In 1989-90, the Urban Regeneration Agency and English Partnerships (together, URA) engaged Mott MacDonald to advise on the investigation and remediation of contamination at St Mary’s Island, part of the former Royal Dockyards in Chatham that was to be developed as a residential site. Initial investigations revealed contamination including ash from a former brickworks, asbestos and dockyard waste. The judge found that the consultant’s historical and intrusive investigations did not show the true extent of the contamination.
The remediation works were carried out by a third-party contractor, with Mott MacDonald engaged as consulting engineer. The cost of the remediation overran dramatically. The eventual cost was about £67.5m. The consultant’s original estimate was approximately £23m.
The case, Urban Regeneration Agency and English Partnerships (Medway) Ltd vs Mott MacDonald Group Ltd and Others (October 1998), lasted 77 days. The judgment (without schedules or appendices) runs to 467 pages, and the facts are complicated. Expert evidence was lengthy. Despite this, the central issue was simple – who was liable for the cost overrun?
Unless overturned on appeal, the message from this case is also simple: the consultant was punished for conducting inadequate initial site investigations, for poor communication with the client and for failure to respond adequately when evidence of the true extent of contamination materialised.
From the shaky foundation of the initial investigations, the consultant recommended the removal of the ash layer and other unacceptable material. The definition of “unacceptable” was a key issue.
The contract between the parties stated that remediation was to be “to a standard sufficient to permit residential and/or commercial development”. It also referred to trigger levels for unacceptable material. “Threshold trigger levels” were, in the consultant’s mind, substances at a concentration where there was a possible need for remediation. “Action trigger levels” were concentrations above which measures had to be taken. URA argued that remediation was required at TTL; for the consultant, TTLs were starting points, and the decision between acceptable and unacceptable contamination was an engineering judgement – in other words, a risk assessment.
The consultant was punished for inadequate site investigations, poor communication and for failure to respond adequately to evidence of the true extent of contamination
Based on its investigations, the consultant said 363 000 m3 of unacceptable material needed to go. In due course, more than 1 100 000 m3 were removed by the contractor.
Today, the risk assessment approach adopted by the consultant is common. It is probably also the case that developers and lenders are more comfortable with these concepts than in 1989-90. To that extent, the treatment of the consultant seems harsh. However, what remains constant is that professionals need to communicate advice clearly to clients.
What we had here were parties that attached radically different meanings to the contractual provision “a standard sufficient to permit residential and/or commercial development of the site”. URA took this to mean the removal of “any accessible chemical within the ground which is unacceptable to [URA] or to a potential purchaser of, or a provider of finance for, a house and garden. Contaminants are of this kind, if they are either harmful to users of the site or to plant or tree life … or are perceived to have these qualities” [emphasis added]. The consultant argued that the contract required risk assessment as outlined above. Unfortunately for the consultant, the judge found that in 1989-90 “there was relatively little [risk assessment] expertise amongst practising consultant engineers and that clients and the public were instinctively unreceptive to the technique”. Indeed the judge accepted that in 1989-90 it was common for developers, planners and funders to accept TTLs as if they were ATLs.
In any event, the judge stressed: “A consultant must provide clear and comprehensive advice in a way that enables a client to appreciate all the factors when implementing remediation. This includes the results of any site investigations, the reasons for any professional judgements and for each recommendation made. Given the dependence of remediation schemes on professional judgement it is important that the nature and shortcomings of such concepts as TTLs, site specific remediation, risk assessment and gradation with depth are clearly spelled out.”
In short, the judge found that the consultant failed to communicate adequately.
After the remediation began, it became clear that the volume of excavated material was well in excess of the consultant’s predictions. The judge held that, in the face of this evidence, the consultant’s response was confused, that it failed to exercise reasonable skill and care in assessing the new information, and that its response should have been, at the very least, that no prediction about the unacceptable material could be given without more investigation.
Postscript
Paul Sheridan is a partner in the environment law group of solicitor CMS Cameron McKenna
