HT-2022-000255 - [2025] EWHC 1434 (TCC)

I now turn to the contractual issues. I am required to construe the agreements in accordance with conventional principles established in the well known cases such as Wood v Capita Insurance Services Ltd [2017] UKSC 24. These principles were not in dispute. The approach is to ascertain the objective meaning of the language in which the parties have chosen to express their agreement. This is not a literalist exercise but requires consideration of the contract as a whole. The factual matrix in which the agreements were signed must be taken into account. Textualism and contexualism are tools which can be deployed to ascertain the objective meaning of the language.

Briefly stated, the factual background against which the agreements were signed is as follows. Initially, ABM and Matière signed a Memorandum of Agreement on or about 17 November 2017. It recorded the award to a Joint Venture between Carillion (Footnote: ¹), Eiffage and Kier of Lots C2 and C3 of the HS2 project and their request to Matière to tender for the design, build, supply and erect the Green Tunnels. Matière and ABM agreed to work together to tender for such works. It was expressly envisaged that the agreement would later be replaced by a Consortium or Joint Venture Agreement. By April 2018, ABM and Matière had worked up version 2 of a draft Collaboration Agreement. In different ways, both parties have relied on the draft Collaboration Agreement as relevant background which informs the proper construction of the Consortium Agreement. ABM relies on the fact of it, whereas Matière relies on some of its terms which were not used in the Consortium Agreement. ABM and Matière submitted their tender to EKJV in July 2018. They described themselves as “currently an unincorporated Joint Venture” and annexed a copy of the draft Collaboration Agreement. Although not legally binding, ABM and Matière’s bid indicated they would operate in a legal, truthful and decent manner and that they had exceptional standards of moral and ethical behaviour.

In January 2019, EKJV, as Contractor, signed a Memorandum of Understanding with Matière and ABM, together as Subcontractor, which was effective from 26 November 2018. Only some of the provisions were legally binding. The ambit of the agreement was set out in Recital D which stated:

“The Subcontractor wishes to enter into a strategic alignment with the Contractor to assist the Contractor in the performance of the Stage One Services and the production of the Main Contract Proposals in connection with the Relevant Activity and, if the Employer decides to award Stage Two to the Contractor and the Parties are able to agree terms, the performance of certain Relevant Activity works for C2 and/or C3.”

In February 2019, EKJV appointed Matière and ABM as Consultant pursuant to a Professional Services Contract, to which I will later need to refer. The Consultant is described in the recitals as EKJV’s “strategic partner”. This ties into the prior reference to “strategic alignment” in the Memorandum of Understanding, set out above.

This was the background against which the Consortium Agreement came to be signed. For a long time the draft Collaboration Agreement remained unexecuted. In the meantime, ABM and Matière were apparently content for their legal relationship to be governed only by the Consortium Agreement. Ultimately they came under pressure from EKJV to execute the Collaboration Agreement as an indication of the robustness and legal efficacy of their Joint Venture. Thus, on 10 May 2020, M.Garnier of EKJV asked for evidence that ABM Matière was, indeed, a joint and several joint venture. The next day, Mr Buckley of ABM replied that a provisional copy of the agreement had been provided at the outset with the tender (as I have identified) and that its terms had not changed. He explained the intention was to finalise it once the final price and contract conditions for the bid were known. Thus, the shared approach of ABM and Matière had been that their dealings were to be regulated by the Consortium Agreement until such time as the terms of their bid had been finalised, whereupon the Collaboration Agreement would be signed. That approach did not satisfy EKJV who said they needed the legal entity comprising ABMM JV to exist and that the JV agreement should be put in place now i.e., before finalisation of the price and terms of the bid. Thus, the Collaboration Agreement was finally signed, with prospective effect only, on 23 June 2020. It was not very different from the draft which had been annexed to the tender response but, materially, added in a new Clause 3.2.

In respect of the alleged breach of the Consortium Agreement, ABM relies on Clause 3.1. This requires me to construe that particular provision. As I construe it, there are three parts to it. First, that ABM and Matière shall co-operate and collaborate with one another “in accordance with the terms of this Agreement”. That element of the provision is somewhat circular or unnecessary because it depends on other provisions to render it meaningful. It adds nothing of substance on its own. In any event, no separate breach of the first part is alleged. It is fair to say that the parties were not agreed that what I have described as the first part was, in fact, separate from the second and third parts. It depends on whether “and” is disjunctive. But either way, I do not believe it adds anything because it all depends on “the terms of this Agreement”, which begs the question. The second part requires the parties to act in good faith towards the other. The third part requires the use of reasonable endeavours to forward the interests of the co-operative enterprise. Both the second and third part are constrained in their ambit in that the two obligations attach to the performance of their obligations pursuant to any associated professional services contract (“PSC”). In fact, ABM does not allege a breach of the third part. In short, ABM confirmed that its claim for breach of the Consortium Agreement was focused entirely on the express “good faith” obligation.

A key point in respect of construction is that Matière contends that ABM cannot identify any relevant obligation under the PSC to which the express obligation to act in good faith attaches. On its case, the functions performed by each of ABM and Matière in their endeavour to win the Green Tunnels Project were not co-extensive with the performance of obligations under the PSC. Anything about which ABM complains as constituting a breach of good faith must, necessarily, attach to the performance of an obligation under the PSC in order to be actionable. As expressed in closing, Matière’s case is that the Consortium Agreement is limited to governing ABM and Matière’s co-operative enterprise as Consultant under the PSC and not their collaboration for the purposes of submitting a tender for and thereafter negotiating the terms of a potential subcontract. In essence, the mere business of working together to bid jointly for the Green Tunnels Project was not within the scope of obligations under the PSC and, for that reason, activities of that sort are not subject to the express duty of good faith. ABM does not allege any implied duty of good faith in respect of actions outside the scope of the obligations under the PSC.

ABM pleaded that the Consortium Agreement was not limited to governing the fulfilment of obligations under the PSC. It contended that it covered ABM and Matière’s entire collaboration for the Green Tunnels Project. This contention is based on the content of the recitals, the definition of “the Project” and Clause 1 of the Consortium Agreement, all viewed against the broad background to which I have referred, including the existence of the draft Collaboration Agreement. Having regard to the various agreements in place, ABM submits there was a contractual scheme which covered all aspects of their relationship. Matière submits that this broad contention is unsustainable.

I accept Matière’s submission that the obligation in Clause 3.1 is inexorably tied to the scope of professional obligations within the PSC and reject ABM’s case that the Consortium Agreement independently covered the entire collaboration for the Green Tunnels Project. The recitals do not prescribe the scope of the Consortium Agreement but simply place the operative provisions in their context. The “co-operative enterprise” in recital A is reflected in Clause 1.3, namely the undertaking of duties as a consultant. The operative provisions in Clauses 1.2 and 1.3 refer to ABM and Matière’s appointment as Consultant and their duties in relation thereto. The co-operative enterprise in Clause 1.3 comprises the undertaking of duties as the Consultant. This ties in with Clause 3.1, which deals with the performance of obligations pursuant to the PSC. Clause 2.1 links the duration of the Consortium Agreement to the lifetime of the PSC. Invoicing and payment was also linked to the PSC.

In January 2019, the parties must be taken to have deliberately decided not to enter into the Collaboration Agreement in the terms of the then current draft. Instead they chose to use the language and structure of the Consortium Agreement. Similarly, whilst the fact of the Memorandum of Agreement concluded in November 2017 forms part of the background, its detailed terms are not relevant to the proper construction of the Consortium Agreement since the intention was that it should be fully replaced by a subsequent agreement.

Although ABM’s position is that the relevant obligations under the Collaboration Agreement were not materially different from those under the Consortium Agreement, that position must be tested by reference to the provisions under each separate agreement. It must take into account that the parties elected not to enter into the Collaboration Agreement in the form of the draft which existed at the time of the Consortium Agreement. It is notable that when the parties did, in the end, enter into the Collaboration Agreement, they decided not to backdate it to encompass the period covered by the Consortium Agreement. That fact cannot, however, inform the proper construction of the Consortium Agreement when it was signed.

On behalf of Matière, Mr Lewis KC submitted that the activities identified in Clauses 5.1 to 5.3 of the Collaboration Agreement, which clearly showed the object was the negotiation and tendering for the proposed Main Subcontract, had no equivalent in the Consortium Agreement. At the time of the Consortium Agreement, he suggested that Matière was therefore performing those activities voluntarily. He said it was not necessary to have a contract in place in order to collaborate to formulate a tender and enter into negotiations in respect of it. Each party would, in any event, have been motivated by the principle objective of being awarded the subcontract. In the absence of an earlier demand from EKJV, both parties were content to operate on an informal basis. Negotiations and bid discussions between ABM and Matière and between both of them and EKJV was not part of any professional service.

At the trial, Mr Streatfeild-James KC developed what I consider to be a new, alternative, case, namely that the subject matter of its claimed breaches, relating to the preparation and submission of the joint bid, formed part of the fulfilment of obligations which arose under the PSC and was, for that reason, within the ambit of Clause 3.1 of the Consortium Agreement if it had to be. He submitted this was clearly so in light of the factual background which included, amongst others, the Memorandum of Understanding between EKJV and Matière/ABM. Whilst Mr Lewis KC later complained that such a case had not been pleaded, he confirmed in opening that he had assumed it to be ABM’s case that the submission of a bid fell within the ambit of the PSC. What constitutes the scope of Services under the PSC is, essentially, a matter of law and, viewed in that way, the merit of any pleading objection falls away. The substance of ABM’s position remained that the matters about which it complained were breaches of Clause 3.1.

Under the PSC, the Consultant agreed to carry out the services set out in Schedule 1. These were defined as “the Services”. Schedule 1 defines the Services as follows:

“The Provision of Professional and Specialist Knowledge to Eiffage Kier Joint Venture in respect of the Preparation of Stage Two Proposals for Submission to HS2 for Pre-cast Concrete Double Arch Cut and Cover Tunnels including associated Waterproofing for C2 and/or C3 in whole or in part and specifically the following in accordance with the Memorandum of Understanding and Confidentiality Agreement executed in and around the time of this Appointment.”

What followed was a list which included these activities:

“a)

Review and constructively challenge the current Scheme Design for the Pre-Cast Tunnels and associated Waterproofing.

…

c)

Identify constraints and define methodology, programme and price based on constraints.

…

e)

Identify interfaces and the impact this may have on the cost model, programme and methodology.

f)

Mobilisation Plan (Site).”

ABM’s case is that the Services described in (c), (e) and (f) are broad enough to encompass questions about the type and location of a factory. In other words, the PSC envisaged the joint provision by ABM/Matière of all professional and specialist knowledge which was necessary to enable EKJV to submit its Stage 2 Proposals to HS2, covering matters such as where and how the concrete segments will be made and transported to site and at what cost. Negotiations and bid discussions between ABM and Matière, and then between both of them and EKJV, were an inherent part of that which was ultimately necessary to enable EKJV to submit its Stage 2 Proposals to HS2. It would have been impossible to disentangle particular types of activity, treating some as within the professional service, and others as outside it. The obvious expectation was that the professional advice in relation to the Stage 2 Proposals, so far as it related to the Green Tunnels, was at the same time going to amount to ABM/Matière JV’s bid. The build-up of the Target Cost was not being undertaken in a vacuum, isolated from the fact that ABM/Matière JV was expected to bid for, and then undertake, the work.

Matière submits that the Court can take account of the parties’ decision not to incorporate reference to tender negotiation and bidding, as appeared in the draft Collaboration Agreement. It says that the PSC does not extend to the making of any response to the ITT nor the submission of any bid to EKJV, nor the negotiation of any bid or terms. Matière points to practical difficulties arising from the conflict between the duty to use reasonable skill and care on the one hand, as required by the PSC, and seeking commercial advantage on the other.

Both parties relied on the way in which the payment provisions in the PSC were structured and in fact implemented. For its part, ABM pointed out that Ganetime (essentially a time-based recording system) covered all work undertaken by ABM/Matière and drew no distinction between different types of activity. M.Vignon was embedded in EKJV’s premises and was providing assistance for EKJV in various respects. He charged all his time to Ganetime, even when fulfilling requests of EKJV to look at alternative options. For its part, Matière pointed out that there was no permissible time-charge for Mr Minihane or M.Matière who were the persons with primary responsibility for the negotiation of the bid. Matière relies on the fact that EKJV later stripped out claims for negotiation of contracts but, as ABM pointed out, those were legal costs.

In my judgment, ABM’s essential submission is correct. The activity of negotiation and bid preparation as between ABM and Matière, and as between both of them and EKJV, was inextricably linked to the ultimate preparation of EKJV’s Stage Two Proposals, as required by the PSC. I do not see how, practically speaking, it would have been possible to separate out these activities as one was an obvious precursor to the other in this particular case. By reference to the Memorandum of Understanding, signed shortly before execution of the Consortium Agreement, it was clear that the common thinking was that ABM/Matière JV would be the successful subcontractor if the Employer, HS2, decided to award Stage 2 to EKJV: see, for example, Recital D thereto, cited earlier. This recital intertwined the strategic alignment of the Subcontractor and Contractor with the assistance which was to be provided in the production of Main Contract Proposals. Thus, the shared understanding was that the contribution to the preparation of the Stage Two Proposals would be undertaken by the entity that would be the successful subcontractor. The Services provided for in Schedule 1 to the PSC cross- referred to the Memorandum of Understanding. All parties had a shared interest in the most competitive price being offered to HS2. To achieve that, it was a necessary prior step that ABM and Matière should work together to produce a joint bid.

As Mr Streatfeild-James KC submitted, if Matière were right that negotiation and bid preparation as between Matière and ABM were excluded from the ambit of Clause 3.1 on its proper construction, the consequences would be stark indeed. It would mean that Matière (or ABM) would be entitled concurrently to prepare alternative tenders, including tenders involving other sub-subcontractors, whilst at the same time jointly providing Services to EKJV. That is not a business-like construction.

By reference to the Fee Structure in the PSC, there was no expectation that individuals such as M.Vignon, who was embedded at EKJV, and Mr Sanderson of ABM should apportion their time in any particular way. Instead, the anticipated arrangement was that their entire time on this project was chargeable on an all-inclusive daily rate. If the intention had been to separate out time spent on anticipated negotiations and bidding from time spent in the provision of Stage Two Proposals, the parties would have been expected to spell out how that arrangement would work in practice. I do not regard it as material that Schedule 2 of the PSC made no provision for the time incurred by Mr Minihane and M.Matière. Their time was likely to have been part of the overhead cost included within the fee but, in any event, their expertise and input formed part of the overall service which had been commissioned, whether chargeable or not.

I quite see that how a conflict between the duty in Clause 1.3 of the PSC to act with reasonable skill and care and the desire of a party to act in its own commercial interests could arise in theory but I doubt that this potential difficulty was a consideration which impacted upon the common intention of the parties. If the conflict did arise, it might sensibly be resolved by application of a “best for project” objective identified in (non-binding) Clause 2.4 of Memorandum of Understanding. At all events, any suggestion of conflicting duties would have to be resolved on the facts.

I also see that the existence, but not the terms of, the draft Collaboration Agreement might in theory form part of the factual matrix for construing the Consortium Agreement but there was no objective evidence as to why it was that the parties had not signed it. Accordingly, not much assistance is gained from the mere fact it existed. Nor do I consider it to be right in principle that regard should be had to the decision of the parties not to adopt the particular wording about negotiations and bidding contained in the then draft Collaboration Agreement. As Mr Streatfeild-James KC submitted, there is no authority to suggest that one agreement, namely the Consortium Agreement, should be construed by reference to what was not taken from another draft agreement, namely the Collaboration Agreement. In any event, the point becomes circular. The parties may have concluded that the words they did use within the Consortium Agreement were sufficient to cover the same ground, even if they were not as explicit as they had appeared in the draft Collaboration Agreement.

EKJV’s subsequent rejection of certain claims for time spent by ABM/Matière is quite irrelevant. Not only was it for lawyer’s time, which is conceptually different from time spent on negotiation and bid formulation, but it came years later after the Consortium Agreement was signed, and has no bearing on the proper construction of the agreement.

In summary, I consider the activities of negotiation and bidding were part of, and inseparable from, the Services contemplated by the PSC and, for that reason, were subject to the express duty of good faith set out in the Consortium Agreement.

The position under the Collaboration Agreement is altogether more straightforward. Clauses 3.1 and 3.2 are clear. Clause 3.3, upon which ABM founds its main complaint, contains an express duty to act in good faith in the course of the performance of obligations under it. Pursuant to Clause 5.2, each of ABM and Matière agreed to consult with each other and negotiate in good faith with the other, in order to achieve agreement of any documents to be submitted to EKJV in reply to the invitation to tender. There are other provisions in Clause 5 which link negotiations with the duty of good faith. However, Clause 5.2 itself is not relied on.