24
INFERENCES FROM NON-NEC CASE LAW David Thomas QC 7 July 2016
INFERENCES FROM NON-NEC CASE LAW
David Thomas QC 7 July 2016
HOW DOES IT WORK?
THE SAME OR
DIFFERENTLY FROM “TRADITIONAL” CONTRACTS
25/07/2016 25
HOW DOES IT WORK
NEC website:
“where traditional forms of contract can promote an adversarial relationship between contractor and client, the
NEC promotes a partnering, collaborative approach..”
25/07/2016 26
Simple language in present tense
Entire Agreement clause
Resolution of ambiguities Mutual trust and co-operation
27
HOW DO WE WORK OUT WHAT IT MEANS
Language
Simple, short, non-legalistic and in the present tense to achieve clarity and simplicity.
However in Laing O’Rourke v Anglian Water [2012] Edwards-Stuart J said:
“I have to confess that the task of construing the provisions in this
form of contract is not made easier by the widespread use of the present tense in its operative provisions. No doubt this approach to drafting has its adherents within the industry but, speaking for myself and from the point of view of a lawyer, it seems to me to represent a triumph of form over substance”.
Why don’t some lawyers like the language?
28
Language
Rainy Sky v Kookmin Bank 2011
“the correct approach to construction of the bonds , as in the case of any contract…the principles have been discussed in many cases ...the ultimate aim ... involves ascertaining what a reasonable person would have understood the parties to have meant”
25/07/2016 29
Arnold v Britton [2015] “First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook [2009] AC 1101 , paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract.”
30
“12.4 This contract is the entire agreement between the Parties”
Effective in principle: Intreprenneur Pub Co v East Crown (2000).
25/07/2016 31
Clause 12.4
Clause 12.4
But how effective ? • Collateral warranties? Probably. Deepak v ICI 1999
• Misrepresentation? Probably not. Thomas Witter v TBP
1996; Misrepresentation Act 1967
• Estoppel? Probably not. Brikom Investments v Carr 1979
• Implied Terms? Not much. Milburn Services v United Trading1995
25/07/2016 32
Clause 17
“Clause 17.1 The Project Manager or The Contractor notifies the other as soon as either becomes aware of an ambiguity or inconsistency in or between the documents which are part of this contract. The Project Manager gives an instruction resolving the ambiguity or inconsistency”
25/07/2016 33
Clause 17.1
How to resolve ? Process of interpretation
• Rainy Sky • Arnold v Britton
• What if get it wrong?
25/07/2016 34
Clause 10
“10.1 The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and co-operation.”
35
Mid Essex Hospital Trust v Compass Group [2013]
Express term: “The Trust and the Contractor will co-operate with each other in good faith and will take all reasonable action as is necessary for the efficient transmission of information and instructions and to enable the Trust or, as the case may be, any Beneficiary to derive the full benefit of the Contract.”
Not a general obligation of good faith, but limited to (1) the efficient transmission
of information and instructions and (2) enabling the Trust or any beneficiary to derive the full benefit of the contract.
Meaning given by Jackson LJ was that the parties will work together honestly
endeavouring to achieve the two stated purposes.
36
Mid Essex Hospital Trust v Compass Group [2013] “The contract in the present case is a detailed one which makes specific provision for a number of particular eventualities…In a situation where a contract makes such specific provision, in my judgment care must be taken not to construe a general and potentially open-ended obligation such as an obligation to “co-operate” or “to act in good faith” as covering the same ground as other, more specific, provisions, lest it cut across those more specific provisions and any limitations in them.”
37
TSG Building Services plc v South Anglia Housing Ltd [2013]
Contract allowed parties to terminate on giving 3 months’ notice. Express term: “The Partnering Team members shall work together and individually
in the spirit of trust, fairness and mutual co-operation for the benefit of the Term Programme, within the scope of their agreed roles, expertise and responsibilities as stated in the Partnering Documents, and all their respective obligations under the Partnering Contract shall be construed within the scope of such roles, expertise and responsibilities, and in all matters governed by the Partnering Contract they shall act reasonably and without delay.”
South Anglia terminated the contract giving three months notice. TSG claimed the
good faith provisions applied to the termination clause, and so South Anglia needed to act in good faith, or at least reasonably, when exercising their discretion to terminate.
38
TSG Building Services plc v South Anglia Housing Ltd [2013]
The Court decided in South Anglia’s favour:-
• The good faith clause did not apply to the termination provisions. • The termination clause provided an unqualified right to either party,
and it was obvious to each that, when entering into the contract, either party would be entitled to terminate at any time.
• The good faith clause was primarily concerned with the performance of
roles, expertise and responsibilities. It did not expand to include every obligation, power or right under the contract.
39
Mears Ltd v Shoreline Housing Partnership Ltd [2015]
Akenhead J at para 72: “I am, further, not satisfied that there would be any such implied term or that the obligation to act in a spirit of mutual trust and cooperation or even in a “partnering way” would prevent either party from relying on any express terms of the contract freely entered into by each party”
40
Clause 10
But possibilities • The time bar in clause 61.3? Could the Project Manager
have an obligation to notify? • Rejecting a programme? • Quotations genuine commercial offers Rejection?
• Provisions not specific
25/07/2016 41
Clause 61.3 “61.3 The Contractor notifies the Project Manager of an event which has happened or which he expects to happen as a compensation event if
the Contractor believes that the event is a compensation event and
the Project Manager has not notified the event to the Contractor.
If the Contractor does not notify a compensation event within eight weeks of becoming aware of the event, he is not entitled to a change in the Prices, the Completion Date or a Key Date [unless the Project Manager should have notified the event to the Contractor but did not.]”
2013 amendment: [“unless the event arises from the Project Manager or the Supervisor giving an instruction, issuing a certificate, changing an earlier decision or correcting an assumption.”]
42
Obrascon Huarte Lain SA v HM AG for Gibraltar [2015]
Contractor claimed for an extension of time
Clause 20.1 of the FIDIC yellow book: requirement to give
notice not later than 28 days after the Contractor becomes aware, or should have become aware, of the event or circumstance giving rise to the claim for an extension of time.
Broad interpretation of this clause in favour of contractor
43
Obrascon Huarte Lain SA v HM AG for Gibraltar [2015]
“Properly construed and in practice, the “event or circumstance giving rise to the claim” for extension must first occur and there must have been either awareness by the Contractor or the means of knowledge or awareness of that event or circumstance before the condition precedent bites. I see no reason why this clause should be construed strictly against the Contractor and can see reason why it should be construed reasonably broadly, given its serious effect on what could otherwise be good claims for instance for breach of contract by the Employer.” But the notice must be recognisable as a claim and be given as soon as practicable with a longstop of 28 days after the Contractor has become or should have become aware. Decision upheld by Court of Appeal in 2015 without comment on time bar provisions.
44
Conclusions
Contract is not in traditional form or language Approach to discerning its meaning is orthodox.
Clauses 10.1, 12.4 and 17.1 do not change that. They
are simply clauses to construe and apply and may have an effect in an individual case.
25/07/2016 45
DAVID THOMAS QC [email protected]
Thank you for listening Any Questions?
Please contact the Practice Management Teams for further information T +44 (0)20 7544 2600
E [email protected] www.keatingchambers.com
© Simmons & Simmons LLP 2016. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
71 / B_LIVE_EMEA1:1842195v2
simmons-simmons.com elexica.com
This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of those practices as the context requires. The word “partner” refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP’s affiliated practices. For further information on the international entities and practices, refer to simmons-simmons.com/legalresp. Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC352713 and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address.
