Construction work not explicitly mentioned in the work schedule does not always constitute additional work. The scope of work is defined by the entire contract documents, including the STWiORB (Technical Specification for the Execution and Acceptance of Construction Work)

A mediation settlement has ended an 8-year litigation related to the settlement of an investment project for the construction of water supply, sanitary sewer and stormwater drainage infrastructure along with road reconstruction. The amount claimed in the case, in excess of PLN 1 million, was to be remuneration for the performance of additional works, which, according to the plaintiff, were not included in the contractual scope.

The Law Firm’s advocates and attorneys represented the defendant Company in this dispute, which remained a subcontractor of the general contractor at the stage of the investment. In addition to the Law Firm’s client, the investor remained jointly and severally the defendant.

The case was of a complex and complicated nature, because regardless of the dispute over the possibility of qualifying the works specified by the plaintiff as additional works, the nature of the contract binding the Law Firm’s Client with the plaintiff also remained in dispute. The latter issue was crucial from the point of view of the possibility of assigning to the Law Firm’s Client and the investor joint and several liability for payment of remuneration for the performance of construction works.

With regard to the nature of the contract binding the Law Firm’s Client with the plaintiff, the problem arose from the fact that there was originally a further subcontracting agreement between the parties, which the investor objected to. However, the investor stipulated that execution of the works by the plaintiff company would be possible if it entered into an agreement directly with the general contractor, or if a consortium was formed between the Law Firm’s Client and the plaintiff. The parties adopted the latter solution, and thus entered into a consortium agreement along with an executive agreement, and carried out the commissioned scope of work in this way.

At the stage of litigation, the plaintiff argued that the conclusion of the consortium agreement and the executive agreement was an ostensible nature, and that in fact the plaintiff and the Company represented by the law firm had a subcontracting relationship. Only this position allowed the plaintiff to direct claims against the Law Firm’s client. Lawyers of the Law Firm presented as to it extensive legal and factual arguments intended to lead to the conclusion that in this case there are no grounds for treating the plaintiff as a subcontractor.

In the course of the dispute, the parties also presented divergent positions as to the possibility of recognizing that the construction works indicated by the plaintiff remained additional works that were not covered by the fee agreed between the parties.

The plaintiff’s position was that the scope of works it had accepted to perform defined only the bill of quantities, which did not include the work indicated in the lawsuit. The Law Firm’s lawyers, on the other hand, argued that the scope of works to be performed by the plaintiff was defined not only by the bill of quantities, but by the entire contractual documentation, including the ToR (Terms of Reference), the design documentation and the Technical Specification for the Execution and Acceptance of Construction Work (STWiORB). These documents were important because they determined which works were included in each unit price. This meant that in a situation where, when valuing the construction work, the plaintiff did not take into account any documents other than the bill of quantities, it was not entitled to claim payment for construction works that, if properly valued, would fall within the scope of the basic work resulting from the investment documentation, and their price should be included in the lump-sum unit prices of the valuation.

Determining the above required two expert opinions. The first opinion remained unfavorable to both the Law Firm’s Client and the jointly and severally sued investor. The Law Firm’s lawyers successfully challenged the evidentiary value of the opinion in question, which led the Court to appoint another expert, who was commissioned to determine whether additional works could be said to be involved in the case. The second opinion overwhelmingly turned out to be favorable to the Law Firm’s Client.

Faced with the findings of the two conflicting expert opinions, as well as wishing to bring a definitive end to the long-standing dispute, the Parties decided to enter into settlement talks with the participation of a mediator. These talks culminated in a mediation settlement on terms satisfactory to both the plaintiff, the Law Firm’s Client and the investor being sued jointly and severally.

This case clearly demonstrates how important it remains to work out such provisions of a construction contract, subcontract, consortium agreement or executive agreement that will properly secure the interests of a given party and, in conflict situations, allow to present such arguments that will lead to the refutation of the claims of the opposing party. Equally important remains the proper and comprehensive analysis of all contractual documentation by individual participants in the investment process, including contractors and subcontractors, who often face problems of improper price calculation and problems arising against the background of settlement of additional works.