05 December 2018

Bill of Quantities and Building Contracts

West Reg Street (Property) Ltd v Central Demolition Ltd [2018] CSOH 98 (West v Central)

In this case the Court had to decide who was responsible for asbestos – the demolition contractor, Central or the developer, West. Despite the fact that asbestos removal was not included within the Bill of Quantities (BoQ), the Court found that the contractor was responsible for the asbestos removal.

This highlights a common problem with construction contracts, where the contract and ancillary documents do not properly marry up with each other and also the importance of ensuring that any exclusion of liability is clearly stated in the contract. Pre-existing ground conditions are a very common problem with construction projects and if a contractor does not agree to take responsibility for them, this must be clearly excluded in the contract.

So what happened in the case?

  • In 2016, Central contracted with West to demolish three adjacent buildings.
  • West also contracted with another company to remove asbestos containing materials (ACM) prior to Central’s demolition works. Note that West had rejected Central’s proposal to carry out the removal of the ACM.
  • Central’s contract provided that if it encountered ACM it was to carry out a number of steps – to report it, suspend work, refrain from disturbing it and agree methods for safe removal. During Central’s work it encountered ACM. West issued instructions to proceed with removal works.  
  • West argued Central was liable for ACM removal based on Clause 2.1D of the contract which stated “Any…contamination…shall be the sole responsibility of the Contractor…and no adjustment shall be made to the Contract Sum…”
  • Central relied on a Clause 4.1 of the contract which stated “quality and quantity of work included in the Contract Sum shall be set out in the [bill of quantities within the tender documents chosen – Bill Number 2] taken together…” In other words, the lump sum agreed in the contract covered the work detailed in the BoQ. The work in BoQ did not include the removal of asbestos.

Decision

The Court of Appeal decided in favour of West.  The basis of the decision was as follows:-

  1. The Works was defined as the “complete demolition” of the buildings as described in the “Contract Documents”.
  2. Contract Documents were defined as including the Specification but that the Specification was the unpriced specification and the Contract Sum Analysis was the priced bills.
  3. The Contract Sum Analysis provided a breakdown of the lump sum, but was not to be used for the measurement and valuation of the works.
  4. The Contract Documents highlighted the risk of residual asbestos and the Court found that these were not merely for regulatory purposes.
  5. Central had undertaken to perform work for a lump sum price which included the removal of any unknown asbestos.
  6. A reasonable person in the position of the parties would have understood "contamination", as in the bill of quantities and contract, was to include asbestos in the buildings.

Conclusion

This case highlights the complications where the legal elements of the contract are drafted separately to the Bill of Quantities. Any exclusions of liability (in this case liability for asbestos) need to be very clearly contained in the contract.

For more information, or advice on Construction contracts, contact a member of our Construction team.