. It began:

In consideration of your entering into an agreement or contract with [Tube Tech] for work at NLNG Bonny Island, Nigeria, we the undersigned agree on behalf of ourselves, our servants and agents…

[Emphasis added]. There followed the substance of the agreement, and the document concluded with the words "Accepted and agreed to: On behalf of TSKJ", with spaces for signature, name and address, and then the words "Accepted and agreed to: On behalf of NLNG" with similar spaces. Since the document is addressed to TSKJ, the word "your" italicized above is clearly inappropriate in so far as the terms are accepted and agreed to on behalf of TSKJ.

29. On 2^nd November, Miss Whitford noticed that there was an error on the front page of proposal 4070 that had been sent to Mr. Knight. The error lay in the payment terms in the box. On the same day, 2^nd November, she sent by fax (in the name of Mr. Byford) to Mr. Dimmock addressed to BPMCO a corrected version of the front page. In the fax message it was explained that the front page of the proposal had been revised by correction of the payment terms.
30. On 4^th November Miss Whitford received by fax the signed proposal 4070 and signed confidentiality agreement. There was no cover sheet and Miss Whitford was unable to identify the source whence the fax had come. Both proposal 4070 and the confidentiality agreement had been amended without comment. On the front page of proposal 4070, the name of the addressee had been amended to LNG – Serviços e Gestão de Projectos Lda., and a Madeiran address given. The front page was otherwise the original front page with the original payment terms in the box. The last page contained two signatures in the box, those of Mr. J. A. Thomas and Mr. O. Chaumeil. A note was added at the end in manuscript limiting the total value of the order to GBP 1 million in the absence of further agreement. That note was signed by the same two gentlemen. Mr. Thomas dated his signature 4^th November; Mr. Chaumeil dated his, evidently erroneously, as 5^th November.
31. The confidentiality agreement had also been amended. The name of the addressee had been changed to Tube Tech, with an out of date address at Basildon. The date had been altered to 4^th November. A page number had been added. And the words "Accepted and agreed to: On behalf of TSKJ" had been amended to "Accepted and agreed to: On behalf of LNG". That part had been signed by Mr. Thomas and Mr. Chaumeil, and their address was given as Funchal, Madeira. No-one had signed on behalf of NLNG. Finally, the name and address and a logo of the fifth defendant appeared clearly in heavy type at the head of the document. The change of the name of the addressee to Tube Tech rendered the word "your" mentioned above inappropriate whoever had signed the agreement.
32. When Miss Whitford received back the signed copy of proposal 4070 on 4^th November, she noticed that the front page had the original terms and conditions in the box. She thereupon e-mailed to Mr. Dimmock the following message:

I have received the proposal by fax, signed by Mr. J. A. Thomas and Mr O Chaumlyl [sic]. Please be advised that page 1 of the returned proposal has been superseded by the amended page 1 forwarded to yourself by fax 02.11.99 and as confirmed during our telephone conversation 03.11.99.

I will fax LNG, Madeira to confirm same.

She did indeed fax her amended version of page 1, containing the box with the revised conditions and also addressed, as before, to TSKJ/MW Kellogg Ltd., Kellogg Tower to Messrs. Thomas and Chaumlyl [sic] at LNG – Madeira. The fax cover sheet contained the following message:

Thank you for signing and returning the above numbered proposal, to confirm acceptance of the terms therein.

Please kindly find to follow a revised page 1 of this proposal which, as agreed with Mr. Martin Dimmock, supersedes the original first page forwarded by e-mail.

33. No further communication took place in the creation of the first contract.
34. Miss Whitford gave evidence that when she sent her amended version of page 1 to Madeira she had not noticed that the name of the addressee on the first page of the signed contract that had been returned to her had been changed to that of the fifth defendant. She was questioned about that in cross-examination, and Mr. Leighton Williams invited me to reject her evidence on the point. At first sight the evidence may appear surprising, since the name is at the top and the box containing the terms is towards the bottom of the page. But since the original box had contained the wrong terms, Miss Whitford may have been anxious to check that it was the page with the correct terms that had been returned as part of the signed contract. However that may be, and Miss Whitford did not speak to the point, I accept her evidence that she did not notice the change in the name of the addressee.
35. Mr. Leighton Williams submitted that the changing back of the name of the addressee to TSKJ/MW Kellogg Ltd. was of no effect since Miss Whitford had not intended to change the name of the addressee when she sent the revised first page to Mr. Thomas and Mr. Chaumeil on 4^th November. I reject that argument. Miss Whitford had not been informed, and was not aware, that the name of the addressee had been changed to that of the fifth defendant.
36. Mr. Thomas and Mr. Chaumeil were financial controllers of the fifth defendant. They signed proposal 4070 as financial controllers without identifying any company. They signed the confidentiality agreement "on behalf of LNG" as financial controllers. It is clear that Miss Whitford must have known their position. Her fax message of 4^th November to them identified their company as LNG – Madeira. As indicated, she twice mis-spelt Mr. Chaumeil's name as Chaumlyl. Underneath Mr. Chaumeil's signature of proposal 4070 as customer his name is given in manuscript block capitals. The writing of the letters EIL is idiosyncratic and looks distinctly like LYL. That resemblance occurs on no other document that is before me. (That the letters really were EIL appears from a similar idiosyncracy in the block capital manuscript writing of the word "value" in the note limiting the value to GBP 1 million without further agreement). Thus, although I accept her evidence that she did not notice the change of address on the front page of proposal 4070, Miss Whitford was aware that the signatories of that proposal could sign on behalf of the fifth defendant (whether or not also on behalf of other companies).
37. The document that comprised contract number 1 was, as I find, the seven pages of the signed proposal 4070, the last page being the page signed by Mr. Thomas and Mr. Chaumeil and the first page being the amended first page sent to the fifth defendant on 4^th November. That final version was not signed again. But in my judgment it constituted a counter-offer which was accepted when performance of the work for which it provided was accepted. If that document is taken in isolation, it is abundantly clear that the customer is TSKJ, whatever the expression "TSKJ" may mean. Tube Tech promises to carry out the cleaning services in return for performance by TSKJ. However, it is clear from other evidence that the document was in fact signed on behalf of the fifth defendant. The question arises whether the fifth defendant, if not itself TSKJ, (a) itself undertook liability (i.e., as a principal) for performance by TSKJ, or (b) undertook that liability on behalf of TSKJ, or (c) both (a) and (b). Neither counsel suggested that (c) was the case. Since the document purported to be signed by the customer, in my judgment the prima facie interpretation is that the fifth defendant, if not itself TSKJ, was, through its admittedly authorized signatories Mr. Thomas and Mr. Chaumeil, signing the document on behalf of TSKJ. The question remains whether the fifth defendant was, or is to be treated as having been, authorized to bind TSKJ.
38. Prima facie, the expression TSKJ means the consortium, as explained to Mr. Watson, Mr. Byford and Miss Whitford. Material published by the fourth defendant and material published by the parent company of the third defendant states that the expression TSKJ means the consortium.
Tube Tech's state of knowledge
39. Mr. Byford was cross-examined as to when he first appreciated the full meaning of the expression TSKJ. There was no mention of that point in his witness statement. The following is an extract from the relevant part of his cross-examination:

Q. For how long did you think that TSKJ was TSKJ Joint Group?

A. I was aware that it was a joint venture.

Q.Yes.

A. But I can't remember exactly when it was clarified that the J wasn't --- Well, yes I can. It was clarified when we attended the next meeting. Bearing in mind this was the first contact we had had, somebody from TSKJ and somebody from NLNG the site owners [and] Tube Tech. I believe two days later that we attended a meeting at Greenford before departing to Nigeria. It was at that meeting that the error was corrected and I became aware that the J didn't stand for a joint venture.

Q. Who corrected it?

A. I can't remember but it was corrected during the --- It wasn't corrected. It became clearer to me that the J wasn't a joint venture. Clearly, as I have already said, the consortium is a joint venture but the J was explained to include the Japanese company, the correct defendant.

40. Mr. Byford went on to say that his understanding was that all of the people at the meeting at Greenford were employed by TSKJ and based in the UK.
41. As to Tube Tech's knowledge or belief as to the identity of the party with whom it was dealing, Mr. Byford said in his witness statement that at the meeting held on 21^st October Tube Tech was advised to address its invoices to LNG Madeira, Portugal but to send the invoices to Mr. Dimmock of TSKJ at Kellogg House, London who would verify them and clear them for payment. Mr. Byford went on to say in his witness statement:

We said that we would prefer to deal with a UK based company. Mr. Dimmock emphasized that all contractual dealings would be with TSKJ or Kelloggs, and that Kelloggs would act as the UK managers of the project, with LNG Madeira acting as the vehicle for all payments associated with the contract. We were told that LNG Madeira was the cost centre which had been set up for this project for tax purposes. All communication would be between Kelloggs/TSKJ and ourselves. We were told that all members of the TSKJ consortium "put money into the pot".

42. Mr. Byford was cross-examined about that. His cross-examination included the following passages:

Q. Did [Mr. Dimmock] say he worked for Bonny Management?

A. Yes, he probably mentioned that he was working, as well as for Kelloggs, for Bonny Management, which we understood to be part of the TSKJ consortium.

…..

Q. He was, in fact, not working for Kelloggs, was he? He was working for LNG and their subsidiary, Bonny Management, in fact, working for Bonny but acting on behalf of LNG.

A. That certainly wasn't clear at the time and, as I say, our understanding was he was working for Kellogg and a subsidiary then of Kellogg was Bonny Management.

…..

Q. And you were not told that members of the TSKJ consortium put money into the pot.

A. Yes, we were told quite clearly that the TSKJ consortium, that Madeira would not be paying it directly but the consortium would be supporting it, they would be standing behind those payments.

…..

A. My understanding was, as told at the meeting, as told, whether it be accurate or inaccurate, or for whatever reason, was, that we would be working for TSKJ and that Madeira themselves would pay us from the proceeds of monies from the consortium.

43. That evidence is in contradistinction to the evidence of Mr. Dimmock. In his first witness statement, Mr. Dimmock said:

It was made quite clear to all concerned at Tube Tech, in particular Martin Byford and Mike Watson, that all correspondence, with the exception of invoices, which were to be made out to LNG, should be addressed to BPMCO who would act solely on behalf of [the fifth defendant] the sole contracting party.

…..

...I specifically made Tube Tech aware of the existence of the Madeira companies and the first four defendants, the reasons for which they were established, the responsibilities and interests that they had in relation to the project and the importance of keeping those responsibilities and interests separate. I advised Tube Tech that "TSKJ" was commonly used within the project to refer to the three Madeira companies (as in TSKJ 3 to mean LNG) by the joint venture companies whose initials were reflected in the abbreviation and that "TSKJ" was not a trading company. The only company trading in Nigeria in its name was TSKJ Nigeria Limited. Again, Tube Tech was made aware of this. Of course, I cannot say whether all this was communicated to all members of Tube Tech.

44. In that last passage, Mr. Dimmock did not say to whom or on what occasion or occasions he imparted the information in question. He may have been referring to the telephone conversation with Miss Whitford which I mentioned in paragraph 23 above. Mr. Dimmock went on:

I wish to reiterate that Tube Tech were advised from the outset of contract 1 by me and others employed by BPMCO that all communications regarding the contract proposals or otherwise were to be addressed to BPMCO for and on behalf of LNG and all invoices were to be submitted to LNG (copy to BPMCO), as LNG would be the contracting party.

45. In his second witness statement, Mr. Dimmock said:

For the avoidance of doubt, I deny that I advised Martin Byford to address invoices to LNG Madeira Portugal but send them to me for verification and payment as alleged. What I recall of that meeting is telling Martin Byford that we (BPMCO/LNG) needed authorization from within the BPMCO's structure who were managing the contract and subsequently recommending payment. Once obtained, this authorization would have been sent to Madeira to verify expenditure. Before this took place, I may have instructed Tube Tech to send the invoices to myself in BPMCO as Madeira had no knowledge of the requirements at this stage. I would have liaised with Madeira to ensure payment.

46. In cross-examination of Mr. Dimmock the following questions and answers were given:

Q. …..But you mentioned a moment ago that you regarded authorization from the Bonny directors [sic] being each a representative of T, of S, of K and of J as sufficient for your purposes on this occasion. As far as your activities at Kellogg Tower [were] concerned, that was your attitude throughout, was it not? That you were essentially working for T and for S and for K and for J?

A. No, I was working for BPMCO.

…..

Q. And I suggest that as far as dealing with outsiders was concerned, and by that I mean people who were not employees within Kellogg Towers, whether of Kellogg or of BPMCO, as far as dealing with outsiders was concerned, you were quite content to portray yourself and your activities as being the activities of T and S and K and J?

A. I made it quite clear to the vendors that I was working for BPMCO. I made it quite clear that my ultimate employer is and was M.W.Kellogg Limited but I was assigned to BPMCO. I made that quite clear to all vendors.

47. The only other witness who attended the meeting of 21^st October was Mr. Demar. He chaired the meeting. He did not give oral evidence. Although he gave some evidence about the meeting, none of it related to the subject-matter of the above evidence given by Mr. Byford and Mr. Dimmock.
48. In so far as the evidence of Mr. Byford and that of Mr. Dimmock on this point conflict, I prefer that of Mr. Byford. My reasons are these. First, Mr. Dimmock gave evidence that Tube Tech were chosen on the basis that their premises were located conveniently near to Greenford. I am satisfied that that statement is quite incorrect, and the making of it adversely affects Mr. Dimmock's credit as a witness. The second reason is the clandestine way in which the addressee's name TSKJ/Kellogg on the proposal for the first contract was changed to that of the fifth defendant. Third, Mr. Dimmock gave evidence that it could well have been Miss Whitford, acting on his instructions, who changed the name of the addressee to that of the fifth defendant, and that he seemed to recollect giving such an instruction. I find that evidence implausible, and it seems to have been given on the spur of the moment. Finally, the fact that the proposals were addressed to TSKJ/M.W.Kellogg Ltd. supports Mr. Byford's evidence. In particular, I accept the evidence of Mr. Byford set out in paragraph 41 above.
49. Mr. Watson gave evidence about the visit that he and Mr. Byford made to the site at Bonny Island on 22^nd and 23^rd November 1999. He said in his witness statement:

The meeting was a little uncomfortable as representatives of both TSKJ and NLNG each wanted to take control. Clearly a lot was riding on this, and Mr. Byford and I both felt that both companies were trying to manage us. We made it clear in front of them all that our contract was with TSKJ and no one refuted this point.

Throughout the course of the project, Mr. Edwards and others advised both Mr. Byford and [me] that TSKJ was our client and not NLNG. Myles Lewis, the TSKJ senior supervisor….., had a loud confrontation with Nizoo Visram, the NLNG plant manager, in front of me, shouting, perhaps as a result of his frustration at NLNG's consistent interference with the project, that "Tube Tech are working for TSKJ and not NLNG and go through me if you want anything".

50. I accept that evidence. Mr. Edwards gave evidence, which I accept, that in Nigeria TSKJ Nigeria Limited was universally referred to as TSKJ. Thus Mr. Edwards and others may have been intending to convey to Mr. Watson that Tube Tech were working for TSKJN, and may have thought that that was what Mr. Watson meant when he used the expression TSKJ. But it is not suggested in these proceedings that the other party contracting with Tube Tech was TSKJN. TSKJN was in fact the site agent of the main contractor under the EPC contract (i.e. of the three Madeiran companies). The confusion extended to the hearing of this claim. TSKJN was occasionally referred to in the documents and orally as the contractor. For example, Mr. Dimmock said (Day 12, p.36) that TSKJ Nigeria was the main contractor.
51. Mr. Watson also said in his witness statement:

At no time…..was I made aware of the company called "TSKJN" or that the claimant's contract was with anyone other than TSKJ. I understood that the claimant's contract would be with the consortium TSKJ, and not with any other associated company. I was only ever aware that "LNG Madeira" was a payment vehicle. That company, LNG Madeira, was never spoken of as the claimant's client by any member of TSKJ or NLNG. It was only later, when payment of the claimant's invoices was disputed, that I became aware that TSKJ was claiming that the claimant had not contracted with the consortium.

I accept that evidence.

52. I conclude that at all material times Tube Tech, in the persons of Mr. Watson and Mr. Byford, firmly believed that they were dealing with the consortium TSKJ. Moreover, that conclusion is borne out by the terminology of the terms and conditions of contracts 1 and 2. Mr Leighton Williams argued that the expression TSKJ in the terms and conditions referred to TSKJN. But whilst that is a possible reading in some instances, it must refer to the party contracting for the services in those places where a financial obligation is imposed.
53. I accept evidence of Miss Whitford that her understanding, derived from Mr. Watson and Mr. Byford, was that TSKJ was the contracting party. She understood the telephone conversation with Mr. Dimmock in which she was told that Tube Tech were working for TSKJ 3 as confirming that understanding. She was business manager of Tube Tech. She had no authority to make or vary contracts on behalf of Tube Tech. The identity of the contracting party was not her responsibility.
54. In the context of Tube Tech's state of knowledge as to the identity of the party with which Tube Tech were contracting, Mr. Leighton Williams invited me to consider the confidentiality agreement and a letter of guarantee.
55. Miss Whitford gave evidence that she did not recall noticing the heading on the confidentiality agreement when she received it back as amended. I consider it unlikely that she did not see the heading. But I find it credible that it did not memorably register with her. She knew that Tube Tech were concerned with the fifth defendant, since Tube Tech's invoices were addressed to that company.
56. The letter of guarantee was dated 1^st November 1999. It was addressed to Tube Tech. It began:

This letter is provided solely in connection with your proposal to LNG – Serviços e Gestão de Projectos, Limitada, dated 29^th October 1999, for subcontract 6333-3L-C005-VSM to repair the cooling water facility at Bonny Island, Nigeria.

We, M.W.Kellogg Limited, hereby guarantee the ability of LNG – Serviços e Gestão de Projectos, Limitada to pay to Tube Tech International Limited any sums of money validly owed under the executed subcontract up to an aggregate limit of £354,500…

The letter was signed by R.C.Goode Jr., as director, chief executive officer and by Steven A. Kuxhausen as director, finance.

57. Mr. Leighton Williams relied on the confidentiality agreement and the letter of guarantee as clearly identifying the fifth defendant as the contracting party. I reject that submission. First, the confidentiality agreement did not identify any party to the agreement. Second, the changes to the draft letter sent by Tube Tech to TSKJ, namely altering the addressee to Tube Tech and altering the name of the principal of the signatories to that of the fifth defendant, were not drawn to the attention of Tube Tech. Mr. Byford gave evidence that he did not notice the changes. As to the letter of guarantee, the statement that Tube Tech's proposal was to the fifth defendant was false. And guaranteeing the ability of the fifth defendant, i.e. in Tube Tech's mind the payment medium, to pay some money would not necessarily imply that the fifth defendant was the contracting party. Mr. Byford did notice the reference to the fifth defendant in the first line, and struck through the letters 'LNG' in the name of the fifth defendant. He left unaltered the name of the fifth defendant as the guarantor. He also made some other manuscript amendments. Mr. Byford did not know what became of his amended version. Mr. Leighton Williams pointed out that the document had a fax number at the top and the name M.W.Kellogg at the centre, which meant received at that end. It seems that Mr. Byford's notes were nevertheless ignored. I accept evidence of Mr. Byford that he did not want a form of guarantee, though he did want assurance of payment.
58. Mr. Leighton Williams submitted that by checking the financial standing of the fifth defendant, Tube Tech showed that it knew that it was contracting with that company. I reject that submission. Clearly, the consortium TSKJ were a consortium of multinational companies any one of which would have been good for any money due under the contracts. There was at least some point in checking the financial standing of the fifth defendant, given that the moneys due to Tube Tech were to pass through its hands.
59. These matters are wholly insufficient in my judgment to negative the conclusion I have reached as to the identities of the parties to the contracts for the work or as to the belief of Tube Tech that they were contracting with TSKJ.
Authority
60. Mr. Dimmock gave evidence that authority to contract on behalf of the fifth defendant came from the committee of BPMCO. That committee was made up of representatives of the four companies of the TSKJ name. On 27^th October 1999 Mr. Dimmock sent a fax message to Tube Tech for the attention of Miss Whitford in which he said:

I still await your formal quotation for the provision of services and equipment. This is important – I need this to generate the necessary approvals from our joint venture, some of whom can be awkward if they find out we are proceeding without their approval.

61. Mr. Dimmock explained in evidence that the reference to "our joint venture" was a reference to the members of the BPMCO committee.
62. As to the decision that the fifth defendant should be the party contracting with Tube Tech, Mr. Dimmock said that some months before October 1999 he had discussed with Mr. Kuxhausen, the finance director of MWKL, and someone from the fourth defendant whose name he could not remember, the question which Madeiran company should be the contracting party in the case of what he described as servicemen contracts. He said he believed it was Mr. Kuxhausen who made the decision. He, Mr. Dimmock, was instructed to comply with it. The reason for the decision was twofold: to avoid the necessity of registering the vendor or supplier of the services as a limited company in Nigeria, and to avoid a Nigerian withholding tax. Mr. Dimmock said that he applied that general instruction in the case of the contract with Tube Tech.
63. Mr. Dimmock explained that by a servicemen contract he meant a labour-only contract. If a contract was for the provision of services within Nigeria, as I find the contracts with Tube Tech to have been, Mr. Dimmock accepted that the contract would have to be made with TSKJ 2.
64. Mr. Lou Pucher was employed at the material time, October 1999, by the third defendant. I accept that from the evidence of Mr. Dimmock. Mr. Pucher did not give oral evidence before me. He gave a witness statement which was in evidence. He stated that at the material time he was employed as the Executive Project Director for NLNG Project; but he did not state by whom he was employed at the material time. He said that not a single contract had been let by the first four defendants collectively or individually nor had any party been so authorized. None of the arrangements between the first four defendants, he said, permit or permitted any of them to enter into contracts for or on behalf of any other of them. He said that he could not make any specific comments as to the contracts that were set up with Tube Tech.
65. Mr. Ernie Demar was employed at the material time by the third defendant. I accept that from the evidence of Mr. Dimmock. Mr. Demar did not give oral evidence before me. He gave a witness statement which was in evidence. He stated that at the material time he was employed as the Home Office Construction Manager for NLNG Project. As such, he was responsible for the co-ordination of all construction activities and engineering procurement in relation to the project. He did not state by whom he was employed at the material time. He said that Mr. Pucher, in his capacity as Executive Project Director, authorized him to take the steps necessary for the cleaning of the condenser tubes and the cooling water system of train 2. He said that he could not make any specific comments as to the contracts that were set up with Tube Tech as they were dealt with by Mr. Dimmock. He said that not a single contract had been let by the first four defendants collectively or individually, nor had any party been so authorized.
66. Mr. Thomas stated in his witness statement that neither he, as financial controller of the fifth defendant, nor the financial controllers of the other two Madeiran companies held any authority to act on behalf of the first four defendants. Mr. Khan, who was employed by M.W.Kellogg Ltd. and was at the material time on secondment to TSKJN as project engineer at the site, said that no-one among the Madeira companies would let out any contract for work within the contractor's scope, except for purchases within Nigeria, which were let by the contractor's site agent TSKJN.
67. I accept the statement of Mr. Thomas mentioned in the preceding paragraph (66), if it was intended to be confined to express authority. I cannot accept the evidence of Mr. Khan quoted in the same paragraph. Possibly there is some error in the drafting of his statement. He was called as a witness by the defendants. It is the defendants' own case that the fifth defendant contracted with Tube Tech. I accept Mr. Pucher's evidence that none of the arrangements between the first four defendants permitted or permit any of them to enter into contracts for or on behalf of any other of them, if he was intending to refer to arrangements giving express permission. There is no evidence of any express prohibition.
68. As to Mr. Pucher's and Mr. Demar's evidence that not a single contract had been let by the first four defendants collectively or individually nor had any party been so authorized, in the context they must have intended it to be confined to contracts for the works to be performed in pursuance of the project. Even so, I cannot accept that evidence in so far as it extends to contracts entered into with the claimants, for reasons that will appear.
69. Mr. Dimmock said, and I accept, that in his capacity as principal buyer for and on behalf of BPMCO, he had the authority, powers and duties to ensure the proper execution of the purchase, inspection and shipping of equipment and materials to the job site in Bonny Island. He also said that he neither had nor at any time purported to have authority to act on behalf of the first four defendants. He was the primary person, he said, who was in charge of the matters relating to the contracting and invoicing aspect of the contracts with Tube Tech.
70. Mr. Dimmock gave evidence, which I accept, that Mr. Thomas, one of the signatories of contract number 1, was employed by MWKL but seconded to Madeira. Mr. Thomas was authorized to sign on behalf of all three Madeira companies.
71. I infer that the four members of the BPMCO committee, representing the four members of the consortium TSKJ, must have given their authority for the signature of a contract with Tube Tech for the supply of cleaning services for the tubes. But I am not satisfied that they saw the proposal or appreciated that it was addressed to TSKJ. I am not satisfied that they authorized the signature of the contract on behalf of any company other than the fifth defendant. It is true that Mr. Thomas and Mr. Chaumeil signed the agreement as customer, and hence ostensibly on behalf of TSKJ, but I am not satisfied that they had actual authority so to sign the agreement.
Holding out
72. There is abundant evidence, given by no fewer than seven of the defendants' witnesses, that the name TSKJ was used and understood to mean TSKJN and the Madeiran companies or any of those four companies. Mr. Kuxhausen stated in his witness statement that the term TSKJ was used by persons within the project as meaning any one or all of the Madeiran companies, or at the Nigerian site to denote TSKJN management. Mr. Elliott stated that TSKJ Nigeria Limited was informally known in Nigeria as TSKJ. Indeed, Mr. Elliott used the expression in his witness statement, where he referred to TSKJN site management as "TSKJ site management". Mr. Dimmock stated in his witness statement that TSKJ was "a term used at site to denote TSKJN management or any or all of the Madeira companies. Thus the term TSKJ to denote LNG was not incorrect". By LNG, Mr. Dimmock meant the fifth defendant. And it was the use of the expression, not on site but in a document, contract 2, emanating from England, to which he was referring as denoting LNG. Mr. Thomas stated in his witness statement that TSKJ was a term commonly used by project personnel to refer to any or all of the Madeira companies that acted as Contractor for the NLNG project. Mr. Pucher stated in his witness statement that the term TSKJ meant the three Contractor Madeira companies and/or its [sic] representative in Nigeria, TSKJ Nigeria Limited. Mr. Edwards said:

The term "TSKJ" was commonly used within the project to refer to the contractor companies (the three Madeira companies: TSKJ – Serviços de Engenharia Limitada, TSKJ II – Construções Internacionais Soçiedade Unipessoal Limitada, and the Fifth Defendant LNG – Serviços e Gestão de Projectos Limitada) formed by the joint venture companies whose initials were reflected in the acronym (Technip, Snamprogetti, Kellogg Brown and Root and JGC Corporation). The term "TSKJ" was also used when referring to TSKJ Nigeria Limited, and the initials T, S, K and J are used in the TSKJ Nigeria Limited logo which is widely used on the job site to identify TSKJ Nigeria Limited buildings, vehicles etc. In Nigeria, TSKJ Nigeria Limited is universally referred to as "TSKJ".

Mr. Khan said that people at site generally spoke of, and still speak of, the Madeira companies and TSKJN as "TSKJ", although often without a precise idea as to which of these companies would contract for which aspect of the project work. I accept all of that evidence.

73. It is manifest that the first four defendant companies acquiesced in the use of their consortium name TSKJ by TSKJN and by the Madeiran companies, including the fifth defendant. In my judgment, the conclusion is clear that they allowed their consortium name to be so used.
74. Mr. Pucher said that the first four defendants have never traded as TSKJ. Mr. Edwards said that to the best of his knowledge defendants 1 to 4 had never traded under the name TSKJ.
75. For reasons that will appear, I cannot accept the broad proposition that the first four defendants have never traded as TSKJ.
76. In my judgment, by allowing their consortium name to be used by TSKJN and by each of the Madeiran companies in the course of their businesses, the consortium and its members allowed TSKJN and the Madeiran companies to trade in their name, and held those companies out as authorized to enter into contracts on their behalf. Thus when Mr. Thomas signed the first contract on behalf of the fifth defendant as customer, the fifth defendant was held out as being authorized to contract on behalf of the consortium.
Ostensible authority
77. I accept the following propositions, adapted from propositions put forward by Mr. Aylwin, as correct and relevant to the question of ostensible authority:

(1) Together with NLNG, the consortium TSKJ created the project, in the sense that it provided the resources of the contractor employed for the project by NLNG.

(2) The consortium created the corporate and administrative structure which ran the project. That is apparent from the shareholdings, and indeed is not in issue.

(3) The consortium created a management structure whereby, to a substantial extent, the project was run from London, from Kellogg Tower. There were several hundred people working on the project at Kellogg Tower.

(4) BPMCO was the company in London running the project.

(5) Each of the four members of the consortium installed a representative at Kellogg Tower to act on its behalf, as a member of the management committee of BPMCO, in the giving of approval to contracts which it was intended should be entered into for the purposes of carrying out the project.

78. Mr. Dimmock had actual authority as principal buyer of BPMCO to arrange contracts between Tube Tech and the Madeiran companies. The making of such contracts required the approval of TSKJ in the form of the management committee of BPMCO. Mr. Leighton Williams drew a distinction between the giving of approval and the giving of authority. But in this case no such distinction arises. Given his authority as principal buyer, all Mr. Dimmock needed in order to arrange contracts was the approval of the committee. Such approval completed his authority. Thus Mr. Dimmock had the actual authority of TSKJ to arrange a contract between Tube Tech and the fifth defendant. Given that the fifth defendant was held out by TSKJ as authorized to enter into contracts behalf of TSKJ, Mr. Dimmock was in my judgment held out by TSKJ, and in particular by the four members of the consortium represented in the BPMCO management committee, as being entitled to use the name TSKJ in relation to those contracts. In particular, he was held out as having authority to authorize other authorized signatories to do so. As I have found, Mr. Dimmock did not explain that he had no actual authority to authorize the making of a contract on behalf of the consortium or its members. Indeed, he held himself out as having such authority at the meeting held on 21^st October.
79. Mr. Thomas and Mr. Chaumeil signed the first contract as the customer, i.e. as TSKJ. They were not actually authorized to do so. They were actually authorized by TSKJ to sign on behalf of the fifth defendant, which was itself ostensibly authorized to enter into the contract on behalf of TSKJ. Although Mr. Watson and Mr. Byford were not led to believe that they were contracting with the fifth defendant, or that Mr. Thomas and Mr. Chaumeil were signing the contract on behalf of the fifth defendant, in my judgment those circumstances are sufficient to establish ostensible authority on the part of Mr. Thomas and Mr. Chaumeil to enter into the contract on behalf of TSKJ. By holding out the fifth defendant as entitled to contract on behalf of TSKJ, TSKJ held out the fifth defendant's authorized signatories, Mr. Thomas and Mr. Chaumeil, as authorized to sign on behalf of TSKJ. That is what they purported to do by signing as customer.
The terms of contracts 1 and 2
80. Contract 1 stated that the objective was to remove as much deposit as possible from internal bore from as many tubes/pipelines as possible within the time allowed on certain units. Those units were identified by alphanumeric references. It said

Total price £735,000.00.

81. Payment terms were set out in a box as follows:

1. 30% payment of estimated total price with order (£125,000.00 part payment received 27^th October 1999 plus £35,000.00 due 29^th October 1999). £60,500.00 balance due immediately.

2. 40% payment of estimated total price prior to departure from UK before or by the 2^nd November 1999.

3. Balance of total estimated price of £735,000.00 will be payable by confirmed irrevocable letter of credit payable 14 days from date of invoice on production of a certificate of declaration….

4. Balance of final invoice for all costs relating to this project will be payable within 14 days from final invoice.

82. 24 terms and conditions were set out on the second page. Some of those conditions were as follows:

1. Above price excludes all costs associated with flights/freight/export packaging/ mobilization/demobilization/insurances/accommodation and subsistence costs/ minor consumables unspecified/consultancy rates of M.Watson/and other charges not otherwise mentioned…..

3. As requested by E. Demar all equipment has been made available for a 21 day period: Committing materials and equipment on 30^th October 99 and returning to our premises on the 19^th Nov. 99.

4. As requested by E. Demar, manning will be provided from departure from the UK on the 2^nd Nov. and departure from Nigeria on the 17^th Nov. 99.

5. In the event of either all equipment or all personnel not returning to Tube Tech International premises by the 19^th Nov. 99, an additional charge of £35,000 per day will apply.

6.If equipment is not returned by latest 3^rd December 99, all equipment will be charged at full new replacement cost. The hire charges as specified in 5 will continue until all replacement equipment has been delivered and commissioned at Tube Tech International premises.

7. In the event that part of the equipment does not return, pro-rata charges will be levied based on the equipment list evaluation schedule provided of each item.

8. In the event of part of the work force not returning, pro-rata charges of £35,000 will be levied based on the percentage of the work force unable to return to the UK.

…..

10. Any additional work required outside the original planned 5 day/5 night scope of works will be charged on a pro rata basis i.e. (£735/21 = £35,000.00).

83. On the third page it was, among other things, stated that the fly out date was 2^nd November 1999, the fly back date was 17^th November 1999, that the work would be carried out utilising about 30 men and that the working period planned was working 5 X 24 hour shifts within a 7 X 24 hour shutdown window only (6^th Nov. 1999 to 12^th Nov. 1999 inclusive). There followed a list of equipment, materials, documents and facilities to be supplied by Tube Tech and a list of facilities, materials, documents and information to be supplied by customer.
84. On the fourth page it was stated that there would be a daily rate of £32,000 per day or part thereof in the event of customer delays or performance restrictions or variations to contract. It was stated that consumables, additional equipment hire, delivery and transport charges would be charged at cost + 15% and that delivery and transport would be to TSKJ account cost + 15%. There followed on the fifth, sixth and last pages a questionnaire which I can pass over, followed by the signatures and manuscript writing that I have mentioned (paragraph 30).
85. Contract 2 was entered into on or about 13^th November 1999. It arose because the deposit in the tubes was found to be substantially worse than expected.
86. Contract 2 stated the objective to unblock and clean as much deposit from as many tubes as possible from the internal bore of condensers E1431A, E1431B and E1431C in the shortest time period, i.e. production standard defined as a good flow of water through the tube. The three condensers E1431A, E1431B and E1431C were included in the list of units given on page 1 of contract 1.
87. Contract 2 continued:

(This quotation is subject to physical hands on assessment of deposit characteristics)

Total estimated price £875,000.00

(Minimum charge for 25 days period from 17^th November 1999 including mobilization of equipment from the Tube Tech International UK premises and return to the same)

At the bottom of the first page five payment terms were set out as follows:

1. 70% payment of total estimated price of £875,000 prior to equipment departure from UK.

2. 30% balance of total estimated price of £875,000.00 will be payable by confirmed irrevocable letter of credit, payable within 14 days from the 11^th December 1999 (the 25^th day)

3. Any subsequent days beyond the 11^th December will be charged pro-rata at £35,000.00 per day payable by immediate Telegraphic Transfer against invoices raised on a weekly basis.

4. Balance of final invoice for all costs relating to this project will be payable by Telegraphic Transfer 14 days from date of invoice.

5. All charges exclude VAT at current rate unless exempt. All overdue accounts will incur interest of 2.5% per month.

88. On page 2 it was stated that the work would be carried out utilizing ca. 24 personnel, that the working period planned was 24 hour shifts until completion, and that work was based on 24 hour working. There was a list of equipment per man, material, documents and facilities to be supplied by Tube Tech, and a list of facilities and information to be supplied to the customer.
89. On page 3 there was a box containing a heading in the following terms:

If in the event of customer delays/performance restrictions and various [sic] to contract, the following variation rates will apply

Under that heading, in the box, various matters, such as restricted access, change in the severity/thickness of deposit/coating, and standing down were shown as attracting the rate "£ pro rata of contract shift rate". The box also showed consumables, additional equipment hire, delivery, and transport charges as to be charged at cost + 15%.

90. On page 7, there was a list of 25 terms and conditions, including the following:

1. The above price excludes all costs associated with flights/freight/export packaging/mobilization/demobilization/insurances/accommodation and subsistence/ consumables unspecified/consultancy rates of Mr. M. Watson/other reasonable charges not otherwise mentioned.

3. The rate of £35,000 per day will commence on 17^th November 1999 and will be ongoing until all UHP pumps tracks and associated equipment and personnel are returned to Tube Tech International premises.

4. In the event that part of the equipment does not return, pro-rata charges will be levied based on the equipment list evaluation schedule or market value provided of each item, which ever is the greater.

5. In the event of only part of the workforce returning, pro-rata charges of £35,000 per day will be levied based on the percentage of the work force unable to return to the UK.

7. Whilst all reasonable and practical endeavours will be made to complete the work scope within the time frame given, no guarantees are implied or given.

15. If duration extends to Xmas period – TSKJ to arrange all staff to be returned no later than 17^th of December and to re-mobilize on 5^th January 2000.

91. There is no dispute that the proposal of contract 2 was addressed to TSKJ/M.W.Kellogg Ltd. Mr. Leighton Williams submitted that the parties were the same as the parties to contract 1, i.e. Tube Tech and the fifth defendant. I accept the first part of that submission, but not the second. I find that both contract 1 and contract 2 were made between Tube Tech and the first four defendants.
92. Mr. Leighton Williams argued that the contracts on their true construction provided that all moneys would be brought into account in due course. And there was an implied term, he submitted, that all invoices submitted by and payments to be made to Tube Tech would be subject to documentary justification, cost accounting and final reconciliation by Tube Tech upon satisfactory conclusion of the work under the contract. He relied upon the facts that the total price was expressed to be estimated and that clauses 7 and 8 in contract 1, and clauses 4 and 5 in contract 2, contained pro rata provisions. He further submitted that any entitlement of Tube Tech to payment of £35,000 a day under clause 5 of contract 1 must be conditional on the supply by Tube Tech of the full complement of approximately 30 men and the specified equipment. Finally, Mr. Leighton Williams submitted that contracts 1 and 2 were contracts for the supply of labour and equipment, not contracts for the supply of services.
93. I reject Mr. Leighton Williams's last point. Tube Tech were a specialist supplier of services which involved special skills, not least in the avoidance of the danger inherent in the use of high pressures. The contracts were clearly on their face contracts for the supply of a service as set out in the stated objectives.
94. In my judgment, the references in both contracts to the price being estimated does not imply that the total price will be revalued on completion of the work on the basis of the man-hours and materials used. It merely foreshadows the fact that the price may be adjusted in accordance with the express terms. Additionally, in relation to contract 2, the inclusion of the word 'estimated' in the expression 'total estimated price £875,000.00' arises out of the immediately preceding statement that the quotation was subject to an assessment of deposit characteristics.
95. The statements of approximate numbers of men to be used are in my judgment merely descriptive of the general nature of the work to be performed. They do not constitute contractual obligations, if only because they are uncertain in the sense of being imprecise. Moreover, the basic obligation in the case of each contract is in effect to work as fast as possible. If that is fulfilled, no damage could be suffered by failure to supply the stated approximate number of men. On the other hand, supply of the stated number of men would be no answer to a claim for breach of the basic obligation.
96. The term sought to be implied by Mr. Leighton Williams is, I think, predicated on the proposition that the sum due to Tube Tech is to be determined by reference to the number of man-days worked and to the number of days' hire of equipment at a notional rate. Since I have rejected that proposition as a general proposition, I reject his submission that the term is to be implied. The proposition is, however, true to the extent, if at all, that an invoice claims sums due under the pro-rating clauses. But none of the invoices in dispute in this case claim sums under those clauses.
97. In support of his submissions, Mr. Leighton Williams relied on the background to the contracts. I consider the background further below under the heading Substantiation, but in my judgment there is nothing in the background or in the express terms of contracts 1 and 2 to necessitate implication of the general term for which Mr. Leighton Williams contends.
98. In my judgment, employment of the approximate numbers of personnel mentioned in contracts 1 and 2 is not a condition of Tube Tech's entitlement to be paid £35,000 a day under clause 5 of contract 1.
99. Clause 5 of contract 1 has the effect, in my judgment, that if some equipment and some personnel return to Tube Tech's premises by 19^th November 1999, the additional charge provided for by that clause will not apply.
Substantiation
100. Mr. Leighton Williams submitted that the contracts, on their true construction, required a breakdown of the costs and substantiation of the charges. Or such a requirement was to be implied. He submitted that Tube Tech were aware from the outset that the fifth defendant required a breakdown, and that repeated requests were made for a breakdown and for substantiation. He relied on communications made both before and after the making of contract 1.
101. As to communications made before the making of contract 1, Mr. Leighton Williams relied, in particular, on the following:

(1) An email of 20^th October 1999 from Mr. Dimmock to Mr. Watson, including the statement "We need your full quotation, with manhour rates, pdq".

(2) An email of 2^nd November 1999 from Mr. Dimmock to Mr. Watson saying "….I have also not had a breakdown of the costs associated with the GBP 735,000 total…I will need …..the latter before setting up the letter of credit…"

102. As to communications made after the making of contract 1, Mr. Leighton Williams relied on the following:

(1) A discussion on site between Mr. Edwards and Mr. Byford which took place on 12^th November 1999. On 8^th November, Mr. Dimmock had sent an email to Mr. Edwards saying "I would like to have the following written into the letter of credit for presentation to the bank before the money is released:…..2. The invoice to have full substantiation of all the costs, including manhour rates, and this to be signed by myself prior to presentation to the bank". On 12^th November, following his meeting with Mr. Byford, Mr. Edwards emailed Mr. Demar this message with reference to Mr. Dimmock's email of 8^th November: "….For 2 [Mr. Byford] will supply a breakdown of costs material and labour, not rates and not 'full substantiation' as he doesn't know what this means".

(2) An email dated 21^st December 1999 from Mr. Dimmock to Miss Whitford in which Mr. Dimmock said "…..please request that Martin Byford visits the office as soon as possible in order that we reach agreement on how this and future invoices can be settled. As reflected in the letter of credit, I need substantiation of how the first total of £735,000 is made up i.e.

Total cost for personnel

Cost of hire of equipment, split into pumps, darts, lances etc.

Cost of purchase of any equipment and ownership of the same

Any other costs

I need this information in order not only to detail the make-up of the expenditure, but also to show to the auditors – whether they be from the client, or our insurers, or client's insurers, etc. – that the costs were competitive and reasonable. I will also require the same for the settlement of the final 30% of the second contract for £875,000".

(3) An email dated 23^rd December 1999 from Miss Whitford to Mr. Bathurst. (Mr. Richard Bathurst was an adviser to Tube Tech on accountancy and financial matters. He gave evidence before me). In that email Miss Whitford said "Further to your discussions with [Mr. Byford], please find to follow breakdown of costs regarding contract 1 (incidentally, this breakdown relates to contract 2 also):-

£250 per day per man x 3 markup x 21 days (30.10 – 17.11.99) based on 32 men = £24,000.00 (manning ranged between 30-35 men over contract, including management and supervision).

Broadly speaking the equipment is therefore £11,000 per day average for hire of equipment.

Richard, please only divulge the fully marked up figures, we do not want to disclose any actual costs of labour or materials for substantiation purposes".

(4) An email from Mr. Dimmock to Mr. Bathurst dated 5^th January 2000 asking Mr. Bathurst to fill in some blanks purporting to give the amounts of various items relating to contract 1 and contract 2.

103. As to point (1) above, there was a conflict of evidence whether Mr. Byford said that he did not know what full substantiation meant. I do not regard this detail as being of importance, but I return to it shortly below.
104. There was a dispute whether such breakdown of costs as was given by Tube Tech was for insurance purposes only or was for the purpose of justifying the charges made under the contracts. Mr. Leighton Williams submitted that it was the latter, and that the giving of such breakdown showed that both parties contemplated that all Tube Tech's charges under the contracts would require justification by reference to costs. It is unnecessary for me to decide that dispute, since it is abundantly clear from the correspondence that such information was supplied with a degree of reluctance on the part of Tube Tech and was given under pressure from BPMCO and TSKJ. The fact that the information was supplied does not in my judgment assist in the construction of the contracts.
105. I have been invited to consider the above communications as part of the background relevant to the construction of the contracts. But there are other matters of background which are also relevant.
106. I am satisfied that Tube Tech were in a strong bargaining position vis a vis TSKJ. TSKJ attempted, without success, to find other contractors willing and able to quote for the urgent work of cleaning the tubes. To the knowledge of Tube Tech, the down time was costing NLNG a sum in the region of 1 million United States dollars a day in the value of lost production.
107. Mr. Byford said in his first witness statement that at the meeting chaired by Mr. Demar on 21^st October 1999 Mr. Demar made it clear that the subject-matter was a category 1 critical path contract and that the site was losing a vast amount of money. He said that the loss would be in the region of $1 million per day during the planned emergency shutdown.
108. There was a conflict of evidence about that. In his supplemental witness statement, Mr. Demar said

I deny that I ever stated that the loss would be in the region of $1 million during the planned emergency shutdown…..I may have said something similar but I would never have quoted any figures as I did not know them at the time.

109. Mr. Demar did not give oral evidence. I find his denial somewhat equivocal. I am satisfied on the documentary evidence from the insurance file that the loss was about $1,250,000 a day and that Tube Tech's work was undertaken in order to minimize that loss. I accept the evidence of Mr. Byford quoted in paragraph 107 above.
110. It is clear from some of the contemporary documents that TSKJ were perfectly well aware of their bargaining position. In his email of 2^nd November 1999 to Mr. Thomas, Mr. Dimmock said

….attached is the Tube Tech proposal and confidentiality agreement. Ernie [Demar], Syed and myself have discussed the terms and conditions, etc. and have concluded that we do not have any choice but to accept them.

And in an email of 8^th November 1999 mentioned above, Mr. Dimmock wrote to Mr. Edwards

We - BPMCO/TSKJ - have been forced to accept almost all of Tube Tech's terms and conditions up till now…..due to the urgency, [I] have not been in a position to negotiate at all.

111. I return to the conflict of evidence mentioned in paragraph 103 above. In his first witness statement, Mr. Byford said:

On 12^th November 1999, Mr. Watson, Mr. Edwards and I held an informal meeting about progress and the supply of equipment. During the meeting, Mr. Edwards advised that Mr. Demar had been chasing him for a breakdown of costs. I advised Mr. Edwards that I would be prepared to provide a "broad brush" breakdown for insurance purposes only, but would not be prepared to provide any substantiation or breakdown of costs. Mr. Edwards therefore immediately emailed Mr. Demar of TSKJ (Mr. Dimmock's senior) in our presence. He confirmed in this email [a copy of which Mr. Byford exhibited] that I would provide a breakdown of costs, material and labour, not rates, and not "full substantiation". Mr. Edwards sent this email during this meeting, but Mr. Watson and I did not see the document until a later date. Had I seen the email at the time, I would have objected to its content, as I was only prepared, at a later stage, to provide a breakdown for insurance purposes. In his email, Mr. Edwards stated that the reason I was not prepared to provide "full substantiation" was because I did not understand what this meant. I never said this, and I can only assume that Mr. Edwards added this comment to ease diplomacy. I had made it abundantly clear to Mr. Edwards that we would not provide this breakdown as our proposals were not based on such calculations.

112. Mr. Edwards, in his second witness statement, said:

In the email I sent to Ernest Demar I accurately reflected Martin Byford's comments. Martin Byford was handed a copy of that email and made no comments or suggested any corrections at the time.

In oral evidence in chief, Mr. Edwards said that he handed the copy of the email to Mr. Byford shortly after he sent it. He printed a copy off, and either the same day or the next day he gave a copy to Mr. Byford for his information. In cross-examination he said that his understanding was that Mr. Byford would break his cost down into a labour element and a material element, but he would not give a rate for each man on the site. He would give cost of labour and cost of materials but would not break it down further. He went on, with reference to Mr. Byford:

The bit he didn't understand was full substantiation. I am sure he didn't want to understand it.

In cross-examination Mr. Byford confirmed his evidence that he did not say that he did not know what full substantiation meant. And he said that he was not handed a copy of the email until some time later when he requested a copy.

113. I am satisfied that Mr. Byford said some words to the effect "I don't know what you mean by full substantiation" or "I don't know what you are talking about". He was clearly using the language euphemistically in order to avoid providing the information in question, as Mr. Edwards clearly understood. As to the time when Mr. Byford received a copy of the email, Mr. Edwards's initial statement strongly implied that Mr. Byford was given a copy of the email on the same occasion as that on which it came into existence; he later qualified that evidence. On balance, I prefer Mr. Byford's evidence on this point, namely that he did not receive a copy of the document until some time later.
Contract 2A
114. Contract 2A is a contract claimed to have been made between Tube Tech and TSKJ on or about 5^th December 1999 whereby Tube Tech would focus all its resources on finishing the cleaning of both exchangers 1431 A and C earlier than the planned finish date of 14^th December 1999 at 6 a.m. and that in return Tube Tech would be paid £35,000 per 12-hour shift saved on both exchangers. It is not disputed that in the event, Tube Tech completed work on the two exchangers by 1800 hours on 13^th December, one shift ahead of program. Accordingly, Tube Tech invoiced the defendants for £35,000 by invoice number 5191. That invoice has not been paid. The defendants contend that they were not party to contract 2A.
115. There is a conflict of witness evidence about contract 2A. Mr. Byford wrote in his witness statement:

During a number of site meetings on or around 5^th December 1999, attended by Mr. Pucher, Mr. Edwards and myself, TSKJ/NLNG and [Tube Tech] site management agreed an early completion scheme. This agreement had been proposed by Wim Kemper of NLNG to the meeting by telephone at one of those site management meetings. I was asked whether it would be possible to incentivize [Tube Tech's] personnel to work faster on site. I said that while it would be possible to offer them an incentive, it would not be possible to make them go any faster. Mr. Kemper explained that they were eager to announce at the Shell AGM, on 14^th December 1999, that the plant cleaning had been completed and that the plant was due to go back on line. (I understand that Shell are, or were at the time, a 25 per cent. shareholder of NLNG).

Mr. Edwards and I agreed upon this scheme at the meeting….At the end of the meeting, I was asked to go away and draft an agreement.

The scheme was authorized by Mr. Pucher of TSKJ and, I believe, David Fletcher of NLNG. The bonus completion scheme was made with NLNG, but it was agreed by Mr. Pucher that it would be paid for by TSKJ.

I drafted an agreement relating to this early completion scheme, dated 15^th December 1999…..I signed this, and then passed it to Mr. Pucher. I now understand that the agreement was passed by Mr. Pucher to Mr. Kemper, as since these legal proceedings began I have seen a memo from Mr. Kemper to Mr. Pucher attaching the agreement.

116. In cross-examination Mr. Byford gave the following evidence:

It is not quite correct that the defendants refused to co-operate in the incentive agreement. Mr. Kemper, who was the senior manager for NLNG communicated with Mr. Pucher, the most senior man of TSKJ. Mr. Pucher asked me and Mr. Edwards if the time was right. We agreed it wasn't. But later when Mr. Kemper asked the question we decided that the time was right. We agreed the financial side with NLNG, who would finance it, and Mr. Pucher asked us to do this – to agree with Mr. Fletcher. The agreement was entered into with the knowledge and blessing of Mr. Pucher, who was the senior TSKJ man on site. And if Mr. Pucher agreed, we did not have a problem.

117. Mr. Edwards, in a witness statement, said this:

NLNG's head of engineering Nizoo Visram was anxious for cleaning work on exchangers 1431 A and C to be accelerated, and, I understand, instructed NLNG's David Fletcher to offer an incentive arrangement to Tube Tech if they completed the work ahead of schedule. Despite my advice to the contrary, I believe that NLNG's engineering manager David Fletcher agreed an incentive scheme with Martin Byford. On 15^th December Tube Tech addressed a note at site to "TSKJ Ltd, Bonny Island, Nigeria", recording the agreement "between David Fletcher and Martin Byford"….. Neither TSKJN nor any of its personnel were a party to this agreement with Tube Tech in that Martin Byford's letter of 15^th December 1999 was not signed by any of the defendants….nor indeed by NLNG.

118. Mr. Edwards was not cross-examined about that passage.
119. Mr. Pucher stated the following in a witness statement:

An e-mail dated 4^th December 1999 has recently been produced by [Tube Tech] which appears to be written by Wim Kemper (Project Manager for Nigeria LNG Limited) and addressed to me and Jay Norcross…..The e-mail appears to suggest that….TSKJN was involved in the agreement and finalization of the early completion scheme…..The early completion scheme was a….NLNG scheme agreed solely between NLNG and [Tube Tech]. TSKJN did not agree with it. Nevertheless, if NLNG wished to incentivize [Tube Tech] to complete the work on exchangers 1431 A/C sooner, then TSKJ could not object. [Tube Tech] is incorrect to suggest that the scheme was agreed to or authorized by either me, TSKJN, [BPMCO] for and on behalf of [the fifth defendant] or defendants 1 to 4 (who had no dealings with [Tube Tech]).

120. The documentary evidence is this. Mr. Kemper, NLNG project manager, sent an e-mail dated 4^th December 1999 to Mr. Pucher and Mr. Norcross of TSKJN. The following is an extract from that e-mail:

Further to the discussions of last Wednesday on the subject of Tube Tech: NLNG believes that it is now time to allow TT management to commit to [sic] its resources any measures required to ensure their crew's motivation for the earliest possible completion on the cleaning work of E-1431 A/C…..

You are requested to develop this further and in detail jointly with Tube Tech. As stated previously, the final arrangement would be subject to our agreement and would be processed by NLNG as a Change Order. Please proceed accordingly.

121. The next document is a draft agreement on Tube Tech headed paper dated Wednesday, 15^th December 1999 addressed to TSKJ Ltd, Bonny Island, Nigeria for the attention of John Elliott (TSKJ), c.c. Peter Edwards (TSKJ), David Fletcher (NLNG). The following is an extract from the draft agreement:

Agreement this day Sunday 5^th December, to implement an early completion scheme…The details of the scheme were finalized and agreed between David Fletcher and Martin Byford.

…..

2. The scheme will reward [Tube Tech] the equivalent of £1000.00 for each operative (for every 12 hour shift saved) plus £4000.00 for the management of the Project equating to £35,000 per 12 hour shift saved on both exchangers.

…..

5. Payment to be made to [Tube Tech] within 14…days of completion for cleaning of exchangers 1431 A and C.

6. TSKJN will raise a change order to facilitate the payment of this scheme.

There are spaces for two signatures, those of David Fletcher (NLNG) and Martin Byford (Tube Tech International). The document is unsigned.

122. The remaining document is a memorandum dated 20^th December 1999 from Mr. Kemper of NLNG to TSKJ: Executive Project Manager (i.e. Mr. Pucher). It is stamped as having been received on 21^st December 1999. The memorandum states:

Attached please find the agreement reached with TSKJ, TUBETECH and Nigeria LNG for the early completion bonus arrangement for exchanger cleaning. In consideration of this agreement TSKJ is requested to progress payment to Tubetech promptly for the earlier completion by one full 12 hour shift. This amounts to a bonus of 35,000 British Pounds, which includes 4000 British Pounds as a Tubetech management fee. TSKJ is requested to process a Change Order for NLNG to reimburse TSKJ for this payment.

123. Mr. Edwards's evidence that the defendants were not party to the agreement appears to be based on his interpretation of the draft, apparently signed only by Mr. Byford. On the other hand, Mr. Kemper's statement in his e-mail of 4^th December that "the final arrangement would be subject to our agreement" suggests a tripartite arrangement. It is clear that "TSKJ" was to pay Tube Tech, and would be reimbursed, or put in funds, by NLNG. The question is whether "TSKJ" was merely a conduit-pipe for payment or was liable as a party to the agreement. (It is clear that Mr. Byford continued to draw no distinction between TSKJ and TSKJN). The fact that the arrangement was instigated by NLNG points one way; the fact that Tube Tech was working for TSKJ points the other way.
124. Some light is thrown on this question by what happened afterwards. Tube Tech presented invoice number 5191 to the fifth defendant in the usual way. It stated:

Incentive for early completion on 1431 A and C. As agreed on Sunday 5^th December between M. Byford [Tube Tech] and David Fletcher (LNG) [sic].

And the sum of £35,000.00 was claimed.

125. The invoice was processed by Mr. Dimmock. There was put before me an email dated 7^th January 2000 from Mr. Dimmock to Mr. Bathurst stating that invoice 5191 could be paid when received by Madeira, as he had now received a memo from the client [sc., NLNG] agreeing to fund it. Mr. Dimmock was cross-examined about that. He said that it was envisaged that invoice number 5191 would be processed for payment. The reason why it was not processed at the time was that there were discussions going on with regard to substantiation of costs and pro-rating of men and equipment to site at the time. Once approval from the BPMCO committee had been received, a change order would have been raised and sent to Madeira.
126. It is difficult to see why approval of the BPMCO committee should be required merely to pass on from NLNG to Tube Tech money in which TSKJ had no interest. Moreover, the reason given by Mr. Dimmock why approval of the payment was not immediately given was clearly that a possible set-off in relation to other invoices presented or to be presented by Tube Tech to the fifth defendant was in consideration. If TSKJ had not regarded themselves as party to the incentive agreement, such considerations would have been, or ought to have been, irrelevant. It may be that TSKJ were reluctant parties to the agreement, but I am satisfied that they believed themselves to be parties. They were in a position to know, and I conclude that they were parties to the agreement.
127. It is said that there was no consideration for the agreement in favour of TSKJ since Tube Tech were already contracted to work as quickly as possible. That may be so. But there was consideration in favour of NLNG. TSKJ appears to have derived a benefit in that the work was completed one shift earlier than planned. Had it not been, TSKJ might have had a remedy for breach of contract, but there was a clear benefit in not having to enforce it.
128. I thus find TSKJ liable to pay the sum claimed under contract 2A. Indeed, given that TSKJ had received the money, it is in my judgment irrelevant whether TSKJ were parties to the agreement or not. They would still be liable to pay the money over to Tube Tech. However, that argument has not been raised.
Contract 3
129. Contract 3 was an oral contract made about mid-November 1999 between Mr. Byford and Mr. Edwards. There is no dispute that an oral agreement was made whereby Tube Tech agreed to retain on site at a daily rate of £10,000 the high pressure equipment that had been used for contract 1. The principal dispute on this point is whether that agreement was reduced to writing, imposing a rate of interest on outstanding payments of 8% a month. For reasons that will appear, I find that it was not.
130. Mr. Edwards said in his witness statement:

A verbal request was made at site, as best as I can recall, between myself and Martin Byford about mid November 1999 to retain equipment on site from contract 1. Tube Tech agreed to this request and I agreed that they should submit a variation to their contract detailing our agreement and the cost of retaining the equipment on site. In due course the variation was prepared and signed by TSKJN on behalf of [the fifth defendant].

131. There is before me a 2-page document dated 16^th December 1999 which states at the end of some narrative:

It was requested by TSKJ to keep all H.P. equipment back to facilitate work in tandem with U.H.P. systems for 1431 A, B and C condensers…..

The customer's name is given as TSKJ, below which appears a signature. The document is also signed by Mr. Watson on behalf of Tube Tech. It does not mention the figure of £10,000, or any price figure. That document is the document referred to by Mr. Edwards in the passage I have just quoted. Mr. Edwards said, and I accept, that the document was signed by Mr. Lewis, the mechanical supervisor of TSKJ.

132. I found Mr. Edwards to be an honest witness, but I do not accept without qualification his opinion that the variation was signed on behalf of the fifth defendant. Mr. Edwards readily stated in cross-examination that he was not a lawyer, that organizing the making of contracts was not the purpose of his being present on site, and that the identity of the other party was not specifically a concern of his job. I deal with the question of parties elsewhere in this judgment.
133. Mr. Byford said in his witness statement:

On 3^rd December 1999 Claude Rieffsteck of TSKJ requested information regarding the return of [Tube Tech's] equipment to enable him to start arranging a return charter to the UK. Mr. Edwards discussed this with me at some point (I cannot recall the exact date) and requested that we keep all equipment on site which had been used for contract 1 in case it was needed to complete contract 2. This was proposal 4070B, dated 18^th December 1999 [which the witness exhibited]. I agreed a nominal concessional rate of £10,000 per day from 28^th November 1999, the day after completion of contract 1. This proposal was to formalize the earlier oral agreement. This formed the basis of contract 3. I gave this proposal to John Elliott on site on or around 18^th December 1999 when he signed off a lot of the other claimant documentation.

Some time after 3^rd December 1999, Mr. Edwards verbally requested that [Tube Tech] remobilize a second inspection team and equipment to undertake additional inspection requirements on E1431 units. I verbally agreed with Mr. Edwards, as a gesture of goodwill, that the £10,000 per day rate for contract 3 would include these services. This was not reflected in writing in contract 3, as I had already drafted proposal 4070B.

134. Proposal 4070B is in similar format to contracts 1 and 2, though not for a fixed sum. On the first page it states the "Nominal concessional charge" of £10,000.00 per day, from 26^th (sic) Nov.1999 until return of HP pumps and associated equipment to Tube Tech International premises. It states that all overdue accounts will incur interest of 8% per month. It is dated 18^th December 1999 and is unsigned.
135. Mr. Byford gave evidence that he handed a copy of proposal 4070B over to Mr. Elliott, hand to hand, before he left Nigeria. He said "We never saw a signature back".
136. Mr Elliott did not give oral evidence before me. I admitted his witness statement in evidence under the provisions of the Civil Evidence Act. He said in his witness statement that he did not recollect having seen the proposal and that if he had received it, it would have been processed through BPMCO. Mr. Dimmock said that he did not see the proposal until after these proceedings had been started. It was put to Mr. Dimmock that he would not have authorized payment of invoice number 5184, which specifically mentioned proposal 4070B, if he had not seen a copy of that proposal. But he insisted that he had not seen it.
137. I accept Mr. Byford's evidence that he handed the proposal to Mr. Elliott. I accept Mr. Dimmock's evidence that he had not seen it when he authorized payment of invoice number 5184. Whatever happened to the proposal, it was not signed. Mr. Byford said in cross-examination that he had not agreed a figure of 8 per cent. interest with Mr. Edwards when the original oral agreement was made; the rate of 8 per cent., he said, was a decision taken by Mr. Watson when raising proposal 4070B on 18^th December.
138. On the totality of the evidence, I am satisfied that the rate of 8 per cent. interest contained in proposal 4070B was not agreed. However, it is clear that an oral agreement was reached, evidenced in writing by the document dated 16^th December 1999, for Tube Tech to keep on site the high pressure equipment that had been used on contract 1 (in contradistinction to the ultra high pressure equipment used on contract 2). Mr. Edwards said in a supplemental witness statement that he did not recall any reference to a concessional rate. His understanding was that "we" (by which I take him to have meant TSKJN) would pay the appropriate rate. The rate of £10,000 a day is not in issue, and there is no suggestion that it was not an appropriate rate.
139. Two invoices, numbers 5184 and 5195, dated respectively 24^th December 1999 and 21^st January 2000, based on the agreement and charged at the rate of £10,000 a day, were paid on 17^th January 2000 and 28^th March 2000 respectively. Invoice number 5184, in the sum of £280,000, covered the period of 28 days from 28^th November 1999 to 24^th December 1999. Invoice number 5195, in the sum of £140,000, covered the period of 14 days from 8^th January 2000 to 21^st January 2000.
140. Notwithstanding the apparent absence of a dispute about the principal sums due under contract 3, two of the four invoices submitted under contract 3 have not been paid. No justification for that has been put forward in the defences and counterclaims. It is simply that the arithmetic of the counterclaims is based on the tacit premise that that withholding is justified. The amounts of those two invoices, being unpaid, are included in the claim. They are invoice number 5192 dated 7^th January 2000, in the sum of £140,000, and part of invoice number 5199, dated 24^th January 2000, in the sum of £30,000. Those invoices respectively cover the period of 14 days from 25^th December 1999 to 7^th January 2000, and the period of three days from 22^nd to 24^th January 2000. There is no suggestion that those two further invoices are not correct.
The arithmetic of the defence and counterclaim.
141. All sums invoiced under contract 1 were paid in full. The last such invoice, number 5181, was in the sum of £362,199.38. The defendants do not admit that part of that sum, viz. £33,779.18 claimed in respect of consumables, was due. They put Tube Tech to proof of that sum.
142. The sums claimed in four of the five invoices issued under contract 2 were paid in full. The defendants now question two of those four invoices. One of them, invoice number 5193, was in the sum of £945,000. The defendants contend that only £651,450 was due under that invoice, and that the balance of £293,550 represents an overpayment. The other invoice of those two, invoice number 5196, was in the sum of £490,000. The defendants claim that only £282,900 was due under that invoice, and that the balance of £207,100 represents an overpayment.
143. A further invoice, number 5199, part of which, in the sum of £438,295.11, was issued under contract 2, was not paid. Of that sum, the defendants contend that £68,400 is not due; and of a further £181,498.42 in respect of consumables they put Tube Tech to proof. The balance amounts to £188,396.69.
144. Under contract 2A, one invoice, number 5191, in the sum of £35,000, was issued. It was not paid, and the defendants contend that there was no liability on their part to pay it.
145. Under contract 3, four invoices were issued. Two of them were not paid: number 5192, in the sum of £140,000, and the remaining part of invoice number 5199 (see paragraph 143 above), in the sum of £30,000. The defendants put forward no reason why those sums should not be paid, save a general argument that they are entitled to an account.
146. Thus the defendants claim to have overpaid the sum of £500,650 (paragraph 142 above) plus up to £33,779.18 (paragraph 141 above) of which latter sum they put Tube Tech to proof. Those two sums together amount to £534,429.18. In addition, in relation to sums not paid, they defend Tube Tech's claim to the extent of £103,400 (paragraphs 143 and 144 above) plus up to £181,498.42, of which latter sum they put Tube Tech to proof. Those two sums together amount to £284,898.42. The total of all four sums is £819,327.60.
147. The total amount invoiced but not paid (which equals the amount of Tube Tech's claim) is £643,295.11. The defendants counterclaim the difference between £819,327.60 and £643,295.11, viz. £176,032.49. They claim no set-off, nor do they claim recovery of overpayments by way of restitution by reason of mistake or otherwise. They rely on an argument that they are entitled to an account and that they are entitled to damages for breach of an implied term that all invoices submitted by and payments to be made to Tube Tech would be subject to documentary justification, cost accounting and final reconciliation by Tube Tech.
148. In the alternative, the defendants claim £831,982.49. In that alternative, they contend that the overcharge for labour was £1,225,000.00. The overcharges for labour contended for in paragraph 142 above, £293,550 and £207,100, amount to £500,650. The overcharge for labour contended for in paragraph 143 above is £68,400. Thus the total overcharge for labour alleged in those paragraphs is £569,050. So the alternative claim for £831,982.49 represents an increase over the claim for £176,032.49 by the difference between £1,225,000 and £569,050, viz. £655,950. Damages are claimed in the alternative.
The invoices
149. Invoice 5193 is for retention of all pumps and equipment from contract 2 for the period 12^th December 1999 to 7^th January 2000: 27 days at £35,000 per day: £945,000.
150. Invoice 5196 is for the same matter as invoice 5193, but for the period from 8^th January to 21^st January 2000: 14 days at £35,000 per day: £490,000.
151. Invoice 5199 (part) extends the period from 22^nd January to 24^th January: 3 days at £35,000 per day: £105,000.
152. Those sums are claimed under clause 3 of contract 2. The defendants contend that those sums are properly divisible into elements representing man-days and equipment hire. The man-days, they contend, are predicated on the assumption that there were 24 men on site, the number mentioned as an approximate number in contract 2. They contend that fewer men were on site, and that therefore the notional labour element of the charge should be reduced pro rata. The actual figures for which the defendants contend I have mentioned in paragraph 142 above. They are based on figures given by Mr. Bathurst to Mr. Dimmock on 24^th December 1999, viz

for contract 1:

Labour costs 32 men X 21 days X £750 per man-day = £504,000

Machinery cost 21 days X £11,000 per day = £231,000

Total £735,000

for contract 2:

Labour costs 24 men X 25 days X £950 per man-day = £570,000

Machinery cost 25 days X £12,200 per day = £305,000

Total £875,000.

Mr. Bathurst stated that the rates were higher on contract 2 because the skill levels required by the labour force were greater and they commanded higher rates of pay and benefits; similarly, the equipment used on contract 2 was of a higher specification in order to cope with the particular work.

153. The defendants' deductions from those invoices may be sought to be justified by reference to clause 5 of contract 2. But Mr. Aylwin submitted, and I accept, that that clause is a 'kidnapping' clause. Both parties perceived that there was a significant risk in sending men and equipment to Nigeria: the possibility of kidnapping in the case of the men and the possibility of equipment being irrecoverable. Clause 5 applies, in terms, to the case where part of the work force is 'unable' to return to the UK. In my judgment, the invoices were properly raised under clause 3.
154. I reject, for reasons given above, particularly in paragraph 94, the argument that there should be pro-rating in this case.
155. There is no dispute that all the pumps and equipment from contract 2 were indeed retained from 12^th December 1999 to 22^nd January 2000. I am satisfied that in fact they were not despatched until 24^th January. Mr. Byford had to stay on in Nigeria to supervise their despatch. Accordingly, I reject the defendants' contentions in relation to these sums.
Christmas
156. There was a dispute over the arrangements for Christmas 1999. It was common ground that contract number 2 provided for the men to return to the United Kingdom for Christmas. Mr. Leighton Williams summarized the dispute in approximately the following terms:

Tube Tech's case is that Tube Tech were asked to work over Christmas, that agreement was reached that they would, but that they were then stood down because the defendants could provide no supervision.

The defendants' case is that Christmas working was discussed but never agreed, not least because Tube Tech wanted to charge too much to do so, that the defendants would have been content for the men to have worked through Christmas and that adequate supervision was available. Any such agreement would have been a variation. No contract variation declaration was sought or issued.

157. The resolution of this dispute does not affect any issue in the case. Mr. Aylwin submitted that it affected the credibility of the witnesses, and he drew my attention to a document showing that Mr. Dimmock was willing for the defendants to pay £500 per man-day for Tube Tech personnel working on the site over Christmas. But there is no claim by Tube Tech or the defendants that depends on the existence of the alleged agreement. Accordingly, I do not consider it necessary to decide this point, and I decline to do so. There is no dispute as to the numbers of persons on site on any given day. If the matter goes further and those numbers become relevant, they will be available.
Interest
158. Mr. Leighton Williams accepted that the rate of interest on all amounts found to be due under any of the contracts was 2½ per cent. a month.
Consumables
159. Clause 1 of contract 1 provided that the "above price" (sc., £735,000) excluded "all costs associated with…..minor consumables unspecified". Clause 1 of contract 2 provided that the "above price" (sc. £875,000) excluded "all costs associated with…..consumables/unspecified". The stroke is evidently a typographical error.
160. Invoice 5181, the amount of which included £33,779.18 in respect of consumables, was paid on 17^th January 2000. It is said that the figure of £33,779.18 had not been substantiated by Tube Tech. The defendants pleaded that they were due repayment of that sum on the basis that Tube Tech had failed to comply with the alleged implied term that all invoices submitted by and payments to be made to Tube Tech would be subject to documentary justification, cost accounting and final reconciliation by Tube Tech. Mr. Aylwin accepted that there was such an implied term in relation to the consumables. But he submitted, first, that by letter of 5^th January 2000 Tube Tech had given substantiation in the form of a breakdown of the figures; and second, that the payment had been made in full and final settlement, and so could not be reopened.
161. On the second of those points, Mr. Aylwin relied on a message from Mr. Dimmock to Mr. Bathurst dated 5^th January 2000. It said "I must press you for a statement that, when settled, the amount shown for contract 1 shall be in full and final settlement of all contract terms and conditions and costs". But the statement was not made, so I reject Mr. Aylwin's submission that the payment was made in full and final settlement.
162. There is no counterclaim for restitution on the ground of mistake or otherwise. There is no defence of set-off. In my judgment, by making the payment the defendants have waived any failure in substantiation. Even if they have not waived it, their entitlement can only be to substantiation and not to a sum of money. As to the claim for damages for breach of the term, there is no allegation (and it is difficult to see how there could have been an allegation) that the breach caused the payment. I reject this part of the counterclaim.
163. Mr. Leighton Williams submitted that there was no difference between the meaning of "minor consumables" in contract 1 and the meaning of "consumables" in contract 2. He submitted that the difference in wording was purely accidental, and was due to the use of two different templates. He invited me to hold that "consumables" in contract 2 meant "minor consumables". Tube Tech's evidence was that the difference in wording was deliberate. In my judgment, it makes no difference to the interpretation of the contracts whether the change was deliberate or not. The private state of mind of Mr. Watson and Mr. Byford cannot affect the interpretation of the contracts. No communication between the parties is relied on in this connection. I have to construe the two different expressions which prima facie have different meanings. That is by no means to say that "consumables" in contract 2 includes major items.
164. Whilst the interpretation of the contracts is a matter for the court, I have been assisted by some opinion evidence of Mr. Edwards. In his third supplemental witness statement, put before the court after he had finished giving his oral evidence, he referred to an email dated 24^th December 1999 from Mr. Bathurst to Mr. Dimmock where Mr. Bathurst was responding to a request for a breakdown of costs. Mr. Bathurst stated that of the charge of £35,000 a day, £11,000 represented the cost of machinery and equipment hire. Mr. Edwards quoted the following passage from the email:

You are aware of the intensity at which this machinery has to operate to achieve the desired results and hence there is a high maintenance/replacement element built into the hire charge.

By another email of the same day, Mr. Bathurst gave the figure of £12,200 per day as the cost of machinery and equipment hire under contract 2. Mr. Bathurst said that the equipment used on that contract was of a higher specification.

165. Mr. Edwards made this statement:

I have been asked to…..[state] my understanding as to what would/should be considered as a consumable generally and under the contracts with the Claimant in particular. My view is as follows:

(1) Generally, "soft" items rather than "hard" items would in my opinion be regarded as consumables. Thus if a car was being utilized the oil and other such items would be consumables but tyres which are a necessary and intrinsic part of the machinery to perform the work would be regarded as a "hard" item and therefore not a consumable, even though they might need to be replaced.

(2) However, having regard to the nature of the work being performed by the Claimant, in which erosion of the parts and replacement would be required, I would also have expected certain "hard" items i.e. those at the workface e.g. flexible hoses, lances, jets and nozzles also to be classified as consumables. Water and air are pumped at high pressure through hoses to a manifold to which the flexible hoses, which lead to the lances, are connected. By "workface" I mean beyond the manifold. Hoses leading from pumps to the manifolds would be regarded as part of the equipment hired.

(3) But in the light of the above email, which expressly states that there "is a high maintenance/replacement element built into the hire charge", and the contract 1 wording that only "minor consumables" were excluded from the fixed rate, I would not expect any hard items to be charged since that was obviously built into the hire charges, which at £11,000 [and] £12,200 per day under contracts 1 and 2 respectively, represent considerable fixed rate sums.

I have also been asked to comment on the schedule of consumables prepared by the Claimants and identify which of the items listed may fairly be described as consumables. Based upon the limited description on the invoices, I have identified as consumables those items (hard and soft) which would be regarded as consumables if the agreement were silent on the point. It is a matter for the court to interpret the meaning of "minor consumables unspecified" but most of the items I have identified as consumables would not easily fit the description of "minor consumables".

166. I interpret that last paragraph as indicating that in making his identification of consumables in the Scott Schedule, Mr. Edwards has applied sub-paragraph (2) but not sub-paragraph (3) of the previous paragraph.
167. In comments on the Scott Schedule the defendants stated the following:

The Defendants accept that the specialist cleaning service the Claimants contracted to provide, which involved projecting air and water at high pressure, will itself cause wear and tear of equipment at the work face, such equipment being the flexible hose leading from the manifold to the lance, the lance itself, the nozzles and the jets: it was to be expected that such items would require replacement during the currency of the contract. Normally such items would be regarded as consumables [but not minor consumables].

The expression that I have put in square brackets is an abbreviated paraphrase.

168. A question arises whether long high-pressure hoses are to be treated as consumables, as being items that are located beyond (i.e. downstream of) the manifold. Mr. Leighton Williams said that his understanding of what Mr. Edwards was saying was that the main hose taking the pressure up to the work face came to the manifold, which was probably the swivel point. Beyond the swivel point were the flexible hoses, by implication short hoses, and it was only those flexible hoses that were consumable hoses. Mr. Watson gave evidence, which I accept, that the hoses led from the pump head to the rotary seals, that is the swivels, on the lances. He went on to say that the hoses did not lead to the manifold: the manifold means the pump head. He did not say that there were any hoses downstream of the swivels.
169. I have seen pictures which show long hoses which appear to be quite flexible. They are consistent with Mr. Watson's evidence. But the difference between the two witnesses may arise from differing interpretations of the word 'manifold'. Apart from a Freelance guide hose, of unstated length, none of the hoses mentioned in the Scott Schedule in relation to contract 2 are less than 17 metres long. Since Mr. Edwards classified the Freelance guide hose as not a consumable, I conclude that that hose was upstream of what Mr. Edwards meant by the manifold. There appear to be no items that answer to the description flexible hoses leading from the swivels to the lances.
170. Mr. Watson said that all the hoses were consumables, since they were subjected to severe erosion by the water passing through them, which was associated with a damaging gaseous impurity. Mr. Aylwin submitted that all things, including for example pressure gauges, which rapidly wore out owing to the severe conditions were to be classified as consumables. Mr. Edwards's logic might lead to that conclusion. But in my judgment his pragmatic approach gives a result that is closer to the normal meaning of consumables. Even though he may have been in error over the use of the word manifold, I prefer his view that the hoses (and indeed the pressure gauges) were not consumables.
171. I find Mr. Edwards's opinion generally helpful. But in my judgment the high price is little guide to the meaning of consumables, given the exceptional nature of these contracts in respect of perceived risks and the relative bargaining power of the parties. The information provided by Mr. Bathurst after the contracts were made cannot, in my judgment, be prayed in aid in construing those contracts. Not without some surprise on my part as to the contents of sub-paragraph (2) of the passage I have quoted in paragraph 165 above, I accept Mr. Edwards's opinion set out in that sub-paragraph, subject to my comments in the previous two paragraphs (169 and 170).
172. Mr. Aylwin submitted that items of tooling needed for Tube Tech's in-house fabrication of consumable items were themselves consumables. His argument was that the defendants would have had to pay the costs if the consumables had been bought in. I reject that argument. Some articles, such as tape rules, which went missing on a regular basis were claimed as consumables on that account. I reject those claims.
173. The expression to be construed is consumables unspecified. In relation to contract 2, Mr. Watson supplied two method statements to Mr. Edwards (addressed to TSKJ Ltd.) dated 18^th November 1999. Those method statements mentioned lances, nozzles and jets. Mr. Leighton Williams submitted that those items were thereby specified and excluded from the definition of "consumables unspecified" in contract 2. I reject that argument. They were not specified as consumables in the method statement. There was no list of specified consumables, and in my judgment the expression "consumables unspecified" in the context means the same as "consumables".
174. The defendants put Tube Tech to proof that the consumables the subject of invoice 5199 were applied to the contract. Mr. Williams submitted that there was a lack of documentary evidence that the goods had been applied to the contract. It is true that no purchase orders on the part of Tube Tech were produced. There was a full set of invoices from suppliers, however, many of them showing the reference J515. Mr. Leighton Williams accepted that goods ordered by Tube Tech under that reference would have been ordered with the Nigerian work in mind. The pro forma invoices and the packing lists were rarely consistent with one another. Values stated in packing lists hardly ever matched the invoice values. A vast amount of goods was brought back to the United Kingdom. There are no contemporaneous records of what was received back.
175. It is scarcely an overstatement to describe the inconsistencies between the invoices from suppliers and the packing lists as amounting to a state of chaos. I find that the chaos in the documentation arose as a result of the extreme urgency of the matter. It is said, truly, that there is no documentation showing receipt of the goods in Nigeria. But the defendants should themselves have had some such documents. There were deliveries to Nigeria most days. Much of the carriage, even of quite heavy goods, was undertaken by the defendants' own personnel, who carried the goods as part of their luggage. I am satisfied on the evidence that all of the goods claimed as consumables were in fact sent out to Nigeria for the purposes of the contract work. Not all of them were used. There was a high rate of attrition of parts, and Tube Tech could not afford to wait until they ran out of stock before ordering replacements. Those that were not used or not worn out were returned to the United Kingdom. Tube Tech still has in its warehouse some unused and some partly-used material for which it has no present use or market. Mr. Leighton Williams pointed out that some of the evidence of Mr. Byford on the stock in Tube Tech's warehouse was derived from the storekeeper, who, he submitted, should have been called as a witness.
176. There is no evidence that Tube Tech have been able to use more than a small part of the consumables returned to the United Kingdom. And there is no evidence that they have been able to dispose profitably of any of them. Mr. Byford prepared an inventory of stock held at Tube Tech's premises as at 22^nd May 2000, indicating specifically the stock that had been sent to Nigeria, and giving in most cases an indication of the extent, if any, that they had been used on site and whether they had been used subsequently. I accept that as the best available evidence of the situation.
177. I conclude that the items claimed as consumables in Scott Schedule 2 were either applied to the contract or sent out to site for that purpose. In so far as they were not used on site, I find them to have been sent out in reasonable anticipation of a requirement for their use on site. But in so far as they were not used on site but have been or may be used for Tube Tech's own purposes, in my judgment they cannot be charged for as consumables. Those that have not now, after almost five years, been used for Tube Tech's purposes are in my judgment unlikely to be so used, and I shall ignore the possibility of their future use. Accepting, as I do, Mr. Byford's evidence as to the use of the goods, I apply a discount to the sums claimed in Scott Schedule 2 where appropriate.
178. I must deal here with one particular item in the Scott Schedule (Scott Schedule 2) for invoice 5199 (contract 2), item 62. It relates to a consignment of goods imported from the U.S.A. They comprised 18 HP lances, 36 nozzles and some accessories. The defendants contend that those goods were ordered by NLNG, and that in consequence they, the defendants, are not liable for the charge. My findings on the evidence are these. The goods were ordered by Mr. Visram of NLNG on behalf of Tube Tech because Mr. Watson had identified them as being urgently required on site. They were delivered by aircraft specially chartered for the purpose by TSKJ. It does not appear who paid for the charter. It was not Tube Tech. The nozzles were used on site, but the lances were found to be incorrect. The lances were taken into stock by Tube Tech. It does not appear why they were not sent back to source. Tube Tech used three of those lances subsequently, on work not connected with the Nigerian work. The remaining 15 remain in stock at the premises of Tube Tech. At least 90 per cent. of the price of £5,975.72 was attributable to the lances. My conclusion is this. Given that the lances were not suitable for the work, the defendants are not liable to pay for them as consumables. The total sum claimed in respect of the other items does not appear, and is only a small proportion of the whole. I thus reject Tube Tech's claim under item 62 of Scott Schedule 2.
179. I thus find the following items in Scott Schedule 2 to be consumables within the meaning of contract 2:

Item	Value (£)	Discount for use (%)	Allowed (£)
1 to 7	4103	0	4103
8(i) to (iii)	3204	0	3204
8(iv)	2992	20	2393.60
8(v) to (viii)	960	0	960
9	357.28	0	357.28
11(v) to (vii)	1310.55	0	1310.55
12(i) to (iii)	2150.38	0	2150.38
13	2930	0	2930
15(i)	9625	20	7700
15(ii) to (v)	4844.60	0	4844.60
16 to 18	4827	0	4827
19(ii) and (iii)	167.69	0	167.69
20(xv)	162.50	0	162.50
21(i)	10.46	0	10.46
22	132.72	0	132.72
23	4497.44	0	4497.44
25(i) to (iii),(v)	1396.80	0	1396.80
26(ii)	164	0	164
27	800	0	800
32	607.60	0	607.60
34	39.54	0	39.54
35	19.60	0	19.60
36	7200	0	7200
37	4000	0	4000
39	20.65	0	20.65
40	889.50	0	889.50
41	4869.50	0	4869.50
43(i) and (ii)	145.61	0	145.61
44(i)	18.18	0	18.18
45	294.39	0	294.39
46(i) to (viii)	144.38	0	144.38
47	167.39	0	167.39
48	31.33	0	31.33
51(ii)	15.57	0	15.57
52	30.55	0	30.55
53	505.57	0	505.57
54	48.23	0	48.23
55(i) and (ii)	465.12	0	465.12
56 to 59	1200.97	0	1200.97
63 to 66	1398.77	0	1398.77
67(i), (iii) to (v), (vii), (viii), (xi) to (xiii), (xv)	1052.12	0	1052.12
68 (i), (ii) and (iv)	990.10	0	990.10
69	1855.12	0	1855.12
70	619.80	0	619.80
71 (i) to (iv), (vii)	79.55	0	79.55
80 to 85	5770.82	0	5770.82
86(ii) to (xiv)	644	0	644
87,88	1759	0	1759

180. Thus the total amount I find to be allowable for consumables under contract 2 is £76,994.98. That includes the 15 per cent. uplift, which is not contested.
Decision
181. It follows that there will be judgment for Tube Tech against the first four defendants for the sum of £538,791.67 plus interest. I shall hear counsel on the amount of the interest. The claim against the fifth defendant is dismissed, as are the counterclaims.