High Court Delivers Judgement on Tender Design Dispute.

BACKGROUND

In CPB Contractors v WSP in New Zealand , Johnson J of the New Zealand High Court delivered its recent judgement on the matter on 22 March 2024.

The dispute concerned the design and construction of an upgrade to State Highway 1, between Manukau and Papakura (the Southern Corridor Improvement (SCI) Project) and loss sustained by CPB for a deficiency in designs at tender stage.

ISSUE IN DISPUTE

CPB's complaint was centered on the quality of the tender design prepared by WSP which was used by CPB to establish its tender bid for the project. After CPB won the tender and entered into a fixed price D&C arrangement it discovered that WSP’s tender pavement design did not comply with the Waka Kotahi requirements. As a consequence, CPB claimed significant amounts in losses against WSP for breach of contract and negligence. CPB calculated the loss based on the amount it would have added to its tender price had WSP provided a compliant tender design.? ?

SJA A Managing Director Steve Abbott served as expert witness in the case assisted by SJA's Tim Stevens NSW Regional manager, and Paul Ashman of SJA's Advisory Services division.

Their contributions were essential in clarifying the details of the quantum and the measurement of the losses CPB incurred including the direct costs and additional time the contractor would have taken in building an alternative compliant design as opposed to the deficient tender design.

WSP argued that the approach of valuing the extra over costs of a compliant design was incorrect. Further, WSP said the design changes proposed (to make the tender design compliant) were different to the design ultimately constructed and therefore CPB’s claimed loss was hypothetical.

DECISION

The court found in favour of CPB and accepted its approach of calculating damages based on the tender price it would have submitted had it received a compliant tender design from WSP and awarded it the full amount claimed as damages, plus costs and interest.

The Court dismissed any concern with CPB’s losses being hypothetical saying that the relevant authorities “demonstrate that hypothetical assessment of the expectation measure of loss is frequently the only proper means of assessment” Justice Johnson also acknowledged that the Court needed to consider the possibility that Waka Kohati would have rejected CPB’s tender price based on a compliant pavement design. This point was satisfied by reference to the next lowest tender bid to confirm CPB’s tender price would still have likely been accepted by Waka Kohati even with the additional amount reflected in the compliant design.

CONCLUSION

Construction disputes can be complex on large infrastructure projects such as the Southern Corridor improvements project and the expert witness often plays a key role in valuing the quantum of such disputes. This recent outcome in NZ is said to be a significant decision by the instructing lawyers Simpson Grierson for the calculation of losses arising from a design error.

The role of quantum expert witness Steve Abbott and the SJA team was integral to the success of this case.