Risky Business: Lessons in clearing up Contractual Confusion in John Sisk and Son Ltd v Capital & Centric (Rose) Ltd
In the case of John Sisk and Son Limited v Capital & Centric (Rose) Limited, the Technology and Construction Court addressed a dispute between the contractor (Sisk) and employer (C&C) regarding who bears the responsibility for existing site conditions.
The position of risk allocation varied between what the contract appeared to provide for, on the face of it, and various “clarifications” documents crossed referred to in the contract, prompting the parties to refer the issue to the Court to determine which documents should be considered.
This case underscores the importance for parties to consistently use clear and precise language in drafting to accurately capture what they have agreed, particularly in key risk areas that have been debated and negotiated in the run up to entering into a contract.
Background facts
The parties entered into a JCT Design and Build Contract 2016 with an extensive schedule of amendments (“the Contract”).
During the works of constructing two new residential buildings and repairing two listed mills, issues emerged regarding the suitability of the existing structure. These issues lead Sisk to seek extensions of time and additional costs. The parties disagreed on who should bear the risks related to the existing structures, including their ability to support and, or facilitate the proposed works.
Before the court proceedings, an adjudication had determined that the ground conditions and existing structures risk lay solely with Sisk. Sisk bought part 8 proceedings, seeking a declaration that the risk associated with existing structures on the site should fall on C&C.
The Contract
At first glance, according to clauses 2.42.1 to 2.42.3 of the Contract, Sisk was responsible for the risk of ground, sub-soil and other physical conditions including in relation to existing structures on the site, specifically their ability to support and facilitate the proposed works with no entitlement to extensions of time and/or additional payment for site risks including those which were unforeseeable. Further, C&C gave no representation as to the condition of the site or existing structures, or the accuracy of any data or information it provided to Sisk.
Clause 2.42 included:
“.3 The Contractor has had the opportunity of inspecting the physical conditions and other conditions of the Site and structures upon it and acknowledges that it shall be solely responsible for ensuring that the ground, the Site and any existing structures to be retained under or upon or adjacent to the Site are (or will upon completion of the Works) be suitable for the development and intended occupation and use of the Site to which the Works relate and the Contractor shall be responsible for dealing with any other matters required to be dealt with in order to complete the Works. Nothing referred to in this clause 2.42.3 shall give rise to an increase in or addition to the Contract Sum, nor to an extension of time, nor give rise to any right on the part of the Contractor to determine its employment on the grounds of any misunderstanding or any such matter nor shall the Contractor be released from any of the risks accepted or obligations undertaken by him under the Contract on the ground that he did not or could not have foreseen any matter which might affect or have affected the execution of the Works.
.4 This clause 2.42 shall be subject to item 2 of the Clarifications.”
Critically, clause 2.42 was stated to be subject to “item 2 of the Clarifications” seemingly intended to qualify Sisk’s risk under the preceding subclauses.
Two clarification documents entitled “contract clarifications” and “tender submission clarifications” existed which provided different positions on risk. The Court’s first job therefore was to determine which documents counted as “the Clarifications”.
Clarification Documents
The contract was produced in an electronic format on a USB drive and also in a bound printed (hard copy) format. The Clarifications were defined in the contract as the document titled “contract clarifications”.
The electronic version of the contract had two clarification documents:
- “contract clarifications” and
- “tender submission clarifications”.
However, the printed version only included an initialled copy of “contract clarifications”.
Item 2 of the clarifications document set out a clarification request from Sisk:
| Sisk Clarification | Comments / Risk Owner |
| Existing Structures Risk including ability to support / facilitate proposed works | The Employer is to insure the Existing buildings/ works. Employer also to obtain warranty from Arup with regard to the suitability of the proposed works. Employer Risk |
In contrast, the “tender submissions clarifications” made apparent C&C was not willing to accept the risk of the existing structures.
As expected, C&C argued that the reference in the contract to “Contract Clarifications” included both documents, as they wished to rely on the “tender submissions clarifications” document.
The Court found that clause 2.42.4 and the contractual definition of “clarifications” referred to the document called “contract clarifications”, not the “tender submission clarifications” in both the electronic and hard copy appendices. Clause 2.42.4 referred to “item 2” of the Clarifications, which could only refer to the “contract clarifications” document.
The “tender submissions clarifications” showed the “history of negotiations”, rather than the final contract position. As such, it was not taken into account when determining the risk allocation. The Contract included an “entire agreement” clause which again meant the Court did not consider the “tender submission clarifications”.
The Court found that the normal and natural meaning of “Employer Risk” clearly meant that C&C bore responsibility for the risk of any unsuitability of the existing structures to support and facilitate the proposed works. Sisk was therefore entitled to claim extensions of time and/or additional costs which arose as a result of that risk.
Key Takeaways
Accuracy
Ensure the final contract accurately reflects all agreed terms and be wary of the dangers of short hand amendments through clarifications. Grey areas in contract drafting create areas rife for disputes.
Avoid unnecessary attachments
Do not append extra documents unless absolutely necessary to avoid confusion and ensure all documents reflect the final agreed position.
Consistency
Ensure electronic and printed copies of the contract contain the same documents.
