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

KML’s case is that the effect of the issue of the Revised Purchase Order, in which there is no dispute that the words ‘Plus weather downtime at applicable rates’ were removed, is that the risk of waiting on weather transferred from KML to Pharos. In relation to KML’s plea that the Contract was amended by the removal of the relevant words, Pharos asked in a Request for Further Information whether it was KML’s case that, before the creation of the Revised Purchase Order, one of the parties had proposed to the other that the Contract should be varied so as to remove Pharos’s right to payment during periods of weather downtime (question 1) and/or whether the parties had agreed this so that the Revised Purchase Order was intended to give effect to this agreed variation (question 3). KML’s response to questions 1 and 3 was as follows:

“The parties were aware that the original time frame for completion and the price set out in the Purchase Order contained risk allowances associated with weather. This can be seen from table 8.2 of document PPL17017-IE-S-058 dated 10 May which preceded the Purchase Order, and which was co-authored by the Claimant. The Purchase Order was revised to reflect this, i.e. the reference to weather downtime was deleted because an allowance for weather down time had already been taken into account. The 10 days provided for in the Purchase Order included 3 days for mobilisation, 1 day for demobilisation and 4 days operational/ working time (which based on table 8.2 was 78 hours/ 20 hour working day) thereby allowing for 2 days of weather risk. Thus, there was no proposal by one party to the other, rather an acknowledgement weather down time had already been priced in and therefore the term relating to weather downtime was to be taken out. The parties agreed verbally that the variation to the purchase order was warranted.

This will be a matter for witness evidence in due course.”

In answer to a further question, KML stated specifically that the removed words ‘were not merely overwritten’. In other words, KML’s positive factual case was that, in contrast to any suggestion that the removal of the words was the result of an unintentional over-writing of the text, the removal was a deliberate one, seeking to reflect a verbal agreement reached in respect of reversing the previously stated risk of waiting on weather.

A statement of truth accompanying this answer was signed by Mr Scullion.

In fact, no evidence supporting KML’s pleaded positive case was served. The author of the Revised Purchase Order - someone unidentified from KML - was not called to give evidence. Mr Scullion’s evidence at paragraph 35 of his first witness statement was limited to the following:

“Further to telephone conversations with Mr. Taylor (Pharos), on 25 May 2022, I circulated [07/102] a revised version of the Purchase Order which incorporated the additional items agreed (including, for example, an extension to the jetting sword to allow the Tool to reach the required cable burial depth of 2m) [02/49]. Mr. Taylor acknowledged receipt of the Purchase Order and provided no feedback on the Purchase Order save to request a variation of the terms of payments from 60-days to 30-days, in light of the fact that the cable burial works were only expected to last 10 days [23/369]. Save for the payment terms, Pharos raised no issue with – or otherwise indicated that they did not agree to – the variations set out in the Purchase Order circulated on 25 May 2022.”

In cross-examination, Mr Scullion confirmed that he had not had any conversation with anyone at Pharos about the transfer of risk, and could not think of anyone else at KML who would have had such a conversation. When asked why, if he could not substantiate any discussion of the sort set out in the Response, he had put his name to the statement of truth, Mr Scullion simply said that it had been signed over a year ago, and he could not now recollect the conversation referred to.

Having heard that evidence and considered the documentary record, I conclude that it is not remotely likely that there was in fact any conversation between anyone in KML and Pharos in which they discussed and agreed verbally that a change to the Purchase Order ‘was warranted’ in order to reverse the previously agreed risk allocation in relation to waiting on weather. It is inconceivable that if such an important point had been discussed in the context of revising the Purchase Order an explicit reference to that discussion would not have found its way into the email exchanges at the time. Moreover, I accept Mr Walker’s unchallenged evidence that he never agreed to such an amendment, and that if KML had proposed such an amendment through Mr Taylor, Mr Taylor would have sought his approval before agreeing. I also accept Mr Walker’s belief that this did not happen. Regrettably, I am unable to accept that when he signed the Statement of Truth in relation to the Further Information in May 2024, there would have been any reliable basis for Mr Scullion to have thought that such a verbal agreement had preceded the production of the Revised Purchase Order. If there had been a proper basis for thinking the Further Information was true, that is not something that Mr Scullion would since have simply forgotten.

Given that I have rejected KML’s explanation that the removal of the words was purposeful, in giving effect to a verbally agreed position, the most likely remaining explanation for the removal of the wording is simply that the new text unintentionally over-wrote the words ‘Plus weather downtime at applicable rates’. This is so irrespective of the fact that there no doubt could have been room to retain the wording had the author of the document thought carefully about it. As is tolerably clear from the wording of the email accompanying the revised Purchase Order, the sole purpose of providing the Revised Purchase Order, construed objectively, was to uplift the previous Purchase Order to reflect the additional equipment for a not to exceed sum of £81,000 following Jeff Taylor’s email of 23 May 2022 at 15.36. It is no doubt in light of this obvious fact that KML felt it necessary to support its case by asserting that the parties had in fact put their minds purposefully to removing the phrase to reflect a new common understanding which had evolved since the 10 May Purchase Order. However, that assertion is, as I have found, wholly without foundation. There is no proper basis to conclude from the Revised Purchase Order, set in its factual context including the circumstances in which the words came to be removed, that the offer made by KML as constituted within the Revised Purchase Order was based upon a fundamentally different allocation of risk in relation to waiting on weather to that which had been agreed previously.

Whilst therefore Clause 2.2 makes clear that the Purchase Order constitutes an offer which supersedes all prior discussions and negotiations, this does not mean that as a matter of contractual construction, that offer must be construed in a complete vacuum from the factual context in which the offer was made. An argument based upon Clause 2.2 is circular, in that it is necessary first to construe what, objectively, the ‘offer’ was. Mr Macey-Dare KC is, of course, correct that there is nothing within the revised PO itself, viewed in splendid isolation, to indicate that the omission of the operative words was “anything other than deliberate”. However, it is not appropriate to look, objectively, only to the revised PO itself, in isolation from the factual context in which it sits. When sat in its wider context, it is plain that the reasonable person in the position of the parties would have concluded that the objective intention of the Revised Purchase Order was to insert the entitlement to additional payment for the additional equipment, leaving the previously agreed risk allocations unaffected, notwithstanding the unintentional loss of some of the words.