HT-2023-000321 - [2025] EWHC 1764 (TCC)

KML’s case is that, on the true construction of the contract, Pharos was not entitled to claim more than 10 days of daily charges in total. Mr Macey-Dare KC contends that this is the effect of:

Pharos disputes that there was a cap or limit on the amount of per diem charges. It says that if the Embedment Works were properly to take longer than 10 working days, Pharos would be entitled to charge accordingly. It accepts that Pharos was not entitled to take as long as it liked: it was under an obligation to carry out and complete the Embedment Works using the UTV-670, the supporting tooling and equipment, and its personnel, with reasonable care and skill, and within a reasonable period of time. Mr Woolgar argues that Clause 6 does not assist KML as the ‘Contract Price’ is not £112,000. He says that on a proper construction ‘10’ is not a ‘not to exceed’ number of days. The 10 days is ‘indicative’, to use the language of the third bullet point which refers to the ‘indicative programme’. Mr Macey-Dare KC contends that this is too vague a reference and probably refers to the sequence of works which by then had been included within the Method Statement.

At a forensic level, Mr Woolgar makes the point that this argument appears to have been something of an afterthought, because it was not an argument deployed in the Defence. Rather than contending that the ‘10’ within the PO constituted a fixed period, KML’s case at paragraph 11(2) of the Amended Defence is that there was a later amendment by a variation in writing as set out in the trackers of bi-weekly meetings that:

I consider that, objectively, the number ‘10’ within the Contract was an indicative number representing the then understanding of the parties of the likely duration of the works. It was not a ‘not to exceed’ or fixed number of days within which Pharos were contractually obligated to complete the works. This is the objective meaning for the following reasons:

Therefore, Pharos’ entitlement to daily charges for equipment and personnel is not capped at 10 days. The works were required to be carried out in a reasonable time, and pursuant to the ‘indicative programme’ of 10 days from arrival at the port of mobilisation.

A reasonable time is to be assessed by means of a broad consideration, with the benefit of hindsight, of what would, in all the circumstances, have been a reasonable time for performance, taking into account matters such as any estimate given of how long it would take Pharos to perform (here, specifically, the ‘indicative programme’ and a period of 10 days), whether that estimate has been exceeded and, if so, in what circumstances; the causes of delay; and the extent to which they were within Pharos’ control. As stated by Lord Herschell in Hick v Raymond & Reid [1893] AC 22 at page 29:

“I would observe, in the first place, that there is of course no such thing as a reasonable time in the abstract. It must always depend upon the circumstances. Upon “the ordinary circumstances” say the learned counsel for the appellant. But what may without impropriety be termed the ordinary circumstances differ in particular ports at different times of the year. As regards the practicability of discharging a vessel they may differ in summer and winter. Again, weather increasing the difficulty of, though not preventing, the discharge of a vessel may continue for so long a period that it may justly be termed extraordinary. Could it be contended that in so far as it lasted beyond the ordinary period the delay caused by it was to be excluded in determining whether the cargo had been discharged within a reasonable time? It appears to be that the appellant’s contention would involve constant difficulty and dispute, and that the only sound principle is that the “reasonable time” should depend on the circumstances which actually exist.”

A reasonable time would therefore take into account the extent to which the works could reasonably proceed on account of the weather, including wind and wave height. It could be said that, if this is so, the inclusion of the words ‘Plus weather downtime at applicable rates’ is surplusage and that the words would only add to the contract if the 10 days was itself a fixed and firm period. Mr Macey-Dare KC fairly accepted that the presumption against surplusage is relatively weak in commercial contracts. As noted at [7.24] of Lewison, The Interpretation of Contracts (8^th Edn), Patten LJ observed in Al-Hasawi v Nottingham Forest Football Club Ltd [2019] EWCA Civ 2242 that “arguments based on surplusage or redundancy are rarely reliable or sure ground on issues of construction”. Mr Macey-Dare KC relies (through paragraph [7.27] of Lewison) on the observation of Coulson J (as he then was) in Secretary of State for Defence v Turner Estate Solutions Ltd [2015] EWHC 1150 (TCC) that although a presumption against surplusage was of little weight in interpreting a standard form of contract, it has a part to play in the case of “a bespoke contract carefully drafted by the parties to meet the exigencies of this particular and significant commercial arrangement”.

In the present case, the Revised Purchase Order, and its predecessor, were of course bespoke documents. To describe them as ‘carefully drafted by the parties’ would, however, be something of an overstatement. They contain a brief description of what was to be required using relatively loose language – they do not, for example, identify what the ‘specifications provided by KML’ were, or, as already discussed, identify with any precision the ‘indicative programme’ other than by reference to 10 per diem units. That the document would carry with it the presumption of meticulous legal drafting seeking no redundancy is somewhat unrealistic. The argument based on surplusage is insufficiently weighty to justify the conclusion that ‘10’ units is to be construed as imposing a fixed and firm duration, rather than a reflection of the explicitly referred to ‘indicative programme’.