€12m mistake could hold up €82m Cork port development, court hears

Building company BAM Civil Ltd, which won a €46m tendering process for some of the relocation works at Cork port, says it made a "significant mistake" in the computation of its tender.

It has told the Port of Cork Company that, after carrying out a review of their €46.3m tender price, they "discovered there was an arithmetical error" and had "omitted approximately €12m" from the price.

That consisted of 6% for head office/offsite overheads and 18% for site preliminaries/overheads "such that our tender is not sufficient to construct the project".

As a result, Port of Cork Company has brought proceedings against BAM seeking a number of orders, including that it commence permanent and temporary works referred to in the contract, provide tax clearance certificates, evidence of insurance and "performance security" for the project.

The contract is part of an €82m plan to move the existing container shipping activity at the city-centre Tivoli location to Ringaskiddy by 2025. It will comprise a 360-metre single berth, a straddle carrier operating system and a new maintenance building for the straddle carriers.

Around 160 acres of the Tivoli land is to be redeveloped for residential and mixed-use purposes.

The relocation project, says Port of Cork Company is part of the Government's March 2013 National Port's Policy Statement and it has already been awarded significant grant funding by the EU. Port of Cork Company has also signed funding agreements, following approval by the Government, with AIB, the European Investment Bank and the Irish Strategic Investment Fund.

John Geoghegan, project director for Port of Cork Company's Ringaskiddy redevelopment, says in an affidavit that Port of Cork Company sent a letter of acceptance of the €46.3m tender offer to BAM on December 20 last. This followed a 13-month tender process.

However, Mr Geoghegan says, in various letters since then, BAM has purported to raise questions as to whether a contract was concluded and more recently sought to deny the existence of the contract.

It asserted it made a mistake and was "entitled to rescission of any such contract by reason of mistake or alternatively rectification". BAM also stated "no legal relationship or other obligation shall arise" between the parties unless and until the contract had been formally executed in writing.

Port of Cork Company says the contract was concluded by reason of the letter of acceptance sent on December 20 last.

In subsequent correspondence, BAM asserted, for the first time, that having carried out a review, it discovered the €12m arithmetical error, Mr Geoghegan says.

There is a risk that Port of Cork Company will not have sufficient time to complete the redevelopment if BAM does not progress the works in accordance with the timelines in the contract, he says. It may also mean having to re-run the tendering process and re-negotiate financing, he says.

On application of Brian O'Moore SC, for Port of Cork Company and with the consent of the defendant, Mr Justice Brian McGovern admitted the case to the fast track commercial list and fixed a date for hearing in July.