HSM Offshore BV v Aker Offshore Partner Limited

Citation: [2017] EWHC 2979 (TCC)

This claim concerned a dispute between the claimant, HSM, and the defendant, Aker arising out of a contract to carry out the fabrication, load-out and sea fastening of two process modules for use on the Clyde Platform in the North Sea. Aker had engaged HSM to carry out the works pursuant to a contract incorporating LOGIC sub-contract terms. During the project it had become apparent that the process modules would not achieve the agreed Ready for Sail Away (RfSA) date of 10 May 2015. The parties therefore entered into a Memorandum of Understanding (MOU) and Sail Away subsequently occurred on 10 August 2015. In the proceedings before the Court, HSM sought to recover sums that they alleged were due under the sub-contract or the MOU. Aker counter-claimed for liquidated damages and damages in respect of defects.

The first issue for the Court to determine was whether the execution of the MOU had altered the sub-contract such that the failure to meet the agreed RfSA date entitled Aker to levy liquidated damages. Coulson J held that the original RfSA date under the sub-contract was no longer operative because both parties knew that it could not be met. Further, the MOU had altered the sub-contract to change from a contract to complete by a certain date to a contract for HSM to use its “fullest endeavours” to achieve Mechanical Completion by 1 July 2015. On the basis that the contract had been altered to one of “fullest endeavours”, Coulson J found that HSM had complied with such an obligation and therefore no issue of liquidated damages could arise in the circumstances.

The next issue for Coulson J to determine was whether any sums approved and paid by Aker could be clawed back as part of the final account process or whether an estoppel by convention had arisen which prevented Aker from doing so. Coulson J held that an estoppel by convention did not arise for several reasons, including the terms of the contract, the approval of the invoices having been “without prejudice” and the evidence of HSM’s witnesses.

Coulson J also examined a number of individual items that HSM claimed they were entitled to as a matter of construction. Coulson J rejected each of these claims. HSM could not point to any individual term in either the MOU or the sub-contract that would entitle them to the items under normal principles of construction.

Representing the Claimant: Simon Hughes QC

Representing the Defendant: Adrian Williamson QC and Calum Lamont

Full Judgment

Counsel

Simon Hughes QC
Adrian Williamson QC
Calum Lamont

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