TinghamGrange Ltd -v- Dew and North West Water (1995)   © Daniel Atkinson 1999

In TinghamGrange Ltd (T A Gryphonn Concrete Ltd) -v- Dew and North West Water (1995) the Engineer cancelled an order for specially manufactured precast drainage blocks and substituted them with a sand and gravel filter media and drainage tiles. The omission of the works was properly ordered under the terms of the contract which was ICE 5 Edition. The supply contract between Dew and Tinghamgrange contained a clause which excluded liability for loss of profit in the event of suspension or abandonment of the contract, but not for omission of the works under the main contract.

It was held at first instance that the supplier was entitled to payment of loss of profit from Dew and that the Engineer was correct in not taking the loss of profit into account in his assessment of fair valuation under clause 52.1. Dew appealed on this second decision.

The Court of Appeal held in a majority decision that the Engineer should have allowed for the loss of profit in evaluating a fair valuation under clause 52.1. The Court was not prepared to examine the argument that the exclusion clause under the supply contract was not sufficiently widely drawn, since the matter had not been pleaded at first instance and no evidence had been adduced as to the common practice in the industry. There had been no pleading that Dew had contributed to its own loss. The dissenting judgment was on the basis that in the absence of evidence to show the Engineer was wrong, this was a matter within the expertise and knowledge of the Engineer who was to be taken to be familiar with the contracting conditions in the industry.

The majority decision is therefore authority for the Engineer to take into account loss of profit in evaluation of fair valuation under clause 52.1, although in this case the loss of profit was a sum the contractor had to pay under the terms of his supply contract, and not the contractor`s own loss of profit.